10-Q: SmartRent Reports Q2 Revenue Growth Amidst Hardware Slowdown

SmartRent, Inc. announced its Q2 2026 results, showing a 4% increase in total revenue driven by professional services, while navigating a decline in hardware sales and a continued net loss.

Summary

• SmartRent, Inc. reported total revenue of $39.8 million for the three months ended June 30, 2026, a 4% increase from $38.3 million in the prior year period.
• For the six months ended June 30, 2026, total revenue was $78.5 million, a slight decrease of 1% from $79.7 million in the same period last year.
• The company experienced a net loss of $5.6 million for the three months ended June 30, 2026, an improvement from a net loss of $10.9 million in the prior year.
• For the six months ended June 30, 2026, the net loss was $10.1 million, a significant improvement from $51.0 million in the prior year period.
• Hardware revenue decreased by 10% and 15% for the three and six-month periods, respectively, primarily due to a decline in Units Shipped.
• Professional services revenue saw substantial increases of 100% and 78% for the three and six-month periods, respectively, driven by higher ARPU related to hub upgrades and access control installations.
• Hosted services revenue decreased by 7% for the three-month period and 7% for the six-month period, largely due to a decline in hub amortization revenue, though SaaS revenue saw growth.
• The company ended the period with $92.7 million in cash and cash equivalents.

Sentiment

Score: 4

Explanation: StockSavvy.ai views this filing as cautiously optimistic, with revenue growth showing resilience despite some hardware segment declines, but the company continues to operate at a net loss.

Positives

• Total revenue increased by 4% to $39.8 million for the three months ended June 30, 2026, compared to the prior year period.
• Professional services revenue increased significantly by 100% to $8.6 million for the three months ended June 30, 2026, and by 78% to $14.7 million for the six months ended June 30, 2026.
• SaaS revenue within Hosted Services increased by 13% for the three-month period and 11% for the six-month period, indicating growth in recurring revenue streams.
• Units Deployed increased by 10% to 929,487 as of June 30, 2026, compared to the prior year.
• Customer Net Revenue Retention was strong at 111% as of June 30, 2026, up from 108% in the prior year.
• Net loss improved significantly to $5.6 million for the three months ended June 30, 2026, from $10.9 million in the prior year, and to $10.1 million for the six months from $51.0 million.
• Bookings increased by 58% to $48.2 million for the three months ended June 30, 2026, and by 16% to $66.7 million for the six months ended June 30, 2026.
• The company ended the period with $92.7 million in cash and cash equivalents, and has an undrawn $75 million revolving credit facility.

Negatives

• Hardware revenue decreased by 10% to $13.6 million for the three months ended June 30, 2026, and by 15% to $29.0 million for the six months ended June 30, 2026.
• Units Shipped decreased by 12% for the three-month period and 19% for the six-month period.
• Hosted Services revenue decreased by 7% for both the three and six-month periods, primarily due to a significant decrease in hub amortization revenue.
• The company continues to report net losses, although the losses have narrowed significantly compared to the prior year.
• Units Booked SaaS ARPU decreased by 32% for the three-month period and 28% for the six-month period.
• Property Net Revenue Retention slightly decreased to 99% as of June 30, 2026, from 102% in the prior year.
• The company expects revenue contribution from hub amortization to continue decreasing significantly in future periods.

Risks

• The company's success depends on its ability to execute its Vision 2028 strategy, which involves accelerating growth and expanding its path to profitability.
• Tariffs imposed by the U.S. government could increase the cost of hardware revenue and reduce hardware revenue margins.
• The company may need to raise additional capital through equity or debt financing to fund future operations until it generates positive operating cash flows, and there is no assurance such financing will be available on acceptable terms.
• The company is subject to legal proceedings, including a class action lawsuit related to a past business combination and a lawsuit concerning tenant privacy rights, which could result in significant costs and damages.
• The company's future growth depends on continued consumer adoption of software and hardware products that improve the resident experience.
• The company's ability to attract and retain highly skilled research and development personnel is critical for developing innovative new software services and hardware products.
• The company's results of operations and cash flows are subject to fluctuations due to changes in foreign currency exchange rates, although the impact has not been material to date.
• The company's goodwill balance was $92.3 million as of June 30, 2026, and future impairment charges could be recorded if assumptions used in valuation change.

