Ubiquiti Networks ®
May 1, 2012

Ubiquiti Networks Reports Q3 Fiscal 2012 Results

SAN JOSE, Calif., May 1, 2012 (GLOBE NEWSWIRE) -- Ubiquiti Networks, Inc. (Nasdaq:UBNT), a next-generation communications technology company, today announced results for the third quarter of fiscal 2012, ended March 31, 2012.

For the third quarter of fiscal 2012, Ubiquiti reported revenues of $91.7 million, an increase of 79% compared to revenues of $51.2 million for the same period the prior year. For the nine months ended March 31, 2012 Ubiquiti reported revenues of $258.6 million, an increase of 98% compared to revenues of $130.3 million for the same period the prior year.

For the third quarter of fiscal 2012, GAAP net income was $27.9 million, an increase of 114% compared to GAAP net income of $13.0 million for the same period the prior year. Non-GAAP net income was $28.1 million, an increase of 113% compared to $13.2 million for the same period last year.

For the nine months ended March 31, 2012, GAAP net income was $74.1 million, an increase of 135% compared to GAAP net income of $31.6 million for the same period the prior year. Non-GAAP net income was $74.7 million, an increase of 134% compared to $32.0 million for the same period last year.

The following table reconciles GAAP net income to non-GAAP net income and weighted-average shares used in computing net income (loss) per share of common stock-diluted to weighted-average shares used in computing non-GAAP Diluted EPS:

  Three Months Ended March 31, Nine Months Ended March 31,
  2012 2011 2012 2011
  (in thousands, except per share data)
  (unaudited)
Net income  $ 27,920  $ 13,033  $ 74,104  $ 31,592
Stock-based compensation, net of taxes 198 154 619 406
Non-GAAP net income  $ 28,118  $ 13,187  $ 74,723  $ 31,998
Weighted-average shares used in computing net income (loss) per share of common stock- diluted 94,177 66,416 80,648 67,022
Weighted-average dilutive effect of stock options and restricted stock units 2,895
Weighted-average shares of Series A preferred shares outstanding 36,035 10,124 36,035
Weighted-average shares used in computing non-GAAP diluted EPS (1) 94,177 102,451 93,667 103,057
Non-GAAP diluted EPS (1)  $ 0.30  $ 0.13  $ 0.80  $ 0.31
         
(1) Non-GAAP Diluted EPS is calculated using non-GAAP net income excluding stock-based compensation, net of taxes and weighted-average shares outstanding as if Series A preferred stock is treated as common stock for the periods presented. 

"We saw solid momentum across all elements of our business, led by the AirMax platform which again posted double digit sequential growth. In addition, our new platforms which include Unifi, our enterprise WLAN offering and AirVision, our IP video surveillance offering, showed combined sequential growth of more than 100%," said Robert J. Pera, Founder and Chief Executive Officer of Ubiquiti Networks. "In addition AirFiber, our fourth technology platform, was announced during the quarter.  The AirFiber platform represents the latest application of Ubiquiti's unique R&D strategy and business model for disrupting markets.  We believe AirFiber will fundamentally redefine the cost/performance as well as user-experience expectations in the wireless backhaul market.  While we continue to advance the performance and offerings in our current technology platforms, we also plan on announcing three more disruptive technology platforms targeting new markets; one each quarter for the remainder of the calendar year.  Our confidence in Ubiquiti's long term opportunity continues to grow as we work to aggressively expand our total addressable market," concluded Mr. Pera.

"While again exceeding both expectations and our own long-term operating model, we are especially pleased with our strong cash generation as during the quarter we added almost $30 million in cash to the balance sheet," said John Ritchie, Chief Financial Officer. "We continue to match our growth objectives with a strong focus on optimizing our profitability, which we will continue to do as we scale our business and introduce new platforms."

Business Outlook

Ubiquiti currently believes the demand environment in its end markets supports the following forecast for the Company's fiscal fourth quarter ending June 30, 2012:

Conference Call

Ubiquiti Networks will discuss the Company's financial results by conference call at 2:00 p.m. PDT today. Instructions for listening to the conference call over the Web are available on the investor relations portion of UBIQUITI NETWORKS's website at www.ubnt.com.

About Ubiquiti Networks

Ubiquiti Networks is a next-generation communications technology company that designs and manufactures proprietary technologies. Since 2005, Ubiquiti's products and solutions have bridged the digital divide between emerging and developed markets by fundamentally changing the economics of deploying high performance networking solutions in underserved and underpenetrated markets globally. Our technology platforms AirMax, UniFi and AirVision, focus on delivering industry-leading performance, compelling price-performing characteristics and an unparalleled user experience. Ubiquiti has reduced high product and network deployment costs and other business model inefficiencies to enable rapid market adoption of their products and solutions in emerging markets. For more information visit http://www.ubnt.com/.

