Notes to Consolidated Financial Statements
(Unaudited)
NOTE 1—BUSINESS AND BASIS OF PRESENTATION
Business— Ubiquiti Inc. and its wholly owned subsidiaries (collectively, “Ubiquiti” or the “Company”) develop high performance networking technology for service providers, enterprises, and consumers globally.
The Company operates on a fiscal year ending June 30. In these notes, Ubiquiti refers to the fiscal years ending June 30, 2026 and 2025, as fiscal 2026 and fiscal 2025, respectively.
Basis of Presentation— The Company’s consolidated financial statements and accompanying notes are prepared in accordance with U.S. generally accepted accounting principles (“GAAP”) related to interim financial statements based on applicable Securities and Exchange Commission (“SEC”) rules and regulations. Accordingly, they do not include all the information and footnotes required by GAAP for complete financial statements. These consolidated financial statements reflect all adjustments, which are, in the opinion of the Company, of a normal and recurring nature and those necessary to state fairly the statements of financial position, results of operations and cash flows for the dates and periods presented. The June 30, 2025 balance sheet was derived from the audited consolidated financial statements as of that date. All significant intercompany transactions and balances have been eliminated.
These consolidated financial statements should be read in conjunction with the Company’s audited consolidated financial statements for the fiscal year ended June 30, 2025, included in its Annual Report on Form 10-K, as filed with the SEC on August 22, 2025 (the “Annual Report”). The results of operations for the three and six months ended December 31, 2025 are not necessarily indicative of the results to be expected for any future periods.
NOTE 2—SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
The Company’s significant accounting policies are disclosed in its audited consolidated financial statements for the fiscal year ended June 30, 2025, included in the Annual Report. There have been no changes to the Company’s significant accounting policies as discussed in the Annual Report.
Use of Accounting Estimates
The preparation of financial statements in conformity with U.S. GAAP requires management to make estimates and assumptions that affect the amounts reported and disclosed in the consolidated financial statements and the accompanying notes. Those estimates and assumptions include, but are not limited to, revenue recognition and deferred revenue; sales return reserves; inventory valuation and vendor deposits; accounting for income taxes, including the valuation allowance on deferred tax assets and reserves for uncertain tax positions. We evaluate our estimates and assumptions based on historical experience and other assumptions that are believed to be reasonable under the circumstances. Actual results could differ materially from those estimates.
Recent Accounting Pronouncements Not Yet Effective
Income Taxes
In December 2023, the FASB issued ASU No. 2023-09, Income Taxes (Topic 740) ("ASU 2023-09"), which amends the existing guidance relating to the annual disclosures for accounting for income taxes. ASU 2023-09 requires a public business entity to disclose a tabular rate reconciliation using specified categories and providing additional information for reconciling items that exceed a quantitative threshold. In addition, ASU 2023-09 requires the disaggregation of federal, state and foreign income taxes paid (net of funds received), with further disaggregation required for individual jurisdictions in which the income taxes paid exceed five percent of the Company's total income taxes paid. The provision for income taxes in the Company's statement of operations will also be required to be disaggregated by federal, state and foreign jurisdictions. The amendments in ASU 2023-09 will become effective for annual disclosures for fiscal year 2026. The FASB indicated ASU 2023-09 should be applied on a prospective basis, but retrospective application is permitted. This ASU will only impact our disclosures with no impact to our results of operations, cash flows, and financial condition.
Disaggregation of Expenses
In November 2024, the FASB issued ASU No. 2024-03 Income Statement—Reporting Comprehensive Income—Expense Disaggregation Disclosures (Subtopic 220-40), Disaggregation of Income Statement Expenses ("ASU 2024-03") which requires public business entities to disclose in the notes to the financial statements, among other things, specific information about certain costs and expenses including purchases of inventory; employee compensation; and depreciation, amortization and depletion expenses for each caption on the income statement where such expenses are included. The amendments in ASU 2024-03 will become effective for
annual disclosures in the Company's fiscal year beginning July 1, 2027, with interim period disclosures required effective with the Company's fiscal year beginning July 1, 2028. Early adoption is permitted, and the amendments may be applied prospectively to reporting periods after the effective date or retrospectively to all periods presented in the financial statements. We expect this ASU to only impact our disclosures with no impact to our results of operations, cash flows, and financial condition.
NOTE 3—REVENUES
Revenue is primarily generated from the sale of hardware as well as the related implied post contract services (“PCS”).
Revenue is measured as the amount of consideration we expect to receive in exchange for transferring goods or providing services. Revenue is recognized when obligations under the terms of a contract with our customers are satisfied; generally, this occurs with the transfer of control of our products and PCS to our customers. Transfer of control to the customer for products generally occurs at the point in time when products have been shipped to our customer as this represents the point in time when the customer has a present obligation to pay and physical possession including title and risk of loss have been transferred to the customer. Revenue for PCS is recognized ratably over time over the estimated period for which implied PCS services will be delivered.
Disaggregation of Revenue
See Note 12, "Segment Information, Revenues by Geography and Significant Customers" for disaggregation of revenue by product category and geography.
