Ubiquiti Networks Reports Record First Quarter Financial Results

       Ubiquiti Networks Reports Record First Quarter Financial Results

~ Record for Revenue, Earnings, Cash Flow and DSOs ~

PR Newswire

SAN JOSE, Calif., Nov. 7, 2013

SAN JOSE, Calif., Nov. 7, 2013 /PRNewswire/ -- Ubiquiti Networks, Inc.
(NASDAQ: UBNT) ("Ubiquiti") today announced results for the first fiscal
quarter of 2014 ending September 30, 2013.

First Quarter Financial Highlights

  oRevenues of $129.7 million, up 111% year-over-year and an increase of 28%
    from the prior quarter, marking the fourth consecutive quarter of
    sequential double-digit revenue growth.
  oGAAP net income was $40.5 million, up 208% year-over-year and an increase
    of 41% sequentially.
  oNon-GAAP operating profitability of $47.1 million, up 186% year-over-year
    and an increase of 37% sequentially.
  oGAAP Diluted EPS of $0.45, up 221% year-over-year and non-GAAP diluted EPS
    of $0.46.
  oAverage DSOs declined to 25 days, a record for the Company.
  o$51.9 million in net cash provided by operating activities.

First Quarter Business Highlights

Service Provider Technology:

  oExtended technology leadership in the fixed wireless broadband market
    through the introduction of next-generation airMAX®, airFiber™ and
    EdgeMAX™ products.
  oSponsored research conducted by IDC on the market opportunity for fixed
    wireless access that showed fixed wireless connections growing at a 21.8%
    CAGR through 2017 and a $10 billion revenue opportunity for wireless
    Internet service providers (WISPs) by 2017.
  oAnnounced the Ubiquiti World Network (beta), a global alliance of WISPs to
    foster market awareness and market growth. Over 1000 WISPs have signed up
    since the announcement on October 16.

Enterprise Technology:

  oAnnounced that the Company shipped its one millionth UniFi™ access point
    since entering the enterprise WLAN market in 2011.
  oAnnounced two additions to the UniFi product line, including the
    industry's first 802.11ac outdoor AP.
  oAchieved the highest market share gain in enterprise WLAN coordinated
    access points for calendar Q2, according to market research firm Gartner.
  oAttained legal victory against counterfeiter of Ubiquiti products in
    China.

"Ubiquiti is continuing to demonstrate the financial leverage, scalability and
disruptive power of our business model," said Robert J. Pera, Founder, Chief
Executive Officer and Executive Chairman of Ubiquiti Networks. "With our
strong pipeline of innovative products, growing traction in the enterprise
business and improving execution we believe that we are well positioned for
future growth."

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

Financials               F1Q14 F4Q13 F1Q13
Revenues                 129.7 101.2 61.5
Cost of Revenues         71.7  56.9  36.5
Gross Profit             58    44.4  25
Total Operating Expenses 12.1  11.2  9.2
Income from Operations   45.9  33.2  15.8
Non-GAAP EPS (diluted)   0.46  0.33  0.15

Product Revenue

Ubiquiti has simplified reporting of its product category revenue. Going
forward, product revenue will be reported in two categories: Service Provider
Technology and Enterprise Technology. Included below is a table that
reconciles the Company's former product presentation with its new format.



                                  Three Months Ended September 30,
                                  2013                2012
                                  (In thousands)
Service Provider Technology:
airMAX                            $60,506             $32,057
New platforms                     11,202              6,487
Other systems                     6,885               3,151
Embedded radio                    2,277               1,714
Antennas/other                    13,347              8,208
Total Service Provider Technology $94,217             $51,617
Enterprise Technology:
New platforms                     $34,358             $9,141
Other systems                     729                 633
Antennas/other                    383                 144
Total Enterprise Technology       $35,470             $9,918
Total revenues                    $129,687            $61,535



Business Outlook

Ubiquiti currently believes the demand environment in its end markets supports
the following forecast for the Company's second fiscal quarter ending December
31, 2013:

  oRevenues of between $130 million and $136 million
  oGAAP Diluted EPS of between $0.40 and $0.44
  oNon-GAAP Diluted EPS of between $0.42 and $0.46

Conference Call
Ubiquiti Networks will host a Q&A-only conference call to discuss the
Company's financial results at 2:00 p.m. PT today. A transcript of
management's prepared remarks can be found on the Investor Relations section
of Ubiquiti Networks' website, http://www.ubnt.com/.

To listen to the Q&A-only conference 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-only
conference call by visiting the Investor Relations section of Ubiquiti
Networks' website.

The playback 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
Ubiquiti Networks' website.

About Ubiquiti Networks
Ubiquiti Networks (NASDAQ: UBNT) is closing the digital divide by building
network communication platforms for everyone and everywhere. With over 10
million devices deployed in over 180 countries, Ubiquiti is transforming
under-networked businesses and communities. Our leading edge platforms,
airMAX™, UniFi™, airFiber™, airVision™, mFi™ and EdgeMAX™ combine innovative
technology, disruptive price 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, the Ubiquiti logo, Ubiquiti Networks, airMAX, UniFi, airFiber,
airVision, mFi and EdgeMAX are registered trademarks or trademarks of Ubiquiti
Networks, Inc. and/or its affiliates in the United States and other countries.

