Sign in

You're signed outSign in or to get full access.

SI

SmartRent, Inc. (SMRT)·Q2 2025 Earnings Summary

Executive Summary

  • Q2 revenue of $38.3M declined 21% YoY and 7% QoQ, driven by the deliberate exit from bulk hardware sales and mix headwinds; SaaS ARR grew 11% YoY to $56.9M, with SaaS now 37% of total revenue .
  • Gross margin was 33.1% (down ~260 bps YoY, up ~30 bps QoQ), while SaaS gross margin was 70.2% (down ~490 bps YoY); margin pressure stemmed from hardware product mix, partly offset by SaaS mix shift .
  • Management expanded the cost reduction program to $30M annualized savings and is targeting adjusted EBITDA and cash flow neutrality on a run rate basis exiting 2025—key catalysts for sentiment if execution is credible .
  • Against S&P Global consensus, revenue was a slight miss (~$0.54M, ~1.4%), EPS was essentially in line/slightly worse (-$0.0558 vs -$0.055), and EBITDA missed more meaningfully (actual -$10.8M vs -$6.2M estimate)*.
  • Liquidity remains strong with $105.0M cash, no debt, and a $75M undrawn facility; the company repurchased ~4.1M shares ($3.7M) during Q2; remaining authorization ~$16.8M .

What Went Well and What Went Wrong

What Went Well

  • SaaS scaling: ARR rose 11% YoY to $56.9M; SaaS revenue reached $14.2M (37% of total), supported by 10% growth in Units Deployed and stable ARPU ($5.66) .
  • Bookings green shoots: Units Booked were 24,319—the highest quarterly booking performance in the past year—an early sign the rebuilt sales motion is gaining traction (though still down YoY) .
  • Discipline and liquidity: Cost actions expanded to $30M annualized; cash of $105.0M, no debt, and $75M undrawn credit facility provide flexibility while pursuing profitability targets .
  • Quote: “This cost reduction program is designed to deliver at least $30 million of annualized expense reductions which we believe will result in adjusted EBITDA and cash flow neutrality on a run rate basis exiting 2025.” — Frank Martell, CEO .

What Went Wrong

  • Hardware-driven top-line pressure: Revenue fell 21% YoY as hardware declined 39% YoY ($15.1M vs $24.7M), reflecting the strategic exit from bulk hardware sales and lower shipments (26,543 vs 48,780) .
  • Margin compression in SaaS: SaaS gross margin decreased ~490 bps YoY to 70.2%, with total GM down to 33.1% (mix shift and hardware product mix noted as drivers) .
  • Profitability deterioration: Adjusted EBITDA of -$7.3M (vs +$0.9M LY) and net loss of -$10.9M (vs -$4.6M LY), pressured by lower hardware revenue and ~$2M severance/legal without prior-year counterpart .

Financial Results

P&L and Profitability vs Prior Periods and Estimates

MetricQ2 2024Q1 2025Q2 2025 ActualQ2 2025 Est.*
Revenue ($M)$48.518 $41.344 $38.308 $38.849*
Diluted EPS ($)-$0.02 -$0.21 -$0.06 -$0.055*
Gross Margin %35.7% 32.8% 33.1% —
SaaS Gross Margin %75.1% 70.7% 70.2% —
EBITDA ($M)-$5.242 -$39.333 -$9.839 -$6.160*
Adjusted EBITDA ($M)$0.902 -$6.372 -$7.349 —

*Values retrieved from S&P Global.

Observations:

  • Revenue declined 21% YoY and 7% QoQ; vs S&P Global, revenue missed by ~$0.54M (~1.4%)* .
  • EPS was effectively in line/slightly worse than consensus (-$0.0558 vs -$0.055)* .
  • EBITDA missed more meaningfully vs consensus (actual -$9.8M vs -$6.2M)* .

Segment Revenue Breakdown

Segment ($M)Q2 2024Q1 2025Q2 2025
Hardware$24.676 $18.830 $15.143
Professional Services$5.816 $3.893 $4.327
Hosted Services (incl. SaaS)$18.026 $18.621 $18.838
Total Revenue$48.518 $41.344 $38.308

Mix notes: SaaS revenue $14.2M (37% of total) in Q2 2025; SaaS ARPU $5.66 .

KPIs and Operating Metrics

KPIQ2 2024Q1 2025Q2 2025
Units Deployed (period-end)771,870 827,611 847,956
New Units Deployed22,469 18,114 21,068
Units Booked37,691 18,210 24,319
Bookings ($000s)$45,511 $27,180 $30,460
Hardware Units Shipped48,780 43,418 26,543
SaaS ARPU ($/mo)$5.63 $5.69 $5.66
Hardware ARPU ($)$506 $434 $571
Prof. Services ARPU ($)$327 $427 $365
ARR ($M)—$55.9 $56.9

Guidance Changes

Metric/ItemPeriodPrevious GuidanceCurrent GuidanceChange
Cost Reduction Program (annualized)FY 2025 run-rate>$10M actions executed (Q1 commentary) ≥$30M annualized savings Raised
Adjusted EBITDA/Cash FlowExit 2025 run-rateNot specifiedTargeting adjusted EBITDA and cash flow neutrality exiting 2025 (run-rate) New
Share Repurchase Authorization RemainingN/A~$20.4M remaining (end of Q1) ~$16.8M remaining (end of Q2) Reduced (usage)
Revenue/Margins OutlookFY/Q3Not providedNot provided Maintained no formal outlook
Tariff HeadwindH2 2025Up to ~$2M exposure flagged (Q1 call) No update in Q2 releaseMaintained risk disclosure (prior)

Earnings Call Themes & Trends

(Note: Q2 2025 call transcript was not retrievable in our system; we use Q2 press materials and prior call transcripts for trend analysis.)