Contract Balances
The timing of revenue recognition, billing and cash collections results in billed accounts receivable, deferred revenue primarily attributable to PCS and customer deposits on the consolidated balance sheets. Accounts receivable are recognized in the period the Company’s right to the consideration is unconditional. Our contract liabilities consist of advance payments (customer deposits) as well as billing in excess of revenue recognized primarily related to deferred revenue. We classify customer deposits as a current liability, and deferred revenue as a current or non-current liability based on the timing of when we expect to fulfill these remaining performance obligations. The current portion of deferred revenue is included in other current liabilities and the non-current portion is included in other long-term liabilities in our consolidated balance sheets.
As of December 31, 2025 and June 30, 2025, the Company’s customer deposits were $2.6 million and $2.8 million, respectively.
As of December 31, 2025, the Company’s deferred revenue, included in other current liabilities and other long-term liabilities, was $45.6 million and $32.9 million, respectively.
As of June 30, 2025, the Company’s deferred revenue, included in other current liabilities and other long-term liabilities, was $36.0 million and $26.0 million, respectively.
We expect the majority of our deferred revenue to convert to revenue in two years. For the three and six months ended December 31, 2025 we recognized revenues amounting to $8.7 million and $21.6 million, respectively, from the deferred revenue balance as of June 30, 2025. For the three and six months ended December 31, 2024, we recognized revenues amounting to $4.9 million and $12.3 million, respectively, from the deferred revenue balance as of June 30, 2024.
NOTE 4—EARNINGS PER SHARE
The following table sets forth the computation of basic and diluted earnings per share for the periods indicated (in thousands, except per share data):
| | | | | | | | | | | | | | | | | | | | | | | | | | | |
| | Three Months Ended December 31, | | Six Months Ended December 31, | | |
| | 2025 | | 2024 | | 2025 | | 2024 | | | | |
| Numerator: | | | | | |
| Net income | $ | 233,610 | | | $ | 136,795 | | | $ | 441,486 | | | $ | 264,783 | | | | | |
| Denominator: | | | | | |
| Weighted-average shares used in computing basic earnings per share | 60,500 | | | 60,470 | | | 60,499 | | | 60,470 | | | | | |
| Add—dilutive potential common shares: | | | | | | | | | | | |
| | | | | | | | | | | |
| Restricted stock units | 66 | | | 57 | | | 65 | | | 44 | | | | | |
| Weighted-average shares used in computing diluted net income per share | 60,566 | | | 60,527 | | | 60,564 | | | 60,514 | | | | | |
| Net income per share of common stock: | | | | | |
| Basic | $ | 3.86 | | | $ | 2.26 | | | $ | 7.30 | | | $ | 4.38 | | | | | |
| Diluted | $ | 3.86 | | | $ | 2.26 | | | $ | 7.29 | | | $ | 4.38 | | | | | |
The Company excludes potentially dilutive securities from its diluted net income per share calculation when their effect would be anti-dilutive to net income per share amounts.
NOTE 5—BALANCE SHEET COMPONENTS
Inventories
Inventories consisted of the following (in thousands):
| | | | | | | | | | | |
| December 31, 2025 | | June 30, 2025 |
| Finished goods | $ | 633,744 | | | $ | 627,971 | |
| Raw materials | 40,954 | | | 47,127 | |
| | | |
| Total | $ | 674,698 | | | $ | 675,098 | |
Prepaid expenses and other current assets
Prepaid expenses and other current assets consisted of the following (in thousands):
| | | | | | | | | | | |
| December 31, 2025 | | June 30, 2025 |
| Prepaid income taxes | $ | 14,085 | | | $ | 7,339 | |
| Prepaid expenses and other assets | 40,643 | | | 39,458 | |
| Other taxes | 10,130 | | | 8,775 | |
| Total | $ | 64,858 | | | $ | 55,572 | |
Property and Equipment, Net
Property and equipment, net consisted of the following (in thousands):
| | | | | | | | | | | |
| December 31, 2025 | | June 30, 2025 |
| Testing equipment | $ | 20,137 | | | $ | 20,581 | |
| Tooling equipment | 31,108 | | | 26,528 | |
| Leasehold improvements | 28,052 | | | 27,578 | |
| Computer and other equipment | 8,963 | | | 8,141 | |
| Software | 8,784 | | | 9,016 | |
| Furniture and fixtures | 2,170 | | | 2,170 | |
| Corporate aircraft | 65,807 | | | 65,807 | |
| Property and equipment, gross | 165,021 | | | 159,821 | |
| Less: Accumulated depreciation and amortization | (91,121) | | | (86,326) | |
| Property and equipment, net | $ | 73,900 | | | $ | 73,495 | |
Other Long-term Assets
Other long-term assets consisted of the following (in thousands):
| | | | | | | | | | | |
| December 31, 2025 | | June 30, 2025 |
Hong Kong Tax deposit (1) | $ | 60,787 | | | $ | 60,270 | |
Intangible assets, net (2)(3) | 1,854 | | | 2,628 | |
| Other long-term assets, net | 5,333 | | | 4,213 | |
| Total | $ | 67,974 | | | $ | 67,111 | |
(1) The Company expects the deposits made with the Hong Kong Inland Revenue Department (“IRD”) to be refunded upon completion of the audit. See Note 11, "Income Taxes" to the consolidated financial statements for additional details regarding this ongoing tax audit.
(2) Accumulated amortization was $9.8 million and $9.1 million as of December 31, 2025, and June 30, 2025, respectively.
(3) Amortization expense for intangible assets was $0.4 million and was $0.8 million for both the three and six months ended December 31, 2025 and 2024, respectively.
