Control4 Reports Financial Results for Third Quarter 2013

Control4 Reports Financial Results for Third Quarter 2013

North America Delivers 21% Year-Over-Year Revenue Growth Contributing to
Strong Net Income

SALT LAKE CITY, Oct. 31, 2013 (GLOBE NEWSWIRE) -- Control4 Corporation
(Nasdaq:CTRL), a leading provider of automation and control solutions for the
connected home, today announced financial results for its third quarter and
the nine months ended September 30, 2013.

Revenue for the third quarter of 2013 was $33.6 million, compared with $28.6
million for the third quarter of 2012, representing 18% year-over-year growth.
Revenue for the nine months ended September 30, 2013 also grew 18% to $92.8
million, compared with $78.8 million for the nine months ended September 30,
2012.

Net income for the third quarter of 2013 was $1.7 million, or $0.07 per
diluted share, compared with net loss of $4.1 million, or $1.73 per diluted
share, in the third quarter of 2012. Net income for the nine months ended
September 30, 2013 was $1.2 million, or $0.06 per diluted share, compared with
net loss of $6.3 million, or $2.69 per diluted share, for the nine months
ended September 30, 2012.

Control4 recorded non-GAAP net income of $2.9 million in the third quarter of
2013, or $0.12 per diluted share, compared with $1.3 million, or $0.07 per
diluted share, in the third quarter of 2012. Non-GAAP net income for the nine
months ended September 30, 2013 was $4.1 million, or $0.20 per diluted share,
compared with a Non-GAAP net income of $547,000, or $0.03 per diluted share,
for the nine months ended September 30, 2012. A reconciliation of GAAP to
non-GAAP financial information is contained in the attached tables.

"This quarter we continued to increase the penetration of our products across
our global dealer network. We are very pleased with our business traction in
North America, which delivered 21% year-over-year revenue growth," said Martin
Plaehn, chief executive officer of Control4. "We launched new multi-room media
distribution products to enhance our audio and video solutions and we continue
to strengthen our 3^rd party device ecosystem to provide our customers and
dealers with unparalleled integration within our home automation solutions."

Commenting on the company's financial results, Dan Strong, chief financial
officer of Control4, added, "Our financial performance speaks to our continued
progress as a leading home automation provider and reflects our focus on
innovation and revenue growth while gaining operating leverage, as evidenced
by both our top line growth and bottom line performance."

For the fourth quarter of 2013, the company expects revenue to be between
$35.0 million and $36.5 million, and expects non-GAAP net income to be between
$2.6 million and $3.7 million, or between $0.10 and $0.15 per diluted share.

Non-GAAP Financial Measures

Control4's stated results include certain non-GAAP financial measures,
including non-GAAP adjusted gross margin, non-GAAP adjusted operating income,
non-GAAP net income and non-GAAP net income per diluted share. Non-GAAP
adjusted gross margin, non-GAAP adjusted operating income, and non-GAAP net
income exclude non-cash expenses related to stock-based compensation as well
as gains or losses on inventory purchase commitments. The company further
excludes litigation settlement expenses from non-GAAP operating income and
non-GAAP net income. 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. Management also believes that it is useful to exclude
gains or losses on inventory purchase commitments because it is income or
expense that arose from our commitment to purchase energy-related products
from a contract manufacturing partner that will not be used going forward due
to the decision to discontinue our energy product line for utility customers.
The Company has not recognized that type of income or expense in periods prior
to 2012, and management believes that past and future periods are more
comparable if that income or expense is excluded. Furthermore, the Company
believes it is useful to exclude litigation settlement expense 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 that expense is 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.

Conference Call

Control4 Corporation (Nasdaq:CTRL) will host an investor conference call and
webcast the event beginning at 2:30 p.m. Mountain Time (4:30 p.m. Eastern
Time) on October 31, 2013. To access the conference call, dial 480-629-9712 or
877-941-2068 (toll free) and enter passcode 4644548. 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 conclusion of the conference through
November 11, 2013. To access the replay, please dial 303-590-3030 or
800-406-7325 and enter passcode 4644548.

About Control4 Corporation (Nasdaq:CTRL):

Control4 is a leading provider of automation and control systems for the
connected home. Control4 unlocks the potential of connected devices, making
entertainment systems easier to use, homes more comfortable and energy
efficient, and families more secure. Control4 provides its consumers with the
ability to integrate music, video, lighting, temperature, security,
communications and other functionalities into a unified home automation
solution that enhances their daily lives.

At the center of the Control4 solution is an advanced software platform, which
Control4 provides through its products that interface with a wide variety of
connected devices developed both by Control4 and by many third parties.
Control4's solution functions as the operating system of the home, making
connected devices work together to control, automate and personalize the homes
of its consumers. By delivering insightfully simple, personalized 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. To learn more, visit
Control4 at www.control4.com.

