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.
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.