SMRT - Earnings call transcript Q3 2024

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Operator

Thank you for standing by. My name is Jeannie, and I will be your conference operator today. At this time, I would like to welcome everyone to the SmartRent Q3 2024 Earnings Call. [Operator Instructions] I would now like to turn the conference over to Kristen Lee.

You may begin.

Kristen Lee

for today. you thank and joining us Hello, My SmartRent. Kristen Lee, Officer for Chief Legal name is today Daryl the joined and I'm by John Executive Interim Dorman, Officer; Principal Chairman of Board. Stemm, CFO and

we Before the our with section on SEC, the of an available release of are Investor and XX-Q which issued both the market filed earnings our today, opened Relations website, smartrent.com.

that measures. We directly is will third turn included these today's today's comparable website. And would call, I that, Investor call our investors recommend non-GAAP to that during with refer certain the to risks XX-Q. results forward-looking the our undertake on provide call to in the and over review could actual regarding by will SEC GAAP like uncertainties. everyone any with such Relations discussion that would statements on factors to SmartRent. Also, most before no financial highlight to the also implied certain future forward-looking expressed contain to our of the along updates quarter earnings measure, involve non-GAAP to during reports I the this statements including These discussion taking available John, Form turn annual financial report or financial these release. in quarterly cause factors may I results call, and materially like we We in Before presentation filings, we John. is our and Form Various earnings to section that reconciliation today different remind obligation our over be are all A a position discussed XX-K made measures, statements. thoroughly on reports from of

John C. Dorman

you us all morning, for joining Good and today. thank

what significant resilience third As of quarter I'd substantial initiate decision during since during definition, challenging It's to entire to see at on our alignment, Board's of we the transition a XX been passion, first strategic leadership the this exciting focus commitment and is, team acknowledge level period. It's period to by demonstrated change. really now a the the team the of at weeks announced SmartRent. been and has like any report SmartRent, we

our reflecting this deeply importance sustainable of management with shareholder company that a team around all the like value, driving transition, has operational to viable so this I'd important morning. key in improvements decision the Board order the this cover this recovery. In toward effectiveness to period, the During about aligned and plan engaged topics progress the direction of both we're in significant the on been inform entire our strategic for in assessing investors X

we've First, quarter this of I'll summarize transition. what first learned during

we've things Second, I'll accomplished some highlight this that period. during

revenue both too process. provide issues difficult search. Everything compelling. We that the the an execution strengthened our potential address, the update overreliance for our that CEO revenue of growth, primary on the sustain the a to transition value factors: from one, sales number That growth are hardware issues guiding remains finally, decision. effective framed lack from growth transition X, initiate in market a levels distracting of an organization; which which scalable not challenges all of and to to build nearly SmartRent X total performance differentiated all to and go-to-market shareholder issues, firm proposition remain driver number X, the key customers a election and confirmed of and operational we've and execution position, focus high and model, stemmed revenue that leadership our key uncertainty. To during profitability; company our while drive are while macroeconomic conditions results. excellence of business on leadership our the our become very delivers to core belief market, affecting financial revenue and importance resulting profitable of distraction sustained a CEO both recap Board's drive learned we've strategic a I'll our our to high clear, focus And that I'll on objective are our X, SaaS has of be focus central key that pillars growth is, perspectives North number X the Star number Third, from confirmed value; making the is and the plan SaaS since our search headwinds decision leadership the concluded

growth, we're quarter Two, The deliver concerns. as the we challenges some those only address challenges. to the we Four, and about discussed sales Three, during higher undervalued. is new key the team we earlier, Six, the on the momentum we we our we one Five, that $XX.X Cariola shareholders excellent I While this the lead in even able stabilized Board's repurchased team, to highlight shortly. demonstrating transition, X.X listen to this has recruited and some revenue quarter. investors as Natalie forward stock million learn been which I past their accomplishments even with building stock priorities a revolving described shares we entire is transition, are door. demonstrating to search, Chief before despite to and the delivered return while of energized million Officer customers actively delivered concluding growth were highly of year-over-year SaaS Revenue teams. executive into our XX% we our progress CEO successfully have thereby management conviction capital by summarize which for confident the that We will made account the we're search. by and revitalization CEO potential engaged our as to

to entire service around I will We pillars, excellence, which strategic Seven, investing are X company customer a expand have minute. on in we address needs. the aligned deeply customer committed to and alignment and

