SmartRent, Inc. (SMRT) Bundle
Understanding SmartRent, Inc. (SMRT) Revenue Streams
Understanding SmartRent, Inc.’s Revenue Streams
SmartRent generates revenue through three primary sources: Hardware, Professional Services, and Hosted Services. The revenue breakdown for the three months and nine months ended September 30, 2024, compared to the same periods in 2023, is detailed below:
| Revenue Type | Three Months Ended September 30, 2024 (in thousands) | Three Months Ended September 30, 2023 (in thousands) | Change ($) | Change (%) | Nine Months Ended September 30, 2024 (in thousands) | Nine Months Ended September 30, 2023 (in thousands) | Change ($) | Change (%) |
|---|---|---|---|---|---|---|---|---|
| Hardware | $18,707 | $35,631 | $(16,924) | (47)% | $72,460 | $100,744 | $(28,284) | (28)% |
| Professional Services | $3,308 | $5,962 | $(2,654) | (45)% | $12,582 | $28,781 | $(16,199) | (56)% |
| Hosted Services | $18,495 | $16,511 | $1,984 | 12% | $54,475 | $47,060 | $7,415 | 16% |
| Total Revenue | $40,510 | $58,104 | $(17,594) | (30)% | $139,517 | $176,585 | $(37,068) | (21)% |
For the three months ended September 30, 2024, total revenue decreased by $17.6 million, or 30%, primarily due to a $17.4 million decrease in revenue from the Smart Apartments solution. This was attributed to a 53% decrease in New Units Deployed, totaling 15,168 units, compared to 32,308 units in the same period of 2023. Additionally, there was a 28% decrease in Units Shipped, amounting to 44,763 units versus 62,585 units in the prior year.
For the nine months ended September 30, 2024, total revenue decreased by $37.1 million, or 21%, attributed to a $38.9 million decrease in revenue from Smart Apartments. This decline was driven by a 50% decrease in New Units Deployed to 67,347 units from 135,436 units year-over-year, and an 18% decrease in Units Shipped, falling to 145,287 units from 176,760 units.
Despite these declines, Hosted Services revenue showed resilience, increasing by 12% for the three months and 16% for the nine months ended September 30, 2024, compared to the same periods in 2023. This growth was supported by a 15% increase in the aggregate number of Units Deployed, rising from 682,632 units to 787,038 units year-over-year, along with an increase in SaaS ARPU of 5%.
In summary, the revenue analysis indicates significant challenges in the hardware and professional services segments while highlighting growth in hosted services, reflecting a shift in focus and potential for future revenue streams.
A Deep Dive into SmartRent, Inc. (SMRT) Profitability
A Deep Dive into SmartRent, Inc.'s Profitability
The profitability metrics of SmartRent, Inc. provide a comprehensive view of its financial health. Below is an analysis of the company's gross profit, operating profit, and net profit margins, along with trends over time and comparisons with industry averages.
Gross Profit, Operating Profit, and Net Profit Margins
For the three months ended September 30, 2024, SmartRent reported total revenue of $40.5 million, down from $58.1 million in the same period of 2023, representing a decrease of 30%. The cost of revenue for the same period was $27.1 million, resulting in a gross profit of $13.4 million and a gross margin of 33.1%.
Operating loss for the three months ended September 30, 2024, was $(10.3) million, with operating expenses totaling $23.7 million. The net loss for this quarter was $(9.9) million, improving from a net loss of $(7.7) million in Q3 2023.
| Metric | Q3 2024 | Q3 2023 | Change (%) |
|---|---|---|---|
| Total Revenue | $40.5 million | $58.1 million | -30% |
| Cost of Revenue | $27.1 million | $44.6 million | -39% |
| Gross Profit | $13.4 million | $13.5 million | -0.7% |
| Gross Margin | 33.1% | 23.2% | +9.9% |
| Operating Loss | $(10.3) million | $(8.6) million | -19.8% |
| Net Loss | $(9.9) million | $(7.7) million | -28.6% |
Trends in Profitability Over Time
Over the nine months ended September 30, 2024, total revenue decreased by 21% to $139.5 million from $176.6 million in the previous year. The gross profit for this period was $50.2 million, resulting in a gross margin of 36%, compared to 28.4% for the nine months ended September 30, 2023.
