PiperJaffray analyst, Troy Jensen, thinks Aerohive (NYSE: HIVE) will see "exceptional growth over the next 4 quarters" as deal sizes increase with the growth of WLAN equipment.

Aerohive reported Q4 revenues of $46.2M, which increased 27.8% Y/Y, came in slightly ahead of Street expectations of $45.9M and at the high-end of the company’s prior guidance ($44 - $47M). Driving results in Q4 was increased E-Rate spending, but upside also came from better than expected Enterprise and Retail verticals. Gross margins of 67.7% were up 70 bps Q/Q. Non-GAAP EPS of ($0.04). EPS came in $0.04 better than consensus estimate of ($0.08).

Product revenue increased 24.9% on a Y/Y basis to $38.9M, while accounting for 84.2% of total sales. Product margins were 68.4%, up 70 bps sequentially. Aerohive highlighted that it received a record number of million dollar deals in the quarter, and over time the company can continue to see an acceleration in deal size given its new partnerships and introduction of new cloud based products. Service revenue increased 9.9% sequentially and 45.2% Y/Y to $7.3M, while service margins increased 110 bps from the previous quarter to 64.3%.

Aerohive guided for a solid Q1 with revenues expected to be in the $38.5-40.5M range (cons $39.6M). This equates to 53.0% year/year growth at the mid-point. The company is also expecting gross margins of 67.0-68.0% and operating margins of (18.0 – 23.0%). This results in non-GAAP EPS guidance of ($0.18) - ($0.15) versus consensus of ($0.16).

No change to the Overweight rating but cutting the price target to $7.20 from $9, based on 1.5x 2016E EV/Sales.

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Shares of Aerohive Networks closed at $4.75 yesterday.