What changed in this filing

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Item 1. Business

2021-08-27 compared with 2020-08-21 · 48 added, 30 removed, 125 unchanged (38% of the section changed)

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The Company was founded by Robert Pera in 2005.

We sell equipment, and provide the related software platforms, worldwide through a network of over 100 distributors and on-line retailers.

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.

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”).

The Company’s Common Stock commenced trading on NYSE on August 20, 2019 under the ticker symbol “UI”.

We sell equipment, and provide the related software platforms, worldwide through a network of over 100 distributors, on-line retailers and direct to customers through our webstores.

Ubiquiti Inc.

is focused on democratizing network technology on a global scale.

Our devices play a role in creating networking infrastructure in over 200 countries and territories around the world.

Our professional networking products are powered by our UNMS and UniFi software platforms to provide high-capacity distributed Internet access and unified information technology management, respectively.

We develop technology platforms for high-capacity distributed Internet access, unified information technology, and consumer electronics for professional, home and personal use.

We categorize our solutions in to three main categories:

We categorize our solutions into three main categories:

high performance networking technology for service providers, enterprises and consumers.

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.

We target consumers through digital marketing, retail chains and, to a lesser extent, the Ubiquiti Community.

The majority of our human capital resources consist of entrepreneurial and de-centralized research and development (“R&D”)

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.

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 target the service provider and enterprise markets through our highly engaged community of service providers, distributors, value added resellers, webstores, systems integrators and corporate IT professionals, which we refer to as the Ubiquiti Community.

We target consumers through digital marketing, including through our webstores, retail chains and, to a lesser extent, the Ubiquiti Community.

In addition to Mr.

Pera, our founder, Chairman of the Board and Chief Executive Officer, who is central to our business, the majority of our human capital resources consist of entrepreneurial and de-centralized research and development (“R&D”) personnel.

support teams.

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.

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.

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.

Our enterprise product platforms provide wireless LAN (“WLAN”) 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.

Our consumer products, sold under the Ubiquiti Labs brand name, are targeted to the smart home and highly connected consumers.

We believe that our products are highly differentiated due to our proprietary software, firmware expertise, and hardware design capabilities.

We believe that our products are differentiated due to our proprietary software, firmware expertise, and hardware design capabilities.

We operate our business as one reportable and operating segment.

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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.

According to Cisco Visual Networking Index, Global Internet Protocol, or IP, traffic is expected to increase from 122 exabytes per month in 2017 to 396 exabytes per month in 2022, representing an approximate 26% compound annual growth rate, or CAGR, over that period.

According to Cisco Annual Internet Report, internet users as a percentage of global population will be 66%, an increase from 51% in 2018.

Additionally, it is estimated that there will be 3.6 networked devices per capita connected to IP networks in 2023, up from 2.4 networked devices per capita in 2018.

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Key Technology Platforms

Our current major Service Provider and carrier solutions include:

Our current Service Provider and carrier solutions include:

• airMAX - our airMAX platform includes proprietary protocols developed by us that contain advanced technologies for minimizing signal noise.

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It is designed to enable internet providers (“ISPs”) to quickly build high speed fiber internet networks for many users and over long distance.

Our current major Enterprise Provider solutions include:

• UniFi -Enterprise WLAN - our UniFi- Enterprise WLAN platform was designed as an enterprise Wi-Fi system, combining Wi-Fi certified hardware with software-based management controller.

Our current Enterprise Provider solutions include:

• UniFi -Enterprise WLAN - our UniFi-Enterprise WLAN platform was designed as an enterprise Wi-Fi system, combining Wi-Fi certified hardware with software-based management controller (UniFi OS).

UniFi uses a virtual controller that allows for on-site management or remote management through the cloud, allowing for configuration of the network and individual access points.

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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.

• UniFi Console - UniFi Console is an Enterprise class router and security gateway device that is expandable and extends the UniFi enterprise solutions to provide cost-effective, reliable routing and advanced network security.

• UniFi Access - UniFi Access is a state-of-the art door access system that is easily expandable.

We offer a consumer product platform, called AmpliFi, which is a Wi-Fi system solution designed to serve the demands of the modern connected home.

We continue to explore consumer related market opportunities and have research and development teams focused on new consumer related solutions.

We continue to explore consumer related market opportunities and have research and development teams focused on consumer related solutions.

Research and Development

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We expect that the number of our research and development personnel will increase over time and that our research and development expenses will also increase.

For a further discussion of the uncertainties and business risks associated with our international workforce and operations, refer to risk factors under “Part I-Item 1A.

Risk Factors-Risks Related to Our International Operations.”

Manufacturing and Suppliers

We use contract manufacturers, primarily located in China, Vietnam and Taiwan, to manufacture our products.

We use contract manufacturers, primarily located in China and Vietnam, to manufacture our products.

Our relationships with contract manufacturers allow us to conserve working capital, reduce manufacturing costs and minimize delivery lead times while maintaining high product quality and the ability to scale quickly to handle increased order volume.

