Exhibit 99.1
Control4 Announces First Quarter 2014 Earnings
Revenue Increases by 20% Year Over Year
SALT LAKE CITY — May 1, 2014 — Control4 Corporation (NASDAQ: CTRL), a leading provider of automation and control solutions for the connected home, today announced financial results for its first quarter ended March 31, 2014.
Revenue for the first quarter of 2014 was $31.9 million, compared with $26.6 million for the first quarter of 2013, representing 20% year-over-year growth.
Net loss for the first quarter of 2014 was $0.5 million, or $0.02 per share, compared with net loss of $1.5 million, or $0.59 per share, in the first quarter of 2013.
Control4 recorded non-GAAP net income of $0.7 million, or $0.03 per share, in the first quarter of 2014, compared with a non-GAAP net loss of $0.7 million, or $0.26 per share, in the first quarter of 2013. A reconciliation of GAAP to non-GAAP financial information is contained in the attached tables.
“This quarter we continued to execute our strategy and make meaningful progress toward our business model goals,” said Martin Plaehn, chairman and chief executive officer of Control4. “We are increasing our presence and coverage in North America, Europe, and Asia; and we are seeing positive results from those investments. We are confident that Control4 is uniquely positioned to continue innovating and driving adoption of our home automation solutions.”
Commenting on the company’s financial results for the first quarter, Dan Strong, chief financial officer of Control4, added: “We are very encouraged by the progress we saw in our international channel this quarter, which contributed to the year-over-year revenue growth of 20% in total revenue and 21% growth in our core revenue. We are also pleased with our increased gross margin percentage from 49% in the first quarter of 2013 to 51% in the first quarter of 2014, contributing to positive non-GAAP net income in our seasonally lowest revenue quarter.”
For the second quarter of 2014, the company expects revenue to be between $36 million and $38 million, and expects non-GAAP net income to be between $2.0 and $3.4 million, or between $0.08 and $0.13 per diluted share.
Conference Call
Control4 Corporation (NASDAQ: CTRL) will host an investor conference call and webcast the event beginning at 3:00 p.m. Mountain Time (5:00 p.m. Eastern Time) on May 1, 2014. To access the conference call, dial 480-629-9809 or 877-941-8418 (toll free) and enter passcode 4680001. The webcast and replay will be accessible on Control4’s investor relations website at http://investor.control4.com/. A replay of the conference call will be available within two hours of the
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conclusion of the conference. To access the replay telephonically through May 15, 2014, please dial 303-590-3030 or 800-406-7325 and enter passcode 4680001. A replay of the conference call will be available online until June 1, 2014.
About Control4 Corporation (NASDAQ: CTRL):
Control4 Corporation (Nasdaq: CTRL) 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 unlocks the potential of connected devices, making entertainment systems easier to use, homes more comfortable and energy efficient, and families more secure. More than 78% of Control4’s consumers have integrated two or more functionalities with Control4’s solution, which is available through more than 3,100 custom integrators, retail outlets, and distributors in over 80 countries. By delivering insightfully simple control solutions that enhance the lives of individuals and families, Control4 is the automation platform of choice for consumers, major consumer electronics companies, hotels, and businesses around the world.
