Financial Data and Key Metrics Changes - Total revenue for Q3 2025 was $36.2 million, down 11% year over year, primarily due to a strategic shift away from bulk hardware sales towards a more sustainable SaaS-focused revenue mix [14] - SaaS revenue reached $14.2 million, increasing 7% year over year, now representing 39% of total revenue compared to 33% in the same period last year [14] - Adjusted EBITDA loss improved by 23% to a loss of $2.9 million, while net loss improved 36% year over year to a loss of $6.3 million [18] - Operating expenses decreased by 34% year over year to $16.6 million, aided by accrual reversals of approximately $2.5 million [16][18] Business Line Data and Key Metrics Changes - Hardware revenue totaled $11.5 million, reflecting a 38% decline year over year due to the strategic shift mentioned earlier [14] - Professional services revenue increased by 113% year over year to $7 million, driven by higher installation volume and improved project efficiency [15] - Annual recurring revenue reached $56.9 million, up 7% year over year, indicating steady expansion of the recurring base [15] Market Data and Key Metrics Changes - The installed base reached 870,000 units, up 11% from the prior year, with 83,000 net new units added since the same quarter last year [15] - The company deployed more than 22,000 new units during the quarter, a 49% increase compared to the prior year period [15] Company Strategy and Development Direction - The company aims to simplify and automate key internal processes over the next eighteen months, expecting significant financial and operational benefits starting in 2026 [8] - The focus remains on building a durable revenue growth platform and achieving higher levels of sustainable profitability in 2026 and beyond [9] - The company is committed to maintaining cost discipline and operational rigor to support future growth [19] Management's Comments on Operating Environment and Future Outlook - Management expressed optimism about the growth of the installed unit base next year, citing improvements in the sales organization and customer engagement [25][36] - The macro environment presents challenges, but there is confidence in the pipeline of potential unit installations [27][35] - Management noted strong customer relationships, with a net revenue retention rate well above 100%, indicating customer satisfaction and loyalty [11] Other Important Information - The company ended the quarter with $100 million in cash, no debt, and $75 million in undrawn credit, providing a strong balance sheet for future investments [18] - A new leader was added to the team to drive expansion and improve internal processes [7] Q&A Session Summary Question: SaaS revenue growth lower than deployed unit growth - Management acknowledged that the SaaS ARPU was impacted by non-IoT related adjustments and expects a correction in Q4 [22][23] Question: Progress within the sales organization - Management indicated that the company can support a deployment capacity of 20,000 to 25,000 units per quarter, with potential for more based on current sales and installation infrastructure [26][28] Question: Feedback from stakeholders - Management reported positive feedback from customers regarding the value of solutions and strong collaboration, with minimal customer turnover [32][34] Question: Future growth rate expectations - Management expects a smoother growth rate in 2026 as bulk hardware sales normalize, leading to a closer coupling of hardware revenue with deployment volume [40] Question: Financial discipline moving forward - Management confirmed a commitment to maintaining disciplined financial practices and evaluating the best use of available cash for reinvestment [41]

Financial Performance - Total revenue decreased by 11% year-over-year to $36.2 million, primarily due to a strategic shift away from hardware-led growth [6, 9] - SaaS revenue grew by 7% year-over-year to $14.2 million, representing 39% of total revenue [4, 10, 13, 19] - Annual Recurring Revenue (ARR) increased by 7% year-over-year to $56.9 million [4, 6, 19] - Net loss improved by $3.6 million year-over-year, from $(9.9) million to $(6.3) million [6] - Adjusted EBITDA improved by $0.9 million year-over-year to $(2.9) million [6] - The company maintains a strong cash balance of $100 million with no debt and a $75 million credit facility [4, 6, 21] Operational Metrics - Units deployed increased by 11% year-over-year to approximately 870,000 units [4, 6, 15, 22] - Customer Net Revenue Retention is greater than 100%, indicating strong customer loyalty [4, 15, 19] - Customer Churn is 0.05%, demonstrating high customer retention [4, 15, 19] Strategic Initiatives - The company completed a $30 million cost reduction plan, positioning it for run-rate neutrality exiting 2025 [4, 20] - The company is focused on shifting away from hardware-only sales towards a recurring revenue model [4, 7, 13]

Revenue Performance - Total revenue for Q3 2025 was $36.2 million, a decrease of 10.4% compared to $40.5 million in Q3 2024[19] - Hardware revenue decreased to $11.5 million in Q3 2025 from $18.7 million in Q3 2024, representing a decline of 38.5%[19] - Professional services revenue increased to $7.0 million in Q3 2025, up 112.5% from $3.3 million in Q3 2024[19] - Total revenue for the nine months ended September 30, 2025 was $115,854, down 17% from $139,517 in the same period of 2024[93] - Total revenue for the three months ended September 30, 2025, was $36,202, a decrease of 10.4% compared to $40,510 for the same period in 2024[164] - Revenue from the United States for Q3 2025 was $36,097, down 9.8% from $40,030 in Q3 2024[93] - Hosted services revenue for Q3 2025 was $17,661, a slight decrease of 4.5% from $18,495 in Q3 2024[93] - SaaS revenue increased to $14,237 for the three months ended September 30, 2025, compared to $13,318 in 2024, reflecting a growth of 6.9%[164] Financial Losses and Improvements - Net loss for Q3 2025 was $6.3 million, compared to a net loss of $9.9 million in Q3 2024, showing an improvement of 36.7%[19] - For the nine months ended September 30, 2025, the net loss was $57,314 thousand, compared to a net loss of $22,220 thousand for the same period in 2024, representing an increase of 157%[26] - The net loss for the three months ended September 30, 2025, was $6,270, compared to a net loss of $9,923 in the same period of 2024, indicating an improvement of 36.7%[164] Assets and Liabilities - Total assets decreased to $335.8 million as of September 30, 2025, down from $420.2 million as of December 31, 2024, a reduction of 20.1%[17] - Total liabilities decreased to $101.4 million as of September 30, 2025, down from $130.7 million as of December 31, 2024, a reduction of 22.4%[17] - Cash and cash equivalents decreased to $100.0 million as of September 30, 2025, compared to $142.5 million as of December 31, 2024, a decline of 29.7%[17] - Total cash, cash equivalents, and restricted cash at the end of the period was $100,022 thousand, down from $163,650 thousand at the end of September 30, 2024, reflecting a decrease of 39%[26] Expenses and Investments - Research and development expenses for Q3 2025 were $6.1 million, a slight decrease from $6.6 million in Q3 2024[19] - Operating expenses for the three months ended September 30, 2025, totaled $16,596, a decrease of 34.3% from $25,194 in 2024[164] - Cash used in operating activities for the nine months ended September 30, 2025, was $29,232 thousand, up from $20,898 thousand in 2024, indicating a 40% increase[26] - The company incurred $3,552,000 in capital expenditures for property and equipment during the nine months ended September 30, 2025, compared to $524,000 in the same period in 2024, indicating a significant increase in investment[26] Stock and Equity - The company reported a total of 189,196 shares outstanding as of September 30, 2025, compared to 192,049 shares as of December 31, 2024[17] - Stock-based compensation for the quarter was recorded at $2,958,000[23] - The company repurchased Class A common stock amounting to $17,214,000 during the quarter[23] - Stock-based compensation expense recognized for the nine months ended September 30, 2025 was $692, a decrease of 55% from $1,528 for the same period in 2024[132] - The company has not drawn on the $75,000 Senior Revolving Facility as of September 30, 2025, which is set to mature in December 2026[112] Legal Matters - The company recorded a legal expense of $5,300 related to a supplier dispute during the three months ended March 31, 2024[154] - The settlement of a class action lawsuit related to the merger with SmartRent.com, Inc. is expected to cost $11,375, pending court approval[155] - The Company continues to negotiate settlements related to the 2024 Class Action, with a portion of the settlement funded by the primary D&O insurance carrier[156] Impairments and Write-offs - The company reported a goodwill impairment of $24,929 thousand for the nine months ended September 30, 2025, while there was no goodwill impairment recorded in the same period of 2024[26] - The company recorded a goodwill impairment charge of $24,929 during the three months ended March 31, 2025, due to a significant decline in stock price and market capitalization[49] - Inventory write-downs for the three months ended September 30, 2025, amounted to $3.258 million, compared to $2.596 million for the same period in 2024, reflecting an increase of approximately 25.5%[100] - The company recorded $1.794 million of inventory write-offs related to the sunsetting of its parking management solution during the three months ended September 30, 2025[100]

Company Completes $30 Million Cost Reduction Program On Track to Achieve Run Rate Cash Flow Neutrality Exiting 2025 Phoenix, Ariz., November 5, 2025 – (BUSINESS WIRE) – 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, 2025. Third Quarter 2025 Highlights: Exhibit 99.1 SmartRent Reports Third Quarter 2025 Financi ...