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. 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 were 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 Registration Statement on
FormS-1 declared effective by the SEC on August1, 2013, and Quarterly Report
on Form 10-Q for the quarter ended June 30, 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. 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.

CONTROL4 CORPORATION
CONSOLIDATED BALANCE SHEETS
(in thousands, except share data)
                                                               
                                                   December 31, September 30,
                                                   2012         2013
                                                               (unaudited)
Assets                                                          
Current assets:                                                 
Cash and cash equivalents                           $18,695    $82,485
Accounts receivable, net                            13,078      15,941
Inventories                                         12,515      15,559
Prepaid expenses and other current assets           1,871       1,965
Total current assets                                46,159      115,950
Property and equipment, net                         2,666       3,640
Intangible assets, net                              926         970
Other assets                                        887         1,130
Total assets                                        $50,638    $121,690
Liabilities, redeemable convertible preferred stock             
and stockholders' equity (deficit)
Current liabilities:                                            
Accounts payable                                    $14,435    $16,699
Accrued liabilities                                 6,571       5,548
Deferred revenue                                    542         637
Current portion of notes payable                    1,321       1,191
Total current liabilities                           22,869      24,075
Notes payable                                       1,838       2,127
Warrant liability                                   601         --
Other long-term liabilities                         1,620       484
Total liabilities                                   26,928      26,686
Commitments and contingencies                                   
Redeemable convertible preferred stock, $0.0001 par
value; 83,163,408 and no shares authorized;
15,293,960 and no shares issued and outstanding at
December 31, 2012 and September 30, 2013            116,313     --
(unaudited), respectively; aggregate liquidation
preference of $118,150 and $0 at December 31, 2012
and September 30, 2013 (unaudited), respectively
Stockholders' equity (deficit):                                 
Preferred stock, $0.0001 par value, no and
25,000,000 shares authorized; no shares issued and  --          --
outstanding at December 31, 2012 and September 30,
2013 (unaudited), respectively
Common stock, $0.0001 par value; 127,836,592 and
500,000 000 shares authorized; 2,490,870 and
22,766,644 shares issued and outstanding at         --          2
December 31, 2012 and September 30, 2013
(unaudited), respectively
Additional paid-in capital                          12,988      199,354
Accumulated deficit                                 (105,587)   (104,354)
Accumulated other comprehensive income (loss)       (4)         2
Total stockholders' equity (deficit)                (92,603)    95,004
Total liabilities, redeemable convertible preferred $50,638    $121,690
stock and stockholders' equity (deficit)


CONTROL4 CORPORATION
CONSOLIDATED STATEMENTS OF OPERATIONS
(in thousands, except per share data)
                                                                 
                                    Three Months         Nine Months
                                    Ended                Ended
                                    September 30,        September 30,
                                    2012       2013      2012       2013
                                    (unaudited)          (unaudited)
Revenue                              $28,605  $33,641 $78,847  $92,755
Cost of revenue                      14,918    16,592   41,710    46,129
Cost of revenue – inventory purchase 1,840     --       1,840     (180)
commitment
Gross margin                         11,847    17,049   35,297    46,806
Operating expenses:                                               
Research and development             5,158     6,409    15,119    18,670
Sales and marketing                  5,333     5,596    15,479    16,597
General and administrative           2,471     2,847    7,666     8,623
Litigation settlement                2,869     200      2,869     440
Total operating expenses             15,831    15,052   41,133    44,330
Income (loss) from operations        (3,984)   1,997    (5,836)   2,476
Other income (expense):                                           
Interest income                      2         4        11        8
Interest expense                     (65)      (209)    (209)     (420)
Other income (expense)               (45)      42       (222)     (699)
Total other income (expense)         (108)     (163)    (420)     (1,111)
Income (loss) before income taxes    (4,092)   1,834    (6,256)   1,365
Income tax expense                   --        (103)    --        (132)
Net income (loss)                    $(4,092) $1,731  $(6,256) $1,233
Net income (loss) per common share:                               
Basic                                $(1.73)  $0.12   $(2.69)  $0.19
Diluted                              $(1.73)  $0.07   $(2.69)  $0.06
Weighted‑average number of shares:                                
Basic                                2,363     14,389   2,324     6,511
Diluted                              2,363     23,556   2,324     21,206
                                                                 
Stock-based compensation expense
included in the consolidated                                      
statements of operations data:
Cost of revenue                      $18      $15     $53      $46
Research and development             202       419      461       974
Sales and marketing                  139       187      421       543
General and administrative           363       319      1,159     1,085
Total stock-based compensation       $722     $940    $2,094   $2,648
expense


CONTROL4 CORPORATION
CONSOLIDATED STATEMENTS OF CASH FLOWS
(in thousands)
                                                                   
