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Page 1: November 2017€¦ · statements about historical results that may suggest trends for the Company’s business and results of operations; any statements concerning the ... (PCNA)

November 2017

Page 2: November 2017€¦ · statements about historical results that may suggest trends for the Company’s business and results of operations; any statements concerning the ... (PCNA)

FORWARD LOOKING STATEMENTS

This presentation contains “forward-looking” statements that involve risks, uncertainties and assumptions. If the risks or uncertainties ever

materialize or the assumptions prove incorrect, the Company’s results may differ materially from those expressed or implied by such forward-

looking statements. All statements other than statements of historical fact could be deemed forward-looking, including, but not limited to: any

statements about historical results that may suggest trends for the Company’s business and results of operations; any statements concerning the

Company’s plans, strategies or objectives; any statements of expectation or belief regarding future events; and any statements of assumptions

underlying any of the foregoing. These statements are based on estimates and information available to the Company at the time of this

presentation and are not guarantees of future performance.

As outlined more fully in the Company’s filings with the SEC on Forms 10-K and 10-Q, actual results could differ materially from the Company’s

current expectations as a result of many factors, including, but not limited to: quarterly fluctuations in the Company’s business and results of

operations; the Company’s ability to address market needs and sell its products and services successfully; the effects of competition; and market

factors and general economic conditions. The Company assumes no obligation for and does not intend to update these forward-looking

statements. Nothing contained herein is, or should be relied on as, a promise or representation as to the future performance of the Company. This

presentation includes certain non-GAAP financial measures.

Logos and trademarks referenced herein are the property of their respective owners.

1

Page 3: November 2017€¦ · statements about historical results that may suggest trends for the Company’s business and results of operations; any statements concerning the ... (PCNA)
Page 4: November 2017€¦ · statements about historical results that may suggest trends for the Company’s business and results of operations; any statements concerning the ... (PCNA)

CONTROL4 INTRODUCTION

▪ Founded in 2003; IPO in 2013

▪ 100% focus on connected home

▪ 300,000+ home and business installations

▪ 10,900+ third-party products controlled

▪ 5,500+ independent dealers

▪ 97 countries served

▪ 630 employees

▪ Headquartered in Salt Lake City

3

$93.4

$109.5

$128.5

$148.8

$163.2

$208.8

$151.4

$176.4

2011 2012 2013 2014 2015 2016 2016 2017

REVENUE TRENDS

$ IN MILLIONS

First 9 Months

Page 5: November 2017€¦ · statements about historical results that may suggest trends for the Company’s business and results of operations; any statements concerning the ... (PCNA)

INVESTMENT HIGHLIGHTS

Addressing Large,

Underpenetrated Market

Recognized Leader in Pro-Installed

Connected Home Solutions

Vast & Expanding Network

of Independent Dealers

Comprehensive, Open &

Scalable Platform & Ecosystem

Executing on Aggressive

New Product & Acquisition Cycle

Committed to Accelerated

Earnings Growth

14.1MUS HOUSEHOLDS

4

Page 6: November 2017€¦ · statements about historical results that may suggest trends for the Company’s business and results of operations; any statements concerning the ... (PCNA)

CONNECTED HOME MARKET SEGMENTS

INTEGRATION & PERSONALIZATION | PREMIUM EXPERIENCE

5

DIY & DIFM MANAGED SERVICE PRO-INSTALLED

Key

Participants

Economic

Model

Pay Per Device,

Usually with Install

Upfront Device, Install

and Monthly Subscription

Upfront System

and Install

Typical Cost $100 – $500 / device $500 – $1,000 / year $1,000 – $50,000

Typical # of Devices 1 – 3 5 – 10 25 – 125

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SIGNIFICANT MARKET OPPORTUNITY

✓ Homeowners

✓ Ages: 35 – 55

✓ Families with Children

✓ College-Educated

✓ Strong Income

SUBSTANTIAL AND UNDERPENETRATED MARKETPREMIUM CUSTOMER

14.1MUS Households

>$150k Income

<2.0%Estimated

Control4 USPenetration

International Opportunity is Even Larger

Source: U.S. Census Bureau, 2015 Current Population Survey.

6

Page 8: November 2017€¦ · statements about historical results that may suggest trends for the Company’s business and results of operations; any statements concerning the ... (PCNA)

HOME AUTOMATION HOME NETWORKS A/V DISTRIBUTION

VIDEO DISTRIBUTION HVAC CONTROL ACCESS CONTROL

LIGHTING CONTROL AUDIO AMPLIFIERS INTERCOMS

CONTROL4: PRO-INSTALLED BRAND LEADER

#1 Home Automation Brand

Source: Rankings are based on CE Pro’s 2017 Brand Analysis survey of the industry’s top 100 custom electronics integrators who were asked to rank their top three vendors in each product category.

