Contact: Tejas Venkatesh
Even as the equity markets have been roiled by uncertainty and slowing corporate growth recently, Ruckus Wireless made it public on Friday. After pricing at the high end of its indicated range of $13-15, the stock edged lower in midday trading. Nevertheless, the Sequoia Capital-backed wireless provider raised $126m and debuts at a market cap of $1.1bn, valuing it at 5.7 times trailing sales. The robust value creation comes at a time when network operators are looking to Wi-Fi networks to offload data traffic that is crowding their wireless 3G and 4G/LTE networks.
With its Wi-Fi wares, Ruckus is capitalizing on concerns about how to handle the rapid expansion of traffic generated by mobile devices. High-performance wireless is clearly in high demand and Ruckus specializes in large-scale deployments that suit high-volume and high-density applications.
And Ruckus’ growth reflects that market opportunity. The 10-year-old company has more than doubled its top line in less than two years, going from $75m in calendar-year 2010 to $194m for the 12 months ended September 30. And even while ramping up sales and marketing, Ruckus has been running solidly in the black for two years. It raised $76.1m in venture funding from Sequoia Capital (which holds a 24% stake) and Motorola Mobility Ventures (5.4% stake), among others. Goldman Sachs and Morgan Stanley were lead underwriters on the offering.
Ruckus has established itself as a distinct player in the crowded Wi-Fi market, and competes against bigger vendors like Cisco Systems, Ericsson, Hewlett-Packard, Motorola Mobility and Aruba Networks. Unlike Cisco and HP, Ruckus builds its devices using standard chipsets from Qualcomm’s Atheros and then uses its own intellectual property to more effectively manage the radios and data operations to improve performance.
The wireless startup’s successful offering comes less than a year after its archrival BelAir Networks was snapped up by Ericsson. While both companies were born at the same time in 2002, Ruckus was clearly the more successful of the two. BelAir had 120 employees at the time of its sale and Ruckus has five times that number, at 606.
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