Core Insights - SmartRent has appointed Pankaj Bansi as Chief Transformation Officer, indicating a strategic move towards enhancing operational efficiency and innovation within the company [1] Company Summary - The appointment of Pankaj Bansi is aimed at driving transformation initiatives within SmartRent, reflecting the company's commitment to adapt and evolve in a competitive market [1]

Company Overview - SmartRent (NYSE: SMRT) is a provider of smart home and smart property solutions specifically for the multifamily industry [1] - The company went public via SPAC in 2021 and has faced challenges related to the clarity of its vision since then [1] Investment Highlights - The article mentions notable investment coverage for other companies, including ADTH and LUMN, with specific buy prices and acquisition details [1] - ADTH was first covered with a "Buy" rating at $1.24 in September 2023, followed by a second coverage at $1.20 in November 2023, and was acquired for $3.21 per share in June 2024 [1] - LUMN was first covered with a "Buy" rating at $1.39 in September 2023, followed by a second coverage at $1.18 in November 2023, and a downgrade after selling the full position at $6.08 in October 2024 [1] Analyst Position - The company has a beneficial long position in the shares of SmartRent through stock ownership, options, or other derivatives [1]

Financial Data and Key Metrics Changes - Total revenue for Q2 2025 was $38.3 million, down 7% sequentially from $41.4 million in Q1 and down 21% year over year, primarily due to the shift away from bulk hardware sales [14][15] - Hardware revenue totaled $15.1 million, representing a 20% decrease sequentially and a 39% decline year over year [15] - SaaS revenue reached $14.2 million, comprising 37% of total revenue, up from 34% in Q1 and 26% year over year [16][18] - Annual recurring revenue increased to $56.9 million, up 11% year over year [17] - Net losses increased to $10.9 million compared to $4.6 million in the prior year quarter [21] Business Line Data and Key Metrics Changes - Professional services revenue was $4.3 million, up 10% sequentially but down 26% year over year [15] - Hosted services revenue reached $18.8 million, representing a 1% sequential growth and a 5% increase year over year [15] - SaaS gross profit was $10 million, up 1% sequentially and 4% year over year, resulting in a gross margin of approximately 70% [18] Market Data and Key Metrics Changes - Approximately 850,000 units were deployed, an increase of 3% sequentially and 10% year over year [18] - The company booked over 24,000 new units in the quarter, marking the highest quarterly booking performance in over a year [19] Company Strategy and Development Direction - The company aims to reset its cost structure, return to profitability, and accelerate top-line growth, with a focus on operational efficiency and product innovation [8][10] - A $10 million investment was made to enhance product development and strengthen the go-to-market team, which is beginning to yield results [11] - The company is transitioning towards a more predictable recurring revenue model, moving away from one-time bulk hardware deals [12][14] Management's Comments on Operating Environment and Future Outlook - Management expressed confidence in the company's ability to achieve cash flow neutrality and adjusted EBITDA profitability by the end of 2025 [10][21] - The CEO highlighted the importance of customer relationships and the potential for growth within the existing customer base [32] - There is a focus on leveraging AI to enhance operational efficiency and customer value [40][54] Other Important Information - The company has a significant cash balance of $105 million and no debt, providing a strong financial position for future investments [21][22] - Cost reduction initiatives are expected to yield $30 million in annualized savings, primarily from workflow optimization and reduced staffing levels [9][10] Q&A Session Summary Question: Details on the $20 million incremental cost savings - Management indicated that the savings primarily come from staffing reductions and third-party spending, with potential for further efficiencies [26][27] Question: Holistic view on evolving SmartRent's strategy - The CEO emphasized the importance of customer relationships and the potential for growth in the installed base, along with plans to invest in AI [29][32] Question: Clarity on the transition to SaaS revenue model - Management noted that the transition will lead to a more predictable revenue trajectory, with expectations for growth in 2026 [42][45] Question: Expectations for adjusted EBITDA and free cash flow neutrality - Management believes they are positioning for breakeven by the end of the year, with plans for profitable growth in the future [51][52] Question: Infusion of AI into products - The CEO discussed plans to leverage AI for operational efficiency and customer decision-making, with a focus on enhancing product offerings [54][55]

Financial Performance - Total revenue decreased by 21% year-over-year to $38.3 million, primarily due to a strategic shift away from hardware-led growth[8, 11] - SaaS revenue grew by 11% year-over-year to $14.2 million, now representing 37% of total revenue[8, 12] - Annual Recurring Revenue (ARR) reached $56.9 million, an increase of 11% year-over-year[5, 8, 25] - Net loss was $(11.2) million, and Adjusted EBITDA was $(7.3) million, a decrease from $0.9 million in the same quarter of the prior year[8] - The company repurchased approximately 4.1 million shares at an aggregate cost of $3.7 million in Q2, with $16.8 million remaining in the authorized program[22] Operational Highlights - Approximately 848,000 units deployed, reflecting a 10% increase year-over-year[5, 8, 17] - Customer Net Revenue Retention was 108%, and Customer Churn was 0.08%, indicating strong customer loyalty[17] - 24,300 units booked, the highest in over a year, signaling early traction from the go-to-market rebuild[5, 24] - SaaS ARPU (Average Revenue Per Unit) improved to $5.66, up 1% year-over-year from $5.63[8, 20] Strategic Initiatives - The cost reduction program has been expanded to $30 million, aiming for adjusted EBITDA and cash flow neutrality by the end of 2025[5, 21] - The company is strategically shifting away from bulk hardware deals towards a recurring revenue model[5]

[PART I - Financial Information](index=3&type=section&id=PART%20I%20-%20Financial%20Information) [Item 1. Financial Statements (Unaudited)](index=3&type=section&id=Item%201.%20Financial%20Statements%20(Unaudited)) This section presents SmartRent, Inc.'s unaudited condensed consolidated financial statements for the periods ended June 30, 2025, and December 31, 2024, including balance sheets, statements of operations and comprehensive loss, statements of stockholders' equity, and cash flows [Condensed Consolidated Balance Sheets](index=3&type=section&id=Condensed%20Consolidated%20Balance%20Sheets) This section provides a snapshot of the company's financial position, detailing assets, liabilities, and equity as of specific dates Condensed Consolidated Balance Sheets (in thousands) | Metric | June 30, 2025 | December 31, 2024 | | :---------------------------------- | :-------------- | :------------------ | | **ASSETS** | | | | Cash and cash equivalents | $105,044 | $142,482 | | Total current assets | $217,543 | $257,650 | | Property and equipment, net | $5,583 | $2,451 | | Goodwill | $92,339 | $117,268 | | Total assets | $353,969 | $420,176 | | **LIABILITIES & EQUITY** | | | | Total current liabilities | $80,059 | $71,032 | | Total liabilities | $115,120 | $130,741 | | Total stockholders' equity | $238,849 | $289,435 | | Total liabilities, convertible preferred stock and stockholders' equity | $353,969 | $420,176 | - **Total assets** decreased by **15.76%** from **$420.176 million** as of December 31, 2024, to **$353.969 million** as of June 30, 2025, primarily due to a decrease in cash and cash equivalents and a goodwill impairment charge[17](index=17&type=chunk) - **Cash and cash equivalents** decreased by **26.3%** from **$142.482 million** at December 31, 2024, to **$105.044 million** at June 30, 2025[17](index=17&type=chunk) - **Goodwill** decreased by **21.3%** from **$117.268 million** at December 31, 2024, to **$92.339 million** at June 30, 2025, due to an impairment charge[17](index=17&type=chunk)[49](index=49&type=chunk) [Condensed Consolidated Statements of Operations and Comprehensive Loss](index=4&type=section&id=Condensed%20Consolidated%20Statements%20of%20Operations%20and%20Comprehensive%20Loss) This section details the company's financial performance over specific periods, including revenue, expenses, and net loss Condensed Consolidated Statements of Operations and Comprehensive Loss (in thousands) | Metric | 3 Months Ended June 30, 2025 | 3 Months Ended June 30, 2024 | 6 Months Ended June 30, 2025 | 6 Months Ended June 30, 2024 | | :---------------------------------- | :--------------------------- | :--------------------------- | :--------------------------- | :--------------------------- | | Total revenue | $38,308 | $48,518 | $79,652 | $99,007 | | Total cost of revenue | $25,640 | $31,213 | $53,422 | $62,279 | | Total operating expense | $24,353 | $24,223 | $54,275 | $53,805 | | Impairment charge | $- | $- | $24,929 | $- | | Loss from operations | $(11,685) | $(6,918) | $(52,974) | $(17,077) | | Net loss | $(10,860) | $(4,605) | $(51,044) | $(12,297) | | Basic and diluted net loss per common share | $(0.06) | $(0.02) | $(0.27) | $(0.06) | - **Total revenue** decreased by **21%** for the three months ended June 30, 2025, and by **20%** for the six months ended June 30, 2025, compared to the same periods in 2024, primarily due to decreased hardware sales and professional services[19](index=19&type=chunk)[219](index=219&type=chunk) - **Net