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Classified in: Science and technology, Business, Covid-19 virus
Subjects: EARNINGS, Dividend, Stock Sale/Buyback

Ubiquiti Inc. Reports Second Quarter Fiscal 2022 Financial Results


Ubiquiti Inc. (NYSE: UI) ("Ubiquiti" or the "Company") today announced its financial results for the second quarter fiscal 2022, ended December 31, 2021.

Second Quarter Fiscal 2022 Financial Summary

Additional Financial Highlights

Financial Highlights ($, in millions, except per share data)

Income statement highlights

 

F2Q22

 

F1Q22

 

F2Q21

Revenues

 

431.6

 

458.9

 

479.4

Enterprise Technology

 

330.4

 

346.8

 

329.6

Service Provider Technology

 

101.2

 

112.1

 

149.9

Gross profit

 

174.7

 

209.5

 

230.7

Gross Profit (%)

 

40.5%

 

45.6%

 

48.1%

Total Operating Expenses

 

49.3

 

47.8

 

39.9

Income from Operations

 

125.4

 

161.7

 

190.8

GAAP Net Income

 

103.6

 

132.2

 

159.7

GAAP EPS (diluted)

 

1.66

 

2.11

 

2.54

Non-GAAP Net Income

 

103.4

 

132.8

 

159.0

Non-GAAP EPS (diluted)

 

1.66

 

2.12

 

2.53

Ubiquiti Inc.

Revenues by Product Type

(In thousands)

(Unaudited)

 

 

 

 

 

 

Three Months Ended December 31,

 

Six Months Ended December 31,

 

 

2021

 

2020

 

2021

 

2020

Enterprise Technology

 

$

330,358

 

$

329,561

 

$

677,131

 

$

645,632

Service Provider Technology

 

 

101,207

 

 

149,875

 

 

213,348

 

 

307,337

Total revenues

 

$

431,565

 

$

479,436

 

$

890,479

 

$

952,969

Ubiquiti Inc.

Revenues by Geographical Area

(In thousands)

(Unaudited)

 

 

 

 

 

 

Three Months Ended December 31,

 

Six Months Ended December 31,

 

 

2021

 

2020

 

2021

 

2020

North America

 

$

187,063

 

$

193,440

 

$

396,136

 

$

414,320

Europe, the Middle East and Africa

 

 

190,966

 

 

218,755

 

 

363,609

 

 

397,934

Asia Pacific

 

 

32,758

 

 

37,374

 

 

75,697

 

 

79,319

South America

 

 

20,778

 

 

29,867

 

 

55,037

 

 

61,396

Total revenues

 

$

431,565

 

$

479,436

 

$

890,479

 

$

952,969

Income Statement Items

Revenues

Revenues for the second quarter fiscal 2022 were $431.6 million, representing a decrease from the comparable prior year period and prior quarter of 10.0% and 6.0%, respectively. Revenues for the first six months of fiscal 2022 were $890.5 million, representing a decrease of 6.6% from the first six months of fiscal 2021.

The decline in revenues from the comparable prior year period was primarily driven by our Service Provider segment, and the decline over the prior quarter was driven by declines on both the Enterprise Technology and Service Provider Technology segments. Overall, revenues were negatively impacted by our inability to fulfill demand due to the global component supply shortage.

Gross Margins

During the second quarter fiscal 2022, gross profit was $174.7 million. GAAP gross margin of 40.5% decreased 7.6% versus the comparable prior year period GAAP gross margin of 48.1% and decreased 5.1% versus the prior quarter GAAP gross margin of 45.6%.

The decline in gross profit margin for both periods was primarily driven by higher shipping costs. General transportation costs have increased materially, and we continue to incur additional costs on top of these general costs to expedite shipments.

Research and Development

During the second quarter fiscal 2022, research and development ("R&D") expenses were $32.9 million. This reflects an increase as compared to R&D expenses of $28.9 million in the comparable prior year period and an increase as compared to R&D expenses of $32.1 million in the prior quarter. The increase in R&D expenses as compared to the comparable prior year period and prior quarter was primarily driven by higher employee related expenses.

Sales, General and Administrative

The Company's sales, general and administrative ("SG&A") expenses for the second quarter fiscal 2022 were $16.4 million. This reflects an increase as compared to the SG&A expenses of $11.0 million in the comparable prior year period and an increase as compared to the SG&A expenses of $15.7 million in the prior quarter. The increase in SG&A costs as compared to the comparable prior year period was primarily due to higher professional fees, marketing expenses and fees associated with webstore credit card processing and the benefit of a legal settlement received in the quarter ended December 2021. The increase in SG&A costs compared to the prior quarter was primarily due to higher professional fees.

Net Income and Earnings Per Share

During the second quarter fiscal 2022, GAAP net income was $103.6 million and non-GAAP net income was $103.4 million. This reflects a decrease in GAAP net income and non-GAAP net income from the comparable prior year period of 35.1% and 35.0%, respectively, primarily driven by a decrease in revenues and lower gross margin. Second quarter fiscal 2022 GAAP earnings per diluted share was $1.66 and non-GAAP earnings per diluted share was $1.66. This reflects a decrease in GAAP and non-GAAP earnings per diluted share from the comparable prior year period of 34.6% and 34.4%, respectively.

