What happened
Shares of Boingo Wireless (WIFI) jumped as much as 29.5% higher on Wednesday morning. At noon EST, the stock had settled down to a somewhat milder 23.3% gain. The provider of Wi-Fi networking and small-cellphone signal services in public places like airports, stadiums, and convention centers posted solid third-quarter earnings last night.
So what
Boingo's revenues fell 1% year over year to $64.7 million, but the average analyst would have settled for $62.8 million. The bottom-line result was breakeven on an adjusted basis, also ahead of the Street consensus, which had been pointing to a net loss of $0.10 per share. In the year-ago period, Boingo recorded a loss of $0.01 per share.
Looking ahead, management narrowed its full-year revenue guidance by around $270 million, in line with the current analyst view. The full-year earnings target was also refocused to a net loss near $0.28 per share. Here the current Street projection calls for a larger loss of $0.31 per share.
Image source: Getty Images.
Now what
The bulk of Boingo's bottom-line improvement stemmed from fiscal discipline, as the general and administrative part of its operating expenses decreased by 36%. During the third quarter, Boingo extended its existing contract with the U.S. Army and Air Force to provide network services on military bases for the next 15 years. Management expects this deal to deliver a cool $1 billion of top-line sales over its lifetime, with opportunities to seize additional growth along the way through ancillary network services.
The company is also looking forward to supporting new wireless networking standards such as Wi-Fi 6 and 5G LTE. Implementations of these upgraded services are already underway.
Boingo's shares are trading 60% lower over the last 52 weeks, Wednesday's sharp jump notwithstanding. It's a relatively small company with lumpy revenues and unpredictable bottom-line profits, making it difficult to place a firm market value on Boingo's stock. I expect this company to do well in the long term, serving an increasingly important market. That being said, buying Boingo stock today will require some patience with short-term volatility, and I don't know in which direction those future moves will be made.
