Ubiquiti Networks ®
Aug 4, 2016

Ubiquiti Networks Reports Preliminary Fourth Quarter Fiscal 2016 Financial Results

 ~ Achieves Record Revenue and Earnings ~

~ Non-GAAP Diluted EPS of $0.69 Per Share ~

SAN JOSE, Calif., Aug. 04, 2016 (GLOBE NEWSWIRE) -- Ubiquiti Networks, Inc. (NASDAQ:UBNT) ("Ubiquiti" or the "Company") today announced results for the fourth fiscal quarter of 2016, ended June 30, 2016.

Fourth Quarter Fiscal 2016 Financial Summary

Recent Financial Highlights

Recent Product Highlights

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

Income statement highlights F4Q16 F3Q16 F4Q15
Revenues  185.7   167.4   145.3 
Service Provider Technology  109.0   96.3   104.8 
Enterprise Technology  76.7   71.1   40.5 
Gross Profit  89.8   82.5   66.1 
Gross Profit (%)  48.3%  49.3%  45.5%
Total Operating Expenses (1)  24.1   22.4   58.8 
Income from Operations  65.6   60.1   7.3 
GAAP Net Income  57.7   52.7   4.5 
GAAP EPS (diluted)  0.69   0.62   0.05 
Non-GAAP Net Income  58.2   53.0   44.1 
Non-GAAP EPS (diluted)  0.69   0.63   0.50 

(1) Includes business e-mail compromise ("BEC") fraud loss of $39.1 million in F4Q15.

Balance Sheet Highlights

Total cash and cash equivalents as of June 30, 2016 were $551.0 million, compared with $446.4 million as of June 30, 2015.  We held $524.3 million of our $551.0 million of cash and cash equivalents in accounts of our subsidiaries outside of the United States.

On June 30, 2016, the Company extinguished the full $50.0 million available of a stock repurchase program
approved by the Board of Directors of the Company on May 4, 2016.

This quarter we saw days sales outstanding in accounts receivable ("DSO") of 41 days, compared with 41 days in the prior quarter and 41 days in the fourth 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 first fiscal quarter ending September 30, 2016.  The following are Ubiquiti's financial performance estimates for the first quarter of fiscal 2017:

Conference Call Information

Ubiquiti Networks will host a Q&A-only call to discuss the Company's financial results at 2:00 p.m. Pacific Time today.  Management's prepared remarks can be found on the Investor Relations section of the Ubiquiti Networks website, http://ir.ubnt.com/results.cfm.

To listen to the Q&A call via telephone, dial (877) 291-1296 (U.S. toll-free) or (720) 259-9209 (International) to be connected to the call by an operator.  Participants should dial in at least 10 minutes prior to the start of the call.  Investors may also listen to a live webcast of the Q&A conference call by visiting the Investor Relations section of the Ubiquiti Networks website at http://ir.ubnt.com.

A recording of the Q&A call will be available approximately two hours after the call concludes and will be accessible on the Investor Relations section of the Ubiquiti Networks website, http://ir.ubnt.com.

About Ubiquiti Networks

Ubiquiti Networks (Nasdaq:UBNT) is closing the digital divide by building network communication platforms for everyone and everywhere. With over 38 million devices sold worldwide, Ubiquiti is transforming under-networked enterprises and communities. Our leading edge platforms, airMAX®, UniFi®, airFiber®, UniFi® Video, mFi® and EdgeMAX®, combine innovative technology, disruptive price-to-performance and the support of a global user community to eliminate barriers to connectivity. For more information, join our community at http://www.ubnt.com.

Ubiquiti, Ubiquiti Networks, the U logo, UBNT, airMAX, UniFi, airFiber, mFi, EdgeMAX and sunMAX are registered trademarks or trademarks of Ubiquiti Networks, Inc. in the United States and other countries.

Investor Relations Contact

Anne Fazioli
Ubiquiti Networks, Vice President of Investor Relations
IR@ubnt.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 expectations related to our cash position, expenses, new products, and financial performance estimates including revenues, GAAP diluted EPS and non-GAAP diluted EPS for the Company's fiscal quarter ending June 30, 2016, 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, fluctuations in our operating results; varying demand for our products due to the financial and operating condition of our distributors and their customers, and 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 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; 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 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; 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, 2015, 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 Networks Investor Relations Department, by email at IR@ubnt.com or by visiting the Investor Relations section of the Ubiquiti Networks website, http://ir.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.  Except as required by law, Ubiquiti Networks 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.

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, Business e-mail compromise ("BEC") fraud loss/(recovery), implementation of overhead capitalization, reserve against vendor deposits relating to a purchase commitment termination fee and the tax effects of these non-GAAP adjustments.  Reconciliations of the adjustments to GAAP results for the three and twelve months ended June 30, 2016 and 2015 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, 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. 

