RigNet's (NASDAQ:RNET) slow recovery from the impact of the oil market downturn continued during the third quarter. While the company has yet to return to profitability, its net loss continues narrowing as its revenue rises. Meanwhile, its backlog of projects is expanding, which should drive revenue higher as it completes them in the coming quarters.

RigNet results: The raw numbers

Metric

Q3 2018

Q3 2017

Year-Over-Year Change

Revenue

$64.8 million

$50.8 million

27.4%

Net income

($2.8 million)

($4.2 million)

N/A

EPS

($0.15)

($0.23)

N/A

Data source: RigNet Inc.

What happened with RigNet this quarter? 

Revenue rose across the board.

  • Revenue not only surged compared to last year's third quarter but was 7.9% higher than the second quarter.
  • RigNet grew sales in all three of its segments both year over year and sequentially. The biggest growth drivers were systems integration, where revenue rocketed 120% year over year to $12.3 million, and sales from the applications and Internet of Things (IoT) segment, where revenue jumped nearly 50% year over year to $7.5 million. Fueling the growth was the improving conditions in the oil market and the increasing adoption of the company's real-time machine learning and artificial intelligence platform.
  • Sites managed increased to 1,350 during the quarter, up from 1,297 in the second quarter, with the company adding new locations across several customer groups, including offshore drilling rigs, offshore production, maritime, and land sites.
  • RigNet's net loss narrowed both year over year and versus the second quarter thanks to the improvement in sales. Meanwhile, its adjusted EBITDA rose to $8.7 million, an increase of 7.8% sequentially.
  • The company ended the quarter with a project backlog of $41.4 million, which is double its level from the second quarter.
Oil platform and tanker ship on offshore area at sunset.

Image source: Getty Images.

What management had to say 

CEO Steven Pickett commented on the company's results:

RigNet continues to execute on our strategic growth plan which focuses on enabling our customers to realize the tangible business benefits of digital transformation. In the third quarter of 2018, and for the second consecutive quarter, the team grew both consolidated revenue and Adjusted EBITDA. Furthermore, revenue grew across all segments during the third quarter of 2018, both sequentially and year-on-year.

One of RigNet's focuses has been on expanding the reach of its apps and IoT solutions. The company noted that Inteli, which is its real-time machine learning and artificial intelligence platform, saw increasing adoption during the quarter. RigNet was able to secure new contracts with both onshore and offshore customers for this solution, which will enable those customers to use data to make real-time decisions.

Looking forward 

While oil prices have tumbled 20% over the past month, oil companies are more bullish on the future than they were at this time last year. As a result, they're sanctioning new offshore drilling projects, which is enabling RigNet to win more projects. While the pace of those awards could slow if crude keeps sliding, the industry expects its recovery to continue in the next year, which many oil service companies believe will be much stronger than 2018.

Matthew DiLallo has no position in any of the stocks mentioned. The Motley Fool recommends RigNet. The Motley Fool has a disclosure policy.