RigNet's expansion from vertical market managed services towards software development continues. The company built a dominant MSP business supporting offshore oil rigs. But when that vertical market imploded, CEO Steven Pickett was forced to pivot the company toward productized software, Internet of Things (IoT) sensor monitoring and more.
RigNet's latest quarterly results show some progress -- though the MSP portion of the business remains under intense pressure. Revenue was $52.8 million in Q4 2016, up about $600,000 from Q4 2015. The company's managed services revenues fell a steep $9.9 million amid in the quarter, amid "reduced spending by oil and gas operators on upstream drilling projects as a result of lower commodity prices," the company said. In response, RigNet cut about 17 percent of its workforce during 2016. Another 6 percent of staff will be cut in Q1, 2017.
So where is RigNet heading next? The company has software development know-how. But many of the development projects involved one-off efforts. Going forward, RigNet will strive to "fully commercialize" those code developments and "make them available broadly to our entire customer base, while we’re adding to that portfolio," Pickett said during an earnings call this week.
From Managed Services to Application Development
The RigNet-developed applications fit into three buckets, he noted:
- Applications that create a safer environment on an offshore rig;
- Software that provides entertainment services for people who work on the rigs; and
- Applications that optimize the performance of the operation itself.
The application development efforts extend out to IoT and sensor opportunities. For instance, RigNet can develop sensor solutions that provide real-time information about localized weather conditions.
Pickett didn't say if or when such applications will arrive. But he sounded confident that RigNet will be rightsized for its current revenue and business opportunities by the end of Q1 2017.