Earnings call transcript Q4 2022

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Operator

Hello, and thank you for standing by. My name is Regina and I will be your conference operator today. At this time, I would like to welcome everyone to the SmartRent Fourth Quarter 2022 Earnings Conference Call. All lines have been placed on mute to prevent any background noise. After the speakers’ remarks, there will be a question-and-answer session. Instructions] [Operator

like of conference ahead. Investor now Lasater, to turn President Vice Relations. to would over the Annalise I Please go

Annalise Lasater

you, first and Annalise and today. everyone, I’m joined Investor operator. for Lucas SmartRent. Thank us Haldeman, by joining Chairman Relations thank for full Okamoto, quarter My and guidance for the Vice Lasater, you is results Chief through you our as XXXX. year Financial today Hiroshi full President well quarter and Officer. year CEO; of name and taking for as They the will Hello be XXXX, fourth

After of year close, issued ended our website and the which release the XXXX, today’s XX, on market of smartrent.com. both an our earnings December are for section we Relations XX-K available filed Investor

I could the to different be actual contain such forward-looking materially Before call like or implied that discussion and Lucas, statements. risks cause future from recommend during factors involve by review any Report to over position uncertainties. call discussed taking in today regard These Annual including to our updates would undertake Form statements financial the to XX-K. turn SEC these Various We forward-looking our reports statements may results everyone expressed remind made to filings, thoroughly I results are in no we with investors our and obligation factors that a on all provide this before SmartRent. that

quarter earnings year measure would section the non-GAAP included is to on full like comparable measures. release. today’s along directly our these website. refer Also discussion will a highlight the financial the that also certain financial deck with most during call, We is Relations fourth to of to today’s we and GAAP in earnings available measures Investor non-GAAP A reconciliation of

over call review with results. Lucas the to let turn me our And to that,

Lucas Haldeman

update turning I’ll full positive our that the discussing Thank financial highlights. thank fourth for of begin before and results Good I’ll we Then, year Hiroshi detailed provide touch for call. trends you, afternoon in to XXXX. more and supply on quarter joining you XXXX expect financials, and XXXX continue chain some call from to today Annalise. our a the

XX% In improvement third gross on consecutive the through adjusted increased marks operating EBITDA, the EBITDA controls This quarter. quarter by fourth quarter, a third to combination our of in tight compared adjusted margins saw improved we expenses. achieved and of

quarter QX QX and professional all Gross X.X% in hardware, we more higher XXXX three QX QX, which streams: Total three million, more margins sizable were compared than SaaS $XX XXXX. times services XXX% than driven million. than a $XX to over totaled of by increase grew revenue XX% in for the And software. a to in revenue ARR, increases increase delivered

million. throughout with level of XXX,XXX in which our $XXX full $XX For XXX% a year the the increase with as prior We revenue was XX% entire improvement drove we a grew fiscal more revenue year record total year the EBITDA units for in XXX,XXX deployed, XXXX. loss ended units Adjusted of the than an year line guidance to over an year-over-year. million, increase of $XX previous million, quarter-over-quarter year. of was was SaaS

on easing nearly all into report sheet. seeing across and as levels chain our the are I quarter inventory balance for in this built year pleased QX of year-end We we that am fourth constraints. further SKUs to reflected supply

we backlog. install our normalizing through is committed and working to are ability Our unit

hosted of increased streams and achieve as upselling XX%, by year-over-year cross to XX% we our us growth services by expand yielded In selling market in to ability services the revenue and through results and These Hardware penetration professional revenue giving each for drive by efforts our current deeper XX%. XXXX suite, product ARPU continued our customers. XXXX: to strong

on focus to from fourth growth ongoing our these profitability and revenue improved meaningful efforts contributed quarter processes efficiency. in In operational have XXXX. in more believe addition Results to we made we and our optimize even will be impactful the boost strides to they

reiterating on We an adjusted our positive of basis. EBITDA guidance intra-quarter achieving are

the will to over to I in detail. financials the more call now turn Hiroshi review

