SmartRent Reports Second Quarter 2022 Results

·20 min read

Company sets new quarterly record for revenue and Units Deployed
Provides revised guidance for 2022 due to supply chain constraints

SCOTTSDALE, Ariz., August 11, 2022--(BUSINESS WIRE)--SmartRent, Inc. (NYSE: SMRT) ("SmartRent" or the "Company") today reported financial results for the quarter ended June 30, 2022.

This press release features multimedia. View the full release here: https://www.businesswire.com/news/home/20220810005737/en/

Second Quarter 2022 Financial Highlights Compared to Second Quarter 2021

  • Record total revenue of $42.4 million compared to $21.7 million, up 96%.

  • SaaS ARR of $30.6 million compared to $7.0 million, up 337%.

  • Net loss of $(25.6) million as compared to $(10.1) million.

  • Adjusted EBITDA of $(19.8) million as compared to $(9.3) million.

  • Deferred revenue of $125.4 million compared to $74.5 million, up 68%.

  • $263.2 million of cash as of June 30, 2022.

"SmartRent’s scale and influence as a leader in real estate enterprise technology continues to expand in line with significant operational milestones reached in the second quarter. As of June 30th, we deployed more than 450,000 units, installed over two million pieces of hardware, and engaged with more than two million operator and resident users. We had 447 unique customers across multiple verticals that own or control more than 6 million units," said Lucas Haldeman, CEO of SmartRent. "We set another record for quarterly revenue and Units Deployed and realized improved margins for hosted and professional services. We are focused on integrating SightPlan into our operations to provide enhanced value to our customers through the powerful solution suite of our combined companies. While unprecedented supply chain constraints are leading us to modify our 2022 outlook, customers remain loyal, as evidenced by our record backlog. We are on a clear path to profitability and expect to be Adjusted EBITDA positive on an intra-quarter basis in 2023," concluded Mr. Haldeman.

Second Quarter 2022 Results

Total revenue increased 96% to $42.4 million in the quarter from $21.7 million in the second quarter of 2021 and set a new SmartRent record for quarterly revenue. Sequentially, total revenue increased 14% from $37.4 million in the first quarter of 2022. The increase reflects higher volume of Units Deployed, growth in the number of recurring software subscriptions, and contribution from SightPlan for a full quarter. SaaS revenue, boosted primarily by SightPlan’s contribution, increased 337% to $7.6 million in the quarter from $1.8 million in the second quarter of 2021. SaaS ARPU, excluding SightPlan, grew 12.0% year-over-year to $3.28 from $2.93. SaaS ARPU, inclusive of SightPlan was $6.05.

Total cost of revenue in the quarter was $41.4 million as compared to $21.4 million in the second quarter of 2021. The increase in cost of revenue was primarily driven by the growth in Units Deployed, the scaling of our professional services team to support increasing demand for our platform and increased general contractor costs. SmartRent improved its gross margin to 2.3% for the quarter compared to 1.3% for the corresponding period last year. Total gross margin grew to 2.3% from a loss of 12.7% in the first quarter. The Company saw improvement in professional services margin to (55)% from (119)% compared to the first quarter, resulting from a 12% increase in ARPU and a 21% decrease in unit costs. The Company also saw continued improvement in Hosted Services margin. During the quarter, Hosted Services margin was 49%, compared to 36% in the second quarter of 2021 and 39% in the first quarter of 2022.

Operating expenses increased to $28.0 million in the quarter from $10.3 million in the prior year period. The increase reflects investment to scale sales and marketing, and research and development teams, as well as cost associated with being a public company and the incremental expenses assumed with the operations of SightPlan and iQuue. General and administrative expenses in the quarter include $3.8 million of stock-based compensation and $1.8 million in acquisition-related compensation expense.