loss** significantly widened by **136%** to **$(10.860) million** for the three months ended June 30, 2025, and by **315%** to **$(51.044) million** for the six months ended June 30, 2025, largely due to a **$24.929 million** goodwill impairment charge in the six-month period[19](index=19&type=chunk)[218](index=218&type=chunk) [Condensed Consolidated Statements of Stockholders' Equity](index=5&type=section&id=Condensed%20Consolidated%20Statements%20of%20Convertible%20Preferred%20Stock%20and%20Stockholders'%20Deficit) This section outlines changes in the company's equity, including common stock, additional paid-in capital, and accumulated deficit Condensed Consolidated Statements of Stockholders' Equity (in thousands) | Metric | Balance, December 31, 2024 | Balance, June 30, 2025 | | :---------------------------------- | :------------------------- | :--------------------- | | Class A Common Stock (Par Value) | $19 | $19 | | Additional Paid-In Capital | $637,361 | $642,010 | | Accumulated Deficit | $(347,847) | $(403,809) | | Accumulated Other Comprehensive Loss | $(98) | $629 | | Total Stockholders' Equity | $289,435 | $238,849 | - **Total stockholders' equity** decreased by **17.48%** from **$289.435 million** at December 31, 2024, to **$238.849 million** at June 30, 2025, primarily due to net losses and stock repurchases[21](index=21&type=chunk) - The **accumulated deficit** increased from **$(347.847) million** at December 31, 2024, to **$(403.809) million** at June 30, 2025, reflecting the net loss incurred during the period[21](index=21&type=chunk) [Condensed Consolidated Statements of Cash Flows](index=7&type=section&id=Condensed%20Consolidated%20Statements%20of%20Cash%20Flows) This section summarizes the cash inflows and outflows from operating, investing, and financing activities over specific periods Condensed Consolidated Statements of Cash Flows (in thousands) | Cash Flow Activity | 6 Months Ended June 30, 2025 | 6 Months Ended June 30, 2024 | | :---------------------------------- | :--------------------------- | :--------------------------- | | Net cash used in operating activities | $(27,099) | $(17,214) | | Net cash used in investing activities | $(5,850) | $(1,997) | | Net cash used in financing activities | $(5,266) | $(8,839) | | Net decrease in cash, cash equivalents, and restricted cash | $(37,438) | $(28,027) | | Cash, cash equivalents, and restricted cash - end of period | $105,044 | $187,682 | - **Net cash used in operating activities** increased to **$(27.099) million** for the six months ended June 30, 2025, from **$(17.214) million** in the prior year, primarily due to a higher net loss and changes in operating assets and liabilities[26](index=26&type=chunk)[266](index=266&type=chunk)[267](index=267&type=chunk) - **Cash, cash equivalents, and restricted cash** decreased by **$37.438 million**, ending the period at **$105.044 million**, compared to **$187.682 million** in the prior year[26](index=26&type=chunk) [Notes to the Condensed Consolidated Financial Statements (Unaudited)](index=9&type=section&id=Notes%20to%20the%20Condensed%20Consolidated%20Financial%20Statements%20(Unaudited)) This section provides detailed explanations and additional information supporting the condensed consolidated financial statements [NOTE 1. Description of Business](index=11&type=section&id=NOTE%201.%20DESCRIPTION%20OF%20BUSINESS) This note describes SmartRent, Inc.'s core business as an enterprise real estate technology provider offering smart building hardware and cloud-based SaaS solutions - SmartRent, Inc. is an enterprise real estate technology company providing comprehensive management software and applications, including smart building hardware and cloud-based SaaS solutions, for property owners, managers, and residents[31](index=31&type=chunk) - The Company's solutions aim to lower operating costs, increase revenue, mitigate operational friction, and protect assets, while enhancing the living experience for residents[31](index=31&type=chunk) [NOTE 2. Significant Accounting Policies](index=11&type=section&id=NOTE%202.%20SIGNIFICANT%20ACCOUNTING%20POLICIES) This note outlines the key accounting principles and methods used in preparing the financial statements, including policies on unaudited interim reporting, functional currency, going concern, and goodwill impairment - The financial statements are unaudited and prepared in accordance with GAAP, with certain notes condensed or omitted for interim reporting[32](index=32&type=chunk) - The Company's functional currency is USD, with foreign subsidiaries using local currencies, and translation adjustments are included in accumulated other comprehensive loss[33](index=33&type=chunk) - Management believes current resources are sufficient for at least one year, but additional capital may be needed for future operations[34](index=34&type=chunk) - A **goodwill impairment charge** of **$24.929 million** was recorded during the three months ended March 31, 2025, due to a sustained decline in stock price and market capitalization[47](index=47&type=chunk)[48](index=48&type=chunk) [NOTE 3. Fair Value Measurements and Fair Value of Instruments](index=21&type=section&id=NOTE%203.%20FAIR%20VALUE%20MEASUREMENTS%20AND%20FAIR%20VALUE%20OF%20INSTRUMENTS) This note explains how the company measures financial instruments at fair value using a three-level hierarchy and details changes in specific liabilities - The Company measures financial instruments at fair value using a three-level hierarchy based on observable or unobservable inputs[54](index=54&type=chunk)[55](index=55&type=chunk)[56](index=56&type=chunk)[57](index=57&type=chunk) - The **acquisition earnout payment liability**, measured using Level 3 unobservable inputs, decreased from **$1.760 million** at December 31, 2024, to **$1.466 million** at June 30, 2025, with the final payment made in July 2025[84](index=84&type=chunk)[85](index=85&type=chunk)[86](index=86&type=chunk) [NOTE 4. Revenue and Deferred Revenue](index=22&type=section&id=NOTE%204.%20REVENUE%20AND%20DEFERRED%20REVENUE) This note provides a breakdown of revenue by type and details the changes in deferred revenue, including expected recognition Revenue by Type (in thousands) | Revenue Type | 3 Months Ended June 30, 2025 | 3 Months Ended June 30, 2024 | 6 Months Ended June 30, 2025 | 6 Months Ended June 30, 2024 | | :------------------ | :--------------------------- | :--------------------------- | :--------------------------- | :--------------------------- | | Hardware | $15,143 | $24,676 | $33,973 | $53,753 | | Professional services | $4,327 | $5,816 | $8,220 | $9,274 | | Hosted services | $18,838 | $18,026 | $37,459 | $35,980 | | Total revenue | $38,308 | $48,518 | $79,652 | $99,007 | - **Deferred revenue** decreased from **$87.659 million** at January 1, 2025, to **$66.357 million** at June 30, 2025. The Company expects to recognize **57%** of total deferred revenue within the next 12 months[93](index=93&type=chunk) [NOTE 5. Other Balance Sheet Information](index=24&type=section&id=NOTE%205.%20OTHER%20BALANCE%20SHEET%20INFORMATION) This note presents detailed breakdowns of inventory and intangible assets, net, and their changes over the reporting periods Inventory (in thousands) | Inventory Type | June 30, 2025 | December 31, 2024 | | :--------------- | :-------------- | :------------------ | | Finished Goods | $32,967 | $34,876 | | Raw Materials | $385 | $385 | | Total inventory | $33,352 | $35,261 | - **Total inventory** decreased by **5.4%** from **$35.261 million** at December 31, 2024, to **$33.352 million** at June 30, 2025[95](index=95&type=chunk) Intangible Assets, Net (in thousands) | Intangible Asset | June 30, 2025 (Net) | December 31, 2024 (Net) | | :------------------- | :-------------------- | :---------------------- | | Customer relationships | $15,655 | $16,767 | | Developed technology | $5,482 | $6,217 | | Trade name | $301 | $391 | | Total intangible assets, net | $21,438 | $23,375 | - **Total intangible assets, net**, decreased by **8.3%** from **$23.375 million** at December 31, 2024, to **$21.438 million** at June 30, 2025[100](index=100&type=chunk) [NOTE 6. Debt](index=26&type=section&id=NOTE%206.%20DEBT) This note describes the company's Senior Revolving Facility, including its terms, interest rates, and compliance with covenants - The Company has a **$75.0 million** Senior Revolving Facility with a five-year term, terminating in December 2026, which has not been drawn upon as of June 30, 2025[107](index=107&type=chunk)[112](index=112&type=chunk) - Interest rates for draws are based on SOFR or ABR, with applicable margins of **1.75%** for SOFR Loans and **(0.50%)** for ABR Loans as of June 30, 2025[108](index=108&type=chunk) - The Company pays a facility fee of **0.25%** per annum on the unused commitment and was in compliance with all financial covenants as of June 30, 2025[109](index=109&type=chunk)[111](index=111&type=chunk) [NOTE 7. Convertible Preferred Stock and Equity](index=27&type=section&id=NOTE%207.%20CONVERTIBLE%20PREFERRED%20STOCK%20AND%20EQUITY) This note details the company's equity structure, including the absence of preferred stock and activity under its stock repurchase program - The Company has no preferred stock issued or outstanding as of June 30, 2025[113](index=113&type=chunk) - Under a stock repurchase program authorized in March 2024 for up to **$50.0 million**, the Company repurchased **4,066 thousand** Class A common shares for **$3.684 million** (average **$0.91/share**) during Q2 2025, and **5,084 thousand** shares for **$4.886 million** (average **$0.96/share**) during H1 2025[114](index=114&type=chunk)[115](index=115&type=chunk) - As of June 30, 2025, approximately **$16.751 million** remained available for stock repurchases[115](index=115&type=chunk) [NOTE 8. Stock-Based Compensation](index=27&type=section&id=NOTE%208.