Hiroshi Okamoto

Thank you, review made guidance. each Lucas. highlights financial full full will before another XXXX metrics detail setting year and of I was progress QX and and and financial year discussing providing on key XXXX in unit metrics record our our year. We more QX significant

was note to year hosted particular revenue grew topline to total million XX% is $XXX the XXXX compared for during now three which from revenue revenue in streams services, XXXX. challenges XX% despite the faced in the XXXX. as up and among chain other $XXX our we of contributes Total supply Of million, constraints growth XX%

revenue services, from $X.XX expected in Total XXXX increased SaaS to was years. of from was QX pattern was growth QX XXXX. with seasonality $X XXX%. for and than XXXX from revenue a revenue SaaS hosted year previous in of doubled million million, XXXX consistent Specifically an in revenue XXXX, Full XXX% $XX and million SaaS $XX ARPU in increase. growth over XX% $X.XX nearly QX to reflecting lower

our are and than grew in we margins SaaS provided principal QX in within quarter The revenue the ARR expenses. more and $X SaaS profitability. operating drivers and Full improvements $XX and gross revenue than was million quarter-over-quarter we QX to and for last guidance year million. highlight more sequentially profitability ranges

improved by X% increase. during Gross margin XX negative all the point XX% a Hardware significantly to percentage for percentage to points improved XX%. margin from services XX%, quarter. from three negative Professional XX increased revenue streams

combination Total gross of of a million improvement revenue a to $X.X to million, gross consecutive quarter While three of in $X.X profit hosted the over increase. services X third QX and gained XX%. improvement. from point points increased total XX% X X.X% streams resulted percentage the percentage margin The X.X%, from

in quarter. upfront over in accounting revenue note An the of deferred of and of has period that shipping recognized. to until fourth Hub instead the latest recognized the to service life now hardware as of which is in services the the is hardware hosted recognized margin fully a revenue will hubs, of be revenue change began Hub item to been our services. the related we version four is estimated continue gross already treatment in late hosted recorded instead over part year

While change has our cash to flow, improved as has on will impact well. the no hardware it accounting treatment hosted and led margins services impact positively margins

$X year the Operating million, expenses, general for million expenses QX. and marketing EBITDA in million $XXX R&D, a and margins that QX we believe decrease operating for individually on Total were expenses aggregate from were and we a from Adjusted which for administrative million adjusted the was QX.We revenue, operating year track million operating full $XX include improvement trend negative negative and quarter. managing profitability expenses. $XX while will and sales gross the and are and as toward million and grow $X.X decreased improving positively $XX for QX, EBITDA

the deployed end of were units the as of Total year XXX,XXX.

XXX,XXX, New over in XXXX XXXX. increase deployed units a were XX%

New requirements. QX. liquidity were cash nearly Units deployed and We in the million, million. seasonality. due have capital believe were XX,XXX, total QX balance at expected units were unchanged the year $XX the sequentially XX,XXX quarter to of We our of bookings ample Booked during working a with end balance to fund $XXX from we the down ended

is XXXX, our growing forward and focus revenue Looking line bottom improving topline adjusted on to EBITDA.

first the guidance and We will full quarter year. provide both for

there growth. deployment has as is less Importantly, suite expanded revenue and new diversified, correlation and product between unit our

We quarter, million. and $XX will for deployed million negative guidance $XX continue QX revenue to units million disclose is EBITDA to $X after negative each $XX is to adjusted million

to $XXX of full Guidance $XX million. EBITDA year million adjusted million XXXX is $XXX $XX revenue for of negative million to negative and

call the remarks questions. to pass now back open the for closing call before we will I Lucas? Lucas for

Lucas Haldeman

Thank you, Hiroshi.

about a both opportunities. The US architecture current and are more XX platform flexibility on and reflect to address of us entire previous As we year, available of our take future rental than including new units, we million allows construction. moment retrofit to the market the our enthusiastic open

diverse Our us upsell cross-sell. offerings entry which multiple product can points and we from of provide

protection, including with Our and undeniable operational value, expense reduction. efficiency increased customers revenue, asset improved provide solutions

property the the our rental in In XXXX, process. our revenue share, SaaS our revenue operations grew as industry. and quarter-to-quarter we our smart offerings market product expanded improving the increasing further for We solutions enhanced home XX%, position market our in profitability and leader and solidified significantly

to in in and off robust demand for market our in and strong are every products is XXXX operate. We a we start channel which

revenue improvement expense We margin are and through profitability growth, achieving on focused management.

