What's happening: Shares of RigNet (RNET) jumped 11% in early trading on Wednesday. Fueling this surge is the company's better-than-expected second-quarter results that were announced after the market closed on Tuesday.
While revenue was a bit weaker than in previous quarters, earnings were robust. In fact, adjusted earnings grew 3.8% year over year and 7.5% sequentially to $15.4 million, or $0.86 per share. Meanwhile, GAAP earnings were much better than analysts were expecting, as the company reversed last quarter's $0.06-per-share loss and earned $0.34 per share this quarter, which beat the consensus estimate by $0.08 per share.
Cost reduction really was the story here, as RigNet axed general and administrative expenses by 23% over just last quarter. Furthermore, it cut capex spending by 29% to $8.1 million. These reductions fueled a 44.1% rise in the company's unlevered free cash flow, which came in at $10.4 million during the quarter.
Why it's happening: While the oil market remains very challenging, RigNet met those challenges head-on as it quickly adjusted its cost structure to be in line with demand. The company's rapid ability to adjust really impressed investors this quarter, which is driving today's surging stock price.
