Release Date: May 08, 2024
For the complete transcript of the earnings call, please refer to the full earnings call transcript.
Positive Points
- SmartRent Inc (SMRT, Financial) reported a revenue of $50.5 million for the quarter, with $12 million coming from SaaS recurring revenue products, showing a 32% year-over-year growth in the SaaS business.
- The company achieved positive adjusted EBITDA of almost $400,000, surpassing guidance and marking the second consecutive quarter of positive adjusted EBITDA.
- SmartRent Inc (SMRT) saw a 24% increase in deployed units year-over-year, reaching nearly 750,000 units, indicating strong market demand and operational growth.
- Gross margin significantly improved to 38.5% from 14% in the same quarter of the previous year, driven by a favorable change in product mix towards Alloy SmartHome hardware.
- The company is expanding its Community WiFi offerings, investing in new talent and technologies, which aligns with its strategic vision to dominate the early-stage multifamily community WiFi market.
Negative Points
- Hardware and professional services revenue both declined year-over-year, with hardware revenue affected by a decrease in hardware RPU and a change in product mix.
- Professional services revenue decreased primarily due to a reduction in new units deployed, reflecting challenges in scaling this segment of the business.
- Total operating expenses increased to $29.6 million in Q1 2024 from $24.4 million in Q1 2023, partly due to a one-time accrual of $5.3 million related to a contractual dispute.
- The company's cash balance decreased by $11 million from the previous quarter, primarily due to stock repurchases and payment of annual cash bonuses.
- SmartRent Inc (SMRT) faces macroeconomic challenges such as higher interest rates and slowing rent growth, which are creating headwinds for customer investment and impacting the deployment of new technologies.
Q & A Highlights
Q: Erik Woodring from Morgan Stanley asked about the confidence in operators investing in SmartRent solutions despite near-term investment concerns, given the current economic environment.
A: Lucas Haldeman, CEO, acknowledged the challenging environment but emphasized that expenditures are often planned and necessary, focusing on securing a portion of the operators' capital expenditures. He highlighted the ongoing rollouts with existing customers who recognize the value of SmartRent's solutions.
Q: Erik Woodring followed up by asking about the expected improvement in professional services gross margins and its relation to units deployed and professional services revenue.
A: Daryl Stemm, CFO, confirmed the goal of breaking even in professional services gross margins by the end of 2024. He mentioned operational improvements and technological enhancements that have reduced fixed costs, aligning with their financial targets despite a decrease in revenue from self-deployments by customers.
Q: Ryan Tomasello from KBW inquired about the reasons behind the sequential slowdown in SaaS revenue growth and the decline in SaaS ARPU.
A: Daryl Stemm explained that the timing of deployments affects quarterly revenue recognition, and Lucas Haldeman added that they are considering providing more detailed guidance on SaaS revenue to better reflect its importance to investors.
Q: Ryan Tomasello also asked for updates on the WiFi projects and their impact on attracting new customers.
A: Lucas Haldeman reported strong demand for WiFi solutions, noting that new customer interest is currently higher in WiFi than in IoT. He confirmed that projects shipped in the previous quarter are progressing well, with robust ongoing demand.
Q: Tom White from DA Davidson asked about the factors influencing the achievement of the higher or lower end of the annual revenue guidance.
A: Daryl Stemm highlighted macroeconomic conditions and the expansion rate of the WiFi market as key variables. He reiterated the importance of upcoming product cycles and market expansions in influencing financial outcomes.
Q: Tom White sought clarification on the relationship between IoT implementations and WiFi deployments.
A: Lucas Haldeman confirmed that customers interested in both IoT and WiFi prefer to implement them simultaneously, which can delay IoT revenue but ultimately leads to higher total revenue from combined services.
For the complete transcript of the earnings call, please refer to the full earnings call transcript.