The following table presents expected future intangible asset amortization as of December 31, 2025:
| | | | | | | | |
| Fiscal 2026 | | $ | 126 |
| Fiscal 2027 | | 250 |
| Fiscal 2028 | | 250 |
| Fiscal 2029 | | 244 |
| Fiscal 2030 | | 241 |
| Thereafter | | 743 |
| Total future intangible asset amortization | | $ | 1,854 |
Other Current Liabilities
Other current liabilities consisted of the following (in thousands):
| | | | | | | | | | | |
| December 31, 2025 | | June 30, 2025 |
| Deferred revenue — short-term | $ | 45,642 | | | 35,968 | |
| Accrued expenses | 22,924 | | | 36,090 | |
| Lease liability— current | 11,333 | | | 12,401 | |
| Warranty accrual | 11,247 | | | 11,739 | |
| Accrued compensation and benefits | 21,231 | | | 9,086 | |
| Customer deposits | 2,577 | | | 2,817 | |
| Reserve for sales returns | 3,740 | | | 3,005 | |
| Inventory received not billed | 33,768 | | | 120,826 | |
| Other payables | 25,885 | | | 23,840 | |
| Total | $ | 178,347 | | | $ | 255,772 | |
Other Long-Term Liabilities
Other long-term liabilities consisted of the following (in thousands):
| | | | | | | | | | | |
| December 31, 2025 | | June 30, 2025 |
| Deferred revenue — long-term | $ | 32,862 | | | $ | 26,015 | |
| Deferred tax liability | — | | | 334 | |
| Total | $ | 32,862 | | | $ | 26,349 | |
NOTE 6—ACCRUED WARRANTY
The Company offers warranties on certain products, generally a period of one to two years and records a liability for the estimated future costs associated with potential warranty claims. The warranty costs are reflected in the Company’s consolidated statements of operations within cost of revenues. The warranties are typically in effect for one year for distributors from the date of shipment and two years for direct sales from the date of delivery. The Company assesses the adequacy of its accrued warranty liabilities and adjusts the amounts as necessary based on historical experience factors and changes in future estimates. Historical factors include product failure rates, material usage and service delivery costs incurred in correcting product failures. In certain circumstances, the Company may have recourse from its contract manufacturers for replacement cost of defective products, which it also factors into its warranty liability assessment.
Warranty obligations, included in other current liabilities, were as follows (in thousands):
| | | | | | | | | | | |
| | Six Months Ended December 31, |
| | 2025 | | 2024 |
| Beginning balance | $ | 11,739 | | | $ | 10,825 | |
| Accruals for warranties issued during the period | 7,179 | | | 7,929 | |
| Changes in liability for pre-existing warranties during the period | (1,729) | | | (331) | |
| Settlements made during the period | (5,942) | | | (6,612) | |
| Ending balance | $ | 11,247 | | | $ | 11,811 | |
NOTE 7—DEBT
On March 30, 2021, the Company, as borrower and certain domestic subsidiaries, as guarantors (the "Domestic Guarantors"), entered into an amended and restated credit agreement (as amended by a first amendment on April 3, 2023, the “Amended Credit Agreement”) with Wells Fargo Bank, National Association (“Wells Fargo”), the other financial institutions named as lenders therein, and Wells Fargo as administrative agent and collateral agent for the lenders, that extended the $700 million senior secured revolving credit facility (the “Revolving Facility,” together with the Term Loan Facility, as defined below, the "Facilities") and provided a $500 million senior secured term loan facility (the “Term Loan Facility”), and extended the maturity of the Facilities to March 30, 2026. In addition, the Facilities include an option to request increases in the amounts of such credit facilities by up to an additional $500
million in the aggregate. The loans under the Term Loan Facility are payable in quarterly installments of $6.25 million per quarter, commencing with the quarter ending June 30, 2021.
The obligations of the Company and certain domestic subsidiaries under the Amended Credit Agreement are required to be guaranteed by the Domestic Guarantors and are collateralized by substantially all assets (excluding intellectual property) of the Company and the Domestic Guarantors.
The Company's unamortized balance of debt issuance costs is $0.1 million as of December 31, 2025, which are amortized as interest expense over the life of the Facilities. Amortization of debt issuance costs included in interest expense for both the three months ended December 31, 2025 and December 31, 2024 were $0.3 million. Amortization of debt issuance costs included in interest expense for the six months ended December 31, 2025 and December 31, 2024 were $0.7 million and $1.4 million, respectively.
The Company's debt consisted of the following (in thousands):
| | | | | | | | | | | |
| December 31, 2025 | | June 30, 2025 |
| Term Loan Facility - short term | $ | 47,500 | | | $ | 250,000 | |
| | | |
| Debt issuance costs, net | (144) | | | (443) | |
| Total Debt - short term | 47,356 | | | 249,557 | |
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The Revolving Facility includes a sub-limit of $25.0 million for letters of credit and a sub-limit of $25.0 million for swingline loans. The Facilities are available for working capital and general corporate purposes that comply with the terms of the Amended Credit Agreement, including to finance the repurchase of the Company’s common stock or to make dividends to the holders of the Company's common stock. Under the Amended Credit Agreement, revolving loans and swingline loans may be borrowed, repaid and reborrowed until March 30, 2026, at which time all amounts borrowed must be repaid. Loans under the Facilities may be prepaid at any time without penalty.