%20STOCK-BASED%20COMPENSATION) This note provides information on stock-based compensation expense, unrecognized compensation, and changes to the equity incentive plan - **Total stock-based compensation expense** was **$2.161 million** for Q2 2025 and **$4.997 million** for H1 2025, a decrease from **$3.284 million** and **$6.565 million** in the respective prior-year periods[141](index=141&type=chunk) - As of June 30, 2025, unrecognized compensation expense for stock options was **$2.192 million** (expected over **2.3 years**) and for restricted stock units (RSUs) was **$17.258 million** (expected over **2.5 years**)[125](index=125&type=chunk)[129](index=129&type=chunk) - The 2021 Equity Incentive Plan was amended to increase authorized shares by **8,900 thousand**, totaling **24,400 thousand** shares, with **8,473 thousand** shares available for future issuance as of June 30, 2025[120](index=120&type=chunk)[123](index=123&type=chunk) [NOTE 9. Income Taxes](index=31&type=section&id=NOTE%209.%20INCOME%20TAXES) This note discusses the company's effective tax rate, valuation allowance for deferred tax assets, and the impact of new tax legislation - The **effective tax rate (ETR)** from continuing operations was **0.30%** for Q2 2025 and **(0.15%)** for H1 2025, differing from the federal statutory rate of **21%** primarily due to changes in valuation allowance and foreign taxes[142](index=142&type=chunk) - A full valuation allowance has been established for net deferred U.S. federal and state tax assets, including net operating loss carryforwards, which will be maintained until realization is more likely than not[143](index=143&type=chunk) - The recently enacted One Big Beautiful Bill Act (OBBBA) in the U.S. will impact the Company's consolidated financial statements, with certain provisions effective in 2025 and others through 2027[144](index=144&type=chunk) [NOTE 10. Net Loss Per Share](index=32&type=section&id=NOTE%2010.%20NET%20LOSS%20PER%20SHARE) This note reports the basic and diluted net loss per common share and explains the exclusion of anti-dilutive shares - Basic and diluted **net loss per common share** was **$(0.06)** for Q2 2025 and **$(0.27)** for H1 2025[19](index=19&type=chunk) - Potentially dilutive shares, including **17,067 thousand** common stock options and restricted stock units, were excluded from diluted net loss per share computation for the periods presented because their inclusion would have been anti-dilutive[145](index=145&type=chunk)[146](index=146&type=chunk) [NOTE 11. Related-Party Transactions](index=32&type=section&id=NOTE%2011.%20RELATED-PARTY%20TRANSACTIONS) This note discloses information about transactions with related parties, including the cessation of a specific related-party relationship - A related-party relationship with a SmartRent customer, where a Board member served on their board, ceased as of June 30, 2025[147](index=147&type=chunk) - Revenue from this customer was **$618 thousand** for Q2 2024 and **$1.298 million** for H1 2024, with all dealings on terms no more favorable than those with unaffiliated third parties[147](index=147&type=chunk) [NOTE 12. Commitments and Contingencies](index=32&type=section&id=NOTE%2012.%20COMMITMENTS%20AND%20CONTINGENCIES) This note details the company's involvement in legal proceedings, including a class action settlement and related financial accruals - The Company is involved in various legal proceedings, including a class action complaint related to the 2021 business combination, which was agreed to be settled for **$11.375 million**[150](index=150&type=chunk) - Legal expenses for H1 2025 included **$3.462 million** in legal fees and **$11.375 million** in accrued settlement costs, partially offset by **$7.500 million** in committed insurance and third-party contributions[152](index=152&type=chunk) - An accrual of **$11.375 million** was included in accrued expenses and other current liabilities as of June 30, 2025, related to legal matters, with a corresponding receivable of **$6.500 million** for contributions[156](index=156&type=chunk) [NOTE 13. Segment Reporting](index=34&type=section&id=NOTE%2013.%20SEGMENT%20REPORTING) This note clarifies that the company operates as a single reportable segment and outlines the key financial measures reviewed by management - The Company operates as a single operating and reportable segment, with its Chief Operating Decision Maker (CODM) reviewing financial information on a consolidated basis[157](index=157&type=chunk) - Key financial performance measures used by the CODM include revenue, gross profit, operating expenses, and net income[159](index=159&type=chunk) - The Company's principal operations and long-lived assets are primarily located in the United States, with **$8.863 million** of assets outside the U.S. as of June 30, 2025[157](index=157&type=chunk) [NOTE 14. Subsequent Events](index=36&type=section&id=NOTE%2014.%20SUBSEQUENT%20EVENTS) This note reports on significant events that occurred after the balance sheet date, including stock issuances and NYSE compliance - In July and August 2025, **132 thousand** shares of Class A Common Stock were issued to employees for vested RSUs and ESPP purchases[164](index=164&type=chunk) - On August 1, 2025, the Company regained compliance with the NYSE minimum share price requirement (Section 802.01C) as of July 31, 2025[164](index=164&type=chunk) [Item 2. Management's Discussion and Analysis of Financial Condition and Results of Operations](index=34&type=section&id=Item%202%20-%20Management's%20Discussion%20and%20Analysis%20of%20Financial%20Condition%20and%20Results%20of%20Operations) This section provides an overview of SmartRent's business, its operational model, key factors influencing performance, and recent developments [Overview](index=37&type=section&id=Overview) This section introduces SmartRent as an enterprise real estate technology company, detailing its platform and market presence - SmartRent is an enterprise real estate technology company offering a comprehensive management platform with cloud-based SaaS solutions and smart building hardware[167](index=167&type=chunk) - The platform integrates with third-party smart devices via a Hub Device, using an open-architecture approach for seamless management[168](index=168&type=chunk) - As of June 30, 2025, SmartRent had **847,956 Units Deployed** and approximately **600 customers**, representing about **14%** of the U.S. institutionally owned multifamily and single-family rental market[169](index=169&type=chunk) [Our Business Model](index=37&type=section&id=Our%20Business%20Model) This section describes how SmartRent generates revenue through sales of smart home systems, subscription fees, and installation services - Revenue is primarily generated from sales of smart home systems, including monthly subscription fees for Hosted Services (access controls, asset monitoring, WiFi), direct sales of smart home devices (Hub Devices, locks, thermostats), and installation services[170](index=170&type=chunk) - Subscription arrangements range from one month to ten years, with a weighted average contract length of **4.2 years** for recurring revenue[170](index=170&type=chunk) [Key Factors Affecting Our Performance](index=37&type=section&id=Key%20Factors%20Affecting%20Our%20Performance) This section identifies critical elements influencing the company's success, such as customer growth, product offerings, supply chain, R&D, and market conditions - Success depends on growing the customer base, expanding hardware and hosted service offerings to increase revenue per Unit Deployed, and providing high-quality products to leverage the business model[171](index=171&type=chunk) - Improvements in the global supply chain have reduced backlogged Access Control and made-to-order lock units, but potential new tariffs could impact cost structure and supply chain[172](index=172&type=chunk)[173](index=173&type=chunk)[174](index=174&type=chunk) - Ongoing investment in R&D is crucial for developing innovative software and hardware, including the recently introduced AI-powered intelligence layer and enhanced energy management tools[175](index=175&type=chunk)[176](index=176&type=chunk) - Category adoption and market growth are vital, though macroeconomic conditions and leadership changes have led to deferred capital expenditures and decreased Units Shipped and New Units Deployed in 2024[178](index=178&type=chunk) [Recent Developments](index=38&type=section&id=Recent%20Developments) This section highlights significant recent events, including leadership changes and compliance with NYSE listing requirements - Michael Shane Paladin departed as President and CEO in April 2025, with John Dorman serving as Interim CEO, followed by the appointment of Frank Martell as the new President and CEO in June 2025[179](index=179&type=chunk) - The Company received a NYSE notification in May 2025 for non-compliance with the minimum share price requirement (**$1.00** average over 30 trading days) but regained compliance as of July 31, 2025[180](index=180&type=chunk) [Key Metrics](index=39&type=section&id=Key%20Metrics) This section presents a summary of critical operational and financial metrics, including Units Deployed, Bookings, and Annual Recurring Revenue Key Metrics Summary | Metric | 3 Months Ended June 30, 2025 | 3 Months Ended June 30, 2024 | Change (%) | 6 Months Ended June 30, 2025 | 6 Months Ended June 30, 2024 | Change (%) | | :--------------------------- | :--------------------------- | :--------------------------- | :--------- | :--------------------------- | :--------------------------- | :--------- | | Hardware Units Shipped | 26,543 | 48,780 | (46)% | 69,961 | 100,524 | (30)% | | Hardware ARPU | $571 | $506 | 13% | $486 | $535 | (9)% | | New Units Deployed | 21,068 | 22,469 | (6)% | 39,182 | 52,179 | (25)% | | Professional services ARPU | $365 | $327 | 12% | $392 | $278 | 41% | | Units Deployed | 847,956 | 771,870 | 10% | 847,956 | 771,870 | 10% | | SaaS ARPU | $5.66 | $5.63 | 0% | $5.67 | $5.53 | 2% | | Units Booked | 24,319 | 37,691 | (35)% | 42,529 | 83,981 | (49)% | | Bookings (in thousands) | $30,460 | $45,511 | (33)% | $57,640 | $84,272 | (32)% | | Units Booked SaaS ARPU | $8.21 | $8.07 | 2% | $9.10 | $7.57 | 20% | | Annual Recurring Revenue (ARR) | $56.9 million | $51.2 million | 11% | $56.9 million | $51.2 million | 11% | | Customer Churn (Smart Communities) | 0.08% | 0.03% | 167% | 0.10% | 0.05% | 100% | | Property Net Revenue Retention | 102% | 103% | (1)% | 102% | 103% | (1)% | | Customer Net Revenue Retention | 108% | N/A | N/A | 108% | N/A | N/A | - **Units Deployed** increased by **10%** YoY to **847,956** as of June 30, 2025, indicating continued growth in active subscriptions[197](index=197&type=chunk) - **Bookings** decreased by **33%** for Q2 2025 and **32%** for H1 2025, reflecting a decline in new binding orders[197](index=197&type=chunk) [Components of Results of Operations](index=42&type=section&id=Components%20of%20Results%20of%20Operations) This section explains the various revenue streams, cost of revenue components, and operating expenses that contribute to the company's financial results - Revenue is generated from hardware sales, professional installation services, and Hosted Services (monthly subscription fees and amortization of non-distinct Hub Devices)[198](index=198&type=chunk)[201](index=201&type=chunk)[202](index=202&type=chunk)[203](index=203&type=chunk) - Cost of revenue includes direct product costs, shipping, warehouse expenses, personnel, and estimated warranty expenses for hardware; personnel, contractor, and travel expenses for professional services; and amortization of non-distinct Hub Devices and infrastructure costs for Hosted Services[205](index=205&type=chunk)[206](index=206&type=chunk)[208](index=208&type=chunk)[209](index=209&type=chunk) - Operating expenses comprise research and development (capitalized qualifying costs, expensed preliminary/post-development costs), sales and marketing (personnel, commissions, programs), and general and administrative (personnel, professional fees, public company expenses, legal settlements)[210](index=210&type=chunk)[211](index=211&type=chunk)[212](index=212&type=chunk) - Other income/expenses include interest income/expense, foreign currency gains/losses, and other income from foreign subsidiaries[214](index=214&type=chunk) [Comparison of the three and six months ended June 30, 2025 and 2024](index=47&type=section&id=Comparison%20of%20the%20three%20and%20six%20months%20ended%20June%2030,%202025%20and%202024) This section provides a detailed comparative analysis of the company's financial performance for the three and six months ended June 30, 2025, versus 2024 Revenue Comparison (in thousands) | Revenue Type | 3 Months Ended June 30, 2025 | 3 Months Ended June 30, 2024 | Change ($) | Change (%) | 6 Months Ended June 30, 2025 | 6 Months Ended June 30, 2024 | Change ($) | Change (%) | | :------------------ | :--------------------------- | :--------------------------- | :--------- | :--------- | :--------------------------- | :--------------------------- | :--------- | :--------- | | Hardware | $15,143 | $24,676 | $(9,533) | (39)% | $33,973 | $53,753 | $(19,780) | (37)% | | Professional services | $4,327 | $5,816 | $(1,489) | (26)% | $8,220 | $9,274 | $(1,054) | (11)% | | Hosted services | $18,838 | $18,026 | $812 | 5% | $37,459 | $35,980 | $1,479 | 4% | | Total revenue | $38,308 | $48,518 | $(10,210) | (21)% | $79,652 | $99,007 | $(19,355) | (20)% | - **Hardware revenue** decreased by **39%** for Q2 2025 and **37%** for H1 2025, primarily due to a **46%** decrease in Units Shipped for Q2 2025 and a **30%** decrease for H1 2025[222](index=222&type=chunk)[223](index=223&type=chunk) - **Hosted Services revenue** increased by **5%** for Q2 2025 and **4%** for H1 2025, driven by a **10%** increase in Units Deployed, partially offset by decreasing hub amortization revenue[226](index=226&type=chunk)[227](index=227&type=chunk) Cost of Revenue Comparison (in thousands) | Cost of Revenue Type | 3 Months Ended June 30, 2025 | 3 Months Ended June 30, 2024 | Change ($) | Change (%) | 6 Months Ended June 30, 2025 | 6 Months Ended June 30, 2024 | Change ($) | Change (%) | | :------------------- | :--------------------------- | :--------------------------- | :--------- | :--------- | :--------------------------- | :--------------------------- | :--------- | :--------- | | Hardware | $12,868 | $16,318 | $(3,450) | (21)% | $26,828 | $35,002 | $(8,174) | (23)% | | Professional services | $6,237 | $8,869 | $(2,632) | (30)% | $13,530 | $15,317 | $(1,787) | (12)% | | Hosted services | $6,535 | $6,026 | $509 | 8% | $13,064 | $11,960 | $1,104 | 9% | | Total cost of revenue | $25,640 | $31,213 | $(5,573) | (18)% | $53,422 | $62,279 | $(8,857) | (14)% | Operating Expenses Comparison (in thousands) | Operating Expense Type | 3 Months Ended June 30, 2025 | 3 Months Ended June 30, 2024 | Change ($) | Change (%) | 6 Months Ended June 30, 2025 | 6 Months Ended June 30, 2024 | Change ($) | Change (%) | | :----------------------- | :--------------------------- | :--------------------------- | :--------- | :--------- | :--------------------------- | :--------------------------- | :--------- | :--------- | | Research and development | $6,465 | $7,484 | $(1,019) | (14)% | $14,723 | $15,846 | $(1,123) | (7)% | | Sales and marketing | $6,375 | $4,716 | $1,659 | 35% | $11,145 | $9,270 | $1,875 | 20% | | General and administrative | $11,513 | $12,023 | $(510) | (4)% | $28,407 | $28,689 | $(282) | (1)% | - **Sales and marketing expenses** increased by **35%** for Q2 2025 and **20%** for H1 2025, driven by higher third-party consultant and personnel-related expenses[240](index=240&type=chunk)[241](index=241&type=chunk) - A **goodwill impairment charge** of **$24.929 million** was recorded for the six months ended June 30, 2025[244](index=244&type=chunk) [Non-GAAP Financial Measures](index=53&type=section&id=Non-GAAP%20Financial%20Measures) This section defines and reconciles non-GAAP financial measures, specifically EBITDA and Adjusted EBITDA, to their most directly comparable GAAP measures - **EBITDA** is defined as net income (loss) before interest income, net, income tax expense (benefit), and depreciation and amortization[251](index=251&type=chunk) - **Adjusted EBITDA** further excludes non-recurring legal matters, stock-based compensation, impairment of investment in non-affiliate, goodwill impairment, non-recurring warranty provisions, other acquisition expenses, and other unusual non-recurring events[252](index=252&type=chunk) EBITDA and Adjusted EBITDA Reconciliation (in thousands) | Metric | 3 Months Ended June 30, 2025 | 3 Months Ended June 30, 2024 | 6 Months Ended June 30, 2025 | 6 Months Ended June 30, 2024 | | :---------------------------------- | :--------------------------- | :--------------------------- | :--------------------------- | :--------------------------- | | Net loss | $(10,860) | $(4,605) | $(51,044) | $(12,297) | | EBITDA | $(9,839) | $(5,242) | $(49,172) | $(13,797) | | Adjusted EBITDA | $(7,349) | $902 | $(13,721) | $1,299 | - **Adjusted EBITDA** decreased significantly to **$(7.349) million** for Q2 2025 from **$0.902 million** for Q2 2024, and to **$(13.721) million** for H1 2025 from **$1.299 million** for H1 2024, primarily due to the goodwill impairment and increased legal expenses[256](index=256&type=chunk) [Liquidity and Capital Resources](index=54&type=section&id=Liquidity%20and%20Capital%20Resources) This section discusses the company's cash position, available credit facilities, and cash flow activities, assessing its ability to fund operations - As of June 30, 2025, the Company had **$105.0 million** in cash and cash equivalents, primarily held in money market funds[258](index=258&type=chunk) - The Company has a **$75.0 million** Senior Revolving Facility, undrawn as of June 30, 2025, which, along with current cash, is expected to fund operations for at least the next 12 months[259](index=259&type=chunk)[260](index=260&type=chunk) - **Cash used in operating activities** increased to **$27.1 million** for H1 2025 from **$17.2 million** for H1 2024, driven by net loss and changes in operating assets and liabilities[266](index=266&type=chunk)[267](index=267&type=chunk) - **Cash used in financing activities** decreased to **$5.3 million** for H1 2025 from **$8.8 million** for H1 2024, mainly due to lower Class A common stock repurchases and no earnout payments in 2025[270](index=270&type=chunk)[271](index=271&type=chunk) [Critical Accounting Estimates](index=56&type=section&id=Critical%20Accounting%20Estimates) This section outlines the key accounting estimates that require significant judgment, including revenue recognition, goodwill impairment, inventory valuation, and stock-based compensation - **Revenue recognition** involves estimating standalone selling prices for hardware, professional services, and Hosted Services, and allocating transaction prices based on these estimates[274](index=274&type=chunk)[278](index=278&type=chunk)[279](index=279&type=chunk) - **Goodwill** is tested for impairment annually (September 30) and when impairment indicators arise; a **$24.929 million** charge was recorded in Q1 2025 due to a decline in stock price and market capitalization[280](index=280&type=chunk)[281](index=281&type=chunk) - **Inventory** is valued at the lower of cost or net realizable value, with adjustments for obsolescence based on demand forecasts and product life cycles[285](index=285&type=chunk) - **Stock-based compensation** for