Cleanspark Inc (NASDAQ:CLSK) is building software that “intelligently models and manages microgrids to save money and optimize performance,” the analyst firm Water Tower Research wrote in a coverage initiation report released Tuesday.
The microgrid sector is growing rapidly, Water Tower wrote, which sets CleanSpark up for future success.
“We believe the market for microgrids is in a long-term secular growth trend,” the firm wrote. “CleanSpark’s software and hardware are vendor agnostic and can connect and communicate with any components of a microgrid regardless of brand. This compares to other industry solutions that are component specific and do not easily allow for a best-in-class approach in building a microgrid.”
READ: CleanSpark reveals award of $370,000 order for its intelligent automatic transfer switch (ATS) switchgear
The company has posted seven-straight quarters of year-over-year growth and is targeting $10 million in revenue for fiscal 2020, the report noted. CleanSpark is a relatively small player, Water Tower says, but has shown it can hold its own.
“CleanSpark has proven its ability to compete effectively but will need to continue to expand its sales network and ensure its software platform evolves with the industry,” the firm wrote. “Management believes the company is well capitalized to achieve its near-term goals but reaching break-even is a critical milestone to reach in the next twelve months.”
CleanSpark's software — mPluse and mVSO (Microgrid Value Stream Optimizer) — enables a microgrid to be scaled to a user's specific needs and can be used by agricultural, commercial and industrial enterprises, as well as the military and municipal governments.
“CleanSpark’s solution is based on intelligent energy software that can model, measure, monitor and adjust how a microgrid engages with the grid and the various assets,” Water Tower wrote. “This is an ROI solution for customers.”
The company also sells intelligent automatic transfer switch (ATS) switchgear technology, which is used to automatically transfer power supply from a primary source to a backup source when it senses a failure or outage.
“The hardware segment accounts for approximately 70% of revenue as of 3Q20 and carries an average margin of approximately 15%,” the firm noted. “Hardware sales primarily include switchgear and energy storage solutions.”
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