Ubiquiti Inc. (UI) DCF Valuation & Fundamental Primer
Ubiquiti Inc. (UI) currently trades at $564.30 with an enterprise value of $16.04B. Our proprietary institutional model rates Ubiquiti Inc. at 68/100 (Grade: B+ · Quality Software Operator). The current market price prices in an implied 5-year revenue CAGR of 43.2% vs. historical growth of 23.3% (Aggressive Growth Expectations Priced In).
Institutional fundamental teardown of Ubiquiti Inc. (UI) covering SEC 10-K/10-Q cash flow conversion, SBC dilution friction, and Reverse-DCF valuation hurdles.
Ubiquiti Inc. (UI) 3-Scenario DCF Valuation Range
Stress-test UI's 5-year growth, target FCF margin, WACC, terminal methodology, and SBC/dilution friction in real time.
Split between 5-Year Explicit Cash Flows and Discounted Terminal Value
2D Institutional Valuation Sensitivity Heatmap
Implied share price & upside/downside spread across 25 valuation states (Current Price: $564.30).
| WACC \ Terminal | 1.5% | 2.0% | 2.5% | 3.0% | 3.5% |
|---|---|---|---|---|---|
| 8.5% | $326.78 -42% | $345.91 -39% | $368.23 -35% | $394.60 -30% | $426.24 -24% |
| 9.3% | $295.76 -48% | $310.83 -45% | $328.13 -42% | $348.20 -38% | $371.76 -34% |
| 10.0% | $270.28 -52% | $282.39 -50% | $296.12 -48% | $311.81 -45% | $329.92 -42% |
| 10.8% | $248.98 -56% | $258.88 -54% | $269.99 -52% | $282.53 -50% | $296.79 -47% |
| 11.5% | $230.92 -59% | $239.14 -58% | $248.26 -56% | $258.46 -54% | $269.94 -52% |
Institutional Software Quality Scorecard (68/100 · Grade B+)
Solid software model with clear operating leverage, partially offset by standard SBC or moderate burn.
Positive FCF but lower conversion efficiency due to capex or timing
Elevated equity dilution; SBC consumes substantial operating cash flow
High-quality software margins with healthy balanced growth and profitability
Zero-debt fortress balance sheet with abundant net cash liquidity
Core Investment Strengths & Moats
- Healthy unit economics: 73.4% gross margin
- Fortress capital structure: Zero debt and $1.88B in pure net cash
Key Operational & Dilution Risks
- Substantial SBC dilution drag: SBC is 15.5% of revenue ($678.4M)
Reverse-DCF Solver: What Growth is Priced Into UI?
The current share price demands 43.2% 5-year CAGR (68.1% net of SBC & dilution)—a +19.9% acceleration over historical run-rate (23.3%). Any growth slowdown risks valuation multiple contraction.
Headline Reverse-DCF ignores Stock-Based Compensation (15.5% of revenue) and annual share dilution (1.8%/yr). Accounting for both requires 68.1% 5-year revenue CAGR to justify $564.30/sh on a true per-share economic cash flow basis.
Ubiquiti Inc. (UI) 5-Year Fundamental Forecast
| Statement Line Item | TTM Audited Base | TTM | Y1 | Y2 | Y3 | Y4 | Y5 |
|---|---|---|---|---|---|---|---|
| Revenue | $4.38B | $4.38B | $5.40B | $6.65B | $8.20B | $10.12B | $12.47B |
| Gross Profit | $3.21B | $3.21B | $3.96B | $4.88B | $6.02B | $7.42B | $9.16B |
| Operating Income (EBIT) | $-118.2M | $-118.2M | $-145.7M | $-179.7M | $-221.5M | $-273.1M | $-336.8M |
| Stock-Based Compensation (SBC) | $678.4M | $678.4M | $836.5M | $1.03B | $1.27B | $1.57B | $1.93B |
| Unlevered Free Cash Flow (FCF) | $512.1M | $512.1M | $631.4M | $778.5M | $959.9M | $1.18B | $1.46B |
| SBC-Adjusted True Cash Flow | $-166.3M | $-166.3M | $-205.1M | $-252.8M | $-311.8M | $-384.4M | $-474.0M |
Software & Cloud Services Peer Comparables & Rule of 40 Regression
Rule of 40 vs. EV / Revenue Multiple Regression
OLS Fit: EV/Rev = -15.1 + 0.54 × (Rule of 40) · R² = 64%Stocks below the gold regression line trade at a discount relative to their Rule of 40 compounding efficiency.
