EnerNOC, Inc. Earnings: Revenue Jumps, but Loss Widens

By Markets Fool.com

EnerNOC, reported fourth-quarter results after the closing bell today. The company delivered strong revenue growth, but it lost money. Those losses are seen continuing in 2015 as EnerNOC expects to report a loss for the year, which is a complete reversal from this year's profit.

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A closer look at the numbers
EnerNOC reported fourth-quarter revenue that was just shy of $46 million. That was 27.7% higher than the fourth quarter of 2013, and about $3 million more than analysts were expecting. Here's how each of the company's segments performed in the quarter versus the same quarter in 2013.

  • Grid operator revenue of $18.2 million -- up 42% from $12.8 million in 2013
  • Utility revenue of $12 million -- down 13% from $13.8 million in 2013
  • Enterprise revenue of $15.7 million -- up 67% from $9.4 million in 2013

Here we note that the company enjoyed strong growth in the grid operator and enterprise segments, while the unity segment was a drag.

Turning to profitability, or lack thereof, EnerNOC reported a non-GAAP loss of $18.3 million, or $0.67 per share. That was actually much better than analysts were expecting as they estimated that the company would lose $0.95 per share during the quarter. That said, the company still lost more money than it did in the fourth quarter of 2013 when it reported a non-GAAP loss of $14.1 million, or $0.51 per share.

The company's underlying profitability was also weak as Adjusted EBITDA was missing the "e," as EnerNOC reported a loss of $14 million, which was a wider loss than the $10.9 million in the fourth quarter of 2013. Meanwhile cash flow from operations and free cash flow also fell 33.2% and 38.4%, respectively, to $30.7 million and $26 million.

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A look ahead
Unfortunately, EnerNOC doesn't see its strong revenue growth momentum continuing, as it actually expects to take a step back in 2015. The company sees its sales slipping to $410 million to $430 million, which is 9%-13% lower than 2014 revenue. This is due to a big drop in grid operator revenue, which it sees at $270 million to $280 million, or down 24%-27%.

However, the company does see its utility and enterprise segments growing in 2015 with utility revenue of $70 million to $75 million, or up 13%-21%, while enterprise revenue is expected to grow to those same levels, which would represent a surge of 70%-83% from the prior year. The company also noted that it sees both of those segments growing to the point of eclipsing grid-operator revenue in a couple of years.

However, that won't help matters much in 2015 as EnerNOC expects to post a non-GAAP loss of $1.66-$1.77 per share, and an Adjusted EBITDA loss of $10 million to $14 million. Both are well below 2014 levels where the company earned $1.26 per share on Adjusted EBITDA of $76.4 million.

Investor takeaway
EnerNOC reported a slightly better quarter than analysts were expecting. However, its guidance was lousy as the company expects to lose money next year as its sales drop. It's in the process of replacing its declininggrid-operator revenue by rapidly growing its utility and enterprise sales; however, that transition will take some time.

The article EnerNOC, Inc. Earnings: Revenue Jumps, but Loss Widens originally appeared on Fool.com.

Matt DiLallo has no position in any stocks mentioned. The Motley Fool owns shares of EnerNOC. Try any of our Foolish newsletter services free for 30 days. We Fools may not all hold the same opinions, but we all believe that considering a diverse range of insights makes us better investors. The Motley Fool has a disclosure policy.