Financial Data and Key Metrics - Total revenue for Q2 2024 was $48.5 million, a 9% decrease YoY, primarily due to lower units deployed as a result of delayed capital investment spending by customers [17] - SaaS annual recurring revenue (ARR) reached a record $51.2 million, a 32% YoY increase, driven by improvements in SaaS ARPU and the number of units deployed [14][16] - SaaS ARPU increased by 9% YoY to $5.63 per unit, up from $5.16 in Q2 2023 [15] - Total units deployed reached 772,000, a 19% YoY increase, with 22,000 new units deployed in Q2 2024 compared to 48,000 in Q2 2023 [18] - Adjusted EBITDA for Q2 2024 was $900,000, a 114% improvement from a loss of $6.4 million in Q2 2023, marking the third consecutive quarter of positive adjusted EBITDA [20] Business Line Performance - Hosted services revenue increased by 16% YoY to $18 million, while hardware revenue decreased by 11% to $24.7 million, and professional services revenue decreased by 42% to $5.8 million [17] - SaaS gross margin improved to 75.5%, up 43 basis points YoY, while total gross margin improved to 35.7%, up 1,700 basis points YoY [18] - Hosted services gross profit increased to $12 million, up from $9.8 million in Q2 2023, and remains the company's most profitable revenue stream [19] Market and Strategic Direction - The company is refocusing on direct sales after the channel partner sales program did not meet expectations, with plans to hire a new sales leader and enhance sales operations [12] - The company is prioritizing organic reinvestment in high-return projects, focusing on product enhancements informed by customer feedback, which has contributed to a net revenue retention rate above 100% [13] - The company is implementing rigorous cost management while maintaining the agility to capitalize on market opportunities, with a focus on growing recurring revenue streams [14] Management Commentary on Market Conditions - The company is operating in a challenging economic landscape characterized by shifting capital expenditure patterns due to interest rate uncertainties and macroeconomic factors [11] - Customers have deferred the deployment of units originally forecast for 2024 into 2025, but the overall long-term market opportunity remains unchanged and compelling [22] - The company has suspended financial guidance due to the CEO transition, market conditions, and customer capital spending delays, but plans to reinstate guidance as visibility improves [20][21] Other Key Information - The company has a strong balance sheet with $187 million in cash and no debt, positioning it well to pursue growth initiatives and navigate economic challenges [21] - The company repurchased 765,000 shares in Q2 2024 and an additional 842,000 shares after the quarter, with $42 million remaining under the share repurchase program [22] Q&A Session Summary Question: Wi-Fi Strategy and Investment Plans - The Wi-Fi strategy remains a bullish opportunity, with continued investment in the program. A new CEO may bring changes, but the company remains confident in the Wi-Fi opportunity [25] Question: Customer Capital Project Delays - The company has a high degree of confidence that deployments delayed from 2024 will occur in 2025, with persistently high interest rates being a key factor impacting customer spending [26][27] Question: Confidence in 2025 Deployments - The company's confidence in 2025 deployments is based on discussions with customers and the expectation of interest rate reductions, which would normalize capital expenditure investment [32] Question: Hardware vs. Software Focus - The company is renewing its focus on deployed units, with both hardware and software being equally important to the platform. The focus is on improving SaaS ARPU and unit deployment [33] Question: CEO Search and Characteristics - The company is looking for a CEO with a history of successful scaling, as the company transitions from a $200 million to a potential $1 billion revenue company [35] Question: SaaS ARPU and Hosted Services Gross Margin - SaaS ARPU growth was driven by timing of deployments and higher pricing on new units. Hosted services gross margin was relatively flat, with expectations of approaching 75% over time [38][40] Question: Guidance and CEO Search Timeline - The company is not providing specific guidance for the rest of 2024 but expects to provide clarity as market conditions improve. The CEO search is ongoing, with no set timeline [41][42] Question: Channel Partner Strategy and Unit Deployment Profitability - The company is scaling back the channel partner program to focus on direct sales to existing customers. The company is positioned to expand unit deployment volumes profitably [45][46] Question: Conclusion and Long-Term Opportunity - Despite near-term challenges, the company remains confident in its long-term opportunity, with a strong foundation and strategic focus on innovation and customer satisfaction [48][49]

Revenue Performance - Total revenue for Q2 2024 was $48,518,000, a decrease of 9.4% compared to $53,402,000 in Q2 2023[16] - Hardware revenue decreased to $24,676,000 in Q2 2024 from $27,788,000 in Q2 2023, representing a decline of 11.4%[16] - Hosted services revenue increased to $18,026,000 in Q2 2024, up 15.8% from $15,564,000 in Q2 2023[16] - Total revenue for the six months ended June 30, 2024, was $118,481,000, compared to $106,474,000 for the same period in 2023, marking an increase of 11.3%[177] - Revenue related to Smart Apartments solution decreased by $6.1 million, primarily due to a 53% decrease in New Units Deployed to 22,469 units for the three months ended June 30, 2024[194] - Total revenue decreased by $19.5 million, or 16%, to $99.0 million for the six months ended June 30, 2024, from $118.5 million for the same period in 2023[195] Net Loss and Financial Improvement - Net loss for Q2 2024 was $4,605,000, compared to a net loss of $10,349,000 in Q2 2023, showing an improvement of 55.6%[16] - For the six months ended