The Ubiquiti Networks, Inc. logo is available at http://www.globenewswire.com/newsroom/prs/?pkgid=10852

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 recurring costs, expenses and gains such as stock based compensation expense and the tax effects of these non-GAAP adjustments. In addition, our non-GAAP adjustments present shares of Series A preferred stock as if these shares had been converted to common stock throughout the periods presented. Reconciliations of the adjustments to GAAP results for the three and nine months ended March 31, 2012 and 2011 are provided below. 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, the 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 "About our Non-GAAP Net Income and Adjustments" after the tables below.

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. 

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", "anticipate", "believe", "estimate", "expect", "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 growth prospects, market positioning, short and long term opportunities, 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 necessarily limited to, fluctuations in our operating results; varying demand for our products due to the financial and operating condition of our distributors and their customers, distributors inventory management practices and general economic conditions; our reliance on a limited number of distributors; inability of our contract manufacturers and suppliers to meet our demand; our dependence on Qualcomm Atheros 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; if we fail 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 the Ubiquiti Community; 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; if 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 and 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 Quarterly Report on Form 10-Q for the period ended December 31, 2011 and other filings filed with the U.S. Securities and Exchange Commission (SEC), which are available at the SEC's website at www.sec.gov . Copies may also be obtained by contacting Ubiquiti Networks' Investor Relations Department, attn: JoAnn Horne by phone at 415.445.3235 or by email at investor.relations@ubnt.com or Ubiquiti Networks' Investor Relations website at www.ubnt.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. Ubiquiti Networks undertakes no obligation to update information contained in this press release. 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 Networks Inc.
Condensed Consolidated Statement of Operations
(In thousands, except per share data) 
(Unaudited)
         
  Three Months Ended March 31, Nine Months Ended March 31,
  2012 2011 2012 2011
Revenues  $ 91,665  $ 51,151  $ 258,649  $ 130,320
Cost of revenues 52,006 30,047 148,687 77,545
Gross profit 39,659 21,104 109,962 52,775
         
Operating expenses:        
Research and development 4,619 2,938 11,671 8,038
Sales, general and administrative 2,484 1,884 7,059 5,307
Total operating expenses 7,103 4,822 18,730 13,345
Income from operations 32,556 16,282 91,232 39,430
Interest income (expense) and other, net (190) 9 (1,136) 50
Income before provision for income taxes 32,366 16,291 90,096 39,480
Provision for income taxes 4,446 3,258 15,992 7,888
Net income  $ 27,920  $ 13,033  $ 74,104  $ 31,592
         
Preferred stock cumulative dividend and accretion of cost of preferred stock (8,154) (112,431) (14,550)
Less allocation of net income to participating preferred stockholders (1,782) (6,186)
Net income (loss) attributable to common stockholders—basic  $ 27,920  $ 3,097  $(38,327)  $ 10,856
Undistributed earnings re-allocated to common stockholders 71 227
Net income (loss) attributable to common stockholders—diluted $ 27,920 $ 3,168 $(38,327) $ 11,083
         
Net income (loss) per share of common stock:        
Basic $ 0.30 $ 0.05 $ (0.48) $ 0.17
Diluted  $ 0.30  $ 0.05 $ (0.48)  $ 0.17
         
Weighted average shares used in computing net income (loss) per share of common stock:        
Basic 91,861 62,610 80,648 63,240
Diluted 94,177 66,416 80,648 67,022
 
 
Ubiquiti Networks Inc.
Reconciliation of GAAP Net Income to Non-GAAP Net Income
(In thousands, except per share data)
(Unaudited)
  Three Months Ended March 31, Nine Months Ended March 31,
  2012 2011 2012 2011
Net income  $ 27,920  $ 13,033  $ 74,104  $ 31,592
Stock-based compensation:        
Cost of revenues 41 8 74 20
Research and development 133 85 365 191
Sales, general and administrative 156 164 593 465
Tax effect of non-GAAP adjustments  (132)  (103)  (413)  (270)
Non-GAAP net income  $ 28,118  $ 13,187  $ 74,723  $ 31,998
Non-GAAP diluted EPS (1)  $ 0.30  $ 0.13  $ 0.80  $ 0.31
         
Weighted-average shares used in non-GAAP diluted EPS (1) 94,177 102,451 93,667 103,057
         
(1) Non-GAAP Diluted EPS is calculated using non-GAAP net income excluding stock-based compensation, net of taxes and weighted-average shares outstanding as if Series A preferred stock is treated as common stock for the periods presented.
 
