Sandvine Corp., a Waterloo based company that sells technology to Internet service providers, saw its annual revenue grow by 21 per cent this year, from US $88 million to $107 million.

Sandvine sells computer equipment and software which allows service providers to monitor or manage Internet traffic better.

Scott Penner, an analyst at TD Securities, said the big story on Sandvine this year is their revenue.

“They’ve been meeting expectations for a number of quarters in a row now,” he said.

“That’s a big difference versus a couple of years ago when it was kind of a white knuckle ride every quarter.”

Robert Young, an analyst from Canaccord Genuity, said Sandvine faced three major problems over recent years.

It was too complicated for clients to do software upgrades, a company they were working with caused some problems with a client and then two new competitors started beating them in wireless sales.

Young said Sandvine upgraded their software’s graphical interfaces and “spent a heck of a lot in R&D in 2011.”

Then through 2013 they stretched ahead of those competitors.

In the past, Sandvine has been criticized by investors for spending too much.

But now they’re out of their research and development cycle, and “they’re looking pretty good,” Young said.

“Operating expenses sort of went flat at the $17 or $18 million level,” he said.

That’s important because technology investors and analysts pay close attention to operating expenses and revenue.

In a news release the company said this year it picked up 25 new customers and made over $9 million in sales to large and well known service providers.

Net Neutrality ruling could change up the US DPI market

Because Sandvine sells equipment in different countries, sometimes its equipment can’t be used at its full extent because of different regulations on Internet traffic management.

But in the United States, an appeals court recently overturned the Federal Communication Commission’s net neutrality regulations.

So called “net neutrality” restrictions limit the extent ISPs can monitor, block or slow Internet traffic.

Scott Parsons, a postdoctoral fellow at University of Toronto’s Citizen Lab, a research group that focuses on Internet communications technology, says no one is realy certain about the effect of the appeals court ruling yet.

But he adds that vendor companies, like Sandvine, which sells to Comcast in the US, have a chance to boost sales.

“It makes their products potentially far more appealing to telecommunications providers int he United States,” he said.

“Various providers – Sandvine, Cisco, or other DPI based vendors have opportunity to target their market more aggressively.”

The FCC regulations made ISPs treat services like Youtube and Netflix the same way as a similar service their own companies or ones they have contracts with might provide.

What has changed, according to Parsons, is the possibility for ISPs to discriminate in regulating traffic flow depending on ownership.

“If you’re selling a product that’s capable of both identifying different kinds of traffic flows and treating it differently on the network, as a vendor, you have an increased opportunity to dive in that market.”

But Parsons also said it’s not clear if carriers actually would do that because it they would risk customers jumping ship to ISPs that preach neutrality.

On the other hand, because US telecom markets are concentrated, they could all start engaging in it.

“It’s not a brand new market that just opened up,” Parsons said. But it could potentially be a new revenue model.

“Sandvine, Cisco, Huawei — all of them are going to be able to make a much stronger case pitching to businesses they can find more value in what you’re providing because you can start changing customers at a more granular level, or turn around and start charging providers for the content.”