UBNT Summary

I know that I’m posting on a stock that doesn’t have incredibl growth…CURRENTLY.

But here goes anyway:

Here are some facts and my thoughts on the recent quarter and the near term prospects for UBNT. Reference the press release for specific numbers. Below is an analysis of the numbers plus future thoughts.

One big caveat…I know nothing about the intricacies of the WISP business and specifics about products. I’ve followed UBNT for around two years.

Total revenue growth was 5.7%. Service Provider revenue growth was 9.9%. Enterprise Technology took a slight step back with a 2% decline, but grew 8.9% sequentially.

Earnings grew 9.4%. Trailing 12 month earnings are $2.05 representing a PE of 14.05 at the current price.

Guidance is $160 - $170 Million in Revenue and $0.53 to $0.60 EPS.

Total cash is $497M up 28%. This quarter generated net cash of $77.3M. UBNT completed a $50M buyback and has no debt (or very little).

Geographically, Asia was up 29% sequentially and the Americas were up 7% sequentially.

Those are some of the facts. Let’s look a bit deeper into the business.

In October, UBNT rolled out several new products. If you’ve listened to past conference calls, you know CEO Pera takes the blame for mis-guided R&D spend and past product failures. This quarter’s call once again spells this out clearly. I couldn’t agree more with Pera’s thoughts on R&D. It is all about talent. He admits this is a limiting factor in product development. Good for him!!!

UBNT has been focused over the past year on bringing in the right people for product development. These investments appear to be reaping rewards AND DOING SO AT AN INCREDIBLY LOW COST.

Pera talks about the R&D invested in SolarMax, for example. They are able to roll out a product on just several hundred thousand dollars of R&D. Their SG&A is 4.4% of revenue with a stated goal between 3-5%. Pera is committed to improving current products and unafraid to look at new avenues for growth.

UBNT is approaching Cisco in volume of access points sold. They are incredibly innovative and selling at a cheap price. I have a small position. Why shouldn’t it be bigger?

I’d like to end by asking a few questions for anyone with industry knowledge. UBNT has stated their number one priority is solving the backward compatibility issue associated with AirMax (or maybe it was UniFi). I do not have a grasp on this and would like to. It is, after all, their top priority.

I’m also interested in any further product knowledge folks can offer especially from a competitive perspective.

Take care,



Founded in 2005 by former Apple (NASDAQ:AAPL) engineer Robert Pera, Ubiquiti Networks designs wireless networking products for the unlicensed Wifi band. In 2010, its breakthrough Airmax product solved the “last mile” problem with a disruptively priced Wifi radio that was affordable for emerging and rural markets, for whom traditional copper, fiber, or satellite had previously been too expensive. In 2011, the company launched wireless networking products (access points, routers, VOIP phones, security cameras) for enterprise, SMB/SOHO, hotels, and schools under its Unifi brand. Recently, Ubiquiti announced it was leveraging its worldwide network of internet service providers to deploy solar under its sunMAX brand, a low-cost, complete solar solution. The company went public in 2011. Robert Pera still owns 67% of the shares…

…Ubiquiti makes it very easy for service providers using the company’s low-cost access points to “plug in” UBNT’s next wave of products: VOIP phones, video cameras, routers, and M2M devices.

Finally, Ubiquiti makes operating margins of 30+% - even better than Apple - and like Apple, makes incredible returns on invested capital and on revenue employee (more on this later)…

Ubiquiti sells products that cost a fraction of the existing solutions. The breakthrough Airmax technology (followed by its Airfiber and new Unifi products) enabled independent service providers all over the world to have a viable business, as the barrier to setting up a network (previously only possible through copper, fiber, or satellite) was broken. Previously, in the early 2000s, big companies such as Intel (NASDAQ:INTC) had funded an effort called WIMAX to solve this “last mile” problem, but the solution was unaffordable.


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