Ubiquiti Inc 10-Q for FY2020 Q3

Ubiquiti Inc. (UI)

10-Q 2020-05-08 For: 2020-03-31

Added on April 08, 2026

About this 10-Q

Ubiquiti Inc filed this 10-Q on May 8, 2020, covering the quarter ended March 31, 2020 (FY2020 Q3).

Headline figures

Quarter ended March 31, 2020, as reported in this filing, compared with the same period a year earlier where the filing states it.

Revenue: $337.42M; up 18.4% from $284.91M a year earlier
Net income: $103.72M; up 17.5% from net income of $88.3M a year earlier
Diluted EPS: $1.60; up 28.0% from $1.25 a year earlier

Search and read filings like this one from Claude or ChatGPT with the SEC filings MCP server →


Delaware						32-0097377
(State or other jurisdiction of incorporation or organization)						(I.R.S. Employer Identification No.)


Title of each class	Trading Symbol(s)	Name of each exchange on which registered
Common Stock, $0.001 par value per share	UI	New York Stock Exchange


		Page
	PART I – FINANCIAL INFORMATION

Item 1.	Financial Statements (Unaudited)	3

	Consolidated Balance Sheets	3

	Consolidated Statements of Operations and Comprehensive Income	4

	Consolidated Statements of Stockholders ’ Equity (Deficit)	5

	Consolidated Statements of Cash Flows	7

	Notes to Consolidated Financial Statements	8

Item 2.	Management’s Discussion and Analysis of Financial Condition and Results of Operations	23

Item 3.	Quantitative and Qualitative Disclosures About Market Risk	32

Item 4.	Controls and Procedures	33

	PART II – OTHER INFORMATION

Item 1.	Legal Proceedings	33

Item 1A.	Risk Factors	33

Item 2.	Unregistered Sales of Equity Securities and Use of Proceeds	53

Item 3.	Defaults Upon Senior Securities	53

Item 4.	Mine Safety Disclosures	53

Item 5.	Other Information	53

Item 6.	Exhibits	54

Signatures			55


	March 31, 2020		June 30, 2019
Assets
Current assets:
Cash and cash equivalents	$	77,781	$	238,147
Investments — short-term	6,932		69,866
Accounts receivable, net of allowance for doubtful accounts of $203 and $203 at March 31, 2020 and June 30, 2019, respectively	173,882		156,043
Inventories	205,244		264,281
Vendor deposits	8,021		11,608

Prepaid income taxes	19		23
Prepaid expenses and other current assets	10,917		13,843
Total current assets	482,796		753,811
Property and equipment, net	79,048		13,618
Operating lease right-of-use assets, net	23,459		—
Deferred tax assets — long-term	2,784		2,910
Investments — long-term	5,113		31,585
Other long-term assets	27,419		73,941
Total assets	$	620,619	$	875,865
Liabilities and Stockholders’ Equity
Current liabilities:
Accounts payable	$	61,017	$	38,722
Income taxes payable	8,369		25,556
Debt — short-term	24,067		30,675
Other current liabilities	84,296		84,233
Total current liabilities	177,749		179,186
Income taxes payable — long-term	116,036		124,262
Operating lease liabilities —long-term	17,230		—
Debt — long-term	659,447		464,700
Other long-term liabilities	6,143		8,440
Total liabilities	976,605		776,588
Commitments and contingencies (Note 10)
Stockholders’ equity:
Preferred stock—$0.001 par value; 50,000,000 shares authorized; none issued	—		—
Common stock—$0.001 par value; 500,000,000 shares authorized:
63,783,333 and 69,472,568 outstanding as of March 31, 2020 and June 30, 2019, respectively	64		69
Additional paid–in capital	—		—
Accumulated other comprehensive income	(22)		393
Retained (deficit) earnings	(356,028)		98,815
Total stockholders’ equity (deficit)	(355,986)		99,277
Total liabilities and stockholders’ equity	$	620,619	$	875,865