I’d Operator, remarks. thank the for you joining we are again prepared like questions. to concludes all call. our for ready This

Operator

Please question the Instructions] of go ahead. comes with [Operator Our Bank. Deutsche first Sidney Ho line from

Sidney Ho

you congrats did seeing the side. demand Thanks appears on any technology talk okay. is change since of the a end question of more my demand the of up sense year? budgets the And holding you customers the hub. and get for on flush when is towards is coming questions for first year? a shifting My new are this taking It what strength Did to in budget you to beginning property noticeable

Lucas Haldeman

thanks Demand to the really, be really for strong. Sidney, continues question.

seeing year fruition. I last coming budgets that into think we’re it’s byproduct in I of from just QX. a think don’t

SmartRent We’re owners to pressure solutions, to actually seeing really levels to that are better control expenses, their turning looking are including occupancy, staff that. optimizing there’s as technology they on and better accomplish their

We this we’re So but I forward. sales year seeing combination trend think had it’s going a both. strong positive of a QX, also in

Sidney Ho

increase past that issue. are, your you for deploy guys just the anymore, demand helpful. in less Thanks. to like about deployment question it’s in That’s the it slowing an ramp is? environment. Okay. the supply year can target you’ve talked How healthy remains of and about follow-up is, -- If but installation the installation seems up Maybe crew you hiring down this constraints a can’t units talk quickly

Lucas Haldeman

it’s we’re forward-looking a good that providing guidance on I think not deployed. note Yes,

to cross-sell it of lot -- the we increase the mentioned, revenue. the of touched to rear and in product in are set just really important the remarks, report going platform, a have my a that’s we but view, I continue is ability with on different and focus. on how metric basis Hiroshi becoming options up-sell but the really As quarterly we that robustness to a of

the So that’s sort first of part.

demand like of yes, seeing come we’re feel needed And we part continue trying we that the to we for can The second feel are increase is, see and as we in. appropriately go that ways to confident the staff we where staffed to as as have we’re our add certainly we question staff. grow,

Sidney Ho

great. of full-year talk maybe Okay, you. last up cannot are what Thank upside follow-up number? you a kind the about will ease the $XXX number? to to guidance part. I in if that look but deploy million to that If constraints of things units, be just And $XXX there supply Maybe we million, at expecting

Lucas Haldeman

we I we’re this lot sit, there robustness of about the important with reiterate I that platform targeted we year want Yeah, get where it’s supply right really at EBITDA. that the least can ways that, worried sort a to of different is think and the now of to not revenue

a I proxy the so, of think as no was even a half that’s a And really away and kind the year year or ago ago, case. take a really important that’s new units revenue, to longer --

why out issues feel confidence have of And but will pathways in we that’s get concern. chain a that’s we there’s so, know let today you a hit we I And putting don’t not lot if that know, like, certainly numbers supply we that there. we about, think these get with to

Sidney Ho

Thank Okay. you.

Lucas Haldeman

Thanks, Sidney.

Operator

line of Ryan question Please KBW. Tomasello go Your the ahead. from next with comes

Ryan Tomasello

taking for Thanks everyone. Hi, questions. the

component, of the revenues finer and point services. was different the hoping if and you between can provide Just breakdown hosted SaaS of a guidance. drivers around dovetailing the remaining the services professional I the hardware on

into how year. you revenues, a have much trend that sight of line through do line SaaS of drilling growth Specifically the down into

seems growth in recent meaningfully pretty more has and actually trends, it at in quarters slowed looking was last revenue like of flattish the SaaS And XQ. few rate

that So for of that the a have can longer and maybe In what’s Thanks. site just you unpack slowdown bit you driving terms XXXX?

Hiroshi Okamoto

Hiroshi. is This Ryan. Hi,

me that trends SaaS show upward. one. continues to positive take Let

mix on I that down the bit of of of QX a really of comes think aberration to was product we will customer hosted think as mix well that, professional to But as improve trajectory we it turns all hardware, kind services in quarter the kind just continue the terms had the seasonality an And three. the Really mentioned. in I out. as services. is and

of terms margins. gross In

Lucas Haldeman

question? your answer Speakers] [Multiple

Ryan Tomasello

I And one on I’ll and try to that in one Hiroshi. Thanks, Yeah. follow more. guess sneak

count like that unit missing longer. disclose, On aren’t KPIs a it you you I’m any committed looks unless different providing it anymore -- the

of extension what’s year there’s curious and driving the read any for Just talked you if that unit any that about committed into pipeline? deployment two typical across timelines

Hiroshi Okamoto

are just a -- to Yeah. this the it about Ryan, in streamlined little metrics focusing just little streamlined, committed XXX,XXX we has a -- in on. provide to this XX-K, wanted is up. of let but we know, we make the what terms units the it more trended units mean, you past we’re have that all in for I and

it is the we XX-K. So all off left script, it in but

Ryan Tomasello

Got it. [Multiple Speakers]

