~ Achieves Record Revenue and Ninth
Consecutive Quarter of Revenue Growth ~
~ Diluted EPS of $0.92 Per Share ~
Ubiquiti Networks, Inc. (NASDAQ:UBNT) (“Ubiquiti" or the
"Company”) today announced results for the first fiscal quarter of
2018, ended September 30, 2017.
First Quarter Fiscal 2018 Financial Summary
- Revenues of $245.9 million, increased
20.1% year-over-year
- GAAP gross profit of $111.7 million,
representing 45.4% of revenues
- GAAP and non-GAAP net income of $74.9
million
- GAAP and non-GAAP diluted EPS of
$0.92
First Quarter Financial Highlights
- Revenues increased 20.1%
year-over-year and 7.6% sequentially. Year-over-year growth was
primarily driven by the UniFi-AC, UniFi-Switch, airMAX-AC, airFiber
and AmpliFi platforms.
- Enterprise Technology revenues
increased over 49.8% year-over-year and 11% sequentially.
Year-over-year growth was driven by the evolution toward AC
technology products, growth in switching and higher average selling
prices.
- GAAP gross margin was 45.4%,
consistent with the prior quarter but down versus the prior year
primarily due to product mix.
- Days sales outstanding in accounts
receivable ("DSO") decreased by 7 days to 48 days, compared
with 55 days in the prior quarter driven by higher
collections.
- Repurchased 2,751,024 shares of
common stock at an average price per share of $54.98, between
July 1 and October 6, 2017.
- Increased the maximum amount of
availability under our revolving loan facility to $425 million from
$300 million, representing an increase of $125 million, as
disclosed in the Form 8-K filed on November 1, 2017.
- Initiated a new stock repurchase
program, authorizing the Company to repurchase up to $50
million of its common stock, as disclosed in the Form 8-K filed on
November 9, 2017.
Recent Product Highlights
- Launched UniFi AC SHD access points,
an 802.11AC Wave 2 MU-MIMO access point with a dedicated security
radio, providing persistent threat management combined with the
latest Wave 2 technology.
- Released GPS Sync for airMAX AC,
providing for GPS synchronization between airMAX AC and airMAX M
series equipment.
- Launched the airCube, a Wi-Fi access
points for use by wireless internet service providers in
residential customer deployments, featuring a sleek design, a
mobile app and 24V PoE passthrough.
- Introduced FrontRow, featuring a new
camera technology that enables effortless capture and sharing
of life’s experiences. The product was launched in mid-August and
is available through on-line retail including FrontRow.com,
Amazon.com, BestBuy.com and through traditional retail channels
such as BestBuy and Sam’s Club.
- Announced significant updates to
Ubiquiti’s proprietary UCRM software, a customer management
platform for wireless internet service providers, including
enhanced billing features and multi-language support.
Financial Highlights ($, in millions,
except per share data)
Income statement highlights
F1Q18 F4Q17 F1Q17
Revenues 245.9 228.6 204.8 Service Provider Technology 119.9 114.7
120.6 Enterprise Technology 126.0 114.0 84.1 Gross profit 111.7
103.2 98.3 Gross Profit (%) 45.4% 45.1% 48.0% Total Operating
Expenses 24.6 31.5 23.4 Income from Operations 87.1 71.7 74.9 GAAP
Net Income 74.9 60.7 71.8 GAAP EPS (diluted) 0.92 0.74 0.86
Non-GAAP Net Income 74.9 61.0 65.5 Non-GAAP EPS (diluted) 0.92 0.75
0.79
Balance Sheet Highlights
Total cash and cash equivalents as of September 30, 2017
were $631.8 million, compared with $604.2 million as of
June 30, 2017. The Company held $597 million of cash and cash
equivalents in accounts of the Company’s subsidiaries outside of
the United States. Cash and cash equivalents, less debt (net cash)
of $333.9 million decreased $13.7 million sequentially. The
sequential decrease in net cash during the first quarter of fiscal
2018 was primarily driven by the repurchase of common stock,
partially offset by operating earnings.
