Ubiquiti Inc.

Ubiquiti Inc. develops technology platforms for high-capacity distributed Internet access, unified information technology, and consumer electronics for professional, home and personal use, categorizing its solutions into high performance networking technology for enterprises, service providers and consumers. The Company sells equipment and provides related software platforms worldwide through a network of over 100 distributors, online retailers and direct to customers through its webstores, with its devices playing a role in creating networking infrastructure in over 200 countries and territories around the world. Internet traffic worldwide has grown rapidly in recent years, driven by an increase in the number of users, increasing mobility of those users and high bandwidth applications, such as video, audio, cloud-based applications, online gaming and social networking, and wireless networks have emerged as an attractive alternative for addressing the broadband access needs of underserved and underpenetrated markets in both emerging and developed countries.

The markets for networking solutions for service providers, enterprise WLAN, video surveillance, microwave backhaul and machine-to-machine communications technology are highly competitive and are influenced by factors including total cost of ownership, simplicity of deployment, ability to rapidly develop high performance integrated solutions, reliability and scalability, market awareness of a particular brand, ability to provide secure access to wireless networks, ability to offer a suite of products and solutions, ability to allow centralized management, and ability to provide quality product support. In the backhaul market, the Company's competitors include Cambium Networks, Ceragon Networks, MikroTīkls and Trango; in the CPE market, competitors include Cambium Networks, MikroTīkls, Tarana Wireless and TP-Link Technologies; in the enterprise WLAN and switching markets, the Company primarily competes with Cisco, Fortinet, HPE Aruba Networks, Juniper Networks and Ruckus (CommScope); and in the video surveillance market, the Company primarily competes with Axis Communications, HIKVISION, Hanwha Vision and Verkada. The Company believes it competes favorably with respect to these competitive factors, having been successful in rapidly developing high performance integrated solutions because it uses individual contributors and small, experienced development teams that focus on the key needs of the markets.

The Company generates revenue principally from the sale of networking hardware, and because it has historically included implied post-contract customer support free of charge in many of its arrangements, it attributes a portion of its revenues to this implied PCS. The Company sells its products and solutions globally to enterprises and service providers primarily through its extensive network of distributors, and to a lesser extent through sales through its webstores, with sales to distributors accounting for 56% and 62% of revenues during the years ended June 30, 2025 and 2024, respectively, and webstore sales accounting for 44% and 38% of revenues during those same periods. The Company does not employ a traditional direct sales force, but instead drives brand awareness through online reviews and publications, its website, its distributors and the Company's user community where customers can interface directly with its R&D, marketing, and support teams.

The Company's Enterprise Technology solutions include UniFi Cloud Gateway, an enterprise class internet and security gateway device that provides reliable routing, advanced cybersecurity and centralized site management; UniFi WiFi, an enterprise WiFi system that combines state-of-the-art hardware with intuitive software management for configuration of access points at scale; UniFi Protect, a powerful video surveillance platform offering private local storage, secure remote access and a versatile range of cameras; UniFi Switch, a versatile switching platform that delivers high-capacity performance and power over ethernet to scale enterprise networks; UniFi Access, a secure and expandable access control solution featuring touchscreen readers, live video integration, and support for mobile credentials; and UniFi Talk, a plug-and-play business phone system and VoIP subscription service. The Company's Service Provider technology and carrier solutions include airMAX, a platform with proprietary protocols containing advanced technologies for minimizing signal noise that supports base stations, radios, backhaul equipment and customer premise equipment; airFiber, a wireless backhaul point-to-point radio system; UFiber GPON, a plug and play fiber network technology that allows users to build passive optical network deployments; and Wave, built on proprietary Wave Technology that leverages the global, unlicensed 60 GHz band to maximize speed and performance across long-range wireless deployments. Enterprise Technology revenues were $2,254,254 thousand ¹ and $1,617,665 thousand ² in fiscal 2025 and 2024, respectively, representing 88% ³ and 84% ⁴ of total revenues, while Service Provider Technology revenues were $319,291 thousand ⁵ and $310,825 thousand ⁶ in fiscal 2025 and 2024, respectively, representing 12% ⁷ and 16% ⁸ of total revenues.

