We’re in the process with about half of our local stores, as of this week, operating on our new platform. There’s more conversions coming. We expect to have that done sometime around the middle of the year with all the stores. That obviously provides effectiveness and efficiency where you don’t have four different platforms that you’re operating on. It’s not a huge amount, maybe $1 million or $2 million on the bottom line by that effectiveness. But, we do think going forward in the future, some of the soft benefits of having one system that’s maintained, be able to be more consistent with our marketing messages, is all out there. And even in the future, we have more work to do. We have different international systems we have to continue to consolidate.
There’s some other things, that we have continue to think about from a platform standpoint. But this really gets a lot of the effectiveness of Snap and Control4 coming together and the local stores coming together.
Robert Jamieson: That’s great. Thank you. Very helpful. And then, just a quick one on seasonality. I know you said embedded in the guidance, to expect second half to be stronger. Should we think about that more like, if I’m looking back in history, like, 45% in the first half, 55% in the second half? Is that kind of like fair to think about?
Mike Carlet: Yes. I think directionally, I don’t have quarters in front of me, but I think the issue really is this market activity. I think what we’re saying is, right now the market continues to be a bit weak and we’re continuing to capture share. And, there’s no expectation that in the next two, three months the market is going to see a dramatic turnaround, but I think there is optimism on the back half of the year. So, there always is some seasonality in the business, which I think is usually, again, 46%, 47%, 45%, 46% of EBITDA. As we go, there’s impacts of local store openings as you go through the year and the timing of them that impacted as well. But, I think this year it’s going to be even a little bit more dramatic just given the overall market activity that we’re anticipating.
Robert Jamieson: Okay. That’s great. Thank you very much. Appreciate it. I’ll pass it back.
Operator: Thank you. One moment for our next question. Our next question comes from the line of Adam Tindle with Raymond James. Your line is now open.
Adam Tindle: Okay. Thanks. Good afternoon, John. I wanted to return to the software platform, release and that you went to a comprehensive overview that was very helpful. I wonder if you could, just maybe touch on the discussions on the strategy. When we think about Snap One, it’s a sizable upfront installation and adding a recurring fee on top. On one hand, it’s probably a minor part of the bill of materials based on the pricing that you’re suggesting here. On the other hand, a lot of the customers are kind of, expecting to pay that onetime large capital type purchase and not have an ongoing stream. So, I guess the question there would be, when you analyze that, was there other models that you looked at, to do this, whether it’s maybe like a Tesla or somebody like that?
And how did you come with the pricing strategy? And the second piece would be, you laid out a very strong case for this to become very material over time. I wonder how you think about, perhaps even expanding that ARPU over time with additional features. And maybe just take us through the road map on how that could become more material from an ARPU and feature standpoint? Thanks.
John Heyman: Hey, Adam, I want to just congratulate you. I think you squeezed a number of questions into there besides one, so well done. All very good questions by the way. So yes, our end customer typically pays a significant price for the acquisition cost of a system. We looked at this in detail, and the prices do range by the way. And for what we call very light systems, single room, low number of devices, while there’s a subscription for Control4 Connect, that subscription is actually free. Now, that’s a small number of our actual installs, but for the price sensitive customer, there is a free solution. And what we would hope is that they step up into our more robust solutions over time. The other element of testing pricing was for the subscription, we have a product called Foresight that over 100,000 customers use.
We have historically charged the dealer around $130 a year for that product. The dealers then mark that product up and sell it to the end customer. So, when we looked at what the price realization was at the end market level, we were able to get a good sense of willingness to pay. And that number, that $250 number felt right. We looked at having a pricing grid that was more or less than $250. We just decided to keep it simple. Part of the messaging then is with the homeowner where you’re asking about willingness to pay is that if your provider is not offering you this, that this is a system that runs on software and that the software helps the system improve over time. And this is the first time ever that a manufacturer is standing behind the software and committing to improve it and the market will see notable improvements to the software this year by the way.
That we felt like why would you ever want to buy a system from someone who isn’t charging you this fairly moderate fee to keep your system updated, current in terms of all the number of integrations you have to do, continuing to improve the security of your system, etcetera. So, that was how we addressed kind of the one-time or Tesla model or the model we ended up on, which was Control4 Connect, which is kind of the annual $250. We did have to build a lot of plumbing into that system, because our market is not used to doing recurring revenues. So, we did build out the recurring revenue platform for the industry and that includes billing the customer directly and sharing it with the integrator. So that’s one. Two, I think I addressed the pricing point mostly through Foresight.
