Fifth Consecutive Quarter of Improved Adjusted
EBITDA - Clear Path to Profitability
SmartRent, Inc. (NYSE: SMRT) (“SmartRent” or the “Company”), a
leading provider of smart home and property operations solutions
for the rental housing industry, today reported financial results
for the three months ended June 30, 2023. Management is hosting an
investor call to discuss results today, August 8, 2023, at 12:30
p.m. Eastern Time.
Second Quarter 2023 Financial and Business Highlights
- Revenue of $53.4 million, up 26% year-over-year.
- Gross profit of $9.9 million, up 900% year-over-year.
- Net loss of $(10.3) million, a 60% improvement
year-over-year.
- Adjusted EBITDA of $(6.4) million, a 24% improvement from Q1
2023 and 68% improvement year-over-year.
- $197.0 million in cash and cash equivalents as of June 30,
2023.
Management Commentary
“We had a strong close to the first half of the year, marked by
significant improvement in sequential and year-over-year
profitability, and remain on track to achieve Adjusted EBITDA
breakeven by year end and cash flow breakeven within six months
following. This was our fifth consecutive quarter of improvement in
Adjusted EBITDA, in-line with our guidance. We experienced notable
improvement in gross margin, growing to 18.5% from 2.3% last year,
with both hardware and hosted services hitting record highs for the
period,” said Lucas Haldeman, CEO of SmartRent.
“We are also pleased to announce we have entered into an
agreement with ADI Global Distribution to serve as our preferred
distribution partner. This agreement improves our cash position by
lowering our inventory levels. ADI will strengthen our competitive
position by enhancing our ability to scale while optimizing our
cash flow and use of working capital. Our customers will continue
to receive products in a timely manner while we remain focused on
the innovation and product enhancements that keep us at the
forefront of our industry."
Second Quarter 2023 Results
Total revenue for the quarter was $53.4 million, up 26% from
last year. Hardware revenue increased $6.9 million, professional
services revenue increased by $0.9 million and hosted services
revenue increased by $3.2 million, combining for a $11.0 million
increase from Q2 2022. On a sequential basis, hardware revenue was
down $9.5 million, along with a decrease in professional services
revenue by $2.7 million as the Company deployed a lower number of
new units. The Company saw a continued increase in hosted services
revenue as our software-as-a-service (“SaaS”) revenue grew 8%
sequentially, pushing SaaS ARR to $38.8 million, up from $36.0
million last quarter. SaaS ARPU for the quarter was flat at $5.16
from $5.21 in Q1 2023. SaaS ARPU for Units Booked increased to
$8.74 from $4.79 last year.
Total Units Deployed at the end of the quarter was 650,324, a
44% increase in Total Units Deployed compared to Q2 of 2022, as the
Company had 47,768 New Units Deployed during the quarter. Units
Booked for the quarter was 19,967, and total Bookings were $31.5
million.
Gross profit totaled $9.9 million, up from $1.0 million in Q2
2022. Total gross margin increased to 18.5%, from 2.3% in Q2 2022
as efficiencies and economies of scale drove improved margin.
Both hardware and hosted services gross margins hit record highs
in the period. Hardware gross margins were 20.9% versus 12.7% in Q1
2023 and a loss last year. Hosted services, which includes both hub
amortization and SaaS gross margin, showed steady growth, improving
sequentially to 63.2% from 61.6%. Hub revenue amortization
decreased while SaaS revenue continued to rise. SaaS gross margins
were 75.1% vs. 73.4% last quarter and 50.9% last year. As expected,
professional services gross margin decreased to (57.3)% from
(38.1)% last quarter and (54.7)% last year, primarily due to a
decrease in the number of New Deployed Units. The Company
anticipates seeing less volatility in professional services gross
margin in future periods as the result of ongoing initiatives.
While each quarter is impacted by the mix and timing of
deployments, the Company anticipates improvement in both
professional services gross margin and total gross margin in the
second half of 2023.
Operating expenses decreased to $22.0 million from $24.4 million
last quarter, a decrease of $2.4 million sequentially and $6.0
million decrease from Q2 2022. The Company achieved efficiencies
through improved processes and technology initiatives, resulting in
a year-over-year headcount reductions.
By simultaneously growing revenue, improving gross margins and
reducing operating expenses, Adjusted EBITDA improved significantly
to ($6.4) million this quarter versus $(8.5) million in Q1 2023 and
$(19.8) million in Q2 2022. The Company continues to execute on its
strategy and anticipates achieving Adjusted EBITDA breakeven by
year end.
The Company ended the quarter with a cash balance of $197.0
million, which is ample liquidity to fund the Company’s anticipated
working capital requirements. The cash burn from operating
activities in the first six months of 2023, including
acquisition-related payments of $7 million, was less than half the
cash burn of $34.9 million in the comparable 2022 period. The
addition of the ADI distribution agreement should dramatically
enhance SmartRent’s cash position as inventory levels decrease in
future periods.
