Reports Q4 revenue $1.85M vs. $1.75M last year. "I’m pleased that Acorn was able to grow in a challenging 2022 macro environment that included higher interest rates, high inflation and weaker overall economic activity. The company not only experienced increased labor and operating costs but also dealt with the sunsetting of 3G technology by mobile carriers, which led to some customer churn. In the face of these headwinds, we grew revenues by 3.3% on a GAAP basis and 2.2% on a cash basis. We also maintained our gross margin at 72.4% versus 72.3% in 2021 by focusing on driving sales of next-generation products in higher-margin commercial and industrial markets. We were able to generate positive cash flow from operating activities for the year – and in fact, we generated $342,000 of cash from operating activities in Q4, due in part to strong receivables collections as well as by our phased reduction of safety stock and gradual return to par inventory levels as supply chains normalize. Though some economic uncertainties persist, 3G sunsetting, which negatively impacted our high-margin monitoring revenue growth in 2022, is behind us. In fact, in Q4, our monitoring revenue was essentially flat versus Q4’21, after being down in each of the first three quarters of 2022. We expect monitoring revenue growth to return and align with historical growth trends in 2023, which we benchmark at greater than 20%. In fact, I’m very bullish that our overall growth, which we define as cash-basis revenue growth, will also exceed this target. Our confidence stems from current discussions and sales orders in early 2023, as well as from the potential of increased monitoring revenue and profitability from "demand response" programs. In July 2022, we announced a partnership between OmniMetrix, CPower Energy Management and Power Solutions Specialists TX, to help homeowners who install new standby generators to earn compensation for grid relief, which is known as demand response. Under the program, homeowners are compensated just for signing up and possibly supplying grid offload by running their generators for up to 12 hours per year, during periods of extreme demand, when the grid is stressed. We anticipate this partnership will begin generating revenue in late 2023. It is also important to note that if we meet our target growth, we’d expect to move to positive profitability in 2023. More than $70M of operating loss carryforwards would largely shield the company from cash taxes and benefit the company’s cash flow and cash position in 2023 and future periods. As customers deal with increasing labor and energy costs, destructive weather events, and growing pressure for more eco-friendly operations, we remain well-positioned for growth. Our solutions increase productivity, reduce downtime due to enhanced analytics, and reduce human-mediated activities like manual inspections and unplanned repairs. Reduced personnel time, travel and fuel costs not only boosts operating efficiency but also lowers carbon emissions and helps customers achieve their sustainability goals. Environmental and electric grid issues will only grow in 2023 and for the foreseeable future. We will continue to build awareness of our industry leading Internet of Things technologies and expanding use cases, as we grow our client base. Our remote monitoring and control solutions are much less expensive and significantly more effective than perpetual, in-person inspection of industrial assets that are often located in remote locations. Given OmniMetrix’s technology leadership and the ongoing innovation of our product engineering and design team, we see an abundance of opportunities for growth in under-penetrated industrial markets, in 2023 and in the long-term, and we have a strong financial footing to support growth. We currently have approximately $1.5M of cash and no debt outstanding. We will also continue to search for attractive, complimentary acquisitions in the monitoring, IoT space, which we’d like to close in 2023. For these reasons, I am very excited about our prospects both near-term and longer-term, and I look forward to stronger and more profitable growth in 2023."
Don’t Miss TipRanks’ Half-Year Sale
- Take advantage of TipRanks Premium at 50% off! Unlock powerful investing tools, advanced data, and expert analyst insights to help you invest with confidence.
- Make smarter investment decisions with TipRanks' Smart Investor Picks, delivered to your inbox every week.
Published first on TheFly
See the top stocks recommended by analysts >>
Read More on ACFN: