UBNT Earnings

UBNT reported great earnings after hours. On EPS they beat expectations by $0.05 reporting .56 vs .51. On sales they beat on revenues rising 54.2% year/year to $156 mln vs the $151.13 mln consensus. Given the great numbers, it was a little disappointing to see their Q1 guidance (first quarter 2015 ends Sept 30). They issued in-line guidance for Q1 of EPS of $0.52-0.54 vs. $0.52 Capital IQ Consensus Estimate and guide Q1 revs of $156-161 mln vs. $156.99 mln Capital IQ Consensus Estimate. As they have done in the past, I think they are sandbagging somewhat here and setting up for another beat next quarter. I vaguely remembering from the last earnings call that Pera said that growth would be stronger in the second half of the calendar year (first half of fiscal 2015), but I may be wrong here. See release below:

http://finance.yahoo.com/news/ubiquiti-networks-reports-reco…

Ubiquiti Networks Reports Record Fourth Quarter Fiscal 2014 Financial Results

~ Achieves Record Revenue and Earnings ~
~ Posts Non-GAAP EPS of $0.56 Per Diluted Share ~

SAN JOSE, Calif., Aug. 7, 2014 (GLOBE NEWSWIRE) – Ubiquiti Networks, Inc. (UBNT) (“Ubiquiti”), a next-generation communications technology company, today announced results for its fourth quarter of fiscal 2014 ended June 30, 2014.

Fourth Quarter Fiscal 2014 Financial Highlights

• Revenues of $156.0 million, up 54% year-over-year
• GAAP operating profit of $52.8 million, up 59% year-over-year
• GAAP net income of $49.4 million, up 71% year-over-year
• GAAP diluted EPS of $0.55 and non-GAAP diluted EPS of $0.56, with non-GAAP up 70% year-over-year
• Average days sales outstanding (“DSO”) of 32 days

Recent Business and Product Highlights

• Sustained growth in Service Provider Technology, mainly driven by demand for our airFiber(R) 5 and airMAX(R) ac products.
• Strong momentum in Enterprise Technology, primarily due to product expansion and further adoption of our UniFi(R) technology platform.
• Launched EdgeSwitch, the first switch of its price/performance class, designed to offer superior performance and capability for a fraction of the cost of a traditional enterprise switch.
• Launched UniFi Video, a new line of video surveillance camera control software and a new generation of cameras - the UVC, UVC-Dome, and UVC-Pro models - to join the UniFi family of products.
• Launched UniFi VoIP, a new scalable VoIP enterprise smart phone technology to provide price/performance disruptive telephony solutions for business, schools, hotels, and more.
• Extended the UniFi platform into a broad Software Defined Networking platform encompassing routing, switching, video security, VoIP, wireless and much more

Fourth Quarter 2014 Financial Highlights

Total revenue for the fourth quarter of fiscal 2014 increased 54% to a record $156.0 million, compared with $101.2 million in the fourth quarter of fiscal 2013. Service Provider Technology revenues increased $33.9 million, or 38%, to $124.0 million in the fourth quarter of fiscal 2014, compared with $90.1 million in the fourth quarter of fiscal 2013. Enterprise Technology revenues increased $20.9 million, or 188%, to $32.0 million in the fourth quarter of fiscal 2014, compared with $11.1 million in the fourth quarter of fiscal 2013.

GAAP net income for the fourth quarter of fiscal 2014 was $49.4 million, or $0.55 per diluted share, compared with GAAP net income of $28.8 million, or $0.32 per diluted share, in the fourth quarter of fiscal 2013. Ubiquiti recorded fourth quarter fiscal 2014 non-GAAP net income of $50.2 million, or $0.56 per diluted share, compared with non-GAAP net income of $29.5 million, or $0.33 per diluted share, in the fourth quarter of fiscal 2013.

Ubiquiti’s net cash inflow from operations for the fourth quarter of fiscal 2014 was $55.8 million, compared with a net cash inflow of $46.2 million in the fourth quarter of fiscal 2013. The key driver for the increase in net cash from operations in the fourth quarter of fiscal 2014 was due to an improvement in our lead times to customers and a reduction in inventory related to new products launched and sold at scale. Total cash and cash equivalents as of June 30, 2014, were $347.1 million, compared with $291.7 million as of March 31, 2014, and $227.8 million as of June 30, 2013.

Average days sales outstanding (“DSO”) was 32 days in the fourth quarter of fiscal 2014, compared with 30 days in the prior quarter, and 32 days in the fourth quarter of fiscal 2013.

“We continue to ramp our R&D resources in an effort to accelerate the next phase of our long-term vision of democratizing end to end communications technology infrastructure for the unconnected” said Robert J. Pera, Founder and Chief Executive Officer of Ubiquiti Networks.

Craig L. Foster, Ubiquiti’s Chief Financial Officer, added, “We are very focused on execution which is demonstrated in another quarter of strong financial results. Several new product launches are driving revenue growth and we continue to make the strategic investments that we believe will help us not only expand our addressable market but also preserve our company’s vision.”

Business Outlook

Based on current business trends, Ubiquiti currently believes the demand environment in its end markets supports the following forecast for the Company’s first fiscal quarter 2015 ending September 30, 2014:

• Revenues of between $156 million and $161 million
• GAAP Diluted EPS of between $0.51 and $0.53
• Non-GAAP Diluted EPS of between $0.52 and $0.54

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