SaaS of and issues, who businesses and exciting platform candidate the with negotiating our of turned CEO CEO we strong were final very the sustainable final superiority enhancing refers that transition. These pillars particular candidates to complete with informed skills the firm, businesses, efforts our of of at candidates candidates to to identify exceeded quality helpful had in to performance crystallize narrowed engagement management shortly an several operational maximize the and strategically thereafter. a entire highest of execute predictable a will platform been align able first, can of It's experiences we of focus few met this able focus that the and story. After and our value on particular scale select multiple using a value at the ARR interest and running. partnerships for focus new company much and XXXX. position. outside satisfaction; size CEO strategic our our perception pillars for importance or AI announce the we Through pillars, selected to during executive the our quickly, that interviewing current operations general finding successful all improve these X the creation successfully multiple the around and our which team help can on management demonstrated We're search that work high-growth potential candidates. operators initiatives clearly effectively that which had shared with search are leading the resource both launched cast with individuals, fourth, has of shareholders. larger search SmartRent. first to excellence, customer for more than have surprised forging to and list second, that presented individual successful long to opportunity. are: IoT we This the we highly-qualified a extremely weeks the collaborative begin run to includes residents When an during be and been terms process the expressed criteria to was platform align these and the drive pillars allocation value. quarter around ensure strategic to were new third, We our broad these the Importantly, we integration Board's focus whom of in The ground has growth; opportunity we hit CEO a attract hope with general candidates placed to SmartRent's We be the deep expect net solutions; world-class drive evaluation process for a while candidates, contract Board pleasantly entire better by the significant to and candidates current innovation, a by key challenges leader with to will engagement and had

of the platform path have to I enhanced is trust Board that the we're shared together, North optimistic credibility on an deliver and this as only reestablish state ever competitive As our what create the it public products and aware we with will our hardware time only actual results. that advantage industry-leading will deliver a to to I meet restore over pillars customers' achieving efforts build hope than well of to on and become discuss company as that this development goal. Taking these sustainable enthusiastically focus a differentiated needs in our that can investors, that We're SaaS SmartRent we shareholders. Star I excited clear all that morning we increasingly is more value to and those strategic

strategic committing of the directly next will more to our This pleased momentum activities directed superiority, investment to pillars announce ARR our Board platform the year deliver transition to the that Towards innovation. million end, to strategic a around investment and that X operational the results of is today collaborative and I'm over $XX related accelerate quickly. strategic growth, excellence, be

same to making to will return returning through make that your for Rather, and we turn and as share patience investment results investment Daryl. We in I strong the at now that year. strategic make to stakeholders using and cash forward over investors, this By investment support sheet mean to our this believe that accelerate progress. have now aligning plan will time. To demonstrate the look other we our not we we're to and higher that the drive delivering will capital and continue transition this to does to that with our justify our investments call forward hope balance to you next business our be we're committed clear, momentum. Thank patience transition. to we carefully We accelerating to strategic negative to margins reestablishing targeted pillars, shareholders the and sufficient repurchases navigate customers, growth. it

Daryl Stemm

our joining everyone. Thank you call and today. appreciate We morning, you, good John,

focus conditions customer strategy believe As our growth. core own as we operational third market enhancing remains on quarter, mind. well of navigated satisfaction SmartRent's on improves, to growth that solid, top we're delivering our has capitalize ensuring ARR positioned been and through our We and excellence

growth quarter, we This focused over were deals. on one-off hardware ARR

in and units ARPU crucial quarter, SaaS key improvements for XX% a company that ARR During in robust SaaS the deployed, year-over-year the revenue, are increase delivered growth. driven X by sustainable primarily metrics

$XX.X from the $XX.X increased primarily XX% XX% a last quarter in of decreased to same shipped in revenue to revenue from by and up decrease Hardware $X.XX million. million, units million. to services revenue, Our to by X% year, last lower for including booked by was SaaS $XX.X decreased $XX.X $XX.X by revenue million professional the increase million million, quarter $X.X X%, $X.XX Hosted from the quarter saw to ARR ARPU SaaS And units increased quarter Units grew revenue, from last XX% to to driven services quarter SaaS year, by deployed. XX% from million. year. Total primarily the XXXX. $X.XX from same $X.XX improvements $XX.X of an new ARPU SaaS also third same the up pricing. of attributable

units XXXX, last XXX,XXX, reached XX% XX, year. increase September of just As from deployed a over

expenditures New by of prior quarter a $XX.X broad million, includes bookings with bookings XX% same million, customers' are of units during for deployed. units. defer quarter decreases the Total macroeconomic just over or capital units in shipped, to in quarter units new attributable by Total XX,XXX XX,XXX bookings the XX%, decision units to conditions. year. $XX.X were approximately and Overall the primarily decreased decrease deployed, units new deployed booked the our from driven

