Ubiquiti Inc. · NYSE:UI
Ubiquiti — Ubiquiti Networks — Investor Presentation (August 2017)
43 slides from Ubiquiti's investor presentation, August 2017
Slide 1: Investor Presentation
Investor Presentation August 2017
Slide 2: Forward Looking Statements
Forward Looking Statements Certain statements in this presentation are forward‐looking statements within the meaning of Section 27A of the Securities Act of 1933, as amended, and Section 21E of the Securities Exchange Act of 1934, as amended. Statements other than statements of historical fact inclu
Slide 3: A Different Kind of Networking Technology Company
A Different Kind of Networking Technology Company With a Successful, Disruptive Business Model Global Markets Disruptive EPS Growth Products Targeted Pricing 2013‐20171 Up to Innovative, high Underserved & performance, 80% 37% Underpenetrated easily deployable lower cost than CAGR competitors Copyri
Slide 4: Disruptive Business Model. Delivering High Performance
THE UBIQUITI STORY Disruptive Business Model. Delivering High Performance A high performance company Disruptive business model Two growth segments Long growth runway Copyright © Ubiquiti Networks, Inc. 2017 4
Slide 5: Two Segments. Strong Global Footprint
AT A G L A N C E Two Segments. Strong Global Footprint Year Ending June 30, 2017 Revenue Breakdown Key Metrics $865M Countries & territories >200 By Service Enterprise1 47% Product 53% Mix Provider Distributors >100 Sales outside N. America 62% Asia Pacific North America Employees in R&D ~60% 11% 38
Slide 6: Global Exposure to Rapidly Growing Markets
Global Exposure to Rapidly Growing Markets Revenue Breakdown by Region ‐ Fiscal 2017 39% EMEA 38% N. America 11% Asia Pacific 12% S. America • 62% of Ubiquiti’s revenue from outside N. America. • Serving fast growing and previously underserved & underpenetrated markets Copyright © Ubiquiti Networks,
Slide 7: A Company on the Move
A Company on the Move 2005 ‐ 2011 2011 ‐ 2016 2017+ • Built disruptive • Expanded into • Long growth business model adjacent markets runway – targeted initial – leveraged low – multiple market operating cost opportunities model Copyright © Ubiquiti Networks, Inc. 2017 7
Slide 8: Success in Initial Target Market Demonstrated Power of Our Business Model
Success in Initial Target Market Demonstrated Power of Our Business Model • Targeted and transformed wireless broadband in underserved markets • Superior product at disruptive price • Shipped 37+ million airMAX® units to ~60 countries (life‐to‐date) Built $2B airMAX® business Copyright © Ubiquiti Ne
Slide 9: Expanded into Adjacent Markets that Leveraged Core Expertise
Expanded into Adjacent Markets that Leveraged Core Expertise Total Addressable Ubiquiti Platform Target Market Market1 UniFi • Enterprise Wi‐Fi (AP, Switches, Routers) $30B UniFi Video • Video Surveillance $ 5B AmpliFi • Consumer Home Wi‐Fi $4B EdgeMax • Carrier Routing and Switching $ 4B airFiber •
Slide 10: Ubiquiti Networks Provides an Integrated End-to-End Solution
Ubiquiti Networks Provides an Integrated End‐to‐End Solution Consumer Service Provider Technology Enterprise Technology Technology “Last Mile” Solutions Broadband Utilization Wi‐Fi Mesh Home Wi‐Fi Mesh Systems WLAN IP Video Controller Wireless Edge Point‐to‐ Surveillance Backhaul Routing Multipoint
Slide 11: Successful Revenue Growth in Targeted Markets
Successful Revenue Growth in Targeted Markets $865M 28% CAGR $666M $596M Enterprise $573M Segment $321M Service Provider Segment FY '13 FY '14 FY '15 FY '16 FY '17 Copyright © Ubiquiti Networks, Inc. 2017 11
