I thought this recent Fool article was a solid recap of why some of us have made UBNT a large portion of our portfolios. I posted some of the more notable snippets below.
…Perhaps best of all, however, is how successful these product launches have been. The primary drivers of operating cash flow growth in the quarter were improvements in customer lead times and and “a reduction in inventory related to new products launched and sold at scale.” In other words, these new products are selling strongly and should continue to drive growth in the quarters ahead.
“We continue to ramp our R&D resources in an effort to accelerate the next phase of our long-term vision of democratizing end to end communications technology infrastructure for the unconnected,” says Pera. These R&D efforts paid off this quarter with successful launches of several new products, helping push Ubiquiti’s enterprise segment to make up more than a fifth of total sales for the quarter.
“Several new product launches are driving revenue growth and we continue to make the strategic investments that we believe will help us not only expand our addressable market,” says CFO Craig Foster, “but also preserve our company’s vision.”
Foolish bottom line
In the upcoming first quarter of the 2015 fiscal year, management is projecting Ubiquiti to grow revenue year-over-year by approximately 20% to 24%. Diluted earnings per share in the upcoming quarter are projected to grow between roughly 13% and 18%. While these numbers wouldn’t represent the breakneck growth we have grown accustomed to in Ubiquiti’s 2014 fiscal year, it is important to remember that Ubiquiti continues to invest in product development and expansion. These efforts should drive growth for the long-term, exactly the kind of growth we like to see as patient investors.
Founder and CEO Robert Pera – who is just 36 years old and spent two years with Apple before founding Ubiquiti – continues to hold 65% of all shares outstanding. Pera has a direct stake in growing this disruptive business for the long haul. Even with shares up more than 15% following this quarter’s results, Ubiquti is trading at a trailing P/E ratio around 23. That strikes me as a very reasonable price for such an innovative business flush with cash, a determined (and invested) leader, and a tremendous market opportunity.