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If necessary, we expect that it would take approximately three to six months to transition manufacturing, quality assurance and shipping services to new providers.

For a further discussion of the uncertainties and risks associated with our contract manufacturers, see “Part I-Item 1A.

Risk Factors - Risks Related to Our Business and Industry – We rely on a limited number of contract manufacturers to produce our products.

Shortages of components or manufacturing capacity could increase our costs or delay our ability to fulfill future orders and could have a material adverse impact on our business and results of operations.”

We rely on third party components and technology to build and operate our products, and we rely on our contract manufacturers to obtain the components, subassemblies and products necessary for the manufacture of our products.

While components and supplies are generally available from a variety of sources, we and our contract manufacturers currently depend on a single or limited number of suppliers for several components for our products.

While components and supplies in the past have been generally available from a variety of sources, we and our contract manufacturers currently depend on a single or limited number of suppliers for several components for our products and the impact of COVID-19 and the current shortage of chips has limited out ability to meet demand.

We and our contract manufacturers rely on purchase orders rather than long-term contracts with these suppliers.

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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.

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.

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.

We have seen in fiscal 2021, and expect to continue to see increasing demand and reduced availability for certain components (including the chipsets), which has impacted and we expect will continue to impact our ability and costs to manufacture our

We do not stockpile sufficient components, particularly the chipsets, to cover the time it would take to re-engineer our products to replace the components which comprise the raw materials for our product offerings and we generally do not have any guaranteed supply arrangements with our suppliers for these components (including the chipsets).

While we have attempted to mitigate supply shortages through our contract manufacturers and exploring open-market avenues to procure the necessary components, but we expect to experience continuing challenges in terms of securing our supply of such components and pricing inflation for the components to manufacture our products.

If we need to seek a suitable second source for these components 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.

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.

We believe any shortage or delay in the supply of these components would harm our ability to continue to manufacture and supply our products, which would adversely affect our product offerings and revenues.

For a further discussion of the uncertainties and business risks associated with the shortages of components, see “Part I-Item 1A.

Risk Factors - Risks Related to Our Business and Industry – We rely upon a limited number of suppliers.

If these sources fail to satisfy our supply requirements or we are unable to manage our supply requirements through other sources, could disrupt our business or have a material adverse effect on our results of operations and financial condition.”

For a further discussion of the uncertainties and business risks associated with the COVID-19 pandemic, refer to “Part I-Item 1A.

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During fiscal 2021, we sold our products to over 100 distributors and direct to customers through our webstores (collectively, “customers”) in over 75 countries.

In fiscal 2020 and 2018, only one customer represented 10% or more of our revenues in each period presented.

In fiscal 2019, two customers represented 10% or more of our revenue.

In fiscal 2021, there were no customers that represented 10% or more of our revenue, while in in fiscal 2020, only one customer represented 10% or more of our revenue and 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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Our sales are primarily made through standard sale orders for delivery of products.

Some orders remain in backlog due to concerns about the credit worthiness of the customer and/or delivery held due to inventory channel.

We do not believe our backlog information is a reliable indicator of our ability to achieve any particular level of revenue or financial performance.

Our inability to procure sufficient product due to COVID-19 and the worldwide chip shortage has led to a significant increase in our backlog of unfulfilled orders.

However, 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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In the backhaul market, our competitors include Cambium Networks, Ceragon Networks, DragonWave, MikroTîkls, Airspan, SAF Tehnika and Trango.

In the CPE market, our competitors include Cambium Networks, MikroTîkls, Ruckus Wireless (Arris) and TP-LINK Technologies.

In the CPE market, our competitors include Cambium Networks, MikroTîkls, Ruckus Wireless (CommScope) and TP-LINK Technologies.

In the antenna market, we primarily compete with PCTEL, ARC, ITELITE and Radio Waves.

In the enterprise WLAN market, we primarily compete with Huawei, Aerohive Networks, Aruba Networks (HPE), Ruckus Wireless (Arris), Cisco Meraki and Cisco.

In the enterprise WLAN market, we primarily compete with Huawei, Aerohive Networks, Aruba Networks (HPE), Ruckus Wireless (CommScope), Cisco Meraki and Cisco.

In the video surveillance market, we primarily compete with Axis Communications, HIKVISION, Mobotix and Vivotek.

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Risk Factors-Risks Related to Intellectual Property”.

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.

Human Capital

As of June 30, 2021, we employed and or contracted with 1,223 full time equivalent employees, of which 867 were in research and development, 267 in operations, and 89 in sales, general and administrative.

Our workforce is diversified across multiple locations with 57%, 28% and 15% located in Asia Pacific, Europe, the Middle East, and Africa ("EMEA") and the Americas, respectively.

The Company believes that its entrepreneurial, decentralized, and diversified work environment has contributed to its success.

We seek to maintain a culture of accountability and performance that enables us to deliver highly-advanced and easily deployable solutions that appeal to a global market.

Available Information

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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.

What changed 10-K

Item 1. Business