What: Shares of Ruckus Wireless (RKUS +0.00%) fell more than 14% on Friday morning. The maker of enterprise-scale Wi-Fi networking systems recorded solid third-quarter results on Thursday night, but followed up with something less than a glowing review of current market conditions.
So what: In the third quarter, Ruckus saw revenues increase 7.3% year over year to land at $99.0 million. GAAP earnings more than doubled to $1.7 million, yielding earnings of $0.02 per diluted share. Adjusted earnings rose from $0.09 to $0.13 per share.
These results were at the very top end of the guidance ranges that Ruckus' management set up three months ago.
Looking ahead, Ruckus expects to deliver sales near $102 million in the fourth quarter, alongside adjusted earnings of roughly $0.13 per share. Hitting these targets would amount to a 19% year-over-year revenue boost and 8% higher earnings per share.
Now what: Investors are naturally worried that Ruckus' bottom line can't seem to keep up with the rampant revenue growth. That's not exactly new, of course, but more of a continuation of long-running business trends:
RKUS Revenue (TTM) data by YCharts
Moreover, the motivation behind that fourth-quarter guidance didn't exactly ooze with management confidence.
"We have taken into account elongated sales cycles in the Asia-Pacific region resulting from the strong US dollar," said Ruckus CFO Seamus Hennessy in a conference call with analysts.
Curiously, this was the only explanation Hennessy wanted to offer to explain his view of the next quarter. This is even more curious when you consider that the company actually didn't break out or discuss the estimated impact of exchange rate swings in this report.
