In today’s world, safety and security has become even more of a priority. This has paved the way for smart home solution providers. A great player in this industry is Control4 Corp. (CTRL, Financial).
The company has posted mixed quarterly results, including a 4.13% increase in total revenue. The company has increased its total operating expenses by 27.01% in the reported quarter compared to the prior-year period.
Control4 Corporation is a leading provider of automation systems for homes and businesses, offering personalized control of lighting, music, video, temperature, security, communications, and similar functionalities into a unified home automation solution that enhances the daily lives of its customers. Control4’s product line includes the Control4 Home Operating System (C4 OS), and the associated application software and software development kits. The company’s products are available through more than 3,600 custom integrators, retail outlets, and distributors in over 90 countries.
Mixed fourth-quarter results
On Feb. 4, the leading global provider of smart home solutions reported results for its fiscal fourth quarter and fiscal year, which ended Dec. 31, 2015. Total revenue increased 4.13% to $42.9 million in the reported quarter, compared to $41.2 million in the prior year period. Compared to the third quarter, total revenue decreased by 1.6%.
Control4 reported net loss of $700,000 or 3 cents per diluted share for the fourth quarter, compared to net income of $3.9 million or 15 cents per diluted share for the comparable prior-year period. Non-GAAP net income was $1.6 million 7 cents per diluted share, compared to $5.4 million 21 cents per diluted share in the year-ago quarter.
Control4’s gross margin increased 4.31% year over year to $21.78 million. Non-GAAP gross margin was $22.17 million compared to $21.07 million for the comparable prior-year period.
During fiscal 2015, Control4 increased its operating expenses for both product development and sales and marketing. Further, a chart has been provided to show Control4’s fiscal 2015 metrics compared to fiscal 2014.
Projections for Q1 2016
For the first quarter 2016, Control4 expects the following:
- Total revenue in the range of $38.5 million to $41.5 million.
- Non-GAAP net income is expected to be between a net loss of $900,000 and net income of $900,000.
- Incremental operating expenses during the expected three to five months of Pakedge integration.
For fiscal 2016, Control4 expects total revenue in the range of $198 million to $202 million. Further, non-GAAP net income is expected to be in the range of $16 million to 18 million, with EPS between 67 cents and 76 cents.
Long-term financial goals
Control4’s long-term financial goals are as follows:
- Adjusted gross margin in the range of 52% to 54%.
- Research and development expenses in the range of 15% to 16%.
- Sales and marketing expenses in the range of 16% to 17%.
- General and administrative expenses in the range of 5% to 6%.
- Adjusted operating margin in the range of 14% to 17%.
Growth and partnerships
Control4 has expanded its wings in more than 80 countries with 3,500 dealers and more than 9,500 third-party devices. The company has over 12 years of innovation and has installed its systems in more than 180,000 homes. Since 2008, the company’s annual revenue has grown at a CAGR of 14.03%. Further, since 2009, the company’s non-GAAP gross margin grew at a CAGR of 11.68%.
Recently, Control4 acquired Pakedge Device & Software Inc. for approximately $32.7 million in cash and expects the acquisition to contribute to revenue growth, and to be both gross margin and EPS accretive on a non-GAAP basis for the full-year 2016.
On Nov. 19, 2015, Control4 partnered with Denon to provide streamlined smart home entertainment. Denon products such as Denon HEOS, A/V receivers, record players, and Blu-ray players will be available through Control4 website.
On Jan. 4, Hikvision USA Inc. partnered with Control4 to provide cutting edge video surveillance technology to the Smart House market. Further, to strengthen its foothold, Control4 recently began to deliver its new line of intelligent Square Wireless Lighting products, and expanding custom and retrofit lighting opportunities for Control4 dealers in Europe and Asia.
A peek into the smart home industry
The smart home concept is booming and people are also more excited about the concept. As per M2M Research, during 2014, North America recorded strong growth in the smart home market. It has been estimated that between 2014 and 2019, the number of households that have adopted smart home systems will grow at a CAGR of 37%, resulting in 38.2 million smart homes. Additionally, 68 million homes in Europe and North America will be smart by 2019. Therefore, there is enough room for Control4 to grow.
(Source: Company website)
On a concluding note
Overall, Control4 is a rock-solid company with strong revenue growth, gross margin expansion, strong cash flow and profitability, healthy channel and product diversification, and progression of the long-term operating model.
Due to security reasons, more and more people are getting inclined towards the smart home concept resulting a great lift in the smart home industry. With the recent quarterly release, the company is aiming for a better future and is all set to create greater shareholder returns.
Disclosure: I do not hold any position in the company.
