01—Abstract
Summary
Summary of the 10-Q filed February 7, 2025. Cited figures are marked; the original filing is the authoritative source.
Ubiquiti Inc. filed this Form 10-Q for the quarter ended December 31, 2024, reporting a strong second quarter of fiscal 2025.
Revenues were $599.9 milliona for the three months ended December 31, 2024, up from $465.0 million a year earlier, and $1,150.2 million for the six months, up from $928.0 million. Enterprise Technology drove the growth, rising to $518.2 million in the quarter from $391.5 million, while Service Provider Technology rose to $81.7 million from $73.5 million. Net income was $136.8 million for the quarter, or $2.26 per diluted share, compared with $82.1 million, or $1.36 per diluted share, a year earlier.
Gross margin improved to 41% from 38%, driven mainly by favorable product mix, lower warehouse-related expenses and excess and obsolete inventory charges, partly offset by higher shipping and tariff costs. The balance sheet and cash flow picture also improved. Net cash provided by operating activities was $386.1 millionb for the six months, compared with $146.3 million a year earlier, and the company repaid $301.9 million of credit facility borrowings, including full repayment of the First Amendment Term Loan and the $175.0 million revolver balance.
Total debt outstanding fell to $406.3 millionc on the Initial Term Loan Facility, and cash and cash equivalents rose to $133.1 million. Inventories increased to $537.3 million from $462.0 million, and inventory received not billed rose to $135.4 million from $72.6 million. Investors should note several risks disclosed in the filing.
Management stated that tariffs on products imported from China, including an incremental 10% tariff announced in February 2025 with a range of 10% to 35%, have affected operating results and margins. The company also disclosed a $50.0 milliond estimated incremental tax liability tied to an IRS adjustment under litigation, and $60.7 million of Hong Kong tax deposits expected to be refunded upon completion of an audit.
Robert J. Pera, founder and CEO, beneficially owned 56,278,181 shares as of February 7, 2025, and the board declared a quarterly dividend of $0.60 per share payable February 24, 2025.
02—Key points
Key Highlights
- Revenues of $599.9 million for the three months ended December 31, 2024, up from $465.0 million, and $1,150.2 million for the six months, up from $928.0 million.
- Net income of $136.8 million ($2.26 per diluted share) for the quarter, versus $82.1 million ($1.36 per diluted share) a year earlier.
- Gross profit margin rose to 41% for the quarter from 38%, driven mainly by favorable product mix and lower warehouse-related expenses, partly offset by higher shipping and tariff costs.
- Net cash provided by operating activities was $386.1 million for the six months, compared with $146.3 million a year earlier.
- Debt was reduced: the First Amendment Term Loan was fully repaid, the $175.0 million revolver balance was repaid, and $406.3 million remained outstanding on the Initial Term Loan Facility at December 31, 2024.
- Inventories increased to $537.3 million from $462.0 million, and inventory received not billed rose to $135.4 million from $72.6 million.
- Tariffs on products imported from China, including an incremental 10% tariff announced in February 2025, have affected operating results and margins, and the filing expects this to continue while the tariffs remain in effect.
03—One dollar
Follow one dollar
Of each $1.00 of revenue in Q2 FY2025, Ubiquiti kept $0.23.
- Revenue$599.9M100.0%
- Cost of revenue−$352.6M58.8%
- Gross profit$247.2M41.2%
- Operating costs−$68.4M11.4%
- Operating income$178.8M29.8%
- Interest, other & tax−$42.0M7.0%
- Net income$136.8M22.8%
04—Financials
Financial Highlights
Figures from 10-QQ2 FY2025filed February 7, 2025Financial Statements
Q2 FY2025 against Q2 FY2024
| Line item | Q2 FY2025Q2 FY2024 | Change |
|---|---|---|
| Revenue | $599.88M$464.95M | +29.0% |
| Cost of Revenue | $352.65M$287.31M | +22.7% |
| Gross Profit | $247.23M$177.65M | +39.2% |
| R&D Expenses | $39.96M$36.91M | +8.3% |
| SG&A Expenses | $28.46M$19.63M | +45.0% |
| Operating Expenses | $68.42M$56.55M | +21.0% |
| Operating Income | $178.81M$121.10M | +47.7% |
| Net Income | $136.79M$82.12M | +66.6% |
| EPS (Basic) | $2.26$1.36 | +66.2% |
| EPS (Diluted) | $2.26$1.36 | +66.2% |
| Shares Outstanding (Basic) | 60.47M60.45M | 0.0% |
| Shares Outstanding (Diluted) | 60.53M60.45M | +0.1% |
05—Questions
Frequently Asked Questions
What drove the revenue growth this quarter?
Revenues rose $134.9 million, or 29%, for the three months ended December 31, 2024. Enterprise Technology revenue increased $126.7 million, or 32%, to $518.2 million, while Service Provider Technology revenue increased $8.2 million, or 11%, to $81.7 million. The filing attributes the Enterprise growth to increases across all regions except South America.
How did gross margin change, and what affected it?
Gross profit margin increased to 41% for the three months ended December 31, 2024, from 38% a year earlier. The company cited favorable product mix, lower warehouse-related expenses and excess and obsolete inventory charges, offset in part by higher shipping and tariff costs.
How much debt does Ubiquiti have, and how has it changed?
Total debt on the balance sheet was $405.5 million at December 31, 2024 (short-term $24.4 million plus long-term $381.1 million), down from $706.4 million at June 30, 2024. The First Amendment Term Loan Facility was fully repaid during the quarter ended September 30, 2024, and the revolver had no outstanding balance at December 31, 2024, with $700.0 million available. The Initial Term Loan Facility had $406.3 million outstanding, and the facilities mature March 30, 2026.
What tax risks does the filing disclose?
The company is in litigation with the IRS over fiscal 2015 and 2016 tax years, and estimates the incremental tax liability associated with the proposed income adjustment at approximately $50.0 million, excluding interest and penalties. Management believes its position is more likely than not to be sustained and has not provided a reserve. The company also has $60.7 million of deposits with the Hong Kong Inland Revenue Department, which it expects to be refunded upon completion of the audit, and $36.1 million of unrecognized tax benefits.
What is the dividend and ownership picture?
On February 4, 2025, the Board approved a quarterly cash dividend of $0.60 per share, payable February 24, 2025 to holders of record on February 18, 2025. As of February 7, 2025, Robert J. Pera beneficially owned 56,278,181 shares of common stock, and the filing states he intends to continue owning at least a majority of the outstanding shares.
06—Continue