Though Ubiquiti (UBNT -19.3%) beat FQ3 estimates , management faced pointed questions on the CC (transcript) about enterprise sales (+1% Q/Q in FQ3) and Americas sales (-10% Q/Q). CFO Craig Foster attributed the former issue to a mix/ASP shift for UniFi Wi-Fi systems, and CEO Robert Pera suggested the latter was due to changes in Ubiquiti's inventory management. "We're not going to ship into regions that we believe [have] adequate inventory."
There were also questions about Ubiquiti's inventory (up nearly 2x Q/Q to $66M). Foster declares the buildup is needed to meet expected calendar 2H demand. He estimates ~$20M of the increase is tied to existing products, and ~$10M to new products such as new airFiber wireless backhaul hardware.
Service provider revenue rose 60% Y/Y to $121M, and enterprise revenue more than tripled to $27.3M. EMEA was 52.5% of revenue, North America 19.7%, South America 16.9%, and Asia-Pac 10.9%.
Gross margin rose 20 bps Q/Q to 44.3%. R&D spend rose 16.7% Q/Q thanks to a 26% increase in headcount, but still only accounted for 5.9% of revenue. SG&A spend rose 38%, but was still only 4.7% of revenue.
FQ4 guidance is for revenue of $147M-$153M and EPS of $0.48-$0.52 vs. a consensus of $147.7M and $0.50.
Wedbush has cut Ubiquiti to Neutral. Wireless backhaul peer Ceragon (CRNT -2.5%), which sold off yesterday following a Q1 miss, is also lower. Ubiquiti and Ceragon both sold off on Wednesday in the wake of Aviat's FQ3 miss.