Ubiquiti Networks Reports Q1 Fiscal 2013 Results

Ubiquiti Networks Reports Q1 Fiscal 2013 Results

  *New product category revenues up over 24% sequentially
  *$23.7 million in net cash provided by operating activities
  *Quarterly GAAP Diluted EPS of $0.14 and Non-GAAP Diluted EPS of $0.15
  *Improved outlook due to expected revenue recovery of airMAX

SAN JOSE, Calif., Nov. 8, 2012 (GLOBE NEWSWIRE) -- Ubiquiti Networks, Inc.
(Nasdaq:UBNT), a next-generation communications technology company, today
announced results for the first quarter of fiscal 2013, ended September 30,
2012.

For the first quarter of fiscal 2013, Ubiquiti reported revenues of $61.5
million, a decrease of 22% compared to revenues of $79.2 million for the same
period the prior year.

For the first quarter of fiscal 2013, GAAP net income was $13.2 million, a
decrease of 39% compared to GAAP net income of $21.5 million for the same
period the prior year. Non-GAAP net income was $13.6 million, a decrease of
37% compared to $21.7 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 per share of common
stock-diluted to weighted-average shares used in computing non-GAAP Diluted
EPS:

                                   Three Months Ended September 30,
                                   2012                 2011
                                   (in thousands, except per share data)
                                   (unaudited)
Net income                          $13,179            $21,493
Stock-based compensation, net of    393                  211
taxes
Non-GAAP net income                 $13,572            $21,704
Weighted-average shares used in
computing net income per share of   92,925               62,717
common stock- diluted
Weighted-average dilutive effect of
stock options and restricted stock  —                    3,877
units
Weighted-average shares of Series A —                    26,873
preferred shares outstanding
Weighted-average shares used in     92,925               93,467
computing non-GAAP diluted EPS (1)
Non-GAAP diluted EPS (1)            $0.15              $0.23
                                                       
(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.

"Profitability, although down, has still remained strong with a 27% operating
margin, $0.15 earnings per share, and approximately $14 million of non-GAAP
net-income, reflecting the robust fundamentals of our strong business
model.We have made significant legal and operational infrastructure
improvements that have resulted in a series of anti-counterfeit successes,
decreased lead times, and a return of stronger order flow," said Robert J.
Pera, Founder and Chief Executive Officer of Ubiquiti Networks."Ubiquiti is
not just about our AirMax wireless Internet distribution system.With our new
product categories now accounting for 25% of our business, and up
approximately 500% year over year, we are a fully diversified Internet
Protocol technology platforms company with exciting solutions for Wireless LAN
(UniFi), Video Surveillance (AirVision), AirFiber (microwave backhaul), mFi
(machine to machine communications), and EdgeMax (advanced routing). This
company has a history of demonstrating an extraordinary ability to dynamically
evolve and conquer challenges.And to this end, we have made fundamental
changes to our infrastructure to ensure our long-term success."

The Company also announced that its Chief Financial Officer, John Ritchie,
plans to leave the Company to pursue other opportunities.The Company has
initiated a search for a new CFO.Mr. Ritchie plans to remain with the Company
through December 31, 2012 to ensure a seamless transition.

"I would like to extend my sincere thanks to John for his contributions to
Ubiquiti and we wish him all the best in the future," said Pera.

Recent Highlights

  *In September, the Company released EdgeMax, a price/performance disruptive
    software and systems routing platform, offering what the company believes
    to be the world's first sub-$100 router technology with greater than 1
    million packet-per-second processing performance packed with powerful
    routing features.
    
  *In October, AirFiber, the Company's microwave backhaul solution, won the
    2012 Wireless Internet Provider Association product of the year award.
    
  *AirVision, the Company's IP video surveillance platform has been
    re-architected and vastly upgraded with the release of the Company's
    AirVision 2.0 NVR and management software.

Business Outlook

Ubiquiti currently believes the demand environment in its end markets supports
the following forecast for the Company's fiscal second quarter ending December
31, 2012:

  *Revenues of $70 million to $78 million
  *GAAP Diluted EPS of $0.18 to $0.21
  *Non-GAAP Diluted EPS of $0.17 to $0.20

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
bridging the digital divide between emerging and developed markets by
fundamentally changing the economics and complexity of deploying high
performance networking solutions in underserved and underpenetrated markets
globally.Our technology platforms focus on delivering industry-leading
performance, compelling price-performing characteristics and an unparalleled
user experience.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
months ended September 30, 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, potential of new
technology platforms, effect of anti-counterfeit manufacturing processes,
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 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; impact of counterfeiting and our
ability to contain that; 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; 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
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 Annual Report on
Form 10-K for the year ended June 30, 2012 and other 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
Ubiquiti Networks' Investor Relations Department, 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 September 30,
                                             2012            2011
Revenues                                      $61,535       $79,167
Cost of revenues                              36,515          46,154
Gross profit                                  25,020          33,013
                                                            
