Image source: Ubiquiti Networks. 

Ubiquiti Networks (NASDAQ:UBNT) last week reported neglible year-over-year growth in its fiscal first quarter that came right toward the higher end of guidance issued in last year's fiscal Q4. The stock jumped 13% immediately afterward. 

But are these results really worth celebrating? Hoped-for sales to networked corporations and other institutions didn't materialize as fast as management had hoped. Revenue from wireless service providers also declined. Here's a closer look at the company's overall performance in fiscal Q1:

MetricQ1 2016 ActualsQ1 2015 ActualsYOY Growth
Revenue  $151.4 million  $150.1 million  0.87%
Non-GAAP net income  $45.5 million  $43.4 million  4.8% 
Adjusted EPS  $0.51  $0.48  6.3%
Cash From Operations   $47.7 million  $46.9 million  1.7%

Data sources: S&P Capital IQ and Ubiquiti Networks press release. 

Putting the results in context, CEO and founder Robert Pera told analysts that Ubiquiti is seeking further improvement in the enterprise portion of its business even as it lowers costs elsewhere.

S&P Capital IQ quotes Pera as saying:

UniFi, in general, has been a huge disappointment. We didn't execute overall on the platform. Last quarter, let's see, $48 million we got from UniFi. If we did our job the past couple of years, it should be double that at least. But we have some new leadership on that platform. And I think the last several months have been probably better than the past couple of years in terms of our R&D productivity and execution. So I expect, UniFi, you'll see better growth over this next year. 

Eagle-eyed investors will notice that Ruckus Wireless (NYSE:RKUS) -- another maker of wireless networking devices -- spent part of its most recent report pitching new ways to entice customers. In Ruckus' case, a lower-end product called Unleashed will be aimed at the small- to medium-sized business market in hopes of driving higher volume and more profit. (Ruckus had zero growth in per-share earnings last quarter.)

What went right: Pera spent much of the call with analysts touting higher gross margin. He's right to do so. Pricing improvements pushed gross margin to 48.5%, up a whopping 420 basis points year over year. That's the best performance in over five years, S&P Capital IQ reports. 

What went wrong: Enterprise technology didn't provide the growth Pera or investors had come to expect. Segment revenue improved just 12.1%, a far cry from the near-doubling we'd seen in earlier quarters. Ubiquiti is also spending big on share repurchases as growth in cash from operations stagnates. Total cash and short-term investments fell $10 million sequentially as a result. Inventory fell nearly $7 million over the same period.

What's next: Looking ahead, Pera and his team forecast fiscal-second-quarter revenue between $150 million and $160 million, resulting in $0.48 to $0.55 a share of profit according to generally accepted accounting principles. Non-GAAP earnings are expected to come in between $0.49 and $0.56 a share.

In the meantime, investors should pay attention to whether Pera's confidence in the changes in the enterprise group take hold and reinvigorate UniFi sales the way he hopes. Details on the capital investment needs of the new sunMAX solar power business are also key. As slow acceptance for UniFi proves, new ideas don't always produce at the level management hopes -- and sunMAX is far afield of Ubiquiti's more traditional data networking business.

Tim Beyers tries not to cause a ruckus. He's also a member of the Motley Fool Rule Breakers stock-picking team and the Motley Fool Supernova Odyssey I mission but didn't own shares in any of the companies mentioned in this article at the time of publication. Check out Tim's web home and portfolio holdings or connect with him on Google+Tumblr, or Twitter, where he goes by @milehighfool.

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