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Why Ixia Stock Skyrocketed Today

By Steve Symington - Feb 24, 2016 at 5:36PM

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The network security and application performance company just capped a strong 2015. Here's what investors need to know.

Ixia's Vision One traffic and application visibility appliance. Image source: Ixia.

What: Shares of application performance and security resilence solutions specialist Ixia (XXIA) rose nearly 28% Wednesday after the company announced better-than-expected fourth-quarter 2015 results.

So what: Quarterly revenue climbed 9% year over year to $138.5 million, and translated GAAP net income of $5.8 million, or $0.07 per diluted share. On an adjusted (non-GAAP) basis, net income rose 19.9% year over year to $18.7 million, and climbed 15.8% per share to $0.22.

Analysts, on average, were anticipating adjusted earnings of just $0.15 per share on revenue of $129.9 million.

Ixia CEO Bethany Mayer called it a "strong finish to a record year," then elaborated, "Our topline growth coupled with our continued focus on operational excellence and financial discipline drove significant earnings growth and the generation of nearly $100 million in cash flow from operations. We believe we are well positioned to execute our strategic objectives and are committed to returning value to our shareholders."

Now what: Relatedly, Ixia also announced its board has approved a new 12-month share repurchase program under which it can buy back up to $25 million in common stock.

During the subsequent conference call, Ixia management provided guidance as well. For the current quarter, Ixia anticipates revenue to be in the range of $121 million to $126 million, with GAAP earnings per share in the range of breakeven to a loss of $0.05 per share, and adjusted earnings per share of $0.10 to $0.14. By comparison, analysts' consensus estimates predicted adjusted earnings of $0.12 per share on revenue of $122.8 million. 

In the end, this was an undeniably solid quarter from a promising company on the cusp of sustained profitability. In light of its earnings growth and with shares of Ixia currently trading at a reasonable 17 times this year's anticipate earnings, I think investors have every reason to celebrate its performance today.

Steve Symington has no position in any stocks mentioned. The Motley Fool has no position in any of the stocks mentioned. 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.

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