options is valued using the Black-Scholes model, and RSUs are valued at grant date fair value, with expense recognized over the vesting period[286](index=286&type=chunk)[287](index=287&type=chunk) [Emerging Growth Company Status](index=58&type=section&id=Emerging%20Growth%20Company%20Status) This section explains SmartRent's status as an "emerging growth company" under the JOBS Act and its implications for financial reporting - SmartRent is an **'emerging growth company'** under the JOBS Act and has elected to use the extended transition period for complying with new or revised financial accounting standards[289](index=289&type=chunk) - This status allows for different accounting standards compared to non-emerging growth companies, potentially affecting comparability of financial results[290](index=290&type=chunk) [Item 3. Quantitative and Qualitative Disclosures About Market Risk](index=52&type=section&id=Item%203%20-%20Quantitative%20and%20Qualitative%20Disclosures%20About%20Market%20Risk) This section outlines SmartRent's exposure to market risks, primarily from fluctuations in interest rates and foreign currency exchange rates - The Company is exposed to market risks from fluctuations in interest rates and foreign currency exchange rates[294](index=294&type=chunk) - A hypothetical **10%** change in interest rates would increase annual interest income by **$10.5 million** or decrease it by **$4.4 million**, based on the cash position as of June 30, 2025[296](index=296&type=chunk) - Foreign currency exchange rate fluctuations are not expected to have a material impact on historical consolidated financial statements, and the Company currently does not engage in hedging strategies[297](index=297&type=chunk) [Item 4. Controls and Procedures](index=52&type=section&id=Item%204%20-%20Controls%20and%20Procedures) This section confirms that SmartRent's management evaluated the effectiveness of disclosure controls and procedures and found no material changes in internal control over financial reporting - Disclosure controls and procedures were evaluated and deemed effective as of June 30, 2025, at the reasonable assurance level[298](index=298&type=chunk) - No material changes in internal control over financial reporting occurred during the three months ended June 30, 2025[299](index=299&type=chunk) [PART II - Other Information](index=52&type=section&id=PART%20II%20-%20Other%20Information) [Item 1. Legal Proceedings](index=52&type=section&id=Item%201%20-%20Legal%20Proceedings) This section reiterates that SmartRent is subject to various legal claims in the ordinary course of business - The Company is subject to various legal proceedings and claims arising in the ordinary course of business[300](index=300&type=chunk) - Management believes that the outcome of these matters will not have a material adverse effect on the Company's business, financial condition, results of operations, or prospects[300](index=300&type=chunk) [Item 1A. Risk Factors](index=52&type=section&id=Item%201A%20-%20Risk%20Factors) This section highlights specific risks and uncertainties facing SmartRent, including challenges related to the new CEO's leadership transition and NYSE listing compliance - The Company's success depends on successfully managing the leadership transition to the new CEO, Frank Martell, appointed June 16, 2025[302](index=302&type=chunk) - Failure to effectively manage this transition could negatively impact customers, employees, investors, and third-party partners, affecting business, results of operations, or stock price[302](index=302&type=chunk) - The Company regained compliance with the NYSE minimum share price requirement (**$1.00** average over 30 trading days) as of July 31, 2025, but continued volatility could lead to future non-compliance and potential delisting[303](index=303&type=chunk)[304](index=304&type=chunk) [Item 2. Unregistered Sales of Equity Securities and Use of Proceeds](index=54&type=section&id=Item%202%20-%20Unregistered%20Sales%20of%20Equity%20Securities%20and%20Use%20of%20Proceeds) This section details the Company's share repurchase activity for the three months ended June 30, 2025, under its authorized stock repurchase program Share Repurchase Activity (3 Months Ended June 30, 2025) | Period | Total Number of Shares Purchased | Average Price Paid Per Share | Total Number of Shares Purchased as Part of Publicly Announced Plans or Programs | Approximate Dollar Value of Shares that May Yet Be Purchased Under the Plans or Programs (in thousands) | | :----------------------- | :------------------------------- | :--------------------------- | :----------------------------------------------------------------------------- | :------------------------------------------------------------------------------------ | | April 1 - April 30, 2025 | 3,326 | $0.84 | 2,777 | $17,450 | | May 1 - May 31, 2025 | 740 | $0.95 | 707 | $16,751 | | June 1 - June 30, 2025 | - | $- | - | $16,751 | | Total | 4,066 | | 3,484 | | - During Q2 2025, the Company repurchased **4,066 thousand** shares of Class A common stock at an average price of **$0.84-$0.95** per share[307](index=307&type=chunk) - As of June 30, 2025, **$16.751 million** remained available under the **$50.0 million** stock repurchase program authorized in March 2024[307](index=307&type=chunk) [Item 3. Defaults Upon Senior Securities](index=54&type=section&id=Item%203%20-%20Defaults%20Upon%20Senior%20Securities) This section states that there were no defaults upon senior securities during the reporting period - There were no defaults upon senior securities[309](index=309&type=chunk) [Item 4. Mine Safety Disclosures](index=54&type=section&id=Item%204%20-%20Mine%20Safety%20Disclosures) This section indicates that mine safety disclosures are not applicable to the Company - Mine safety disclosures are not applicable to the Company[310](index=310&type=chunk) [Item 5. Other Information](index=54&type=section&id=Item%205%20-%20Other%20Information) This section reports on securities trading plans of directors and executive officers and announces the departure of the Chief Legal Officer - No directors or executive officers adopted, modified, or terminated any Rule 10b5-1 or non-Rule 10b5-1 trading arrangements during the three months ended June 30, 2025[311](index=311&type=chunk) - Kristen Lee, Chief Legal Officer and Corporate Secretary, will step down effective August 15, 2025, and will receive a cash severance payment of **$100 thousand** as per a transition agreement[312](index=312&type=chunk)[313](index=313&type=chunk) [Item 6. Exhibits](index=55&type=section&id=Item%206%20-%20Exhibits) This section lists all exhibits filed as part of, or incorporated by reference into, the Quarterly Report on Form 10-Q - The report includes various exhibits such as the Third Amended and Restated Certificate of Incorporation, Amended and Restated Bylaws, and several employment and transition agreements[316](index=316&type=chunk) - Certifications from the Principal Executive Officer and Principal Financial Officer, as required by the Sarbanes-Oxley Act, are filed as exhibits[316](index=316&type=chunk) - Inline XBRL Instance Document, Taxonomy Extension Schema, and Cover Page Interactive Data File are included for electronic data submission[316](index=316&type=chunk) [Signatures](index=56&type=section&id=Signatures) This section confirms the signing of the Quarterly Report on Form 10-Q by the President and CEO and the Chief Financial Officer - The Quarterly Report on Form 10-Q was signed on August 6, 2025, by Frank Martell, President and Chief Executive Officer, and Daryl Stemm, Chief Financial Officer[320](index=320&type=chunk)[322](index=322&type=chunk)

[Executive Summary](index=1&type=section&id=1.%20Executive%20Summary) SmartRent reported a 21% YoY revenue decrease to $38.3 million in Q2 2025, with increased net loss, while expanding cost reduction and maintaining strong liquidity [Second Quarter 2025 Overview](index=1&type=section&id=1.1.%20Second%20Quarter%202025%20Overview) SmartRent reported Q2 2025 financial results, with total revenue decreasing 21% YoY to $38.3 million, primarily due to a strategic shift away from bulk hardware sales. Net loss increased to $(10.9) million, and Adjusted EBITDA was $(7.3) million. The company expanded its cost reduction program to $30 million in annualized savings, targeting cash flow neutrality by the end of 2025, and maintains a strong liquidity position with $105 million in cash and no debt Key Financial and Operational Metrics | Metric | Q2 2025 | Q2 2024 | Change (YoY) | | :----- | :------ | :------ | :----------- | | Total Revenue | $38.3 million | $48.5 million | -21% | | Annual Recurring Revenue (ARR) | $56.9 million | N/A | +11% | | Net Loss | $(10.9) million | $(4.6) million | Increased by $6.3 million | | Adjusted EBITDA | $(7.3) million | $0.9 million | Decreased by $8.2 million | | Cash Balance | $105.0 million | N/A | N/A | | Undrawn Credit Facility | $75 million | N/A | N/A | - Company expanded its cost reduction program to **$30 million in annualized savings**, aiming for Adjusted EBITDA and cash flow neutrality exiting 2025[4](index=4&type=chunk)[6](index=6&type=chunk) [Management Commentary](index=1&type=section&id=1.2.%20Management%20Commentary) CEO Frank Martell emphasized SmartRent's compelling opportunities for profitable growth in an expanding market with a differentiated SaaS platform. He highlighted aggressive steps taken in Q2 to reset the cost structure, drive productivity, and invest in growth acceleration through new products and AI integration. CFO Daryl Stemm noted the strong liquidity position and flexibility to drive profitable growth, despite the impact of ceasing bulk hardware sales on 2025 growth trends - SmartRent is a hardware-enabled SaaS company with a differentiated platform, operating in a large, expanding market[3](index=3&type=chunk) - The company is investing in growth acceleration through innovative new products, capabilities, and the progressive infusion of AI into products and operations[4](index=4&type=chunk) - The deliberate decision to cease bulk hardware sales, made in the second half of last year, impacted Q2 2025 revenue and growth trends, but the impact is expected to normalize later this year[5](index=5&type=chunk) [Company Overview](index=3&type=section&id=2.