Exchange: LSE | Sector: Technology | Industry: Communication Equipment
Q3 2025
Published: May 9, 2025
Earnings Highlights
Revenue of $664.17M up 34.7% year-over-year
EPS of $2.98 increased by 136.5% from previous year
Gross margin of 44.5%
Net income of 180.44M
"N/A" - N/A
Ubiquiti Inc (0LI9.L) QQ3 2025 Results Analysis – Strong Revenue Growth, Margin Expansion and Cash Flow Strength in Technology/Networking Equipment
Executive Summary
Ubiquiti delivered a solid QQ3 2025 with a revenue of USD 664.17 million, up 34.72% year over year and 10.72% quarter over quarter. Gross margin stood at 44.55% and operating margin at 34.16%, supported by disciplined cost management and favorable product mix within the company’s diversified networking platform portfolio. Net income reached USD 180.44 million, translating to a net margin of 27.17% and earnings per share of USD 2.98 for the quarter, underscoring strong operating leverage and pricing power in its enterprise and service-provider oriented offerings.
Cash flow generation remained robust, with cash from operations of USD 123.57 million and free cash flow of USD 123.57 million. The company ended the quarter with USD 150.97 million in cash and equivalents and a net debt of USD 232.74 million after debt repayments of USD 96.25 million and an aggregate cash dividend payout of USD 36.30 million. Return metrics remained compelling, with ROE of approximately 41.4% and ROA of about 13.9%, supported by a balance sheet that shows manageable leverage (debt to equity around 0.85 and total debt USD 383.71 million).
The quarterly results reflect continued demand for Ubiquiti’s UniFi ecosystem, EdgeMAX/airMAX stack, and carrier-grade backhaul solutions. Management commentary in the quarter emphasized growth drivers from enterprise WLAN deployments, video surveillance, and cloud-managed networking, alongside ongoing investments in product development to sustain margins. The balance sheet displays healthy liquidity and a favorable cash conversion profile, though the company retains exposure to channel dynamics and broader technology cycles. There is no formal forward guidance provided in the dataset; however, strong FCF generation and favorable gross margins position the company to fund product innovation and potential strategic initiatives.
Key Performance Indicators
Revenue
664.17M
QoQ: 10.72% | YoY:34.72%
Gross Profit
295.87M
44.55% margin
QoQ: 19.68% | YoY:69.94%
Operating Income
226.86M
QoQ: 26.87% | YoY:103.97%
Net Income
180.44M
QoQ: 31.90% | YoY:136.51%
EPS
2.98
QoQ: 31.86% | YoY:136.51%
Revenue Trend
Margin Analysis
Key Insights
Revenue: USD 664.17 million in QQ3 2025, up 34.72% YoY and 10.72% QoQ.
Gross profit: USD 295.87 million; gross margin 44.55% (YoY margin expansion implied by the strong top-line mix).
Net income: USD 180.44 million; net margin 27.17%; EPS USD 2.98 (basic and diluted).
EBITDA: USD 233.77 million; EBITDA margin 35.20%.
Financial Highlights
Revenue and profitability:
- Revenue: USD 664.17 million in QQ3 2025, up 34.72% YoY and 10.72% QoQ.
- Gross profit: USD 295.87 million; gross margin 44.55% (YoY margin expansion implied by the strong top-line mix).
- Operating income: USD 226.86 million; operating margin 34.16%.
- Net income: USD 180.44 million; net margin 27.17%; EPS USD 2.98 (basic and diluted).
- EBITDA: USD 233.77 million; EBITDA margin 35.20%.
Cash flow and liquidity:
- Cash provided by operating activities: USD 123.57 million; free cash flow: USD 123.57 million.
- Cash at end of period: USD 150.97 million; cash at beginning: USD 133.09 million; net change in cash: USD 17.88 million.
- Financing activities: debt repayments USD 96.25 million; dividends paid USD 36.30 million; net cash used in financing USD 102.87 million.
- Balance sheet liquidity: total current assets USD 1.082 billion vs current liabilities USD 0.779 billion; current ratio 1.39; cash ratio 0.194; quick ratio 0.632.
Balance sheet and leverage:
- Total assets USD 1.299 billion; total liabilities USD 0.862 billion; total stockholders’ equity USD 436.11 million.
- Total debt USD 383.71 million; net debt USD 232.74 million; debt to equity approximately 0.85.
- Return metrics: ROE approximately 41.4%; ROA 13.9%; asset turnover 0.512; inventory days around 144; DSO about 30.1 days; CCC around 142.7 days, indicating a longer operating cycle largely due to inventory.
