In 2007, Waterloo’s Sandvine (TSX:SVC) was still a bright light of the Canadian tech scene. But a worldwide economic crisis, failed AIM listing and lacklustre Canadian tech sector would, by 2012, send the company’s shares dangerously near penny stock status.
Today, however, Sandvine is regaining some of its lost swagger.
Shares of the company hit a intraday mark of $4.08 this morning, a number it last touched in December of 2007, when it was on its way down from its all-time high of just over seven dollars. The stock has been trending up for the better part of a year, fueled by improving numbers. The company’s recent Q1, 2014 results, reported earlier this month, were roundly cheered by the street.
Sandvine earned $7.5-million on revenue of $31.5-million for its first quarter of 2014, a topline that was a record for the company. CEO Dave Caputo explained the reasons for the company’s recent success in a note accompanying the numbers.
“We are pleased to have had a good start to the year. We reported record quarterly revenue, record wireless market revenue and strong net income, all while introducing four significant product innovations,” he said. “Our ongoing commitment to product innovation contributed to the strong financial performance in fiscal 2013 and the first quarter of this year. We will continue to innovate in 2014, while remaining focused on revenue growth and profitability.”
Sandvine was founded in 2001 by a group that had just sold PixStream to Cisco for $554-million. After Pixstream became the 117th acquisition Cisco did in 2000, it curiously shut the division down just four months later. Sandvine, however, grew because web traffic exploded. As networks became increasingly burdened in the latter half of the last decade, the company’s technology gave service providers a window into the world of their chaotic traffic. The company’s deep packet inspection technology equipped network operators with the critical information they need to make decisions and form policies on service plans, capital investments and premium services.
Sandvine’s reversal may have caught some on the street by surprise, but not all. For more than a year before its resurgence, analysts such as Cormark’s Richard Tse, M Partners’ Ron Shuttleworth, and then Stifel Nicolaus analyst Blair Abernethy predicted its slide was ending.