Strong Quarter of Record Revenue and
Significant Improvement in Gross Profit Drive Path to
Profitability
SmartRent, Inc. (NYSE: SMRT) (“SmartRent” or the “Company”), a
leading provider of smart home and property operations solutions
for the multifamily industry, today reported financial results for
the three months ended March 31, 2023. Management is hosting an
investor call to discuss results today, May 10, 2023, at 4:30 p.m.
Eastern Time.
First Quarter 2023 Financial and Business Highlights
- Revenue of $65.1 million, up 60% quarter-over-quarter and 74%
year-over-year.
- Gross profit of $9.1 million, up 132% quarter-over-quarter and
up 292% year-over-year.
- Net income of $(13.2) million, improved 38%
quarter-over-quarter and 44% year-over-year.
- Adjusted EBITDA of $(8.5) million, a 40% improvement
quarter-over-quarter and 63% improvement year-over-year.
- $204.4 million in cash as of March 31, 2023.
Management Commentary
“We had an exceptionally strong start to the year, delivering
record revenue of $65.1 million and our fourth consecutive quarter
of improvement in Adjusted EBITDA,” said Lucas Haldeman, CEO of
SmartRent. “Higher gross margins, tighter controls on operating
expenses and ongoing, steady demand position us well for continued
success. As a leading-edge provider in our industry, we remain
confident and energized about our business plan and believe we will
achieve and sustain profitability.”
First Quarter 2023 Results
Total revenue for the quarter was $65.1 million, up 74% from Q1
2022, up 60% sequentially from Q4 and up 37% from the previous
record set two quarters ago. Hardware revenue increased $19.6
million, professional services revenue increased by $4.0 million
and hosted services revenue increased by $0.9 million, combining
for a $24.5 million increase from last quarter. A full quarter of
revenue recognition for new hubs, combined with increased sales of
our IoT and non-IoT hardware, drove the growth in hardware revenue.
Professional services revenue grew due to higher unit volume and
increased average revenue per unit (“ARPU”) from a favorable
customer mix. The growth in hosted services revenue is attributable
to growth in software-as-a-service (“SaaS”) revenue which
experienced an 11% sequential increase from last quarter, pushing
SaaS ARR to $36.0 million, up from $32.3 million last quarter. SaaS
ARPU for the quarter increased from $5.12 to $5.21, a 2% increase
sequentially. SaaS ARPU for Units Booked was $5.40, a 23%
improvement sequentially from $4.39 the previous quarter.
Units Deployed at the end of the quarter was 602,556 as the
Company deployed 55,360 units during the quarter, a 29% increase
from deployed units in Q4 of 2022. Units Booked for the quarter was
65,108 units, and total Bookings were $37.3 million.
Gross profit totaled $9.1 million, which more than doubled from
$3.9 million last quarter. Total gross margin increased from 9.7%
to 14.0%, a 4.3% increase as efficiencies and economies of scale
drove improved margin.
Hardware gross margin declined slightly from 14.8% to 12.7% due
to a high volume of third-party products, which offset margin
improvement from a full quarter of new hub revenue recognition.
Professional Services demonstrated significant improvement, as
gross margin of (80.6)% was halved to (38.1)% compared to last
quarter due to better labor utilization rates, steady deployment
volumes and new initiatives including the adoption of new
technology tools and enhancements. In addition to ARPU growth, the
Company is focused on streamlining processes to enhance
performance, velocity and productivity. Hosted services, which
includes both hub amortization and SaaS, gross margin showed steady
growth, improving sequentially from 59.6% to 61.6%. As hubs are no
longer added to this revenue stream, Hosted Services will gradually
be weighted more toward SaaS revenue. SaaS gross margin, a new
metric the Company is providing, has improved over the past five
quarters, from 31.8% a year ago from 69.9% in Q4 to 72.5% in
Q1.
Operating expenses decreased from $26.2 million last quarter to
$24.4 million, a decrease of 7% sequentially. R&D expenses
decreased slightly, while sales and marketing expenses increased as
the Company balanced sustained growth with profitability
objectives. The Company achieved efficiency through improved
processes and technology initiatives, resulting in a year-over-year
headcount reduction of approximately 10% companywide that
contributed to the $2.2 million reduction in general and
administrative expenses.