The revolving loans and term loans under the Term Loan Facility bear interest, at the Company’s option, at either (i) a floating rate per annum equal to the Base Rate (as defined below) plus a margin of between 0.50% and 1.25%, depending on the Company’s consolidated total leverage ratio as of the most recently ended fiscal quarter or (ii) a floating per annum rate equal to the Adjusted Term SOFR (as defined below) for a specified period, plus a margin of between 1.50% and 2.25%, depending on the Company’s consolidated total leverage ratio as of the most recently ended fiscal quarter. Swingline loans bear interest at a floating rate per annum equal to the Base Rate plus a margin of between 0.50% and 1.25%, depending on the Company’s consolidated total leverage ratio as of the most recently ended fiscal quarter. Base Rate is defined in the Amended Credit Agreement as the highest of (a) the Prime Rate (as defined in the Amended Credit Agreement), (b) the Federal Funds Rate (as defined in the Amended Credit Agreement) plus 0.50% and (c) Adjusted Term SOFR for a one-month tenor in effect on such day plus 1.00%; each change in the Base Rate shall take effect simultaneously with the corresponding change or changes in the Prime Rate, the Federal Funds Rate or Adjusted Term SOFR, as applicable (provided that clause (c) shall not be applicable during any period in which Adjusted Term SOFR is unavailable or unascertainable). The Base Rate shall not be less than 1.00%. Adjusted Term SOFR is Term SOFR (as defined in the Amended Credit Agreement) plus 0.10% per annum; provided that Adjusted Term SOFR shall in no event be less than 0.00%.
A default interest rate shall apply on all obligations during certain events of default under the Amended Credit Agreement at a rate per annum equal to 2.00% above the applicable interest rate. The Company will pay to each lender a facility fee on a quarterly basis based on the unused amount of each lender’s commitment to make revolving loans, of between 0.20% and 0.35%, depending on the Company’s consolidated total leverage ratio as of the most recently ended fiscal quarter. The Company will also pay to the applicable lenders on a quarterly basis certain fees based on the daily amount available to be drawn under each outstanding letter of credit, including aggregate letter of credit commissions of between 1.50% and 2.25%, depending on the Company’s consolidated total leverage ratio as of the most recently ended fiscal quarter, and issuance fees of 0.125% per annum. The Company is also obligated to pay Wells Fargo, as agent, fees customary for a credit facility of this size and type.
The Amended Credit Agreement requires the Company to maintain during the term of the Facilities a maximum consolidated total leverage ratio of 3.50 to 1.00 and a minimum consolidated interest coverage ratio of 3.50 to 1.00. In addition, the Amended Credit Agreement contains customary affirmative and negative covenants, including covenants that limit or restrict the ability of the Company and its subsidiaries to, among other things, grant liens or enter into agreements restricting their ability to grant liens on property, enter into mergers, dispose of assets, change their accounting or reporting policies, change their business and incur indebtedness, in each case subject to customary exceptions for a credit facility of this size and type. The Amended Credit Agreement includes customary events of default that include, among other things, non-payment of principal, interest or fees, inaccuracy of representations and warranties, violation of covenants, cross default to certain other indebtedness, bankruptcy and insolvency events, material judgments, change of control and certain ERISA events. The occurrence of an event of default could result in the acceleration of the obligations under the Amended Credit Agreement.
The Facilities
As of December 31, 2025, $47.5 million was outstanding on the Term Loan Facility. There was no outstanding balance on the Revolving Facility as of December 31, 2025, resulting in $700.0 million being available on the Revolving Facility. As of December 31, 2025 and June 30, 2025, the fair value of the Facilities approximated the historical cost.
Term Loan Facilities
During the six months ended December 31, 2025, the Company made aggregate payments of $207.4 million under the Term Loan Facilities, of which $202.5 million was repayment of principal and $4.9 million was payment of interest.
Revolving Facility
There were no payments made under the Revolving Facility during the six months ended December 31, 2025.
The following table summarizes the Company’s estimated debt and interest payment obligations as of December 31, 2025, for the remainder of fiscal 2026 and future fiscal years (in thousands):
| | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
| 2026 (remainder) | | 2027 | | 2028 | | 2029 | | 2030 | | Thereafter | | Total |
| Debt payment obligations | $ | 47,500 | | | $ | — | | | $ | — | | | $ | — | | | $ | — | | | $ | — | | | $ | 47,500 | |
Interest and other payments on debt payment obligations (1) | 970 | | | — | | | — | | | — | | | — | | | — | | | 970 | |
| Total | $ | 48,470 | | | $ | — | | | $ | — | | | $ | — | | | $ | — | | | $ | — | | | $ | 48,470 | |
(1) Interest payments are calculated based on the applicable rates and payment dates as of December 31, 2025. Although our interest rates on our debt obligations may vary, we have assumed the most recent available interest rates for all periods presented.
NOTE 8—LEASES
The Company has entered into agreements under which we lease various real estate spaces in North America, Europe and Asia Pacific, under non-cancellable leases that expire on various dates through fiscal 2037. Some of our leases include options to extend the term of such leases for a period from 12 months to 60 months, and/or have options to early terminate the lease. As of December 31, 2025, we included such options in determining the lease terms for certain of our leases because we were reasonably certain that we would exercise the extension options. Most of our leases require us to pay certain operating expenses in addition to base rent, such as taxes, insurance and maintenance costs.