Forward-Looking Statements
This press release contains “forward-looking statements” within the meaning of the “safe harbor” provisions of the Private Securities Litigation Reform Act of 1995, including but not limited to, statements regarding Control4’s financial outlook and market positioning. All statements other than statements of historical fact contained in this press release are forward-looking statements. In some cases, you can identify forward-looking statements by terminology such as “may,” “will,” “should,” “expects,” “plans,” “anticipates,” “believes,” “estimates,” “predicts,” “potential” or “continue” or the negative of these terms or other comparable terminology. These forward-looking statements are made as of the date they were first issued and are based on current expectations, estimates, forecasts, and projections as well as the beliefs and assumptions of management. Forward-looking statements are subject to a number of risks and uncertainties, many of which involve factors or circumstances that are beyond Control4’s control. Control4’s actual results could differ materially from those stated or implied in forward-looking statements due to a number of factors, including but not limited to, risks detailed in Control4’s risk factors discussed in filings with the U.S. Securities and Exchange Commission (“SEC”), including but not limited to Control4’s Annual Report on Form 10-K for the year ended December 31, 2013, as well as other documents that may be filed by the Company from time to time with the SEC. In particular, the following factors, among others, could cause results to differ materially from those expressed or implied by such forward-looking statements: the ability of Control4 to remain competitive and maintain its position in the market; Control4’s ability to increase market awareness of its solution and brand; the ability of dealers and distributors to sell Control4 solutions; quarterly and annual operating results may fluctuate more than expected; the ability of Control4 to develop new solutions and develop and expand its network of dealers and distributors; the ability of Control4 to realize the intended benefits of its strategic relationships; the compatibility of Control4 solutions with third-party products and applications; the ability of Control4 to adapt to technological changes; the market for Control4’s solutions may develop more slowly than expected; the risk of losing key employees; increased demands on employees and costs associated with operating as a public company; general political or destabilizing events, including war, conflict, or acts of terrorism; and other risks and uncertainties. Past performance is not necessarily indicative of future results. The forward-looking statements included in this press release represent Control4’s views as of the date of this press release. The Company anticipates that subsequent events and developments will cause its views to change.
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Control4 undertakes no intention or obligation to update or revise any forward-looking statements, whether as a result of new information, future events, or otherwise. These forward-looking statements should not be relied upon as representing Control4’s views as of any date subsequent to the date of this press release.
Non-GAAP Financial Measures
Control4’s stated results include certain non-GAAP financial measures, including non-GAAP gross margin, non-GAAP income (loss) from operations, non-GAAP net income (loss), and non-GAAP net income (loss) per diluted share. Non-GAAP gross margin, non-GAAP income (loss) from operations, and non-GAAP net income (loss) exclude non-cash expenses related to stock-based compensation. The company further excludes expenses related to stock warrants from non-GAAP net income (loss). Management believes that it is useful to exclude stock-based compensation expense because the amount of such expense in any specific period may not directly correlate to the underlying performance of our business operations. Furthermore, the Company believes it is useful to exclude expenses related to stock warrants because of the variable and unpredictable nature of these expenses, which are not indicative of past or future operating performance. Management believes that past and future periods are more comparable if those expenses are excluded. Control4 believes these adjustments provide useful comparative information to investors. Control4 considers these non-GAAP financial measures to be important because they provide useful measures of its operating performance and are used by its management for that purpose. In addition, investors often use measures such as these to evaluate the operating performance of a company. Non-GAAP results are presented for supplemental informational purposes only for understanding Control4’s operating results. The non-GAAP results should not be considered a substitute for financial information presented in accordance with generally accepted accounting principles, and may be different from non-GAAP measures used by other companies.
