SMRT SmartRent Inc

Delivers Record SaaS Annual Recurring Revenue (“ARR”) of $53 million in Q3 2024

Returns Cash to Shareholders with Share Repurchase

Focuses on Four Pillars to Drive Shareholder Value and Customer Success

SmartRent, Inc. (NYSE: SMRT) (“SmartRent” or the “Company”), a leading provider of smart communities solutions and smart operations solutions for the rental housing industry, today reported financial results for the three months ended September 30, 2024. Management is hosting an investor call to discuss results today, November 6, 2024, at 11:30 a.m. Eastern Time.

Financial and Business Highlights for the Third Quarter 2024

• Total Revenue of $40.5 million, decreased by 30% percent year-over year.
• SaaS Revenue of $13.3 million, increased by 23% percent year-over year.
• Net Loss of $(9.9) million, increased by 29% percent from $(7.7) million year-over-year.
• Adjusted EBITDA of $(3.8) million, improved by 24% percent, from $(5.0) million year-over-year.
• Repurchased 9.8 million shares at an aggregate cost of $17.1 million.
• Balance Sheet: $163.7 million in cash, cash equivalents and restricted cash as of September 30, 2024, no debt and an undrawn credit facility of $75 million.

Management Commentary

"In the third quarter, SmartRent demonstrated remarkable resilience and strategic focus amid a series of market headwinds and operational transitions," stated John Dorman, Chairman of the Board. "During the quarter, we confirmed and strengthened our firm belief that the key issues affecting SmartRent performance are execution issues, while the core business model, the growth potential of our market, our market leadership position and the differentiated value proposition for our customers all remain very compelling,"

Dorman continued, "As a key step in addressing execution, we are excited to announce the hiring of our new Chief Revenue Officer, Natalie Cariola, to lead the revitalization of our sales strategy with the goal of driving further revenue growth and market share expansion. And, to further focus and align our efforts, we’ve defined four strategic pillars: Sustainable ARR Growth, Platform Superiority, Operational Excellence and Collaborative Innovation. With a solid strategy in place and a clear focus on enhancing our competitive strengths, SmartRent is well prepared to capitalize on significant market opportunities, deliver high ROI to our customers and create sustainable long-term value for our shareholders."

Third Quarter 2024 Results

The Company delivered a 23% year-over-year increase in SaaS revenue, driven by improvements in SaaS ARPU and Units Deployed. Over the same period, ARR increased to $53.2 million, up from $43.3 million in Q3 2023. SaaS ARPU for the quarter increased by 5%, to $5.70 from $5.41 in Q3 2023, primarily due to improvements in pricing. Additionally, Units Booked SaaS ARPU saw an increase of 8% to $9.73 from $9.04 in Q3 2023.

Total revenue for the quarter was $40.5 million, a 30% decrease from the same quarter in the prior year, driven by fewer Units Shipped and New Units Deployed. Hosted services revenue, which includes $13.3 million of SaaS revenue, was $18.5 million for the quarter, a 12.0% increase from $16.5 million from the same quarter in the prior year. Hardware revenue was $18.7 million, a decrease of $16.9 million or 47% from the same quarter in the prior year. Professional services revenue was $3.3 million, a decrease of $2.7 million, or 45% from the same quarter in the prior year.

As of September 30, 2024, Units Deployed reached 787,038, a 15% increase with 104,406 more units compared to September 30, 2023. The Company had 15,168 New Units Deployed during the quarter, a 53% decrease with 32,308 New Units Deployed in the same quarter in the prior year. Units Booked for the quarter was 17,048, a 63% decrease with 29,224 fewer units compared to the same quarter in the prior year. Total Bookings were $19.6 million, marking a $30.1 million or 61% decrease from the same quarter in the prior year. Daryl Stemm, CFO and interim Principal Executive Officer commented, "Our New Units Deployed and Total Bookings were disappointing but not unexpected, as we anticipated some market headwinds and disruptions stemming from our July leadership change. We are taking steps to reorient our sales force under the leadership of Natalie Cariola, our new Chief Revenue Officer."