Lucas Haldeman

Sorry.

bit give on other me units a just away moving on of the just more you Let color. mean kind from little reason totally is is. I focusing it

If where at XX%. the XX% numbers, you grew in year look revenue was unit growth a

can of are diverging. kind those So you lines see that

Ryan Tomasello

of thinking Thanks hardware And Lucas. the just guess, given final intensive satisfaction a often product. I question terms implementation, talk for then to in least the installations. glove SmartRent’s combined the that scalability puts one the growth obviously, with over I you bit nature rates using approach and get on through the model of the of is one, about bottlenecks that that one picture of of at benefits we think Right. bigger in usage the around -- one offset perceived and But that guys a business platform latter most the time, client is of white

So the the the to approach strategy Board if intensive business thinking to or over just to a there whether and flexibility management or a that’s trying evolve is not about people beyond sustainable process. for installation are more how time understand

Lucas Haldeman

take I’ll Ryan. one. that

it’s question. I think a great

also committed customers goal we certainly but on looking got okay clients. level white some but same rate installation, who we’re trade-off. we’ve That the are for effective are the more other of our cost with we that to ways So be can service, a that glove won’t our accomplish same at

So us continue that. see through you work will to

going scale. constraints allowed issues, But our we’re clients a we now installations slow has into capital from is complete to virtually budget of own we can actually a other service way on doing their think with move all sort the see are model us the and be as I white It of glove. of to us it friends of And options several really get you’ll where our variable what there. with to to of self-installation we have pull -- guidance cornerstone crews. some

Ryan Tomasello

Thanks color. Great. that for all

Lucas Haldeman

Ryan. Thanks,

Operator

question Compass from ahead. of next Please Weaver comes line go Point. the Jason with Your

Jason Weaver

anything I quite ranges, question. to taking of margins sleeve wondering like sort both quarter, that market hardware you was hosted the a afternoon. improvement. Thanks some negative or year the first good improvement about of for At almost it it’s of you my just XX% to or the that X%. implying year services Hey, XX%, midpoint and for comment for you’re as the pricing in if sources course the over X% as full negative can guidance your come And else scale on? well XXXX, something more both seems of updates up have than within from

Hiroshi Okamoto

Yeah.

you’ve one. It’s lot a take combination things actually different that me Let a of that of mentioned.

side, on margins. seeing pricing a efficiencies we’re very the margins, think in also scale, also but our SaaS a but level of coming revenues improvements, seeing where at lot additional increase have will we high the that operational I we’re of reached

Jason Weaver

you right, All thank that. for

Hiroshi Okamoto

Sure.

Lucas Haldeman

can I you question. think go next the Operator, to

Operator

next the from Imperial Capital. with ahead. will Please go Brian of Our question line come Ruttenbur

Brian Ruttenbur

in Great. XXXX Thank talk does XXXX, it But Long you add ARPU, see as much. terms in before and you you you very as it in I can in additional out up XXXX, services, XXXX? my happening assume XXXX, dramatically about added services question. from ARPU pause more XXXX where went what to you tap of

Hiroshi Okamoto

Sure.

that Lucas join then on. Let first me take can and

will to will continue push existing increase as to as we the we’ve continue think that customers, ARPU. our of ARPU our which of up-sell well in to really are cross-sell increase to hard kind I our the terms seen increase we trying

Lucas Haldeman

a just to Yeah, me Brian, little let color that. add

really to saw last I of a but dramatic of year. key that think of grow us know see we opportunity the I increase that’s continuing plan. that our them why increase, platform, and to don’t we’ll customers And I is are It level new kind part that expand gives certainly robust new we having time. adding adding the is so customers all without and to add important. the we think

for both that love I are things to so, to continue And there us grow.

and go you’ll this that year see going continue on continued So to up forward.

Brian Ruttenbur

little average, is me just or on? up? Help kind get can new gave and much down I $XX. drill customers coming things more. us You customers a out you of bit but are where at to it’s $XX, Maybe where average coming me that moved gave trying your new how out the perspective where see out I’m are?

