Why Redknee Solutions Kicked Up

Is this meaningful? Or just another movement?

Iain Butler ❯

Chief Investment Advisor, Motley Fool Canada Fool since November 2012 Iain Butler, CFA, is Lead Advisor on Discovery Canada 2017. He is also the Chief Investment Advisor for Motley Fool Canada and is the lead advisor on its flagship Stock Advisor Canada product. Before joining the Fool, Iain was a “buy-side” analyst and through this experience is well-versed in the idiosyncratic ways of the Canadian market. His investing interests are centred on scouring the market for interesting businesses that trade at reasonable prices and offer an appealing risk/reward relationship. Since joining the Fool in 2012, Iain dedicates each day to spreading Foolishness throughout this great country!

Published August 14, 2013 12:24 pm EDT

Although we don’t believe in timing the market or panicking over market movements, we do like to keep an eye on big changes — just in case they’re material to our investing thesis.

What: Shares of communication software technologist Redknee Solutions (TSX: RKN) popped 10% today after its quarterly results topped Bay Street expectations.

So what: The stock has skyrocketed over the past year on signs of strong recurring revenue growth, and today’s Q3 results — top-line soared 295% with recurring revenue representing 54% of total revenue vs. 48% in the year-ago period — only confirm that bullishness. Additionally, the company’s recent acquisition of Business Support System helped boost its backlog to a record $163.1 million, giving analysts some decent visibility into upcoming quarters as well.

Now what: Don’t expect the momentum to slow anytime soon. “Our combined solution portfolio presents new cross-selling and upselling opportunities, and we are committed to providing the highest level of service to our customers,” said CEO Lucas Skoczkowski. “We remain focused on successfully integrating the acquisition and look to expand sales both with new customers, as well as increasing the share of wallet with our existing customers.” So while Redknee is still too small and unproven for conservative Fools, its exposure to the rapidly growing wireless industry might be something for more aggressive growth investors to look at.

Like small caps? The Motley Fool Canada has recently released its top small-cap pick for 2013….and beyond! Simply click here now to download your copy of this FREE report today.

The Motley Fool’s purpose is to help the world invest, better. Click here now for your free subscription to Take Stock, The Motley Fool Canada’s free investing newsletter. Packed with stock ideas and investing advice, it is essential reading for anyone looking to build and grow their wealth in the years ahead.

Follow us on Twitter and Facebook for the latest in Foolish investing.

Fool contributor Brian Pacampara does not own shares in any of the companies mentioned at this time. The Motley Fool does not own shares in any of the companies mentioned at this time.