First quarter fiscal 2018 days sales outstanding in accounts
receivable ("DSO") were 48 days, compared with 55 days in the prior
quarter, and 43 days in the first quarter of fiscal 2017. DSO's in
the current period declined approximately one week versus the prior
quarter, driven primarily by higher collections.
Ubiquiti continues to invest in inventory to reduce lead times,
meet increasing demand and support the commensurate growth of the
Company’s customers. At the same time, the Company is committed to
optimizing inventory to correspond with end-market demand.
Inventory at the end of the quarter decreased $19.8 million to
$122.2 million. Consequently, inventory weeks on hand decreased on
a sequential basis to 13 weeks in the current quarter versus 14
weeks the prior quarter. The Company expects to hold 8 to 12 weeks
of previously introduced product inventory in warehouses going
forward, in addition to new product inventory and selected raw
materials.
Business Outlook
Based on recent business trends, Ubiquiti currently believes the
demand environment in its end markets supports the following
forecast for the Company's second fiscal quarter ending
December 31, 2017:
- Revenues of between $240 million and
$250 million;
- GAAP diluted EPS of $0.85 - $0.92;
- Gross margins are expected to remain
consistent on a sequential basis; and
- An effective tax rate of 13.5%.
Conference Call Information
Ubiquiti Networks will host a Q&A-only call to discuss the
Company’s financial results at 11:00 a.m. Eastern Time (8:00 a.m.
Pacific Time) today. Management’s prepared remarks can be found on
the Investor Relations section of the Ubiquiti Networks website,
http://ir.ubnt.com/financial/quarterly-results.
To listen to the Q&A call via telephone, dial (866) 807-9684
(U.S. toll-free) or (412) 317-5415 (International) to be connected
to the call by an operator. Participants should dial in at
least 10 minutes prior to the start of the call. Investors may also
listen to a live webcast of the Q&A conference call by visiting
the Investor Relations section of the Ubiquiti
Networks website at http://ir.ubnt.com. A recording of
the Q&A call will be available for replay
at http://ir.ubnt.com.
A recording of the Q&A call will be available approximately
two hours after the call concludes and will be accessible on the
Investor Relations section of the Ubiquiti Networks website,
http://ir.ubnt.com.
About Ubiquiti Networks
Ubiquiti Networks, Inc. currently focuses on 3 main
technologies: high-capacity distributed Internet access, unified
information technology, and next-gen consumer electronics for home
and personal use. The majority of the company’s resources consist
of entrepreneurial and de-centralized R&D teams. Ubiquiti does
not employ a traditional direct sales force, but instead drives
brand awareness largely through the company’s user community where
customers can interface directly with R&D, marketing, and
support. With over 70 million devices shipped in over 200 countries
and territories in the world, Ubiquiti aims to connect everyone to
everything, everywhere. Ubiquiti was founded by former Apple
engineer Robert Pera in 2005. More insight about the company
management can be found at www.rjpblog.com.
Ubiquiti, Ubiquiti Networks, the U logo, UBNT, airMAX, airFiber,
mFi, EdgeMAX, UniFi, AmpliFi and UFiber are registered trademarks
or trademarks of Ubiquiti Networks, Inc. in the United States and
other countries.
Safe Harbor for Forward Looking Statements
Certain statements in this press release are forward-looking
statements within the meaning of Section 27A of the Securities Act
of 1933, as amended, and Section 21E of the Securities Exchange Act
of 1934, as amended. Statements other than statements of historical
fact including words such as “look”, "will", “anticipate”,
“believe”, “estimate”, “expect”, "forecast", “consider” and “plan”
and statements in the future tense are forward looking statements.
The statements in this press release that could be deemed
forward-looking statements include statements regarding
expectations for the second fiscal quarter of 2018 and full fiscal
year 2018 and statements regarding expectations related to our cash
position, expenses, DSO, number of distributors and resellers,
shipments, the roll-out of our consumer retail channel, the
introduction of new consumer products, Gross Margins, R&D,
SG&A, tax rates, inventory turns, growth opportunities, demand
and long term global environment for our products, new products,
and financial performance estimates including revenues and GAAP
diluted EPS for the Company's second fiscal quarter of 2018 and
full fiscal year 2018, and any statements or assumptions underlying
any of the foregoing.
