SmartRent, Inc. Q1 FY2025 earnings call

• SmartRent was founded to deploy IoT technology for property operations and resident experiences, with key differentiators like integrating IoT hardware through an enterprise software platform, seamless integration with existing systems, and retrofit deployment. - Over the past nine months, significant organizational changes have been made, including adding seasoned leaders in sales and customer success, and breaking down silos. - Strategic pillars include sustainable ARR growth, platform superiority, operational excellence, and collaborative innovation. - Over $10 million in annualized cost savings have been executed to improve cash flow and move toward profitability. - Customer satisfaction metrics: 96% of property managers said SmartRent had a positive impact on customer experience, and 90% view NOI expansion as a key driver of continued investment in smart home adoption.

Total revenue for the first quarter was $41.3 million, down 18% year-over-year. Hardware revenue was $18.8 million, down 35% year-over-year. SaaS revenue grew 17% year-over-year to $14 million. SaaS ARPU increased to $5.69, up 5% from the prior year and up slightly sequentially. Units booked SaaS ARPU reached $10.28, a 44% increase year-over-year. Gross margin in Q1 was 32.8% compared to 38.5% in the prior year. Operating expenses were $29.9 million including a $5 million legal accrual. Net losses increased to $40.2 million compared to $7.7 million in the same period prior year, primarily due to a non-cash goodwill impairment charge of $24.9 million. Adjusted EBITDA was negative $6.4 million.

• Aim to achieve non-GAAP adjusted EBITDA profitability without sacrificing long-term growth. - $10 million in cost savings actions taken in April, with benefits starting to be seen in Q3. - Tariff developments could present cost pressure in the second half of 2025, and the company is assessing mitigation strategies.

• Decline in stock price led to a goodwill impairment charge. - Tariff developments may impact costs. - Past execution challenges affected customer relationships though customers remain committed.

Q: Starting on the restructuring actions, do the $10 million of savings represent the full benefit ultimately expected to realize there? Or are there more efficiencies to come? And how much of that $10 million is run rating through adjusted EBITDA in 1Q results? And when should we expect the full effect?

A: Daryl Stemm said the $10 million annualized savings are actions taken in April, not seeing adjustments for severance or one-time charges in Q1 result. Cash flow neutral in Q2, start seeing benefit on adjusted EBITDA in Q2, full effect in Q3.

Q: In terms of the sales organization build-out, do you feel like you're in a good spot to support scalability? Or more hiring needed? And on broader operational changes, finer point on customer success and technology operations?

A: John Dorman said they think they've completed initial wave of sales organization build-out, still adding talent in customer success. Operational reorganization broke down silos, collapsed customer-facing operations into customer success, making touch points more customer centered.

Q: Considering the ongoing CEO search, how much of the broader organizational and strategy changes are hitting pause and reserving for new CEO?

A: John Dorman said they're not hitting pause on anything, changes are ongoing, and engagement with finalist candidates is deepening for a smooth handoff.

Q: Regarding tariffs, how is SmartRent able to minimize impact and when will the fruits of go-to-market team build-out inflect positively?

A: Daryl Stemm said they have a $2 million potential exposure to tariffs in H2 2025, evaluating manufacturing location changes. John Dorman said 2025 is foundation building with some growth, proof points include beginning of sustainable acceleration in bookings.

Q: What are the proof points that will make the management team more positive throughout the year?

A: John Dorman said the principal proof point is the beginning of a sustainable path of acceleration in bookings.