Proving the Business Case for the Internet of Things

Revenues drop at Echelon's smart grid business

Iain Morris
May 13, 2014
Smart grid platform provider Echelon has flagged a decline in sales and earnings for the first quarter of the year as it works on repositioning itself for new Internet of Things (IoT) opportunities.

The company – which develops chips, modules, routers and software for smart grid and other IoT markets – saw revenues fall to $17.8 million, from $25.2 million in the same period last year, while its net loss grew to $3.1 million from $1.9 million over the same period.

Echelon (San Jose, CA, USA) suffered a particular setback at its grid business, with revenues falling to $6.9 million from $13.4 million between the first quarters of 2013 and 2014.

Meanwhile, sales at its industrial IoT business dropped from $11.8 million from $10.9 million over the same period.

That included revenues of $1.5 million from sales to Enel (Rome, Italy) – Italy’s largest energy utility – down from a figure of $1.9 million in the first quarter of 2013.

Echelon is not the only smart grid player to have recently reported a quarterly decline in earnings, with Silver Spring Networks (Redwood City, CA, USA) flagging a similar setback that it blamed on the fact newer customer deployments were taking a long time to “ramp up”.

Echelon, however, appeared to attribute its own earnings decline to various repositioning efforts as it looks to capitalize on emerging opportunities in the IoT area.

“Execution of our strategic initiatives remains our most significant priority as we position Echelon to meet the emerging demand for industrial IoT solutions,” said Ron Sege, the chairman and chief executive of Echelon. “This quarter we announced new products, began expanding our distribution channels under new sales leadership, and achieved significant milestones towards grid awards in Eastern Europe.”

“As we move forward, we believe we can help our customers take advantage of emerging IIoT applications, add value as the lighting market transitions to LEDs and position ourselves well for grid modernization awards in our target geographies,” he added. “By aligning our investments with these opportunities, we are focused on returning value to our shareholders long term.”

Echelon expects to decline sequentially in the second quarter, to between $15 million and $16.5 million, with 35% coming from grid activities and the remainder from its industrial IoT business.
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