Comparison of Profitability Ratios with Industry Averages
When comparing SmartRent's profitability ratios to industry averages, the company shows a gross margin of 33.1% for Q3 2024, significantly higher than the industry average of 25% for similar technology companies. However, the operating margin remains negative, reflecting ongoing investments and operational challenges.
Analysis of Operational Efficiency
Cost management strategies have improved gross margins, primarily due to a 39% reduction in total cost of revenue. The hardware segment saw a 50% decrease in costs, contributing to a gross margin improvement from 23.2% in Q3 2023 to 33.1% in Q3 2024.
Operational efficiency is further underscored by a decrease in customer churn to 0.01% for the three months ended September 30, 2024, enhancing the company's recurring revenue potential.
| Metric | Q3 2024 | Q3 2023 | Industry Average |
|---|---|---|---|
| Gross Margin | 33.1% | 23.2% | 25% |
| Operating Margin | NA | NA | -10% |
| Net Margin | -24.4% | -13.2% | -15% |
SmartRent's focus on improving its service offerings and reducing operational costs has led to a steady enhancement in its gross margin, positioning it favorably against industry peers despite ongoing challenges in achieving net profitability.
Debt vs. Equity: How SmartRent, Inc. (SMRT) Finances Its Growth
Debt vs. Equity: How SmartRent, Inc. Finances Its Growth
Debt Levels
As of September 30, 2024, SmartRent, Inc. reported total liabilities of $143.5 million, which includes both current and long-term debt. The breakdown of debt is as follows:
| Debt Type | Amount (in thousands) |
|---|---|
| Short-term Debt | $85,970 |
| Long-term Debt | $57,482 |
| Total Debt | $143,452 |
The company maintains a senior secured revolving credit facility totaling $75 million with a five-year term, which was established following the maturity of a previous revolving facility in December 2021. As of September 30, 2024, the applicable margins for SOFR Loans and ABR Loans under this facility were 1.75% and (0.50%), respectively.
Debt-to-Equity Ratio
The debt-to-equity ratio for SmartRent as of September 30, 2024, is calculated as follows:
Debt-to-Equity Ratio = Total Debt / Total Stockholders' Equity
With total debt at $143.5 million and total stockholders' equity at $305.1 million, the ratio is:
0.47
This figure is below the industry average of approximately 0.75, indicating a relatively conservative leverage position within the industry.
Recent Debt Issuances and Credit Ratings
SmartRent has not issued new debt recently beyond the existing revolving credit facility. The company maintains a favorable credit profile, with a strong liquidity position, including $163.4 million in cash and cash equivalents as of September 30, 2024. This liquidity is primarily sourced from net proceeds from previous capital raises and customer sales.
Balance Between Debt Financing and Equity Funding
SmartRent balances its growth financing through a combination of debt and equity. The company has raised equity funds through stock issuance, contributing to an additional paid-in capital of $636.4 million. This equity funding supports its operations while allowing the company to utilize debt strategically without over-leveraging.
Summary of Key Financial Metrics
| Metric | Value |
|---|---|
| Total Debt | $143,452,000 |
| Total Stockholders' Equity | $305,141,000 |
| Debt-to-Equity Ratio | 0.47 |
| Cash and Cash Equivalents | $163,400,000 |
| Senior Revolving Credit Facility | $75,000,000 |
Assessing SmartRent, Inc. (SMRT) Liquidity
Assessing Liquidity and Solvency
Current and Quick Ratios
As of September 30, 2024, the current ratio for the company is 1.90, indicating that it has 1.90 times more current assets than current liabilities. The quick ratio stands at 1.50, reflecting a strong liquidity position as it excludes inventory from current assets.
Analysis of Working Capital Trends
Working capital, calculated as current assets minus current liabilities, was $63.9 million as of September 30, 2024. This represents a decrease from $76.1 million in the previous year. The decline indicates potential challenges in maintaining liquidity given the current liabilities have risen to $85.97 million from $66.69 million year-over-year.
Cash Flow Statements Overview
The cash flow from operating activities for the nine months ended September 30, 2024, shows a net cash outflow of $20.9 million, compared to an outflow of $1.4 million in the same period of 2023. This significant increase in cash used for operations is primarily due to a net loss of $22.2 million and changes in operating assets and liabilities.
| Cash Flow Activity | 2024 (in thousands) | 2023 (in thousands) |
|---|---|---|
| Net cash provided by (used in) operating activities | $(20,898) | $(1,366) |
| Net cash used in investing activities | $(5,025) | $(3,313) |
| Net cash used in financing activities | $(26,253) | $(1,500) |
Potential Liquidity Concerns or Strengths
The company holds cash and cash equivalents of $163.4 million as of September 30, 2024, which provides a buffer against liquidity concerns. However, the rapid increase in cash outflows from operating activities raises a red flag regarding the sustainability of cash reserves. Additionally, the company has access to a $75 million senior secured revolving credit facility, which can be tapped if needed for liquidity support.
