The Secret to Acuity's $4B Reinvention

In the mid-2010s, Acuity Brands saw its shine start to fade. LED technology had transformed lights into low-margin commodities, squeezing profits and growth. Today, the company stands out as a smart lighting and building intelligence leader.

of Acuity’s revenue now comes from its high-tech Intelligent Spaces segment, up from just 6% a few years ago. In practical terms, nearly a quarter of the company’s business is no longer traditional light fixtures at all, but IoT controls, software, and smart systems.

Here’s what you’ll learn

By the mid-2010s, the LED revolution had turned basic lighting into a brutal commodity business. LED bulb prices collapsed more than 90% in a decade, from around $40 in 2010 to under $3 by 2020. For industry leaders like Acuity, decades of dominance built on selling bulbs and fixtures suddenly faced a new reality: when buyers view products as interchangeable, they shop on price. The premium once earned by incumbents vanishes.

Cheap imports and new rivals accelerated that shift. Revenue at Acuity peaked around $3.7 billion in fiscal 2018, then stagnated. Signify, the former Philips Lighting and a dominant peer, saw sales slump as it remained tethered to the low-end, commoditized segment. The trap was becoming clear: incumbents can be strong operators yet still lose altitude if they stay anchored to the part of the value chain where competition is fiercest and willingness to pay is lowest.

Even Acuity's large North American distribution network, an asset that once helped lock in demand and defend shelf space, couldn't insulate it indefinitely from a market that increasingly treated lighting as a commodity rather than a branded value proposition.

Acuity, the largest lighting company in North America, faced a classic innovator's dilemma: keep harvesting the old cash cow under heavy price pressure, or pivot while it still had the scale and balance sheet to change course. The appointment of Neil Ashe as CEO in January 2020 marked a turning point. Ashe, a former tech executive who had led e-commerce at Walmart and run CBS Interactive, openly acknowledged that "bulbs and ballasts" were no longer a sustainable path. He pushed Acuity toward "software and sensors" instead, an attempt to escape the commodity trap by redefining what lighting meant in the first place.

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Acuity's answer to commoditization was to move up the value chain, from selling standalone products to selling integrated solutions. That shift meant embedding intelligence into lighting and expanding into broader building management. The company pursued a dual strategy: keep the core lighting business healthy while investing aggressively in smart systems as the next growth engine.

The legacy business got leaner. Through initiatives like the Acuity Business System, the company sustained strong execution in manufacturing and distribution, preserving operating margins in the high teens. Its stable of brands, from Lithonia and Holophane to Juno and nLight, continued to ship millions of LED fixtures into commercial and industrial projects. But the important evolution was how those fixtures were sold: increasingly bundled with proprietary sensors and controls. By packaging lighting with controls through its unrivaled sales network, Acuity could offer more value in customer installs and avoid pure price fights. The result was differentiation versus no-name LEDs and an installed base designed for upgrades.

The deeper bet was turning lighting into an intelligent system. Under Ashe's vision, the company pushed into connected lighting and IoT software. It formed an Intelligent Spaces group, acquired Distech Controls for building management, and introduced the Atrius platform to connect lighting with HVAC, security, and other building systems. The smart building market is projected to more than double by 2030, reaching over $300 billion. Acuity wanted a piece of that growth.

In January 2025, the transformation culminated in Acuity's largest deal ever: a $1.2 billion acquisition of QSC, a leader in cloud-manageable audio, video, and control systems. QSC's platform added advanced AV and data capabilities, and came with $535 million in annual revenue, underscoring the scale of the solutions market Acuity was now targeting. Two months later, it rebranded as "Acuity, Inc.," dropping "Brands" to signal it was no longer just a lighting manufacturer.

The results of Acuity's pivot have been striking. In the first quarter of fiscal 2026, sales reached $1.1 billion, up 20% year over year, despite what the CEO called a "tepid" construction market. The split inside the business tells the story: core lighting barely moved, growing about 1% organically. Meanwhile, Intelligent Spaces surged 250% with the QSC integration, giving Acuity a growth engine less tied to the old lighting cycle.

The margin picture has improved as revenue tilts toward software and services. Adjusted operating margins hit 17.2% in the quarter. Intelligent Spaces carries gross margins near 60%, compared to roughly 45% for legacy lighting. Management has leaned into this contrast, with the CEO calling the lighting division "clearly the best performing lighting business in the world."

The pivot is also meant to reduce cyclicality. Lighting companies have historically risen and fallen with new construction. Acuity is trying to break that pattern by focusing on retrofits and recurring revenue from software subscriptions. Buildings account for roughly 40% of global carbon emissions, making efficiency upgrades both a regulatory and economic priority.

Investors have rewarded the shift. The stock climbed from its 2020 pandemic low of around $68 to an all-time high above $376 in early 2026, with market capitalization reaching roughly $10 billion. But that valuation tightens the tolerance for missteps. Integrating QSC, staying ahead of building automation rivals like Honeywell and Johnson Controls, and managing ongoing fixture price pressure will determine whether the transformation endures.

Key takeaways to consider…

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94% - How much the price of LED bulbs collapsed from 2010-2020

$1.2B - How much Acuity paid to acquire QSC

$582.8M - Acuity’s operating profit for fiscal 2024. A 14.4% increase despite a 4% decrease in topline.

3x - Roughly the market cap growth since Neil Ashe was appointed CEO in 2020

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