Ubiquiti Inc. (UI)·Q2 2025 Earnings Summary

Executive Summary

• Q2 FY2025 delivered record revenue of $599.9M and GAAP diluted EPS of $2.26; non-GAAP diluted EPS was $2.28, with broad-based strength across Enterprise Technology and Service Provider Technology platforms .
• Gross margin was 41.2%, down 90bps sequentially vs Q1 FY2025 (42.1%) on unfavorable product mix and higher shipping/tariff costs, but up 300bps YoY vs Q2 FY2024 (38.2%) on favorable mix and lower warehouse/excess & obsolete inventory charges .
• Operating leverage remained strong: income from operations rose to $178.8M (+6% q/q, +48% y/y), despite higher SG&A from a customer default and higher webstore card processing fees; I&O expenses rose sequentially on FX losses but fell sharply YoY on lower interest expense from reduced borrowings and rates .
• The Board declared a $0.60/share quarterly cash dividend, payable Feb 24, 2025 (consistent with prior quarters), reinforcing capital return continuity .
• Wall Street consensus (S&P Global) for Q2 FY2025 EPS and revenue was unavailable at time of retrieval; estimate comparisons are therefore not provided. Values from S&P Global were unavailable due to request-limit constraints.

What Went Well and What Went Wrong

What Went Well

• Enterprise Technology revenue rose to $518.2M (+10% q/q, +32% y/y), driving the record quarter: “The increase… was driven by an increase in revenue from both our Enterprise Technology platform and Service Provider Technology platform.” .
• YoY gross margin expansion to 41.2% (+300bps) was supported by favorable product mix and lower warehouse/excess & obsolete inventory charges: “The increase… was primarily driven by favorable product mix, lower warehouse-related expenses and excess and obsolete inventory charges…” .
• Non-GAAP EPS rose 65% YoY to $2.28, reflecting higher revenues and gross profit: “This reflects an increase… primarily driven by higher revenues and gross profit.” .

What Went Wrong

• Sequential gross margin compression (-90bps q/q) on unfavorable product mix and higher shipping/tariff costs offset by lower warehouse/E&O charges: “The decrease… was primarily driven by unfavorable product mix, higher shipping and tariff costs…” .
• SG&A increased to $28.5M (from $24.4M in Q1) primarily due to a customer default and higher webstore credit card processing fees, partially offset by lower marketing/professional fees .
• Interest & other expense rose sequentially to $11.4M due to higher FX losses (partially offset by lower interest expense), highlighting currency-related headwinds even as total borrowing costs fell YoY .

Financial Results

Consolidated P&L and EPS

Segment Revenue

Geographic Revenue

Actual vs Estimates (Q2 FY2025)

Guidance Changes

Earnings Call Themes & Trends

Note: No Q2 FY2025 earnings call transcript was found in the catalog; themes below reflect press releases and sequential comparisons.

Management Commentary

• Revenue drivers: “The increase in revenues… was driven by an increase in revenue from both our Enterprise Technology platform and Service Provider Technology platform.”
• Margin commentary: “The decrease in gross profit margin… was primarily driven by unfavorable product mix, higher shipping and tariff costs… The increase… vs prior year period was primarily driven by favorable product mix, lower warehouse-related expenses and excess and obsolete inventory charges…”
• SG&A drivers: “Higher bad debt expenses relating to a customer default and higher fees associated with webstore credit card processing offset in part by lower marketing expenses and professional fees.”
• I&O drivers: “Higher foreign exchange losses offset in part by lower interest expense driven by a decrease in borrowings and lower interest rates.”
• Capital return: Declared a $0.60/share cash dividend for Q2 FY2025 .

Q&A Highlights

• No Q2 FY2025 earnings call transcript was available in the catalog; therefore, no Q&A highlights or guidance clarifications can be provided from a call.

Estimates Context

• Wall Street consensus (S&P Global) for Q2 FY2025 EPS and revenue was unavailable at time of retrieval due to request-limit constraints. As a result, beat/miss versus consensus cannot be assessed in this report.
• Given the record revenue and YoY margin expansion, estimates for revenue and EPS may require upward adjustments, while sequential gross margin pressures from mix and tariffs could temper margin expectations near-term; these directional considerations are grounded in reported drivers .

Key Takeaways for Investors

• Revenue momentum is accelerating: $599.9M in Q2 (+9% q/q, +29% y/y), with strength across Enterprise and Service Provider platforms underpinning topline durability .
• Gross margin headwinds reappeared sequentially (-90bps q/q) on product mix and shipping/tariffs; monitor mix normalization and logistics cost trends in H2 FY2025 .
• SG&A increase included a customer default and higher payment processing fees—watch distributor/customer credit quality and transaction cost management .
• FX volatility is impacting I&O sequentially; however, lower borrowings and rates reduced interest expense YoY—currency remains a key variable for near-term EPS variability .
• Regional demand is centered in North America and EMEA, with notable sequential step-up in North America in Q2 .
• Capital return remains consistent with a $0.60 dividend; continuity supports shareholder yield amid expanding earnings base .
• Absence of formal guidance suggests focusing on operational drivers disclosed (mix, tariffs/shipping, FX, prototype-related R&D) to frame expectations for sequential margin and EPS trajectories .