Net loss was $(25.6) million in the quarter as compared to $(10.1) million in the second quarter of 2021 and a net loss of $(23.4) million in the first quarter of 2022. Adjusted EBITDA was $(19.8) million for the quarter, as compared to $(9.3) million in the prior year period and $(23.1) million in the first quarter of 2022. As a result of record revenue and improved gross margins, Adjusted EBITDA improved by more than $3 million compared to the first quarter of 2022.

The Company ended the quarter with approximately $125.4 million of deferred revenue on its balance sheet, up 68% from $74.5 million as of June 30, 2021, reflecting growth in the Company’s Deployed Units. The Company expects to recognize 61% of its deferred revenue within the next 12 months.

Key Operating Metrics(1)

Quarter ended June 30,

Six months ended June 30,

Quarterly Unit KPIs

2022

2021

%
Change

2022

2021

%
Change

New Units Deployed

60,329

23,834

153.1

%

111,525

56,320

98.0

%

Units Booked

59,306

38,812

52.8

%

150,788

84,348

78.8

%

Bookings (in '000s)

$

56,887

$

30,495

86.5

%

$

128,872

$

62,913

104.8

%

Bookings SaaS ARPU*

$

4.79

$

3.83

25.3

%

$

4.41

$

3.97

11.3

%

* Bookings SaaS ARPU in the quarter refers to average price contracted for smart home deployments

As of June 30,

Aggregate Unit KPIs

2022

2021

% Change

Committed Units

780,036

606,455

28.6

%

Total Units Deployed

451,010

211,425

113.3

%

Total Deployed and Committed Units

1,231,046

817,880

50.5

%

Recent Business Highlights

On July 25, SmartRent announced the appointment of Terry Danner as its Executive Vice President of Sales. Mr. Danner will oversee the Company’s sales function to drive strategic growth across current and future customers and markets. Mr. Danner most recently served as the CEO of SightPlan and is a pioneer in the multifamily industry with more than 30 years of experience.

On June 27, as a result of the 2022 Russell Index’s annual reconstitution, SmartRent was added as a member of the US small-cap Russell 2000 and Russell 3000 Indexes.

In the second quarter, SmartRent expanded its customer base by adding an additional 38 customers across its platform. The Company has a total of 447 customers who own or control over 6 million units which provides SmartRent and SightPlan with a large and unique opportunity to harvest growth from its existing customer base through cross-selling and up selling.

Balance Sheet and Liquidity

As of June 30, 2022, the Company had approximately $263.2 million in cash on its balance sheet, as compared to $286.4 million as of March 31, 2022. The change in cash reflects capital used in operations.

As of June 30, 2022, the Company had no outstanding debt and approximately $338.2 million in liquidity, including full availability of its $75 million revolving credit facility and cash on the balance sheet.

Financial and Business Outlook

The Company continues to experience strong demand for its smart home enterprise solutions but also faces unprecedented supply chain constraints related to certain component parts in its product line and select third-party hardware devices. The Company has contractual agreements for deployments that are currently on hold due to supply chain constraints and are now included in its record backlog. Consequently, the Company is adjusting its outlook for full-year 2022 and providing guidance for the third quarter.

The estimates presented below represent a range of possible outcomes and may differ materially from actual results. These estimates exclude the impact of potential acquisitions, capital markets activities, and unforeseen continued challenges with supply chain and logistics. The estimates are forward-looking based on the Company’s current assessment of demand for its product, execution capabilities and market conditions, as well as other risks outlined below under the caption "Forward-Looking Statements."

Revised Full-Year 2022 Guidance

  • Total Revenue of $155 to $180 million from prior guidance of $220 to $250 million.

  • Adjusted EBITDA of $(75) to $(70) million from prior guidance of $(50) to $(35) million.

  • Units Deployed of 190,000 to 220,000 from prior guidance of 280,000 to 320,000.

Quarter ended September 30, 2022 Guidance

  • Total Revenue of $43 to $47 million.

  • Units Deployed of 45,000 to 50,000.