By simultaneously growing revenue, improving gross margin and
reducing operating expenses, Adjusted EBITDA improved significantly
from ($14.1) million last quarter to ($8.5) million this quarter.
The Company continues to execute on its strategy, and anticipates
achieving Adjusted EBITDA profitability in at least one quarter
this year.
The Company ended the quarter with a cash balance of $204.4
million, which is ample liquidity to fund the Company’s working
capital requirements. The cash burn from ongoing operations in Q1,
excluding any acquisition-related payments, of $5.4 million was
less than half of the average quarterly burn of $20.3 million in
2022.
Key Operating Metrics Table
Quarter
ended
March 31, 2023
March 31, 2022
% Change
Total Units Deployed(1)
602,556
390,681
54%
New Units Deployed
55,360
51,196
8%
Units Booked
65,108
91,482
(29)%
Bookings (in '000s)
$37,305
$71,985
(48)%
SaaS ARPU for Units Booked
$5.40
$4.17
30%
(1) As of the last date of the
quarter.
Financial Outlook
Hiroshi Okamoto, CFO of SmartRent, stated, “We kicked off 2023
with a phenomenal quarter, substantially free of the supply chain
headwinds that we experienced last year and one that demonstrated
the resiliency of our business model despite challenging
macroeconomic fundamentals. Although the path ahead may not be
linear, we plan to carry this momentum forward and continue to
execute on our mission toward growth and profitability.”
While the Company believes it can sustain meaningful top line
growth and narrow the Adjusted EBITDA loss, timing differences may
lead to some quarter-to-quarter variability. SmartRent’s guidance
for the second quarter and full-year 2023 is as follows:
Second Quarter 2023 Guidance
- Total Revenue of $50 to $55 million
- Adjusted EBITDA of $(7) to $(3) million
Full-Year 2023 Guidance
- Total Revenue of $225 to $250 million
- Adjusted EBITDA of $(25) to $(15) million
The estimates presented above represent a range of possible
outcomes and may differ materially from actual results. These
estimates exclude the impact of potential acquisitions, capital
markets activities, and unforeseen continued challenges with supply
chain and logistics. The estimates are forward-looking based on the
Company’s current assessment of demand for its product, execution
capabilities and market conditions, as well as other risks outlined
below under the caption “Forward-Looking Statements.”
Conference Call Information
SmartRent is hosting a conference call today, May 10, 2023 at
4:30p.m. ET to discuss its financial results. To join the call,
please register on the Company’s investor relations website
here.
A fourth earnings deck is available on the Investor Relations
section of our website.
About SmartRent
Founded in 2017, SmartRent, Inc. (NYSE: SMRT) is a leading
provider of smart home and smart property solutions for the
multifamily industry. The company’s unmatched platform, comprised
of smart hardware and cloud-based SaaS solutions, gives operators
seamless visibility and control over real estate assets, empowering
them to simplify operations, automate workflows, benefit from
additional revenue opportunities and deliver exceptional site team
and resident experiences. SmartRent serves 15 of the top 20
multifamily owners and operators, and its solutions enable millions
of users to live smarter every day. For more information, please
visit www.smartrent.com.
Forward-Looking Statements
This press release contains forward-looking statements which
address the Company's expected future business and financial
performance, and may contain words such as "goal," "target,"
"future," "estimate," "expect," "anticipate," "intend," "plan,"
"believe," "seek," "project," "may," "should," "will" or similar
expressions. Examples of forward-looking statements include, among
others, statements regarding the expected financial results,
product portfolio enhancements, expansion plans and opportunities
and earnings guidance related to financial and operational metrics.
