A Ubiquiti Networks Air Fiber dish array broadcasting along the coastline. Credit: Ubiquiti Networks via Facebook.
Shares of Ubiquiti Networks (UI -0.39%) stock fell 4.9% on Thursday as of 5:21 p.m. ET as investors took a dim view of the company's fiscal third-quarter results. Here's a closer look at the final Q3 totals versus Wall Street's projections:
| UBNT | Revenue | YOY Growth | EPS | YOY Growth |
|---|---|---|---|---|
| Consensus estimate | $147.49 million | (0.57%) | $0.47 | (6%) |
| Q3 actuals | $147.46 million | (0.59%) | $0.47 | (6%) |
| DIFFERENCE | ($0.03 million) | (0.02%) | $0.00 | 0% |
Sources: S&P Capital IQ and Ubiquiti Networks press release.
Commenting on the results, CEO and founder Robert Pera said in a press release: "We are focused on advancing our R&D and expanding our market opportunities in the coming quarters."
What went right: Enterprise technology sales, a catalyst last quarter, came in strong again. Segment sales rose 50.9% as companies snapped up UniFi access points and related products for enhanced wireless service. Pera and his team also controlled direct expenses and administrative expenses -- both were essentially flat year over year -- to invest heavily in R&D to chase the opportunities Pera alludes to in his quote.
What went wrong: Service provider revenue continued its descent, falling 12.1% year over year. That wouldn't have been so bad if Enterprise Technology had grown more. Instead, Enterprise sales accounted for just 27.9% of revenue versus 34.9% last quarter, resulting in a slight year-over-year decline in gross sales.
What's next: Looking ahead, Ubiquiti Networks expects $140 million to $150 million in fiscal fourth-quarter revenue, resulting in $0.43 to $0.48 a share in profits after accounting for non-cash charges and one-time items. Analysts tracked by S&P Capital IQ have the company generating $155.47 million in revenue and $0.49 a share in adjusted profit versus $156.01 million and $0.56 a share in last year's Q4.
The disparity between Ubiquiti's revenue projection and Wall Street's hopes appears to have contributed to the after-hours sell-off. Longer term, analysts have Ubiquiti Networks growing earnings by an average of 8.81% annually during the next three-to-five years.
In the meantime, investors should also review Ubiquiti's 10-Q quarterly filing with the SEC. There you'll find cash flow detail that's left out of the press release plus additional management commentary on the financial results -- though Ubiquiti did say that it produced $36.7 million in cash from operations during the quarter.