%20Company%20Overview) SmartRent, founded in 2017, delivers smart community and operations solutions to the rental housing industry, automating operations and serving top multifamily operators [About SmartRent](index=3&type=section&id=2.1.%20About%20SmartRent) Founded in 2017, SmartRent, Inc. is a leading provider of smart communities and smart operations solutions for the rental housing industry. Its end-to-end ecosystem automates operations, protects assets, and reduces energy consumption, serving 15 of the top 20 multifamily operators with purpose-built software and hardware, and comprehensive implementation and support - SmartRent provides smart communities and smart operations solutions to the rental housing industry[16](index=16&type=chunk) - The company's ecosystem automates operations, protects assets, and reduces energy consumption, leveraging purpose-built software and hardware with end-to-end implementation and support[16](index=16&type=chunk) - SmartRent serves **15 of the top 20 multifamily operators**[16](index=16&type=chunk) [Second Quarter 2025 Financial Results](index=1&type=section&id=3.%20Second%20Quarter%202025%20Financial%20Results) This section details SmartRent's Q2 2025 financial performance, including revenue, gross profit, operating expenses, net loss, and liquidity [Revenue Performance](index=1&type=section&id=3.1.%20Revenue%20Performance) Total revenue for Q2 2025 decreased by 21% year-over-year to $38.3 million, primarily due to a strategic shift away from bulk hardware sales. Hosted services revenue, including SaaS, increased by 5% to $18.8 million, with SaaS revenue growing 10% YoY and representing 37% of total revenue (up from 26% in prior year). Hardware revenue declined 39% to $15.1 million, and professional services revenue decreased 26% to $4.3 million [Total Revenue](index=1&type=section&id=3.1.1.%20Total%20Revenue) Total revenue for the second quarter of 2025 was $38.3 million, a 21% decrease compared to $48.5 million in the prior year quarter, mainly attributed to lower hardware revenues following a strategic shift from bulk hardware sales Total Revenue Performance | Metric | Q2 2025 | Q2 2024 | Change (YoY) | | :----- | :------ | :------ | :----------- | | Total Revenue | $38.3 million | $48.5 million | -21% | - The decline in total revenue primarily reflects the Company's strategic move away from bulk hardware sales not aligned with customer implementation timelines[7](index=7&type=chunk) [Revenue by Segment](index=2&type=section&id=3.1.2.%20Revenue%20by%20Segment) Hosted services revenue, which includes SaaS, increased by 5% year-over-year to $18.8 million. SaaS revenue specifically grew 10% YoY and now constitutes approximately 37% of total revenue, up from 26% in the prior year. Conversely, hardware revenue saw a significant 39% decrease to $15.1 million, and professional services revenue declined by 26% to $4.3 million Revenue by Segment Breakdown | Revenue Segment | Q2 2025 (in thousands) | Q2 2024 (in thousands) | Change (YoY) | | :-------------- | :--------------------- | :--------------------- | :----------- | | Hardware | $15,143 | $24,676 | -39% | | Professional services | $4,327 | $5,816 | -26% | | Hosted services | $18,838 | $18,026 | +5% | | SaaS revenue (part of Hosted) | $14.2 million | N/A | +10% | - SaaS revenue represented approximately **37% of total second quarter revenue in 2025**, up from 26% in the prior year[8](index=8&type=chunk) [Gross Profit and Margin](index=2&type=section&id=3.2.%20Gross%20Profit%20and%20Margin) Total gross margin decreased by 260 basis points to 33.1% in Q2 2025, down from 35.7% in the prior year, mainly due to changes in the product mix of hardware shipments. SaaS gross margin also decreased by 490 basis points to 70.2%. However, professional services gross loss improved to $(1.9) million from $(3.1) million, driven by increased operational efficiencies. Hosted services gross profit increased slightly to $12.3 million [Total Gross Margin](index=2&type=section&id=3.2.1.%20Total%20Gross%20Margin) Total gross margin for Q2 2025 was 33.1%, a decrease of approximately 260 basis points from 35.7% in the prior year quarter, primarily influenced by changes in the product mix of hardware shipments. Total gross profit was $12.7 million, down from $17.3 million Total Gross Margin and Profit | Metric | Q2 2025 | Q2 2024 | Change (YoY) | | :----- | :------ | :------ | :----------- | | Total Gross Margin | 33.1% | 35.7% | -260 bps | | Total Gross Profit | $12.7 million | $17.3 million | -$4.6 million | - The decrease in total gross margin was primarily driven by changes to product mix of hardware shipments[11](index=11&type=chunk) [Gross Profit by Segment](index=2&type=section&id=3.2.2.%20Gross%20Profit%20by%20Segment) SaaS gross margin decreased by 490 basis points to 70.2% from 75.1% in the prior year. Hardware gross profit significantly decreased by $6.1 million to $2.3 million, reflecting lower shipment volume due to the shift from bulk sales. Professional services gross loss improved to $(1.9) million from $(3.1) million, while Hosted services gross profit increased to $12.3 million from $12.0 million Gross Profit and Margin by Segment | Segment Gross Profit/Margin | Q2 2025 | Q2 2024 | Change (YoY) | | :------------------------ | :------ | :------ | :----------- | | SaaS Gross Margin | 70.2% | 75.1% | -490 bps | | Hardware Gross Profit | $2.3 million | $8.4 million | -$6.1 million | | Professional Services Gross Loss | $(1.9) million | $(3.1) million | Improved by $1.2 million | | Hosted Services Gross Profit | $12.3 million | $12.0 million | +$0.3 million | - Professional services gross loss improved due to increased operational efficiencies and improved unit economics on SmartRent installations[11](index=11&type=chunk) [Operating Expenses](index=2&type=section&id=3.3.%20Operating%20Expenses) Operating expenses in the second quarter of 2025 were $24.4 million, which included approximately $2 million of severance and legal expenses that had no prior year counterpart Operating Expenses Breakdown | Metric | Q2 2025 (in thousands) | Q2 2024 (in thousands) | Change (YoY) | | :----- | :--------------------- | :--------------------- | :----------- | | Total Operating Expense | $24,353 | $24,223 | +$130 | | Research and development | $6,465 | $7,484 | -$1,019 | | Sales and marketing | $6,375 | $4,716 | +$1,659 | | General and administrative | $11,513 | $12,023 | -$510 | - Operating expenses included approximately **$2 million of severance and legal expenses** in Q2 2025 that were not present in the prior year[10](index=10&type=chunk) [Net Loss and Adjusted EBITDA](index=1&type=section&id=3.4.%20Net%20Loss%20and%20Adjusted%20EBITDA) Net loss increased to $(10.9) million in Q2 2025 from $(4.6) million in the prior year, and Adjusted EBITDA was $(7.3) million, a decrease of $8.3 million from $0.9 million in Q2 2024. These increased losses were primarily due to lower hardware revenue and the aforementioned severance and legal expenses Net Loss and Adjusted EBITDA Performance | Metric | Q2 2025 | Q2 2024 | Change (YoY) | | :----- | :------ | :------ | :----------- | | Net Loss | $(10.9) million | $(4.6) million | Increased by $6.3 million | | Adjusted EBITDA | $(7.3) million | $0.9 million | Decreased by $8.2 million | - Increased losses were principally attributable to lower hardware revenue and severance and legal expenses incurred in 2025[12](index=12&type=chunk) [Liquidity and Capital Management](index=1&type=section&id=3.5.%20Liquidity%20and%20Capital%20Management) SmartRent ended Q2 2025 with a strong liquidity position, including $105.0 million in cash and an undrawn credit facility of $75 million, with no debt. The company repurchased approximately 4.1 million shares at an aggregate cost of $3.7 million during the quarter under its $50 million share repurchase program, with $16.8 million remaining available Liquidity and Capital Position | Metric | Q2 2025 | | :----- | :------ | | Cash Balance | $105.0 million | | Undrawn Credit Facility | $75 million | | Debt | None | | Shares Repurchased (Q2) | 4.1 million | | Cost of Repurchases (Q2) | $3.7 million | | Remaining Share Repurchase Authorization | $16.8 million | [Key Operating Metrics](index=2&type=section&id=4.%20Key%20Operating%20Metrics) This section presents SmartRent's key operational performance indicators for Q2 2025, including units deployed, bookings, and average revenue per unit [Units Performance](index=2&type=section&id=4.1.%20Units%20Performance) As of June 30, 2025, Units Deployed increased by 10% year-over-year to 847,956, reflecting continued expansion of the installed base. However, New Units Deployed during the quarter decreased by 6% to 21,068 Units Deployed and Shipped | Metric | Q2 2025 | Q2 2024 | Change (YoY) | | :----- | :------ | :------ | :----------- | | Units Deployed (as of June 30) | 847,956 | 771,870 | +10% | | New Units Deployed (Q2) | 21,068 | 22,469 | -6% | | Hardware Units Shipped (Q2) | 26,543 | 48,780 | -46% | [Bookings](index=2&type=section&id=4.2.