EnerNOC, Inc.s Loss Widens, but Its Outlook Improves Slightly

By Markets Fool.com

Energy intelligence software provider EnerNOC, reported its first-quarter results after the closing bell on Thursday. The results weren't all that great as the company's revenue and earnings slipped during last year's first quarter, and both missed the consensus estimates of analysts. However, EnerNOC is making some progress, as it announced two important strategic partnerships, and it revised its guidance to reflect the fact that it doesn't expect to lose as much money this year.

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A look at the numbers
For the quarter, EnerNOC reported revenue of $50.6 million. That was down 3.7% from the $52.5 million in revenue it earned in the first quarter of last year, and it missed analysts' estimates by about $500,000. The culprit was the company's grid-operator segment, which saw revenue decline from $35.7 million in last year's first quarter to just $23.7 million this past quarter.

This was nearly offset by EnerNOC's enterprise segment as revenue jumped to $16.1 million, which is nearly $10 million more than it brought in during the first quarter of last year. The company's utility segment also grew revenue; it was up about $500,000, to $10.8 million.

Profitability was non-existent as EnerNOC reported a loss of $50.3 million, or $1.80 per share, which was $0.15 per share worse than analysts were expecting. The loss was also well above the $20.4 million, or $1.09 per share, from last year's first quarter. Even on a non-GAAP basis, the company's loss widened from $23.4 million, or $0.84 per share, last year to $39.6 million, or $1.41 per share.

Meanwhile, free cash flow also weakened from last year's first quarter. Free cash flow went from a negative $17.7 million last year to a negative $23.7 million this year.

However, there were some positives in the quarter. The company's annual recurring revenue, or ARR, increased to $122 million, which is up 82% year over year, and 40% quarter over quarter. The biggest driver was its enterprise ARR, which doubled from the past quarter to an annual rate of $55 million. This growth was due to very robust organic growth, as well as the company's acquisition of World Energy Solutions.

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In addition to that, the company recently announced two very key strategic partnerships. The first is an agreement with SunPower , which will bundle EnerNOC's software with SunPower's solar energy systems to provide an integrated solution to SunPower's customers. In addition to that, EnerNOC announced that it will collaborate with Tesla on the deployment and management of energy storage systems in commercial and industrial buildings. The collaboration, according to EnerNOC, "will allow companies to monetize batteries through demand charge management and demand response using EnerNOC's software.

Turning to its outlook, EnerNOC issued a very slight update to its 2015 guidance. Much of it is staying the same as it still sees full-year revenue of $410 million to $430 million, with the same revenue ranges for each of its three segments. Where the slight change comes into play is in its expected loss for the year.

Instead of a GAAP loss in the range of $3.23-$3.12 per share, it sees that loss moderating to $3.12-$3.02 per share. Likewise, the company sees its non-GAAP loss moderating a bit; instead of a loss of $1.77-$1.66 per share, it's now seeing that loss coming in at $1.72-$1.61 per share.

Investor takeaway
EnerNOC is working to transition its business to a much more stable recurring-revenue model. The company made very good progress in the quarter as its AAR surged. It also entered into two really key strategic partnerships with well-known companies, which could drive growth in the years ahead.

Finally, its loss is moderating a bit from its earlier guidance. These are all positive steps forward as the company works to improve its long-term profitability.

The article EnerNOC, Inc.s Loss Widens, but Its Outlook Improves Slightly originally appeared on Fool.com.

Matt DiLallo has no position in any stocks mentioned. The Motley Fool recommends EnerNOC and Tesla Motors. The Motley Fool owns shares of EnerNOC and Tesla Motors. 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.