	Three Months Ended March 31,						Nine Months Ended March 31,
	2020		2019		2020		2019
Revenues	$	337,417	$	284,911	$	968,978	$	875,092
Cost of revenues	177,782		152,081		512,866		470,425
Gross profit	$	159,635	$	132,830	$	456,112	$	404,667
Operating expenses:
Research and development	21,672		21,341		65,965		59,540
Sales, general and administrative	10,606		9,352		30,053		33,715
Litigation settlement	—		—		—		18,000
Total operating expenses	32,278		30,693		96,018		111,255
Income from operations	127,357		102,137		360,094		293,412
Interest expense and other, net	(6,618)		(3,447)		(23,356)		(9,186)
Income before income taxes	120,739		98,690		336,738		284,226
Provisions for income taxes	17,017		10,390		49,059		32,427
Net income	$	103,722	$	88,300	$	287,679	$	251,799
Net income per share of common stock:
Basic	$	1.60	$	1.25	$	4.36	$	3.50
Diluted	$	1.60	$	1.25	$	4.35	$	3.50
Weighted average shares used in computing net income per share of common stock:
Basic	64,630		70,540		66,003		71,856
Diluted	64,699		70,692		66,094		72,036

Other comprehensive income:
Unrealized (losses) gains on available-for-sale securities	$	(90)	$	325	$	(415)	$	177
Other comprehensive (loss) gains	(90)		325		(415)		177
Comprehensive income	$	103,632	$	88,625	$	287,264	$	251,976


☒			QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934


☐			TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934


	Three and Nine Months Ended March 31, 2020
	Common Stock					Additional Paid-In Capital		Retained Earnings (Deficit)		Accumulated Other Comprehensive Income (Loss)		Total Stockholders’ Equity (Deficit)
	Shares	Amount		Amount		Amount		Amount		Amount
Balance at June 30, 2019	69,472,568	$	69	$	—	$	98,815	$	393	$	99,277
Net Income	—	—		—		98,146		—		98,146
Other comprehensive income (loss)	—	—		—		—		(153)		(153)
Stock options exercised	678	—		3		—		—		3

Restricted stock units issued, net of tax withholdings	9,743	—		(501)		—		—		(501)
Repurchases of Common Stock	(3,635,534)	(3)		(191)		(416,025)		—		(416,219)
Stock-based compensation expense	—	—		689		—		—		689
Dividends Paid on Common Stock ($0.30 per share)	—	—		—		(20,669)		—		(20,669)
Balances at September 30, 2019	65,847,455	$	66	$	—	$	(239,733)	$	240	$	(239,427)
Net Income	—	—		—		85,811		—		85,811
Other comprehensive income (loss)	—	—		—		—		(172)		(172)
Stock options exercised	17,192	—		124		—		—		124

Restricted stock units issued, net of tax withholdings	7,935	—		(139)		—		—		(139)
Repurchases of Common Stock	(995,495)	(1)		(250)		(119,321)		—		(119,572)
Stock-based compensation expense	—	—		730		—		—		730
Dividends Paid on Common Stock ($0.30 per share)	—	—		—		(19,460)		—		(19,460)
Balances at December 31, 2019	64,877,087	$	65	$	465	$	(292,703)	$	68	$	(292,105)
Net Income	—	—		—		103,722		—		103,722
Other comprehensive income (loss)	—	—		—		—		(90)		(90)
Stock options exercised	2,478	—		25		—		—		25

Restricted stock units issued, net of tax withholdings	16,374	—		(416)		—		—		(416)
Repurchases of Common Stock	(1,112,606)	(1)		(799)		(147,600)		—		(148,400)
Stock-based compensation expense	—	—		725		—		—		725
Dividends Paid on Common Stock ($0.30 per share)	—	—		—		(19,447)		—		(19,447)
Balances at March 31, 2020	63,783,333	$	64	$	—	$	(356,028)	$	(22)	$	(355,986)


	March 31, 2020
	Adjusted Cost		Gross Unrealized Gains		Gross Unrealized Losses		Fair Value		Cash and Cash Equivalents (1)		Short-Term Investments		Long-Term Investments
Level 1
Money market funds	$	543	$	—	$	—	$	543	$	543	$	—	$	—
Subtotal	$	543	$	—	$	—	$	543	$	543	$	—	$	—

Level 2

Corporate securities	12,067		36		(58)		12,045		—		6,932		5,113


Subtotal	$	12,067	$	36	$	(58)	$	12,045	$	—	$	6,932	$	5,113

Total	$	12,610	$	36	$	(58)	$	12,588	$	543	$	6,932	$	5,113


	March 31, 2020
	Continuous Unrealized Losses
	Less than 12 Months		12 Months or Greater		Total
Fair Value of marketable securities	$	7,175	$	—	$	7,175
Unrealized Loss	$	(58)	$	—	$	(58)


