Founder, BWS Financial Inc

Hamed Khorsand

Founder

Independent Stock Specific Research

BWS Financial Inc

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Equity Bottom-Up

<ul>
<li>Ubiquiti (UI) reported fiscal second quarter (December) results showing sequential improvement in enterprise revenue while service provider remains a headwind for the business</li>
<li>Ubiquiti introduced several products in the December quarter which started to gain customer traction. There could be momentum in the March quarter as customers become familiar with the new products</li>
<li>The year over year revenue performance has been challenged with Ubiquiti lapping the initial customer enthusiasm about the Company having product in stock</li>
</ul>


Ubiquiti (UI) reported fiscal second quarter (December) results showing sequential improvement in enterprise revenue while service provider remains a headwind for the business
Ubiquiti introduced several products in the December quarter which started to gain customer traction. There could be momentum in the March quarter as customers become familiar with the new products
The year over year revenue performance has been challenged with Ubiquiti lapping the initial customer enthusiasm about the Company having product in stock


<ul>
<li>New product introductions have historically resulted in revenue growth at Ubiquiti (UI) and fiscal second quarter 2024 (December 2023) had several of them</li>
<li>Ubiquiti has introduced a series of new products. The biggest change at Ubiquiti is the availability of paid for tech support</li>
<li>There are several products that have stood out this past quarter. Including, a new Dream Machine meant for the home, called UniFi Express. The device immediately sold out</li>
</ul>


New product introductions have historically resulted in revenue growth at Ubiquiti (UI) and fiscal second quarter 2024 (December 2023) had several of them
Ubiquiti has introduced a series of new products. The biggest change at Ubiquiti is the availability of paid for tech support
There are several products that have stood out this past quarter. Including, a new Dream Machine meant for the home, called UniFi Express. The device immediately sold out


<ul>
<li>UI fiscal first-quarter results (September) fell short of consensus estimates, primarily due to underperforming sales in the enterprise segment.</li>
<li>Our initial expectations included the anticipation of soft demand for Ubiquiti, which was compounded by our belief in the enterprise spending momentum continuing</li>
<li>Ubiquiti's fiscal first-quarter revenue came in at $463.1 million, falling short of our estimate of $547.9 million. Historically, the quarter has been a strong period, making this deviation particularly noteworthy</li>
</ul>


UI fiscal first-quarter results (September) fell short of consensus estimates, primarily due to underperforming sales in the enterprise segment.
Our initial expectations included the anticipation of soft demand for Ubiquiti, which was compounded by our belief in the enterprise spending momentum continuing
Ubiquiti's fiscal first-quarter revenue came in at $463.1 million, falling short of our estimate of $547.9 million. Historically, the quarter has been a strong period, making this deviation particularly noteworthy


<ul>
<li>UI stock has come under pressure on fears UI could have exposure to an overstocked channel with the Company’s debt balance becoming a new concern in a rising rate environment</li>
<li>Prior to the inventory build, the biggest challenge for Ubiquiti was not having enough inventory</li>
<li>Ubiquiti was the premier sponsor for this year’s Wispapalooza conference. The sponsorship marks a return for the Company to the trade show in four years</li>
</ul>


UI stock has come under pressure on fears UI could have exposure to an overstocked channel with the Company’s debt balance becoming a new concern in a rising rate environment
Prior to the inventory build, the biggest challenge for Ubiquiti was not having enough inventory
Ubiquiti was the premier sponsor for this year’s Wispapalooza conference. The sponsorship marks a return for the Company to the trade show in four years


<ul>
<li>UI June quarter (fiscal year end) showcased how investment in more inventory has led to Ubiquiti growing revenue and the return of gross margin above 40 percent</li>
<li>UI reported revenue of $491.1 million for the June quarter compared to our forecast of $483.4 million. Ubiquiti having more product in stock on a regular basis led to outperformance</li>
<li>Ubiquiti is now on pace to grow revenue again in fiscal 2024 with greater possibility of free cash flow compared to fiscal 2023</li>
</ul>


UI June quarter (fiscal year end) showcased how investment in more inventory has led to Ubiquiti growing revenue and the return of gross margin above 40 percent
UI reported revenue of $491.1 million for the June quarter compared to our forecast of $483.4 million. Ubiquiti having more product in stock on a regular basis led to outperformance
Ubiquiti is now on pace to grow revenue again in fiscal 2024 with greater possibility of free cash flow compared to fiscal 2023


United States

Ubiquiti Inc. provides wireless networking products and solutions. The Company offers radios, antennas, and management tools that have been designed to deliver carrier class performance for wireless networking and other applications in the unlicensed radio frequency. Ubiquiti operates in the State of New York.

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Ubiquiti Inc. (UI US)

UI: Inventory & Free Cash Flow

Ubiquiti has continued to reduce inventory and generate free cash flow with revenue showing consistency at a level materially higher compared to...

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UI: New Products Surging Interest

UI released a series of new products in the December quarter. A new Pro Max switch and UniFi Express product have garnered significant interest we...

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UI: Surprise Revenue Miss, PT to $160

We continue to believe new product introductions should serve as a catalyst to ignite growth. However, an extended timeline to reach our initial...

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UI: Wispa’s of a Comeback

Ubiquiti's presence at Wispapalooza should not be overlooked given the decline in service provider revenue in recent years. We are projecting a...

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UI: Restart of Growth

UI's June quarter affirms our expectations of the return of revenue growth after UI invested in having ample inventory available to meet demand.

BWS Financial Inc

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