Executive Summary

Record quarter: revenue $664.2M (+10.7% q/q, +34.7% y/y) and GAAP diluted EPS $2.98; non-GAAP diluted EPS $3.00. Gross margin expanded to 44.5% on favorable mix and lower indirect costs .
Material beat vs S&P Global consensus: revenue $664.2M vs $622.4M*, EPS $3.00 vs $1.97*; coverage thin (1 estimate each)*. Drivers: Enterprise Technology strength, gross margin expansion, and lower I&O expenses aided by FX gains and reduced borrowings .
Operating leverage: income from operations rose to $226.9M; operating expenses remained contained at $69.0M despite higher R&D, with SG&A down sequentially as bad-debt expense normalized .
Capital return maintained: $0.60 per share quarterly dividend declared for May 27, 2025 (same as prior two quarters) .

What Went Well and What Went Wrong

What Went Well

Margin expansion and mix: GAAP gross margin rose to 44.5% from 41.2% q/q and 35.3% y/y, “primarily driven by favorable product mix and lower indirect operating expenses” and aided by lower E&O and tariffs y/y .
Enterprise strength: Enterprise Technology revenue hit $585.7M (vs $518.2M in Q2 and $414.3M y/y), the core driver of total revenue growth .
Lower I&O expense: Interest and other expense fell to $5.4M from $11.4M in Q2, driven by FX gains and lower interest expense from reduced borrowings .

What Went Wrong

Service Provider softness: Service Provider Technology revenue declined q/q to $78.4M (from $81.7M) and was roughly flat y/y ($78.7M) .
R&D spend stepped up: R&D rose to $44.3M from $40.0M in Q2, driven by higher employee, prototype and software expenses .
Freight/tariff and shipping still a factor: While improved y/y, management noted higher shipping costs remained a partial offset to margin benefits y/y .

Financial Results

Headline P&L vs prior quarters

Metric	Q1 FY2025	Q2 FY2025	Q3 FY2025
Revenue ($M)	$550.3	$599.9	$664.2
Gross Profit ($M)	$231.6	$247.2	$295.9
Gross Margin (%)	42.1%	41.2%	44.5%
Income from Operations ($M)	$169.2	$178.8	$226.9
GAAP Net Income ($M)	$128.0	$136.8	$180.4
GAAP Diluted EPS ($)	$2.12	$2.26	$2.98
Non-GAAP Diluted EPS ($)	$2.14	$2.28	$3.00

Segment revenue ($M)

Segment	Q1 FY2025	Q2 FY2025	Q3 FY2025
Enterprise Technology	$470.2	$518.2	$585.7
Service Provider Technology	$80.2	$81.7	$78.4
Total	$550.3	$599.9	$664.2

Geographic revenue ($M)

Region	Q1 FY2025	Q2 FY2025	Q3 FY2025
North America	$271.2	$321.6	$322.7
EMEA	$204.9	$208.6	$282.1
Asia Pacific	$40.9	$43.1	$37.5
South America	$33.3	$26.6	$21.8
Total	$550.3	$599.9	$664.2

KPIs and operating items

KPI	Q1 FY2025	Q2 FY2025	Q3 FY2025
Total Operating Expenses ($M)	$62.4	$68.4	$69.0
Interest expense and other, net ($M)	$10.58	$11.44	$5.42
Provision for Income Taxes ($M)	$30.64	$30.58	$41.01
Diluted Shares (M)	60.494	60.527	60.545
Dividend per Share ($)	$0.60 (declared)	$0.60 (declared)	$0.60 (declared)

Guidance Changes

Metric	Period	Previous Guidance	Current Guidance	Change
Formal revenue/earnings guidance	FY/Quarterly	Not provided	Not provided	Maintained (no guidance)
Quarterly dividend per share	Q2 FY2025 vs Q3 FY2025	$0.60 (payable Feb 24, 2025)	$0.60 (payable May 27, 2025)	Maintained

Earnings Call Themes & Trends

Note: No earnings call transcript or presentation was posted for Q3 FY2025 on the company’s IR “Quarterly Results” page (press release and 10-Q only) .