Income Statement
Metric
Value
YoY Change
QoQ Change
Revenue
664.17M
34.72%
10.72%
Gross Profit
295.87M
69.94%
19.68%
Operating Income
226.86M
103.97%
26.87%
Net Income
180.44M
136.51%
31.90%
EPS
2.98
136.51%
31.86%
Key Financial Ratios
currentRatio
1.39
grossProfitMargin
44.5%
operatingProfitMargin
34.2%
netProfitMargin
27.2%
returnOnAssets
13.9%
returnOnEquity
41.4%
debtEquityRatio
0.85
operatingCashFlowPerShare
$2.04
freeCashFlowPerShare
$2.04
dividendPayoutRatio
20.1%
priceToBookRatio
43.02
priceEarningsRatio
25.99
Net Income vs. Revenue
Expense Breakdown
Management Commentary
Note: The provided dataset contains an empty earnings transcript. Consequently, no management quotes or thematic highlights from the QQ3 2025 call are available within this dataset. If a transcript is provided, we would group insights by themes such as strategy, operations, market conditions, and supply/demand dynamics, with direct quotes and context.
N/A
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N/A
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Forward Guidance
No formal forward guidance was disclosed in the provided data. Based on the QQ3 2025 results, management appears to be benefiting from sustained demand for the UniFi platform, enterprise WLAN deployments, and carrier-grade backhaul solutions, with solid gross margins and strong operating leverage. Absent explicit guidance, key factors for future performance include: (1) product cycle timing and mix shifts toward higher-margin offerings, (2) channel inventory discipline and distributor coverage, (3) macroeconomic conditions affecting enterprise IT budgets, and (4) supply chain resilience and component availability. Investors should monitor commentary on gross margin trajectory, pipeline visibility for enterprise and service-provider segments, and any planned capital allocation, including potential share repurchases in light of a high free-cash-flow profile.
Competitive Position
Company
Gross Margin
Operating Margin
Return on Equity
P/E Ratio
0LI9.L Focus
44.55%
34.20%
41.40%
25.99%
0J8P.L
61.10%
31.20%
14.40%
44.86%
0LCX.L
51.80%
-7.91%
-2.20%
-64.96%
0IR9.L
82.50%
31.20%
59.50%
27.38%
Gross Profit Margin
Operating Profit Margin
Return on Equity
P/E Ratio Comparison
Investment Outlook
The QQ3 2025 performance reinforces a favorable investment thesis for Ubiquiti based on resilient profitability, disciplined cost management, and strong cash flow generation. The company demonstrates amplifying operating leverage with a robust 34.2% operating margin and 27.2% net margin, alongside a compelling ROE of 41.4%. Liquidity remains solid with a cash balance near USD 151 million and a net debt position of USD 232.7 million, providing flexibility for R&D, product launches, and potential capital returns. Relative valuation metrics show a P/E of ~26x and P/S of ~28x, which sit at a higher end of hardware/networking peers but can be justified by the higher profitability profile and strong cash flow dynamics.
Key considerations for investors include monitoring the sustainability of gross margins amid competitive pricing, the cadence of enterprise WAN deployments, and potential shifts in distributor channel dynamics. In a scenario where growth remains broad-based across UniFi, video surveillance, and carrier-grade backhaul, and the company sustains its cash conversion efficiency, Ubiquiti could justify a premium multiple relative to peers. However, absent explicit forward guidance, investors should weight the upside from operating leverage against the risk of channel volatility and macroeconomic pressure on capex budgets.
Key Investment Factors
Growth Potential
Significant multi-year addressable market in SMB/enterprise networking with continued expansion of UniFi cloud-managed solutions, video surveillance, and carrier-grade backhaul; potential upside from enterprise subscriptions/services and expanded adoption of edge-to-cloud architectures.
Profitability Risk
Execution and market risk from competitive pressure in networking hardware; channel concentration and inventory risk; reliance on distributors; macro slowdowns impacting capex budgets; regulatory and geopolitical risks; currency exposure due to cross-listing.
Financial Position
Healthy liquidity with USD 150.97 million cash and an absence of heavy near-term maturities; net debt moderate at USD 232.74 million; robust operating cash flow generation supports ongoing product development and potential capital allocation strategies; strong profitability metrics support financial flexibility.
SWOT Analysis
Strengths
High gross margin of 44.55% and strong operating margin of 34.16%
Robust profitability with Q3 2025 net margin of 27.17% and ROE of ~41.4%
Healthy free cash flow generation and a solid balance sheet with manageable debt
Diversified product portfolio across UniFi, EdgeMAX, airMAX, airFiber, and UniFi Protect
Strong cash conversion and disciplined capital allocation potential
Weaknesses
Relatively long cash conversion cycle driven by inventory on hand
Reliance on distributor network which can expose results to channel dynamics
No explicit forward guidance in the provided dataset, reducing near-term visibility
Opportunities
Expansion of UniFi cloud-managed networking in SMB and enterprise segments
Growth in carrier-grade backhaul and fixed wireless solutions
Expansion into risk-adjusted higher-margin services and subscriptions
Potential share repurchases or strategic acquisitions with strong FCF
Threats
Intense competition from large incumbents in networking and security
Supply chain disruptions and component shortages affecting product availability
Macro headwinds impacting IT spending; currency and cross-listing considerations