Ubiquiti(US:UI)2025-11-07 12:00Financial Performance - Revenues for the three months ended September 30, 2025, were $733,773,000, a 33.3% increase from $550,344,000 in the same period of 2024[115] - Gross profit for the same period was $337,409,000, representing a gross profit margin of 46%, up from 42% in 2024[115] - Operating income increased to $261,722,000, which is 35% of revenues, compared to 31% in the prior year[115] - Net income for the three months ended September 30, 2025, was $207,876,000, or 28% of revenues, compared to $127,988,000, or 23% of revenues in 2024[115] - Total revenues increased by $183.4 million, or 33%, from $550.3 million in Q3 2024 to $733.8 million in Q3 2025[116] Revenue Breakdown - Sales to distributors accounted for 57% of total revenues, while direct sales made up 43% during the three months ended September 30, 2025[104] - Enterprise Technology revenue rose by $187.0 million, or 40%, from $470.2 million in Q3 2024 to $657.1 million in Q3 2025, accounting for 90% of total revenues[117] - Service Provider Technology revenue decreased by $3.5 million, or 4%, from $80.2 million in Q3 2024 to $76.6 million in Q3 2025[118] - North America revenues increased by $111.6 million, or 41%, from $271.2 million in Q3 2024 to $382.8 million in Q3 2025[121] Expenses - Research and development expenses were $48,543,000, maintaining 7% of revenues, while sales, general and administrative expenses were $27,144,000, also 4% of revenues[115] - R&D expenses increased by $10.5 million, or 28%, from $38.0 million in Q3 2024 to $48.5 million in Q3 2025, remaining at 7% of revenues[126] - SG&A expenses increased by $2.7 million, or 11%, from $24.4 million in Q3 2024 to $27.1 million in Q3 2025, consistent at 4% of revenues[128] - Interest expense decreased by $7.4 million, or 70%, from $10.6 million in Q3 2024 to $3.2 million in Q3 2025, reducing its percentage of revenue from 2% to 0.4%[130] - Provision for income taxes increased by $20.0 million, or 65%, from $30.6 million in Q3 2024 to $50.7 million in Q3 2025, with an effective tax rate of 19.6%[132] Cash and Commitments - Cash and cash equivalents increased to $177.2 million as of September 30, 2025, up from $149.7 million as of June 30, 2025[134] - As of September 30, 2025, the company had $1,249.8 million in purchase commitments with third-party manufacturers[150] - The company reported other obligations of $4.9 million primarily related to research and development projects as of September 30, 2025[151] - The company had $34.7 million in unrecognized tax benefits and an additional $6.0 million for accrued interest classified as non-current liabilities as of September 30, 2025[154] Risks and External Factors - The company has experienced increased costs due to tariffs imposed on imports, which are expected to continue affecting operating results and margins[97] - Supply constraints have led to increased inventory and vendor deposit balances, impacting future material excess and obsolete inventory risks[98] - The ongoing geopolitical tensions, including the Russia-Ukraine conflict and China-Taiwan tensions, are being monitored for their potential impact on operations and supply chains[99][100] Currency and Interest Rate Sensitivity - A 200-basis-point increase in interest rates would result in an incremental charge of approximately $2.7 million to income before income taxes over the next twelve months[158] - A 10% change in foreign currency exchange rates could result in a charge or benefit of approximately $3.2 million to income before income taxes for the three months ended September 30, 2025[159] - The company may face a charge or benefit of approximately $4.4 million due to fluctuations in foreign currency exchange rates for bank accounts as of September 30, 2025[160]