The latest sign that the long-hoped-for bonanza from IoT lighting continues to be just that — long hoped for — comes from LED lighting stalwart Acuity Brands, whose CEO recently acknowledged that the company’s Atrius IoT software and services has yet to hit an “inflection point.”
Still, the Atlanta firm is optimistic that Atrius will soon accelerate, and could even get a boost at some point via an Acuity acquisition of a company that would expand the company’s IoT universe, CEO Neil Ashe told analysts on a web call to discuss robust fourth-quarter and year-end results earlier this month.
While overall sales and profits for the fourth quarter and year ending Aug. 31 increased notably, most of the sales came from Acuity’s mainstay lighting operations, called Acuity Brands Lighting. ABL accounted for about $1.05 billion of $1.1 billion in overall quarterly sales. The Intelligent Spaces Group (ISG) that houses Atrius contributed $61.4 million in net sales, or about 5.6%.
For the year, the ratio was similar, with ISG contributing $216.1 million, or 5.4% of $4.1 billion in sales.
While ISG itself grew 21.6% for the quarter and 13.7% for the year, that growth came from a comparatively small base.
Observers might have expected ISG by now to have contributed a greater share of the revenue pie at Acuity. That’s because in July 2021, Ashe articulated strong intentions to ratchet up the company’s services and technology offerings, having just acquired Seattle company Rockpile Ventures which Acuity described as an artificial intelligence incubator.
At the time, ISG represented 6.2% of overall revenue. So, if anything, ISG’s percentage share has actually slightly declined.
Much of Acuity’s ISG revenues come from its Distech operations, which provides smart building controls for lighting as well as HVAC. Atrius is not so much a controls play as it is an effort to gather data in buildings and massage it into useful insights that help companies track assets, optimize space, and other analytic-based functions.
It is the classic IoT reach that many lighting companies such as Signify and Fagerhult have, like Acuity, thus far found elusive.
As Oppenheimer analyst Christopher Glynn pointed out to Ashe on the web call, “I think it’s been a story of active piloting the last few years.” He then asked, “I’m wondering what sort of transitions and inflections you’re anticipating for the ability to scale the software?”
CEO Ashe was candid.
“On Atrius, you’re exactly accurate,” he replied. Although Acuity recently added features to two piece of Atrius software aimed at locating and tracking things, the big leap in the business has not yet happened.
“We don’t feel like we’re yet at an inflection point with Atrius, but we’re confident in the work that we’ve been doing,” Ashe said, noting that the greatest possibilities are in what he describes as the “edge to cloud” space.
He also hinted that an acquisition could be in order for ISG.
"We would expect in the next couple of years that M&A will become a more important component of our capital allocation,” he said at one point, later elaborating that, “We see very interesting adjacencies currently in the pipeline around our Spaces group which are both on the Distech side and the Atrius side.”
He did not elaborate on which companies Acuity might be eyeing. ISG president Peter Han told LEDs Magazine in July 2021 that the group’s commercial projects will not always necessarily have a lighting aspect.
MARK HALPER is a contributing editor for LEDs Magazine, and an energy, technology, and business journalist ([email protected]).
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