SmartRent(US:SMRT)2025-05-07 12:12PART I - Financial Information Item 1. Financial Statements (unaudited) SmartRent reported Q1 2025 revenue of $41.3 million, a net loss of $40.2 million (including a $24.9 million goodwill impairment), and total assets of $366.1 million Condensed Consolidated Balance Sheets Total assets decreased to $366.1 million by March 31, 2025, driven by reduced cash and a goodwill impairment, while equity declined to $250.7 million Condensed Consolidated Balance Sheet Highlights (in thousands) | Account | March 31, 2025 | December 31, 2024 | | :--- | :--- | :--- | | Assets | | | | Cash and cash equivalents | $125,600 | $142,482 | | Total current assets | $227,863 | $257,650 | | Goodwill | $92,339 | $117,268 | | Total assets | $366,065 | $420,176 | | Liabilities & Equity | | | | Total current liabilities | $75,873 | $71,032 | | Total liabilities | $115,395 | $130,741 | | Total stockholders' equity | $250,670 | $289,435 | | Total liabilities and stockholders' equity | $366,065 | $420,176 | Condensed Consolidated Statements of Operations and Comprehensive Loss Q1 2025 total revenue decreased 18% to $41.3 million, leading to a $40.2 million net loss, significantly impacted by a $24.9 million goodwill impairment charge Condensed Consolidated Statements of Operations (in thousands, except per share amounts) | Metric | Q1 2025 | Q1 2024 | | :--- | :--- | :--- | | Total revenue | $41,344 | $50,489 | | Total cost of revenue | $27,782 | $31,066 | | Impairment charge | $24,929 | $- | | Loss from operations | $(41,289) | $(10,159) | | Net loss | $(40,184) | $(7,692) | | Net loss per share (Basic and diluted) | $(0.21) | $(0.04) | Condensed Consolidated Statements of Cash Flows Net cash used in operating activities increased to $12.2 million in Q1 2025, contributing to a $16.9 million decrease in cash and cash equivalents for the quarter Summary of Cash Flows (in thousands) | Cash Flow Activity | Q1 2025 | Q1 2024 | | :--- | :--- | :--- | | Net cash used in operating activities | $(12,169) | $(3,337) | | Net cash used in investing activities | $(3,469) | $(956) | | Net cash used in financing activities | $(1,505) | $(6,462) | | Net decrease in cash and cash equivalents | $(16,882) | $(10,761) | Notes to the Condensed Consolidated Financial Statements Notes detail a $24.9 million goodwill impairment, declining hardware sales, growing SaaS revenue, stock repurchases, and subsequent events including a CEO departure and NYSE non-compliance - The company conducted an interim goodwill impairment test during Q1 2025 due to a sustained decline in its stock price and a significant decrease in market capitalization, resulting in a goodwill impairment charge of $24,929 thousand4647 Revenue by Type (in thousands) | Revenue Type | Q1 2025 | Q1 2024 | | :--- | :--- | :--- | | Hardware | $18,830 | $29,077 | | Professional services | $3,893 | $3,458 | | Hosted services | $18,621 | $17,954 | | Total revenue | $41,344 | $50,489 | - In March 2024, the Board authorized a stock repurchase program of up to $50 million, with 1,018 thousand shares repurchased for $1.2 million during Q1 2025, leaving approximately $20.4 million available115116 - Subsequent to the quarter end, the CEO departed in April 2025, and on May 2, 2025, the company received an NYSE non-compliance notice for its average closing stock price falling below $1.00159164 Item 2. Management's Discussion and Analysis of Financial Condition and Results of Operations Revenue declined 18% due to macroeconomic factors and leadership changes, with hardware sales down 35% but SaaS revenue up 17%, resulting in an Adjusted EBITDA loss of $6.4 million Key Metrics Q1 2025 saw a 39% drop in New Units Deployed and 61% in Units Booked, while total Units Deployed grew 10% and Annual Recurring Revenue (ARR) increased to $55.9 million Key Operating Metrics Comparison | Metric | Q1 2025 | Q1 2024 | % Change | | :--- | :--- | :--- | :--- | | New Units Deployed | 18,114 | 29,710 | (39)% | | Hardware Units Shipped | 43,418 | 51,744 | (16)% | | Units Booked | 18,210 | 46,290 | (61)% | | Units Deployed (Total) | 827,611 | 749,401 | 10% | | SaaS ARPU | $5.69 | $5.41 | 5% | | Bookings (in thousands) | $27,180 | $38,761 | (30)% | - Annual Recurring Revenue (ARR) increased to approximately $55.9 million as of March 31, 2025, up from $47.6 million as of March 31, 2024, demonstrating growth in the recurring revenue base despite declines in new hardware deployments187 Results of Operations Total revenue decreased 18% to $41.3 million, primarily from a 35% drop in hardware revenue, while hosted services grew 