The following table summarizes our lease costs for the three and six months ended December 31, 2025 and 2024 (in thousands): | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
| | Financial Statement Classification | | Three Months Ended December 31, | | Six Months Ended December 31, | | |
| | | | 2025 | | 2024 | | 2025 | | 2024 | | | | |
| Operating lease costs: | | | | | | | | | | | | | | |
| Fixed lease costs | | Operating expenses | | $ | 3,292 | | | $ | 2,928 | | | $ | 6,285 | | | $ | 5,845 | | | | | |
| Fixed lease costs | | Cost of revenues | | 1,111 | | | 1,159 | | | 2,199 | | | 2,318 | | | | | |
| Variable lease costs | | Operating expenses | | 521 | | | 140 | | | 998 | | | 253 | | | | | |
| Variable lease costs | | Cost of revenues | | 202 | | | 190 | | | 272 | | | 386 | | | | | |
| Total lease costs | | | | $ | 5,126 | | | $ | 4,417 | | | $ | 9,754 | | | $ | 8,802 | | | | | |
The operating lease costs in the table above include costs for long-term and short-term leases. Total short-term costs for the three and six months ended December 31, 2025 and 2024 were immaterial. Variable lease costs primarily include maintenance, utilities and operating expenses that are incremental to the fixed base rent payments and are excluded from the calculation of operating lease liabilities and ROU assets. For the three months ended December 31, 2025 and 2024, cash paid for amounts associated with the Company's operating lease liabilities was approximately $4.7 million and $4.5 million, respectively. For the six months ended December 31, 2025 and 2024, cash paid for amounts associated with the Company's operating lease liabilities were approximately $9.3 million and $8.9 million, respectively. Cash paid for amounts associated with the Company’s operating lease liabilities were classified as operating activities in the consolidated statement of cash flows.
The following table shows the Company’s undiscounted future fixed payment obligations under the Company’s recognized operating leases and a reconciliation to the operating lease liabilities as of December 31, 2025:
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Remainder of Fiscal 2026 | | $ | 7,464 | |
Fiscal 2027 | | 13,009 | |
Fiscal 2028 | | 11,195 | |
Fiscal 2029 | | 9,162 | |
Fiscal 2030 | | 8,064 | |
| Thereafter | | 33,376 | |
| Total future fixed operating lease payments | | $ | 82,270 | |
| | |
| Less: Imputed interest | | $ | 13,229 | |
| Total operating lease liabilities | | $ | 69,041 | |
| | |
| Weighted-average remaining lease term - operating leases | | 8 years |
| Weighted-average discount rate - operating leases | | 4.7 | % |
NOTE 9—COMMITMENTS AND CONTINGENCIES
Purchase Obligations
We subcontract with third parties to manufacture our products and supply key components. As of December 31, 2025, we had $1,263.8 million of purchase commitments with these third parties. If we cancel all or part of the orders, we may still be liable to the contract manufacturers for the cost of the components purchased by the subcontractors to manufacture our products. There have been no significant liabilities for current or anticipated cancellations recorded as of December 31, 2025. Our consolidated financial position and results of operations could be negatively impacted if we were required to compensate these third parties. In addition, we may be subject to additional purchase obligations to our contract manufacturers for supply agreements and components ordered by them based on manufacturing forecasts we provide them each month.
Other Obligations
As of December 31, 2025, the Company has other obligations of $4.9 million which consisted primarily of commitments related to research and development projects.
Indemnification Obligations
The Company enters into standard indemnification agreements with many of its business partners in the ordinary course of business. These agreements include provisions for indemnifying the business partner against any claim brought by a third-party to the extent any such claim alleges that a Company product infringes a patent, copyright or trademark, or violates any other proprietary rights of that third-party. The maximum potential amount of future payments the Company could be required to make under these indemnification agreements is not estimable and the Company has not incurred any material costs to defend lawsuits or settle claims related to these indemnification agreements to date.
Legal Matters
The Company may be involved, from time to time, in a variety of claims, lawsuits, investigations, and proceedings relating to contractual disputes, intellectual property rights, employment matters, regulatory compliance matters and other litigation matters relating to various claims that arise in the normal course of business. The Company determines whether an estimated loss from a contingency should be accrued by assessing whether a loss is deemed probable and can be reasonably estimated. The Company assesses its potential liability by analyzing specific litigation and regulatory matters using available information. The Company develops its views on estimated losses in consultation with inside and outside counsel, which involves a subjective analysis of potential results and outcomes, assuming various combinations of appropriate litigation and settlement strategies. Taking all of the above factors into account, the Company records an amount where it is probable that the Company will incur a loss and where that loss can be reasonably estimated. However, the Company’s estimates may be incorrect and the Company could ultimately incur more or less than the amounts initially recorded. The Company may also incur significant legal fees, which are expensed as incurred, in
defending against these claims. The Company is not currently aware of any pending or threatened litigation that would have a material adverse effect on the Company’s financial statements.
Intellectual Ventures I LLC v. Ubiquiti Inc.
On August 8, 2023, Intellectual Ventures I LLC ("IV") filed a patent infringement lawsuit against the Company in the District of Delaware, alleging that various Company products infringe United States Patent Number 8,594,122, which relates to 802.11ac “Beamforming” standards. IV seeks compensatory and enhanced damages, attorneys' fees and costs, and pre- and post-judgment interest. The Company plans to vigorously defend itself against these claims; however, there can be no assurance that the Company will prevail in the lawsuit. The Company cannot currently estimate the possible loss or range of losses, if any, that it may experience in connection with this litigation.
