Opower finished 2014 with $128.4 million in revenue, a 45 percent increase over 2013. The utility-consumer behavior expert posted a GAAP net loss of $41.8 million in 2014.
For years, Opower has helped utilities tackle easy-to-fix energy-efficiency problems and improve basic customer offerings. But now, many utilities are thinking about more sophisticated segmentation and increased customer satisfaction. In most cases, utilities lag behind other industries in the evolution of customer services.
By helping its utility customers catch up in customer engagement in both the U.S. and abroad, Opower expects to reach profitability in 2017, Dan Yates, CEO of Opower, said on a call discussing the firm's financial results for 2014.
“The utility industry is one of the largest remaining industries yet to be transformed by cloud software,” the CEO said in a statement. “We are leading that transformation.”
Opower booked a significant expansion of its platform with Southern California Edison in late 2014. The investor-owned utility will use Opower's technology to create energy management solutions that will be available to all of its customer classes. Yates said that the deal should start to deliver revenue in 2015. The expansion with Southern California Edison will also involve a key partner, FirstFuel, which allows Opower to service commercial and industrial customers more effectively.
Partnerships will be a key area for helping Opower grow its existing business. Yates said EnergySavvy, a startup with an enterprise platform for utility efficiency programs, is the first ecosystem partner to run entirely on top of Opower’s API.
Still, there were some bumps in the road for Opower in 2014. Two international deals did not renew, both of which were using Opower’s energy-efficiency product to try to increase customer retention.
Energy efficiency, it turns out, is not a compelling customer retention strategy, and Opower will focus on its digital engagement and customer-care solutions in competitive markets moving forward. However, energy efficiency is a driver in regions where there is government pressure to decrease energy use, as there is in Malaysia, where Opower recently inked a deal.
One strategy Opower won’t be using to drive growth is serving as the platform provider for the smart thermostats that are increasingly being used in bring-your-own-thermostat programs. As recently as Q3 2014, Opower was talking about its OpenStat API. But it turns out that Opower will not be jumping into the thermostat platform business after all.
“We realized that the thermostat has become entirely a consumer business,” Yates said on the call, “and that's not our bread and butter -- and our utility clients have had the same realization.”
Instead, the company continues to push its behavioral demand response offering, which it has rolled out successfully to more than 1 million Baltimore Gas & Electric customers. Opower expects demand response to be a growing percentage of its revenue in 2015, along with digital engagement and its newest offering, Billing Suite. Puget Sound Energy will be the first utility to launch the entire Billing Suite product later this year.
The company expects 2015 revenue of between $144 million and $149 million, with a non-GAAP net loss of $33 million to $38 million.