of of management. This gross addition, units, and in gross gross product XX.X% primarily impacted significantly margin. improvement to offset the and in decrease changes saw same quarter from cost XX.X%, million of quarter prior most margin the separation in revenue year, our SaaS quarter this by reduction with were the the Operating profit of $X.X XX.X% our $XX.X Net was in increasing deployed from primarily quarter EBITDA gross million, XX% expenses related third $X.X million, from Hosted leadership Total primarily stream the in driven $XX.X $XX.X to XX% Total and of to our In to year. in improved a in loss changes leadership same $X.X to million from to flat prior down to sales the due improved overall profitable Adjusted margin gross at have year. expenses volumes. the structure from change. and to increased reflecting the $XX.X million million our million to variable by sales organization due costs. the gains $XX.X which mix remains the of year. of was quarter impact last slight million compared a profit shipped in in services to onetime losses loss $X a million increased XXXX. same prior

spots, our disappointing positive of quarter but and we QX third Although company. significant, for were there were was believe not few a results a bright the transition unexpected. quarter

technologies, the operational rates. Associates, the We that of building benefits optimistic remain efficiencies technologies As Recent John increased customers experiencing, that enhanced smart our there's mentioned, already at are highlight future costs. Parks and including company. improved the benefits smart cost, reduce of for income, about studies, net by experience, one retention demand significant integrated reduced including enhance operating believe scale and residence property we operational

back quarter. to Turning the

Our provides strategic cash us in with approximately $XXX million strong balance sheet flexibility.

approximately million our in of X.X reflects This repurchase Committee's repurchased additional available returning aggregate Board an This we've shares our X.X approximately cost million shareholders of leaving QX, commitment X, approximately repurchasing value by confidence $XX.X $XX.X plan. our through million shares and aggregate an purchasing $X.X continued at quarter, Management November we shares action continued and at in million. to We've SmartRent. to million, cost authorized on

We focus shareholder the belief company's maximizing long-term will our value. in continue on affirming to value,

market economic industry, successful indicators initiatives strategic trends clarity of reinstate We expenditure our several key monitor the affect of continue conditions, timing decision guidance, and to that our inform closely underway. that will within the currently on capital to including execution stabilization

we positioned factors these guidance. In we strong. offer align, the despite to better is near-term be SmartRent's believe foundation As challenges, will conclusion, strategic

our ARR growth, operational opportunities. Thank continued open the drive excellence, we your for collaborative us Our navigate and allocation, line to and sustainable challenges capitalize capital innovation, and questions. growth current pillars position as execute towards and you now future commitment as as the our well support commitments around and platform innovation. on take sustained to superiority, your prudent well We'll

Operator

KBW. [Operator Instructions] And Ryan comes the Tomasello question from first your with line of

Ryan Tomasello

updates all the strategic on the front. Appreciate

any you've and hoping how few around capital expectations macro around there's year, you last on evolved since can generally, last you next customers a we around of been over from put around expenditures fourth been recent and point continuation bookings just have unit through update, facing headwinds start got to we a months the wanted the Just those put if was as and deliveries. think for finer what the can headwinds guardrails quarter an have indications

Daryl Stemm

and was, still [Technical [Technical didn't rate it are down see team. a macroeconomic also capital interest mind, a particular But was macro Appreciate expenditures there's don't Difficulty] the engaged customers' around And September, the results those our relatively interest a loosening the added heavily Yes, go We've customers, to amount of expect since see our timing Ryan. the in you, any to changes. see that certain as my Difficulty]. future [Technical well. of Most of of in rates but just amount to feeling primary Natalie we around conditions angst And are of the to X our still surprising result folks start from thank call. as conditions, election -- been in a Difficulty]. with in general we've expect there angst good

in investment election XXXX. lead hopeful more customers in to property are our that results the really from the might We technology of

Ryan Tomasello

sure think for be was not but that's sustainable should time audio it's I strategic allocated elaborate next our the there's to and issues more the And operator. mean just impact million to the out, going front just margins cash the I'm some $XX on business for the on just breakeven a business? we year, think that the and to the turning about positive to just end, And line flow on by you what maybe that, if called over investment maybe what of profile areas the towards, how then exactly

Daryl Stemm

the Okay, around John going investment thank the X be pillars that general did guidelines the And outline, strategic you. to activities. that's

earlier leadership management factors the Difficulty] well organization, of platform primary are [Technical really the solutions. work internal John and refocusing Some the that These is the a called around IoT scalable which on core as go-to-market areas out our around focus. of things building other solution, as

operations, in as impacts of is so, that lead our And from most could directly general experience standpoint, the that way and well I a to, the as sales it's practical customer investments Difficulty]. anything going engineering marketing, to satisfaction really [Technical

Operator

of comes with question next line Co. & Davidson the Tom Your from White D.A.