Definitions of non-GAAP financial measures and the reconciliations to the most directly comparable GAAP measures are provided in subsequent sections of the press release and supplemental schedules. SmartRent has not provided a reconciliation of forward-looking Adjusted EBITDA, including certain components of the forward-looking reconciliation to the most directly comparable GAAP financial measures, due primarily to variability and difficulty in making accurate forecasts and projections of non-operating matters that may arise, as not all of the information necessary for a quantitative reconciliation is available to SmartRent without unreasonable effort. For the same reasons, SmartRent is unable to address the probable significance of the information.

Conference Call Information

SmartRent is hosting a conference call today, August 11, 2022, at 5 p.m. ET to discuss its first quarter 2022 financial results. To join the call, dial 1-877-407-3982 in the USA or Canada, or 1-201-493-6780 if dialing in internationally. The passcode for the conference call is 13730376.

Following the call’s conclusion, a webcast of the call will be posted on the Events and Presentations section of SmartRent’s website.

About SmartRent

Founded in 2017, SmartRent, Inc. (NYSE: SMRT) is a recognized enterprise property technology leader designed by and for real estate operators. The company’s comprehensive product suite, comprised of smart home building hardware and cloud-based SaaS solutions, provides seamless visibility and control over real estate assets. Its subsidiary, SightPlan, specializes in workflow management solutions that automate the property lifecycle. SmartRent and SightPlan’s robust, end-to-end enterprise platform increases efficiencies, delivers cost savings and additional revenue opportunities, and elevates user experiences. For more information, please visit smartrent.com.

Forward-Looking Statements

This press release contains forward-looking statements which address the Company's expected future business and financial performance, and may contain words such as "goal," "target," "future," "estimate," "expect," "anticipate," "intend," "plan," "believe," "seek," "project," "may," "should," "will" or similar expressions. Examples of forward-looking statements include, among others, statements regarding the benefits of the Company's strategic acquisitions, changes in the market for our products and services, expected financial results, product portfolio enhancements, expansion plans and opportunities and earnings guidance related to financial and operational metrics. Forward-looking statements involve risks and uncertainties that could cause actual results to differ materially from those currently anticipated. Some of the factors that could cause actual results to differ materially from those expressed or implied by the forward-looking statements include, among other things, our ability to: (1) execute our business strategy within the smart home technology industry; (2) expand our products and solutions to meet the demands of the market; (3) meet legal obligations, including laws and regulations related to security and privacy; (4) prevent unauthorized or inadvertent access to our information technology systems and customer or resident data; (5) successfully manage the competitiveness of our market and pricing levels of our competitors; (6) hire, retain, manage and motivate employees, including key personnel; (7) successfully manage and ensure that our suppliers produce or obtain quality products and services on a timely basis or in sufficient quantity; (8) successfully manage interruptions to, or other problems with, our website and interactive user interface, information technology systems, manufacturing processes or other operations; (9) successfully identify, acquire, and integrate quality acquisition targets; (10) successfully resolve legal proceedings, recall claims, and governmental inquiries; (11) acquire and protect our intellectual property and acquire or make investments in other businesses, patents, technologies, products or services to grow the business; (12) comply with laws and regulations applicable to our business, including developments in state and local regulations; (13) fuel growth and accelerate the adoption of our products and services; (14) develop, design, and sell services that are differentiated from those of competitors; (15) manage risks associated with product liability, warranty, personal injury, property damage and recall matters; and (16) successfully deploy the proceeds from the business combination we completed last year. The forward-looking statements herein represent the judgment of the Company, as of the date of this release, and SmartRent disclaims any intent or obligation to update forward-looking statements. This press release should be read in conjunction with the information included in the Company's other press releases, reports and other filings with the SEC. Understanding the information contained in these filings is important in order to fully understand the Company's reported financial results and our business outlook for future periods.