Key Operating Metrics Table
Quarter
ended
June 30, 2023
June 30, 2022
% Change
Total Units Deployed(1)
650,324
451,010
44
%
New Units Deployed
47,768
60,329
(21
)%
Units Booked
19,967
59,306
(66
)%
Bookings (in '000s)
$31,539
$56,887
(45
)%
SaaS ARPU for Units Booked
$8.74
$4.79
82
%
(1) As of the last date of the
quarter.
Financial Outlook
Hiroshi Okamoto, CFO of SmartRent, stated, “We had another solid
quarter of revenue growth, expanding margins and narrowing Adjusted
EBITDA loss. We believe we can sustain our strong revenue growth
and achieve Adjusted EBITDA breakeven by year end.”
The Company believes it can sustain meaningful top-line growth
while narrowing the Adjusted EBITDA loss, although timing
differences may lead to some quarter-to-quarter variability. The
Company has tightened its full year 2023 guidance to $233 to $250
million from $225 to $250 million in revenue and $(22) to $(18)
million from $(25) to $(15) million in Adjusted EBITDA. SmartRent’s
guidance for the third quarter, fourth quarter and full-year 2023
is as follows:
Third Quarter 2023 Guidance
- Total Revenue of $57 to $62 million
- Adjusted EBITDA of $(6.5) to $(4.5) million
Fourth Quarter 2023 Guidance
- Total Revenue of $58 to $70 million
- Adjusted EBITDA of $0 to $2 million
Full-Year 2023 Guidance
- Total Revenue of $233 to $250 million
- Adjusted EBITDA of $(22) to $(18) 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, August 8, 2023 at
12:30p.m. ET to discuss its financial results. To join the call,
please register on the Company’s investor relations website
here.
A second quarter 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.
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 income/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.
CONDENSED CONSOLIDATED
STATEMENTS OF OPERATIONS AND COMPREHENSIVE LOSS
(Unaudited)
(in thousands, except per share
amounts)
For the three months ended
June 30,
For the six months ended June
30,
2023
2022
2023
2022
Revenue
Hardware
$
27,788
$
20,895
$
65,113
$
43,009
Professional services
10,050
9,123
22,819
16,032
Hosted services
15,564
12,391
30,549
20,727
Total revenue
53,402
42,409
118,481
79,768
Cost of revenue
Hardware
21,990
20,951
54,562
42,809
Professional services
15,809
14,115
33,443
29,282
Hosted services
5,720
6,355
11,478
11,433
Total cost of revenue
43,519
41,421
99,483
83,524
Operating expense
Research and development
6,536
8,030
13,767
14,476
Sales and marketing
4,829
6,139
9,990
11,301
General and administrative
10,605
13,832
22,622
25,783
Total operating expense
21,970
28,001
46,379
51,560
Loss from operations
(12,087
)
(27,013
)
(27,381
)
(55,316
)
Interest income, net
1,815
253
3,831
241
Other (expense) income
(59
)
162
(3
)
276
Loss before income taxes
(10,331
)
(26,598
)
(23,553
)
(54,799
)
Income tax (expense) benefit
(18
)
1,009
(11
)
5,816
Net loss
$
(10,349
)
$
(25,589
)
$
(23,564
)
$
(48,983
)
Other comprehensive loss
Foreign currency translation
adjustment
(9
)
(407
)
95
(590
)
Comprehensive loss
$
(10,358
)
$
(25,996
)
$
(23,469
)
$
(49,573
)
Net loss per common share
Basic and diluted
$
(0.05
)
$
(0.13
)
$
(0.12
)
$
(0.25
)
Weighted-average number of shares used in
computing net loss per share
Basic and diluted
199,619
195,693
198,980
194,381
SMARTRENT, INC.
CONDENSED CONSOLIDATED BALANCE
SHEETS
(Unaudited)
(in thousands, except per share
amounts)
June 30, 2023
December 31, 2022
ASSETS
Current assets
Cash and cash equivalents
$
196,970
$
210,409
Restricted cash, current portion
247
7,057
Accounts receivable, net
60,032
62,442
Inventory
60,506
75,725
Deferred cost of revenue, current
portion
12,012
13,541
Prepaid expenses and other current
assets
16,438
9,182
Total current assets
346,205
378,356
Property and equipment, net
1,725
2,069
Deferred cost of revenue
16,751
22,508
Goodwill
117,268
117,268
Intangible assets, net
29,185
31,123
Other long-term assets
10,347
9,521
Total assets
$
521,481
$
560,845
LIABILITIES, CONVERTIBLE PREFERRED
STOCK AND STOCKHOLDERS' EQUITY
Current liabilities
Accounts payable
$
6,304
$
18,360
Accrued expenses and other current
liabilities
21,403
34,396
Deferred revenue, current portion
92,866
80,020
Total current liabilities
120,573
132,776
Deferred revenue
49,970
59,928
Other long-term liabilities
3,733
3,941
Total liabilities
174,276
196,645
Commitments and contingencies (Note
12)
Convertible preferred stock, $0.0001 par
value; 50,000 shares authorized as of June 30, 2023 and December
31, 2022; no shares of preferred stock issued and outstanding as of
June 30, 2023 and December 31, 2022
-
-
Stockholders' equity
Common stock, $0.0001 par value; 500,000
shares authorized as of June 30, 2023 and December 31, 2022,
respectively; 200,069 and 198,525 shares issued and outstanding as
of June 30, 2023 and December 31, 2022, respectively
20
20
Additional paid-in capital
621,755
615,281
Accumulated deficit
(274,489
)
(250,925
)
Accumulated other comprehensive loss
(81
)
(176
)
Total stockholders' equity
347,205
364,200
Total liabilities, convertible preferred
stock and stockholders' equity
$
521,481
$
560,845
SMARTRENT, INC.
