SmartRent Q2 Earnings Call Highlights

Key Points

• Core revenue growth accelerated: SmartRent’s second-quarter revenue rose 4% to $40 million, while core revenue increased 14% to $38 million. SaaS revenue grew 13% to $16 million, lifting annual recurring revenue to approximately $65 million, although hardware revenue declined 10%.
• Bookings, installed units and profitability improved: Trailing-12-month bookings rose 40% to about 112,000 units, and the installed base grew 10% to nearly 930,000. Gross margin expanded to 41%, adjusted EBITDA was positive for the third consecutive quarter, and the company reduced its net loss by 48% year over year.
• Management sees additional growth opportunities: SmartRent plans to build data, analytics and AI capabilities through partnerships with Databricks and Hexaware, while subscription renewals and pricing escalators are expected to increase revenue. The company ended the quarter with $93 million in cash, no debt and an expanded $25 million share-repurchase authorization.

SmartRent NYSE: SMRT reported second-quarter results marked by accelerating core revenue growth, higher recurring software revenue and expanded margins, as the smart-home technology provider continued to execute its Vision 2028 strategy.

President and Chief Executive Officer Frank Martell said the company’s plan is centered on expanding its installed base, scaling its go-to-market organization, developing data, analytics and artificial intelligence capabilities, simplifying hardware and improving operating discipline.

“By almost every measure, SmartRent delivered strong progress in the second quarter,” Martell said, pointing to growth in bookings, installed units, annual recurring revenue and profitability.

Revenue Mix Shifts Toward SaaS and Services

Total revenue was $40 million, up 4% from the year-earlier period. Core revenue, which excludes non-cash hub amortization and which management said better represents underlying business volume, rose 14% to $38 million. Martell said it was the company’s highest quarterly core-revenue growth rate in more than two years.

SaaS revenue increased 13% to $16 million and represented more than 40% of total revenue. Annual recurring revenue rose to approximately $65 million from $57 million a year earlier, driven by the expansion of the company’s installed base and increased adoption of access-control and self-guided-tour products.

Hardware revenue declined 10% to $14 million. Meanwhile, professional services revenue doubled to $9 million, reflecting greater hardware-refresh installation activity and higher access-control volume, according to Chief Financial Officer Daryl Stemm.

Stemm said SmartRent is evolving into a “full-cycle, hardware-enabled technology company,” with revenue increasingly supported not only by new deployments but also by hardware refreshes, subscription renewals and add-on solutions. Because individual products have different equipment, installation and average-revenue-per-unit characteristics, the company expects booking and ARPU mixes to fluctuate.

• Total revenue: $40 million, up 4%
• Core revenue: $38 million, up 14%
• SaaS revenue: $16 million, up 13%
• Annual recurring revenue: approximately $65 million
• Professional services revenue: $9 million, up 100%

Bookings and Installed Base Continue to Grow

SmartRent booked more than 48,000 units during the quarter. On a trailing 12-month basis, units booked increased 40% to approximately 112,000, compared with 80,000 in the comparable period a year earlier.

The company’s installed Internet of Things footprint grew 10% to nearly 930,000 units. Martell said the pace of orders supports SmartRent’s objective of surpassing 1 million installed units in the first half of 2027.

Management emphasized that quarterly bookings can be uneven because of the company’s lengthy sales cycle and the timing of customer purchasing decisions. Martell told analysts that a couple of larger orders that had been under discussion for some time fell into the second quarter, while the company also saw greater traction from investments in its sales organization and broader go-to-market efforts.

Stemm said recent quarterly deployments have been roughly 20,000 units per quarter and suggested the trailing-12-month bookings trend offers a more useful forward indicator than any individual period. He cautioned, however, against assuming a full increase from 20,000 to nearly 30,000 units would occur immediately in the third quarter.

Margins Improve as Company Posts Third Straight Positive Adjusted EBITDA Quarter

Total gross margin expanded 760 basis points to 41%. SaaS gross margin increased to 75% from 70% a year earlier, which Stemm attributed to ARPU growth and cost discipline. Professional-services gross margin improved to 21% from negative 44%, while hardware gross margin was 13%, down from 15%, primarily because of changes in mix.

Operating expenses declined 7% to $23 million. SmartRent reported a net loss of $6 million, an improvement of $5 million, or 48%, from the prior-year period. Adjusted EBITDA was positive $700,000, representing the company’s third consecutive quarter of positive adjusted EBITDA.

Martell said revenue growth, a greater SaaS contribution and structural cost-reduction efforts are helping move the company toward consistent adjusted EBITDA profitability and free cash flow.

Data, Analytics and Renewals Seen as Future Opportunities

SmartRent plans to launch a dedicated data and analytics practice, supported in part by its collaboration with Databricks. Martell said the company intends to use information generated by its network of connected devices to provide customers with insights related to energy efficiency, water conservation, temperature management and risk management.

He said the company expects a repeatable data and analytics business to become a meaningful contributor to revenue in coming years, potentially increasing ARPU and expanding SmartRent’s addressable market. The company also announced a partnership with Hexaware, which Martell described as an AI-forward business process outsourcing provider intended to support operating leverage and greater use of AI in SmartRent’s processes.

On renewals, Stemm said previously completed negotiations are expected to contribute approximately $0.05 per unit per month by the end of 2026, or roughly $50,000 of incremental monthly revenue. He said the benefit should continue to grow as additional communities reach the end of their original subscription periods and move to updated pricing, including escalation clauses.

SmartRent ended the quarter with $93 million in cash, no debt and an undrawn $75 million credit facility. During the quarter, the company repurchased about 3 million shares, or approximately 1.5% of shares outstanding, for $3 million. After quarter-end, the board expanded its repurchase authorization to up to $25 million.

Looking ahead, Stemm said SmartRent expects revenue, profitability and cash flow in the second half of 2026 to exceed first-half levels, supported by stronger trailing-12-month bookings, operational improvements and continued growth in the installed base and recurring revenue.

About SmartRent (NYSE:SMRT)

SmartRent Inc is a technology company that develops smart home and smart building automation solutions for the residential rental housing industry. Its integrated hardware and software platform enables property managers and owners to remotely monitor, manage and control access, energy use and overall resident experience. The company's product portfolio includes smart locks, thermostats, leak and flood sensors, door and window sensors, security cameras, and a centralized management dashboard that interfaces with leading property management systems.

SmartRent's platform is designed to streamline operations for multifamily communities and single-family rental portfolios by automating routine tasks such as digital resident self-showings, remote lease turnovers, package management and preventative maintenance alerts.

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