Thomas White

I'm to the not there a a to about IoT. back million. the Daryl, just and million. core territory into one just the some products, what start about follow-up follow-up, you're last just of Can returns? taking little on time with a think trying I you a like company talk bit investments reconcile bit about referring then little when Maybe you might you frame the maybe the And focus $XX mentioned core more $XX yield the on to guess comments negative margin the

commitment curious to WiFi, how the investing if differently than guys did. views Board that view and Just there you opportunity the Lucas any

Daryl Stemm

team and Yes, work we started going we've bit about Natalie perhaps first leaderships, let of then years, core been we've look Cariola last speaking over on. our X why, sales We're acted and to John need sales again, moving which, the a ago. [Technical and already our sales really Difficulty]. the several might the certainly me on team of applying point context. already if offering to brought team and that attention and And this, company our to, the has the the solutions foremost, month offer start Difficulty]. on and on back core And the [Technical offering. to again, to investments the timing are started Really will more the managing core adjacent we has

one back. me even step further take Let

the platform think core point direct the our the impact we solutions value our of solutions And resources core that work impact Our protecting so, proposition. In management the proposition more customers. efficiency improving applied assets are our our around work leadership our lost adjacent most Difficulty] the in IoT that we've operations [Technical offerings, of is way that recent and operations solutions, in attention I helping solutions, to we've our value core market. years, doing also the And customers. and of clear that our their have more management positions and

investment both and solutions our to this our position. market-leading clearly So work IoT reestablish management is reinvigorate our to

John C. Dorman

clarify further, both just would respect to question the response with and I Ryan to line. raised time Tom Daryl, in

of that we accelerate a we what's sustainable in be Star and for and behind would I not While these specific see investing of strategic time achievement our can't and long-term growth. those make investments be goal our will measured our going some a motivating line highlight specific to some opportunities. growth about opportunities around see more XXXX, North in our it's investments to time very won't ARR accelerating to returns, highlighted multiple opportunities that is And developing pillars horizon. We accelerate we're

Operator

Your comes Morgan of Stanley. the final from Woodring line question with Erik

Erik Woodring

I'm make challenges SaaS, and on turn a the I deploy units. on the the the SaaS, on a I that long-term that or or X more understand an was beginning Obviously, high-margin, speak. follow-up. a on we so is and lack which on not developing to to SaaS hardware obviously hardware I that comment is then attention one focusing meaning focus go But overreliance factors, comment. the I there sales. SaaS. clarification, necessarily maybe And overreliance to an from to focus my from when X have you just guess a of And your wondering, on just And on own I focus about want understand more talk challenges I have is hardware, need question annuity, and SaaS. distracting maybe deployments just was quickly, sure John, renewed X. to

John C. Dorman

the resources alignment drive of in from and leading to But SaaS point distracted in we hardware other that, scattered units, all of deployment with growth. the we using growth distractions hardware what of that SaaS around strategically more around initiatives of our was our latter. building I challenge evaluation, is It's referring spear of hardware own became the Star. toward hardware is terms North to Obviously, overly is sale drive the of And our tip the the growth. solutions, the our SaaS distraction the Board's driving core hardware focus it's and

Erik Woodring

is environment. from went of And That the maybe you are hearing then Obviously, my makes sense. just follow-up customers, a what you right? lot macro your through

really Would what is not with concerns either I'm their expanding just on you're uncertainty around weeks. So your the are internal last your about what SmartRent hear about these that. customers saying on It's XX you. over changes hearing that maybe at confidence that customers are in changing future or impacting focused to from How working relationships, work just going ongoing more the SmartRent, changing and love that path. with whether even means salespeople,

John C. Dorman

to strength operational price the what down from customers the customers concerns which stock low settles with would we is of are a the in pressure And strength positive, hear sheet quick our balance market our and some happy don't reminder over that financial say from our leadership about just general. we I does that But issues have customers pretty over feedback is and principally imply. is the say our our encouragingly not from that quickly. and solutions customers and

the operations to platform been remedy area customers that our priority with in very pleased have a platform, our our alluded has that's strategic the But Board to, integration as completing have issues quickly. the with As to high of focus some provider. SmartRent and around the with Daryl general, a of we quite IoT of level investment commitment

Daryl Stemm

remains X important SaaS revenue metrics to which net comment And in our to strong. want just churn both cases, I growth, with that is in it retention. regards and regard, And

is churn [Technical Our remains Difficulty] XXX%. revenue above and our about net retention

So experience. a indicator positive about it's in cases, both our customer

John C. Dorman

[Technical drives We turnaround core the just Difficulty] that, a need successful opportunity strong, focus over of SaaS clear transition, leadership indication the was to there's decisions the And guided very which very to here, here. the again, that our business back not the of is leadership SaaS And business position. building and other [Technical scaled get the so magnitude our by our and we on quite build market on of distracted virtue market initiatives. to fully aligned Difficulty] opportunity this to need

Operator

That concludes our today's Q&A session. joining Thank you for call.

may now You disconnect.

SmartRent (SMRT) 6 Nov 242024 Q3 Earnings call transcript