The Company's current Enterprise Technology solutions include UniFi Cloud Gateway, UniFi WiFi, UniFi Protect, UniFi Switch, UniFi Access, and UniFi Talk, while its current Service Provider technology and carrier solutions include airMAX, airFiber, UFiber GPON, and Wave. Enterprise Technology revenues increased $636.6 million ⁹, or 39.4% ¹⁰, from $1,617.7 million ¹¹ in fiscal 2024 to $2,254.3 million ¹² in fiscal 2025, primarily due to an increase in revenue from the Enterprise Technology platform in all regions except South America. Service Provider Technology revenues increased $8.5 million ¹³, or 2.7% ¹⁴, from $310.8 million ¹⁵ in fiscal 2024 to $319.3 million ¹⁶ in fiscal 2025, primarily due to an increase in revenue in the Service Provider Technology platform in the Europe, the Middle East and Africa region, partially offset by declines in all other regions.

During fiscal 2025, the Company sold its products to over 100 distributors and direct to customers through its webstores in over 75 countries, and there were no customers that represented 10% or more of revenue. The Company's research and development team consisted of 1,187 ¹⁷ full time equivalent employees, including contractors, located in the United States, Taiwan, China, Latvia, the Czech Republic, Lithuania, Ukraine, Sweden, and elsewhere as of June 30, 2025. The Company employed and/or contracted with 1,667 ¹⁸ full time equivalent employees as of June 30, 2025, of which 1,187 ¹⁹ were in research and development, 357 ²⁰ were in operations, and 123 ²¹ were in sales, general and administrative, with the workforce diversified across multiple locations with 65% ²², 24% ²³ and 11% ²⁴ located in Asia Pacific, Europe, the Middle East, and Africa, and the Americas, respectively. The Company's balance outstanding under the Amended Credit Agreement for its Term Facilities was $250.0 million ²⁵ as of June 30, 2025, with no outstanding balance on the Revolving Facility, and the Facilities mature in March 2026. On August 22, 2025, the Company announced that the Board declared a cash dividend of $0.80 ²⁶ per share payable on September 8, 2025 to shareholders of record at the close of business on September 2, 2025, and the Company intends to pay regular quarterly cash dividends of at least $0.80 ²⁷ per share during each remaining quarter of fiscal 2025.

Total revenues increased $645.1 million ²⁸, or 33.4% ²⁹, from $1,928.5 million ³⁰ in fiscal 2024 to $2,573.5 million ³¹ in fiscal 2025, driven by an increase in revenue from both the Enterprise Technology platform and, to a lesser extent, the Service Provider Technology platform, with an increase in both direct sales through webstores as well as sales through distributors. Gross profit margin increased to 43.4% ³² in fiscal 2025 from 38.4% ³³ in fiscal 2024, primarily driven by favorable product mix, and as a percentage of revenue, lower excess and obsolete inventory charges and lower indirect operating expenses, partially offset by higher tariffs. Net income was $711.9 million ³⁴, $350.0 million ³⁵ and $407.6 million ³⁶ in fiscal 2025, 2024 and 2023, respectively, and net cash provided by operating activities was $640.0 million ³⁷ in fiscal 2025.

The Company intends to pay regular quarterly cash dividends of at least $0.80 ³⁸ per share during each remaining quarter of fiscal 2025, however any future dividends will be subject to the approval of the Board, and in determining whether to approve future dividends, the Board will take into account such matters as the Company's financial position and results of operations, available cash and cash flow, capital requirements, growth opportunities, applicable corporate legal requirements, and other factors deemed relevant.