Use of Non-GAAP Financial Measures

In addition to disclosing financial results that are determined in accordance with GAAP, SmartRent also discloses certain non-GAAP financial measures in this press release. These financial measures are not recognized measures under GAAP and should not be considered in isolation or as a substitute for, or superior to, the financial information prepared and presented in accordance with GAAP. EBITDA and Adjusted EBITDA are non-GAAP financial measures as defined by SEC rules. These non-GAAP financial measures, as defined below by SmartRent, may be determined or calculated differently by other companies. Reconciliations of these non-GAAP measurements to the most directly comparable GAAP financial measurements have been provided in the financial statement tables included in this press release, and investors are encouraged to review the reconciliations.

As detailed in the reconciliations, the GAAP measure most directly comparable to EBITDA and Adjusted EBITDA is net income or loss. EBITDA and Adjusted EBITDA are not used as measures of SmartRent’s liquidity and should not be considered alternatives to net income or loss or any other measure of financial performance presented in accordance with GAAP.

SmartRent’s management uses EBITDA and Adjusted EBITDA in a number of ways to assess the Company’s financial and operating performance and believes that these measures provide useful information to investors regarding financial and business trends related to SmartRent’s results of operations. EBITDA and Adjusted EBITDA are also used to identify certain expenses and make decisions designed to help SmartRent meet its current financial goals and optimize its financial performance, while neutralizing the impact of expenses included in its operating results which could otherwise mask underlying trends in its business. SmartRent’s management believes that investors are provided with a more meaningful understanding of SmartRent’s ongoing operating performance when non-GAAP financial information is viewed with GAAP financial information.

(1) Key Operating Metrics Defined

SmartRent regularly monitors several operating and financial metrics including the following non-GAAP financial measures which the Company believes are key measures of its growth, to evaluate its operating performance, identify trends affecting its business, formulate business plans, measure its progress, and make strategic decisions. The Company’s Key Operating Metrics may not provide accurate predictions of future GAAP financial results.

Units Deployed is defined as the aggregate number of SmartHubs that have been installed (also including customer self-installations) as of a stated measurement date. The Company uses this operating metric to assess the general health and trajectory of its business growth.

New Units Deployed is defined as the aggregate number of SmartHubs that have been installed (also including customer self-installations) during a stated measurement period. The Company uses this operating metric to assess the general health and trajectory of its business growth.

Committed Units is defined as the aggregate number of SmartHub units that are subject to binding orders from customers together with units that existing customers who are parties to a SmartRent master services agreement have informed us (on a non-binding basis) that they intend to order in the future for deployment within two years of the measurement date. The Company tracks the number of Committed Units to assess the general health and trajectory of its business and to assist in its longer-term resource analysis.

Units Booked is defined as the aggregate number of SmartHubs associated with binding orders executed during a stated measurement period. The Company utilizes the concept of Units Booked to measure estimated near-term resource demand and the resulting approximate range of post-delivery revenue that it will earn and record. Units Booked represent binding orders only and accordingly are a subset of Committed Units.

Annual Recurring Revenue ("ARR") is defined as the annualized value of our recurring SaaS revenue earned in the current quarter.

EBITDA and Adjusted EBITDA: We define EBITDA as net income or loss computed in accordance with GAAP before the following items: interest expense, income tax expense, and depreciation and amortization. We define Adjusted EBITDA as EBITDA before the following items: stock-based compensation expense, non-employee warrant expense, loss on extinguishment of debt, change in fair value of derivatives, unrealized gains and losses in currency exchange rates, warranty provisions for battery deficiencies and non-recurring expenses in connection with acquisitions. Management uses EBITDA and Adjusted EBITDA to identify certain expenses and make decisions designed to help us meet our current financial goals and optimize our financial performance, while neutralizing the impact of expenses included in our operating results which could otherwise mask underlying trends in our business. See "Use of Non-GAAP Financial Measures" for additional information and reconciliation of these measures.

SMARTRENT, INC.

