Q2 2024 SmartRent Inc Earnings Call

August 7, 2024

Daryl Stemm, Lucas Haldeman, Kristen Lee

Operator: Thank you for standing by. My name is Mandeep, and I'll be your operator today. At this time, I'd like to welcome everyone to the SmartRent Q2 2024 conference call. All lines are being placed on mute to prevent any background noise.

Operator: Thank you for standing by.

Mon-Deep: My name is Mon-Deep, and I'll be your operator today.

Operator: After the speaker's remarks, there will be a question and answer session. If you'd like to ask a question during this time, simply press star followed by the number one on your telephone keypad. If you'd like to withdraw your question, press star one again. Thank you. I would now like to turn the call over to Kristen Lee, Chief Legal Officer. You may begin.

Mon-Deep: At this time, I'd like to welcome everyone to the SmartRent Q2 2024 conference call. All lines being placed on mute, rent any background noise.

Mandeep: Thank you for standing by. My name is Mandeep and I'll be your operator today. At this time, I'd like to welcome everyone to the SmartRent Q2 2024 conference call. All lines are being placed on mute to prevent any background noise.

Mon-Deep: After the speaker summaries, there will be a question and answer session. We'd like to ask a question during this time to be pressed star followed by the number one on your telephone keypad. We'd like to withdraw your question; press star one again. Thank you.

Mandeep: After the speaker's remarks, there will be a question and answer session. If you would like to ask a question during this time, simply press star followed by the number 1 on your telephone keypad. If you would like to withdraw your question, press star 1 again. Thank you. I would now like to turn the call over to Kristen Lee, Chief Legal Officer. You may begin.

Kristen Lee: I would now like to turn the call over to Kristen Lee, Chief Legal Officer. You may begin.

Kristen Lee: Hello, and thank you for joining us today. My name is Kristen Lee, Chief Legal Officer for SmartRent. I'm joined today by Daryl Stemm, CFO and Interim Principal Executive Officer, and Frank Martell, Director and Chair of the Operating Committee. Before the market opened today, we issued an earnings release and filed our 10-Q with the SEC, both of which are available on the Investor Relations section of our website, SmartRent.com. Before I turn the call over to Daryl, I'd like to remind everyone that the discussion today may contain certain forward-looking statements that involve risks and uncertainties.

Kristen Lee: Hello and thank you for joining us today. My name is Kristen Lee, Chief Legal Officer for SmartRent.

Speaker Change: I'm joined today by Daryl Stemm, CFO and Interim Principal Executive Officer, and Frank Martell, Director and Chair of the Operating Committee.

Kristen Lee: Before the market opened today, we issued an earnings release and filed our 10-Q with the SEC. Both of which are available in the Investor Relations section of our website, SmartRent.com.

Speaker Change: Before the market opened today, we issued an earnings release and filed our 10-Q with the SEC, both of which are available on the Investor Relations section of our website, SmartRent.com.

Kristen Lee: Before I turn the call over to Daryl, I'd like to remind everyone that the discussion today may contain certain forward-looking statements that involve risks and uncertainties. Various factors could cause our actual results to be materially different from any future results expressed or implied by such statements. These factors are discussed in our SEC filings, including our annual report on Form 10-K and quarterly reports on Form 10-Q.

Kristen Lee: Various factors could cause our actual results to be materially different from any future results expressed or implied by such statements. These factors are discussed in our SEC filings, including our annual report on Form 10-K and quarterly reports on Form 10-Q. We undertake no obligation to provide updates regarding forward-looking statements made during this call, and we recommend that all investors review these reports thoroughly before taking a financial position in SmartRent. Also, during today's call, we will refer to certain non-GAAP financial measures.

Speaker Change: Before I turn the call over to Daryl, I'd like to remind everyone that the discussion today may contain certain forward-looking statements that involve risks and uncertainties.

Speaker Change: Various factors could cause our actual results to be materially different from any future results expressed or implied by such statements.

Speaker Change: These factors are discussed in our SEC filings, including our annual report on Form 10-K and quarterly reports on Form 10-Q .

Kristen Lee: We undertake no obligation to provide updates regarding forward-looking statements made during this call, and we recommend that all investors review these reports thoroughly before taking a financial position in SmartRent.

Speaker Change: We undertake no obligation to provide updates regarding forward-looking statements made during this call, and we recommend that all investors review these reports thoroughly before taking a financial position in SmartRent.

