SmartRent, Inc. Q1 FY2026 earnings call

Frank mentioned over the past three quarters, the company focused on strengthening leadership team, right-sizing cost structure, driving operating leverage through process reengineering and automation, and investing in go-to-market and technology capabilities. In Q1, IoT footprint grew 10% to over 911,000 rental units; ARR revenue grew 9% to $61 million, or approximately 39% of total revenue; gross profit and margin totaled 15 million and 39% respectively, with gross margins up 630 basis points; delivered positive adjusted EBITDA of approximately $0.4 million in Q1; ended March with $99 million of cash and no debt. Vision 2028 is a three-year program with two priorities: accelerating profitable growth and achieving higher levels of profitability and cash flow, operationalized through five strategic pillars.

Total revenue for the first quarter was $38.7 million, a decrease of approximately 6% from $41.3 million in the first quarter of 2025. Within the revenue mix, SAS revenue was $15.2 million, up 9% year-over-year and represents 39% of total revenue. Hardware revenue was $15.4 million, down 18% year-over-year. Professional services revenue was $6 million, up 55% year over year. Total gross profit was $15.1 million with total gross margin expanding approximately 630 basis points year over year to 39.1% from 32.8%.

Expect continued ARR growth primarily driven by expansion of installed base; hub amortization revenue will continue to decline but expect revenue to improve as year progresses with sales team reaching fuller productivity and VAR channel contributing; expect to be adjusted EBITDA profitable for the full year; expect to be free cashflow positive on a full year basis with Q1 seasonal use not reflective of annual results.

Discussion of forward-looking statements involving risks and uncertainties where various factors could cause actual results to be materially different from future results expressed or implied, and factors discussed in SEC filings including annual report on Form 10-K and quarterly reports on Form 10-Q.

Q: Elaborate on initiatives to scale sales organization, number of reps, hiring plans.

A: Going to double on-staff sales team, adding about 25% in next three months, launched VAR program, making progress on renegotiating contracts.

Q: Elaborate on legacy contracts renewal impact on SAS ARPU.

A: Completion of first three renewals by end of year should have positive impact on SAS ARPU of about five cents per unit per month, three on average have 33% increase on original pricing, about 300,000 units subject to renewals.

Q: ARR declined sequentially and SAS ARPU declined sequentially, drivers?

A: Primary driver is churn off of smart operation solution had negative impact on SAS ARPU of about 11 cents, addition of new deployed units mitigated half of that reduction