UBNT Numbers

Hi Everybody,

Well, revenues seem to on their way back up, growing almost 6% QoQ.

Rev	Mar	Jun	Sep	Dec
2011	51.2	67.6	79.2	87.8
2012	91.7	94.9	61.5	74.9
2013	83.2	101.2	129.7	138.4
2014	148.3	156.0	150.1	153.1
2015	147.5	145.3	151.4	161.9
Grth	Mar	Jun	Sep	Dec
2012	79.2%	40.4%	-22.3%	-14.7%
2013	-9.3%	6.7%	110.8%	84.8%
2014	78.4%	54.1%	15.7%	10.6%
2015	-0.6%	-6.9%	0.9%	5.7%

This growth was due to the Service Provider segment as the Enterprise segment revenue, although higher than any of the last three quarters, was down just over 2% QoQ.

SPRev	Mar	Jun	Sep	Dec		EntRev	Mar	Jun	Sep	Dec
2013	75.5	90.1	94.2	111.5		2013	7.7	11.1	35.5	27.0
2014	121.0	124.0	107.3	99.7		2014	27.3	32.0	42.8	53.4
2015	106.2	104.8	103.4	109.6		2015	41.2	40.5	48.0	52.3
Grth	Mar	Jun	Sep	Dec		Grth	Mar	Jun	Sep	Dec
2014	60.3%	37.6%	13.9%	-10.5%		2014	256.0%	188.2%	20.7%	98.0%
2015	-12.2%	-15.5%	-3.6%	9.9%		2015	50.7%	26.5%	12.1%	-2.1%

This is from the earnings release:Enterprise Technology revenues increased 9% quarter-over-quarter, fueled by UniFi® AC access points, UniFi Switch and other industry-leading products targeting the Enterprise market.

Here is the table with the comps from the same release:

Three Months Ended December 31,	  2015	          2014
Service Provider Technology	$109,616	 $99,720
Enterprise Technology	         $52,255	 **$53,417**
Total revenues	                $161,871	$153,137

This doesn’t look like 9% growth in Enterprise Technology to me. I wonder what I’m missing here.

So revenues aren’t exactly blowing through the roof. But gross and operating margins are doing quite well.

GrPr%	Mar	Jun	Sep	Dec		OpInc%	Mar	Jun	Sep	Dec
2012	0.0%	0.0%	0.0%	0.0%		2012	43.3%	43.3%	40.7%	40.7%
2013	0.0%	0.0%	0.0%	0.0%		2013	28.3%	32.8%	35.4%	34.0%
2014	44.2%	44.2%	40.6%	45.1%		2014	33.8%	33.8%	29.1%	33.1%
2015	44.8%	45.5%	48.5%	48.8%		2015	30.7%	5.0%*	39.5%	34.8%
_*due to losing $40 million from the email scam._

This is a great answer from Pera when asked about margins during the conference call:

Yeah I think this is another thing misunderstood by you guys. We have never dropped the price of product in the history of the company. When we go into new markets and we see opportunities we’ll purposely price the product much lower and a lot of in some cases we leave money on the table, but we do that to ensure our position for long-term opportunity. And I think what you’re seeing is that strategy playing out where with a disruptive pricing we secured position for long-term opportunity and because that prices never change and because our product lifecycles are so long we had a lot of time in the background to make materials production cost more efficient. And I think that’s what you’re seeing now.

Last year Pera was derided for sounding ignorant on the March, 2015 conference call when asked about share repurchases. Perhaps you’ll remember this exchange:

Jess L. Lubert - Wells Fargo Securities, LLC, Research Division
So maybe just last one for me. I was hoping you could update us on how you’re thinking about the buyback, which expires in a few months. Do you plan to use what’s remaining here? Or should we expect you to let this expire at the end of the term? I think there’s $60 million left on it.

Robert J. Pera
No comments there. I think if we get to a point where we feel it’s a good investment for the company, we’ll exercise that option. But other than that, I don’t have comments on that.

Jess L. Lubert - Wells Fargo Securities, LLC, Research Division
I mean, Robert, the stock’s down pretty materially last year. It’s underperforming the market again pretty materially. Here, you’ve got a pretty healthy cash position. The board’s given you the authorization to use the buyback. Of the $75 million, I think you’ve only used $15 million. Any reason that you wouldn’t look to be more aggressive, if you think the business could triple over the next couple of years? I would think this would be a tremendous return on your money. How come, by your actions, you’re not thinking the same way?

Robert J. Pera
Yes, you’re making some good points. Should we do it? What do you think?

Well, they repurchased the remaining $60 million plus another $50 million and are authorizing another $100 million.

Check out this exchange from the recent call:

Jess Lubert
And then maybe just last one it looks like you completed the last buyback authorization. Are there plans to issue another one or should we not expect buybacks at this point in time?

Robert J. Pera
I think if the stock looks like it’s weakening it’s undervalued we’re always going to look to buyback.

Jess Lubert
Alright, thanks.

I really liked reading the earnings transcript. It looks like things are going in the right direction.



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