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Control4 IPO Could Light Up the Nasdaq

Home automation company is riding a potentially huge trend


Control4 — a top developer of a home-automation software operating system — has filed to go public.

The company provides software with a built-in intelligence that makes it easy to manage music, video, lighting, temperature and security for homes. Here’s an example of how it works:

When you wake in the morning, the thermostat adjusts according to your settings and the lighting gets gradually brighter. When you leave for work, you only need to press one button — not just on a console, but from an Apple (AAPL) iPhone or Google (GOOG) Android device — to turn on the security system. Most non-essential devices will shut off. When you get back from work, the house reactivates and achieves the appropriate lighting and temperature. It also reacts to certain habits — let’s say you want to watch a movie, Control4’s software will dim the lights and close the blinds.

This is the connected “smarthome,” and it represents a blossoming mega-trend. According to Control4’s S-1, the company believes the market is at an “inflection point” because consumers have already widely adopted smartphones and tablets — and now people are increasingly expecting these devices to one day manage their homes as well. According to ABI Research, this market was just $571 million in 2012, but it’s forecast to reach $2.6 billion annually in 2017, or an average annual growth rate of 35%.

Control4 sells its OS through a network of dealers and distributors, and to date has installed the system in more than 120,000 homes. The result has been standout financials. From 2010 to 2012, Control4 reported revenues that grew 31% to $109.5 million, and while the company continues to sustain losses, they’ve been falling, from $16.3 million to $3.7 million in the same time frame.

For the most part, Control4 has the kinds of things an IPO investor looks for — high growth, strong technology and an emerging mega-trend — so expect a strong offering within the next couple months.

Control4 will trade on the Nasdaq under the ticker “CTRL.” Lead underwriters include BofA Merrill Lynch (BAC) and Raymond James. No pricing terms have been announced.

Tom Taulli runs the InvestorPlace blog IPO Playbook. He is also the author of High-Profit IPO StrategiesAll About Commodities and All About Short Selling. Follow him on Twitter at @ttaulli. As of this writing, he did not hold a position in any of the aforementioned securities.

Article printed from InvestorPlace Media,

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