Ubiquiti Inc. · NYSE:UI
Ubiquiti — Ubiquiti Networks — Investor Presentation (February 2017)
55 slides from Ubiquiti's investor presentation, February 2017
Slide 1: Investor Presentation
Investor Presentation February 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… STRENGTH Our strength is our global online community BUSINESS VISION Connecting everyone, MODEL everywhere MISSION C U LT U R E Our business Ubiquiti unifies top model is unique To design and develop designers and industry-leading, developers to ach
Slide 4: … with a Successful, Disruptive Business Model
… with a Successful, Disruptive Business Model Global Markets Disruptive EPS Growth Products Targeted Pricing 2013-20161 Up to Underserved & Innovative, easily deployable 80% 41% Underpenetrated lower cost than CAGR competitors 1. Diluted EPS for the fiscal years ending June 30 Copyright © Ubiquiti
Slide 5: 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 5
Slide 6: Two Segments. Strong Global Footprint
AT A G L A N C E Two Segments. Strong Global Footprint Latest Twelve Months (LTM) Ending Q2F171 Revenue Breakdown Key Metrics $771M Countries & territories >180 By Service Enterprise2 43% Product 57% Mix Provider Distributors >100 Sales outside N. America 61% Asia Pacific North America Employees in
Slide 7: Global Exposure to Rapidly Growing Markets
Global Exposure to Rapidly Growing Markets Revenue Breakdown by Region LTM Q2F17 39% EMEA 39% N. America 11% Asia Pacific 11% S. America • 61% of Ubiquiti’s revenue from outside N. America • Serving fast growing and previously underserved & underpenetrated markets Copyright © Ubiquiti Networks, Inc.
Slide 8: 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 cost – multiple market model opportunities Copyright © Ubiquiti Networks, Inc. 2017 8
Slide 9: 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 Net
Slide 10: 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) $21B UniFi Video • Video Surveillance $ 5B EdgeMax • Carrier Routing and Switching $ 4B airFiber • Wireless Backhaul $ 4B Total $34B
Slide 11: 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 12: Successful Revenue Growth in Targeted Markets
Successful Revenue Growth in Targeted Markets 28% $771M CAGR1 $666M $596M Enterprise $573M Segment $321M Service Provider Segment FY '13 FY '14 FY '15 FY '16 LTM Q2'17 1. CAGR calculated using 0.5 year period, including LTM Q2F17 Copyright © Ubiquiti Networks, Inc. 2017 12
Slide 13: Results: An Unusual Combination – Disruptive Model + Highly Profitable
Results: An Unusual Combination – Disruptive Model + Highly Profitable Revenues EPS1 Cash Equivalents ($M) ($) ($M) $771M $2.89 $613M 2.4X 3.2X 2.7X $321M $228M $0.89 2013 LTM Q2'17 2013 LTM Q2'17 2013 LTM Q2'17 Fiscal Year Fiscal Year Fiscal Year 1. Diluted Copyright © Ubiquiti Networks, Inc. 2017
Slide 14: 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 14
Slide 15: A Disruptive Business Model
A Disruptive Business Model 1. Target underserved 2. Deliver innovative, and underpenetrated differentiated 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 15
Slide 16: 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 17: 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 17
Slide 18: 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 simple, easy to install, robust products Price sensitive Good growth potent
Slide 19: 1. Target Underserved Markets
BUSINESS MODEL #1 1. Target Underserved Markets Service Provider – Examples Enterprise Solutions – Examples • Emerging markets “unconnected” • Small and medium businesses • Developed markets • Hospitality “under-connected” or price • Education (K-12) sensitive • The connected home Copyright © Ubiqui
Slide 20: 2. Develop Innovative, Differentiated Products
BUSINESS MODEL #2 2. Develop Innovative, Differentiated Products • High performance − include proprietary components, protocols and processes • Intellectual property1 − 39 patents in U.S., 20 in foreign countries, 130 pending • “Last entrant” advantage − designed from blank sheet of paper − focus on
Slide 21: 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. 21-97% for peers1 Low Cos
Slide 22: 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 23: 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) 28%-75% 21%-97% 48% 53% 47% 12% Peer Avg Peer Avg Highest Sales per Employee Highest 3-YR Net Income Margin $1.4M 28% $0.2-$1.4M -28%-19% $0.5 4% Peer Avg Peer Avg Copyrigh