CONSOLIDATED STATEMENTS OF OPERATIONS AND COMPREHENSIVE LOSS

(Unaudited)

(in thousands, except per share amounts)

For the three months ended June 30,

For the six months ended June 30,

2022

2021

2022

2021

Revenue

Hardware

$

20,895

$

14,029

$

43,009

$

26,427

Professional services

9,123

3,564

16,032

7,165

Hosted services

12,391

4,084

20,727

7,245

Total revenue

42,409

21,677

79,768

40,837

Cost of revenue

Hardware

20,951

12,514

42,809

24,657

Professional services

14,115

6,274

29,282

11,734

Hosted services

6,355

2,606

11,433

4,577

Total cost of revenue

41,421

21,394

83,524

40,968

Operating expense

Research and development

8,030

4,083

14,476

7,176

Sales and marketing

6,139

2,392

11,301

4,146

General and administrative

13,832

3,806

25,783

7,763

Total operating expense

28,001

10,281

51,560

19,085

Loss from operations

(27,013

)

(9,998

)

(55,316

)

(19,216

)

Interest income (expense), net

253

(64

)

241

(142

)

Other income, net

162

52

276

127

Loss before income taxes

(26,598

)

(10,010

)

(54,799

)

(19,231

)

Income tax benefit (expense)

1,009

(41

)

5,816

(87

)

Net loss

(25,589

)

(10,051

)

(48,983

)

(19,318

)

Other comprehensive loss

Foreign currency translation adjustment

(407

)

63

(590

)

(65

)

Comprehensive loss

$

(25,996

)

$

(9,988

)

$

(49,573

)

$

(19,383

)

Net loss per common share

Basic and diluted

$

(0.13

)

$

(4.87

)

$

(0.25

)

$

(1.99

)

Weighted-average number of shares used in computing net loss per share

Basic and diluted

195,693

2,064

194,381

9,721

SMARTRENT, INC.

CONSOLIDATED BALANCE SHEETS

(Unaudited)

(in thousands, except per share amounts)

June 30, 2022

December 31, 2021

ASSETS

Current assets

Cash and cash equivalents

$

255,008

$

430,841

Restricted cash, current portion

7,660

1,268

Accounts receivable, net

45,135

45,486

Inventory

59,235

33,208

Deferred cost of revenue, current portion

11,345

7,835

Prepaid expenses and other current assets

11,047

17,369

Total current assets

389,430

536,007

Property and equipment, net

1,899

1,874

Deferred cost of revenue

21,708

18,334

Goodwill

117,889

12,666

Intangible assets, net

33,214

3,590

Other long-term assets

11,667

7,212

Total assets

$

575,807

$

579,683

LIABILITIES, CONVERTIBLE PREFERRED STOCK AND STOCKHOLDERS' EQUITY

Current liabilities

Accounts payable

$

14,774

$

6,149

Accrued expenses and other current liabilities

23,045

22,234

Deferred revenue, current portion

65,108

42,185

Total current liabilities

102,927

70,568

Deferred revenue

60,337

53,412

Other long-term liabilities

7,935

6,201

Total liabilities

171,199

130,181

Commitments and contingencies (Note 12)

Convertible preferred stock, $0.0001 par value; 50,000 and 50,000 shares authorized as of June 30, 2022 and December 31, 2021; no shares of preferred stock issued and outstanding as of June 30, 2022 and December 31, 2021

-

-

Stockholders' equity

Common stock, $0.0001 par value; 500,000 shares authorized as of June 30, 2022 and December 31, 2021, respectively; 197,502 and 193,864 shares issued and outstanding as of June 30, 2022 and December 31, 2021

20

19

Additional paid-in capital

608,755

604,077

Accumulated deficit

(203,586

)

(154,603

)

Accumulated other comprehensive (loss) income

(581

)

9

Total stockholders' equity

404,608

449,502

Total liabilities, convertible preferred stock and stockholders' equity

$

575,807

$

579,683

SMARTRENT, INC.