In the third quarter, total gross margin improved to 33.2% from 23.3%, or approximately 1,000 basis points, from the same quarter in the prior year, primarily driven by changes to product mix, cost management and improvements to our operating model. SaaS gross margin decreased to 73.0% from 74.2%, for a decrease of approximately 100-basis points from the same quarter in the prior year. Total gross profit in the third quarter was $13.5 million and was essentially flat from the same quarter in the prior year. Hardware gross profit was $4.9 million, a 39.8% decrease from $8.1 million from the same quarter in the prior year. Professional services gross loss narrowed to $(3.5) million from $(5.2) million in the same quarter of the previous year, primarily due to overall reduced volume in New Units Deployed, followed by the benefits of cost management initiatives. Hosted services gross profit increased to $12.1 million from $10.6 million in the same quarter in the prior year and continues to be the Company’s most profitable revenue stream.

In the third quarter of 2024, operating expenses were $25.2 million, an increase from $23.5 million in the same quarter from the prior year, primarily reflecting the impact of one-time separation expenses. Net losses in the third quarter were $(9.9) million, compared to $(7.7) million in the third quarter of 2023. Adjusted EBITDA was $(3.8) million, a 24% improvement from $(5.0) million in the same quarter from the prior year.

Under the Company’s authorized $50 million share repurchase program, SmartRent repurchased approximately 9.8 million shares at an aggregate cost of $17.1 million in the quarter. Following the close of the quarter through November 4, 2024, the Company repurchased an additional 2.4 million shares, leaving approximately $22.6 million available for future repurchases. The Company ended the quarter with a cash balance of approximately $164 million.

"We believe our solid balance sheet and prudent capital management will enable us to work through the current leadership transition, address our operational challenges and allow us to invest in advancing our growth strategies,” stated Stemm.

Revenue Drivers

 

 

For the three months ended September 30,

 

 

2024

2023

% Change

Hardware

 

 

 

Hardware Units Shipped

 

44,763

 

62,585

-28

%

Hardware ARPU

$

418

$

569

-27

%

 

 

 

 

Professional Services

 

 

 

New Units Deployed

 

15,168

 

32,308

-53

%

Professional Services ARPU

$

443

$

253

75

%

 

 

 

 

Hosted Services

 

 

 

Units Deployed (1)

 

787,038

 

682,632

15

%

Average aggregate units deployed

 

779,454

 

666,478

17

%

SaaS ARPU

$

5.70

$

5.41

5

%

 

 

 

 

Bookings

 

 

 

Units Booked

 

17,048

 

46,272

-63

%

Bookings (in 000's)

$

19,582

$

49,661

-61

%

Units Booked SaaS ARPU

$

9.73

$

9.04

8

%

(1) As of the last date of the quarter

 

 

 

Conference Call Information

SmartRent is hosting a conference call today, November 6, 2024, at 11:30 a.m. ET to discuss its financial results. To join the call, please register on the Company’s investor relations website here. A copy of the third quarter 2024 earnings deck is available on the Investor Relations section of SmartRent’s website.

About SmartRent

Founded in 2017, SmartRent, Inc. (NYSE: SMRT) is a leading provider of smart communities solutions and smart operations solutions to the rental housing industry. SmartRent’s end-to-end ecosystem powers smarter living and working in rental housing by automating operations, protecting assets, reducing energy consumption and more. The Company’s differentiators - purpose-built software and hardware, and end-to-end implementation and support - create an exceptional experience, with 15 of the top 20 multifamily operators and millions of users leveraging SMRT solutions daily. For more information, please visit smartrent.com.

Forward-Looking Statements

This press release contains forward-looking statements which address the Company's expected future business and financial performance, areas of focus, including our sales organization, the Company's approach to operational and financial discipline, leadership transition, expected growth, strategy, performance, financial review, stock repurchase program and expected benefits from stock repurchase program, and other future events and forward-looking statements. Forward-looking statements 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) accelerate adoption of our products and services; (2) anticipate the uncertainties inherent in the development of new business lines and business strategies; (3) manage risks associated with our third-party suppliers and manufacturers and partners for our products; (4) manage risks associated with adverse macroeconomic conditions, including inflation, slower growth or recession, barriers to trade, changes to fiscal and monetary policy, tighter credit, higher interest rates, high unemployment, and currency fluctuations; (5) attract, train, and retain effective officers, key employees and directors and manage risks associated with the leadership transition; (6) develop, design, manufacture, and sell products and services that are differentiated from those of competitors; (7) realize the benefits expected from our acquisitions; (8) acquire or make investments in other businesses, patents, technologies, products or services to grow the business; (9) successfully pursue, defend, resolve or anticipate the outcome of pending or future litigation matters; (10) comply with laws and regulations applicable to our business, including privacy regulations; (11) realize the benefits expected from our stock repurchase program; and (12) maintain key strategic relationships with partners and distributors. 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, including EBITDA and Adjusted EBITDA. 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.