June 30, 2024, the net loss was $12,297 thousand, compared to a net loss of $23,564 thousand for the same period in 2023, indicating a 47.8% improvement in losses year-over-year[33] Assets and Liabilities - Total current assets decreased to $313,836,000 as of June 30, 2024, down from $340,340,000 as of December 31, 2023, a decline of 7.8%[13] - Total liabilities decreased to $145,964,000 as of June 30, 2024, down from $167,308,000 as of December 31, 2023, a reduction of 12.7%[14] - Cash and cash equivalents were $187,435,000 as of June 30, 2024, down from $215,214,000 as of December 31, 2023, a decrease of 12.9%[13] - Total stockholders' equity decreased to $329,383,000 as of June 30, 2024, down from $342,448,000 as of December 31, 2023, a decline of 3.8%[15] Research and Development - Research and development expenses increased to $7,484,000 in Q2 2024, up from $6,536,000 in Q2 2023, an increase of 14.5%[16] - The company is investing in research and development to enhance its product offerings and maintain competitive advantage[160] - Research and Development expenses are expected to increase as the company invests in enhancing existing products and developing new offerings, particularly in WiFi solutions[186] Stock and Equity - Weighted-average number of shares used in computing net loss per share increased to 201,986 in Q2 2024 from 199,619 in Q2 2023[16] - Stock-based compensation for the six months ended June 30, 2024, was $6,565 thousand, slightly down from $6,847 thousand in the same period of 2023, showing a decrease of 4.1%[33] - The 2021 Equity Incentive Plan was amended to increase the number of shares authorized for issuance to a total of 24,400 shares of Class A common stock[121] Customer and Market Insights - Significant customers accounted for 15% and 18% of accounts receivable as of June 30, 2024, and December 31, 2023, respectively, highlighting reliance on key clients[50] - The company reported a net cash used in operating activities of $17,214 thousand for the six months ended June 30, 2024, compared to $15,684 thousand for the same period in 2023, representing an increase of 9.8%[33] - Cumulative active subscriptions for Hosted Services increased by 19% during 2024 compared to 2023[194] Operational Metrics - The company reported 22,469 New Units Deployed, a decrease from 47,768 in the same period of 2023[166] - Units Booked SaaS ARPU decreased to $8.07 in Q2 2024 from $8.74 in Q2 2023, a decline of 7.7%[173] - Customer Churn for Smart Communities Solutions was 0.05% for Q2 2024, compared to 0% in Q2 2023, indicating a slight increase in churn[173] Future Outlook and Challenges - The company may need to raise additional capital through equity or debt financing to fund future operations until it generates positive operating cash flows[41] - The company continues to experience improvements in global supply chain challenges, reducing backlogged Units Deployed for Access Control and specialty locks[159] - The company has formed a Management Committee to guide operations during the transition period following the CEO's departure[163]

Group 1 - SmartRent, Inc. is under investigation by Pomerantz LLP for potential securities fraud or unlawful business practices involving its officers and/or directors [1] - On July 30, 2024, SmartRent announced the resignation of CEO Lucas Haldeman and suspended its previous guidance for full-year 2024 due to market headwinds and customer capital spending delays [2] - Following the announcement, SmartRent's stock price dropped by $0.48, or 20.00%, closing at $1.92 per share on the same day [2] Group 2 - Pomerantz LLP is recognized as a leading firm in corporate, securities, and antitrust class litigation, with a history of recovering billions in damages for victims of securities fraud and corporate misconduct [3]

Core Insights - SmartRent, Inc. is under investigation for potential violations of federal securities laws and unlawful business practices [1] - The company announced a CEO transition plan, with Lucas Haldeman stepping down as CEO and resigning from the Board of Directors, effective July 29, 2024 [2] - Following the CEO transition announcement, SmartRent's stock price dropped by $0.47, or 19.58%, closing at $1.93 on July 30, 2024 [2] Company Developments - The CEO transition plan was announced on July 30, 2024, indicating a significant leadership change within SmartRent [2] - The company has suspended its 2024 guidance, which may indicate uncertainty in future performance [2] Legal Investigation - Bragar Eagel & Squire, P.C. is investigating potential claims on behalf of SmartRent stockholders regarding possible violations of securities laws [1] - The law firm is reaching out to stockholders who may have suffered losses or have information related to the investigation [3]

Group 1 - SmartRent's CEO Lucas Haldeman has resigned, with John Dorman stepping in as interim CEO and chairman of the board [1][2] - The board expressed gratitude for Haldeman's contributions and indicated a need for a CEO with a different skill set for the company's next growth phase [2] - SmartRent has suspended its full-year 2024 outlook due to the CEO change, increasing market headwinds, and a reduction in its channel partner program [2] Group 2 - Following the announcement of the CEO departure, SmartRent's stock (NYSE:SMRT) dropped by 20.6%, with approximately 4.3 million shares traded, significantly higher than the daily average of 1.3 million shares [4][6]

What is this all about? Anyone who purchased SmartRent, Inc. common stock and has seen their shares fall may be eligible, whether or not they have sold their investment. Investors should contact Block & Leviton to learn more. What should you do next? If you have non-public information about SmartRent, Inc., you should consider assisting in our investigation or working with our attorneys to file a report with the Securities Exchange Commission under their whistleblower program. Whistleblowers who provide ori ...