Future Outlook

The company expects its research and development expenses to increase in future periods to support Vision 2028. Sales and marketing expenses are also expected to increase as the company invests in building a scalable sales organization. Hosted Services cost of revenue is expected to increase in absolute dollars at a rate lower than the corresponding increase in Hosted Services revenue. Revenue from hub amortization is expected to continue decreasing significantly in future periods.

Management Comments

• Our success is dependent on many factors, including those discussed below. Our operating results and cash flows are influenced by our ability to execute our Vision 2028 strategy, which is designed to extend our market leadership while creating long-term value for our stakeholders.
• Vision 2028 is centered on two strategic priorities: (1) accelerating growth by reinforcing our competitive moat and (2) expanding our path to profitability through a more leverageable operating model.
• We believe that our current cash, cash equivalents, available borrowing capacity under the Senior Revolving Facility, and cash raised in the business combination with SmartRent.com, Inc. will be sufficient to fund our operations for at least the next 12 months beyond the issuance date of this Report.

Industry Context

StockSavvy.ai notes that SmartRent operates in the competitive enterprise smart home solutions market. The company's focus on an open-architecture, brand-agnostic approach and its expansion into Smart Operations solutions aim to differentiate it. The reported increase in professional services revenue, driven by hub upgrades and access control installations, suggests a strategic shift or increased demand for these services within the property technology sector.

Comparison to Industry Standards

• The company's Customer Net Revenue Retention of 111% is strong and generally exceeds industry benchmarks for subscription-based software services, indicating high customer loyalty and ability to upsell.
• Property Net Revenue Retention at 99% is slightly below the prior year's 102%, which could be a point of attention, as many SaaS companies aim for retention rates above 100%.
• The decrease in Hardware ARPU and Units Shipped may reflect broader trends in the smart home device market, potentially influenced by economic conditions or increased competition.
• The significant increase in Professional Services ARPU suggests a successful strategy in upselling installation and upgrade services, a common practice in the IoT and smart home installation sectors to offset hardware margin pressures.

Legal Proceedings

• A putative class action complaint was filed against Fifth Wall Acquisition Sponsor, LLC, Fifth Wall Asset Management, LLC, and individual directors of Fifth Wall Acquisition Corp. I, alleging damages arising from the business combination with SmartRent. The parties agreed to settle for $11,375, with legal expenses and settlement costs of $3,462 incurred in the six months ended June 30, 2025.
• The San Francisco Tenants Union and three residents filed claims against the Company and property owners for alleged violations of tenant privacy rights and the San Francisco Rent Ordinance, seeking declaratory and injunctive relief, and unspecified damages. The Company disputes these claims and intends to vigorously defend against them.

Stakeholder Impact

• Shareholders: The continued net loss and decrease in hardware revenue may be a concern, but the improvement in net loss and growth in SaaS revenue and bookings are positive indicators. The stock repurchase program offers potential returns to shareholders.
• Employees: The company's Vision 2028 strategy includes investments in R&D and sales/marketing, potentially leading to growth and opportunities. Stock-based compensation remains a significant expense.
• Customers: The company's focus on enhancing its platform with data, analytics, and AI, along with simplifying hardware and expanding software, aims to improve customer value and experience.
• Suppliers: The company has long-term purchase commitments totaling $32.5 million through 2030, indicating ongoing relationships with key suppliers.

Next Steps

• Continue executing the Vision 2028 strategy focused on accelerating growth and expanding the path to profitability.
• Invest in research and development to enhance existing products and develop new ones.
• Continue to build a scalable sales organization and invest in sales and marketing activities.
• Monitor and manage supply chain improvements and potential impacts of tariffs.
• Focus on increasing SaaS revenue and managing the decline in hub amortization revenue.
• The company may seek to raise additional funds through equity and debt in the future.

Key Dates

Recommendation

SmartRent shows signs of operational improvement with reduced net losses and strong growth in professional services and SaaS revenue, alongside robust bookings. However, the decline in hardware revenue and Units Shipped, coupled with the ongoing net loss and the expected continued decrease in hub amortization revenue, warrant a cautious approach. The company's strategy for future growth and profitability is promising but still in execution phase. Therefore, a 'hold' recommendation is appropriate, pending further evidence of sustained profitable growth and successful execution of Vision 2028.

Keywords

Smart Home Technology, Property Management Software, SaaS, Hardware, Enterprise Solutions, Real Estate Technology, Access Control, Units Deployed