Active Power says its sales strategy adjustments work well

Electrical equipment maker Active Power has managed to substantially increase its revenue in the fourth quarter of 2009, sequentially, and lower its net losses. The vendor’s executives say the uptick is not an accident, but rather the result of deliberate and fundamental changes in the way the company does business.

Active Power said its revenue for the quarter grew by 64 percent over the year’s third quarter and was “the second highest quarterly revenue in company history.” In a statement, Active Power CEO Jim Clishem attributed the jump in to a 20 percent growth in its direct sales business over the course of the year.

Active Power CFO John Penver said the company had been expanding direct sales in order to reduce its reliance on the organization that has until recently been its core OEM channel partner: Caterpillar. As one of the world’s largest industrial-grade electrical equipment makers had been struggling over the past two years, attention given to UPS sales was dwindling.

According to Penver, sales through Caterpillar amounted to more than 90 percent of Active Power’s revenue five years ago. In the fourth quarter of 2009, those sales represented only nine percent of the vendor’s revenue. Active Power expanded direct channel sales to compensate for the decline in OEM sales.

While Active Power’s total revenue in the fourth quarter ($14 million) was an increase from the prior quarter, the figure represented a 14 percent decline from the same period in 2008. The company’s full 2009 revenue came to $40.3 million, a six percent drop from the full 2008, when it brought in $43 million in revenue.

Along with sequential revenue growth, Active Power shrunk its net loss, which in the fourth quarter of 2009 stood at $2.2 million. In the third quarter of the same year, the company reported a net loss of $3 million. Net loss in the final quarter of 2008 was $431,000.

In the second half of 2009, customers placed $8 million in orders of the company’s PowerHouse product, a shipping container packed with all necessary electrical equipment for data centers and other types of power-intensive deployments. PowerHouse sales in the two quarters were higher than sales the company generated from the product throughout 2008.

Penver: PowerHouse orders in the fourth quarter of 2009 amounted to about $5 million.

Besides expanding its direct sales, Active Power also added an IT partner channel, with companies like HP, Sun and Verari marketing PowerHouse to compliment their containerized data center solutions.

“We had over $10 million in powerhouse revenue last year,” Penver said. “Half of that came from our IT partners Sun and HP.”

Active Power shipped 86 of its flywheel-based UPS systems at an average of $90,000 a piece during the year’s final quarter. The result was an improvement from the third quarter, when the company sold 56 units at an average selling price of $78,000 per unit.

Penver said the jump in average selling price was another result of decreased reliance on OEM sales, with the company being able to charge more when selling directly to an end user, then it was when going through an OEM.