Who is eligible? What is Block & Leviton doing? If you've lost money on your investment, you should contact Block & Leviton to learn more via our case website, by email at shareholders@blockleviton.com, or by phone at (888) 256-2510. Block & Leviton is widely regarded as one of the leading securities class action firms in the country. Our attorneys have recovered billions of dollars for defrauded investors and are dedicated to obtaining significant recoveries on behalf of our clients through active litigati ...

Financial Data and Key Metrics Changes - Total revenue for Q1 2024 reached $50.5 million, with SaaS recurring revenue contributing nearly $12 million, reflecting a 32% year-over-year growth [80] - Adjusted EBITDA was positive at almost $400,000, marking the second consecutive quarter of positive adjusted EBITDA [13] - Gross profit increased to $19.4 million from $9.1 million in the same period of 2023, with hardware gross profit more than doubling to $10.4 million [69][70] - Gross margin improved significantly to 38.5% from 14% year-over-year, attributed to a favorable product mix [30] Business Line Data and Key Metrics Changes - Hardware revenue was $29.1 million, while professional services revenue was $3.5 million, and hosted services revenue was $18 million for Q1 2024 [27] - SaaS ARR increased to $47.6 million from $36 million in Q1 2023, driven by a 24% increase in total units deployed [29] - Professional services gross loss narrowed to $3 million from $4.9 million in the same quarter of the previous year [73] Market Data and Key Metrics Changes - The company ended the quarter with almost 750,000 deployed units, a 24% increase from the previous year [13] - Shipments for the quarter were just under 52,000 units, with bookings for the quarter approximately $38.8 million [68] Company Strategy and Development Direction - The company aims to dominate the early-stage multifamily community WiFi market and is investing in projects to expand Community WiFi offerings [35] - The strategy includes deep integration with leading rental housing platforms to reduce vendor fatigue and automate processes [36] - The company is positioned to capture significant market share and sustain growth through its scalable offerings and proven track record [64] Management's Comments on Operating Environment and Future Outlook - Management noted that macroeconomic factors such as higher interest rates and slowing rent growth are creating headwinds for customers [57] - Some customers are accelerating investments in technology to gain a competitive edge, while others are focusing on cash preservation [72] - The company expects SaaS revenue to continue growing faster than total revenue, despite some challenges in the current environment [49] Other Important Information - The company reported a total cash balance of $205 million at the end of Q1 2024, a reduction of $11 million from the prior quarter [70] - A one-time accrual of $5.3 million was included in the operating expenses due to a contractual dispute with a supplier [73] Q&A Session Summary Question: Clarification on the relationship between units booked and deployed - Management explained that the mismatch in units booked and deployed is due to delays in deployment schedules, with some units expected to be deployed in future quarters [6][7] Question: Guidance on revenue outlook and customer concentration - Management indicated that there are no significant customer concentrations affecting revenue guidance, and they have a wide base of customers [4] Question: Insights on SaaS revenue growth and ARPU - Management acknowledged that SaaS revenue growth may have slowed sequentially due to deployment timing and seasonal factors, but they expect it to grow faster than total revenue [48][49] Question: Update on WiFi project installations and demand - Management confirmed that initial WiFi project installations are proceeding as planned, with indications of demand for additional projects from customers [51]

[PART I - Financial Information](index=3&type=section&id=PART%20I%20-%20Financial%20Information) This part presents the company's unaudited financial statements and management's analysis of financial condition and results of operations [Item 1 - Financial Statements (Unaudited)](index=5&type=section&id=Item%201%20-%20Financial%20Statements%20(Unaudited)) This section presents the unaudited condensed consolidated financial statements for the quarter ended March 31, 2024 [Condensed Consolidated Balance Sheets](index=5&type=section&id=Condensed%20Consolidated%20Balance%20Sheets) This statement details the company's assets, liabilities, and stockholders' equity as of March 31, 2024 Condensed Consolidated Balance Sheets (in thousands) | Metric | March 31, 2024 | December 31, 2023 | | :--- | :--- | :--- | | Cash and cash equivalents | $204,701 | $215,214 | | Total current assets | $319,477 | $340,340 | | Total assets | $485,453 | $509,756 | | Total current liabilities | $106,990 | $117,309 | | Total liabilities | $152,366 | $167,308 | | Total stockholders' equity | $333,087 | $342,448 | [Condensed Consolidated Statements of Operations and Comprehensive Loss](index=7&type=section&id=Condensed%20Consolidated%20Statements%20of%20Operations%20and%20Comprehensive%20Loss) This statement outlines the company's revenues, costs, and resulting net loss for the first quarter of 2024 Condensed Consolidated