SmartRent Q3 Earnings Call Highlights

Key Points

• Revenue rose 15% year over year to $42 million, driven by 61% growth in hardware revenue; gross margin improved to 41% from 26%, and net loss narrowed to $3.9 million.
• Bookings increased, with trailing 12-month units booked up 44% to 123,000. SmartRent expects fourth-quarter revenue growth of 15%–20% and says deployment activity should rise into 2027.
• SmartRent ended the quarter with $89 million in cash and no debt, and posted its fourth consecutive quarter of positive adjusted EBITDA. Ongoing attrition in maintenance solutions is pressuring software revenue per unit, though the company expects its platform investments to begin contributing in 2027.

SmartRent NYSE: SMRT reported higher third-quarter revenue and a narrower net loss as hardware sales rose and gross margins expanded, while executives said they expect deployment activity to increase in the fourth quarter and into 2027.

Revenue rose 15% year over year to $42 million, and core revenue increased 24% to $41 million, Chief Financial Officer Daryl Stemm said on the earnings call. Core revenue excludes non-cash hub amortization associated with hubs shipped in prior years, which fell to approximately $1 million from $3 million a year earlier.

President and CEO Frank Martell described the quarter as the company’s strongest financial and operational performance in more than two years. He said SmartRent had approximately 942,000 installed units and expects to reach 1 million in the first half of 2027.

Hardware Growth Drives Revenue

Hardware revenue increased 61% to $19 million from $12 million. Stemm attributed the growth to shipments supporting fourth-quarter deployments, increased Access Control shipments and equipment upgrades and refreshes. Access Control shipments rose 242% year over year to $2.5 million.

Over the trailing 12 months, hardware units shipped fell to approximately 107,000 from 114,000 in the prior-year period, while hardware average revenue per unit increased 14% to $558.

Hosted services revenue totaled $17 million, including $16 million from software and $1 million from hub amortization. Software revenue grew 11% year over year, supported by an expanding installed base and adoption of Access Control and Self-Guided Tours, partly offset by attrition in maintenance solutions, Stemm said.

Annual recurring revenue increased 11% year over year, according to Martell. During the question-and-answer session, KBW analyst Ryan Tomasello said ARR had declined sequentially alongside a reduction in software-as-a-service revenue per unit. Stemm attributed some of the pressure to attrition in Smart Operations solutions and said the company expects some attrition to continue for a couple more quarters.

Stemm said SmartRent is enhancing its maintenance offering and integrating it into its core platform, with the company expecting to see benefits from those investments beginning in 2027.

Margins Improve as Expenses Rise

Gross margin expanded to 41% from 26% a year earlier, and gross profit rose 79% to $17 million. Operating expenses increased to $22 million from $17 million. Excluding a $2.5 million nonrecurring accrual reversal that benefited the prior-year period, expenses rose approximately 15%, reflecting higher revenue and investments in sales, operations and technology, Stemm said.

Net loss narrowed to $3.9 million from $6.3 million. Adjusted EBITDA improved by $4 million to $1.1 million, marking the company’s fourth consecutive quarter of positive adjusted EBITDA.

SmartRent ended September with $89 million in cash and no debt, and generated positive cash flow from operations during the quarter. It repurchased approximately 2.5 million shares for $3.4 million. Stemm said the company expects to remain active under its existing repurchase authorization.

Bookings and Outlook

Trailing 12-month units booked increased 44% to 123,000, while bookings measured in dollars rose 29% to approximately $144 million. Stemm said hardware shipments in the third quarter preceded an expected increase in deployment activity beginning in the fourth quarter and continuing into 2027.

For the fourth quarter, SmartRent expects total revenue growth of 15% to 20% and core revenue growth of 20% to 25%, both year over year. It also expects adjusted EBITDA to increase roughly 450% to 650% from the prior-year quarter.

Martell declined to provide specific 2027 guidance but said he expects continued improvement across major financial metrics. He said SmartRent has been investing a couple of million dollars per quarter, primarily in technology platforms and operational enhancements, and expects those investments to begin generating revenue in 2027.

Asked about multifamily operators’ appetite for capital spending, Martell said the market was “not great” but that customers continued to invest in efficiency and resident experience. He said he had not seen a meaningful change in those discussions during the year.

About SmartRent (NYSE:SMRT)

SmartRent, Inc NYSE: SMRT provides smart-home technology and property-management solutions for rental housing owners, operators and residents. Its platform is designed to help housing providers manage connected properties, improve operational efficiency and offer residents digital control over home features and services.

The company's products and services include smart locks, thermostats, sensors, hubs, access-control systems and other connected devices, along with software for monitoring and managing properties.

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