We define Adjusted EBITDA as EBITDA before the following items: non-recurring legal matters, stock-based compensation expense, non-recurring warranty provisions, impairment of investment in a non-affiliate, compensation expenses in connection with acquisitions, non-recurring expenses in connection with acquisitions, other acquisition expenses, and other expenses caused by non-recurring, or unusual, events that are not indicative of our ongoing business. We define EBITDA as net income or loss computed in accordance with GAAP before interest income/expense, income tax expense and depreciation and amortization.

EBITDA and Adjusted EBITDA may be determined or calculated differently by other companies. Reconciliations of these non-GAAP measures to the most directly comparable GAAP financial measures have been provided in the financial statement tables included in this press release, and investors are encouraged to review the reconciliations.

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 metrics including the following 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. These metrics may not provide accurate predictions of future GAAP financial results.

Units Deployed is defined as the aggregate number of Hub Devices that have been installed (including customer self-installations) and have an active subscription as of a stated measurement date.

New Units Deployed is defined as the aggregate number of Hub Devices that were installed (including customer self-installations) and resulted in a new active subscription during a stated measurement period.

Units Shipped is defined as the aggregate number of Hub Devices that have been shipped to customers during a stated measurement period.

Units Booked is defined as the aggregate number of Hub Device units subject to binding orders executed during a stated measurement period that will result in a New Unit Deployed. 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.

Bookings represent the contract value of hardware, professional services, and the first year of ARR for binding orders executed during a stated measurement period.

Annual Recurring Revenue (“ARR”) is defined as the annualized value of our SaaS revenue earned in the current quarter.

Average Revenue per Unit (“ARPU”) is used to assess the growth and health of the overall business and reflects our ability to acquire, retain, engage and monetize our customers, and thereby drive revenue. Each revenue stream ARPU is calculated as follows:

Hardware ARPU is total hardware revenue during a given period divided by the total Units Shipped during the same period.

Professional Services ARPU is total professional services revenue during a given period divided by the total New Units Deployed, excluding customer self-installations, during the same period.

SaaS ARPU is total SaaS revenue during a given period divided by the average aggregate Units Deployed in the same period.

Units Booked SaaS ARPU is the first year ARR for binding orders executed during the stated measurement period divided by the total Units Booked in the same period.

Net Revenue Retention is defined as SaaS revenue at the end of the current period related to properties which had SaaS revenue at the end of the same period in the prior year, divided by SaaS revenue at the end of the same period in the prior year for those same properties. This includes additions to revenue from price increases on existing products, and additions of new products at existing properties offset by any reductions in revenue caused by cancellations or downgrades.

SMARTRENT, INC.

CONSOLIDATED STATEMENTS OF OPERATIONS AND COMPREHENSIVE LOSS

(in thousands, except per share amounts)

 

 

For the three months ended September 30,

 

For the nine months ended September 30,

 

2024

2023

2024

2023

Revenue

 

 

 

 

 

 

 

 

Hardware

$

18,707

 

$

35,631

 

$

72,460

 

$

100,744

 

Professional services

 

3,308

 

 

5,962

 

 

12,582

 

 

28,781

 

Hosted services

 

18,495

 

 

16,511

 

 

54,475

 

 

47,060

 

Total revenue

 

40,510

 

 

58,104

 

 

139,517

 

 

176,585

 

 

 

 

 

 

 

 

 

 

Cost of revenue

 

 

 

 

 

 

 

 

Hardware

 

13,843

 

 

27,556

 

 

48,845

 

 

82,118

 

Professional services

 

6,840

 

 

11,130

 

 

22,157

 

 

44,573

 

Hosted services

 

6,370

 

 

5,887

 

 

18,330

 

 

17,365

 

Total cost of revenue

 

27,053

 

 

44,573

 

 

89,332

 

 

144,056

 

 

 

 

 

 

 

 

 

 

Operating expense

 

 

 

 

 

 

 

 

Research and development

 

6,596

 

 

7,573

 

 

22,442

 

 

21,340

 

Sales and marketing

 

4,444

 

 

4,636

 

 

13,714

 

 

14,626

 

General and administrative

 

14,154

 

 

11,269

 

 

42,843

 

 

33,891

 

Total operating expense

 

25,194

 

 

23,478

 

 

78,999

 

 

69,857

 

 

 

 

 

 

 

 

 

 

Loss from operations

 

(11,737

)

 

(9,947

)

 

(28,814

)

 

(37,328

)

