I posted this over on the UBNT board.


Here are some of the metrics for this board that I didn’t write in my prior post.

EPS up 37% this quarter.
TTM EPS growth 11%
Current PE - 17
1YPEG - 1.55

If they hit their mid point for next quarter’s guidance at today’s price the 1YPEG will be 0.76.

The long story short of my linked post, Pera seems to be finally delivering on his promises. I’m excited about their long term prospects due to their disruptive pricing model.

Would love to hear other’s opinion.



I’m with you all the way, AJ!

UBNT has been a profitable investment for me ever since I initiated a position in 2014. Granted, my investing results have been mainly due to careful selection of entry/exit points (I’ve swung-traded quite a bit). Even so, I still hold shares that are two years old and I believe the company will fare well in the coming year (it just hit a new 52-week high). As a matter of fact, I bought more today.

I couldn’t access your link, so I don’t know if I’m simply repeating you, but here’s what I like about UBNT (or any company that has similar metrics):

Cash Flow - I consider cash flow the whole point of buying any company. Companies that generate positive cash flow aren’t as likely to disappoint over the long term (depending, of course, on what the company does with its cash flow). UBNT cash flow has almost doubled over 5 years. Me like.

Profit Margin - Roughly 30% (TTM) and holding strong.

Then there are my “go to” metrics:

ROE (return on equity) - 35% (TTM) and getting even better
ROA (return on assets - 24% (TTM) and getting even better
ROI (return on investment) - 28 % (TTM) holding strong.

What’s not to like? Pera runs a lean, mean, quirky machine that generates lotsa cash and continues to develop products for profitable market niches.

Long UBNT (6% position)


Thanks for chiming in Putnid.
I didn’t write about any metrics actually. My post was more of the recent failures within UBNT and their turnaround.

Here is the whole post copied since I don’t know how to use TinyURL yet.

Thoughts on the Future

I happen to be a believer in Robert Pera and the business model of UBNT. I want to share a few thoughts about what I’ve learned listening to their conference calls over the past several quarters.

Pera hasn’t been shy about the major mistakes his company has made specifically in their accounting department and with development of their UniFi AC products. Their growth has stalled for many quarters due to these failures until it picked up this past quarter.

I believe we are witnessing a turn around in this company, but will warn you that my belief is based upon what I’ve heard from Robert Pera. It has nothing to do with an intimate knowledge of their products. In fact, the second part of this post is directed to those with product knowledge who can hopefully help me.

Here’s Pera’s comment with regard to the UniFi AC turnaround:

Well, obviously, UniFi is starting to take off, which is both frustrating and encouraging. It should have been huge. It should be three times, four times, five times as big as it is now. And we finally turned around the R&D team. And what you’re seeing right now is the start of hopefully a really good run.

Pera has stated for many quarters the TAM for UniFi AC is incredibly large. It has only been a matter of executing. Here’s another money quote:

What I can tell you is UniFi ac is picking up very strong. It’s out of stock in a lot of places. The demand is great. The reviews have been great. And what’s interesting is, in previous versions or the previous version of UniFi, the lower end models – the lower price models tended to dominate the volumes. With UniFi ac, the highest end model has dominated the volume, which bodes very well for our plan and our vision to take UniFi upstream to higher end markets.

Another mistake UBNT made in the past is within its internal accounting controls. This resulted in being a victim of fraud and a loss of over $30M. After searching many months, they have finally brought on board their new CAO (Chief Accounting Officer). The title reflects Pera’s belief the new Officer will be primarily responsible for internal controls of their finances. I’m happy they have found someone who will relieve them from relying on an outside consultant for accounting assistance.

Due to the need for outside help, their SG&A expenses this quarter soared to a whopping 5% of revenue. They expect this to be 3 - 5% going forward. With SG&A that low, UBNT can afford to make a few mistakes.

In short, it appears Pera has worked to fix their internal accounting controls and has been on target about growth based on the improved UniFi AC product.

The next section is devoted to technical questions I have. Hopefully there is someone out there who can help.

Technical Questions

What aspects of the new UniFi AC has the market been waiting for that are driving growth? While I know they are priced favorably, how does the new UniFi product stand up to competition?

During the conference call held three months ago, Pera stated their number one priority is backwards compatibility related to AirMax AC. Can anyone comment on what this would mean if they are successful?

Can anyone explain the following comment from yesterday’s call? Is this still referencing backward compatibility?
We also have not yet turned the corner on airMAX ac and interoperability, but we believe we will

Finally, what does Pera mean when he talks about taking UniFi AC “upstream?” How can this impact revenue?

Thanks to all for reading and anyone who comments. If nothing else, I’d like to hear what others are thinking about UBNT as an investment. My position has been a small part of my portfolio. I plan on increasing that and continuing to follow this interesting company.

Take care,