CONSOLIDATED STATEMENTS OF CASH FLOWS

(Unaudited)

(in thousands)

For the six months ended June 30,

2022

2021

CASH FLOWS FROM OPERATING ACTIVITIES

Net loss

$

(48,983

)

$

(19,318

)

Adjustments to reconcile net loss to net cash used by operating activities

Depreciation and amortization

1,636

173

Amortization of debt discount

-

4

Non-employee warrant expense

238

399

Provision for warranty expense

-

170

Non-cash lease expense

648

218

Stock-based compensation related to acquisition

401

402

Stock-based compensation

6,945

453

Compensation expense related to acquisition

2,109

-

Deferred tax benefit

(5,889

)

-

Non-cash interest expense

41

-

Provision for excess and obsolete inventory

16

115

Provision for doubtful accounts

-

(27

)

Change in operating assets and liabilities

Accounts receivable

1,493

(6,215

)

Inventory

(26,197

)

(4,294

)

Deferred cost of revenue

(6,884

)

(4,185

)

Prepaid expenses and other assets

4,027

(7,826

)

Accounts payable

8,800

2,436

Accrued expenses and other liabilities

(3,676

)

(2,114

)

Deferred revenue

29,091

21,158

Lease liabilities

(496

)

(233

)

Net cash used in operating activities

(36,680

)

(18,684

)

CASH FLOWS FROM INVESTING ACTIVITIES

Payments for SightPlan acquisition, net of cash acquired

(128,953

)

-

Purchase of property and equipment

(470

)

(340

)

Net cash used in investing activities

(129,423

)

(340

)

CASH FLOWS FROM FINANCING ACTIVITIES

Payments on term loan

-

(834

)

Proceeds from warrant exercise

3

5

Proceeds from options exercise

62

-

Proceeds for ESPP purchases

488

-

Taxes paid related to net share settlements of stock-based compensation awards

(3,389

)

-

Convertible preferred stock issued

-

34,793

Payments of business combination and private offering transaction costs

(70

)

-

Net cash (used in) provided by financing activities

(2,906

)

33,964

Effect of exchange rate changes on cash and cash equivalents

(432

)

(24

)

Net (decrease) increase in cash, cash equivalents, and restricted cash

(169,441

)

14,916

Cash, cash equivalents, and restricted cash - beginning of period

432,604

38,618

Cash, cash equivalents, and restricted cash - end of period

$

263,163

$

53,534

Reconciliation of cash, cash equivalents, and restricted cash to the consolidated balance sheets

Cash and cash equivalents

$

255,008

$

53,534

Restricted cash, current portion

7,660

-

Restricted cash, included in other long-term assets

495

-

Total cash, cash equivalents, and restricted cash

$

263,163

$

53,534

SMARTRENT, INC.

RECONCILIATION OF NON-GAAP MEASURES

(amounts in thousands)

Three months ended June 30,

Six months ended June 30,

2022

2021

2022

2021

Net loss

$

(25,589

)

$

(10,051

)

$

(48,983

)

$

(19,318

)

Interest income, net

(253

)

64

(241

)

142

Provision for income taxes

(1,009

)

41

(5,816

)

87

Depreciation and amortization

1,227

93

1,636

173

EBITDA

(25,624

)

(9,853

)

(53,404

)

(18,916

)

Stock-based compensation

3,823

428

7,346

855

Non-employee warrant expense

21

167

238

399

Compensation expense in connection with acquisitions

1,830

-

2,109

-

Other non-recurring acquisition expenses

119

-

739

-

Adjusted EBITDA

$

(19,831

)

$

(9,258

)

$

(42,972

)

$

(17,662

)

View source version on businesswire.com: https://www.businesswire.com/news/home/20220810005737/en/

Contacts

Investor Contact
Evelyn León Infurna – SVP, Investor Relations
Phone: 480-371-2828
Email: investors@smartrent.com

Media Contact
Amanda Chavez – Director, Corporate Communications
Phone: 480-805-9811
Email: media@smartrent.com