4%, leading to a higher operating loss due to a $24.9 million impairment - The decrease in total revenue was primarily driven by a $10.2 million (35%) decline in hardware revenue, attributed to a 16% decrease in Units Shipped and a 23% decrease in Hardware ARPU due to a change in customer mix217219 - Hosted Services revenue increased by 4%, with SaaS revenue growing by $2.1 million (17%), while revenue from hub amortization decreased by $1.4 million, and future amortization revenue is expected to decline further221222 - General and administrative expenses increased slightly by $0.2 million, primarily due to a $1.7 million increase in legal matters, largely offset by decreases in the provision for expected credit losses and stock compensation231 Non-GAAP Financial Measures Adjusted EBITDA for Q1 2025 was a loss of $6.4 million, a significant decline from prior year profit, after adjusting for a $24.9 million goodwill impairment and other non-cash items Reconciliation of Net Loss to Adjusted EBITDA (in thousands) | Line Item | Q1 2025 | Q1 2024 | | :--- | :--- | :--- | | Net loss | $(40,184) | $(7,692) | | Interest income, net | $(1,200) | $(2,409) | | Income tax expense | $108 | $45 | | Depreciation and amortization | $1,943 | $1,501 | | EBITDA | $(39,333) | $(8,555) | | Legal matters | $5,105 | $5,300 | | Stock-based compensation | $2,836 | $3,281 | | Goodwill impairment | $24,929 | $- | | Adjusted EBITDA | $(6,372) | $397 | Liquidity and Capital Resources The company holds $125.6 million in cash and has a $75.0 million undrawn credit facility, deemed sufficient for the next 12 months, despite $12.2 million cash used in operations - The company's primary sources of liquidity are its cash balance of $125.6 million and an undrawn $75.0 million senior secured revolving credit facility245246 - Cash used in operating activities increased to $12.2 million in Q1 2025 from $3.3 million in Q1 2024, primarily due to a higher net loss, partially offset by non-cash charges like the goodwill impairment253 Item 3. Quantitative and Qualitative Disclosures About Market Risk Primary market risks include interest rate fluctuations on cash and foreign currency exposure, with a 10% interest rate change having a notable impact, and no hedging strategies currently employed - The company's main market risk exposures are interest rate risk on its $125.6 million cash balance and foreign currency risk from its international operations279281282 Item 4. Controls and Procedures Management, including the Interim CEO and CFO, concluded that disclosure controls and procedures were effective as of March 31, 2025, with no material changes in internal control - Management concluded that the company's disclosure controls and procedures were effective as of the end of the period covered by the report283 PART II - Other Information Item 1. Legal Proceedings The company is involved in various legal claims in the ordinary course of business, which management does not expect to have a material adverse effect on its financial condition - The company states that it is subject to various legal proceedings but does not expect them to have a material adverse effect on its financial condition or results of operations285 Item 1A. Risk Factors New risk factors include potential adverse impacts from the CEO's departure and the risk of NYSE delisting due to non-compliance with the minimum share price requirement - A new risk factor was added regarding the April 2025 departure of the CEO, Michael Shane Paladin, as the leadership transition could create uncertainty and negatively impact business operations287 - The company disclosed it is not in compliance with the NYSE's minimum share price requirement as of May 2, 2025, and failure to regain compliance could result in the delisting of its stock, adversely impacting trading volume, liquidity, and market price288289 Item 2. Unregistered Sales of Equity Securities and Use of Proceeds During Q1 2025, the company repurchased 1,018 thousand shares for approximately $1.2 million as part of its $50 million stock repurchase program Share Repurchase Activity for Q1 2025 | Period | Total Shares Purchased (thousands) | Average Price Paid Per Share | Total Value (thousands) | | :--- | :--- | :--- | :--- | | Jan 2025 | - | $- | $- | | Feb 2025 | - | $- | $- | | Mar 2025 | 1,018 | $1.18 | $1,201* | | Total | 1,018 | $1.18 | $1,201* | *Calculated from shares and average price. Item 6. Exhibits This section lists exhibits filed with the Form 10-Q, including the CEO severance agreement, Interim CEO employment agreement, and officer certifications