Slide 24: 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 24
Slide 25: Two Growth Segments
Two Growth Segments Long Term Sustainable Growth Service Provider Enterprise Solutions Solutions • $441M LTM Q2F17 • $330M LTM Q2F17 revenues, 57% of total revenues, 43% of total Disruptive Business Model Copyright © Ubiquiti Networks, Inc. 2017 25
Slide 26: Service Provider Solutions – Consistent and Steady Growth
SERVICE PROVIDER Service Provider Solutions – Consistent and Steady Growth Profile Revenues Key products: 4% CAGR1 $441M $418M $418M 2015 2016 LTM Q2'17 Fiscal Year • 1st Half F17 up 11% over same period F16 1. CAGR calculated using 0.5 year period, including LTM Q2F17 Copyright © Ubiquiti Networks,
Slide 27: Positioned in Large, Growing Market
SERVICE PROVIDER Positioned in Large, Growing Market1 Market Size 2016 Market Growth 2016-2020 5-10% annually Total Market $10B Total Addressable Market $1.4B $0.4B 1. Source: IDC custom Fixed Wireless Access (FWA): Global and Regional Market Opportunity Analysis dated October 2013, and Management e
Slide 28: 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 29: 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 30: Two Growth Segments
Two Growth Segments Long Term Sustainable Growth Service Provider Enterprise Solutions Solutions • $441M LTM Q2F17 • $330M LTM Q2F17 revenues, 57% of total revenues, 43% of total Disruptive Business Model Copyright © Ubiquiti Networks, Inc. 2017 30
Slide 31: Enterprise Solutions Continuing to Grow Rapidly
ENTERPRISE SOLUTIONS Enterprise Solutions Continuing to Grow Rapidly Profile Revenues Key products: $330M 48% CAGR1 $248M $178M HD $122M 2014 2015 2016 LTM Q2'17 Fiscal Year • 1st Half F17 up 82% over same period F16 1. CAGR calculated using 0.5 year period, including LTM Q2F17 Copyright © Ubiquiti
Slide 32: Positioned in Large, Growing Market
ENTERPRISE SOLUTIONS Positioned in Large, Growing Market1 Market Size 2016 Market Growth 2016-2020 10-15% annually Total Market $35-$40B Total Addressable Market $10-$15B $0.3B Copyright © Ubiquiti Networks, Inc. 2017 1. Sources: Dell’Oro Group WLAN 5-Yr Forecast Report January 2017, Gartner study,
Slide 33: Rapidly Gaining Market Share in Wireless LAN Market
ENTERPRISE SOLUTIONS Rapidly Gaining Market Share in Wireless LAN Market1 Global Market Ubiquiti Global Sales US Unit Market Share (WLAN Only per IDC) $9.6B $207M 3.1% $9.3B +3% +53% +140 BPS $135M 1.7% Sept '15 Sept '16 Sept '15 Sept '16 Sept '15 Sept '16 LTM LTM LTM LTM LTM LTM 1. Share data for E
Slide 34: 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 35: Case Study: InterContinental Bali Resort Uses UniFi
ENTERPRISE SOLUTIONS Case Study: InterContinental Bali Resort Uses UniFi® to Deliver Superior Guest Experience The Company • Luxury Bali resort, 417 rooms The Deployment INDONE S IA • Ubiquiti customer since 2007 Bali • Coverage of entire 44.5 acre resort − 146 UniFi APs − 10 outdoor units • Advanta
Slide 36: 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 36
Slide 37: 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 38: Continue to Innovate, Grow in Adjacent Markets
A C L O S E R L O O K AT S T R AT E G Y # 2 Continue to Innovate, Grow in Adjacent Markets Future / Growth airFiber LTU Consumer AmpliFi Video Surveillance Connected Smart Home Fixed Present / Wireless Large / Broadband Enterprise UniFi Family Growing WLAN Products 1 Excel in core businesses 2 Build
Slide 39: Grow by Cross-Selling to Loyal Ubiquiti Community Customer Base
A C L O S E R L O O K AT S T R AT E G Y # 5 Grow by Cross-Selling to Loyal Ubiquiti Community Customer Base Revenue airMAX AC air Fiber EdgeMAX airMAX 4,000,000 UniFi registered Ubiquiti UniFi AC HD SECURITY Community UniFi GATEWAY members UniFi VIDEO UniFi AMPLIFI SWITCH Time Copyright © Ubiquiti N
Slide 40: Growth Drivers Next 2-3 Years: $1B in Revenue Goal Fiscal 2018
OUTLOOK Growth Drivers Next 2-3 Years $1B in Revenue Goal Fiscal 2018 Service Provider Enterprise Solutions • airMAX ac with backward compatibility • Strong Y-o-Y growth in UniFi Family – replenishment cycle • Continued share gains, attracting larger businesses • New sophisticated products containin
Slide 41: Ubiquiti 2-3 Years Out
