Anne Fazioli - Vice President-Investor Relations Robert J. Pera - Chairman & Chief Executive Officer.

Matt Robison - Wunderlich Securities, Inc. Meta A. Marshall - Morgan Stanley & Co. LLC Michael A. Kerlan - Wells Fargo Securities LLC.

Good day, ladies and gentlemen, and welcome to the Ubiquiti Networks Third Quarter Fiscal Year 2016 Question-and-Answers Conference Call. As a reminder, this call is being recorded. I would now like to introduce your host for today's conference, Ms. Anne Fazioli, Vice President of Investor Relations. You may begin, ma'am..

Thank you, Rania, and thank you, everyone, for joining us today. I'm Anne Fazioli, Vice President of Investor Relations for Ubiquiti Networks. I'm here with Robert J. Pera, Founder, CEO and Chairman of the Board at Ubiquiti Networks. Before we get started, I'd like to review the Safe Harbor statement.

Some of the statements we'll make during this call constitute forward-looking statements, including 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 the actual results to differ materially from those expressed during this call.

Information on risk factors and uncertainties is contained in our most recent filing on Form 10-K with the SEC and our other SEC filings, which are available on SEC's website at www.sec.gov. Forward-looking statements are made as of today, May 5, 2016, and we assume no obligation to update them.

We hope you've reviewed management's prepared remarks, which are posted as a transcript on the Events & Presentations and Financial Information sections of our Investor Relations website, ir.ubnt.com. This call will be a Q&A only. Please limit yourself to two questions. Time permitting, we'll allow for follow-up questions.

Operator, we are now ready for questions..

Thank you. And our first question comes from the line of Matt Robison from Wunderlich. Your line is now open..

Hey. Thanks. Nice results and guidance. So, a lot of drama with the relative growth in the two major segments and some of the changes in geography, also noticed no 10% distributors.

Robert, can you give us a little flavor on what segments of your business you think are going to drive this strong guidance that you have for the June quarter?.

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.

The vision for UniFi was to be a complete software-defined networking platform, not just a Wi-Fi platform, but the merge of events, system Wi-Fi with a high-end switching, security gateways, and something that could go upstream not just to low cost Wi-Fi deployment. And I think our business model is positioned really well for a future run.

It disrupts a lot of the traditional IT sales cycle. And I think you're just seeing the beginning of UniFi. Of course, there is some concern on the service provider side. But I think it's a little early to draw conclusions. Definitely, UniFi is a much larger addressable market. That's what we're excited about.

Service provider – we do have significant investments that you'll see coming to market in the next few quarters. We also have not yet turned the corner on airMAX ac and interoperability, but we believe we will. And so, in the short-term, it's kind of our game to lose with airMAX ac.

If we can get there, I think, you'll see a significant bump in the short-term in the operators space. And, I think, it will be interesting two quarters as we'll have some really compelling technology breakthroughs for the operator space..

So it's a little more diversified than the 802.11ac on the UniFi side these days? You've seen some pick up in some other places and -.

Just starting to see it, especially with switching..

Switching good. And congrats for the addition of Mr. Radigan as well. I'll put somebody else to question now..

And our next question comes from the line of Meta Marshall from Morgan Stanley. Your line is now open..

Hi. I just wanted to ask about some of the strength that you saw in Europe and whether that was channel expansion or strengthen in emerging markets? And then with the appointment of Mr. Radigan today, do you think the timeline to FTI expenses going down accelerates or are they still to be there for the near future? Thank you..

I think EMEA is strong because of UniFi and UniFi starting to reach higher tiered customers. And a lot of those customers are in that region. The FTI expenses, of course, will start trailing down. I don't know when we'll be pulling independent FTI, but it's going to be definitely quarters and not years..

Great. Thank you..

And our next question comes from the line of Jess Lubert from Wells Fargo. Your line is now open..

Hey, guys. It's Mike Kerlan on for Jess. I just wanted to confirm with Kevin. You'd mentioned that he will be performing Principal Financial Officer and accounting duties.

What does this mean for the CFO position? Will he be handling those responsibilities as well as search ongoing?.

Well, I know, traditionally, the term CFO is used. I don't know what you want to call it CFO, CAO. What we needed was a responsible leader of the accounting team, someone that is going to, first and foremost, install very good controls, which we're lacking. And he's going to be fully concentrated on the finance side.

And we think it's probably a more disciplined approach to call that person Chief Accounting Officer, because we want to emphasize the person we're bringing on board isn't somebody who is going to build a personal roll deck and talk with Wall Street.

It's somebody that's going to first and foremost rollup his sleeves and lead that finance team and set an example and make sure we have the proper controls in place. It was something like we went through never happens again..

Okay. Thanks. That's helpful. And then just on the enterprise business, what was the mix of UniFi ac versus the older UniFi lineup? And I believe in the past, you had mentioned the newer ac might carry better gross margin.

I just wanted to confirm if that's correct because I did notice you expanded your gross margin long-term forecast, just a little bit at the upper end of the guidance..

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. And we're heavily invested into high end switching and high end security gateways and some other solutions coming up..

Okay. Thanks..

And that does conclude our question-and-answer session for today's call. Ladies and gentlemen, thank you for participating in today's conference. This concludes today's program. You may all disconnect. Everyone, have a wonderful day..