Global Component Supply

During the three months ended December 31, 2021, we continued to experience a disruption in our supply chain as a result of the COVID-19 pandemic and the global shortage of available components. The current environment has resulted in our inability to fulfill customer orders and has increased our cost base as we have incurred, and we continue to incur, additional costs to expedite deliveries of components and services. Our future results are dependent on our ability to procure components and services and we expect the Company's results to be negatively impacted until the ongoing supply chain and logistics issues caused by the global component supply shortage and the COVID-19 pandemic are resolved.

About Ubiquiti Inc.

Ubiquiti Inc. is focused on democratizing network technology on a global scale ? aggregate shipments of over 134 million devices play a key role in 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 statements regarding the impact of COVID-19, global component supply, logistics related costs and delays and our intentions to pay quarterly cash dividends 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, 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 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, 2021, 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 [email protected] or by visiting the Investor Relations section of the Ubiquiti Inc. website, http://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,

 

 

 

2021

 

 

 

2020

 

 

 

2021

 

 

 

2020

 

Revenues

 

$

431,565

 

 

$

479,436

 

 

$

890,479

 

 

$

952,969

 

Cost of revenues

 

 

256,867

 

 

 

248,762

 

 

 

506,319

 

 

 

494,179

 

Gross profit

 

 

174,698

 

 

 

230,674

 

 

$

384,160

 

 

$

458,790

 

Operating expenses:

 

 

 

 

 

 

 

 

Research and development

 

 

32,870

 

 

 

28,912

 

 

 

64,920

 

 

 

54,725

 

Sales, general and administrative

 

 

16,437

 

 

 

10,951

 

 

 

32,151

 

 

 

23,301

 

Total operating expenses

 

 

49,307

 

 

 

39,863

 

 

 

97,071

 

 

 

78,026

 

Income from operations

 

 

125,391

 

 

 

190,811

 

 

 

287,089

 

 

 

380,764

 

Interest expense and other, net

 

 

(2,717

)

 

 

(3,613

)

 

 

(6,532

)

 

 

(7,530

)

Income before income taxes

 

 

122,674

 

 

 

187,198

 

 

 

280,557

 

 

 

373,234

 

Provision for income taxes

 

 

19,025

 

 

 

27,530

 

 

 

44,758

 

 

 

57,057

 

Net income

 

$

103,649

 

 

$

159,668

 

 

$

235,799

 

 

$

316,177

 

Net income per share of common stock:

 

 

 

 

 

 

 

 

Basic

 

$

1.66

 

 

$

2.54

 

 

$

3.78

 

 

$

5.00

 

Diluted

 

$

1.66

 

 

$

2.54

 

 

$

3.78

 

 

$

5.00

 

Weighted average shares used in computing net income per share of common stock:

 

 

 

 

 

 

 

 

Basic

 

 

62,323

 

 

 

62,823

 

 

 

62,421

 

 

 

63,217

 

Diluted

 

62,361

 

 

62,889

 

 

62,461

 

 

 

63,282

 

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, 2021

 

September 30, 2021

 

December 31, 2020

 

 

2021

 

 

 

2020

 

Net Income

 

$

103,649

 

 

$

132,150

 

 

$

159,668

 

 

$

235,799

 

 

$

316,177

 

Stock-based compensation:

 

 

 

 

 

 

 

 

 

 

Cost of revenues

 

 

23

 

 

 

22

 

 

 

29

 

 

 

45

 

 

 

57

 

Research and development

 

 

587

 

 

 

570

 

 

 

512

 

 

 

1,157

 

 

 

1,022

 

Sales, general and administrative

 

 

209

 

 

 

218

 

 

 

209

 

 

 

427

 

 

 

411

 

Litigation settlement

 

 

?

 

 

 

?

 

 

 

(1,625

)

 

 

?

 

 

 

(1,625

)

Partial recovery of investment previously impaired

 

 

(901

)

 

 

?

 

 

 

?

 

 

 

(901

)

 

 

?

 

Tax effect of Non-GAAP adjustments

 

 

(193

)

 

 

(191

)

 

 

206

 

 

 

(383

)

 

 

32

 

Non-GAAP net income

 

$

103,374

 

 

$

132,769

 

 

$

158,999

 

 

$

236,144

 

 

$

316,074

 

Non-GAAP diluted EPS

 

$

1.66

 

 

$

2.12

 

 

$

2.53

 

 

$

3.78

 

 

$

4.99

 

 

 

 

 

 

 

 

 

 

 

 

Weighted-average shares used in Non-GAAP diluted EPS

 

 

62,361

 

 

 

62,561

 

 

 

62,889

 

 

 

62,461

 

 

 

63,282

 

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, litigation settlement, gain on partial recovery of investment previously impaired 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 for the periods presented, are:

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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