Forward-looking statements are subject to certain risks and
uncertainties that could cause our actual future results to differ
materially, or cause a material adverse impact on our results.
Potential risks and uncertainties include, but are not limited to,
fluctuations in our operating results; varying demand for our
products due to the financial and operating condition of our
distributors and their customers, and distributors' inventory
management practices; political and economic conditions and
volatility affecting the stability of business environments,
economic growth, currency values, commodity prices and other
factors that may influence the ultimate demand for our products in
particular geographies or globally; impact of counterfeiting and
our ability to contain such impact; our reliance on a limited
number of distributors; inability of our contract manufacturers and
suppliers to meet our demand; our dependence on Qualcomm Atheros
for chipsets without a short-term alternative; as we move into new
markets competition from certain of our current or potential
competitors who may be more established in such markets; our
ability to keep pace with technological and market developments;
success and timing of new product introductions by us and the
performance of our products generally; our ability to effectively
manage the significant increase in our transactional sales volumes;
we may become subject to warranty claims, product liability and
product recalls; that a substantial majority of our sales are into
countries outside the United States and we are subject to numerous
U.S. export control and economic sanctions laws; costs related to
responding to government inquiries related to regulatory
compliance; our reliance on the Ubiquiti Community; our reliance on
certain key members of our management team, including our founder
and chief executive officer, Robert J. Pera; adverse tax-related
matters such as tax audits, changes in our effective tax rate or
new tax legislative proposals; whether the final determination of
our income tax liability may be materially different from our
income tax provisions; the impact of any intellectual property
litigation and claims for indemnification; litigation related to
U.S. Securities laws; and economic and political conditions in the
United States and abroad. We discuss these risks in greater detail
under the heading “Risk Factors” and elsewhere in our Annual Report
on Form 10-K for the year ended June 30, 2017, and subsequent
filings filed with the U.S. Securities and Exchange Commission (the
“SEC”), which are available at the SEC's website at www.sec.gov.
Copies may also be obtained by contacting the Ubiquiti Networks
Investor Relations Department, by email at IR@ubnt.com or by
visiting the Investor Relations section of the Ubiquiti Networks
website, http://ir.ubnt.com.
Given these uncertainties, you should not place undue reliance
on these forward-looking statements. Also, forward-looking
statements represent our management's beliefs and assumptions only
as of the date made. Except as required by law, Ubiquiti Networks
undertakes no obligation to update information contained herein.
You should review our SEC filings carefully and with the
understanding that our actual future results may be materially
different from what we expect.
Ubiquiti Networks, Inc. Condensed Consolidated
Statement of Operations (In thousands, except per share
data) (Unaudited) Three Months Ended September
30, 2017 2016 Revenues $ 245,868 $ 204,757
Cost of revenues 134,212 106,453 Gross profit 111,656
98,304 Operating expenses: Research and development
16,928 14,539 Sales, general and administrative 7,665 8,863
Total operating expenses 24,593 23,402 Income
from operations 87,063 74,902 Interest expense and other, net
(1,361 ) (1,099 ) Income before provision for income taxes 85,702
73,803 Provision for income taxes 10,777 2,015 Net
income and comprehensive income $ 74,925 $ 71,788 Net
income per share of common stock: Basic $ 0.93 $ 0.88
Diluted $ 0.92 $ 0.86 Weighted average shares used in
computing net income per share of common stock: Basic 80,135
81,812 Diluted 81,748 83,854
Ubiquiti Networks, Inc. Reconciliation of GAAP Net Income
to Non-GAAP Net Income (In thousands, except per share
data) (Unaudited) Three Months Ended September
30, 2017 2016 Net income and comprehensive
income $ 74,925 $ 71,788 Stock-based compensation: Cost of revenues
245 144 Research and development 456 560 Sales, general and
administrative 211 223 Excess tax benefits resulting from the
adoption of ASU 2016-09 Stock Compensation (575 ) (6,820 ) Tax
effect of Non-GAAP adjustments (365 ) (371 ) Non-GAAP net income $
74,897 $ 65,524 Non-GAAP diluted EPS $ 0.92 $
0.79 Shares outstanding (Diluted) 81,748 83,854 Share
adjustment (ASU 2016-09 Adoption) (616 ) (774 ) Weighted-average
shares used in Non-GAAP diluted EPS 81,132 83,080
Use of Non-GAAP Financial Information
To supplement our condensed consolidated financial results
prepared under generally accepted accounting principles, or GAAP,
we use non-GAAP measures of net income and earnings per diluted
share that are adjusted to exclude certain costs, expenses and
gains such as stock based compensation expense, the adoption of ASU
2016-09 Improvements to Employee Share-Based Payments Accounting,
and the tax effects of these non-GAAP adjustments. Reconciliations
of the adjustments to GAAP results for the three months ended
September 30, 2017 and 2016 are provided above. In addition,
an explanation of the ways in which management uses non-GAAP
financial information to evaluate its business, the substance
behind management's decision to use this non-GAAP financial
information, material limitations associated with the use of
non-GAAP financial information, the manner in which management
compensates for those limitations, and the substantive reasons
management believes that this non-GAAP financial information
provides useful information to investors is included under "About
our Non-GAAP Net Income and Adjustments" after the tables
below.