Ubiquiti Networks Inc.
Condensed Consolidated Statement of Operations
(In thousands, except per share data)
(Unaudited)
  Three Months Ended
June 30,
 Years Ended
June 30,
  2016 2015 2016 2015(1)
Revenues $185,676  $145,267  $666,395  $595,947 
Cost of revenues 95,919  79,129  341,600  333,760 
Gross profit 89,757  66,138  324,795  262,187 
Operating expenses:        
Research and development 14,955  14,672  57,765  54,565 
Sales, general and administrative 9,156  5,039  33,269  21,607 
Business e-mail compromise ("BEC") fraud loss   39,137  (8,294) 39,137 
Total operating expenses 24,111  58,848  82,740  115,309 
Income from operations 65,646  7,290  242,055  146,878 
Interest expense and other, net (838) (326) (2,115) (1,130)
Income before provision for income taxes 64,808  6,964  239,940  145,748 
Provision for income taxes 7,102  2,446  26,324  16,085 
Net income and comprehensive income $57,706  $4,518  $213,616  $129,663 
Net income per share of common stock:        
Basic $0.70  $0.05  $2.53  $1.47 
Diluted $0.69  $0.05  $2.49  $1.45 
Weighted average shares used in computing net income per share of common stock:        
Basic 82,494  87,685  84,402  88,008 
Diluted 83,836  89,110  85,784  89,569 

(1) Derived from audited consolidated statements as of and for the year ended June 30, 2015.

 
Ubiquiti Networks Inc.
Reconciliation of GAAP Net Income to Non-GAAP Net Income
(In thousands, except per share data) 
(Unaudited)
  Three Months Ended June 30, Years Ended June 30,
  2016 2015 2016 2015
Net income $57,706  $4,518  $213,616  $129,663 
Stock-based compensation:        
Cost of revenues 107  161  448  601 
Research and development 526  355  2,296  2,854 
Sales, general and administrative 220  297  975  1,537 
Business e-mail compromise ("BEC") fraud loss   39,137  (8,294) 39,137 
Purchase commitment termination fee       5,500 
Implementation of overhead capitalization (8)   (1,221)  
Tax effect of non-GAAP adjustments (341) (325) (1,342) (2,656)
Non-GAAP net income $58,210  $44,143  $206,478  $176,636 
Non-GAAP diluted EPS $0.69  $0.50  $2.41  $1.97 
Weighted-average shares used in non-GAAP diluted EPS 83,836  89,110  85,784  89,569 


Ubiquiti Networks Inc.
Condensed Consolidated Balance Sheets
(In thousands, except share amounts)
(Unaudited)
  June 30,
  2016 2015(1)
Assets    
Current assets:    
Cash and cash equivalents $551,031  $446,401 
Accounts receivable, net 82,790  66,104 
Inventories 57,113  37,031 
Vendor Deposit 30,255  19,998 
Current deferred tax asset   1,535 
Prepaid income taxes 299  2,566 
Prepaid expenses and other current assets 7,153  7,711 
Total current assets 728,641  581,346 
Property and equipment, net 12,953  15,602 
Long-term deferred tax asset 4,195  1,515 
Other long—term assets 2,262  2,109 
Total assets $748,051  $600,572 
Liabilities and Stockholders' Equity    
Current liabilities:    
Accounts payable $51,510  $43,856 
Income taxes payable 1,488  1,108 
Debt - short-term 11,250  10,000 
Other current liabilities 26,672  15,170 
Total current liabilities 90,920  70,134 
Long-term taxes payable 23,202  19,810 
Debt - long-term 192,250  87,500 
Deferred revenues - long-term 1,303  974 
Total liabilities 307,675  178,418 
Stockholders' equity:    
Common stock 82  87 
Additional paid—in capital    
Retained earnings 440,294  422,067 
Total stockholders' equity 440,376  422,154 
Total liabilities and stockholders' equity $748,051  $600,572 

(1) Derived from audited consolidated statements as of and for the year ended June 30, 2015.

 
Ubiquiti Networks Inc.
Revenues by Product Type
(In thousands) 
(Unaudited)
  Three Months Ended June 30, Years Ended June 30,
  2016 2015 2016 2015
Service provider technology $109,004  $104,788  $418,346  $418,021 
Enterprise technology 76,672  40,479  248,049  177,926 
Total revenues $185,676  $145,267  $666,395  $595,947 


Ubiquiti Networks Inc.
Revenues by Geographical Area
(In thousands)
(Unaudited)
  Three Months Ended June 30, Years Ended June 30,
  2016 2015 2016 2015
North America $71,087  $44,293  $239,245  $197,693 
South America 23,925  25,876  85,318  97,118 
Europe, the Middle East and Africa 69,658  56,909  264,403  234,383 
Asia Pacific 21,006  18,189  77,429  66,753 
Total revenues $185,676  $145,267  $666,395  $595,947 


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 costs, expenses and gains/losses.

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.

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 certain adjustments and the tax effect of those adjustments.  Items excluded from net income are:

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.

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.