Ubiquiti Inc.

Ubiquiti Inc.

UI·NYSE

$576.13

+0.12%
TechnologyCommunication Equipment

Ubiquiti Inc. develops networking technology for service providers, enterprises, and consumers. It develops technology platforms for high-capacity distributed Internet access, unified information technology, and consumer electronics for professional, home, and personal use. Its service provider product platforms offer carrier-class network infrastructure for fixed wireless broadband, wireless backhaul systems, and routing; and enterprise product platforms provide wireless LAN infrastructure, video surveillance products, switching and routing solutions, security gateways, and other WLAN products, as well as consumer products under the Ubiquiti Labs brand name. The company also provides technology platforms, such as airMAX, which include proprietary protocols that contain technologies for minimizing signal noise; EdgeMAX, a software and system routing platform; airFiber, a point-to-point radio system; and UFiber GPON, a plug and play fiber network technology to build high speed fiber internet networks. In addition, it offers UniFi -Enterprise WLAN, an enterprise Wi-Fi system that allows for on-site and remote management through the cloud; UniFi Protect, a video surveillance system, which provides statistical reporting and advanced analytics; UniFi Switch that deliver performance, switching, and power of Ethernet support for enterprise networks; UniFi Console, an enterprise class router and security gateway device; and UniFi Access, a door access system. Further, offers base stations, radios, backhaul equipment, and customer premise equipment; embedded radio products; antennas; and mounting brackets, cables, and power over Ethernet adapters. It serves customers through a network of approximately 100 distributors, online retailers, and direct to customers worldwide. The company was formerly known as Ubiquiti Networks, Inc. and changed its name to Ubiquiti Inc. in August 2019. Ubiquiti Inc. was incorporated in 2003 and is headquartered in New York, New York.

At a Glance

Live Snapshot
Market Cap$34.87B
EPS11.7700
P/E Ratio48.95
Earnings Date08/28/2026

Earnings Call Transcript

UI • 2018 • Q4

Executives
Laura Kiernan - Senior Vice President, Investor Relations Robert Pera - Founder, Chief Executive Officer and Chairman
Analysts
Tim Long - BMO Capital Markets Erik Suppiger - JMP Securities
Operator
Good morning and welcome to the Ubiquiti Networks Fourth Quarter Fiscal 2018 Conference Call. All participants are in a listen-only mode. [Operator Instructions] Please note this event is being recorded. I would now like to turn the conference over to Ms. Laura Kiernan. Please go ahead.
Laura Kiernan
Thank you, Ann and thank you everyone for joining us today. I am here with Robert Pera, Founder, CEO and Chairman of the Board at Ubiquiti Networks. Before we get started, I would like to review the Safe Harbor statement. Some of the statements we will make during this call constitute forward-looking statements, including the perspectives on our future financial results, products, market conditions and competition. These statements are subject to known and unknown risks and uncertainties that could cause actual results to differ materially from those expressed during today’s call. Information on these risk factors and uncertainties is contained in our most recent Form 10-K filed with the SEC and our other filings, which are available on the SEC website at sec.gov. Forward-looking statements are made as of today, August 24, 2018 and we assume no obligation to update them. This call will be a Q&A call only. Please limit yourself to one question. Operator, we are now ready for questions.
Operator
Thank you. [Operator Instructions] We will take our first question from Tim Long with BMO Capital Markets.
Tim Long
Thank you. Robert, real strong performance in North America and in enterprise in the quarter, I am sure they are related. Could you just talk a little bit about what was behind that strong performance this quarter? I am assuming UniFi was strong, but was there anything – any other color you can give us maybe on kind of the unit ASP dynamic or other products that might have contributed to that strength that would be great? Thank you.
Robert Pera
Sure. Thanks for the question. I think it was maybe a couple of main things. First, UniFi is expanding fast from just being known as WiFi to being a unified networking solution with getting in network security and we continue to add advanced features. The second thing is our supply chain is still pretty inefficient and our sales channel and their ability to stock is still very inefficient and we setup some – a big facility in the U.S., inventory facility that kind of plugged the weaknesses of the sales channel to-date keeping product and stock. And we are still not there yet, but I think those are the two key things with UniFi. Moving forward, we continue to expand the application use and get into more verticals and then we need to continue improving our operations to just meet the demand, which we are not doing yet.
Operator
We will go next to Erik Suppiger with JMP Securities.
Erik Suppiger
Yes, thanks for taking the question. I have two if I could. One, on the tariff front, can you tell us are you expecting those to take effect and if you are, would you consider raising prices to pass through some of the cost or the tax? And then secondly on the warehouse inventory, your inventories are approaching your – your finished good inventories are approaching 8 to 12 weeks right now, how much of your shipments are actually coming from inventory that has been through your warehouse?
Robert Pera
I believe a decent percentage of our U.S. revenue is now flowing through our inventory center. Outside the U.S. largely we ship directly out of Asia.
Erik Suppiger
That suggests that there is still going to be a considerable addition of finished goods as you expand warehouse inventory or is it at a level that you think you will maintain at least at this point?
Robert Pera
My primary priority is we are trying to find a way to meet demand. Right now, we have still chronic stock-outs on key items and that’s what’s going to drive my business decisions not inventory level on the balance sheet.
Operator
We will take a follow-up question from Tim Long with BMO Capital Markets.
Tim Long
Thanks a lot. Just wanted to ask Robert on the gross margin, it sounds like there is obviously an impact from expedited shipping cost this quarter, but longer term that would go away, particularly with what you are doing on the inventory front. But you made some comments about new products having higher margins and some cost reduction actions that you continually take on the products. Can you just give us a little color on that new product front? Are you addressing some newer areas and why would they have higher margin profiles? And the cost reduction actions would that – should we think of that really focused on across the portfolio or is that mostly UniFi or where would that be targeted most?
Robert Pera
So, we are continuously making good cost reductions, but we also plan to continue to be aggressive on new product introductions. For example, video security is something I think we should have a much larger market share of and we are going to be very aggressive with UniFi video over the next couple of years. And so you have a product mix that could bring margins down in the short-term, but you also have some material efficiency, cost efficiency capture on mature products. So, I think long-term, our peer margins should remain relatively steady. Now, where we have to improve is everything else that goes into those margins, specifically, our shipping logistics efficiency. We have been very inefficient on delivering product to the channel and meeting demand and as a result, we have had a lot of excessive cost due to last minute air shipping. So, I think as our operations continue to mature you are going to see significant margin improvement from that.
Transcript from August 24, 2018

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