SmartRent(SMRT) - 2025 Q2 - Quarterly Results

Executive Summary 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 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][6] Management Commentary 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] - The company is investing in growth acceleration through innovative new products, capabilities, and the progressive infusion of AI into products and operations[4] - 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] Company Overview SmartRent, founded in 2017, delivers smart community and operations solutions to the rental housing industry, automating operations and serving top multifamily operators About SmartRent 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] - 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] - SmartRent serves 15 of the top 20 multifamily operators[16] Second Quarter 2025 Financial Results This section details SmartRent's Q2 2025 financial performance, including revenue, gross profit, operating expenses, net loss, and liquidity Revenue Performance 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 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] Revenue by Segment 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] Gross Profit and Margin 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 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] Gross Profit by Segment 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] Operating Expenses 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] Net Loss and Adjusted EBITDA 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] Liquidity and Capital Management 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 This section presents SmartRent's key operational performance indicators for Q2 2025, including units deployed, bookings, and average revenue per unit Units Performance 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 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] Average Revenue Per Unit (ARPU) 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 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 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 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 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] Non-GAAP Financial Measures This section defines and reconciles SmartRent's non-GAAP financial measures, such as EBITDA and Adjusted EBITDA, to their GAAP equivalents Definition and Rationale 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] - 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] Reconciliation to GAAP Measures 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 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] - Annual Recurring Revenue ("ARR"): The annualized value of our SaaS revenue earned in the current quarter[27] - 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] Additional Information This section includes important disclosures regarding forward-looking statements and details for the conference call and investor contacts Forward-Looking Statements 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] - 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] Conference Call and Contacts 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] - Contact information for Investor Relations (Kelly Reisdorf) and Media Contact (Amanda Chavez) is provided[40]