Forward-looking statements involve risks and uncertainties that
could cause actual results to differ materially from those
currently anticipated. Some of the factors that could cause actual
results to differ materially from those expressed or implied by the
forward-looking statements include, among other things, our ability
to: (1) execute our business strategy within the smart home
technology industry; (2) expand our products and solutions to meet
the demands of the market; (3) meet legal obligations, including
laws and regulations related to security and privacy; (4) prevent
unauthorized or inadvertent access to our information technology
systems and customer or resident data; (5) successfully manage the
competitiveness of our market and pricing levels of our
competitors; (6) hire, retain, manage and motivate employees,
including key personnel; (7) successfully manage and ensure that
our suppliers produce or obtain quality products and services on a
timely basis or in sufficient quantity; (8) successfully manage
interruptions to, or other problems with, our website and
interactive user interface, information technology systems,
manufacturing processes or other operations; (9) successfully
identify, acquire, and integrate quality acquisition targets; (10)
successfully resolve legal proceedings, recall claims, and
governmental inquiries; and (11) acquire and protect our
intellectual property and acquire or make investments in other
businesses, patents, technologies, products or services to grow the
business. The forward-looking statements herein represent the
judgment of the Company, as of the date of this release, and
SmartRent disclaims any intent or obligation to update
forward-looking statements. This press release should be read in
conjunction with the information included in the Company's other
press releases, reports and other filings with the SEC.
Understanding the information contained in these filings is
important in order to fully understand the Company's reported
financial results and our business outlook for future periods.
Use of Non-GAAP Financial Measures
In addition to disclosing financial results that are determined
in accordance with GAAP, SmartRent also discloses certain non-GAAP
financial measures in this press release. These financial measures
are not recognized measures under GAAP and should not be considered
in isolation or as a substitute for, or superior to, the financial
information prepared and presented in accordance with GAAP. EBITDA
and Adjusted EBITDA are non-GAAP financial measures as defined by
SEC rules. These non-GAAP financial measures, as defined below by
SmartRent, may be determined or calculated differently by other
companies. Reconciliations of these non-GAAP measurements to the
most directly comparable GAAP financial measurements have been
provided in the financial statement tables included in this press
release, and investors are encouraged to review the
reconciliations.
SmartRent is not providing a quantitative reconciliation of
Adjusted EBITDA included in its 2023 financial outlook above, in
reliance on the "unreasonable efforts" exception for
forward-looking non-GAAP measures set forth in SEC rules because
certain financial information, the probable significance of which
cannot be determined, is not available and cannot be reasonably
estimated without unreasonable effort and expense. In this regard,
SmartRent is unable to provide a reconciliation of forward-looking
Adjusted EBITDA to GAAP net income, due to the inherent difficulty
in forecasting and quantifying certain amounts that are necessary
for such reconciliation. Due to the uncertainty of estimates and
assumptions used in preparing forward-looking non-GAAP measures,
SmartRent cautions investors that actual results could differ
materially from these non-GAAP financial projections.
As detailed in the reconciliations, the GAAP measure most
directly comparable to EBITDA and Adjusted EBITDA is net income or
loss. EBITDA and Adjusted EBITDA are not used as measures of
SmartRent’s liquidity and should not be considered alternatives to
net income or loss or any other measure of financial performance
presented in accordance with GAAP.
SmartRent’s management uses EBITDA and Adjusted EBITDA in a
number of ways to assess the Company’s financial and operating
performance and believes that these measures provide useful
information to investors regarding financial and business trends
related to SmartRent’s results of operations. EBITDA and Adjusted
EBITDA are also used to identify certain expenses and make
decisions designed to help SmartRent meet its current financial
goals and optimize its financial performance, while neutralizing
the impact of expenses included in its operating results which
could otherwise mask underlying trends in its business. SmartRent’s
management believes that investors are provided with a more
meaningful understanding of SmartRent’s ongoing operating
performance when non-GAAP financial information is viewed with GAAP
financial information.
1. Operating Metrics Defined
SmartRent regularly monitors several operating and financial
metrics including the following non-GAAP financial measures which
the Company believes are key measures of its growth, to evaluate
its operating performance, identify trends affecting its business,
formulate business plans, measure its progress, and make strategic
decisions. The Company’s Key Operating Metrics may not provide
accurate predictions of future GAAP financial results.
Units Deployed is defined as the aggregate number of
SmartHubs that have been installed (also including customer
self-installations) as of a stated measurement date. The Company
uses this operating metric to assess the general health and
trajectory of its business growth.
New Units Deployed is defined as the aggregate number of
SmartHubs that have been installed (also including customer
self-installations) during a stated measurement period. The Company
uses this operating metric to assess the general health and
trajectory of its business growth.
