Ubiquiti Networks Inc (NASDAQ:UBNT) announced results for the second fiscal quarter of 2016, ended December 31, 2015.

Second Quarter Fiscal 2016 Financial Summary

  • Revenues of $161.9 million
  • GAAP gross profit of $79.0 million and non-GAAP gross profit of $79.1 million
  • GAAP net income of $49.5 million and non-GAAP net income of $49.7 million
  • GAAP diluted EPS of $0.57 and non-GAAP diluted EPS of $0.58
  • Cash of $496.7 million, up 28% year-over-year and 14% sequentially
  • $77.3 million in net cash provided by operating activities

Recent Financial Highlights

  • Enterprise Technology revenues increased 9% quarter-over-quarter, fueled by UniFi® AC access points, UniFi Switch and other industry-leading products targeting the Enterprise market.
  • Service Provider Technology revenues increased 6% quarter-over-quarter, primarily fueled by our airMAX® technology platform.
  • Completed $50 million stock repurchase plan as of February 3, 2016.

Recent Product Highlights

  • Shipped in volume UniFi AC access points which feature the latest Wi-Fi 802.11ac technology in a refined industrial design and are ideal for cost-effective deployment of high‑performance wireless networks.
  • Released EdgePoint, an innovative combination of robust routing performance, fiber backhaul capability, and the convenience of passive PoE support.
  • Shipped LiteBeam, an ultra-lightweight airMAX ac CPE device with incredible range and disruptive pricing.
  • Shipped UniFi Cloud Key, a hybrid cloud device manager that securely runs a local instance of the UniFi Controller software and features cloud Single Sign-On for remote access.

Financial Results Summary ($, in millions, except per share data)

Income statement highlights   F2Q16   F1Q16   F2Q15
Revenues     161.9       151.4       153.1  
Service Provider Technology     109.6       103.4       99.7  
Enterprise Technology     52.3       48.0       53.4  
Cost of Revenues     82.8       77.9       84.1  
Gross Profit     79.0       73.5       69.0  
Gross Profit (%)     48.8 %     48.5 %     45.1 %
Total Operating Expenses(1)     22.6       13.7       18.3  
Income from Operations     56.4       59.8       50.7  
GAAP Net Income     49.5       53.8       46.3  
GAAP EPS (diluted)     0.57       0.61       0.52  
Non-GAAP Net Income     49.7       45.5       47.1  
Non-GAAP EPS (diluted)     0.58       0.51       0.53  
(1)  Includes business e-mail compromise (“BEC”) fraud loss recoveries of $8.0 million and $257 thousand in F1Q16 and F2Q16, respectively.

Balance Sheet Highlights

Total cash and cash equivalents as of December 31, 2015 were $496.7 million, compared with $436.1 million as of September 30, 2015.  We held $476.9 million of our $496.7 million of cash and cash equivalents in accounts of our subsidiaries outside of the United States.

The sequential increase in cash and cash equivalents during the second quarter of fiscal 2016 is net of $36.7 million in share repurchases as part of our $100 million share repurchase program which has been extinguished, partially offset by draws of $33 million on our revolver.  Effective November 6, 2015, the Board of Directors of the Company approved a $50 million stock repurchase program.  The full $50 million common stock repurchase program was completed subsequent to the close of second quarter of fiscal 2016.

This quarter we saw days sales outstanding in accounts receivable (“DSO”) of 37 days, compared with 39 days in the prior quarter, and 44 days in the second quarter of fiscal 2015.

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 third fiscal quarter ending March 31, 2016.  The following are Ubiquiti’s financial performance estimates for the third quarter of fiscal 2016:

  • Revenues between $160 million and $170 million
  • GAAP diluted EPS of $0.52 – $0.59
  • Non-GAAP diluted EPS of $0.53 – $0.60 (Original Source)

Shares of Ubiquiti Networks are up nearly 19% in after-hours trading. UBNT has a 1-year high of $37.10 and a 1-year low of $25.50. The stock’s 50-day moving average is $29.82 and its 200-day moving average is $32.53.

On the ratings front, Ubiquiti has been the subject of a number of recent research reports. In a report issued on January 14, Bernstein Research analyst Pierre Ferragu downgraded UBNT to Hold, with a price target of $30, which implies an upside of 6.9% from current levels. Separately, on October 20, Morgan Stanley’s James Faucette downgraded the stock to Sell and has a price target of $24.

According to TipRanks.com, which ranks over 7,500 financial analysts and bloggers to gauge the performance of their past recommendations, Pierre Ferragu and James Faucette have a total average return of -1.9% and 11.3% respectively. Ferragu has a success rate of 57.6% and is ranked #2499 out of 3612 analysts, while Faucette has a success rate of 77.6% and is ranked #204.

Ubiquiti Networks Inc develops high performance networking technology for service providers & enterprises. It offers fixed wireless broadband, wireless backhaul systems, routing, wireless LAN infrastructure & video surveillance products, and among others.