Ubiquiti Beats Estimates but Shares Fall on Warning of Rising Component Costs

Ubiquiti Inc. shares traded higher in early trading Friday after the networking technology company reported fiscal fourth-quarter results that exceeded Wall Street expectations for both revenue and adjusted earnings. However, the stock later gave up those gains and turned lower.

Ubiquiti reported adjusted earnings per share of $4.73, beating the analyst estimate of $4.03. Revenue rose 23.5% year over year to a record $937.3 million, surpassing the consensus estimate of $850.5 million.

Enterprise Technology Drives Revenue Growth

Enterprise technology revenue jumped to $868.3 million from $680.1 million in the year-ago period. Meanwhile, service provider technology revenue declined to $69 million from $79 million. Ubiquiti said enterprise technology drove overall revenue growth, partially offset by a decline in its service provider technology platform.

Gross profit increased to $429.3 million from $342.7 million in the year-ago period. Gross margin improved to 45.8% from 45.1%. However, this was below the 47% recorded in the prior quarter.

Ubiquiti warned that higher component costs and supply constraints could pressure gross margins in the near term. The company said pricing and other measures may help offset some of the costs.

GAAP net income rose 6.8% year over year to $284.9 million, while adjusted net income grew 33.6% to $286.5 million. GAAP diluted earnings per share increased to $4.70 from $4.41.

Ubiquiti Expands $500 Million Buyback Program

Ubiquiti's board declared a quarterly cash dividend of $1 per share, payable on September 8 to shareholders of record as of August 31. The company also said it plans to pay a quarterly dividend of at least $1 per share during fiscal 2027, subject to board approval.

Additionally, Ubiquiti expanded its existing stock repurchase program. The authorization allows the company to repurchase up to $500 million of its common stock through September 30, 2027.

UI Stock Performance: Friday data showed Ubiquiti shares were down 4.54% at $547.82 at the time of publication.