SmartRent, Inc. Q2 FY2025 earnings call

• Frank is energized to be CEO, highlighting SmartRent's opportunities in a large expanding market with a differentiated platform. - Cost reduction initiatives: $10 million in annualized savings by end of Q1 2025, expanded by $20 million more, with savings from staffing, third-party spending, workflow optimization. - Revenue mix transformation: Moving to more predictable recurring model; SaaS revenue at 37% of total revenue, up from prior periods. - Booked over 24,000 units in Q2, highest in over a year; deployed units at 850,000 with low churn and net revenue retention over 100%.

For the second quarter of 2025, total revenue was $38.3 million. Hardware revenue was $15.1 million, down 20% sequentially and 39% year-over-year, with hardware gross profit at $2.3 million. Professional services revenue was $4.3 million, up 10% sequentially and down 26% year-over-year, with a gross loss of $1.9 million (improved from prior year's $3.1 million loss). Hosted services revenue was $18.8 million, up 1% sequentially and 5% year-over-year, with gross profit of $12.3 million. SaaS revenue was $14.2 million, comprising 37% of total revenue. Annual recurring revenue was $56.9 million, up 11% year-over-year. Deployed units were 850,000, up 3% sequentially and 10% year-over-year. SaaS gross profit was $10 million, with a gross margin of roughly 70%.

• Aim to achieve adjusted EBITDA and cash flow neutrality on a run rate basis exiting 2025. - $30 million in cost reductions to benefit financial results over 2025. - Maintain significant cash balance ($105 million at end of Q2) to fund product innovation and operating efficiencies into 2026.

Q: In terms of the $20 million of incremental cost savings, details on sources and future room for efficiencies?

A: Predominant reductions from staffing and third-party spending; plenty of productivity yet with workflow optimization, automation, and procurement. There's more runway for efficiency.

Q: Holistic view on evolving SmartRent's strategy; attractive opportunities?

A: Team is dedicated; large installed base with room to grow; potential in new segments; investment in AI for customer engagement, operational effectiveness, etc.

Q: SaaS revenue model adoption, hardware headwind subsiding, transition to SaaS for customers?

A: Hardware headwind to subside, expecting growth in 2026; expanding installed base and enhancing product offering drive SaaS revenue; existing customers have room to grow SaaS usage.

Q: Adjusted EBITDA and free cash flow neutrality, AI infusion in product?

A: Positioning to exit 2025 on breakeven; not formally guiding yet but planning to align costs with revenue; AI to be infused in customer engagement, operational effectiveness, using data for better decisions, servicing efforts, and risk detection.