Ubiquiti Networks, Inc. Condensed Consolidated
Balance Sheets (In thousands, except share amounts)
(Unaudited) September 30, 2017 June
30, 2017 (1) Assets Current assets: Cash and cash
equivalents $ 631,810 $ 604,198 Accounts receivable, net 128,589
140,561 Inventories 122,263 142,048 Vendor Deposits 69,542 54,082
Prepaid income taxes 2,415 2,419 Prepaid expenses and other current
assets 8,039 9,026 Total current assets 962,658 952,334 Property
and equipment, net 13,946 12,916 Long-term deferred tax assets
5,133 5,133 Other long-term assets 2,006 2,328 Total assets $
983,743 $ 972,711
Liabilities and Stockholders’ Equity
Current liabilities: Accounts payable $ 26,319 $ 49,008 Income
taxes payable 7,008 1,707 Debt - short-term 14,743 14,743 Other
current liabilities 58,857 33,030 Total current liabilities 106,927
98,488 Long-term taxes payable 29,783 28,023 Debt - long-term
283,135 241,821 Deferred revenues - long-term 2,687 2,615 Total
liabilities 422,532 370,947 Stockholders’ equity: Common stock 78
80 Additional paid–in capital — 525 Retained earnings 561,133
601,159 Total stockholders’ equity 561,211 601,764 Total
liabilities and stockholders’ equity $ 983,743 $ 972,711 (1)
Derived from audited consolidated financial statements as of and
for the year ended June 30, 2017.
Ubiquiti
Networks, Inc. Revenues by Product Type (In
thousands) (Unaudited) Three Months Ended
September 30, 2017 2016 Service Provider
Technology $ 119,915 $ 120,632 Enterprise Technology 125,953 84,125
Total revenues $ 245,868 $ 204,757
Ubiquiti
Networks, Inc. Revenues by Geographical Area (In
thousands) (Unaudited) Three Months Ended
September 30, 2017 2016 North America $
96,170 $ 74,165 South America 31,053 24,184 Europe, the Middle East
and Africa ("EMEA") 93,314 81,375 Asia Pacific 25,331 25,033 Total
revenues $ 245,868 $ 204,757
Ubiquiti Networks,
Inc. Condensed Consolidated Cash Flows (In
thousands) (Unaudited) Three Months Ended
September 30, 2017 2016 Cash Flows from
Operating Activities: Net income $ 74,925 $ 71,788 Adjustments
to reconcile net income to net cash provided by operating
activities: Depreciation and amortization 1,655 1,541 Provision for
inventory obsolescence 324 80 (Recovery)/Provision for loss on
vendor deposits 376 (676 ) Stock-based compensation 912 927 Other,
net 103 135 Changes in operating assets and liabilities: Accounts
receivable 12,017 (12,925 ) Inventories 19,421 (22,442 ) Vendor
deposits (15,836 ) 843 Prepaid income taxes 4 (15 ) Prepaid
expenses and other assets 1,288 807 Accounts payable (22,408 )
(9,026 ) Income taxes payable 7,061 1,842 Deferred revenues 1,376
466 Accrued liabilities and other current liabilities 15,702
(576 ) Net cash provided by operating activities 96,920
32,769
Cash Flows from Investing Activities: Purchase
of property and equipment and other long-term assets (2,932 )
(1,064 ) Net cash (used in) investing activities (2,932 ) (1,064 )
Cash Flows from Financing Activities: Proceeds from revolver
loan 45,000 — Repayments of term loan (3,750 ) (2,500 ) Repurchases
of common stock (107,997 ) (6,483 ) Proceeds from exercise of stock
options 722 682 Tax withholdings related to net share settlements
of restricted stock units (351 ) (791 ) Net cash (used in) provided
by financing activities (66,376 ) (9,092 ) Net increase in cash and
cash equivalents 27,612 22,613 Cash and cash equivalents at
beginning of period 604,198 551,031 Cash and cash
equivalents at end of period $ 631,810 $ 573,644