| Company | Ticker | Market Cap | TTM Revenue | Gross Margin | FCF Margin | Rule of 40 | SBC % Rev | EV / Rev |
|---|---|---|---|---|---|---|---|---|
| Ubiquiti Inc. | UI | $34.14B | $4.38B | 73.4% | 11.7% | 35.0% | 15.5% | 7.4× |
| ServiceNow | NOW | $152.61B | $10.98B | 79.2% | 31.1% | 54.2% | 15.9% | 13.9× |
| Workday, Inc. | WDAY | $50.35B | $8.00B | 75.0% | 27.4% | 43.9% | 19.0% | 6.4× |
| Salesforce | CRM | $217.10B | $37.90B | 77.2% | 32.8% | 42.8% | 8.4% | 5.8× |
| Datadog | DDOG | $46.05B | $2.68B | 80.8% | 31.1% | 57.7% | 21.3% | 17.4× |
| Snowflake Inc. | SNOW | $71.79B | $3.63B | 66.5% | 25.2% | 57.7% | 40.8% | 20.0× |
| Hubspot | HUBS | $19.89B | $2.63B | 85.0% | 21.3% | 52.7% | 19.2% | 7.7× |
| Peer Cohort Median Benchmark (N=6) | 78.2% | 29.2% | 53.5% | 19.1% | 10.8× | |||
EV / Revenue Multiple Compression Stress Test
| Multiple Scenario | EV / Revenue | Implied Enterprise Value | Implied Equity Value | Implied Share Price | Delta vs Current |
|---|---|---|---|---|---|
| Current Multiple | 7.4× | $32.26B | $34.14B | $564.30 | 0.0% |
| -20% Multiple Compression | 5.9× | $25.81B | $27.69B | $457.65 | -20.0% |
| -35% Multiple Compression | 4.8× | $20.97B | $22.85B | $377.66 | -35.0% |
| Software Baseline Floor (5.0× EV/Rev) | 5.0× | $21.88B | $23.76B | $392.77 | -32.2% |
Frequently Asked Questions: Ubiquiti Inc. (UI) Valuation
What is Ubiquiti Inc. (UI)'s intrinsic DCF valuation and implied share price?
Based on audited SEC 10-K/10-Q filings and a 5-year 3-statement discounted cash flow (DCF) model, Ubiquiti Inc. (UI) has a Base Case implied value of $296.12 per share (with a Bear Case of $138.87 and a Bull Case of $523.47), compared to its current price of $564.30. The model discounts projected free cash flows at a 10.0% WACC and a 2.5% terminal growth rate.
What is Ubiquiti Inc. (UI)'s Rule of 40 score and Free Cash Flow margin?
Ubiquiti Inc. achieves a Rule of 40 score of 35.0%, combining a 23.3% revenue growth run-rate with a 11.7% TTM free cash flow margin on $4.38B in trailing twelve-month revenue. In the Software & Cloud Services peer cohort, the median Rule of 40 benchmark is 53.5%.
What revenue growth rate is priced into UI stock according to Reverse-DCF analysis?
At $564.30 per share (Enterprise Value of $32.26B), our Reverse-DCF solver indicates the market is pricing in a 5-year implied revenue CAGR of 43.2%, compared to Ubiquiti Inc.'s historical CAGR of 23.3%. Overall market expectations are rated as "Aggressive Growth Expectations Priced In".
How does Ubiquiti Inc. compare to Software & Cloud Services software peers?
Ubiquiti Inc. (UI) earns an institutional Software Quality Score of 68/100 (Grade B+ — Quality Software Operator). Across its Software & Cloud Services peer group (NOW, WDAY, CRM, DDOG, SNOW), the cohort trades at a median EV/TTM Revenue multiple of 10.8× and a median gross margin of 78.2%.
How does Stock-Based Compensation (SBC) impact Ubiquiti Inc. (UI)'s valuation?
Ubiquiti Inc. recorded $678.4M in TTM stock-based compensation (15.5% of revenue). When treating SBC as a cash-equivalent compensation expense, Ubiquiti Inc.'s SBC-adjusted free cash flow yield is -0.5%, scoring 10/25 on our Shareholder Dilution Friction pillar.