TopicPrevious Mentions (Q4 2024, Q1 2025)Current Period (Q2 2025)Trend
AI/Technology initiativesQ4: Smart Operations upgrades; emphasis on SaaS roadmap . Q1: $10M innovation investment prioritized for smart operations .Launch of SMRT IQ (conversational AI) and energy management enhancements; positioned to drive operational insights and ESG-linked efficiency .Positive momentum; product-led differentiation expanding.
Sales org rebuild/BookingsQ4: Reorg under new CRO; channel program unwound . Q1: Initial build-out complete; ramp and customer success consolidation underway .24.3K Units Booked—the highest in a year—suggesting early traction from GTM rebuild .Improving, but not yet back to prior-year levels.
Mix shift to SaaSQ4: SaaS % rising; ARR $54.4M . Q1: SaaS +17% YoY; ARR $55.9M .SaaS 37% of revenue; ARR $56.9M (+11% YoY) .Continued execution; durable trajectory.
MarginsQ4: Total GM 28.7% (FY 34.5%); SaaS GM ~74% . Q1: GM 32.8%; SaaS GM 70.7% .GM 33.1%; SaaS GM 70.2%—mix pressure persists .Stable QoQ; below prior-year comps due to mix.
Liquidity/Capital allocationQ4: $142.5M cash; buybacks continued . Q1: $125.6M cash; $1.2M repurchased .$105.0M cash; $3.7M repurchased; $75M undrawn credit .Ample but trending lower with operations and buybacks.
Tariffs/Supply chainQ4: Monitoring tariff policy changes . Q1: Up to ~$2M H2 exposure; mitigation under review .No new Q2 update in release .Risk remains; monitoring.
Legal/One-time itemsQ4: Legal-related expenses noted . Q1: $5M legal accrual .~$2M severance/legal in Q2 opex .One-time items still impacting opex.

Management Commentary

  • Strategy and profitability focus: “This cost reduction program is designed to deliver at least $30 million of annualized expense reductions which we believe will result in adjusted EBITDA and cash flow neutrality on a run rate basis exiting 2025.” — Frank Martell, President & CEO .
  • Liquidity and discipline: “We exited Q2 with $105 million in cash, no debt, and a $75 million undrawn credit facility… we expect to end the year with a strong liquidity position…” — Daryl Stemm, CFO .
  • Revenue mix decision: “Our second quarter revenue was impacted by our deliberate decision to cease the practice of bulk hardware sales… we expect the impact… to normalize later this year.” — Daryl Stemm, CFO .
  • Product innovation (AI): “SMRT IQ… delivers constant, real-time IoT-device level data… by combining that data with conversational AI, we’re helping teams make smarter decisions faster.” — Isaiah DeRose-Wilson, CTO .

Q&A Highlights

  • Note: The Q2 2025 earnings call transcript was not retrievable in our system. Based on the Q1 2025 Q&A and Q2 disclosures, recent focus areas included:
    • Cost savings timing and impact: $10M annualized actions taken in April with benefits ramping into Q3 (Q1 context) .
    • Tariff exposure: Management cited up to ~$2M potential H2’25 impact, with mitigation levers (Q1 context) .
    • Sales/customer success rebuild and go-to-market ramp: initial build complete; ongoing ramp and customer-centric reorg (Q1 context) .

Estimates Context

  • Revenue: $38.31M actual vs $38.85M consensus (miss by ~$0.54M, ~1.4%)*.
  • Primary EPS: -$0.0558 actual vs -$0.055 consensus (essentially in line/slight miss)*.
  • EBITDA: -$10.78M actual vs -$6.16M consensus (larger miss, reflecting mix and one-time opex)*.
  • Estimate coverage was thin (2 estimates for revenue and EPS)*.
MetricQ2 2025 Consensus*Q2 2025 Actual*
Revenue ($)38,848,50038,308,000
Primary EPS ($)-0.055-0.0558
EBITDA ($)-6,159,500-10,778,000

*Values retrieved from S&P Global.

Implications: modest top-line miss and in-line EPS offset by a more negative EBITDA signal; estimate revisions may bias modestly downward on EBITDA/margins while revenue outlook may hold pending H2 bookings cadence.

Key Takeaways for Investors

  • The pivot away from bulk hardware is compressing near-term revenue and margins but is increasing SaaS mix (37% of revenue) and ARR durability (+11% YoY), a constructive long-term shift .
  • Execution proof points to watch: sustained bookings recovery (Q2’s 24.3K was the best in a year), continued Units Deployed growth, and SaaS ARPU/margin trends as SMRT IQ and energy tools scale .
  • Cost actions are now sizable ($30M annualized) with a stated run-rate adjusted EBITDA and cash flow neutrality target exiting 2025—delivery against this timeline is likely a key stock catalyst .
  • Liquidity remains a buffer for execution risk ($105M cash, no debt), though cash trended lower with operations and repurchases; careful monitoring of cash burn vs opex reductions is warranted .
  • Margin recovery hinges on hardware product mix normalization and operating leverage from SaaS growth; watch SaaS GM stabilization and total GM trajectory .
  • Tariff exposure remains a late-2025 risk factor; monitor supplier actions and management’s mitigation progress (Q1 context) .
  • Absent formal revenue guidance, near-term narrative will be driven by bookings cadence and evidence that the sales/customer success rebuild translates into deployments and ARR growth .

Citations: Q2 2025 8-K and press release ; Q2 2025 press release ; Q2 2025 slides ; Q1 2025 press release and transcript ; Q4 2024 press release and transcript ; AI product press release .