Non-Cash Investing and Financing Activities: Unpaid stock
repurchases $ 8,765 $ — Unpaid property and equipment and other
long-term assets $ 178 $ 413
About our Non-GAAP Net Income and Adjustments
Use of Non-GAAP Financial Information
To supplement our condensed consolidated financial results
prepared under generally accepted accounting principles, or GAAP,
we use non-GAAP measures of net income and earnings per diluted
share that are GAAP net income and GAAP earnings per diluted share
adjusted to exclude certain costs, expenses and gains/losses.
We believe that the presentation of non-GAAP net income and
non-GAAP earnings per diluted share provides important supplemental
information regarding non-cash expenses, significant items that we
believe are important to understanding our financial, and business
trends relating to our financial condition and results of
operations. Non-GAAP net income and non-GAAP earnings per diluted
share are among the primary indicators used by management as a
basis for planning and forecasting future periods and by management
and our board of directors to determine whether our operating
performance has met specified targets and thresholds. Management
uses non-GAAP net income and non-GAAP earnings per diluted share
when evaluating operating performance because it believes that the
exclusion of the items described below, for which the amounts or
timing may vary significantly depending upon the Company's
activities and other factors, facilitates comparability of the
Company's operating performance from period to period. We have
chosen to provide this information to investors so they can analyze
our operating results in the same way that management does and use
this information in their assessment of our business and the
valuation of our Company.
Use and Economic Substance of Non-GAAP Financial Measures
used by Ubiquiti Networks
We compute non-GAAP net income and non-GAAP diluted earnings per
share by adjusting GAAP net income and GAAP earnings per diluted
share to remove the impact of certain adjustments and the tax
effect of those adjustments. Items excluded from net income
are:
- Stock-based compensation expense
- Adoption of ASU 2016-09 Improvements to
Employee Share-Based Payment Accounting
- Tax effect of non-GAAP adjustments,
applying the principles of ASC 740
Usefulness of Non-GAAP Financial Information to
Investors
These non-GAAP measures are not in accordance with, or an
alternative to, GAAP and may be materially different from other
non-GAAP measures, including similarly titled non-GAAP measures
used by other companies. The presentation of this additional
information should not be considered in isolation from, as a
substitute for, or superior to, net income or earnings per diluted
share prepared in accordance with GAAP. Non-GAAP financial measures
have limitations in that they do not reflect certain items that may
have a material impact upon our reported financial results.
For more information on the non-GAAP adjustments, please see the
table captioned “Reconciliation of GAAP Net Income to Non-GAAP Net
Income” included in this press release.
View source
version on businesswire.com: http://www.businesswire.com/news/home/20171109005421/en/
Investor Relations:Ubiquiti Networks, Inc.Laura Kiernan,
1-914-598-773SVP, Investor Relationslaura.kiernan@ubnt.com
Ubiquiti Networks (NASDAQ:UBNT)
Historical Stock Chart
From Mar 2024 to Apr 2024
Ubiquiti Networks (NASDAQ:UBNT)
Historical Stock Chart
From Apr 2023 to Apr 2024