Brand Leadership Across Many Categories

61%

45%

42%

14%

10%

10%

7

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SOLUTIONS FOR EVERY LIFESTYLE

Single Room

$1,000

$5,000

Multi-Room

$5,000

$20,000

Whole Home

$20,000

$250,000

Flexibility to Scale Up and Scale Down

8

Page 10: November 2017€¦ · statements about historical results that may suggest trends for the Company’s business and results of operations; any statements concerning the ... (PCNA)

PRODUCT PORTFOLIO

SMART

LIGHTING

SAFETY &

SECURITY

INTELLIGENT

NETWORKINGCONTROLLERS &

OPERATING SYSTEM

COMFORT &

CONVENIENCE

HOME

ENTERTAINMENT

USER

EXPERIENCE

9

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OPEN SOFTWARE PLATFORM AND ECOSYSTEM

▪ Interoperable with 10,900 third-party products

▪ Orchestrating ~12 million connected devices

▪ Average 40+ devices per home

▪ 250+ SDDP partners shipping 2,900+ models

SELECTED SDDP PARTNERS

10

Page 12: November 2017€¦ · statements about historical results that may suggest trends for the Company’s business and results of operations; any statements concerning the ... (PCNA)

EXPANDING EXPERT DEALER NETWORK

✓ Local Presence

✓ Local Expertise

✓ Local Marketing

✓ Local Service

✓ Scalable Model

3,017 3,179 3,463

3,688

5,141 5,522

2012 2013 2014 2015 2016 Q3 2017

North America International

Note: 2016 and Q3 2017 dealer counts include active dealers that are authorized to sell only the Pakedge and Triad-branded line of products.

BENEFITS OF OUR DEALER CHANNELCERTIFIED DEALERS AT END OF PERIOD

11

Page 13: November 2017€¦ · statements about historical results that may suggest trends for the Company’s business and results of operations; any statements concerning the ... (PCNA)

Recruit More

Dealers

GROWTH STRATEGY

Capture

Market Share

Expand Share

of Wallet

Increase Dealer

Efficiency

▪ North American Expansion

▪ Add International Direct Dealers

▪ New Dealers via Pakedge and Triad

▪ Lead-Gen and Marketing

▪ Software Innovation

▪ Training and Support

▪ Leaf, Pakedge and Triad

▪ EA Series

▪ International Lighting

▪ Customer Delight

▪ Expert Local Channel

▪ Open Platform

12

Page 14: November 2017€¦ · statements about historical results that may suggest trends for the Company’s business and results of operations; any statements concerning the ... (PCNA)

EA-SERIES CONTROLLERS

▪ Entertainment & Automation (“EA”) Series

• EA-1: $500 US MSRP – single room

• EA-3: $1,000 US MSRP – multi-room

• EA-5: $2,000 US MSRP – whole-home

▪ Also includes Native Music Services

13

High-Performance Automation with High-Resolution Audio

New September 2017

▪ Control4 OS 2.10

• Enhanced 4Sight Service

- When >> Then – Automation Personalization (CEDIA “Best of Show”)

- A/V Intercom Anywhere (to/from Mobile App)

• Added streaming from Spotify and iHeartRadio

Page 15: November 2017€¦ · statements about historical results that may suggest trends for the Company’s business and results of operations; any statements concerning the ... (PCNA)

PAKEDGE NETWORKING

▪ Acquired in January 2016

▪ Leader in networking solutions designed for audio, video, security and home automation

▪ 2,904 Control4 dealers have purchased Pakedgeproducts during 2017

14

New September 2017

▪ Pakedge WR-1 with BakPak Lite (CEDIA “Best of Show”)- Integrated network router and wireless access point

- Built-in cloud-based network management

- 802.11ac Wave 2 Wi-Fi technology

- $300 MSRP

▪ Pakedge Certified Network Administrator (PCNA) Program- Online training program to ensure networking competency of dealers

- Includes Pakedge networking equipment – $2,000 MSRP

- Cost to dealers: $650 per technician (net of rebate)

High-Performance Networking for Reliable Connected-Home Experiences

Page 16: November 2017€¦ · statements about historical results that may suggest trends for the Company’s business and results of operations; any statements concerning the ... (PCNA)

