I’ve been trying to post on this for several several days now, but suffering from “not good enough” syndrome. So here is a “just do it” version that I might be able to flesh out subsequently.
I think that UBNT revenue will not reaccelerate in the next few quarters. One specific reason is my opinion about their enterprise surveillance product. Mr.Pera stated that this would be a monster product this year. He also stated that they had made “rookie mistakes” in the design but that… what, the third version??? my note taking sucks… that the problems were solved. However, at the date of the comment and after, the discussion on the community forum indicated otherwise. For those interested, the community forum is almost like having a seat at the product development table because the community is not only used for evangelical marketing/sales but also, to some extent, for new product ideas and development.
I have more thoughts about product development in an engineering-heavy organization, and comments on the AirFiber 24 wireless backhaul product which I think Mr. Pera characterized as “ahead of its time”.
Another thought is that Ubiquiti needs new product introduction to sustain high growth so new product stumbles are a drag. The more mature Airmax product line has 22 products, AirFiber just 4, again “I think”. Did you know that Ubiquiti makes phones? Part of their enterprise VoIP product line. Lots of irons in the fire.
Gotta go. Retirement is such a busy time. Will try to add some more discussable input in future posts.
There, just “done” it,
Just a comment on the predictability of growth of revenue in different types of companies. BTW, forgot to include disclosure that UBNT is my second biggest Fool position. BOFI is bigger.
Anyway, some companies are easy to forecast. One of my holdings in Natural Grocers at Vitamin Cottage. They are growing by adding stores, funding them from operational cash flow. Increasing store count by about 18%. With retail companies, a 1000 store count in U.S. is a common goal, so growing from 100 towards 1,000 is a trajectory that can be projected and results followed: store count, same store sales, revenue.
With UBNT, however, one doesn’t know what to expect. There is such a mix of products and geography and such “granular” reporting that it is difficult to make a prediction whether or not growth will slow or accelerate. At the grossest level, one could say “who cares?” Growth has slowed, I don’t care why, I’m out. For the slightly more buy-and-hold crowd, more disclosure from management would help, but not likely to see product by product, region by region forecasts and results. Too proprietary, I suspect.
BTW, the “rookie mistake” mentioned in previous post involved the video recorder. The motion detection triggered the camera. The event would be displayed on screen, but it would not always be recorded. So there would be a mugging or whatnot but no video record. Not good. Your customer’s customer is not happy. Your customer is part of your community and loyal to a point. But that point is where he loses his customer. The community consists of a lot of very small business owners whose own advertising is word-of-mouth and reputation. UBNT can’t ramp up sales through marketing and promotions the way grocery stores can. UBNT ramps up sales via enthusiastic system installers who have happy users. Predicted revenue comes up short if the new product isn’t ready for prime time.