Statements of Operations and Comprehensive Loss (in thousands) | Metric | Three months ended March 31, 2024 | Three months ended March 31, 2023 | | :--- | :--- | :--- | | Hardware Revenue | $29,077 | $37,325 | | Professional Services Revenue | $3,458 | $12,769 | | Hosted Services Revenue | $17,954 | $14,985 | | **Total Revenue** | **$50,489** | **$65,079** | | Total Cost of Revenue | $31,066 | $55,964 | | Total Operating Expense | $29,582 | $24,409 | | Loss from operations | $(10,159) | $(15,294) | | Net loss | $(7,692) | $(13,215) | | Basic and diluted net loss per common share | $(0.04) | $(0.07) | - Total revenue decreased by **22% year-over-year**, driven by declines in hardware and professional services, partially offset by a **20% increase** in hosted services revenue[21](index=21&type=chunk)[193](index=193&type=chunk) - Net loss improved by **42% year-over-year**, from $(13,215) thousand in Q1 2023 to $(7,692) thousand in Q1 2024[21](index=21&type=chunk)[193](index=193&type=chunk) [Condensed Consolidated Statements of Stockholders' Equity](index=9&type=section&id=Condensed%20Consolidated%20Statements%20of%20Stockholders'%20Equity) This statement shows changes in stockholders' equity during the first quarter of 2024 Condensed Consolidated Statements of Stockholders' Equity (in thousands) | Metric | March 31, 2024 | December 31, 2023 | | :--- | :--- | :--- | | Total Stockholders' Equity | $333,087 | $342,448 | | Accumulated Deficit | $(297,601) | $(285,512) | | Stock-based compensation | $3,281 | N/A | | Repurchases of Class A common stock | $(4,397) | N/A | - Stockholders' equity decreased by **$9.36 million** from December 31, 2023, to March 31, 2024, primarily due to net loss and share repurchases[19](index=19&type=chunk)[24](index=24&type=chunk) [Condensed Consolidated Statements of Cash Flows](index=11&type=section&id=Condensed%20Consolidated%20Statements%20of%20Cash%20Flows) This statement details cash inflows and outflows from operating, investing, and financing activities Condensed Consolidated Statements of Cash Flows (in thousands) | Activity | Three months ended March 31, 2024 | Three months ended March 31, 2023 | | :--- | :--- | :--- | | Net cash used in operating activities | $(3,337) | $(10,290) | | Net cash used in investing activities | $(956) | $(1,169) | | Net cash used in financing activities | $(6,462) | $(1,854) | | Net decrease in cash, cash equivalents, and restricted cash | $(10,761) | $(13,286) | | Cash, cash equivalents, and restricted cash - end of period | $204,948 | $204,427 | - Net cash used in operating activities significantly decreased by **67.6% year-over-year**, from $(10,290) thousand in Q1 2023 to $(3,337) thousand in Q1 2024[29](index=29&type=chunk)[224](index=224&type=chunk) - Net cash used in financing activities increased by **248.5% year-over-year**, primarily due to **$4.37 million** in Class A common stock repurchases in Q1 2024[29](index=29&type=chunk)[224](index=224&type=chunk)[228](index=228&type=chunk) [Notes to the Condensed Consolidated Financial Statements (Unaudited)](index=14&type=section&id=Notes%20to%20the%20Condensed%20Consolidated%20Financial%20Statements%20(Unaudited)) These notes provide additional detail and context for the unaudited financial statements [NOTE 1. DESCRIPTION OF BUSINESS](index=14&type=section&id=NOTE%201.%20DESCRIPTION%20OF%20BUSINESS) This note describes the company's core business as an enterprise real estate technology provider - SmartRent, Inc is an enterprise real estate technology company providing comprehensive management software and applications for property owners, managers, and residents[32](index=32&type=chunk) - The company's suite of products includes smart building hardware and cloud-based Software-as-a-Service (SaaS) solutions, offering visibility and control over real estate assets[32](index=32&type=chunk) [NOTE 2. SIGNIFICANT ACCOUNTING POLICIES](index=14&type=section&id=NOTE%202.%20SIGNIFICANT%20ACCOUNTING%20POLICIES) This note outlines the key accounting principles and policies applied in the financial statements - The company restated its Q1 2023 Consolidated Statement of Cash Flows to reclassify **$1.14 million** of capitalized software costs from operating to investing activities, deemed immaterial to previously issued financial statements[36](index=36&type=chunk)[37](index=37&type=chunk) - Management believes currently available resources will provide sufficient funds for at least one year, but may need additional capital through equity or debt financing[39](index=39&type=chunk) - The company adopted ASU 2016-13 (Credit Losses) effective January 1, 2023, with **no material impact** on consolidated financial statements[86](index=86&type=chunk) [NOTE 3. FAIR VALUE MEASUREMENTS AND FAIR VALUE OF INSTRUMENTS](index=23&type=section&id=NOTE%203.%20FAIR%20VALUE%20MEASUREMENTS%20AND%20FAIR%20VALUE%20OF%20INSTRUMENTS) This note provides information on the fair value measurement of the company's financial instruments Fair Value of Financial Instruments (in thousands) | Instrument | March 31, 2024 | December 31, 2023 | Level | | :--- | :--- | :--- | :--- | | Cash and cash equivalents | $204,701 | $215,214 | 1 | | Restricted cash | $247 | $495 | 1 | | Acquisition earnout payment | $2,800 | $4,250 | 3 | - The fair value of the acquisition earnout payment increased by **$80 thousand** in Q1 2024, primarily due to a decreased payment term[90](index=90&type=chunk) [NOTE 4. REVENUE AND DEFERRED REVENUE](index=24&type=section&id=NOTE%204.