Why Control4 IPO is Significant to Home Systems Integrators
Investors seem to want Control4 (CTRL) stock even though the home automation company is staying focused on the professional installation channel.
You think DIY and the mass market is the only big thing in home automation? Think again.
Take a look at Control4’s S1 filing for its IPO and you’ll see that the company is still banking its success on the traditional custom installation market – the ones that brung ‘em to the party.
Control4 begins trading today on Nasdaq under the ticker symbol CTRL. Only time will tell if the market believes in custom installation like we do but the evidence looks good judging by the IPO price of $16 for 4 million shares – about 18% of the company.
At that price, Control4 is valued at about $400 million, or about 3.6 times 2012 revenues of $109.5 million. In 2012, Control4 had a net loss of $3.7 million but the company expects to be profitable in Q2 of this year.
Control4 didn’t pick this valuation out of its ear. The company would have received guidance from potential investors.
And what did it tell these investors? Not that it would have a kiosk in every Home Depot, nor that some utility was going to deploy Control4 to millions of households.
Control4 simply reiterated that it would do what it’s been doing all along – just more of it and better.
The company’s S1 filing explains that Control4 would continue along the path of making integrated home control systems – including audio, video, energy management, lighting control, security and communications – for the mainstream, and that a base of authorized dealers would do the selling and installation.
There’s no mention of being the OS of the home or deploying home control in a “really broad way” with Cisco. Those plans may be in the works at some point, but right now Control4 is focused on these growth strategies, as enumerated in the S1:
- Enhance Our Software Platform and Products. We intend to continue to invest in our software platform to develop new products, features and capabilities that deliver exceptional performance and value to our consumers;
- Strengthen and Expand Our Global Dealer Network. We plan to continue to expand, train, support and optimize our global certified dealer network to ensure that we have sufficient geographic coverage across both existing and new markets;
- Increase Penetration of Our North America Core Market. We intend to continue to focus sales and marketing resources to increase penetration of the residential market in North America;
- Expand Our Focus on Adjacent Markets. We plan to continue making investments to capitalize on opportunities outside the residential market, including in the light commercial, multi-dwelling unit and hospitality markets, and internationally;
- Enhance Our Solution with Services and Apps. We intend to continue to enhance our 4Sight subscription services and to support third-party apps via our 4Store application marketplace to deliver more functionality and value to our consumers;
- Pursue Technology Licensing Opportunities. We plan to expand our licensing activities to leverage third-party distribution channels, grow our partner relationships, and simplify the home automation experience for dealers and consumers; and
- Pursue Strategic Acquisitions. We intend to identify, acquire and integrate strategic technologies, assets and businesses that we believe will enhance the overall strength of our business.
So you can take your Nest thermostats and your Philips Hue and your Lowe’s Iris and your Goji locks (some day) and your Canary cameras (some day) and your Ube Internet light switches (some day) and dozens of oversubscribed crowdfunded projects and have a ball.
Or you can invest in a given – mainstream integrated home control, installed by high-touch professionals.
Introducing Control4: Automation Vets Plan ‘Unrivaled’ Product Launch (2004)
Control4 Aims to Be ‘OS’ of the Automated Home (2008)
Control4 Shows Bigger, Better Home Automation App Store (2010)
Control4 Brings Smart Grid to 20,000 Nevada Homes (2011)
Cisco, Control4 to Deploy Home Control in ‘Really Broad Way’ (2011)
Control4 Taps RealNetworks Engineer Martin Plaehn as New CEO (2011)
New Sony A/V Receivers Have Control4 Inside (2012)
Control4 Files for $60M IPO (2013)
Control4 Sets IPO Terms, Could be Valued at $404 Million (2013)
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Julie Jacobson, recipient of the 2014 CEA TechHome Leadership Award, is co-founder of EH Publishing, producer of CE Pro, Electronic House, Commercial Integrator, Security Sales and other leading technology publications. She currently spends most of her time writing for CE Pro in the areas of home automation, security, networked A/V and the business of home systems integration. Julie majored in Economics at the University of Michigan, spent a year abroad at Cambridge University, earned an MBA from the University of Texas at Austin, and has never taken a journalism class in her life. She's a washed-up Ultimate Frisbee player currently residing in Carlsbad, Calif. Email Julie at [email protected]
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