The Company has been investing and expects to continue to invest in growth areas in its enterprise and service provider technologies, such as expansion in enterprise and service provider technologies and subscription services, though the return on these investments may be lower or develop more slowly than expected. The Company's enterprise product platforms provide wireless LAN infrastructure, video surveillance products, switching and routing solutions, security gateways, door access systems, and other complimentary WLAN products along with a unique software platform which enables users to control their network from one simple, easy to use software interface, and the Company's operator-owner service-provider-product platforms provide carrier-class network infrastructure for fixed wireless broadband, wireless backhaul systems and routing and the related software for WISPs to easily control, track and bill their customers. The Company expects that the number of its research and development personnel will increase over time and that its research and development expenses will also increase.

The Company's gross profit has been and may in the future be influenced by several factors including changes in product mix, target end markets for products, channel inventory levels, tariffs, and trade disputes pricing due to competitive pressure, production costs and global demand for electronic components. Recently, the U.S. government has issued several executive orders imposing significant tariffs on imports from China, and tariffs on most imports from other counties, including Vietnam, and these actions have increased the cost of importing products containing certain raw materials and have affected the Company's operating results and margins, with the magnitude and scope of the recent changes having increased and will significantly increase product costs, and for so long as such tariffs are in effect, the Company expects they will continue to affect its operating results and margins. As a result, the Company's historical and current gross profit margins may not be indicative of its gross profit margins for future periods.

The Company uses contract manufacturers, primarily located in Vietnam and China, to manufacture its products, and over the long term, these contract manufacturers are not required to manufacture products for any specific period or in any specific quantity, though if necessary, the Company expects that it would take approximately three to six months to transition manufacturing, quality assurance and shipping services to new providers. The Company relies on third party components and technology to build and operate its products, and relies on its contract manufacturers to obtain the components, subassemblies and products necessary for the manufacture of its products, and while components and supplies in the past have been generally available from a variety of sources, the Company and its contract manufacturers currently depend on a single or limited number of suppliers for several components for its products. The Company has experienced in the past, particularly from 2020 to 2023, and may experience in the future, periodic volatility in the supply of components used to manufacture its products, which has resulted in supply constraints and corresponding increases in component delivery lead times and costs to obtain components, and resulted in delays in product production, and its efforts to mitigate these supply constraints have included increasing its inventory build in an attempt to secure supply and meet customer demand, paying higher component and shipping costs to secure supply and modifying its product designs to leverage alternate suppliers.

Research and development expenses were $169.7 million ³⁹, $159.8 million ⁴⁰ and $145.2 million ⁴¹ for fiscal 2025, fiscal 2024 and fiscal 2023, respectively, and the Company expects that the number of its research and development personnel will increase over time and that its research and development expenses will also increase. The Company used $12.6 million ⁴² of cash in investing activities during fiscal 2025, consisting primarily of $12.6 million ⁴³ of capital expenditures, and used $12.0 million ⁴⁴ of cash in investing activities during fiscal 2024, consisting primarily of $12.0 million ⁴⁵ of capital expenditures. The Company used $604.1 million ⁴⁶ of cash in financing activities during fiscal 2025, which primarily consisted of repayments of debt and payment of common stock dividends, including repayment of $175.0 million ⁴⁷ on its Revolving Facility, net of borrowings, $283.1 million ⁴⁸ on its Term Loan Facilities, and payment of $145.2 million ⁴⁹ for dividends on its common stock.

The Company believes its existing cash and cash equivalents, in addition to the ability to draw cash under the existing Revolving Facility and its intention to have a new facility before the existing one matures in March 2026, if needed, will be sufficient to meet its near-term working capital requirements, dividends, repurchases of its common stock and capital expenditure needs for the next twelve months. The Company believes that it has sufficient track record of managing working capital that it will be able to establish a new credit facility prior to the maturity of its existing credit facility, satisfying its long-term liquidity requirements in the event that the cash from operations is not adequate to meet its cash needs.