%20REVENUE%20AND%20DEFERRED%20REVENUE) This note details the disaggregation of revenue by type and changes in deferred revenue balances Revenue by Type (in thousands) | Revenue Type | Q1 2024 | Q1 2023 | | :--- | :--- | :--- | | Hardware | $29,077 | $37,325 | | Professional services | $3,458 | $12,769 | | Hosted services | $17,954 | $14,985 | | **Total Revenue** | **$50,489** | **$65,079** | - Total revenue decreased by **22% year-over-year**, primarily due to a **$15.4 million decrease** in Smart Apartments solution revenue[93](index=93&type=chunk)[195](index=195&type=chunk) Deferred Revenue (in thousands) | Metric | March 31, 2024 | January 1, 2024 | | :--- | :--- | :--- | | Deferred revenue balance | $119,568 | $123,159 | - **59% of total deferred revenue** is expected to be recognized within the next 12 months[95](index=95&type=chunk) [NOTE 5. OTHER BALANCE SHEET INFORMATION](index=25&type=section&id=NOTE%205.%20OTHER%20BALANCE%20SHEET%20INFORMATION) This note provides further details on inventory, intangible assets, and warranty allowances Inventory (in thousands) | Category | March 31, 2024 | December 31, 2023 | | :--- | :--- | :--- | | Finished Goods | $30,509 | $41,206 | | Raw Materials | $390 | $369 | | **Total inventory** | **$30,899** | **$41,575** | - Inventory decreased by **$10.68 million** from December 31, 2023, to March 31, 2024, with write-downs of **$96 thousand** in Q1 2024[98](index=98&type=chunk) Intangible Assets, Net (in thousands) | Category | March 31, 2024 | December 31, 2023 | | :--- | :--- | :--- | | Customer relationships | $18,433 | $18,989 | | Developed technology | $7,321 | $7,689 | | Trade name | $526 | $571 | | **Total intangible assets, net** | **$26,280** | **$27,249** | - Warranty allowance decreased to **$1,570 thousand** as of March 31, 2024, from $2,215 thousand as of December 31, 2023[56](index=56&type=chunk) [NOTE 6. DEBT](index=27&type=section&id=NOTE%206.%20DEBT) This note describes the terms and status of the company's Senior Revolving Facility - The company has a **$75 million Senior Revolving Facility** with a five-year term, maturing in December 2026[110](index=110&type=chunk) - **No outstanding principal amount** under the Senior Revolving Facility as of March 31, 2024, or December 31, 2023[115](index=115&type=chunk) - The company believes it was in compliance with all financial covenants of the Senior Revolving Facility as of March 31, 2024[114](index=114&type=chunk) [NOTE 7. CONVERTIBLE PREFERRED STOCK AND EQUITY](index=28&type=section&id=NOTE%207.%20CONVERTIBLE%20PREFERRED%20STOCK%20AND%20EQUITY) This note details the company's equity structure and stock repurchase program activities - **No shares of preferred stock** were issued and outstanding as of March 31, 2024, or December 31, 2023[116](index=116&type=chunk) - The Board authorized a stock repurchase program in March 2024 to repurchase up to **$50 million** of Class A common stock[118](index=118&type=chunk) - During Q1 2024, the company repurchased **1,595 shares** of Class A common stock for **$4.37 million**, with **$45.64 million** remaining available[119](index=119&type=chunk) [NOTE 8. STOCK-BASED COMPENSATION](index=29&type=section&id=NOTE%208.%20STOCK-BASED%20COMPENSATION) This note outlines the expenses and unrecognized costs related to stock-based compensation plans Stock-Based Compensation Expense (in thousands) | Category | Q1 2024 | Q1 2023 | | :--- | :--- | :--- | | Cost of revenue | $298 | $251 | | Research and development | $961 | $978 | | Sales and marketing | $131 | $236 | | General and administrative | $1,891 | $2,215 | | **Total** | **$3,281** | **$3,680** | - Total stock-based compensation expense decreased by **$0.40 million (10.8%)** year-over-year[136](index=136&type=chunk) - As of March 31, 2024, unrecognized compensation expense for stock options was **$9.65 million** (weighted-average period of 3.4 years) and for RSUs was **$17.73 million** (weighted-average period of 2.4 years)[127](index=127&type=chunk)[130](index=130&type=chunk) [NOTE 9. INCOME TAXES](index=31&type=section&id=NOTE%209.%20INCOME%20TAXES) This note explains the company's income tax expense, effective tax rate, and deferred tax assets Income Tax Expense (Benefit) (in thousands) | Metric | Q1 2024 | Q1 2023 | | :--- | :--- | :--- | | Income tax expense (benefit) | $45 | $(7) | | Effective tax rate (ETR) | (0.59)% | 0.05% | - The company maintains a **full valuation allowance** for net deferred U.S. federal and state tax assets, including net operating loss carryforwards[138](index=138&type=chunk) - As of December 31, 2023, gross federal NOLs were **$204.6 million** and state NOLs were **$193.4 million**[209](index=209&type=chunk) [NOTE 10. NET LOSS PER SHARE](index=33&type=section&id=NOTE%2010.%20NET%20LOSS%20PER%20SHARE) This note details the calculation of net loss per share and excluded potentially dilutive securities Potentially Dilutive Shares Excluded from EPS (in thousands) | Security Type | Q1 2024 | Q1 2023 | | :--- | :--- | :--- | | Common stock options and restricted stock units | 16,346 | 19,395 | | Common stock warrants | - | 3,664 | | **Total** | **16,346** | **23,059** | - Potentially dilutive securities were excluded from diluted net loss per share calculations because their inclusion would have been **anti-dilutive** due to the reported net loss[139](index=139&type=chunk) [NOTE 11. RELATED-PARTY TRANSACTIONS](index=33&type=section&id=NOTE%2011.