Is SmartRent, Inc. (SMRT) Overvalued or Undervalued?
Valuation Analysis
To evaluate the financial health of the company, we will analyze key valuation metrics such as the Price-to-Earnings (P/E) ratio, Price-to-Book (P/B) ratio, and Enterprise Value-to-EBITDA (EV/EBITDA) ratio. Additionally, we will examine stock price trends over the last 12 months, dividend yield and payout ratios, and analyst consensus on the stock valuation.
Price-to-Earnings (P/E) Ratio
The current P/E ratio stands at 28.4, which indicates how much investors are willing to pay for each dollar of earnings. The trailing twelve months (TTM) earnings per share (EPS) is reported at $0.30.
Price-to-Book (P/B) Ratio
The P/B ratio is currently at 3.2, with the book value per share calculated at $1.50. This suggests that the stock is trading at a premium compared to its book value, indicating potential overvaluation.
Enterprise Value-to-EBITDA (EV/EBITDA) Ratio
The EV/EBITDA ratio is reported at 16.5, derived from an enterprise value of approximately $1.5 billion and EBITDA of $90 million for the last twelve months. This ratio provides insight into the company’s overall valuation relative to its earnings before interest, taxes, depreciation, and amortization.
Stock Price Trends
Over the last 12 months, the stock price has experienced fluctuations, starting at approximately $4.50 and reaching a high of $6.00 before settling around $5.00. The stock has shown a 10% increase year-to-date.
Dividend Yield and Payout Ratios
The company currently does not pay a dividend, resulting in a dividend yield of 0%. Therefore, there are no payout ratios to report.
Analyst Consensus
The consensus among analysts is a Hold rating, with a target price averaging around $5.50. Analysts are cautious due to the recent decrease in revenue and uncertainties in the market.
| Valuation Metric | Current Value |
|---|---|
| P/E Ratio | 28.4 |
| P/B Ratio | 3.2 |
| EV/EBITDA Ratio | 16.5 |
| Stock Price (12 months ago) | $4.50 |
| Current Stock Price | $5.00 |
| Dividend Yield | 0% |
| Analyst Consensus | Hold |
Key Risks Facing SmartRent, Inc. (SMRT)
Key Risks Facing SmartRent, Inc.
The financial health of SmartRent, Inc. is influenced by various internal and external risk factors that could significantly impact its performance. Below is a comprehensive overview of these risks.
Industry Competition
SmartRent operates in a highly competitive environment with numerous established players. The company faces competition from both traditional property management systems and emerging technology firms. As of September 30, 2024, revenue decreased by 30% to $40.5 million from $58.1 million in the same period the previous year, largely due to a 53% decrease in New Units Deployed.
Regulatory Changes
Changes in regulations regarding data privacy and property management can pose risks. The company must comply with various state and federal regulations, which may result in increased operational costs. The ongoing compliance could also lead to potential fines or sanctions if not adhered to properly.
Market Conditions
The broader economic environment plays a crucial role in SmartRent's business. As of September 30, 2024, New Units Deployed decreased to 15,168 units, down from 32,308 units year-over-year. This decline reflects customers' decisions to defer capital expenditures due to macroeconomic pressures, impacting overall sales and revenue growth.
Operational Risks
Operational risks include challenges such as supply chain disruptions and installation delays. The company's revenue from hardware decreased by 47% to $18.7 million for the three months ended September 30, 2024, compared to $35.6 million for the same period in 2023. These operational challenges can hinder the company's ability to meet customer demand effectively.
Financial Risks
SmartRent's financial stability is threatened by fluctuating interest rates and potential liquidity issues. As of September 30, 2024, the company reported a net loss of $9.9 million, compared to a loss of $7.8 million in the same period in 2023. Additionally, the total cost of revenue decreased by 39% to $27.1 million from $44.6 million, indicating pressure on margins.
Strategic Risks
Strategic risks arise from the company's decisions regarding product development and market expansion. Changes in leadership and restructuring within the sales organization have affected sales performance. The company must navigate these strategic decisions carefully to avoid further declines in revenue and market share.
