On August 23, 2024, Ubiquiti Inc (UI, Financial) released its 8-K filing detailing its financial results for the fourth quarter and full fiscal year 2024, ended June 30, 2024. Ubiquiti Inc is a wireless and wireline network equipment provider for small Internet service providers and small- and midsize-business integrators. The company operates in two primary categories: Service Provider Technology and Enterprise Technology, with the latter generating the majority of its revenue. Geographically, Ubiquiti derives most of its revenue from North America, with additional presence in Europe, the Middle East and Africa, Asia Pacific, and South America.
Performance Overview
Ubiquiti Inc reported Q4 revenues of $507.5 million, a 2.9% increase from the previous quarter and a 3.3% increase from the same period last year. However, this figure fell short of the analyst estimate of $511.62 million. The company's GAAP diluted earnings per share (EPS) for the quarter was $1.72, missing the analyst estimate of $2.10. Non-GAAP diluted EPS was slightly higher at $1.74.
Financial Achievements and Challenges
For the full fiscal year 2024, Ubiquiti Inc reported revenues of $1.9 billion, a slight decrease of 0.6% compared to fiscal 2023. The GAAP diluted EPS for the year was $5.79, while the non-GAAP diluted EPS was $5.87, both missing the annual estimates of $6.17. The company's Board of Directors declared a $0.60 per share cash dividend, payable on September 9, 2024, to shareholders of record as of September 3, 2024.
Income Statement Highlights
| Metric | F4Q24 | F3Q24 | F4Q23 |
|---|---|---|---|
| Revenues | $507.5M | $493.0M | $491.1M |
| Gross Profit | $204.1M | $174.1M | $203.3M |
| Gross Profit (%) | 40.2% | 35.3% | 41.4% |
| GAAP Net Income | $103.8M | $76.3M | $103.7M |
| GAAP EPS (diluted) | $1.72 | $1.26 | $1.72 |
Analysis of Key Metrics
Ubiquiti Inc's gross profit for Q4 was $204.1 million, with a gross margin of 40.2%, up from 35.3% in the previous quarter but down from 41.4% in the same period last year. The increase in gross margin compared to the prior quarter was primarily driven by lower excess and obsolete inventory charges, favorable product mix, and lower tariffs, partially offset by higher shipping costs.
Research and development (R&D) expenses for Q4 were $44.1 million, up from $42.5 million in the previous quarter and $40.5 million in the same period last year. The increase was mainly due to higher prototype-related and employee-related expenses. Sales, general, and administrative (SG&A) expenses were $21.7 million, up from $20.4 million in the previous quarter and $18.9 million in the same period last year, driven by higher fees associated with webstore credit card processing, marketing expenses, and professional fees.
Commentary
"The increase in gross profit margin as compared to the prior quarter was primarily driven by lower excess and obsolete inventory charges, favorable product mix and lower tariffs, offset in part by higher shipping costs," the company stated in its filing.
Conclusion
While Ubiquiti Inc showed some positive trends in revenue and gross profit margins, the company fell short of analyst expectations for both revenue and EPS. The increase in R&D and SG&A expenses, along with challenges in managing inventory and shipping costs, contributed to the mixed results. Investors will be keen to see how the company addresses these challenges in the coming quarters.
Explore the complete 8-K earnings release (here) from Ubiquiti Inc for further details.