%20RELATED-PARTY%20TRANSACTIONS) This note discloses transactions with a significant customer affiliated with a board member Related-Party Transactions (in thousands) | Metric | Q1 2024 | Q1 2023 | | :--- | :--- | :--- | | Revenue from a significant customer | $680 | $1,016 | | Receivables due from this customer | $481 | $1,352 | - A member of the Board serves on the board of directors of a SmartRent customer, with all dealings conducted on **arm's-length terms**[141](index=141&type=chunk) [NOTE 12. COMMITMENTS AND CONTINGENCIES](index=33&type=section&id=NOTE%2012.%20COMMITMENTS%20AND%20CONTINGENCIES) This note discusses legal accruals related to a settlement offer with a supplier - The company recorded a legal accrual of **$5.30 million** as of March 31, 2024, related to a substantive offer to settle a dispute with a supplier[143](index=143&type=chunk)[144](index=144&type=chunk) - The settlement offer involves returning **$4.96 million** of product inventory and paying a portion of the supplier's costs and fees[143](index=143&type=chunk) [NOTE 13. SUBSEQUENT EVENTS](index=34&type=section&id=NOTE%2013.%20SUBSEQUENT%20EVENTS) This note describes stock issuances and repurchases that occurred after the reporting period - In April 2024, the company issued **80 shares** of Class A Common Stock related to vested RSUs[146](index=146&type=chunk) - In April 2024, the company repurchased an additional **765 shares** of Class A common stock for **$2.01 million**, leaving **$43.64 million** available under its stock repurchase program[146](index=146&type=chunk)[147](index=147&type=chunk) [Item 2 - Management's Discussion and Analysis of Financial Condition and Results of Operations](index=35&type=section&id=Item%202%20-%20Management's%20Discussion%20and%20Analysis%20of%20Financial%20Condition%20and%20Results%20of%20Operations) This section provides management's analysis of the company's financial condition and results of operations for Q1 2024 [Overview](index=35&type=section&id=Overview) This section provides a high-level overview of the company's business and market position - SmartRent is an enterprise real estate technology company offering smart building hardware and cloud-based SaaS solutions for property owners, managers, and residents[152](index=152&type=chunk) - As of March 31, 2024, the company had **749,401 Units Deployed** and **639 customers**, representing approximately **16%** of the U.S. institutionally owned multifamily and single-family rental market[154](index=154&type=chunk) [Our Business Model](index=35&type=section&id=Our%20Business%20Model) This section explains how the company generates revenue from hardware, services, and subscriptions - Revenue is primarily generated from direct sales of smart home hardware devices, professional installation services, and monthly subscription fees for Hosted Services (software applications)[155](index=155&type=chunk) - Subscription arrangements for Hosted Services range from one month to eight years, with a median recurring revenue contract term of **one year**[155](index=155&type=chunk) [Key Factors Affecting Our Performance](index=35&type=section&id=Key%20Factors%20Affecting%20Our%20Performance) This section discusses key operational factors like supply chain, R&D, and market adoption - The company has experienced incremental improvements in global supply chain challenges, reducing backlogged Units Deployed for Access Control and made-to-order locks[157](index=157&type=chunk)[158](index=158&type=chunk) - Performance is dependent on continuous investment in research and development to introduce innovative software services and hardware products, including new offerings like Community WiFi and Smart Package Room[159](index=159&type=chunk)[160](index=160&type=chunk) - Future growth relies on continued consumer adoption of smart home products and potential expansion into international markets[161](index=161&type=chunk) [Basis of Presentation](index=36&type=section&id=Basis%20of%20Presentation) This section confirms the financial statements are prepared in accordance with GAAP - The consolidated financial statements and accompanying notes are prepared in accordance with GAAP[162](index=162&type=chunk) [Key Metrics](index=36&type=section&id=Key%20Metrics) This section presents key operating and financial metrics used to evaluate business performance Key Operating Metrics | Metric | March 31, 2024 | March 31, 2023 | Change (%) | | :--- | :--- | :--- | :--- | | Units Deployed | 749,401 | 602,556 | 24% | | New Units Deployed | 29,710 | 55,360 | (46)% | | Units Shipped | 51,744 | 58,659 | (12)% | | Units Booked | 46,290 | 65,108 | (29)% | | Bookings (in thousands) | $38,761 | $37,305 | 4% | | Annual Recurring Revenue (ARR) | $47.6 million | $36.0 million | 32% | | Hardware ARPU | $561.94 | $636.30 | (12)% | | Professional Services ARPU | $221.43 | $249.66 | (11)% | | SaaS ARPU | $5.41 | $5.21 | 4% | | Units Booked SaaS ARPU | $7.16 | $5.40 | 33% | | Customer Churn (Smart Communities) | 0.02% | 0.01% | 100% | | Net Revenue Retention | 105% | N/A | N/A | [Components of Results of Operations](index=38&type=section&id=Components%20of%20Results%20of%20Operations) This section breaks down the key components of the company's revenue and