CONDENSED CONSOLIDATED
STATEMENTS OF CASH FLOWS
(Unaudited)
(in thousands)
For the six months ended June
30,
2023
2022
CASH FLOWS FROM OPERATING
ACTIVITIES
Net loss
$
(23,564
)
$
(48,983
)
Adjustments to reconcile net loss to net
cash used by operating activities
Depreciation and amortization
2,596
1,636
Non-employee warrant expense
-
238
Non-cash lease expense
412
648
Stock-based compensation related to
acquisition
109
401
Stock-based compensation
6,847
6,945
Compensation expense related to
acquisition
1,769
2,109
Change in fair value of earnout related to
acquisition
306
-
Deferred tax benefit
-
(5,889
)
Non-cash interest expense
65
41
Provision for excess and obsolete
inventory
47
16
Provision for doubtful accounts
(1
)
-
Change in operating assets and
liabilities
Accounts receivable
2,416
1,493
Inventory
15,188
(26,197
)
Deferred cost of revenue
7,285
(6,884
)
Prepaid expenses and other assets
(6,311
)
5,856
Accounts payable
(12,059
)
8,800
Accrued expenses and other liabilities
(13,201
)
(3,676
)
Deferred revenue
2,878
29,091
Lease liabilities
(466
)
(496
)
Net cash used in operating activities
(15,684
)
(34,851
)
CASH FLOWS FROM INVESTING
ACTIVITIES
Payments for SightPlan acquisition, net of
cash acquired
-
(128,953
)
Purchase of property and equipment
(49
)
(470
)
Capitalized software costs
(2,279
)
(1,829
)
Net cash used in investing activities
(2,328
)
(131,252
)
CASH FLOWS FROM FINANCING
ACTIVITIES
Proceeds from warrant exercise
-
3
Proceeds from options exercise
71
62
Proceeds from ESPP purchases
438
488
Taxes paid related to net share
settlements of stock-based compensation awards
(1,085
)
(3,389
)
Payments for business combination and
private offering transaction costs
-
(70
)
Payment of earnout related to
acquisition
(1,702
)
-
Net cash used in financing activities
(2,278
)
(2,906
)
Effect of exchange rate changes on cash
and cash equivalents
41
(432
)
Net decrease in cash, cash equivalents,
and restricted cash
(20,249
)
(169,441
)
Cash, cash equivalents, and restricted
cash - beginning of period
217,713
432,604
Cash, cash equivalents, and restricted
cash - end of period
$
197,464
$
263,163
Reconciliation of cash, cash
equivalents, and restricted cash to the consolidated balance
sheets
Cash and cash equivalents
$
196,970
$
255,008
Restricted cash, current portion
247
7,660
Restricted cash, included in other
long-term assets
247
495
Total cash, cash equivalents, and
restricted cash
$
197,464
$
263,163
SMARTRENT, INC.
RECONCILIATION OF NON-GAAP
MEASURES
Three months ended June
30,
Six months ended June
30,
2023
2022
2023
2022
(dollars
in thousands)
(dollars
in thousands)
Net loss
$
(10,349
)
$
(25,589
)
$
(23,564
)
$
(48,983
)
Interest income, net
(1,815
)
(253
)
(3,831
)
(241
)
Provision for income taxes
18
(1,009
)
11
(5,816
)
Depreciation and amortization
1,342
1,227
2,596
1,636
EBITDA
(10,804
)
(25,624
)
(24,788
)
(53,404
)
Stock-based compensation
3,276
3,823
6,956
7,346
Non-employee warrant expense
-
21
-
238
Compensation expense in connection with
acquisitions
370
1,830
1,995
2,109
Severance charges
488
-
488
-
Other non-recurring acquisition
expenses
226
119
431
739
Adjusted EBITDA
$
(6,444
)
$
(19,831
)
$
(14,918
)
$
(42,972
)
View source
version on businesswire.com: https://www.businesswire.com/news/home/20230808660057/en/
Investor Contact Brian Ruttenbur Senior Vice President,
Investor Relations investors@smartrent.com
Media Contact Amanda Chavez Senior Director, Corporate
Communications media@smartrent.com
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