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Ubiquiti Inc. Reports Second Quarter Fiscal 2025 Financial Results

1. Ubiquiti reports Q2 FY2025 revenues of $599.9 million, up 29% YoY. 2. GAAP diluted EPS increased to $2.26, a 66.2% YoY growth. 3. Declared a cash dividend of $0.60 per share, payable February 2025. 4. R&D expenses rose to $40 million, reflecting innovation investments. 5. Gross margin improved to 41.2%, despite a slight quarter-over-quarter decline.

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Why Bullish?

Strong revenue growth and profit margins boost investor confidence; historically, positive earnings reports tend to drive share price up.

How important is it?

The earnings report includes key financial metrics that directly impact UI's valuation and investor sentiment.

Why Short Term?

Immediate positive market reaction likely, benefit reflected shortly in stock price; past earnings announcements have shown quick impacts.

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NEW YORK--(BUSINESS WIRE)--Ubiquiti Inc. (NYSE: UI) ("Ubiquiti" or the "Company") today announced its financial results for the second quarter ended December 31, 2024. Second Quarter Fiscal 2025 Financial Summary Revenues of $599.9 million GAAP diluted EPS of $2.26 Non-GAAP diluted EPS of $2.28 Additional Financial Highlight The Company's Board of Directors declared a $0.60 per share cash dividend payable on February 24, 2025 to shareholders of record at the close of business on February 18, 2025. Financial Highlights ($, in millions, except per share data) Income statement highlights F2Q25 F1Q25 F2Q24 Revenues 599.9 550.3 465.0 Enterprise Technology 518.2 470.2 391.5 Service Provider Technology 81.7 80.2 73.5 Gross profit 247.2 231.6 177.6 Gross Profit (%) 41.2% 42.1% 38.2% Total Operating Expenses 68.4 62.4 56.5 Income from Operations 178.8 169.2 121.1 GAAP Net Income 136.8 128.0 82.1 GAAP EPS (diluted) 2.26 2.12 1.36 Non-GAAP Net Income 138.1 129.3 83.3 Non-GAAP EPS (diluted) 2.28 2.14 1.38   Ubiquiti Inc. Revenues by Product Type (In thousands) (Unaudited) Three Months Ended December 31, Six Months Ended December 31, 2024 2023 2024 2023 Enterprise Technology $ 518,202 $ 391,492 $ 988,385 $ 771,586 Service Provider Technology 81,677 73,462 161,838 156,446 Total revenues $ 599,879 $ 464,954 $ 1,150,223 $ 928,032   Ubiquiti Inc. Revenues by Geographical Area (In thousands) (Unaudited) Three Months Ended December 31, Six Months Ended December 31, 2024 2023 2024 2023 North America $ 321,644 $ 225,858 $ 592,890 $ 450,642 Europe, the Middle East and Africa 208,579 172,951 413,467 345,345 Asia Pacific 43,081 33,270 84,019 69,356 South America 26,575 32,875 59,847 62,689 Total revenues $ 599,879 $ 464,954 $ 1,150,223 $ 928,032 Income Statement Items Revenues Revenues for the second quarter fiscal 2025 were $599.9 million, representing an increase from the prior quarter of 9.0% and an increase from the comparable prior year period of 29.0%. The increase in revenues compared to the prior quarter as well as the comparable prior year period was driven by an increase in revenue from both our Enterprise Technology platform and Service Provider Technology platform. Gross Margins During the second quarter fiscal 2025, GAAP gross profit was $247.2 million. GAAP gross margin of 41.2% decreased by 0.9% as compared to the prior quarter GAAP gross margin of 42.1% and increased by 3.0% as compared to the comparable prior year period GAAP gross margin of 38.2%. The decrease in gross profit margin as compared to the prior quarter was primarily driven by unfavorable product mix, higher shipping and tariff costs offset in part by lower warehouse related expenses and excess and obsolete inventory charges. The increase in gross profit margin as compared to the comparable prior year period was primarily driven by favorable product mix , lower warehouse-related expenses and excess and obsolete inventory charges, offset in part by higher shipping and tariff costs. Research and Development During the second quarter fiscal 2025, research and development ("R&D") expenses were $40.0 million. This reflects an increase as compared to the R&D expenses of $38.0 million in the prior quarter and an increase as compared to the R&D expenses of $36.9 million in the comparable prior year period. The increase in R&D expenses as compared to the prior quarter was primarily driven by higher prototype-related expenses. The increase in R&D expenses as compared to the comparable prior year period was primarily driven by higher prototype-related expenses and employee-related expenses. Sales, General and Administrative The Company’s sales, general and administrative ("SG&A") expenses for the second quarter fiscal 2025 were $28.5 million. This reflects an increase as compared to the SG&A expenses of $24.4 million in the prior quarter and an increase compared to the SG&A expenses of $19.6 million in the comparable prior year period. The increase in SG&A costs as compared to the prior quarter was primarily due to higher bad debt expenses relating to a customer default and higher fees associated with webstore credit card processing offset in part by lower marketing expenses and professional fees. The increase in SG&A as compared to the comparable prior year period was primarily due to higher bad debt expenses relating to a customer default and higher fees associated with webstore credit card processing. Interest Expense and Other, net During the second quarter fiscal 2025, interest expense and other, net ("I&O") expenses were $11.4 million. This reflects an increase as compared to the I&O expenses in the prior quarter of $10.6 million and a decrease as compared to the I&O expenses in the comparable