 

 

 

 

 

 

 

 

 

Interest income, net

 

2,019

 

 

2,233

 

 

6,718

 

 

6,064

 

Other income (expense), net

 

(187

)

 

(42

)

 

7

 

 

(45

)

Loss before income taxes

 

(9,905

)

 

(7,756

)

 

(22,089

)

 

(31,309

)

 

 

 

 

 

 

 

 

 

Income tax expense (benefit)

 

18

 

 

(33

)

 

131

 

 

(22

)

Net loss

 

(9,923

)

 

(7,723

)

 

(22,220

)

 

(31,287

)

Other comprehensive loss

 

 

 

 

 

 

 

 

Foreign currency translation adjustment

 

270

 

 

(188

)

 

265

 

 

(93

)

Comprehensive loss

 

(9,653

)

 

(7,911

)

 

(21,955

)

 

(31,380

)

Net loss per common share

 

 

 

 

 

 

 

 

Basic and diluted

$

(0.05

)

$

(0.04

)

$

(0.11

)

$

(0.16

)

Weighted-average number of shares used in computing net loss per share

 

 

 

 

 

 

 

 

Basic and diluted

 

198,731

 

 

201,584

 

 

201,391

 

 

199,858

 

SMARTRENT, INC.

CONSOLIDATED BALANCE SHEETS

(in thousands, except per share amounts)

 

 

As of

 

September 30, 2024

December 31, 2023

ASSETS

 

 

 

 

Current assets

 

 

 

 

Cash and cash equivalents

$

163,403

 

$

215,214

 

Restricted cash, current portion

 

247

 

 

495

 

Accounts receivable, net

 

63,013

 

 

61,903

 

Inventory

 

35,948

 

 

41,575

 

Deferred cost of revenue, current portion

 

10,158

 

 

11,794

 

Prepaid expenses and other current assets

 

12,217

 

 

9,359

 

Total current assets

 

284,986

 

 

340,340

 

Property and equipment, net

 

1,357

 

 

1,400

 

Deferred cost of revenue

 

4,713

 

 

11,251

 

Goodwill

 

117,268

 

 

117,268

 

Intangible assets, net

 

24,343

 

 

27,249

 

Other long-term assets

 

15,926

 

 

12,248

 

Total assets

$

448,593

 

$

509,756

 

 

 

 

 

 

LIABILITIES, CONVERTIBLE PREFERRED STOCK AND STOCKHOLDERS' EQUITY

 

 

 

 

Current liabilities

 

 

 

 

Accounts payable

$

9,535

 

$

15,076

 

Accrued expenses and other current liabilities

 

26,574

 

 

24,976

 

Deferred revenue, current portion

 

49,861

 

 

77,257

 

Total current liabilities

 

85,970

 

 

117,309

 

Deferred revenue

 

50,111

 

 

45,903

 

Other long-term liabilities

 

7,371

 

 

4,096

 

Total liabilities

 

143,452

 

 

167,308

 

 

 

 

 

 

Commitments and contingencies

 

 

 

 

Convertible preferred stock, $0.0001 par value; 50,000 shares authorized as of September 30, 2024 and December 31, 2023; no shares of preferred stock issued and outstanding as of September 30, 2024 and December 31, 2023

 

-

 

 

-

 

 

 

 

 

 

Stockholders' equity

 

 

 

 

Class A common stock, $0.0001 par value; 500,000 shares authorized as of September 30, 2024 and December 31, 2023, respectively; 192,971 and 203,327 shares issued and outstanding as of September 30, 2024 and December 31, 2023, respectively

 

19

 

 

20

 

Additional paid-in capital

 

636,418

 

 

628,156

 

Accumulated deficit

 

(331,345

)

 

(285,512

)

Accumulated other comprehensive loss

 

49

 

 

(216

)

Total stockholders' equity

 

305,141

 

 

342,448

 

Total liabilities, convertible preferred stock and stockholders' equity

$

448,593

 

$

509,756

 

SMARTRENT, INC.