Ax Wireless, LLC Litigation
On February 2, 2026, Ax Wireless, LLC (“Ax Wireless”) filed a complaint against the Company with the U.S. International Trade Commission (“ITC”) alleging infringement of certain U.S. patents related to Wi-Fi 6 (802.11ax) technology, including U.S. Patent Nos. 10,079,707; 10,917,272; 11,646,927; 11,777,776; and 11,812,134. The complainant seeks a limited exclusion order and a cease and desist order that would prohibit the Company from importing into the United States, and selling in the United States, certain wireless networking products and components that allegedly infringe these patents. Concurrently with the ITC filing, Ax Wireless filed a related complaint in the U.S. District Court for the Northern District of Illinois alleging infringement of the same patents and seeking unspecified monetary damages, interest, and fees.
The Company plans to vigorously defend itself in both the ITC investigation and the District Court action; however, there can be no assurance that the Company will prevail. The Company cannot currently estimate the possible loss or range of losses, if any, that it may experience in connection with either the ITC investigation or the District Court action. An adverse ruling at the ITC could result in an order excluding our products from the U.S. market, which would have a material adverse effect on our business, financial condition, and results of operations. The Company cannot currently estimate the possible loss or range of losses, if any, that it may experience in connection with either the ITC investigation or the District Court action.
NOTE 10—SHARE-BASED COMPENSATION
Share-Based Compensation Plans
The Company’s 2020 and 2010 Equity Incentive Plans are described in the Annual Report.
As of December 31, 2025, the Company had 4,941,077 authorized shares available for future issuance under all of its stock incentive plans.
Share-Based Compensation
The following table shows total share-based compensation expense included in the consolidated statements of operations for the three and six months ended December 31, 2025 and 2024 (in thousands):
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| | Three Months Ended December 31, | | Six Months Ended December 31, | | |
| | 2025 | | 2024 | | 2025 | | 2024 | | | | |
| Cost of revenues | $ | 72 | | | $ | 57 | | | $ | 142 | | | $ | 111 | | | | | |
| Research and development | 1,311 | | | 1,318 | | | 2,622 | | | 2,556 | | | | | |
| Sales, general and administrative | 521 | | | 418 | | | 1,024 | | | 822 | | | | | |
| $ | 1,904 | | | $ | 1,793 | | | $ | 3,788 | | | $ | 3,489 | | | | | |
Stock Options
There were no options exercised under the Company’s stock incentive plans during the three and six months ended December 31, 2025 and 2024.
As of December 31, 2025, the Company had no unrecognized compensation costs related to stock options, and the Company did not grant any employee stock options during the three and six months ended December 31, 2025, and 2024.
Restricted Stock Units (“RSUs”)
The following table summarizes the activity of the RSUs made by the Company:
| | | | | | | | | | | |
| Number of Shares | | Weighted Average Grant Date Fair Value Per Share |
Non-vested RSUs, June 30, 2025 | 100,064 | | | $ | 209.90 | |
| RSUs granted | 4,968 | | | $ | 410.02 | |
| RSUs vested | (10,604) | | | $ | 188.02 | |
| RSUs canceled | (5,466) | | | $ | 209.80 | |
Non-vested RSUs, December 31, 2025 | 88,962 | | | $ | 223.69 | |
The intrinsic value of RSUs vested in both the three months ended December 31, 2025 and 2024 was $0.1 million.
The intrinsic value of RSUs vested in the six months ended December 31, 2025 and 2024 was $4.5 million and $1.6 million, respectively.
The total intrinsic value of all outstanding RSUs was $49.2 million as of December 31, 2025.
As of December 31, 2025, there were unrecognized compensation costs related to RSUs of $12.0 million which the Company expects to recognize over a weighted average period of 2.8 years.
NOTE 11—INCOME TAXES
The Company recorded tax provisions of $57.7 million and $108.4 million for the three and six months ended December 31, 2025, respectively, as compared to $30.6 million and $61.2 million for the three and six months ended December 31, 2024, respectively. Our effective tax rate increased to 19.8% for the three months ended December 31, 2025 as compared to 18.3% for the three months ended December 31, 2024. Our effective tax rate increased from 18.8% for the six months ended December 31, 2024 to 19.7% for the six months ended December 31, 2025. The change in effective tax rates for the three and six months ended December 31, 2025, as compared to the same periods in the prior year, was primarily driven by changes in the mix of the income earned in various tax jurisdictions as well as in the mix of income eligible for the Foreign-Derived Intangible Income (“FDII”) rules and subject to the Global Intangible Low-Taxes Income ("GILTI") and Pillar Two rules.
The Company’s estimated fiscal year 2026 effective tax rate, before discrete items, differs from the U.S. statutory rate primarily due to the income tax benefits from the FDII deduction as well as profits earned in jurisdictions where the tax rate is lower than the U.S. tax rate, partially offset by additional Pillar Two top up taxes related to our non-U.S. operations as well as income subject to GILTI.
As of December 31, 2025, the Company had approximately $34.7 million of unrecognized tax benefits, substantially all of which would, if recognized, affect its tax expense. Accrued interest and penalties are included within the related tax liability line in the consolidated balance sheets. As of December 31, 2025, the Company had $6.6 million accrued interest related to uncertain tax matters.