Operating expenses:                                          
Research and development                      4,711           3,369
Sales, general and administrative             4,534           2,144
Total operating expenses                      9,245           5,513
Income from operations                        15,775          27,500
Interest expense and other, net               (86)            (634)
Income before provision for income taxes      15,689          26,866
Provision for income taxes                    2,510           5,373
Net income                                    $13,179       $21,493
Preferred stock cumulative dividend and       —               (102,727)
accretion of cost of preferred stock
Net income (loss) attributable to common      $13,179       $(81,234)
stockholders—diluted
                                                            
Net income (loss) per share of common stock:                 
Basic                                         $0.14         $(1.30)
Diluted                                       $0.14         $(1.30)
                                                            
Weighted average shares used in computing net                
income (loss) per share of common stock:
Basic                                         90,970          62,717
Diluted                                       92,925          62,717


Ubiquiti Networks Inc.
Reconciliation of GAAP Net Income to Non-GAAP Net Income
(In thousands, except per share data)
(Unaudited)
                                                       
                                     Three Months Ended September 30,
                                     2012               2011
Net income                            $13,179          $21,493
Stock-based compensation:                               
Cost of revenues                      81                 6
Research and development              266                116
Sales, general and administrative     309                229
Tax effect of stock-based             (263)              (140)
compensation
Non-GAAP net income                   $13,572          $21,704
Non-GAAP diluted EPS (1)              $0.15            $0.23
Weighted-average shares used in       92,925             93,467
non-GAAP diluted EPS (1)
                                                       
(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 September 30,
                                           2012              2011
Weighted-average shares used in computing
net income(loss) per share of common stock- 92,925            62,717
diluted
Add back:                                                    
Weighted-average dilutive effect of stock   —                 3,877
options and restricted stock units
Weighted-average shares of Series A         —                 26,873
preferred shares outstanding
Weighted-average shares used in computing   92,925            93,467
non-GAAP diluted EPS


Ubiquiti Networks Inc.
Condensed Consolidated Balance Sheets
(In thousands, except share amounts)
(Unaudited)
                                                      
                                    September 30, 2012 June 30, 2012^(1)
Assets                                                 
Current assets:                                        
Cash and cash equivalents           $132,486         $122,060
Accounts receivable, net            60,877             75,644
Inventories                         7,632              7,734
Current deferred tax asset          882                882
Prepaid expenses and other current   2,428              1,577
assets
Total current assets                204,305            207,897
Property and equipment, net         5,042              4,471
Long-term deferred tax asset         232                232
Other long–term assets              1,577              1,136
Total assets                        $211,156         $213,736
Liabilities, Convertible Preferred                     
Stock and Stockholders' Deficit
Current liabilities:                                  
Accounts payable                    $ 25,465           $ 26,450
Customer deposits                   384                235
Deferred revenues                   798                805
Income taxes payable                3,284              946
Debt – short-term                    5,008              6,968
Other current liabilities           10,031             17,031
Total current liabilities           44,970             52,435
Long–term taxes payable             7,727              7,727
Debt – long-term                     44,843             22,623
Total liabilities                   97,540             82,785
Stockholders' deficit:                                 
Common stock                        89                 92
Additional paid–in capital          129,725            128,981
Treasury stock                       (100,770)         (69,515)
Retained earnings                   84,572             71,393
Total stockholders' deficit         113,616            130,951
Total liabilities, convertible
preferred stock and stockholders'    $211,156         $213,736
deficit
                                                      
(1) Derived from audited consolidated statements as of and for the year     
ended June 30, 2012.


Ubiquiti Networks Inc.
Revenue by Product Category and Geographical Area
(In thousands)
(Unaudited)
                                                  
                                  Three Months Ended September 30,
                                  2012             2011
                                                  
Revenue by Product Category                        
AirMax                             $32,057        $49,835
New platforms                      15,628           2,734
Other systems                      3,784            12,765
Total systems                      51,469           65,334
Embedded radio                     1,714            3,225
Antennas/other                     8,352            10,608
Total revenues                     $61,535        $79,167
                                                  
Revenue by Geographical Area                       
North America                      $20,361        $24,941
South America                      10,243           19,835
Europe, the Middle East and Africa 23,144           24,783
Asia Pacific                       7,787            9,608
Total revenues                     $61,535        $79,167

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:

  *Recurring charges and gains, including:

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

  *Tax effect of non-GAAP adjustments.After adjusting to exclude the items
    described above, we apply the principles of ASC 740, Income Taxes, to
    estimate the non-GAAP income tax provision.

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: The Abernathy MacGregor Group
         Ian Campbell / idc@abmac.com / 213-630-6550
         Amy Feng / asf@abmac.com / 213-630-6550

Ubiquiti Networks, Inc.
 
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