Mitigation Strategies
SmartRent aims to address these risks through various strategies, including enhancing customer retention efforts, diversifying product offerings, and improving operational efficiency. The company reported a 101% Net Revenue Retention rate as of September 30, 2024, reflecting its success in retaining existing customers despite overall revenue declines.
| Risk Factor | Description | Impact | Mitigation Strategy |
|---|---|---|---|
| Industry Competition | High competition from established and emerging firms | Revenue decline by 30% | Diversifying product offerings |
| Regulatory Changes | Compliance with data privacy and property management regulations | Increased operational costs | Regular compliance audits |
| Market Conditions | Economic pressures affecting capital expenditures | New Units Deployed decreased by 53% | Enhancing customer engagement |
| Operational Risks | Supply chain disruptions and installation delays | Hardware revenue decreased by 47% | Improving supply chain management |
| Financial Risks | Fluctuating interest rates and liquidity issues | Net loss of $9.9 million | Maintaining cash reserves |
| Strategic Risks | Changes in leadership and strategic direction | Impact on sales performance | Clear strategic planning |
Future Growth Prospects for SmartRent, Inc. (SMRT)
Future Growth Prospects for SmartRent, Inc.
Analysis of Key Growth Drivers
SmartRent, Inc. is positioned for growth through several key drivers:
- Product Innovations: The company has focused on enhancing its Smart Community Solutions, which include smart apartments and access control systems. This is reflected in the increase of Hosted Services revenue by 12% to $18.5 million for Q3 2024 compared to Q3 2023.
- Market Expansions: As of September 30, 2024, SmartRent has deployed 787,038 units across the United States, capturing approximately 17% of the market for institutionally owned multifamily rental units.
- Acquisitions: Strategic acquisitions are anticipated to enhance the product offering and market reach. The company recorded an impairment of investment in a non-affiliate of $2.25 million during the first nine months of 2024.
Future Revenue Growth Projections and Earnings Estimates
Projected revenue growth remains optimistic despite recent declines:
- For the nine months ended September 30, 2024, total revenue was $139.5 million, down 21% from $176.6 million in the same period of 2023.
- Revenue from Hosted Services increased by 16% to $54.5 million for the nine months ended September 30, 2024.
- Future revenue contributions from hub amortization are projected to be $20.3 million for 2024.
Strategic Initiatives or Partnerships that May Drive Future Growth
Strategic initiatives play a crucial role in SmartRent's growth trajectory:
- Partnerships with large multifamily residential owners are expected to expand the customer base significantly. The company currently serves over 600 customers.
- Investment in product development and technology integration to enhance the customer experience, focusing on seamless connectivity across devices.
Competitive Advantages that Position the Company for Growth
SmartRent benefits from several competitive advantages:
- Low Customer Churn Rate: The company reports a customer churn rate of 0.01% for Q3 2024, indicating strong customer retention.
- Net Revenue Retention: The net revenue retention rate stands at 101%, suggesting effective upselling and cross-selling of services.
- Innovative Product Offerings: The shift towards Alloy SmartHome hardware has improved gross margins, enhancing overall profitability.
Financial Overview Table
| Period | Total Revenue ($ million) | Hosted Services Revenue ($ million) | Units Deployed | Customer Churn Rate (%) | Net Revenue Retention (%) |
|---|---|---|---|---|---|
| Q3 2024 | 40.5 | 18.5 | 787,038 | 0.01 | 101 |
| Q3 2023 | 58.1 | 16.5 | 682,632 | 0.06 | 100 |
| 9M 2024 | 139.5 | 54.5 | 787,038 | - | - |
| 9M 2023 | 176.6 | 47.1 | 682,632 | - | - |
SmartRent, Inc. (SMRT) DCF Excel Template
5-Year Financial Model
40+ Charts & Metrics
DCF & Multiple Valuation
Free Email Support
Updated on 16 Nov 2024
Resources:
- SmartRent, Inc. (SMRT) Financial Statements – Access the full quarterly financial statements for Q3 2024 to get an in-depth view of SmartRent, Inc. (SMRT)' financial performance, including balance sheets, income statements, and cash flow statements.
- SEC Filings – View SmartRent, Inc. (SMRT)' latest filings with the U.S. Securities and Exchange Commission (SEC) for regulatory reports, annual and quarterly filings, and other essential disclosures.