EnerNOC (ENOC) is growing its SaaS-model, energy management services for the enterprise, currently comprising $50 million in revenue out of a total of $380 million, and the company is diversifying its customer base for its larger demand-response systems business, says Pavel Molchanov, Analyst Raymond James & Associates, Inc.
“In contrast to traditional SaaS companies, EnerNOC is trading at dramatically lower multiples. It trades at four times EBITDA, whereas traditional SaaS stocks trade at double-digit EBITDA multiples. And EnerNOC is also profitable, whereas many SaaS companies have negative earnings,” Molchanov said.
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Molchanov says ENOC is trading at a lower multiple than other SaaS companies for two main reasons, one being the seasonality of its business, and the other the high dependence on a small number of customers, particularly in the U.S.
“The good news is that EnerNOC is diversifying its revenue mix every year. First it’s diversifying by increasing its exposure to non-demand-response revenue, energy management for enterprises. And second, within demand response, it is becoming much more international. It’s already operating in several countries outside the United States, such as Australia, and I think there will be an entry into at least two more countries, quite possibly Japan and Korea, over the next 12 months,” Molchanov said.
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