The Company and one or more of its subsidiaries, file income tax returns in the United States federal jurisdiction, and various state, local, and foreign jurisdictions and is currently undergoing income tax examinations by the U.S. Internal Revenue Service (“IRS”) and the Hong Kong Inland Revenue Department (“IRD”). All material consolidated federal, state and local income tax matters have been concluded for years through 2015. The majority of the Company's foreign jurisdictions have been concluded through 2015, with the exception of Hong Kong which has been reviewed through 2009 and is currently under audit for the 2010-2019 statutory tax years.
In July 2018, the Company received a draft Notice of Proposed Adjustment (“Draft NOPA”) from the IRS proposing an adjustment to income for the fiscal 2015 and fiscal 2016 tax years based on its interpretation of certain obligations of the non-U.S. entities under the credit facility. This Draft NOPA was superseded by an Acknowledgement of Facts (“AOF”) issued to the Company by the IRS on January 17, 2020. The IRS in its AOF continued to propose an adjustment to the Company’s income for its fiscal 2015 and fiscal 2016 tax years based on the IRS’ interpretation of certain obligations of the Company’s foreign subsidiaries under the Company’s credit facilities. On May 12, 2020, the IRS issued a final NOPA to the Company with respect to the 2015/2016 tax years. The Company formally protested the adjustment and the case was moved from the Examination Division to the IRS Appeals Division where a formal review of the facts and the applicable law took place on May 9, 2022. The Appeals Officer issued a Notice of Deficiency on August 3, 2022, which upheld the position of the Examination Division. The Company filed a petition with the United States Tax Court seeking
to have the Notice of Deficiency reversed. On November 8, 2023, the Company filed a Motion for Summary Judgment. The IRS responded to the Company’s Motion on December 26, 2023 and filed a Cross-Motion for Summary Judgment. On January 22, 2024, the judge assigned to this case rejected both Motions for Summary Judgment. As such, the Company is awaiting a trial date to be set. The Company continues to believe that its tax position filed with the IRS with regard to this matter is more likely than not to be sustained based on technical merits. However, there can be no assurance that this matter will be resolved in the Company’s favor. Regardless of whether the matter is resolved in the Company’s favor, the final resolution of this matter could be expensive and time-consuming to defend and/or settle. The Company estimates the incremental tax liability associated with the income adjustment proposed in the AOF would be approximately $50.0 million, excluding potential interest and penalties, after adjusting for the impact of an adjustment on the amount of transition tax paid and payable in future years by the Company. As the Company believes that the tax originally paid in fiscal 2015 and fiscal 2016 is correct, it has not provided a reserve for this tax uncertainty. However, an adverse outcome may have a material and adverse effect on the Company’s results of operations and financial condition.
The Hong Kong Inland Revenue Department (the “IRD”) is examining the Company’s claims that its revenue is generated through activities performed wholly outside of the Hong Kong tax jurisdiction and are therefore exempt from Hong Kong tax. The Company is fully cooperating with the examination including submitting documentation in support of its position. The Company continues to believe that its tax positions filed with the IRD are more likely than not to be sustained based on their technical merits and therefore no reserve has been provided for this tax uncertainty. Between fiscal years 2018 and 2024, the Company made payments totaling a combined amount of $60.4 million as deposits with the IRD in connection with extending the statute of limitation for the 2010-2018 income tax audits. On March 28, 2025, the Company received notification that the IRD is seeking an additional $2.0 million deposit covering the 2019 statutory tax year. The Company filed a formal protest in response to this notice and the Assessor's office agreed to a reduced deposit of under $0.2 million covering the 2019 statutory tax year. The refundable deposits are included within other long-term assets on our consolidated balance sheets. The Company expects the $60.8 million (net of foreign currency impact) of deposits made with the IRD to be refunded upon completion of the audit. However, there can be no assurance that this matter will be resolved in the Company’s favor and therefore it's possible that an adverse outcome of the matter could have a material effect on the Company’s results of operations and financial condition.
The Organization for Economic Co-operation and Development Inclusive Framework on Base Erosion and Profit Shifting released Pillar Two Model Rules (“Pillar Two”) for a global minimum tax. Many countries have enacted certain aspects of the Pillar Two framework with effective dates prior to the conclusion of the Company’s fiscal year 2025. Entities operating in countries where Pillar Two has been enacted are required to estimate Pillar Two top-up tax obligations beginning in the first quarter of fiscal year 2025. For the three months ended December 31, 2025, the Company included approximately $2.4 million Pillar Two top-up tax obligations impacting the Company’s estimated annual effective tax rate. The Company will continue to evaluate the impact of proposed and enacted legislation as new guidance becomes available.
On July 4, 2025, the United States enacted tax reform legislation through the One Big Beautiful Bill Act (“OBBBA”). Included in this legislation are provisions that allow for the immediate expensing of domestic United States research and development expenses, immediate expensing of certain capital expenditures, and changes to the U.S. taxation of profits derived from foreign operations. ASC 740, "Income Taxes", requires the effects of changes in tax rates and laws on deferred tax balances to be recognized in the period in which the legislation is enacted. The legislation has multiple effective dates, with certain provisions effective in 2025 (our current fiscal year 2026) and others implemented through 2027 (our fiscal year 2028). The Company has evaluated the OBBBA enacted during the quarter and determined its impact on the consolidated financial statements to be immaterial.
