Disappointing Growth, Guidance Tanks Ubiquiti Networks Inc. Stock

By Markets Fool.com

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A Ubiquiti Networks Air Fiber dish array broadcasting along the coastline. Credit: Ubiquiti Networks via Facebook.

Shares of Ubiquiti Networks stock fell 4.9% on Thursday as of 5:21 p.m. ET as investors took a dim view of the company's fiscal third-quarter results. Here's a closer look at the final Q3 totals versus Wall Street's projections:

UBNT Revenue YOY Growth EPS YOY Growth
Consensus estimate $147.49 million (0.57%) $0.47 (6%)
Q3 actuals $147.46 million (0.59%) $0.47 (6%)
DIFFERENCE ($0.03 million) (0.02%) $0.00 0%

Sources: S&P Capital IQand Ubiquiti Networks press release.

Commenting on the results, CEO and founder Robert Pera said in a press release: "We are focused on advancing our R&D and expanding our market opportunities in the coming quarters."

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What went right:Enterprise technology sales, a catalyst last quarter, came in strong again. Segment sales rose 50.9% as companies snapped up UniFi access points and related products for enhanced wireless service. Pera and his team also controlled direct expenses and administrative expenses -- both were essentially flat year over year -- to invest heavily in R&D to chase the opportunities Pera alludes to in his quote.

What went wrong:Service provider revenue continued its descent, falling 12.1% year over year. That wouldn't have been so bad if Enterprise Technology had grown more. Instead, Enterprise sales accounted for just 27.9% of revenue versus 34.9% last quarter, resulting in a slight year-over-year decline in gross sales.

What's next:Looking ahead, Ubiquiti Networks expects $140 million to $150 million in fiscal fourth-quarter revenue, resulting in $0.43 to $0.48 a share in profits after accounting for non-cash charges and one-time items. Analysts tracked by S&P Capital IQ have the company generating $155.47 million in revenue and $0.49 a share in adjusted profit versus $156.01 million and $0.56 a share in last year's Q4.

The disparity between Ubiquiti's revenue projection and Wall Street's hopes appears to have contributed to the after-hours sell-off. Longer term, analysts have Ubiquiti Networks growing earnings by an average of 8.81%annuallyduring the next three-to-five years.

In the meantime, investors should also review Ubiquiti's 10-Q quarterly filing with the SEC. There you'll find cash flow detail that's left out of the press release plus additional management commentary on the financial results -- though Ubiquiti did say that it produced $36.7 million in cash from operations during the quarter.

The article Disappointing Growth, Guidance Tanks Ubiquiti Networks Inc. Stock originally appeared on Fool.com.

Some days,Tim Beyers is just earning his keep. He's also a member of theMotley Fool Rule Breakers stock-picking team and the Motley Fool Supernova Odyssey I mission and owned shares of Apple at the time of publication. Check out Tim'sweb homeandportfolio holdingsor connect with him onGoogle+,Tumblr, or Twitter, where he goes by@milehighfool.The Motley Fool recommends Apple, Facebook, and Ubiquiti Networks. The Motley Fool owns shares of Apple and Facebook. Try any of our Foolish newsletter services free for 30 days. We Fools may not all hold the same opinions, but we all believe that considering a diverse range of insights makes us better investors. The Motley Fool has a disclosure policy.