Control4 Reports Higher Revenues, But Below Expectations
Control4 reports $41.2 million in Q4 revenues for 16% annual growth rate, but cites 'softness' in market due to poor weather and lack of new hardware product release. Stock drops 17% in overnight trading.
Home automation manufacturer Control4 (NASDAQ: CTRL) has reported record revenues, record profits, a 16 percent annual growth rate, and has $97 million in cash, so everything is rosy right? Not for President and CEO Martin Plaehn, who admits the quarterly results are at the “low end” of expectations.
As such, Control4 shares dropped 17 percent in overnight trading from $15.79 at yesterday’s close to $13.08 this morning in heavy trading.
Revenue for Q4 2014 was $41.2 million, compared with revenue of $35.8 million for the fourth quarter of 2013, representing 15 percent year-over-year growth. Total revenue for the year ended up at $148.8 million, a 16 percent increase from $128.5 million for 2013.
Net income for the fourth quarter of 2014 was $3.9 million, or $0.15 per diluted share, compared to net income of $2.3 million, or $0.09 per diluted share, in the fourth quarter of 2013. Net income for the twelve months ended December 31, 2014 was $8.2 million, or $0.32 per diluted share, compared to net income of $3.5 million, or $0.16 per diluted share, for the twelve months ended December 31, 2013. Since the financial release, the company’s stock has fallen about 17 percent to just over $13 per share.
“For the fourth quarter, revenue was at the low end of our guidance due to softness in North America, which has continued into January,” says Plaehn. He says the “small gap” in expectations vs. results is primarily due to what he calls the “natural ebb and flows of an early phase market more than any long-term market dynamic, unanticipated competitive assault or meaningful internal missteps.”
Plaehn also blamed the lousy weather in the U.S., noting that in nearly every region of the country “pretty traumatic weather” played in part in tamping sales momentum. However, the company still sold 22,737 controllers in Q4, which was a 29 percent increase over Q4 in 2013. In total, Plaehn says Control4 has 80,000-plus customers running on new systems.
Profit-wise, Control4 generated $7.8 million in cash in Q4 and $12.7 million for the year. In total, it now has $97 million in cash. It just used $9 million of that to purchase Australia-based video distribution company Leaf, in a move that should be “moderately” accretive to 2015 earnings.
Other reasons Plaehn remains confident is that the company is on verge of a new hardware release to its dealer base. Historically, he says those releases have acted as “an endorphin” to spur sales. The company has not had a significant new product release since mid-2013 when it released its lighting control products. He hinted that the company has a planned unveiling next week at ISE 2015 in Amsterdam.
Committed to Dealer Channel
Speaking of dealers, Plaehn says the company is not swayed by the growth in the DIY market. He notes that “local professional installations for physical configuration and deployment is always going to be needed for a large number of projects… That’s where we are focused today.”
Other key data from the investor report:
- Control4 added 315 new North American dealers in Q4 to bring its total authorized dealer base to 2,676 in North America.
- Internationally, the company now has 787 direct dealers, excluding Germany, a country that Control4 recently made a new focus.
- Lighting control was the product category that had the largest dollar and percentage revenue increases, although that is not broken out specifically in the financial reporting.
- In terms of its Simple Device Discovery Protocol (SDDP) licensing, it now has 110 companies shipping 560 product modules to communicate with Control4, including newly announced Panasonic Ultra HD TVs.
- The company’s homebuilder relationships are continuing to expand. National luxury builder Toll Brothers now has 18 communities under construction with Control4 equipment. The company soon says it will have a second top 10 national builder in its fold.
Jason has covered low-voltage electronics as an editor since 1990. He joined EH Publishing in 2000, and before that served as publisher and editor of Security Sales, a leading magazine for the security industry. He served as chairman of the Security Industry Association’s Education Committee from 2000-2004 and sat on the board of that association from 1998-2002. He is also a former board member of the Alarm Industry Research and Educational Foundation. He is currently a member of the CEDIA Education Action Team for Electronic Systems Business. Jason graduated from the University of Southern California. Have a suggestion or a topic you want to read more about? Email Jason at firstname.lastname@example.org
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