Key Takeaways
- Ubiquiti stock jumped 15% after revenue rose 39.9% to a record $1.03 billion in its fiscal first quarter.
- Its enterprise sales grew faster than Cisco’s networking and HPE’s Campus & Branch sales in their latest quarters, a sign UniFi is winning over the incumbents’ customers.
- Rising component costs and tight supply are the main risk to its margins and its shipments.
Ubiquiti (UI) stock is up 15% today after the company posted record fiscal first-quarter revenue of $1.03 billion, up 39.9% from a year earlier.
That’s faster than the incumbents are growing. Cisco (CSCO) grew networking product revenue 28% in its quarter to July 25, and HPE (HPE) grew its Campus & Branch networking revenue 31.0% in its quarter to July 31.
The details
Here’s Ubiquiti’s quarter to Sept. 30, against a year earlier:
- Enterprise Technology revenue: $941.3 million, up from $657.1 million
- North America revenue: $541.7 million, up 41.5%
- Gross margin: 47.3%, up from 46.0%
- Non-GAAP EPS: $5.32, up from $3.46
Analysts already expected earnings to keep climbing through fiscal 2028:
Ubiquiti earned 30% of that $17.71 fiscal 2027 estimate in one quarter, so I’d expect it to rise.
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UniFi is outgrowing the giants
Ubiquiti sells UniFi gear with no license or subscription fees, much of it through its own webstores. Its webstore sales grew enough that card fees on them helped lift its costs.
And it runs lean: operating expenses were 9.1% of revenue, against 30.4% for Cisco in its fiscal fourth quarter, even on Cisco’s adjusted basis.
But demand is strong for everyone: Cisco’s networking product orders rose 40% in that quarter, its eighth straight quarter of double-digit growth. If Cisco’s networking growth holds up in next week’s report, Ubiquiti is riding a strong market as much as taking Cisco’s customers.
HPE’s Campus & Branch line, $1.4 billion in its latest quarter, chases many of the same office buyers. HPE reports later this month. Can that line keep up with Ubiquiti’s 43.2% growth in Enterprise Technology?
Component costs are the catch
Ubiquiti said some component costs have risen since its fiscal fourth quarter and may keep rising, with supply still tight. That could squeeze margins if pricing doesn’t offset it, and cap how much it ships.
Still, the stock isn’t expensive by its own standards. Its forward P/E was about 31x at its latest reading, under its five-year average of 34x:
Today’s jump takes it to about 35x, near that average and about half its 67x peak from a year ago.
Bottom line: UniFi is gaining ground in a growing market, at a fair price. I like it from here.
Of course, if component costs climb faster than Ubiquiti can raise prices, we’ll see it in next quarter’s gross margin first.
So what is Ubiquiti stock actually worth?
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Disclaimer:
Please note that the articles on TIKR are not intended to serve as investment or financial advice from TIKR or our content team, nor are they recommendations to buy or sell any stocks. We create our content based on TIKR Terminal’s investment data and analysts’ estimates. Our analysis might not include recent company news or important updates. TIKR has no position in any of the stocks mentioned. Thank you for reading, and happy investing!
