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The Company has a very broad installed base with over 108 million devices sold in over 200 countries and territories around the world, since inception.
+Added: On August 8, 2019, the Company, acting pursuant to authorization from its Board of Directors (the “Board”), determined to voluntarily withdraw the listing of its common stock, par value $0.001 per share (the “Common Stock”) from the Nasdaq Global Select Market (“Nasdaq”) and transfer the listing to the New York Stock Exchange (the “NYSE”).
+Added: The Company’s Common Stock commenced trading on NYSE on August 20, 2019 under the ticker symbol “UI”.
We develop technology platforms for high-capacity distributed Internet access, unified information technology, and consumer electronics for professional, home and personal use.
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We target the service provider and enterprise markets through our highly engaged community of service providers, distributors, value added resellers, systems integrators and corporate IT professionals, which we refer to as the Ubiquiti Community.
−Removed: We target consumers through digital marketing, retail chains and to lesser extent the Ubiquiti community.
−Removed: The majority of our resources consist of entrepreneurial and de-centralized research and development ("R&D").
−Removed: We do not employ a traditional direct sales force, but instead drives brand awareness through online reviews and publications, our website, its distributors and the company’s user community where customers can interface directly with R&D, marketing, and support.
−Removed: Our 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 markets.
+Added: We target consumers through digital marketing, retail chains and, to a lesser extent, the Ubiquiti Community.
+Added: The majority of our human capital resources consist of entrepreneurial and de-centralized research and development (“R&D”)
+Added: We do not employ a traditional direct sales force, but instead drive brand awareness through online reviews and publications, our website, our distributors and the Company’s user community where customers can interface directly with our R&D, marketing, and support teams.
+Added: Our 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 market.
We offer a broad and expanding portfolio of networking products and solutions for operator-owners of wireless internet services (“WISP’s”), enterprises and smart homes.
−Removed: Our operator-owner service provider-product platforms provide carrier-class network
−Removed: infrastructure for fixed wireless broadband, wireless backhaul systems and routing and the related software for WISP's to easily control, track and bill their customers.
+Added: Our 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 WISP’s to easily control, track and bill their customers.
Our enterprise product platforms provide wireless LAN (“WLAN”) infrastructure, video surveillance products, switching and routing solutions, security gateways, 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.
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Further information regarding Segments can be found in Note 15 to our Consolidated Financial Statements.
−Removed: Our revenues were $1.2 billion, $1.0 billion and $865.3 million in the fiscal years ended June 30, 2019, 2018 and 2017, respectively.
+Added: Our revenues were $1.3 billion, $1.2 billion and $1.0 billion in the fiscal years ended June 30, 2020, 2019 and 2018, respectively.
We reported net income of $380.3 million, $322.7 million and $196.3 million in the fiscal years ended June 30, 2020, 2019 and 2018, respectively.
−Removed: Refer to our Consolidated Financial Statements included under Part IV, Item 15 of this report for more financial information.
+Added: Refer to our Consolidated Financial Statements included under Part IV,
+Added: Item 15 of this report for more financial information.
Industry Overview
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• UniFi Switch - UniFi Switch is one of our top selling categories as end customers can easily add equipment as they expand their networks.
−Removed: UniFi Switches deliver performance, switching, and power of ethernet ("PoE+") support for enterprise networks.
+Added: UniFi Switch delivers performance, switching, and power of ethernet (“PoE+”) support for enterprise networks.
• UniFi Security Gateway - UniFi Security Gateway extends the UniFi enterprise solutions to provide cost-effective, reliable routing and advanced network security.
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We and our contract manufacturers rely on purchase orders rather than long-term contracts with these suppliers.
−Removed: The majority of our product revenues are dependent upon the sale of products that incorporate components from Qualcomm Atheros, Inc.
−Removed: ("Qualcomm Atheros").
−Removed: We are party to a non-exclusive license agreement with Qualcomm Atheros whereby we license certain technology that we incorporate into our products.
−Removed: This agreement automatically renews for successive one year periods unless the agreement is terminated by written notice of nonrenewal at least 90 days prior to the end of its then-current term.
−Removed: The Company has not received a termination notice as of the date of this Report.
−Removed: We depend on this license agreement to modify and replace firmware that Qualcomm Atheros provides with the chipsets with our proprietary firmware.
−Removed: While our agreement with Qualcomm Atheros remains effective, in accordance with the current terms of the agreement, either party may terminate the agreement without cause at the end of the annual contract term.
−Removed: We do not stockpile sufficient chipsets to cover the time it would take to re-engineer our products to replace the Qualcomm Atheros chipsets which comprise the raw materials for our product offerings.
−Removed: If we need to seek a suitable second source for Qualcomm Atheros in our products, there can be no assurance that we would be able to successfully source our chipsets on suitable terms, if at all.
+Added: The majority of our product revenues are dependent upon the sale of products that incorporate components from a small number of suppliers.
+Added: We are party to non-exclusive license agreements with some of these suppliers whereby we license certain technology that we incorporate into our products.
+Added: These agreements generally automatically renew for successive one-year periods unless the agreements are terminated by written notice of nonrenewal with advance notice prior to the end of their then-current term.