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. Reconciliations of the
adjustments to GAAP results for the three months ended September 30, 2013 and
2012 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", "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 anticipated healthy and strong demand,
growth prospects, expected product launches and new updates, market
positioning, potential of new technology platforms, effect of anti-counterfeit
manufacturing processes, short and long term opportunities, revenues, GAAP
diluted EPS and non-GAAP diluted EPS forecasts for the Company's fiscal
quarter ending December 31, 2013, 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 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 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, 2013 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
IR@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,
                                              2013                2012
Revenues                                      $129,687            $61,535
Cost of revenues                              71,664              36,515
Gross profit                                  58,023              25,020
Operating expenses:
Research and development                      6,317               4,711
Sales, general and administrative             5,810               4,534
Total operating expenses                      12,127              9,245
Income from operations                        45,896              15,775
Interest expense and other, net               (246)               (86)
Income before provision for income taxes      45,650              15,689
Provision for income taxes                    5,122               2,510
Net income                                    $40,528             $13,179
Net income per share of common stock:
Basic                                         $0.46               $0.14
Diluted                                       $0.45               $0.14
Weighted average shares used in computing
net income per share of common stock:
Basic                                         87,411              90,970
Diluted                                       89,473              92,925



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,
                                              2013                2012
Net income                                    $40,528             $13,179
Stock-based compensation:
Cost of revenues                              144                 81
Research and development                      496                 266
Sales, general and administrative             527                 309
Tax effect of non-GAAP adjustments            (467)               (263)
Non-GAAP net income                           $41,228             $13,572
Non-GAAP diluted EPS                          $0.46               $0.15
Weighted-average shares used in non-GAAP      89,473              92,925
diluted EPS

Ubiquiti Networks Inc.






Condensed Consolidated Balance Sheets
(In thousands, except share amounts)
(Unaudited)
                                          September 30, 2013  June 30, 2013(1)
Assets
Current assets:
Cash and cash equivalents                 $279,729            $227,826
Accounts receivable, net                  35,798              35,884
Inventories                               16,375              15,880
Current deferred tax asset                733                 733
Prepaid expenses and other current        2,273               3,151
assets
Total current assets                      334,908             283,474
Property and equipment, net               5,834               5,976
Long-term deferred tax asset              4                   4
Other long–term assets                    2,701               2,886
Total assets                              $343,447            $292,340
Liabilities and Stockholders' Equity
Current liabilities:
Accounts payable                          $44,311             $36,187
Customer deposits                         3,578               5,123
Deferred revenues                         793                 691
Income taxes payable                      1,263               1,257
Debt - short-term                         5,015               5,013
Other current liabilities                 12,850              11,150
Total current liabilities                 67,810              59,421
Long-term taxes payable                   12,385              11,857
Debt - long-term                          69,874              71,116
Deferred revenues - long-term             2,514               2,510
Total liabilities                         152,583             144,904
Stockholders' equity:
Common stock                              88                  87
Additional paid–in capital                137,881             134,982
Treasury stock                            (123,864)           (123,864)
Retained earnings                         176,759             136,231
Total stockholders' equity                190,864             147,436
Total liabilities and stockholders'       $343,447            $292,340
equity

(1) Derived from audited consolidated statements as of and for the year ended
June 30, 2013.



Ubiquiti Networks Inc.
Revenues by Product Type - New Categories
(In thousands)
(Unaudited)
                                          Three Months Ended September 30,
                                          2013                2012
Service Provider Technology               $94,217             $51,617
Enterprise Technology                     35,470              9,918
Total revenues                            $129,687            $61,535

Ubiquiti Networks Inc.
Revenues by Product Type - Prior Categories
(In thousands)
(Unaudited)
                                            Three Months Ended September 30,
                                            2013                2012
airMAX                                      $60,506             $32,057
New platforms                               45,560              15,628
Other systems                               7,615               3,784
Systems                                     113,681             51,469
Embedded radio                              2,277               1,714
Antennas/other                              13,729              8,352
Total revenues                              $129,687            $61,535

Ubiquiti Networks Inc.
Revenue by Geographical Area
(In thousands)
(Unaudited)
                                    Three Months Ended September 30,
                                    2013                2012
North America                       $37,433             $20,361
South America                       20,776              10,243
Europe, the Middle East and Africa  52,866              23,144
Asia Pacific                        18,612              7,787
Total revenues                      $129,687            $61,535



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. Examples of items excluded from net income are:

  oRecurring charges and gains, including:

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

  oTax 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 table
captioned "Reconciliation of GAAP Net Income to non-GAAP Net Income" included
in this press release.

Contact:

Mary Zimmerman – IR@ubnt.com

SOURCE Ubiquiti Networks, Inc.

Website: http://www.ubnt.com