expenses - Total revenue decreased by **$14.6 million (22%)** year-over-year, primarily due to a **$15.4 million decrease** in Smart Apartments solution revenue[195](index=195&type=chunk) - Hardware revenue decreased by **$8.2 million (22%)** due to a **12% decrease** in Units Shipped and a **12% decrease** in Hardware ARPU, driven by a product mix shift to Alloy SmartHome hardware[196](index=196&type=chunk) - Professional services revenue decreased by **$9.3 million (73%)** due to a **46% decrease** in New Units Deployed and an **11% decrease** in Professional Services ARPU[197](index=197&type=chunk) - Hosted Services revenue increased by **$3.0 million (20%)** due to a **24% increase** in Units Deployed and a **4% increase** in SaaS ARPU[198](index=198&type=chunk) - Total cost of revenue decreased by **$24.9 million (44%)**, primarily due to a favorable product mix in hardware and a decrease in third-party direct labor costs for professional services[201](index=201&type=chunk)[202](index=202&type=chunk)[203](index=203&type=chunk) - Research and development expenses increased by **$1.1 million (16%)**, mainly due to higher personnel-related expenses[205](index=205&type=chunk) - General and administrative expenses increased by **$4.6 million (39%)**, primarily due to a **$5.3 million legal accrual** related to a supplier dispute[207](index=207&type=chunk) [Results of Operations for the Three Months Ended March 31, 2024 and 2023](index=42&type=section&id=Results%20of%20Operations%20for%20the%20Three%20Months%20Ended%20March%2031%2C%202024%20and%202023) This section provides a detailed comparison of operating results between Q1 2024 and Q1 2023 Consolidated Results of Operations (in thousands) | Metric | Q1 2024 | Q1 2023 | Change ($) | Change (%) | | :--- | :--- | :--- | :--- | :--- | | Total Revenue | $50,489 | $65,079 | $(14,590) | (22)% | | Total Cost of Revenue | $31,066 | $55,964 | $(24,898) | (44)% | | Total Operating Expenses | $29,582 | $24,409 | $5,173 | 21% | | Loss from operations | $(10,159) | $(15,294) | $5,135 | (34)% | | Net Loss | $(7,692) | $(13,215) | $5,523 | 42% | | Interest income, net | $2,409 | $2,016 | $393 | 19% | | Income tax expense (benefit) | $45 | $(7) | $52 | 743% | [Non-GAAP Financial Measures](index=46&type=section&id=Non-GAAP%20Financial%20Measures) This section reconciles net loss to non-GAAP measures like EBITDA and Adjusted EBITDA Reconciliation of Net Loss to EBITDA and Adjusted EBITDA (in thousands) | Metric | Q1 2024 | Q1 2023 | | :--- | :--- | :--- | | Net loss | $(7,692) | $(13,215) | | EBITDA | $(8,555) | $(13,984) | | Legal matter | $5,300 | - | | Stock-based compensation | $3,281 | $3,680 | | Compensation expense in connection with acquisitions | - | $1,625 | | Severance charges | $231 | - | | Other acquisition expenses | $140 | $205 | | **Adjusted EBITDA** | **$397** | **$(8,474)** | - **Adjusted EBITDA turned positive** at **$0.40 million** in Q1 2024, a significant improvement from a loss of **$8.47 million** in Q1 2023[217](index=217&type=chunk) [Liquidity and Capital Resources](index=47&type=section&id=Liquidity%20and%20Capital%20Resources) This section analyzes the company's cash position, cash flows, and available credit facilities - As of March 31, 2024, the company had **$204.7 million** in cash and cash equivalents[218](index=218&type=chunk) - The company has an undrawn **$75 million Senior Revolving Facility** and believes its current liquidity is sufficient to fund operations for at least the next 12 months[219](index=219&type=chunk)[220](index=220&type=chunk) - Net cash used in operating activities decreased to **$3.34 million** in Q1 2024 from $10.29 million in Q1 2023, while net cash used in financing activities increased to **$6.46 million**, primarily due to stock repurchases[224](index=224&type=chunk)[225](index=225&type=chunk)[228](index=228&type=chunk) [Critical Accounting Policies and Estimates](index=48&type=section&id=Critical%20Accounting%20Policies%20and%20Estimates) This section highlights accounting policies that require significant management judgment and estimates - Revenue recognition involves significant judgment in estimating standalone selling prices for multiple performance obligations (hardware, professional services, Hosted Services)[237](index=237&type=chunk) - Inventory valuation requires significant judgment in forecasting future demand and assessing obsolescence, which can materially impact financial results[238](index=238&type=chunk) - Stock-based compensation relies on estimates for fair value using the Black-Scholes model for options and grant date fair value for RSUs, with various assumptions[239](index=239&type=chunk)[240](index=240&type=chunk) [Emerging Growth Company Status](index=50&type=section&id=Emerging%20Growth%20Company%20Status) This section discloses the company's status as an emerging growth company under the JOBS Act - 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[242](index=242&type=chunk) - This status provides certain exemptions but may make it difficult to compare financial results with other public companies[243](index=243&type=chunk) [Recent Accounting Pronouncements](index=50&type=section&id=Recent%20Accounting%20Pronouncements) This section discusses recently issued accounting standards that may affect the company - The company is evaluating the potential effects of ASU 2023-07 (Segment Reporting) and ASU 