Data Centers Boost Johnson Controls Sustainable Building Revenues; Search for Next CEO Continues
November 6, 2024 by Joe Panettieri
Johnson Controls, while hunting for an executive to succeed current CEO George Oliver, continues to gain momentum in the smart building and sustainable technology markets. Much of that success involves data center solutions and direct sales rather than channel partners -- though the company has 10,000 channel partners.
Among the anecdotes to note:
Sales in Q4 of 2024 rose 7% to $7.4 billion compared to Q4 in 2023.
Net income was $536 million, compared to $481 million in Q4 of 2023.
Roughly 15% of sales involve channel partners, according to a November 2024 earnings call discussion.
For a closer look at the overall business strategy, rewind to a December 2023 earnings call with Wall Street analysts. On that call, Oliver explained how the company was betting its business on smart building technologies that align with customers' energy efficiency, sustainability and decarbonization goals.
The strategy leans heavily on artificial intelligence (AI), Internet of Things (IoT) and cloud computing services that save energy and reduce emissions, while improving the overall building occupant experience, the company has emphasized.
Johnson Controls: Direct Sales and Channel Partner Strategies
Fast forward to November 2024, and Johnson Controls appears to be maintaining its momentum. Much of the sales momentum involves data centers, the company noted. "Our differentiated solutions to enhance efficiency and sustainability in commercial buildings continue to resonate with our customers across the key verticals we serve," Oliver asserted during the company's November 2024 earnings call.
Marc Vandiepenbeeck, CFO, Johnson Controls
In terms of revenue mix, the company typically sells direct when "we see an ability to both sell value, create high service attach rate and being able to drive the life cycle value of those products in the buildings we are in," CFO Marc Vandiepenbeeck said during the November 2024 earnings call.
Also, the company typically leverages channel partners in "markets where maybe it's harder to sell value or that's not where the customer wants to meet us, or the lifecycle value comes in a different profile, either because of the application of the building itself, the type of vertical it addresses, or just simply the complexity of that market," Vandiepenbeeck added.
The channel sales motion often involves a "more commoditized part of the market, more mid to low end of the market. And there we leverage an indirect channel through our distribution and sales partners," Vandiepenbeeck concluded.
Johnson Controls Considers CEO Candidates, Evolves Revenue Mix
Meanwhile Johnson Controls since July 2024 has been seeking a CEO to succeed George Oliver. "The Board is actively considering an impressive list of candidates, both internal and external, and we do expect to have an update in the first-half of calendar 2025," Oliver told Wall Street analysts on the November 2024 earnings call.
Amid the CEO search, Johnson Controls continues to evolve its revenue mix. Recent moves include:
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