Ubiquiti Inc. (NYSE: UI) shares initially popped on Friday after the networking tech company delivered fiscal fourth-quarter numbers that beat Wall Street's expectations on both the top and bottom lines. But the enthusiasm didn't last. The stock has since given back those gains and is trading lower.
Here's the headline: adjusted earnings came in at $4.73 per share, comfortably ahead of the $4.03 analysts were looking for. Revenue rose 23.5% year over year to a record $937.3 million, topping the $850.5 million consensus estimate. Solid numbers, right? So why the dip?
Enterprise Tech Powers the Quarter
The growth engine was Enterprise Technology, which saw revenue jump to $868.3 million from $680.1 million a year earlier. Service Provider Technology, on the other hand, slipped to $69 million from $79 million. Ubiquiti said the enterprise segment drove overall growth, partially offset by the decline in its service provider platform.
Gross profit improved to $429.3 million from $342.7 million, and gross margin ticked up to 45.8% from 45.1% a year ago. But here's the catch: that margin is down from 47% in the previous quarter. And the company is warning that higher component costs and supply constraints could keep squeezing margins in the near term. They're hoping pricing and other measures will help offset some of that pain.
On the bottom line, GAAP net income rose 6.8% year over year to $284.9 million, while adjusted net income climbed 33.6% to $286.5 million. GAAP diluted EPS increased to $4.70 from $4.41.
Buyback and Dividend: A Shareholder-Friendly Move
Ubiquiti's board declared a quarterly cash dividend of $1 per share, payable Sept. 8 to shareholders of record Aug. 31. The company also said it plans to pay quarterly dividends of at least $1 per share during fiscal 2027, subject to board approval.
On top of that, Ubiquiti extended its stock repurchase program, authorizing up to $500 million in buybacks through Sept. 30, 2027.
UI Price Action: Ubiquiti shares were down 4.54% at $547.82 at the time of publication on Friday, according to market data.