Lucas Haldeman

Yeah.

across are come new a we’re multiple the that to customers on desk exciting coming more New that have seven-day it’s range. me of seeing products the of contracts attached of kind most to them. And

So of some guidance Brian. there that’s kind

Brian Ruttenbur

Thank Okay, helpful. you very much. that’s

In terms so on, quarter. to how test we a an the I believe, going beta us you tell update know that going first that Can I us far? where of deployment. in of about you’re and giving are betas couple WiFi do and are

Lucas Haldeman

Yeah.

have We going growing fantastic. and betas several they’re

multifamily seeing product. of that our demand It’s I something service embraced we think phase a industry how the really next and for needed that what’s the residents. as of has We’re lot

feel incredibly about we’re beta. bullish that product early days, I product It in and So that is line.

be I something not and it’s a we we that, our signs going all publicly. a seeing forward. to it’s the lot you think guidance have provide that that So piece we’re can of But like we tell of really business going where important to

Brian Ruttenbur

for And Okay. Hiroshi. last question then

happen XXXX? In in should to or we beginning breakeven flow, that for of look of year cash something getting of this kind does that terms positive, is the XXXX,

Hiroshi Okamoto

Yeah.

positive one that. positive guidance free in adjusted And from or will that modeling is two of EBITDA flow is given that we’ve after XXXX. So quarters kind the cash intra-quarter turn we

very XXXX So, in realistically positive. sometime is

Brian Ruttenbur

much. very you Thank Great.

Hiroshi Okamoto

Yeah.

Lucas Haldeman

Thanks, Brian.

Operator

Fitzgerald. line with Brett Knoblauch of Cantor go ahead. question next from Please Your the comes

Brett Knoblauch

basis, guess, on growth bit, taking think, sequential just new ARR, a kind I new deployed my as unit I On was and I I kind guess, for added more. there? ARR per bit guys, the takes Hi of puts Was that net a expecting a guess, I question. any seasonality, declined of thanks

Lucas Haldeman

But continues terms continues of expand, seasonality of for to a business. is, always I important the a question. total volume. in looking of thanks this you’re some the total it’s since the come that down percentage Yeah, from step metrics been it at QX QX, Brett, seeing think to is continues grow, of Yeah. revenue. beginning as think bigger become we’re to the I in

Brett Knoblauch

we ARR to in growth I in it. guess, should how expect Got trend And XXXX?

Lucas Haldeman

see it you’ll direction continuing think to I in ARR the growth trend been has going.

flowing you the at all continue the I And increases are as think three get of only help going to guidance If products, for year, kind full pricing certainly streams continues additional we SaaS those in look see of add as and to revenue that ARR, to through. to and grow you how as flowing just software there. well

in all So as see trying of we’re it’s I of think a time well. core what sort mean, that grow key the metric focus to aware you’ll of that. and meaningful business think, we’re of over a growth I I really

Brett Knoblauch

Perfect. Understood. Thanks guys.

Lucas Haldeman

you. Thank

Operator

next question Tom come will with Your from ahead. Please Instructions] [Operator DA the go Davidson. line of White

Tom White

for Thanks question. taking my Great.

quarter in one implies the but the the I’m kind year-over-year the quick site plan, the full color year any midpoint into or that’s of rate, revenue growth curious decel for there? any the first Thanks. of conservatism on due the of guess, kind just just and to is a Just year. last the three baked outlook significant quarter outlook versus first pretty there a if quarters the maybe of I the guidance.

Hiroshi Okamoto

Yeah.

estimate are. to at of for the range will QX QX We that we’re bake a of and -- and have that But different kind end where because Tom. the feel continue within to question, our we be. we we where that guidance best So increase year rate range It’s thanks is pretty for at we we the for already, the March feel scenarios. almost the the revenues good full X, expect of gave in feel we we provide of

Lucas Haldeman

Yeah. I’d a couple Tom, of just just to that, add anecdotes.

year-over-year, of strong. our which at quarter going -- also guidance in would north XX% low And think record it you’re guidance, think incredibly of the I -- of is range end revenue. would it’s revenue be I to that another growth

hit think really I where we’re a quarter, we’re get first to strong than certainly having So year issues. with supply starting last chain stronger

look healthy year-over-year, you pretty if growth. so, step-up the revenue, And at of sort in

Tom White

Okay. it. you. Appreciate Thank

Hiroshi Okamoto

Tom. Thanks,

Operator

at We over will I back questions this the closing now have further time. for to any turn call Lucas remarks. no Haldeman

Lucas Haldeman

everyone to thanks, Thanks, operator the forward all call Regina. upcoming the -- appreciate thank and investor feedback. Yeah, for you to conferences I’d like seeing and look in joining

Operator

call. thank you Ladies all will for today’s that and joining. gentlemen, We conclude

disconnect. You may now

SmartRent (SMRT) 8 Mar 232022 Q4 Earnings call transcript