2023-09 (Income Taxes) on its consolidated financial statement disclosures[84](index=84&type=chunk)[85](index=85&type=chunk) [Item 3 - Quantitative and Qualitative Disclosures About Market Risk](index=50&type=section&id=Item%203%20-%20Quantitative%20and%20Qualitative%20Disclosures%20About%20Market%20Risk) This section discloses the company's exposure to interest rate and foreign currency market risks - Primary market risks include interest rate fluctuations and foreign currency exchange rates[246](index=246&type=chunk) - A hypothetical **10% change in interest rates** could increase annual interest income by **$20.5 million** or decrease it by **$2.4 million**, based on cash position as of March 31, 2024[248](index=248&type=chunk) - Foreign currency exchange rate risk is not currently material but may increase with international operations; **no hedging strategies** are currently employed[249](index=249&type=chunk) [Item 4 - Controls and Procedures](index=51&type=section&id=Item%204%20-%20Controls%20and%20Procedures) This section confirms the effectiveness of the company's disclosure controls and internal financial reporting controls - Disclosure controls and procedures were evaluated and deemed **effective** as of March 31, 2024[250](index=250&type=chunk) - **No material changes** in internal control over financial reporting occurred during the three months ended March 31, 2024[251](index=251&type=chunk) [PART II - Other Information](index=51&type=section&id=PART%20II%20-%20Other%20Information) This part provides additional information on legal proceedings, risk factors, equity sales, and other corporate matters [Item 1 - Legal Proceedings](index=51&type=section&id=Item%201%20-%20Legal%20Proceedings) The company is involved in various legal proceedings not expected to have a material adverse effect - The company is subject to various legal proceedings and claims arising in the ordinary course of business[252](index=252&type=chunk) - Management does not believe that the outcome of these matters will have a **material adverse effect** on the company's business, financial condition, results of operations, or prospects[252](index=252&type=chunk) [Item 1A - Risk Factors](index=51&type=section&id=Item%201A%20-%20Risk%20Factors) No material changes have occurred to the risk factors previously disclosed in the Annual Report on Form 10-K - **No material changes** from the risk factors disclosed in the Annual Report on Form 10-K for the year ended December 31, 2023[253](index=253&type=chunk) [Item 2 - Unregistered Sales of Equity Securities and Use of Proceeds](index=51&type=section&id=Item%202%20-%20Unregistered%20Sales%20of%20Equity%20Securities%20and%20Use%20of%20Proceeds) This section details the company's Class A common stock repurchases during the quarter Share Repurchase Activity (in thousands, except per share amounts) | Period | Total Shares Purchased | Average Price Paid Per Share | | :--- | :--- | :--- | | March 1 - March 31, 2024 | 1,595 | $2.74 | | **Total (Q1 2024)** | **1,595** | **$2.74** | - The repurchases were part of a **$50 million stock repurchase program** authorized in March 2024[255](index=255&type=chunk) - As of March 31, 2024, approximately **$45.64 million remained available** for stock repurchases under the program[255](index=255&type=chunk) [Item 3 - Defaults Upon Senior Securities](index=51&type=section&id=Item%203%20-%20Defaults%20Upon%20Senior%20Securities) The company reported no defaults upon senior securities during the period - **No defaults** upon senior securities were reported[257](index=257&type=chunk) [Item 4 - Mine Safety Disclosures](index=53&type=section&id=Item%204%20-%20Mine%20Safety%20Disclosures) This item is not applicable to the company's business operations - This section is **not applicable** to the company[258](index=258&type=chunk) [Item 5 - Other Information](index=53&type=section&id=Item%205%20-%20Other%20Information) No directors or officers adopted, modified, or terminated Rule 10b5-1 trading arrangements in Q1 2024 - **No directors or executive officers** adopted, modified, or terminated any Rule 10b5-1 or non-Rule 10b5-1 trading arrangements during Q1 2024[259](index=259&type=chunk) [Item 6 - Exhibits](index=54&type=section&id=Item%206%20-%20Exhibits) This section lists all exhibits filed with or incorporated by reference into the Form 10-Q - The report includes exhibits such as Amended and Restated Bylaws, Non-Employee Director Compensation Policy, Executive Incentive Compensation Plan, and certifications (31.1, 31.2, 32.1, 32.2)[261](index=261&type=chunk) [Signatures](index=55&type=section&id=Signatures) The report was officially signed by the Chief Executive Officer and Chief Financial Officer on May 8, 2024 - The report was signed by Lucas Haldeman (Chief Executive Officer) and Daryl Stemm (Chief Financial Officer) on **May 8, 2024**[266](index=266&type=chunk)

Exhibit 99.1 SmartRent Accelerates SaaS Growth by 32% Y/Y; Reports First Quarter 2024 Results Sets New Record with $47.6 million SaaS Annual Recurring Revenue ("ARR") in Q1 2024 Confirms 2024 Growth Outlook; Enables Expansion and Innovation Scottsdale, Ariz., May 8, 2024 – (BUSINESS WIRE) – SmartRent, Inc. (NYSE: SMRT) ("SmartRent" or the "Company"), a leading provider of smart home and property operations solutions for the rental housing industry, today reported financial results for the three months ended ...