prior year period of $18.3 million, respectively. The increase in I&O expenses as compared to the prior quarter was primarily due to higher foreign exchange losses offset in part by lower interest expense driven by a decrease in borrowings and lower interest rates. The decrease in I&O expenses as compared to the comparable prior year period was primarily due to lower interest expense driven by a decrease in borrowings and lower interest rates, partly offset by higher foreign exchange losses. Net Income and Earnings Per Share During the second quarter fiscal 2025, GAAP net income was $136.8 million and non-GAAP net income was $138.1 million. This reflects an increase in GAAP net income and non-GAAP net income from the comparable prior year period by 66.6% and 65.9%, respectively, primarily driven by higher revenues and gross profit. Second quarter fiscal 2025 GAAP earnings per diluted share was $2.26 and non-GAAP earnings per diluted share was $2.28. This reflects an increase in GAAP and non-GAAP earnings per diluted share from the comparable prior year period of 66.2% and 65.2%, respectively. About Ubiquiti Inc. Ubiquiti Inc. is focused on democratizing network technology on a global scale — creating networking infrastructure in over 200 countries and territories around the world. Our professional networking products are powered by our UISP and UniFi software platforms to provide high-capacity distributed Internet access and unified information technology management, respectively. Ubiquiti and the U logo are trademarks or registered trademarks of Ubiquiti and/or its affiliates in the United States and other countries. For more information, please visit www.ui.com. 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 the statement regarding our intention to pay quarterly cash dividends, any statements or assumptions underlying the foregoing, and any statement regarding future events and the future financial performance of Ubiquiti Inc. that involves risks or uncertainties. 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, the impact of public health problems, such as COVID-19, and U.S. tariffs on results; fluctuations in our operating results; varying demand for our products due to the financial and operating condition of our distributors and their customers, and our 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 chipset suppliers 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 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 social, economic and political conditions in the United States and abroad, including the impact of the military conflict between Russia and Ukraine and the tension between China and Taiwan. 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, 2024, 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 Inc. Investor Relations Department, by email at IR@ui.com or by visiting the Investor Relations section of the Ubiquiti Inc. website, https://ir.ui.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 Inc. 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 Inc. Condensed Consolidated Statements of Operations and Comprehensive Income (In thousands, except per share data) (Unaudited) Three Months Ended December 31, Six Months Ended December 31, 2024 2023 2024 2023 Revenues $ 599,879 $ 464,954 $ 1,150,223 $ 928,032 Cost of revenues 352,649 287,307 671,375 566,510 Gross profit 247,230 177,647 478,848 361,522 Operating expenses: Research and development 39,958 36,911 77,955 73,194 Sales, general and administrative 28,460 19,634 52,875 38,923 Total operating expenses 68,418 56,545 130,830 112,117 Income from operations 178,812 121,102 348,018 249,405 Interest expense and other, net 11,440 18,262 22,018 39,486 Income before income taxes 167,372 102,840 326,000 209,919 Provision for income taxes 30,577 20,724 61,217 40,053 Net income $ 136,795 $ 82,116 $ 264,783 $ 169,866 Net income per share of common stock: Basic $ 2.26 $ 1.36 $ 4.38 $ 2.81 Diluted $ 2.26 $ 1.36 $ 4.38 $ 2.81 Weighted average shares used in computing net income per share of common stock: Basic 60,470 60,448 60,470 60,447 Diluted 60,527 60,451 60,514 60,451   Ubiquiti Inc. Reconciliation of GAAP Net Income to Non-GAAP Net Income (In thousands, except per share data) (Unaudited) Three Months Ended Six Months Ended December 31, December 31, 2024 September 30, 2024 December 31, 2023 2024 2023 Net Income $ 136,795 $ 127,988 $ 82,116 $ 264,783 $ 169,866 Share-based compensation: Cost of revenues 57 54 35 111 69 Research and development 1,318 1,237 1,161 2,556 2,295 Sales, general and administrative 418 405 310 822 642 Tax effect of Non-GAAP adjustments (440 ) (416 ) (361 ) (856 ) (720) Non-GAAP net income $ 138,148 $ 129,268 $ 83,261 $ 267,416 $ 172,152 Non-GAAP diluted EPS $ 2.28 $ 2.14 $ 1.38 $ 4.42 $ 2.85 Shares outstanding (Diluted) 60,527 60,494 60,451 60,514 60,451 Weighted-average shares used in Non-GAAP diluted EPS 60,527 60,494 60,451 60,514 60,451 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 share-based compensation expense and the tax effects of these non-GAAP adjustments. Reconciliations of the adjustments to GAAP results for the periods presented 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 the paragraphs below. Usefulness of Non-GAAP Financial Information to Investors 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. About our Non-GAAP Net Income and Non-GAAP Earnings per Diluted Share We compute non-GAAP net income and non-GAAP earnings per diluted 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: Share-based compensation expense Tax effect of non-GAAP adjustments, applying the principles of ASC 740 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.

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