Slide 12: Results: An Unusual Combination – Disruptive Model + Highly Profitable
Results: An Unusual Combination – Disruptive Model + Highly Profitable Revenues EPS1 Net Cash ($M) ($) ($M) $3.09 $865M $348M 2.7X 3.5X 2.3X $152M $321M $0.89 2013 2017 2013 2017 2013 2017 Fiscal Period Fiscal Period Fiscal Period 1. Diluted Copyright © Ubiquiti Networks, Inc. 2017 12
Slide 13: Disruptive Business Model. Delivering High Performance
THE UBIQUITI STORY Disruptive Business Model. Delivering High Performance A high performance company Disruptive business model Two growth segments Long growth runway Copyright © Ubiquiti Networks, Inc. 2017 13
Slide 14: A Disruptive Business Model
A Disruptive Business Model 1. Target underserved 2. Deliver innovative, high and underpenetrated performance products markets The Ubiquiti Community 5. Unmatched 3. Low cost operations financial profile and new product development 4. Disruptive pricing Copyright © Ubiquiti Networks, Inc. 2017 14
Slide 15: The Ubiquiti Community – A Core Competitive Advantage
AT T H E C E N T E R The Ubiquiti Community – A Core Competitive Advantage With 4 Million Registered Users Globally Wide Range of Community 2016 Key Metrics Global ThousandsOnline In‐depthof Product Forums Ubiquiti Community Support Community and Blogs Stories and Case Studies Active user sessions 1
Slide 16: Advantages of Ubiquiti Community
AT T H E C E N T E R Advantages of Ubiquiti Community Highly engaged and loyal evangelists Drives market awareness, avoids traditional sales force Real‐time feedback to R&D teams faster, lower cost product development Scalable and self‐sustaining Copyright © Ubiquiti Networks, Inc. 2017 16
Slide 17: 1. Target Underserved Markets
BUSINESS MODEL #1 1. Target Underserved Markets Market Examples Characteristics of Targeted Markets Fixed Wireless Enterprise – UniFi AP, Consumer airMAX Switches, Cameras… AmpliFi Underserved by traditional players Need for high performance, easy to install and maintain products Price sensitive Goo
Slide 18: 1. Target Underserved Markets
BUSINESS MODEL #1 1. Target Underserved Markets Service Provider – Examples Enterprise Solutions – Examples • Emerging markets “unconnected” and • Small, medium & large businesses in developed markets need of high performance, price sensitive “under‐connected” or price solutions sensitive • Hospital
Slide 19: 2. Develop Innovative, High Performance Products
BUSINESS MODEL #2 2. Develop Innovative, High Performance Products • High performance − include proprietary components, protocols and processes − latest technologies • Intellectual property1 − 53 patents in U.S., 34 in foreign countries, over 100 pending • “Last entrant” advantage − designed from bl
Slide 20: 3. Low Cost Operations
BUSINESS MODEL #3 3. Low Cost Operations Avoids Cost of a Sales Force • Distributors, resellers and connection with Ubiquiti Community drive sales Operating Highly Productive R&D Expenses • Hire elite engineers, lower cost countries (Eastern 12% Europe & China) of sales vs. ~20‐90% for peers1 Low Co
Slide 21: 4. Deliver Products at Industry Leading / Disruptive Prices
BUSINESS MODEL #4 4. Deliver Products at Industry Leading / Disruptive Prices In February 2017, the Company launched UniFi AC HD, the highest performance access point in the industry at the best value High UAP AC HD Performance Vendor C Vendor A Vendor R Low $0 $300 $600 $900 $1,200 $1,500 $1,800 Pr
Slide 22: 5. Financial Profile of a Disruptive Player