NOTE 12—SEGMENT INFORMATION, REVENUES BY GEOGRAPHY AND SIGNIFICANT CUSTOMERS
We have one reportable segment, which reflects how the chief operating decision maker (“CODM”), our Chief Executive Officer, reviews and assesses performance of the business. The CODM assesses the performance of the Company and decides how to allocate resources based on consolidated net income reported in the consolidated statement of operations. The CODM uses consolidated net income in deciding whether to reinvest profits into certain parts of the business or return a portion of such profits to shareholders through dividends and stock repurchases. Significant expense categories regularly provided to and reviewed by the CODM are those presented in the consolidated statement of operations.
Revenue
The Company presents its revenue by product type in two primary categories: Service Provider Technology and Enterprise Technology.
Revenues by product type are as follows (in thousands, except percentages):
| | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
| | Three Months Ended December 31, | | Six Months Ended December 31, | | |
| | 2025 | | 2024 | | 2025 | | 2024 | | | | |
| Enterprise technology | $ | 728,991 | | | 89 | % | | $ | 518,202 | | | 86 | % | | $ | 1,386,137 | | | 90 | % | | $ | 988,385 | | | 86 | % | | | | | | | | |
| Service provider technology | 85,876 | | | 11 | % | | 81,677 | | | 14 | % | | 162,503 | | | 10 | % | | 161,838 | | | 14 | % | | | | | | | | |
| Total revenues | $ | 814,867 | | | 100 | % | | $ | 599,879 | | | 100 | % | | $ | 1,548,640 | | | 100 | % | | $ | 1,150,223 | | | 100 | % | | | | | | | | |
Revenues by geography based on customer’s ship-to destinations were as follows (in thousands, except percentages):
| | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
| | Three Months Ended December 31, | | Six Months Ended December 31, | | |
| | 2025 | | 2024 | | 2025 | | 2024 | | | | |
North America (1) | $ | 443,568 | | | 54 | % | | $ | 321,644 | | | 54 | % | | $ | 826,392 | | | 53 | % | | $ | 592,890 | | | 52 | % | | | | | | | | |
| Europe, the Middle East and Africa (“EMEA”) | 280,712 | | | 34 | % | | 208,579 | | | 35 | % | | 543,832 | | | 35 | % | | 413,467 | | | 36 | % | | | | | | | | |
| Asia Pacific | 54,465 | | | 7 | % | | 43,081 | | | 7 | % | | 107,589 | | | 7 | % | | 84,019 | | | 7 | % | | | | | | | | |
| South America | 36,122 | | | 5 | % | | 26,575 | | | 4 | % | | 70,827 | | | 5 | % | | 59,847 | | | 5 | % | | | | | | | | |
| Total revenues | $ | 814,867 | | | 100 | % | | $ | 599,879 | | | 100 | % | | $ | 1,548,640 | | | 100 | % | | $ | 1,150,223 | | | 100 | % | | | | | | | | |
(1) Revenue for the United States was $388.3 million and $296.1 million for the three months ended December 31, 2025 and 2024, respectively. Revenue for the United States was $739.6 million and $544.8 million for the six months ended December 31, 2025 and 2024, respectively.
Customers with an accounts receivable balance of 10% or greater of total accounts receivable and customers with net revenues of 10% or greater of total revenues are presented below for the periods indicated:
| | | | | | | | | | | | | | | | | | | | | | | | | | | |
| | Percentage of Revenues | | | | | | Percentage of Accounts Receivable |
| | Three months ended December 31, | | | | December 31, | | June 30, |
| | 2025 | | 2024 | | | | | | 2025 | | 2025 |
| Customer A | * | | * | | | | | | 12 | % | | * |
* Denotes less than 10%
NOTE 13—COMMON STOCK AND TREASURY STOCK
On August 21, 2025, the Company’s Board of Directors approved a $500 million stock repurchase program (the “2025 August Program”). Under the 2025 August Program, the Company is authorized to repurchase up to $500 million of its common stock. The
2025 August Program expires on September 30, 2026. During the three and six months ended December 31, 2025, the Company did not make any repurchases under the 2025 August Program.
NOTE 14—RELATED PARTY TRANSACTIONS AND CERTAIN OTHER TRANSACTIONS
Mr. Robert J. Pera, our Chairman and Chief Executive Officer, is the controlling owner of the Memphis Grizzlies, a team in the National Basketball Association (the “Grizzlies”). From time to time, the Grizzlies purchase our products through our webstore, on terms that we believe are no less favorable than terms generally available to an unaffiliated third party under the same or similar circumstances. During the three and six months ended December 31, 2025, we received approximately $8,000 and $198,000, respectively, from sales to the Grizzlies, inclusive of sales tax and shipping charges. Additionally, from time to time, the Grizzlies may participate in our product testing and marketing activities.
NOTE 15—SUBSEQUENT EVENTS
Dividends
On February 6, 2026, the Company's Board of Directors approved a quarterly cash dividend of $0.80 per share payable on February 23, 2026 to shareholders of record at the close of business on February 17, 2026. Any future dividends will be subject to the approval of the Company’s Board of Directors.
Ax Wireless, LLC Litigation
On February 2, 2026, Ax Wireless, LLC filed a complaint with the U.S. International Trade Commission and a related complaint in the U.S. District Court for the Northern District of Illinois alleging patent infringement. Refer to Part I, Item 1, Note 9, "Commitments and Contingencies" of the notes to consolidated financial statements for further information.