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CONTROL4 CORPORATION
CONDENSED CONSOLIDATED BALANCE SHEETS
(in thousands, except share data)
| | December 31, | | March 31, | |
| | 2013 | | 2014 | |
| | (unaudited) | |
Assets | | | | | |
Current assets: | | | | | |
Cash and cash equivalents | | $ | 84,546 | | $ | 26,885 | |
Short-term investments | | — | | 36,592 | |
Accounts receivable, net | | 15,064 | | 15,623 | |
Inventories | | 15,312 | | 17,120 | |
Prepaid expenses and other current assets | | 1,773 | | 2,022 | |
Total current assets | | 116,695 | | 98,242 | |
Property and equipment, net | | 3,943 | | 3,727 | |
Long-term investments | | — | | 22,107 | |
Intangible assets, net | | 928 | | 830 | |
Other assets | | 1,120 | | 1,143 | |
Total assets | | $ | 122,686 | | $ | 126,049 | |
Liabilities and stockholders’ equity | | | | | |
Current liabilities: | | | | | |
Accounts payable | | $ | 13,314 | | $ | 14,395 | |
Accrued liabilities | | 6,821 | | 5,420 | |
Deferred revenue | | 644 | | 766 | |
Current portion of notes payable | | 1,138 | | 1,091 | |
Total current liabilities | | 21,917 | | 21,672 | |
Notes payable | | 1,828 | | 1,578 | |
Other long-term liabilities | | 467 | | 450 | |
Total liabilities | | 24,212 | | 23,700 | |
Commitments and contingencies | | | | | |
Stockholders’ equity: | | | | | |
Common stock, $0.0001 par value; 500,000,000 shares authorized; 22,785,104 and 23,579,068 shares issued and outstanding at December 31, 2013 and March 31, 2014 (unaudited), respectively | | 2 | | 2 | |
Additional paid-in capital | | 200,545 | | 204,991 | |
Accumulated deficit | | (102,084 | ) | (102,623 | ) |
Accumulated other comprehensive income (loss) | | 11 | | (21 | ) |
Total stockholders’ equity | | 98,474 | | 102,349 | |
Total liabilities and stockholders’ equity | | $ | 122,686 | | $ | 126,049 | |
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CONTROL4 CORPORATION
CONSOLIDATED STATEMENTS OF OPERATIONS
(in thousands, except per share data)
| | Three Months
Ended
March 31, | |
| | 2013 | | 2014 | |
| | (unaudited) | |
| | | | | |
Revenue | | $ | 26,571 | | $ | 31,855 | |
Cost of revenue | | 13,550 | | 15,619 | |
Gross margin | | 13,021 | | 16,236 | |
Operating expenses: | | | | | |
Research and development | | 6,066 | | 6,775 | |
Sales and marketing | | 5,605 | | 6,301 | |
General and administrative | | 2,828 | | 3,688 | |
Total operating expenses | | 14,499 | | 16,764 | |
Loss from operations | | (1,478 | ) | (528 | ) |
Other income (expense): | | | | | |
Interest, net | | (75 | ) | (19 | ) |
Other income, net | | 26 | | 8 | |
Total other expense | | (49 | ) | (11 | ) |
Loss before income taxes | | (1,527 | ) | (539 | ) |
Income tax benefit | | 56 | | — | |
Net loss | | $ | (1,471 | ) | $ | (539 | ) |
Net loss per common share: | | | | | |
Basic | | $ | (0.59 | ) | $ | (0.02 | ) |
Diluted | | $ | (0.59 | ) | $ | (0.02 | ) |
Weighted-average number of shares: | | | | | |
Basic | | 2,502 | | 23,117 | |
Diluted | | 2,502 | | 23,117 | |
| | | | | |
Stock-based compensation expense included in the consolidated statements of operations data: | | | | | |
Cost of revenue | | $ | 16 | | $ | 20 | |
Research and development | | 236 | | 478 | |
Sales and marketing | | 184 | | 222 | |
General and administrative | | 402 | | 527 | |
Total stock-based compensation expense | | $ | 838 | | $ | 1,247 | |
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CONTROL4 CORPORATION
CONSOLIDATED STATEMENTS OF CASH FLOWS
(in thousands)
| | Three Months
Ended
March 31, | |
| | 2013 | | 2014 | |
| | (unaudited) | |
| | | | | |
Operating activities | | | | | |
Net loss | | $ | (1,471 | ) | $ | (539 | ) |
Adjustments to reconcile net loss to net cash used in operating activities: | | | | | |