BUSINESS MODEL #5 5. Financial Profile of a Disruptive Player Mid‐range Gross Margin Leanest OpEx to Sales (Disruptive Pricing) 25%‐76% 20%‐90% 46% 53% 45% 12% Peer Avg Peer Avg Highest Sales per Employee Highest 3‐YR Net Income Margin $1.3M 28% $0.2‐$1.3M ‐28%‐19% $0.5 4% Peer Avg Peer Avg Copyrigh
Slide 23: Disruptive Business Model. Delivering High Performance
THE UBIQUITI STORY Disruptive Business Model. Delivering High Performance A high performance company Disruptive business model Two growth segments Long growth runway Copyright © Ubiquiti Networks, Inc. 2017 23
Slide 24: Two Growth Segments
Two Growth Segments Long Term Sustainable Growth Service Provider Enterprise Solutions Solutions • $455M 2017 revenues • $410M 2017 revenues • 53% of total • 47% of total Disruptive Business Model Copyright © Ubiquiti Networks, Inc. 2017 24
Slide 25: Service Provider Solutions – Consistent and Steady Growth
SERVICE PROVIDER Service Provider Solutions – Consistent and Steady Growth Profile Revenues Key products1: 4% CAGR $455M $418M $418M 2015 2016 2017 Fiscal Year F’17 up 9% over F’16 Copyright © Ubiquiti Networks, Inc. 2017 1. airMAX AC GEN2 was launched in March 2017; UFiber launch occurred in July 2
Slide 26: Positioned in Large, Growing Market
SERVICE PROVIDER Positioned in Large, Growing Market1 Note: Market size and growth here does not include GPON (new in F2018) Market Size 2016 Market Growth 2016‐2020 5‐10% annually Total Market (incl. WISP FWA subscription revenue) $10B Total Addressable Market $1.4B $0.4B 1. Source: IDC custom Fixe
Slide 27: Typical airMAX Network Setup
SERVICE PROVIDER SOLUTIONS Typical airMAX® Network Setup airFiber® X Antenna with airFiber X Radio airFiber® X Antenna with airFiber X Radio Point‐to‐Point (PtP) Backhaul Link Internet Backbone ISP Network airPrism Antenna with Rocket5ac Prism Radios PtMP (Point‐to‐MultiPoint) airMAX AC Links Intern
Slide 28: Case Study: Sling Broadband
SERVICE PROVIDER Case Study: Sling Broadband Background: • One of the largest wireless internet service providers in North America operating in 30 regional markets with thousands of customers and covering 5,000 sq. miles • Long‐haul networks cover 6,100 miles of fiber and connect several major South
Slide 29: Two Growth Segments
Two Growth Segments Long Term Sustainable Growth Service Provider Enterprise Solutions Solutions • $455M 2017 revenues • $410M 2017 revenues • 53% of total • 47% of total Disruptive Business Model Copyright © Ubiquiti Networks, Inc. 2017 29
Slide 30: Enterprise Solutions Continuing to Grow Rapidly
ENTERPRISE SOLUTIONS Enterprise Solutions Continuing to Grow Rapidly Profile Revenues Key products1: $410M 50% CAGR $248M HD $178M $122M 2014 2015 2016 2017 Fiscal Year F’17 up 65% over F’16 1. UniFi AC HD AP launched 3QF17; AmpliFi launched 2QF17 Copyright © Ubiquiti Networks, Inc. 2017 30
Slide 31: Positioned in Large, Growing Market
ENTERPRISE SOLUTIONS Positioned in Large, Growing Market1 Note: Market size and growth here does not include Consumer Home Wi‐Fi (launched in F2017) Market Size 2016 Market Growth 2016‐2020 10‐15% annually Total Market $35‐$40B Total Addressable Market $10‐$15B $0.4B Copyright © Ubiquiti Networks, I
Slide 32: Rapidly Gaining Market Share in Wireless LAN Market
ENTERPRISE SOLUTIONS Rapidly Gaining Market Share in Wireless LAN Market1 Global Market Ubiquiti Global Access Global Unit Market Share Point Sales UniFi Access Points (Per Dell’Oro) (Per Dell’Oro) $4.9B $208M 16% $4.3B +13% +73% 12% +34% $120M 2014 2016 2014 2016 2014 2016 2017 Market Share @ >19%
Slide 33: Typical UniFi Network Setup