	Available-For-Sale
	Adjusted Cost		Fair Value
Due within 1 year and money market funds	$	7,479	$	7,475
Due after 1 year through 5 years	5,131		5,113
Total	$	12,610	$	12,588


	March 31, 2020		June 30, 2019
Finished goods	$	201,966	$	260,895
Raw materials	3,278		3,386

Total	$	205,244	$	264,281


	March 31, 2020		June 30, 2019
Testing equipment	$	12,439	$	10,258
Tooling equipment	13,136		10,624
Leasehold improvements	12,511		11,712
Computer and other equipment	7,503		7,264
Software	7,242		6,870
Furniture and fixtures	2,031		2,083
Corporate aircraft	64,224		—
Property and Equipment, Gross	119,086		48,811
Less: Accumulated depreciation	(40,038)		(35,193)
Property and Equipment, Net	$	79,048	$	13,618


	March 31, 2020		June 30, 2019
Deposits on aircraft ⁽¹⁾	$	—	$	42,000
Hong Kong tax deposit ⁽²⁾	19,960		19,960
Intangible assets, net ⁽³⁾	3,095		3,257

Other long-term assets ⁽⁴⁾	4,364		8,724
Total	$	27,419	$	73,941


	March 31, 2020		June 30, 2019
Deferred revenue — short-term	$	16,872	15,338
Accrued expenses	10,807		14,203
Lease liability— current	7,314		—
Warranty accrual	4,544		4,518
Accrued compensation and benefits	3,184		3,866
Customer deposits	1,048		2,982
Reserve for sales returns	964		783
Other payables	39,563		42,543
Total	$	84,296	$	84,233


	Nine Months Ended March 31,
	2020		2019
Cash Flows from Operating Activities:
Net income	$	287,679	$	251,799
Adjustments to reconcile net income to net cash provided by operating activities:
Depreciation and amortization	5,098		5,474
Impairment of cost based investment	5,000		—
Amortization of debt issuance costs	1,308		836
Non-cash lease expense	1,085		—
Premium amortization and (discount accretion), net	(56)		(555)
Write off unamortized debt issuance costs	105		—
Provision for inventory obsolescence	5,823		2,995
Provision for loss on vendor deposits and purchase commitments	1,587		2,333

Stock-based compensation	2,144		2,306
Deferred Taxes	126		—
Other, net	102		(399)
Changes in operating assets and liabilities:
Accounts receivable	(17,839)		14,888
Inventories	53,293		(180,749)
Vendor deposits	2,442		16,170
Prepaid income taxes	4		(3,533)
Prepaid expenses and other assets	3,399		(4,576)
Accounts payable	22,715		77,362
Income taxes payable	(25,413)		4,286
Deferred revenues	1,093		8,687
Accrued and other liabilities	(14,365)		(39,070)
Net cash provided by operating activities	$	335,330	$	158,254
Cash Flows from Investing Activities:
Purchase of property and equipment and other long-term assets	(28,786)		(7,701)
Private equity investment	—		(5,000)

Purchase of investments	(27,957)		(200,791)
Proceeds from sale of investments	103,848		69,670
Proceeds from maturities of investments	13,272		29,831
Net cash provided by (used in) investing activities	$	60,377	$	(113,991)
Cash Flows from Financing Activities:
Proceeds from borrowing under the credit facility - Term	37,500		—
Proceeds from borrowing under the credit facility- Revolver	340,000		—


	Nine Months Ended March 31,
	2020		2019
Beginning balance	$	4,518	$	3,840
Accruals for warranties issued during the period	5,828		5,748
Changes in liability for pre-existing warranties during the period	408		(34)
Settlements made during the period	(6,210)		(5,214)
Ending balance	$	4,544	$	4,340


	March 31, 2020		June 30, 2019
Term Loan - short term	$	25,000	$	31,250
Debt issuance costs, net	(933)		(575)
Total Debt - short term	24,067		30,675
Term Loan - long term	456,250		431,250
Revolver - long term	205,000		35,000
Debt issuance costs, net	(1,803)		(1,550)
Total Debt - long term	$	659,447	$	464,700


Debt Payment Obligations	Interest Rate as of March 31, 2020		Rate Reset Date	Reset Rate
$120 Million Revolver	2.55	%	April 14, 2020	2.58	%
$50 Million Revolver	2.67	%	April 23, 2020	2.37	%
$25 Million Revolver	2.36	%	April 20, 2020	2.47	%
$10 Million Revolver	2.45	%	April 16, 2020	2.54	%