+Added: The Company has not received any termination notice as of the date of this Report.
+Added: We depend on these license agreements to modify and replace firmware on certain chipsets with our proprietary firmware.
+Added: While our agreements with suppliers remains effective, the terms of these agreements, allow either party to terminate the agreements without cause at the end of the annual contract term.
+Added: We do not stockpile sufficient chipsets to cover the time it would take to re-engineer our products to replace the chipsets which comprise the raw materials for our product offerings.
+Added: If we need to seek a suitable second source for our products, there can be no assurance that we would be able to successfully source our chipsets on suitable terms, if at all.
In any event, our use of chipsets from multiple sources may require us to significantly modify our designs and manufacturing processes to accommodate these different chipsets.
+Added: We have experienced a major disruption in our supply chain as a result of the COVID-19 pandemic due to COVID-19 related restrictions that have significantly impacted our suppliers’ ability to manufacture or provide key components or services.
+Added: For a further discussion of the uncertainties and business risks associated with the COVID-19 pandemic, refer to “Part I-Item 1A.
+Added: Risk Factors - Risks Related to Our Business and Industry - Our contract manufacturers, logistics centers and certain administrative and research and development operations, as well as our customers and suppliers, are located in areas likely to be subject to natural disasters and public health problems, which could adversely affect our business, results of operations and financial condition.”
In June 2018, the Office of the United States Trade Representative announced new proposed tariffs for certain products imported into the U.S.
−Removed: As of September 24, 2018, these tariffs were implemented with an initial rate of 10% impacting a portion of our products.
−Removed: On May 10, 2019, the Office of the U.S.
−Removed: Trade Representative increased tariffs on certain imported goods from China to 25%.
−Removed: On May 13, 2019, the U.S.
−Removed: Trade Representative released a list of Chinese-origin products with an annual trade value of approximately $ 300 billion on which the U.S.
−Removed: proposed to impose Section 301 tariffs of up to 25%, which covered almost all remaining imports from China that are not already subject to Section 301 tariffs.
−Removed: On June 29, 2019 President Trump announced that trade negotiations with China are resuming and the proposed Section 301 tariffs on $300 billion worth of Chinese goods, first announced on May 13, 2019, were place on hold.
−Removed: On August 13, 2019, it was announced the Section 301 tariffs on $300 billion would go into effect in two parts.
−Removed: "List 4A" on September 1, 2019 at 10% and "List 4B" on December 15, 2019 at 10%.
−Removed: progress and continuation of the negotiations continues to be uncertain and a further escalation of the trade war remains a possibility.
+Added: The vast majority of our products that are imported into the U.S.
+Added: from China are currently subject to tariffs that range between 7.5% and 25%.
+Added: On January 22, 2020, the United States of Trade Representative announced it will reduce Section 301 List 4A additional tariffs from 15% to 7.5% and the List 4B tariffs would not go into effect.
These tariffs have already affected our operating results and margins.
−Removed: As a result, current gross profit margins may not be indicative of future periods.
+Added: For so long as such tariffs are in effect, we expect it will continue to affect our operating results and margins.
+Added: As a result, our historical and current gross profit margins may not be indicative of our gross profit margins for future periods.
Refer to “Part I—Item 1A.
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During fiscal 2020, we sold our products to over 100 distributors and direct to customers through our webstores (collectively, “customers”) in over 75 countries.
−Removed: In fiscal 2019, two customers represented 10% or more of our revenues.
−Removed: In fiscal 2018 and 2017, one customer in each period represented 11% of our revenues.
+Added: In fiscal 2020 and 2018, only one customer represented 10% or more of our revenues in each period presented.
+Added: In fiscal 2019, two customers represented 10% or more of our revenue.
Refer to Note 15 in our Notes to Consolidated Financial Statements for more information regarding financial data by geographic areas.
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Some orders remain in backlog due to concerns about the credit worthiness of the customer and/or delivery held due to inventory channel.
−Removed: We do not believe our backlog information is a reliable indicator of our ability to achieve any particular level of revenue of financial performance.
+Added: We do not believe our backlog information is a reliable indicator of our ability to achieve any particular level of revenue or financial performance.
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 the following competitive factors, among others:
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As of June 30, 2020, we employed and or contracted with 1,021 full time equivalent employees, which included 714 in research and development, 84 in sales, general and administrative and 223 in operations.
−Removed: None of our employees are represented by a labor union or are party to a collective bargaining agreement.
−Removed: We consider our relations with our employees to be good.
Available Information
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Securities and Exchange Commission (the “SEC”).
−Removed: Such reports and other information filed by the Company with the SEC are available free of charge on the Company’s website at http://ir.ui.com/sec.cfm when such reports are available on the SEC website.
+Added: Such reports and other information filed by the Company with the SEC are available free of charge on the Company’s website at http://ir.ui.com when such reports are available on the SEC website.
Reports of beneficial ownership filed pursuant to Section 16(a) of the Exchange Act are also available on our website.
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Compared sentence by sentence after normalising whitespace, quotation marks, case and digits, so re-formatting and restated figures do not read as changed language. Wording changes appear as one removal and one addition. The current filing and the prior one are authoritative.