 
Ubiquiti Networks, Inc.
Reconciliation of Weighted-Average Shares Used in Computing Net Income (Loss) Per Share of Common Stock-Diluted to Weighted-Average Shares Used In Computing Non-GAAP Diluted EPS
(In thousands, except per share data)
(Unaudited)
  Three Months Ended March 31, Nine Months Ended March 31,
  2012 2011 2012 2011
Weighted-average shares used in computing net income(loss) per share of common stock- diluted 94,177 66,416 80,648 67,022
Add back:        
Weighted-average dilutive effect of stock options and restricted stock units 2,895
Weighted-average shares of Series A preferred shares outstanding 36,035 10,124 36,035
Weighted-average shares used in computing non-GAAP diluted EPS 94,177 102,451 93,667 103,057
 
 
Ubiquiti Networks Inc.
Condensed Consolidated Balance Sheets
(In thousands, except share amounts) 
(Unaudited)
  March 31, 2012  June 30, 2011(1)
Assets    
Current assets:    
Cash and cash equivalents   $ 94,200  $ 76,361
Accounts receivable, net  68,528 39,811
Inventories  9,111 5,663
Deferred costs  922 881
Prepaid expenses and other current assets  1,784 5,386
Total current assets  174,545 128,102
Property and equipment, net  2,245 1,022
Long-term deferred tax asset 324 324
Other long—term assets  401 2,230
Total assets   $ 177,515  $ 131,678
Liabilities, Convertible Preferred Stock and Stockholders' Deficit  
Current liabilities:     
Accounts payable   $ 24,533  $ 14,758
Customer deposits  1,068 1,675
Deferred revenues  2,475 1,734
Income taxes payable  3,588 4,428
Debt — short-term 6,966  --
Other current liabilities  9,140 15,206
Total current liabilities  47,770 37,801
Long—term deferred tax liabilities  1,870 1,870
Debt — long-term 24,365  --
Other long—term liabilities 123 32
Total liabilities  74,128 39,703
Redeemable convertible preferred stock 145,847
Stockholders' deficit:    
Common stock  92 63
Additional paid—in capital  129,902 545
Treasury stock (69,515) (69,515)
Retained earnings  42,908 15,035
Total stockholders' deficit  103,387 (53,872)
Total liabilities, convertible preferred stock and stockholders' deficit  $ 177,515  $ 131,678
     
(1) Derived from audited consolidated statements as of and for the year ended June 30, 2011.
 
 
Ubiquiti Networks Inc.
Revenue by Product Category and Geographical Area
(In thousands) 
(Unaudited)
  Three Months Ended March 31, Nine Months Ended March 31,
  2012 2011 2012 2011
         
         
Revenue by Product Category        
AirMax  $ 61,978  $ 28,324  $ 164,752  $ 71,041
New platforms 9,914 926 16,874 930
Other systems 10,308 10,568 41,327 33,545
Systems 82,200 39,818 222,953 105,516
Embedded radio 2,232 4,174 8,024 10,669
Antennas/other 7,233 7,159 27,672 14,135
Total revenues  $ 91,665  $ 51,151  $ 258,649  $ 130,320
         
Revenue by Geographical Area        
North America  $ 16,647  $ 15,829  $ 63,028  $ 39,910
South America 27,666 13,711 71,751 32,546
Europe, the Middle East and Africa 36,398 17,135 91,537 46,431
Asia Pacific 10,954 4,476 32,333 11,433
Total revenues  $ 91,665  $ 51,151  $ 258,649  $ 130,320

About our Non-GAAP Net Income and Adjustments

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 GAAP net income and GAAP earnings per diluted share adjusted to exclude certain recurring costs, expenses and gains. 

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 recurring 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 and/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.

Use and Economic Substance of Non-GAAP Financial Measures used by Ubiquiti Networks

We compute non-GAAP net income and non-GAAP diluted earnings per share by adjusting GAAP net income and GAAP earnings per diluted share to remove the impact of recurring stock-based compensation expense, and the tax effect of these adjustments. In addition, our non-GAAP diluted earnings per share is calculated using weighted-average shares outstanding as if Series A preferred stock outstanding had been converted to common stock throughout the periods presented. Examples of items excluded from net income are:

  • Stock-based compensation expense is recognized in accordance with FASB Accounting Standards Codification, Topic 718, Stock Compensation. 

Usefulness of Non-GAAP Financial Information to Investors

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. We expect to continue to incur expenses of a nature similar to the non-GAAP adjustments described above, and exclusion of these items from our non-GAAP net income and non-GAAP earnings per diluted share should not be construed as an inference that these costs are unusual, infrequent or non-recurring.

For more information on the non-GAAP adjustments, please see the tables captioned "Reconciliation of GAAP Net Income to non-GAAP Net Income" and "Reconciliation of Weighted-Average Shares Used in Computing Net Income (Loss) Per Share of Common Stock-Diluted to Weighted-Average Shares Used In Computing Non-GAAP Diluted EPS" included in this press release.

CONTACT: John Ritchie

         Chief Financial Officer

         Ubiquiti Networks

         408.942.3085 ext 329



         Investor Relations:

         JoAnn Horne

         Market Street Partners

         415.445.3235

Ubiquiti Networks, Inc.

Source: Ubiquiti Networks

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