Topic	Previous Mentions (Q1 FY2025)	Previous Mentions (Q2 FY2025)	Current Period (Q3 FY2025)	Trend
Product mix/gross margin drivers	Margin up q/q and y/y on favorable mix; offsets from shipping/warehouse/E&O	Margin down q/q on mix; up y/y on mix and lower E&O; shipping/tariffs higher	Margin up q/q and y/y on favorable mix, lower indirect costs/E&O, lower tariffs; shipping partially offset	Improving sequentially
Tariffs/shipping costs	Tariffs down y/y; shipping costs higher	Shipping and tariffs higher q/q; y/y tariffs improved	Lower tariffs aided y/y; higher shipping costs still a partial offset	Mixed but easing y/y
FX/interest expense	Lower borrowings and FX gains reduced I&O vs prior periods	I&O up q/q on FX losses; lower borrowings/rates helped vs y/y	I&O fell sharply on FX gains and lower interest expense	Favorable in Q3
R&D investment	$38.0M; lower q/q, higher y/y (employee/software)	$40.0M; higher q/q (prototype) and y/y	$44.3M; higher q/q and y/y (employee, prototype, software)	Stepping up
SG&A dynamics	$24.4M; higher q/q (marketing, professional fees, processing)	$28.5M; higher q/q on bad debt and processing fees	$24.8M; down q/q as bad debt normalized; higher marketing/processing fees	Normalizing sequentially
Regional demand	NA and EMEA strong vs y/y	NA + EMEA growth vs y/y	EMEA sharply higher q/q and y/y; NA stable q/q and up y/y	Broad-based growth

Management Commentary

Gross margin: “GAAP gross margin of 44.5% increased by 3.3% q/q and 9.2% y/y… primarily driven by favorable product mix and lower indirect operating expenses… and lower excess and obsolete inventory charges and lower tariffs, offset in part by higher shipping costs.”
Revenue mix: “Increase in revenues… was driven by an increase in revenue from our Enterprise Technology platform, partially offset by a decrease in revenue from our Service Provider Technology platform.”
Interest & other: “I&O expenses were $5.4 million… decrease vs prior quarter primarily due to foreign exchange gains… and lower interest expense driven by a decrease in borrowings.”
Operating expenses: “R&D expenses were $44.3 million… increase vs prior quarter due to higher employee-related, prototype-related and software expenses.” “SG&A… $24.8 million… decrease vs prior quarter primarily due to lower bad debt expenses… offset in part by higher marketing expenses and… credit card processing fees.”
Capital returns: $0.60 per share cash dividend declared, payable May 27, 2025 .

Q&A Highlights

No earnings call transcript or presentation was made available on the company’s IR site for Q3 FY2025; materials posted were the press release and Form 10-Q .

Estimates Context

Metric	Consensus (S&P Global)*	Actual	Outcome
Revenue ($M)	622.4*	664.2	Beat
Diluted EPS ($)	1.97*	3.00 (non-GAAP)	Beat
# of Estimates (Revenue / EPS)	1 / 1*	—	Thin coverage

Values retrieved from S&P Global.*

Why the beat: Enterprise Technology strength drove top-line, while gross margin expanded on favorable mix and lower indirect/E&O/tariff costs; EPS also benefited from lower I&O expense (FX gains, lower interest) .

Key Takeaways for Investors

Momentum accelerating: three straight “record” quarters with revenue rising from $550.3M → $599.9M → $664.2M, underpinned by Enterprise demand and EMEA strength .
Quality of earnings improved: gross margin at 44.5% and I&O expense halved q/q on FX gains and lower borrowings, supporting EPS outperformance .
Expense discipline with targeted investment: SG&A normalized post bad-debt spike while R&D increased to support product roadmap; monitor cadence of R&D scaling vs revenue growth .
Mix watch: Service Provider revenue softened sequentially; continued Enterprise-led mix should sustain margin tailwinds, but shipping costs remain an offset .
Capital return consistent: dividend maintained at $0.60; with rising profitability and lower borrowing needs, balance sheet flexibility improves .
Street estimates likely reset higher but note limited coverage (1 estimate) increases the probability of estimate dispersion in future prints*.
Near-term setup: Absent formal guidance, focus on Enterprise order trends, EMEA sustainability, FX trajectory, and any updates on shipping/tariff costs that could influence margins next quarter .

Appendix: Prior Quarter Summaries (for context)

Q2 FY2025: Revenue $599.9M; GAAP EPS $2.26; gross margin 41.2%. I&O $11.4M on FX losses; dividend $0.60 .
Q1 FY2025: Revenue $550.3M; GAAP EPS $2.12; gross margin 42.1%. I&O $10.6M with FX gains and lower interest; dividend $0.60 .

Ubiquiti Inc. (UI)·Q3 2025 Earnings Summary