What's happening: Shares of Ruckus Wireless (RKUS) jumped as much as 18.5% higher on Thursday morning. The enterprise-class Wi-Fi networking specialist reported strong second-quarter results on Wednesday night, helping the stock reverse a terrible long-term slide. The stock was up 16.5% as of 11:35 a.m.
Why it's happening: In the second quarter, Ruckus reported adjusted earnings of $0.09 per share on $92.2 million in total sales. The bottom-line result was in line with analyst targets, but revenues came in 4.5% above the consensus. Management set similarly skewed guidance targets for the third quarter, with in-line earnings goals but strong expected sales.
In a conference call with analysts, Ruckus CEO Selina Lo noted that a new line of gigabit Wi-Fi systems has been well-received by customers across all geographic and vertical markets.
"Columbia Public Schools is using more than 1,400 Ruckus R710 in the nation's first districtwide production deployment of a Gigabit-class 11ac Wave 2 network," Lo said. "According to the school, the R710 was able to deliver twice the Wi-Fi capacity and higher levels of TCP throughput at a longer range with a 60% to 70% reduction in the number of access points required compared to the closest competitor in their side by side trial."
If that sounds like technical mumbo-jumbo, rest assured that it's music to the ears of a network manager who's looking to install a high-speed, high-quality Wi-Fi network. That brief statement oozes with selling points, and serves to clarify how Ruckus is beating sales expectations right now. Until rivals catch up with these market-leading features for corporate Wi-Fi solutions, this product line is practically selling itself.
Image source: Ruckus Wireless.
To underscore that point, the new 802.11ac line accounted for 71% of Ruckus' access point sales in the second quarter. Not bad for a device that was introduced as recently as early April.
That being said, this spike is more a reparation of earlier damage than a sudden wealth-builder. Heading into this report, Ruckus investors could look back at a 20% 52-week slide, driven by disappointing sales and slow deal-making. This quarter makes up for some of that damage, but the company must still rebuild a lot of bygone investor trust.
The high-speed router line could be just the ticket to get it done, but there can be no guarantees.