	March 31, 2020		June 30, 2019
Deferred Revenue — long-term	$	6,085	$	6,525
Other long-term liabilities	58		1,915
Total	$	6,143	$	8,440


	2020 (remainder)		2021		2022		2023		2024		Thereafter		Total
Debt payment obligations	$	6,250	$	25,000	$	25,000	$	630,000	$	—	$	—	$	686,250
Interest and other payments on debt payment obligations ⁽¹⁾	4,967		19,490		18,795		10,051		—		—		53,303
Total	$	11,217	$	44,490	$	43,795	$	640,051	$	—	$	—	$	739,553


	Financial Statement Classification	Three Months Ended March 31, 2020		Nine Months Ended March 31, 2020
Operating lease costs:
Fixed lease costs	Operating expenses	$	1,568	$	4,415
Fixed lease costs	Cost of revenues	515		1,553
Variable lease costs	Operating expenses	81		256
Variable lease costs	Cost of revenues	107		309
Total lease costs		$	2,271	$	6,533


Remainder of Fiscal 2020	$	2,080
Fiscal 2021	7,165
Fiscal 2022	3,826
Fiscal 2023	3,271
Fiscal 2024	3,124
Thereafter	7,960
Total future fixed operating lease payments	$	27,426

Less: Imputed interest	$	2,882
Total operating lease liabilities	$	24,544

Weighted-average remaining lease term - operating leases	6 years
Weighted-average discount rate - operating leases	4.0		%


Fiscal 2020	$	7,395
Fiscal 2021	5,509
Fiscal 2022	2,639
Fiscal 2023	2,205
Fiscal 2024	1,982
Thereafter	7,116
Total future minimum annual payments	$	26,846

Fiscal 2019 rent expense under operating leases	$7.8 million


Date of Publicly Announced Program	Amount of Publicly Announced Program	Total Number of Shares Purchased as Part of Publicly Announced Programs	Average Price Paid per Share		Total Aggregate Amount Paid		Period of Purchases	Estimated Remaining Balance Available for Share Repurchases under the Program			Expiration date of Program
November 9, 2018	$200 million	293,709	$	121.9	$	35.8	July 8, 2019 - August 12, 2019	$	—		12/31/2019
August 9, 2019	$500 million	4,337,320	$	115.3	$	500.0	August 12, 2019 - October 28, 2019	$	—		12/31/2020
November 8, 2019	$200 million	1,112,606	$	133.4	$	148.4	February 7, 2020 - March 31, 2020	$	51.6	million	12/31/2021


	Common Stock Options Outstanding
	Number of Shares	Weighted Average Exercise Price		Weighted Average Remaining Contractual Life (Years)	Aggregate Intrinsic Value (In thousands)
Balance, June 30, 2019	44,847	$	9.50	2.78	$	5,472

Exercised	(20,348)	$	7.52

Balance, March 31, 2020	24,499	$	11.14	2.42	$	3,196
Vested as of March 31, 2020	24,499	$	11.14	2.42	$	3,196
Vested and exercisable as of March 31, 2020	24,499	$	11.14	2.42	$	3,196


	Number of Shares	Weighted Average Grant Date Fair Value Per Share
Non-vested RSUs, June 30, 2019	112,786	$	73.24
RSUs granted	20,333	$	157.68
RSUs vested	(40,874)	$	62.31
RSUs canceled	(6,887)	$	80.02
Non-vested RSUs, March 31, 2020	85,358	$	98.04


	Percentage of Revenues							Percentage of Accounts Receivable
	Three Months Ended March 31,			Nine Months Ended March 31,			March 31,	June 30,
	2020	2019	2020	2019	2020	2019
Customer A	*	*	*	*	*	13%
Customer B	10%	*	12%	10%	10%	20%


Period	Total Number of Shares Purchased	Average Price Paid per Share		Total Number of Shares Purchased as Part of Publicly Announced Programs	Estimated Remaining Balance Available for Share Repurchases
January 1, 2020 - January 31, 2020	—	$	—	—	$	200,000
February 1, 2020 - February 29, 2020	293,988	$	139.15	293,988	$	159,093
March 1, 2020 - March 31, 2020	818,618	$	131.31	818,618	$	51,600
Total	1,112,606	$	133.38	1,112,606	$	51,600