EnerNOC, Inc. (NASDAQ:ENOC) Q4 2014 Earnings Conference Call - Final Transcript

Feb 26, 2015 • 05:00 pm ET


EnerNOC, Inc. (NASDAQ:ENOC) Q4 2014 Earnings Conference Call - Final Transcript


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Good afternoon and welcome to EnerNOC's Q4 and Fiscal-Year 2014 Conference call. At this time, all participants are in a listen-only mode. Later, we will conduct a question-and-answer session and instructions will follow at that time. (Operator Instructions) As a reminder, ladies and gentlemen, this conference call is being recorded.

I would now like to introduce your host for today's call, Sarah McAuley, Senior Director of Communications. Please go ahead.

Sarah McAuley

Thanks, Brad. Good afternoon, everyone, and welcome to our conference call. I'm joined by Tim Healy, our Chairman and CEO; David Brewster, our President; and Neil Moses, our COO and CFO. The press release announcing our fourth quarter results and fiscal-year 2014 results and our business outlook as well as a reconciliation of management's use of non-GAAP financial measures as compared to the most applicable GAAP measures is available on the Investor Relations section of our website at www.enernoc.com. There, you'll also find summary statement of operations, a summary balance sheet and a summary of key financial and operating statistics for the last six quarters.

(Forward-Looking Cautionary Statements) A couple of calendar items before I turn the call over to Tim. We again have an active IR schedule coming up, including the Raymond James Investor Conference in Florida and the Pac Crest Tech Summit and Morgan Stanley Technology Conference in San Francisco. In addition, we'll be hosting an Analyst Day, Wednesday, March 25th in Philadelphia. This year's event is co-hosted with EnergySMART, our Annual User Conference of the Pennsylvania Convention center.

With that, I'll turn the call over to Tim.

Tim Healy

Thank you and good afternoon everyone. As you have seen from our financial results released earlier today, 2014 was a very good year for EnerNOC. We ended the year in a strong financial position with record results achieved in several areas of the business. We're excited about the increase in diversification of our business, the growth of our annual recurring revenue or ARR and the expansion of our enterprise customer base.

These achievements are creating more consistent predictable revenue streams with higher margins and position us well for continued success in the emerging $20 billion energy intelligent software or EIS market. As you have also seen in today's press release, we're modeling a significant decline in our grid operator revenue and a GAAP net loss of $90 million from 2015 with breakeven free cash flow.

Our strategy to increase investment in our software offerings from both enterprise and utility customers, despite the decline in our grid operator business this year, is the right choice to capitalize on the EIS market opportunity that we're uniquely positioned to lead. On today's call, we will discuss the individual components of our business and the metrics that will drive our software business. Specifically, we will review the cyclical trends in wholesale markets that contributed positively to our 2014 numbers, but will negatively impact our 2015 P&L and will discuss how we intend to further invest and grow our energy intelligent software business for our utility