What's happening: Shares of RigNet (NASDAQ: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.
Matt DiLallo owns shares of RigNet. The Motley Fool recommends RigNet. Try any of our Foolish newsletter services free for 30 days. We Fools may not all hold the same opinions, but we all believe that considering a diverse range of insights makes us better investors. The Motley Fool has a disclosure policy.