15

AMAZON ALEXA INTEGRATION

▪ Control4 with Amazon Echo, Dot, and FireTV

▪ Personalized Whole-Home Voice Control

▪ Lights, Customized Lighting Scenes, Thermostats

▪ End-User Installation from Alexa App

▪ Dealer definable Voice Scenes for Listen, Watch, Comfort, Convenience

▪ End-User Voice-Command Customization via customer.control4.com

▪ Secure 4Sight Control4-Cloud to AVS-Cloud Integration

▪ Marketing Programs and Kits for Control4 Dealers

New in 2017

▪ Now available in the UK and Germany

Page 17: November 2017€¦ · statements about historical results that may suggest trends for the Company’s business and results of operations; any statements concerning the ... (PCNA)

TRIAD AUDIO

▪ Acquired Feb 2017; Ordered by 1,645 Control4 Dealers To-Date

▪ Industry leader in high-performance audio

▪ Family-Rooms, Home Theaters, Whole-Home & Patio Audio

▪ Full range of high-performance products – Made-to-Order Custom Capabilities

▪ Acoustic Specialists – Product Engineering and Installation Design Services

▪ Released in 2017 – new outdoor landscape and in-ceiling speakers

New September 2017

▪ New high-resolution audio products- Triad AMS-24 and AMS-8 Audio Matrix Switches

- Triad 8-Zone Power Amplifier

- Triad One Streaming Amplifier

16

High-Performance Audio for Connected-Home Entertainment Experiences

HOME THEATERMULTI-ROOM AUDIO SOUNDBARS OUTDOOR SPEAKERS

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Page 19: November 2017€¦ · statements about historical results that may suggest trends for the Company’s business and results of operations; any statements concerning the ... (PCNA)

HIGHLIGHTSNON-GAAP FINANCIAL PERFORMANCE

Q3 2017 RECAP

▪ Record revenue at the high end of guidance

• Total y/y revenue growth of 16%

• Pro forma y/y revenue growth of 12% (1)

▪ Record non-GAAP net income exceeded the high end

of guidance by over $2M; increased 49% y/y

▪ Non-GAAP gross margins of 52.7%; up 18 bps y/y

▪ Ended Q3 with $71.9M of cash (including restricted);

no debt plus $30M unused line of credit; generated

$6.6M in cash flow from operations

▪ $14.1M in share repurchases since May 2015

$ In Millions, Except EPS

18

Q3 2016 Q3 2017 Change

Revenue $55.2 $64.7 +17%

Gross Margin 52.5% 52.7% +18 bps

Operating Income $6.5 $9.5 +45%

Operating Margin 11.8% 14.6% +280 bps

Net Income $6.4 $9.6 +49%

Net Margin 11.6% 14.8% +313 bps

EPS $0.26 $0.35 +$0.09

(1) Pro forma revenue growth has been presented as if Triad was acquired on 6/30/16.

Note: See Appendix for a reconciliation of GAAP to non-GAAP figures.

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COMMENTARY

STEADY REVENUE GROWTH

▪ 2016 Overall Revenue Grew 28%

• Growth of 15% pro forma (1)

▪ 2016 North America Core Grew 31%

• Growth of 17% pro forma (1)

▪ 2016 International Core Grew 12%

• Growth of 21% on a constant currency basis

▪ 2017 Guidance Implied Growth 17%

• Includes $10M of Triad revenue; 11% pro forma (1)

• Raised from prior guidance of $240.5M – $244.5M

$ IN MILLIONS

19

17.3% 27.9%15.8% 9.7%

$128.5

$148.8$163.2

$208.8

2013 2014 2015 2016 2017

ANNUAL REVENUE & Y/Y GROWTH

$242.5 – $244.5

Guidance(1) 2016 and 2017 pro forma revenue growth has been presented as if Pakedge was acquired on 12/31/14 and Triad was acquired on 12/31/16.

16.6%

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QUARTERLY REVENUE TRENDS

20

$ IN MILLIONS

SECOND QUARTER

19.9% 0.7% 34.1% 16.7% 12.7% 21.8% 19.2% 15.4% 16.3% 11.3% 26.7% 17.3% 15.1% 4.2% 33.7% 10.7%

$31.9 $32.1

$43.0

$50.2

$36.7

$44.6

$53.2

$61.4

$39.1

$43.6

$55.2

$64.7

$41.2 $42.9

$57.4

$66.3 – $68.3

Q1 14 Q1 15 Q1 16 Q1 17 Q2 14 Q2 15 Q2 16 Q2 17 Q3 14 Q3 15 Q3 16 Q3 17 Q4 14 Q4 15 Q4 16 Q4 17

Guidance

FIRST QUARTER THIRD QUARTER FOURTH QUARTER

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Top 10 5%

11 – 100 14%

101 – 500 30%

Other51%

BALANCED REVENUE MIX

Platform Products Drive 2x Attach Rate

to Solution Products

Top 100 Dealers Represent

Only 19% of Total Revenue

Solution Products

72%

2016 REVENUE BY CATEGORY2016 REVENUE BY DEALER

21

Platform

Products

28%

Page 23: November 2017€¦ · statements about historical results that may suggest trends for the Company’s business and results of operations; any statements concerning the ... (PCNA)