Depreciation expense | | 512 | | 608 | |
Amortization of intangible assets | | 68 | | 98 | |
Provision for doubtful accounts | | 70 | | 59 | |
Stock-based compensation | | 838 | | 1,247 | |
Warrant liability income | | (25 | ) | — | |
Changes in assets and liabilities: | | | | | |
Accounts receivable | | (332 | ) | (603 | ) |
Inventories | | (94 | ) | (1,783 | ) |
Prepaid expenses and other current assets | | (338 | ) | (246 | ) |
Other assets | | (1,595 | ) | (23 | ) |
Accounts payable | | (1,319 | ) | 1,038 | |
Accrued liabilities | | 77 | | (1,408 | ) |
Deferred revenue | | 493 | | 122 | |
Other long-term liabilities | | 179 | | (17 | ) |
Net cash used in operating activities | | (2,937 | ) | (1,447 | ) |
Investing activities | | | | | |
Purchases of available-for-sale investments | | — | | (59,775 | ) |
Proceeds from sales of available-for-sale investments | | — | | 1,043 | |
Purchases of property and equipment | | (1,431 | ) | (389 | ) |
Net cash used in investing activities | | (1,431 | ) | (59,121 | ) |
Financing activities | | | | | |
Proceeds from exercise of options for common stock | | 37 | | 3,199 | |
Proceeds from notes payable | | 435 | | — | |
Repayment of notes payable | | (200 | ) | (297 | ) |
Net cash provided by financing activities | | 272 | | 2,902 | |
Effect of exchange rate changes on cash and cash equivalents | | (26 | ) | 5 | |
Net decrease in cash and cash equivalents | | (4,122 | ) | (57,661 | ) |
Cash and cash equivalents at beginning of period | | 18,695 | | 84,546 | |
Cash and cash equivalents at end of period | | $ | 14,573 | | $ | 26,885 | |
Supplemental disclosure of cash flow information | | | | | |
Cash paid for interest | | $ | 63 | | $ | 39 | |
Cash paid for taxes | | 50 | | 93 | |
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CONTROL4 CORPORATION
RECONCILIATION OF NON-GAAP FINANCIAL MEASURES
(in thousands, except percentages and per share data)
(unaudited)
| | Three Months Ended | |
| | March 31, | |
| | 2013 | | 2014 | |
Reconciliation of Gross Margin to Non-GAAP Gross Margin: | | | | | |
Gross margin | | $ | 13,021 | | $ | 16,236 | |
Stock-based compensation expense in cost of revenue | | 16 | | 20 | |
Non-GAAP gross margin | | $ | 13,037 | | $ | 16,256 | |
Revenue | | $ | 26,571 | | $ | 31,855 | |
Gross margin percentage | | 49.0 | % | 51.0 | % |
Non-GAAP gross margin percentage | | 49.1 | % | 51.0 | % |
| | | | | |
Reconciliation of Loss from Operations to Non-GAAP Income (Loss) from Operations: | | | | | |
Loss from operations | | $ | (1,478 | ) | $ | (528 | ) |
Stock-based compensation expense | | 838 | | 1,247 | |
Non-GAAP income (loss) from operations | | $ | (640 | ) | $ | 719 | |
Revenue | | $ | 26,571 | | $ | 31,855 | |
Operating margin percentage | | -5.6 | % | -1.7 | % |
Non-GAAP operating margin percentage | | -2.4 | % | 2.3 | % |
| | | | | |
Reconciliation of Net Loss to Non-GAAP Net Income (Loss): | | | | | |
Net loss | | $ | (1,471 | ) | $ | (539 | ) |
Stock-based compensation expense | | 838 | | 1,247 | |
Convertible preferred stock warrant | | (25 | ) | — | |
Non-GAAP net income (loss) | | $ | (658 | ) | $ | 708 | |
Non-GAAP net income (loss) per common share: | | | | | |
Basic | | $ | (0.26 | ) | $ | 0.03 | |
Diluted | | $ | (0.26 | ) | $ | 0.03 | |
Weighted-average number of shares: | | | | | |
Basic | | 2,502 | | 23,117 | |
Diluted | | 2,502 | | 25,746 | |
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CONTACTS:
Investor Relations | | Media Relations |
Mike Bishop | | Cory Ziskind |
The Blueshirt Group | | ICR, Inc. |
Tel: +1 415-217-4968 | | Tel: +1 646-277-1232 |
Mike@blueshirtgroup.com | | Cory.Ziskind@icrinc.com |
# # #
Source: Control4
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