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What's Happening: Shares of Ubiquiti Networks (NYSE:UI) were up more than 16% at noon Friday after the company handily beat analyst estimates for its second-quarter earnings.
Total revenue rose 11% year-over-year to $153.1 million, driving an 8% rise in operating profit and an 11% increase in net income. Ubiquiti reported non-GAAP EPS of $0.53 for the quarter, five cents higher than what analysts were expecting.
Why It's Happening: While revenue from Ubiquiti's service provider segment, which is its largest, declined by 10.5%, strong growth in its enterprise technology segment more than made up for it. Enterprise technology revenue almost doubled to $53.4 million, making up a little more than a third of the company's total revenue. This is up from just 20% in the same period last year.
The North American market performed well, making up for weakness in both South America and the Asia Pacific region. North American revenue rose by 66% to $54.1 million, while the smaller South American and Asia Pacific markets declined by 20.5% and 12.4%, respectively.
Guidance for the third quarter did come in below expectations, despite the strong results. Ubiquiti expects revenue between $146 million and $158 million, barely including the average analyst estimate of $157.9 million. Expected non-GAAP EPS between $0.45 and $0.50 also falls short of the $0.51 consensus.