Ubiquiti 2-3 Years Out • Increased share of sales in N. America – reflects faster growth in both Service • Improved investor • Revenue projected Provider and Enterprise understanding of to increase Solutions segment company >50% • Continue to leverage low cost product development capability − contin
Slide 42: Longer Term will Continue to Deliver Industry-Leading Financial Profile
Longer Term will Continue to Deliver Industry-Leading Financial Profile First Half Long-Term As % of Revenues F17 Model Revenues 100% 100% Gross margin 46% 45% - 50% R&D 7% 8% - 10% SG&A 4% 3% - 5% Operating margin 35% 30% - 38% Net income margin 32% 25% - 35% Copyright © Ubiquiti Networks, Inc. 201
Slide 43: Current Valuation – Set to Improve as Margin Sustainability Understood
Current Valuation – Set to Improve as Margin Sustainability and Growth Profile Understood 2017 P/E Ratio1 High Growth Peer Average 23x 15x High Growth Peers • Arista • Avigilon • Infinera • A10 • Fortinet • NETGEAR 1. Prices and 2017 Forecasted EPS at 02/14/17 Copyright © Ubiquiti Networks, Inc. 201
Slide 44: 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 45: About Ubiquiti Networks
About Ubiquiti Networks Ubiquiti Networks, Inc. (Nasdaq: UBNT) eliminates barriers to connectivity for under- networked enterprises, communities and consumers with its leading-edge platforms that connect hundreds of millions of people throughout the world. With over 60 million devices sold worldwide
Slide 46: Appendix
Appendix WJ UBIQUITI NETWORKS
Slide 47: UBNT Key Metrics Versus Peers
UBNT Key Metrics Versus Peers1 In Order of 3-Yr. Net Margin Percentage Sales/ Net Income Ticker LTM Gross LTM OpEx to LTM Op. 2017 P/E Employee Margin Margin % Sales % Margin % Ratio (millions) 3 Yr. Avg. % UBNT US 48% 12% 36% $1.4 28% 15.3 CSCO US 63% 37% 26% $0.7 19% 12.1 MSI US 48% 30% 17% $0.4 1
Slide 48: Enterprise Wireless LAN Networking – Dollars Equipment Analysis
Enterprise Wireless LAN Networking – Dollars Equipment Analysis – LTM September 30, 2016
Slide 49: Summary Dollar Share
Summary Dollar Share All Data sourced from IDC • Ubiquiti’s growth of 53.1% versus a very low industry growth rate of 3.2%, over the past year, was outstanding • It's apparent Ubiquiti’s share is shifting towards the US where the Company had more than 100% growth in at factory sales (sell-in) the pa
Slide 50: Wireless LAN Data Networking Equipment
Wireless LAN Data Networking Equipment Total Industry - Latest 12 Months (Calendar Q4’15-Q3’16). Ubiquiti growth rate of 53.1% (see next page) over the past year is outstanding relative to industry growth of 3.2% Factory Revenue (USD millions) by Region LTM 9/15 – Total $9.3B +3.2% LTM 9/16 – Total
Slide 51: Wireless LAN Data Networking Equipment – Ubiquiti
Wireless LAN Data Networking Equipment – Ubiquiti Latest 12 Months (Calendar Q4’15-Q3’16) - It's apparent Ubiquiti share is shifting towards the US where there was more than 100% growth. Ubiquiti global unit share of WLAN equipment was 12% in early calendar 2016 according to both Gartner & IDC. Oct.
Slide 52: Wireless LAN Data Networking Equipment – Industry
Wireless LAN Data Networking Equipment – Industry Latest 12 Months (Calendar Q4’15-Q3’16) Factory Revenue ($M) by Standard LTM 9/15 – Total $9.3B +3.2% LTM 9/16 – Total $9.6B $927.3 $870.2 $3,437.7 $4,782.9 $3,571.1 $5,287.1 802.11n 802.11ac Other 802.11n 802.11ac Other In addition to global WLAN up
Slide 53: Wireless LAN Data Networking Equipment – Ubiquiti
Wireless LAN Data Networking Equipment – Ubiquiti Latest 12 Months (Calendar Q4’15-Q3’16) Factory Revenue ($M) by Standard LTM 9/15 – Total $135.4 +53.1% LTM 9/16 – Total $207.3 0 0 $28.1 $62.0 $145.3 $107.3 802.11n 802.11ac Other 802.11n 802.11ac Other …and the consumer upgrade cycle to 802.11ac fr
Slide 54: Wireless LAN Data Networking Equipment – Industry
Wireless LAN Data Networking Equipment – Industry Latest 12 Months (Calendar Q4’15-Q3’16) Factory Revenue ($M) by Product Class LTM 9/15 – Total $9.3B +3.2% LTM 9/16 – Total $9.6B $4,342.2 $4,240.6 $4,961.5 $5,358.2 Consumer Enterprise Consumer Enterprise The Enterprise market is growing whereas the
Slide 55: Wireless LAN Data Networking Equipment – Ubiquiti
Wireless LAN Data Networking Equipment – Ubiquiti Latest 12 Months (Calendar Q4’15-Q3’16) Factory Revenue ($M) by Product Class LTM 9/15 – Total $135.4 +53.1% LTM 9/16 – Total $207.3 $- $- $135.4 $207.3 Consumer Enterprise Consumer Enterprise Global Enterprise dollar Market Share of UniFi went from
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