%20Bookings) Units Booked for Q2 2025 reached 24,319, marking the highest quarterly booking performance in the past year, despite a 35% year-over-year decrease primarily due to the cessation of bulk hardware sales. Total Bookings (in thousands) also decreased by 33% to $30,460 Bookings Performance | Metric | Q2 2025 | Q2 2024 | Change (YoY) | | :----- | :------ | :------ | :----------- | | Units Booked | 24,319 | 37,691 | -35% | | Bookings (in 000's) | $30,460 | $45,511 | -33% | - Units Booked for the quarter was the Company's **highest quarterly booking performance in the past year**[9](index=9&type=chunk) [Average Revenue Per Unit (ARPU)](index=2&type=section&id=4.3.%20Average%20Revenue%20Per%20Unit%20%28ARPU%29) SaaS ARPU for Q2 2025 increased by 2% year-over-year to $5.66. Hardware ARPU increased by 13% to $571, and Professional Services ARPU increased by 12% to $365. Units Booked SaaS ARPU also saw a 2% increase to $8.21 Average Revenue Per Unit (ARPU) by Segment | Metric | Q2 2025 | Q2 2024 | Change (YoY) | | :----- | :------ | :------ | :----------- | | SaaS ARPU | $5.66 | $5.63 | +2% | | Hardware ARPU | $571 | $506 | +13% | | Professional Services ARPU | $365 | $327 | +12% | | Units Booked SaaS ARPU | $8.21 | $8.07 | +2% | [Condensed Consolidated Financial Statements](index=8&type=section&id=5.%20Condensed%20Consolidated%20Financial%20Statements) This section provides SmartRent's condensed consolidated statements of operations, balance sheets, and cash flows for the reported periods [Statements of Operations and Comprehensive Loss](index=8&type=section&id=5.1.%20Statements%20of%20Operations%20and%20Comprehensive%20Loss) The condensed consolidated statements of operations show a net loss of $(10.9) million for the three months ended June 30, 2025, compared to $(4.6) million in the prior year. For the six months, net loss was $(51.0) million in 2025 versus $(12.3) million in 2024, significantly impacted by a $24.9 million goodwill impairment charge in 2025 Condensed Consolidated Statements of Operations and Comprehensive Loss | Metric (in thousands) | Q2 2025 | Q2 2024 | 6 Months 2025 | 6 Months 2024 | | :-------------------- | :------ | :------ | :------------ | :------------ | | Total Revenue | $38,308 | $48,518 | $79,652 | $99,007 | | Total Cost of Revenue | $25,640 | $31,213 | $53,422 | $62,279 | | Total Operating Expense | $24,353 | $24,223 | $54,275 | $53,805 | | Impairment charge | $- | $- | $24,929 | $- | | Loss from operations | $(11,685) | $(6,918) | $(52,974) | $(17,077) | | Net loss | $(10,860) | $(4,605) | $(51,044) | $(12,297) | | Basic and diluted Net loss per common share | $(0.06) | $(0.02) | $(0.27) | $(0.06) | [Balance Sheets](index=9&type=section&id=5.2.%20Balance%20Sheets) As of June 30, 2025, total assets were $354.0 million, down from $420.2 million at December 31, 2024, primarily due to a decrease in cash and cash equivalents and a goodwill impairment charge. Total liabilities decreased to $115.1 million from $130.7 million, while total stockholders' equity decreased to $238.8 million from $289.4 million Condensed Consolidated Balance Sheets | Metric (in thousands) | June 30, 2025 | December 31, 2024 | | :-------------------- | :------------ | :---------------- | | Cash and cash equivalents | $105,044 | $142,482 | | Total current assets | $217,543 | $257,650 | | Goodwill | $92,339 | $117,268 | | Total assets | $353,969 | $420,176 | | Total current liabilities | $80,059 | $71,032 | | Total liabilities | $115,120 | $130,741 | | Total stockholders' equity | $238,849 | $289,435 | [Statements of Cash Flows](index=10&type=section&id=5.3.%20Statements%20of%20Cash%20Flows) For the six months ended June 30, 2025, net cash used in operating activities increased to $(27.1) million from $(17.2) million in the prior year. Net cash used in investing activities was $(5.9) million, and net cash used in financing activities was $(5.3) million. The company experienced a net decrease in cash, cash equivalents, and restricted cash of $(37.4) million, ending the period with $105.0 million Condensed Consolidated Statements of Cash Flows | Metric (in thousands) | 6 Months 2025 | 6 Months 2024 | | :-------------------- | :------------ | :------------ | | Net cash used in operating activities | $(27,099) | $(17,214) | | Net cash used in investing activities | $(5,850) | $(1,997) | | Net cash used in financing activities | $(5,266) | $(8,839) | | Net decrease in cash, cash equivalents, and restricted cash | $(37,438) | $(28,027) | | Cash, cash equivalents, and restricted cash - end of period | $105,044 | $187,682 | - Goodwill impairment of **$24.9 million** was a significant non-cash adjustment in operating activities for the six months ended June 30, 2025[37](index=37&type=chunk) [Non-GAAP Financial Measures](index=4&type=section&id=6.%20Non-GAAP%20Financial%20Measures) This section defines and reconciles SmartRent's non-GAAP financial measures, such as EBITDA and Adjusted EBITDA, to their GAAP equivalents [Definition and Rationale](index=4&type=section&id=6.1.%20Definition%20and%20Rationale) SmartRent uses non-GAAP financial measures like EBITDA and Adjusted EBITDA to assess financial and operating performance, identify trends, and make strategic decisions. These measures are not recognized under GAAP and should not be considered substitutes for GAAP financial information. Adjusted EBITDA specifically excludes items such as non-recurring legal matters, stock-based compensation, goodwill impairment, and acquisition-related expenses - Non-GAAP measures (EBITDA and Adjusted EBITDA) are used by management to assess financial and operating performance, identify trends, and make decisions, believing they provide useful information to investors[22](index=22&type=chunk) - Adjusted EBITDA is defined as EBITDA before non-recurring legal matters, stock-based compensation expense, non-employee warranty expense, non-recurring warranty provisions, goodwill impairment, compensation and other expenses in connection with acquisitions, asset impairment, and other non-recurring or unusual events[19](index=19&type=chunk) [Reconciliation to GAAP Measures](index=11&type=section&id=6.2.%20Reconciliation%20to%20GAAP%20Measures) The report provides a reconciliation of net loss (GAAP) to EBITDA and Adjusted EBITDA (non-GAAP). For Q2 2025, Adjusted EBITDA was $(7.3) million, compared to $0.9 million in Q2 2024. For the six months ended June 30, 2025, Adjusted EBITDA was $(13.7) million, compared to $1.3 million in the prior year, with significant adjustments including a $24.9 million goodwill impairment in 2025 Reconciliation of Net Loss to Adjusted EBITDA | Metric (in thousands) | Q2 2025 | Q2 2024 | 6 Months 2025 | 6 Months 2024 | | :-------------------- | :------ | :------ | :------------ | :------------ | | Net loss (GAAP) | $(10,860) | $(4,605) | $(51,044) | $(12,297) | | EBITDA | $(9,839) | $(5,242) | $(49,172) | $(13,797) | | Goodwill impairment | $- | $- | $24,929 | $- | | Stock-based compensation | $2,161 | $3,284 | $4,997 | $6,565 | | Adjusted EBITDA | $(7,349) | $902 | $(13,721) | $1,299 | [Financial and Operating Metrics Definitions](index=5&type=section&id=7.%20Financial%20and%20Operating%20Metrics%20Definitions) This section provides detailed definitions for key financial and operating metrics used by SmartRent to evaluate performance and make strategic decisions. These include Units Deployed, New Units Deployed, Units Shipped, Units Booked, Bookings, Annual Recurring Revenue (ARR), SaaS Revenue, and various Average Revenue per Unit (ARPU) calculations (Hardware, Professional Services, SaaS, Units Booked SaaS). It also defines Property Net Revenue Retention and Customer Net Revenue Retention - **Units Deployed:** Aggregate number of Hub Devices that have been installed (including customer self-installations) and have an active subscription as of a stated measurement date[24](index=24&type=chunk) - **Annual Recurring Revenue ("ARR"):** The annualized value of our SaaS revenue earned in the current quarter[27](index=27&type=chunk) - **SaaS ARPU:** Total SaaS Revenue during a given period divided by the average aggregate Units Deployed in the same period divided by the number of months in the period[29](index=29&type=chunk) [Additional Information](index=3&type=section&id=8.%20Additional%20Information) This section includes important disclosures regarding forward-looking statements and details for the conference call and investor contacts [Forward-Looking Statements](index=4&type=section&id=8.1.%20Forward-Looking%20Statements) This section contains forward-looking statements regarding SmartRent's future business and financial performance, including expectations for growth, cost reduction, and the stock repurchase program. It highlights that these statements involve risks and uncertainties that could cause actual results to differ materially, such as the ability to accelerate product adoption, manage macroeconomic conditions, and retain key personnel. The company disclaims any obligation to update these statements - Forward-looking statements address expected future business and financial performance, areas of focus, cost reduction, expected growth, strategy, and the stock repurchase program[17](index=17&type=chunk) - Forward-looking statements involve risks and uncertainties that could cause actual results to differ materially, including factors like product adoption, macroeconomic conditions, and managing third-party suppliers[17](index=17&type=chunk) [Conference Call and Contacts](index=3&type=section&id=8.2.%20Conference%20Call%20and%20Contacts) SmartRent hosted a conference call on August 6, 2025, to discuss its financial results, with presentation materials available on its investor relations website. Contact information for Investor Relations and Media Relations is also provided - SmartRent hosted a conference call on **August 6, 2025**, to discuss financial results, with presentation available on the investor relations website[15](index=15&type=chunk) - Contact information for Investor Relations (Kelly Reisdorf) and Media Contact (Amanda Chavez) is provided[40](index=40&type=chunk)