The Company's business may be negatively affected by geopolitical events and foreign policy responses, as escalating tensions between the U.S., China and other countries may result in changes in laws or regulations that will affect its ability and/or increase its costs to manufacture and sell its products, and the current U.S. administration has imposed significant increases to tariffs on goods imported into the U.S., including from China and Vietnam, and has raised the possibility of imposing significant, additional tariff increases or expanding the tariffs to capture additional countries and types of goods. The Company faces significant political risks associated with doing business in mainland China and Taiwan, particularly due to the tense relationship between mainland China and Taiwan, as relations between mainland China and Taiwan and other factors affecting military, political or economic conditions in mainland China and Taiwan, including responses by governments worldwide to the geopolitical tension or conflict between mainland China and Taiwan, could materially and adversely affect its business, financial condition and results of operations. The Company is monitoring the military conflict between Russia and Ukraine and the escalating tensions between China and Taiwan, and while the impact on its operations in Ukraine and Taiwan has not been material to its business or results of operations as of the date hereof, the full impact of these conflicts on its business and results of operations remains uncertain.

The Company has limited visibility into future sales as a result of its reliance on distributors, which may increase volatility in its results and makes it difficult to forecast its future results of operations, and because of this limited visibility into end customer demand and channel inventory levels, its ability to accurately forecast future sales is limited. The markets the Company serves can be especially volatile, and weakness in orders could harm its future results of operations, as orders from the markets it serves could decline for many reasons other than the competitiveness of its products and services within their respective markets, and these conditions have harmed its business and results of operations in the past.

The Company has limited visibility into future sales as a result of its reliance on distributors, which may increase volatility in its results and makes it difficult to forecast future results of operations, and because the lead times for procurement of components and subsequent manufacturing are usually much longer than the lead time from customer orders to expected delivery, the risk of manufacturing too many or not enough products in any given period is increased. The Company relies upon a limited number of suppliers, currently depending on some chipset suppliers such as Qualcomm and Broadcom as single-source suppliers of certain components for some of its products, and a disruption in the supply of those components would significantly disrupt its business. The Company's contract manufacturers, logistics centers and certain administrative and research and development operations, as well as its customers and suppliers, are located in areas likely to be subject to natural disasters, public health problems, military conflicts and geopolitical tensions, with manufacturing and logistics contractors primarily located in Vietnam and China and operations in Ukraine, Taiwan and their surrounding countries. The Company faces significant political risks associated with doing business in mainland China and Taiwan, particularly due to the tense relationship between mainland China and Taiwan, as both China and Taiwan are leading manufacturers of the world's semiconductor supply, and conflict between China and Taiwan might lead to trade sanctions, technology disputes, or supply chain disruptions which could affect the semiconductor industry and result in reduced availability of components used to manufacture its products, especially chipsets. The Company's Chief Executive Officer, Robert J. Pera, beneficially owned 56,278,181 ⁵⁰ shares of common stock as of August 22, 2025, and is able to exercise voting rights with respect to a majority of the voting power of outstanding stock, giving him the ability to control the outcome of matters submitted to stockholders for approval.

Management's message emphasizes that the Company was founded by Robert Pera in 2005 and is focused on democratizing network technology on a global scale, with its devices playing a role in creating networking infrastructure in over 200 countries and territories around the world. The Company's technology platforms were designed from the ground up with a focus on delivering highly-advanced and easily-deployable solutions that appeal to a global customer base, and management believes that the Company's products are differentiated due to its proprietary software, firmware expertise, and hardware design capabilities. Management has stated that the Company intends to pay regular quarterly cash dividends of at least $0.80 ⁵¹ per share during each remaining quarter of fiscal 2025, and that the Company believes its existing cash and cash equivalents, in addition to the ability to draw cash under the existing Revolving Facility and its intention to have a new facility before the existing one matures in March 2026, if needed, will be sufficient to meet its near-term working capital requirements, dividends, repurchases of its common stock and capital expenditure needs for the next twelve months.