Units Booked is defined as the aggregate number of
SmartHubs associated with binding orders executed during a stated
measurement period. The Company utilizes the concept of Units
Booked to measure estimated near-term resource demand and the
resulting approximate range of post-delivery revenue that it will
earn and record. Units Booked represent binding orders only and
accordingly are a subset of Committed Units.
Bookings represent the dollar value of Units Booked from
hubs and other hardware, professional services, as well as one year
of SaaS.
Annual Recurring Revenue (“ARR”) is defined as the
annualized value of our recurring SaaS revenue earned in the
current quarter.
EBITDA and Adjusted EBITDA: We define EBITDA as net
income or loss computed in accordance with GAAP before the
following items: interest expense, income tax expense and
depreciation and amortization. We define Adjusted EBITDA as EBITDA
reduced by stock-based compensation expense, non-employee warrant
expense, warranty provisions for battery deficiencies, asset
impairment, loss on extinguishment of debt, change in fair value of
derivatives, unrealized gains and losses in currency exchange
rates, non-recurring expenses in connection with acquisitions and
other expenses caused by non-recurring, or unusual, events that are
not indicative of our ongoing business. Management uses EBITDA and
Adjusted EBITDA to identify controllable expenses and make
decisions designed to help us meet our current financial goals and
optimize our financial performance, while neutralizing the impact
of expenses included in our operating results which could otherwise
mask underlying trends in our business.
SMARTRENT, INC.
CONSOLIDATED STATEMENTS OF
OPERATIONS AND COMPREHENSIVE LOSS
(Unaudited)
(in thousands, except per share
amounts)
For the three months ended
March 31,
2023
2022
Revenue
Hardware
$
37,325
$
22,114
Professional services
12,769
6,909
Hosted services
14,985
8,336
Total revenue
65,079
37,359
Cost of revenue
Hardware
32,572
21,858
Professional services
17,634
15,167
Hosted services
5,758
5,078
Total cost of revenue
55,964
42,103
Operating expense
Research and development
7,231
6,446
Sales and marketing
5,161
5,162
General and administrative
12,017
11,951
Total operating expense
24,409
23,559
Loss from operations
(15,294
)
(28,303
)
Interest income (expense), net
2,016
(12
)
Other income
56
114
Loss before income taxes
(13,222
)
(28,201
)
Income tax benefit
7
4,807
Net loss
$
(13,215
)
$
(23,394
)
Other comprehensive loss
Foreign currency translation
adjustment
104
(183
)
Comprehensive loss
$
(13,111
)
$
(23,577
)
Net loss per common share
Basic and diluted
$
(0.07
)
$
(0.12
)
Weighted-average number of shares used in
computing net loss per share
Basic and diluted
198,334
193,055
SMARTRENT, INC.
CONSOLIDATED BALANCE
SHEETS
(Unaudited)
(in thousands, except per share
amounts)
March 31, 2023
December 31, 2022
ASSETS
Current assets
Cash and cash equivalents
$
203,933
$
210,409
Restricted cash, current portion
247
7,057
Accounts receivable, net
59,069
62,442
Inventory
66,853
75,725
Deferred cost of revenue, current
portion
13,141
13,541
Prepaid expenses and other current
assets
14,251
9,182
Total current assets
357,494
378,356
Property and equipment, net
1,910
2,069
Deferred cost of revenue
19,614
22,508
Goodwill
117,268
117,268
Intangible assets, net
30,154
31,123
Other long-term assets
9,900
9,521
Total assets
$
536,340
$
560,845
LIABILITIES, CONVERTIBLE PREFERRED
STOCK AND STOCKHOLDERS' EQUITY
Current liabilities
Accounts payable
$
11,712
$
18,360
Accrued expenses and other current
liabilities
23,204
34,396
Deferred revenue, current portion
88,459
80,020
Total current liabilities
123,375
132,776
Deferred revenue
54,510
59,928
Other long-term liabilities
3,838
3,941
Total liabilities
181,723
196,645
Commitments and contingencies (Note
12)
Convertible preferred stock, $0.0001 par
value; 50,000 shares authorized as of March 31, 2023 and December
31, 2022; no shares of preferred stock issued and outstanding as of
March 31, 2023 and December 31, 2022
-
-
Stockholders' equity
Common stock, $0.0001 par value; 500,000
shares authorized as of March 31, 2023 and December 31, 2022,
respectively; 199,357 and 198,525 shares issued and outstanding as
of March 31, 2023 and December 31, 2022, respectively
20
20
Additional paid-in capital
618,809
615,281
Accumulated deficit
(264,140
)
(250,925
)
Accumulated other comprehensive loss
(72
)
(176
)
Total stockholders' equity
354,617
364,200
Total liabilities, convertible preferred
stock and stockholders' equity
$
536,340
$
560,845
SMARTRENT, INC.