ENTERPRISE SOLUTIONS Typical UniFi® Network Setup Clients Want Convergence and Flexibility1 University / Industrial Campus Corporate Buildings Controller Internet Cafe Hotel Dorm or Residence Total network control on ONE screen 1. Controller Advantage: 2016 wired and wireless access LAN infrastructu
Slide 34: Case Study: World Record Set with High-Performance Event Wi-Fi
ENTERPRISE SOLUTIONS Case Study: World Record Set with High‐Performance Event Wi‐Fi The Company • KINnect YOU, a family history event for youths, was held at Burns Arena. KINnect YOU set a world record during a 30‐minute period: 18,563 memories uploaded and 12,111 photos tagged using UniFi AC HD Acc
Slide 35: Disruptive Business Model. Delivering High Performance
THE UBIQUITI STORY Disruptive Business Model. Delivering High Performance A high performance company Disruptive business model Two growth segments Long growth runway Copyright © Ubiquiti Networks, Inc. 2017 35
Slide 36: Continuing to Execute Consistent and Proven Strategy
Continuing to Execute Consistent and Proven Strategy 1. Continue to deliver high performance products — at disruptive prices 2. Leverage technologies / business model into adjacent markets 3. Maintain / extend technology leadership 4. Continue to grow powerful user community 5. Continue to cross‐sel
Slide 37: Growth Drivers Next 2-3 Years
OUTLOOK Growth Drivers Next 2‐3 Years $1B‐$1.15B in Revenue and $3.70‐$4.30 Diluted EPS Fiscal 2018 Service Provider Enterprise Solutions • airMAX AC GEN2 upgrade cycle • Strong Y‐o‐Y growth in UniFi Family • New UFiber GPON offering to enable • Continued share gains, attracting larger WISP’s to com
Slide 38: Longer Term will Continue to Deliver Industry-Leading Financial Profile
Longer Term will Continue to Deliver Industry‐Leading Financial Profile Long Term As % of Revenues F2017 Model Revenues 100% 100% Gross margin 46% 45% ‐ 50% R&D 8% 6% ‐ 8% SG&A 4% 3% ‐ 5% Operating margin 34% 30% ‐ 38% Net income margin 30% 25% ‐ 35% Copyright © Ubiquiti Networks, Inc. 2017 38
Slide 39: Current Valuation – Set to Improve as Margin Sustainability and Growth Profile Understood
Current Valuation – Set to Improve as Margin Sustainability and Growth Profile Understood Calendar 2017 P/E Ratio1 High Growth Peer Average 22x 15x High Growth Peers • Arista • Avigilon • Infinera • A10 • Fortinet • NETGEAR 1. Prices and 2017 Forecasted EPS at 08/02/17 Copyright © Ubiquiti Networks,
Slide 40: Disruptive Business Model. Delivering High Performance
SUMMARY Disruptive Business Model. Delivering High Performance • Proven, consistent performance The Performance outgrowing the industry The Business • Disruptive business model Model • Continually introducing disruptive The Products price / performance products • Long growth runway, sustainable Th
Slide 41: About Ubiquiti Networks
About Ubiquiti Networks Ubiquiti Networks, Inc. (NASDAQ: UBNT) currently focuses on 3 main technologies: hi‐ capacity distributed Internet access, unified information technology, and next‐gen consumer electronics for home and personal use. The majority of the company’s resources consist of entrepren
Slide 42: Appendix
Appendix Ob UBIQUITI N ET WOR K §S
Slide 43: UBNT Key Metrics Versus Peers
UBNT Key Metrics Versus Peers1 In Order of 3‐Yr. Net Income Margin Percentage Sales/ Net Income Calendar 2017 Ticker LTM Gross LTM Op. Employee Margin P/E Margin % Margin % (millions) 3 Yr. Avg. % Ratio UBNT US 46% 34% $1.3 28% 15 CSCO US 63% 26% $0.7 19% 12 MSI US 48% 21% $0.4 17% 16 ANET US 64% 25
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