Why Gigamon Inc Shares Spiked Today

By Jeremy BowmanMarketsFool.com

Image Source: Gigamon.

What:Shares ofGigamon Inc(NYSE: GIMO) were soaring today, closing up 12% after breezing past estimates in its second-quarter earnings report.

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So what:The network-traffic specialist said it made an adjusted per-share profit of $0.30 in the quarter, up from $0.16 a year ago, and better than estimates at $0.24. Revenue jumped 46%, to $75.1 million, also topping expectations of $70 million.

The company has benefited from its close relationship withAmazonWeb Services, and its cloud business should see revenue accelerate next year. CEO Paul Hopper said that "strong execution across the company" helped drive the impressive performance, noting, in particular, its first-to-market Security Delivery Platform.

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Now what:In the last quarter, the company announced field trials of the Amazon Web Services Elastic Cloud Compute offering -- "the first visibility solution for information traversing with the public cloud."Gigamon's relationship with Amazon could prove to be lucrative as the AWS juggernaut is a fast-growing business set to hit $10 billion in revenue this year. The stock has more than doubled this year as the company has pushed further into the networking security market, which now makes up 60% of its revenue.

Gigamon did not issue guidance, but the strong demand for its products, and growth in cloud, should continue to push shares higher, as adjusted profits nearly doubled in the quarter.

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Jeremy Bowman has no position in any stocks mentioned. The Motley Fool has no position in any of the stocks mentioned. Try any of our Foolish newsletter services free for 30 days. We Fools may not all hold the same opinions, but we all believe that considering a diverse range of insights makes us better investors. The Motley Fool has a disclosure policy.