CONSOLIDATED STATEMENTS OF
CASH FLOWS
(Unaudited)
(in thousands)
For the three months ended
March 31,
2023
2022
CASH FLOWS FROM OPERATING
ACTIVITIES
Net loss
$
(13,215
)
$
(23,394
)
Adjustments to reconcile net loss to net
cash used by operating activities
Depreciation and amortization
1,254
409
Non-employee warrant expense
-
217
Non-cash lease expense
299
286
Stock-based compensation related to
acquisition
109
199
Stock-based compensation
3,571
3,324
Compensation expense related to
acquisition
1,625
279
Change in fair value of earnout related to
acquisition
141
-
Deferred tax benefit
-
(4,844
)
Non-cash interest expense
32
29
Provision for excess and obsolete
inventory
(60
)
81
Provision for doubtful accounts
(89
)
-
Change in operating assets and
liabilities
Accounts receivable
3,483
(15,780
)
Inventory
8,949
(9,199
)
Deferred cost of revenue
3,294
(5,701
)
Prepaid expenses and other assets
(5,719
)
3,793
Accounts payable
(6,661
)
5,435
Accrued expenses and other liabilities
(11,129
)
(739
)
Deferred revenue
3,011
16,986
Lease liabilities
(327
)
(168
)
Net cash used in operating activities
(11,432
)
(28,787
)
CASH FLOWS FROM INVESTING
ACTIVITIES
Payments for SightPlan acquisition, net of
cash acquired
-
(117,535
)
Purchase of property and equipment
(27
)
(233
)
Net cash used in investing activities
(27
)
(117,768
)
CASH FLOWS FROM FINANCING
ACTIVITIES
Proceeds from options exercise
71
62
Proceeds from ESPP purchases
438
488
Taxes paid related to net share
settlements of stock-based compensation awards
(661
)
-
Payments for business combination and
private offering transaction costs
-
(70
)
Payment of earnout related to
acquisition
(1,702
)
-
Net cash (used in) provided by financing
activities
(1,854
)
480
Effect of exchange rate changes on cash
and cash equivalents
27
(153
)
Net (decrease) in cash, cash equivalents,
and restricted cash
(13,286
)
(146,228
)
Cash, cash equivalents, and restricted
cash - beginning of period
217,713
432,604
Cash, cash equivalents, and restricted
cash - end of period
$
204,427
$
286,376
Reconciliation of cash, cash
equivalents, and restricted cash to the consolidated balance
sheets
Cash and cash equivalents
$
203,933
$
278,003
Restricted cash, current portion
247
7,878
Restricted cash, included in other
long-term assets
247
495
Total cash, cash equivalents, and
restricted cash
$
204,427
$
286,376
SMARTRENT, INC.
RECONCILIATION OF NON-GAAP
MEASURES
Three Months Ended March
31,
2023
2022
(dollars
in thousands)
Net loss
$
(13,215
)
$
(23,394
)
Interest (income) expense, net
(2,016
)
12
Provision for income taxes
(7
)
(4,807
)
Depreciation and amortization
1,254
409
EBITDA
(13,984
)
(27,780
)
Stock-based compensation
3,680
3,523
Non-employee warrant expense
-
217
Compensation expense in connection with
acquisitions
1,625
279
Other non-recurring acquisition
expenses
205
620
Adjusted EBITDA
$
(8,474
)
$
(23,141
)
View source
version on businesswire.com: https://www.businesswire.com/news/home/20230510005263/en/
Investor Contact Annalise Lasater – VP, Investor
Relations investors@smartrent.com
Media Contact Amanda Chavez – Director, Corporate
Communications media@smartrent.com
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