CONSISTENT GROSS MARGINS

▪ Generally Consistent Across Products

▪ Software Value-Add Preserves Pricing

▪ Ops Team Manages Product Costs

▪ Higher Margins Through Direct Dealers

▪ Q3 2017 Non-GAAP Gross Margin of 52.7%

▪ Triad Gross Margin Range of 35% – 40%

COMMENTARYNON-GAAP GROSS MARGIN TRENDS

Note: See Appendix for a reconciliation of GAAP to non-GAAP figures.

22

48.1%50.3% 51.7% 51.1% 52.2%

2012 2013 2014 2015 2016 Target

52% – 54%

Range

Page 24: November 2017€¦ · statements about historical results that may suggest trends for the Company’s business and results of operations; any statements concerning the ... (PCNA)

COMMENTARYANNUAL NON-GAAP NET INCOME

$ IN MILLIONS

RAPID EARNINGS GROWTH

▪ Made Investments in R&D and S&M in 2015

▪ Realized Returns on Those Investments in 2016

▪ 2016 Non-GAAP Net Income Grew 150% Y/Y

▪ Realizing Further Margin Expansion in 2017

▪ Q3 2017 Non-GAAP Net Income Reached $9.6M

– a 49% Increase Over Q2 2016

▪ Raised 2017 Guidance From $26.5M – $28.5M to

$30.2M – $31.2M Based on Strong YTD results

Note: See Appendix for a reconciliation of GAAP to non-GAAP figures.

23

$8.7

$14.0

$8.3

$20.6

2013 2014 2015 2016 2017

$30.2 – $31.2

Guidance

Page 25: November 2017€¦ · statements about historical results that may suggest trends for the Company’s business and results of operations; any statements concerning the ... (PCNA)

POSITIVE

FREE CASH FLOW

DRIVING SHAREHOLDER VALUE

INCREASE

REVENUE

INCREASE

MARKET SHARE

ORGANIC

INITIATIVES

SHARE

BUYBACKS

STRATEGIC

ACQUISITIONS

24

Page 26: November 2017€¦ · statements about historical results that may suggest trends for the Company’s business and results of operations; any statements concerning the ... (PCNA)

INVESTMENT HIGHLIGHTS

Addressing Large,

Underpenetrated Market

Recognized Leader in Pro-Installed

Connected Home Solutions

Vast & Expanding Network

of Independent Dealers

Comprehensive, Open &

Scalable Platform & Ecosystem

Executing on Aggressive

New Product & Acquisition Cycle

Committed to Accelerated

Earnings Growth

14.1MUS HOUSEHOLDS

25

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2013 2014 2015 2016 9M 2016 9M 2017Gross Margin Reconciliation

GAAP Gross Profit $64,657 $76,357 $81,534 $103,679 $74,132 $89,814

Stock-Based Compensation Expense 63 105 174 171 128 185

Amortization of Intangible Assets 319 491 1,392 3,052 2,266 2,367

Acquisition-Related Costs - - 294 2,162 2,173 165

Inventory Purchase Commitment (380) - - - - -

Non-GAAP Gross Profit $64,659 $76,953 $83,394 $109,064 $78,699 $92,531

Revenue $128,511 $148,800 $163,179 $208,802 $151,435 $176,386

GAAP Gross Margin 50.3% 51.3% 50.0% 49.7% 49.0% 50.9%

Non-GAAP Gross Margin 50.3% 51.7% 51.1% 52.2% 52.0% 52.5%

Net Income Reconciliation

GAAP Net Income (Loss) $3,503 $8,156 $(1,652) $12,954 $8,940 $9,921

Stock-Based Compensation Expense 3,760 5,341 7,034 8,370 5,933 9,191

Amortization of Intangible Assets 319 491 1,474 4,598 3,393 3,885

Acquisition-Related Costs - - 1,393 (5,911) (5,942) (1,969)

Inventory Purchase Commitment (380) - - - - -

Litigation Settlements 440 47 21 475 400 -

Convertible Preferred Stock Warrant 709 - - - - -

Executive Severance 340 - - 157 157 -

Non-GAAP Net Income $8,691 $14,035 $8,270 $20,643 $12,881 $21,028

GAAP TO NON-GAAP RECONCILIATION

27

$ IN THOUSANDS