With the connected home being an emerging trend, we are profiling Control4 (CTRL 30.68, -0.19, -0.62%), which is a play on that
trend. It's a provider of automation and networking systems
for homes and businesses. Its platform allows people to integrate and control more
than 12,000 third-party consumer products. This creates an ecosystem of lighting,
music, video, temperature, security, and more with into a smart home system. Control4
sells its system using 5,700+ custom integrators, retailers, and distributors
authorized to sell Control4 products.
As tech development has ramped up in the last decade, interest in the Internet of Things has accelerated rapidly. Network-aware devices include TVs, phones, thermostats, audio systems, lighting, blinds, security, video doorbell etc.
Control4's platform is designed to be simple and intuitive. Consumers can easily interact with their entire automated home without learning multiple interfaces or numerous remote controls. All parts of the ecosystem can be controlled by a Control4 device which can include a smartphone or tablet with Control4's app.
In February 2018, CTRL released its new CA-1 controller which is designed for entry-level projects for homeowners interested in lighting, temperature control, and security. It retails for $350 plus installation. This supplements its Entertainment and Automation series of controllers, or the EA Series, which includes the entry-level EA-1 controller at a reduced price point ($500 + install) for entry-level consumers wanting to start with a single room multi-media automation experience. Projects can then scale in sophistication and scope from a single room to a fully-integrated whole-home experience.
The stock gapped higher in early August when CTRL reported strong Q2 results, including a sizeable EPS beat, its largest beat in years. Sales growth is being driven by an increase in sales partners and by higher average deal size.
Furthermore, in May 2018, CTRL took a big step in showcasing its system when it announced the opening of 140 Control4 Certified Showrooms, which allow homeowners, architects, and designers to get an immersive, powerful experience in terms of what it's like to have a Control4 system. Early results have been promising.
Looking ahead, Control4 has captured only a small percentage of its potential market, which includes households with an annual income over $150K. CTRL feels it has a tremendous opportunity. The stock has pulled back with the overall market in recent sessions, but it's a name in the connected home space that is worth staying connected with. CTRL is expected to report Q3 results in late October or early November.
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