                                                         Nine Months
                                                         Ended
                                                         September 30,
                                                         2012       2013
                                                         (unaudited)
Operating activities                                                
Net income (loss )                                        $(6,256) $1,233
Adjustments to reconcile net income (loss) to net cash              
(used in) provided by operatingactivities:
Depreciation expense                                      1,254     1,609
Amortization of intangible assets                         203       218
Provision for doubtful accounts                           203       112
Loss (gain) on inventory purchase commitment              1,840     (180)
Stock‑based compensation                                  2,094     2,648
Warrant liability expense                                 222       709
Changes in assets and liabilities:                                  
Accounts receivable                                       (3,199)   (2,978)
Inventories                                               (1,318)   (2,947)
Prepaid expenses and other current assets                 (495)     (98)
Other assets                                              (783)     (243)
Accounts payable                                          3,964     2,150
Accrued liabilities                                       2,650     (838)
Deferred revenue                                          46        95
Other long-term liabilities                               (450)     (1,138)
Net cash (used in) provided by operating activities       (25)      352
Investing activities                                                
Purchases of property and equipment                       (1,656)   (2,575)
Business acquisition                                      --        (88)
Net cash used in investing activities                     (1,656)   (2,663)
Financing activities                                                
Proceeds from issuance of common stock, net of issuance   --        65,556
costs
Proceeds from exercise of options for common stock        191       367
Proceeds from notes payable                               1,376     1,145
Repayment of notes payable                                (708)     (986)
Net cash provided by financing activities                 859       66,082
Effect of exchange rate changes on cash and cash          (37)      19
equivalents
Net increase (decrease) in cash and cash equivalents      (859)     63,790
Cash and cash equivalents at beginning of period          18,468    18,695
Cash and cash equivalents at end of period                $17,609  $82,485
Supplemental disclosure of cash flow information                    
Cash paid for interest                                    $208     $419
Cash paid for taxes                                       --        131
Supplemental schedule of non-cash investing and financing           
activities
Options for common stock granted in connection with a     --        174
business acquisition
Elimination of liability upon net exercise of warrants to --        1,310
purchase preferred stock
Conversion of redeemable convertible preferred stock to   --        116,313
common stock


CONTROL4 CORPORATION
RECONCILIATION OF NON-GAAP FINANCIAL MEASURES
(in thousands, except percentages and per share data)
(unaudited)
                                                                 
                                    Three Months         Nine Months
                                    Ended                Ended
                                    September 30,        September 30,
                                    2012       2013      2012       2013
Reconciliation of Gross Margin on a
GAAP Basis to Adjusted Gross Margin                               
on a Non-GAAP Basis:
Gross margin                         $11,847  $17,049 $35,297  $46,806
Stock-based compensation expense in  18        15       53        46
cost of revenue
Cost of revenue - inventory purchase 1,840     --       1,840     (180)
commitment
Adjusted gross margin                $13,705  $17,064 $37,190  $46,672
Revenue                              $28,605  $33,641 $78,847  $92,755
Gross margin percentage              41.4%      50.7%     44.8%      50.5%
Adjusted gross margin percentage     47.9%      50.7%     47.2%      50.3%
                                                                 
                                                                 
Reconciliation of Operating Income
(Loss) on a GAAP Basis to Adjusted                                
Operating Income on a Non-GAAP
Basis:
Income (loss) from operations        $(3,984) $1,997  $(5,836) $2,476
Stock-based compensation expense     722       940      2,094     2,648
Cost of revenue - inventory purchase 1,840     --       1,840     (180)
commitment
Litigation settlement                2,869     200      2,869     440
Adjusted operating income from       $1,447   $3,137  $967     $5,384
operations
Revenue                              $28,605  $33,641 $78,847  $92,755
Operating margin percentage          -13.9%     5.9%      -7.4%      2.7%
Adjusted operating margin percentage 5.1%       9.3%      1.2%       5.8%
                                                                 
                                                                 
Reconciliation of Net Income (Loss)
on a GAAP Basis to Adjusted Net                                   
Income on a Non-GAAP Basis:
Net income (loss)                    $(4,092) $1,731  $(6,256) $1,233
Stock-based compensation expense     722       940      2,094     2,648
Cost of revenue - inventory purchase 1,840     --       1,840     (180)
commitment
Litigation settlement                2,869     200      2,869     440
Adjusted net income                  $1,339   $2,871  $547     $4,141
Adjusted net income per common                                    
share:
Basic                                $0.57    $0.20   $0.24    $0.64
Diluted                              $0.07    $0.12   $0.03    $0.20
Weighted‑average number of shares:                                
Basic                                2,363     14,389   2,324     6,511
Diluted                              19,052    23,556   18,872    21,206

CONTACT: Investor Relations
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         The Blueshirt Group
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         Media Relations
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         ICR, Inc.
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