Ruckus Wireless Files for IPO – Highlights from the S-1

On Friday October 5, 2012, Ruckus Wireless filed its S-1 for Initial Public Offering to raise up to $100M.  Goldman Sachs, Morgan Stanley, Deutsche Bank Securities are lead underwriters.

Like all S-1 documents, it provides a wealth of details regarding the state of the company.

Company Overview:

Ruckus is a provider of carrier-class Wi-Fi solutions – known as Smart Wi-Fi –  used by service providers and enterprises to solve network capacity and coverage challenges associated with the rapidly increasing traffic on wireless networks.

The company was formed in 2004 and located in Sunnyvale, CA.  Ruckus has an initial focus to develop Wi-Fi CPE that was optimized for the delivery of live TV – particularly IPTV.  In 2007, it launched its first carrier-class product, the ZoneFlex.  Since that time, it has focused its development on enterprise and carrier Wi-Fi solutions and away from CPE – which now contributes less than 5% of company revenues.

There are currently 559 employees, 301 in R&D,  168 in sales and marketing and 90  in customer support.

Ruckus has sold its solutions to 16,000 end-customers, including 45 service provider customers such as Bright House Networks, KDDI, PCCW, Telefonica UK (O2) and Time Warner Cable.

Its solutions are deployed in across multiple verticals, including hospitality, education, healthcare, warehousing and logistics, corporate enterprise, retail, state and local government and public venues, such as stadiums, convention centers, airports and major outdoor public areas.

Revenue has steadily increased YoY:

  • 2009: $44.4M
  • 2010: $75.5M
  • 2011: $120.0 M
  • 1H2012: $93.9M

In 2011, 39% of revenues was derived in Americas, 38% APAC and 33% EMEA.  Additionally, 95% of revenues is associated with product and 5% services.  More than 50% of its APAC revenue is currently derived in Japan, while 95% of its Americas revenue is from the U.S.

Ruckus sells its products primarily through value-added resellers, which number 5,400, with  Mitsui Electronics Corporation, ScanSource Security Distribution, Inc. and Synnex Corporation its largest, representing 10% but not more than 25% of revenue for 2011 and the six months ended June 30, 2012.

Ruckus Value Proposition – Focus

Traditional (now referred to as basic) Wi-Fi is faced with a number of challenges, such as the inability to handle interference in crowded circumstances;  degradation in performance under load; inconsistent coverage as users move around while connected to the network and an inability to deliver rich content such VoIP, without choppy or interrupted transmission.

For service providers to offer Wi-Fi – solutions must be able to integrate with existing networks and provide adequate scalability for the hundreds of thousands of access points required.  Additionally, solutions much offer the cost and ease of use benefits offered by basic Wi-Fi technology.

Additionally, Ruckus solutions are addressing the capacity gap – the gap between the expected traffic volume and the expected capacity of conventional cellular infrastructure.   The capacity gap is also opening up new business opportunities for other service providers, such as cable companies, wholesale operators and fixed-line carriers, to bundle reliable wireless access services to their traditional access services.

Ruckus Product/Solution Overview

Ruckus offers a range of Smart Wi-Fi products, including advanced Wi-Fi controllers and gateways;  indoor and outdoor access points; and Wi-Fi infrastructure management software. These products incorporate proprietary technologies, including:

  • Smart Radio, which leverages a patented antenna technology and a proprietary software capabilities to avoid interference and dynamically direct Wi-Fi signals to maximize throughput;
  • Smart QoS, which provides real-time prioritization of traffic to optimize quality of transmission and manage traffic load dynamically as usage demands and operating environments change;
  • Smart Mesh, which uses advanced self-organizing network principles to create highly resilient, high-speed Wi-Fi links between access points to extend coverage without the cost of cabling each access point;
  • SmartCell, which integrates proprietary software and specialized hardware deployed at the edge of service provider networks to facilitate the integration of Wi-Fi and mobile networks; and
  • Smart Scaling, which enables the support of hundreds of thousands of access points and millions of mobile devices across a Wi-Fi network

Competition

Ruckus sees competition in 3 main areas:

  • Large Telecommunications & Networking Vendors such as Cisco and Ericsson
  • Diversified Technology Companies such as HP and Motorola
  • Enterprise Wi-Fi companies such as Aruba Networks

Investors include Sequoia, Sutter Hill, Investor AB, Motorola Ventures, T-Ventures, Telus, Firelake Capital, Focus Ventures and has raised $72.8 million to date.

Ruckus currently holds 60 patents with 80 pending and has shipped more than 3,000,000 units worldwide

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