CONSOLIDATED STATEMENTS OF CASH FLOWS

(in thousands)

 

 

For the nine months ended September 30,

 

2024

2023

CASH FLOWS FROM OPERATING ACTIVITIES

 

 

 

 

Net loss

$

(22,220

)

$

(31,287

)

 

 

 

 

 

Depreciation and amortization

 

4,730

 

 

3,991

 

Impairment of investment in non-affiliate

 

2,250

 

 

-

 

Provision for warranty expense

 

(837

)

 

-

 

Non-cash lease expense

 

1,079

 

 

733

 

Stock-based compensation related to acquisition

 

-

 

 

109

 

Stock-based compensation

 

9,523

 

 

10,120

 

Compensation expense related to acquisition

 

-

 

 

1,913

 

Change in fair value of earnout related to acquisition

 

140

 

 

225

 

Non-cash interest expense

 

107

 

 

103

 

Provision for excess and obsolete inventory

 

2,697

 

 

1,780

 

Provision for expected credit losses

 

804

 

 

39

 

Non-cash legal expense

 

7,255

 

 

-

 

 

 

 

 

 

Accounts receivable

 

(1,739

)

 

(1,142

)

Inventory

 

(2,020

)

 

26,423

 

Deferred cost of revenue

 

8,175

 

 

9,928

 

Prepaid expenses and other assets

 

4,474

 

 

537

 

Accounts payable

 

(5,581

)

 

(9,338

)

Accrued expenses and other liabilities

 

(5,338

)

 

(12,299

)

Deferred revenue

 

(23,189

)

 

(2,378

)

Lease liabilities

 

(1,208

)

 

(823

)

Net cash used in operating activities

 

(20,898

)

 

(1,366

)

 

 

 

 

 

Purchase of property and equipment

 

(524

)

 

(116

)

Capitalized software costs

 

(4,501

)

 

(3,197

)

Net cash used in investing activities

 

(5,025

)

 

(3,313

)

 

 

 

 

 

Payments for repurchases of Class A common stock

 

(23,462

)

 

-

 

Proceeds from options exercise

 

2

 

 

899

 

Proceeds from ESPP purchases

 

586

 

 

809

 

Taxes paid related to net share settlements of stock-based compensation awards

 

(1,849

)

 

(1,506

)

Payment of earnout related to acquisition

 

(1,530

)

 

(1,702

)

Net cash used in financing activities

 

(26,253

)

 

(1,500

)

Effect of exchange rate changes on cash and cash equivalents

 

117

 

 

(40

)

Net decrease in cash, cash equivalents, and restricted cash

 

(52,059

)

 

(6,219

)

Cash, cash equivalents, and restricted cash - beginning of period

 

215,709

 

 

217,713

 

Cash, cash equivalents, and restricted cash - end of period

$

163,650

 

$

211,494

 

 

 

 

 

 

 

 

 

 

 

Cash and cash equivalents

$

163,403

 

$

211,000

 

Restricted cash, current portion

 

247

 

 

247

 

Restricted cash, included in other long-term assets

 

-

 

 

247

 

Total cash, cash equivalents, and restricted cash

$

163,650

 

$

211,494

 

SMARTRENT, INC.

RECONCILIATION OF NON-GAAP MEASURES

 

 

For the three months ended September 30,

For the nine months ended September 30,

 

2024

2023

2024

2023

 

(dollars in thousands)

(dollars in thousands)

Net loss

$

(9,923

)

$

(7,723

)

$

(22,220

)

$

(31,287

)

Interest income, net

 

(2,019

)

 

(2,233

)

 

(6,718

)

 

(6,064

)

Income tax expense (benefit)

 

18

 

 

(33

)

 

131

 

 

(22

)

Depreciation and amortization

 

1,644

 

 

1,395

 

 

4,730

 

 

3,991

 

EBITDA

 

(10,280

)

 

(8,594

)

 

(24,077

)

 

(33,382

)

Legal matter

 

2,325

 

 

-

 

 

7,625

 

 

-

 

Stock-based compensation

 

1,653

 

 

3,273

 

 

8,218

 

 

10,229

 

Impairment of investment in non-affiliate

 

-

 

 

-

 

 

2,250

 

 

-

 

Non-recurring warranty provision

 

(522

)

 

-

 

 

(59

)

 

-

 

Compensation expense in connection with acquisitions

 

-

 

 

15

 

 

-

 

 

2,010

 

Other acquisition expenses

 

(4

)

 

(23

)

 

253

 

 

408

 

Other non-operating expenses

 

3,006

 

 

317

 

 

3,267

 

 

805

 

Adjusted EBITDA

$

(3,822

)

$

(5,012

)

$

(2,523

)

$

(19,930

)

 

View source version on businesswire.com: https://www.businesswire.com/news/home/20241106368931/en/

Investor Contact Kelly Reisdorf Head of Investor Relations investors@smartrent.com

Media Contact Amanda Chavez Vice President, Marketing & Communications media@smartrent.com