Kristen Lee: Also, during today's call, we will refer to certain non-GAAP financial measures. A discussion of these non-GAAP financial measures, along with the reconciliation to the most directly comparable GAAP measure, is included in today's earnings release.

Kristen Lee: A discussion of these non-GAAP financial measures, along with the reconciliation to the most directly comparable GAAP measure, is included in today's earnings release. We would also like to highlight that a second quarter earnings presentation is available in the Investor Relations section of our website. And with that, I will turn the call over to Daryl.

Speaker Change: Also, during today's call, we will refer to certain non-GAAP financial measures. A discussion of these non-GAAP financial measures, along with the reconciliation to the most directly comparable GAAP measure, is included in today's earnings release.

Kristen Lee: We would also like to highlight that a second quarter earnings presentation is available on the Investor Relations section of our website.

Speaker Change: We would also like to highlight that a second quarter earnings presentation is available on the Investor Relations section of our website. And with that, I will turn the call over to Daryl.

Daryl Stemm: And with that, I will turn the call over to Daryl. Good morning, everyone, and thank you for joining us today.

Daryl Stemm: Good morning, everyone, and thank you for joining us today. Before we delve into our financial performance and strategic updates, I'm honored to introduce Frank Martell, our CEO and Chair of the Operating Committee. Frank joined our board in 2024 and has quickly become a valued member, bringing fresh perspectives and experience that will support our company through our leadership transition. His leadership and experience are extremely impactful as we focus on enhancing our operational capabilities and efficiencies and capitalizing on growth opportunities in our dynamic market environment. Frank's oversight is critical as we discuss today's updates on our leadership and strategic business objectives. And now, I'll turn the call over to Frank.

Daryl Stemm: Before we delve into our financial performance and strategic updates, I'm honored to introduce Frank Martell, our director and chair of the operating committee. Frank joined our board in 2024 and has quickly become a valued member, bringing fresh perspectives and experience that will support our company through our leadership transition. His leadership and experience are extremely impactful as we focus on enhancing our operational capabilities and efficiencies and capitalize on growth opportunities in our dynamic market environment. Frank's oversight is critical as we discuss today's updates on our leadership and strategic business objectives.

Daryl Stemm: Good morning, everyone, and thank you for joining us today.

Frank Martel: Before we delve into our financial performance and strategic updates, I'm honored to introduce Frank Martel, our director and chair of the operating committee.

Speaker Change: Frank joined our board in 2024 and has quickly become a valued member, bringing fresh perspectives and experience that will support our company through our leadership transition.

Speaker Change: His leadership and experience are extremely impactful as we focus on enhancing our operational capabilities and efficiencies and capitalize on growth opportunities in our dynamic market environment.

Speaker Change: Frank's oversight is critical as we discuss today's updates on our leadership and strategic business objectives. And now I'll turn the call over to Frank.

Frank Martell: And now I'll turn the call over to Frank. Thank you for the introduction, Daryl. Good morning, everyone. I appreciate all of you being on the call today.

Frank Martell: Thank you for the introduction, Daryl. Good morning, everyone.

Frank: Thank you for the introduction, Daryl. Good morning, everyone. I appreciate all of you being on the call today.

Frank Martell: Before Daryl provides us with an operational update and discusses our second quarter results, I want to say a few words about last week's news and the future of smart work. I recently joined SmartRent as an independent board director because I was intrigued and excited by the innovative company the SmartRent is, which is leading in the smart home technology movement and revolutionizing the rental housing industry. Since joining the board, it's become very clear to me that this company is a category creator with a unique and leading market position, compelling competitive strengths, and exceptional growth. Speaking on behalf of our board, we are as confident as ever in SmartRent's long-term potential and are focused on working with the management team to enhance our operations, provide increased value to our customers and the residents, and to drive significant value for shareholders.

Frank Martell: I appreciate all of you being on the call today. Before Daryl provides us with an operational update and discusses our second quarter results, I wanted to say a few words about last week's news and the future of SmartRent. I recently joined SmartRent as an independent board director because I was intrigued and excited by the innovative company that SmartRent is, which is leading the smart home technology movement and revolutionizing the rental housing industry.

Frank: before darrell provides us with an operational update and discusses our second quarter results i wanted to say a few words about last week's news and the future of smart rent

Speaker Change: i recently joined smart rent as an independent board director

Speaker Change: because I was intrigued and excited by the innovative company that SmartRent is.

Speaker Change: which is leading in the smart home technology movement and revolutionizing the rental housing industry.

Frank Martell: Since joining the board, it's become very clear to me that this company is a category creator with a unique and leading market position, compelling competitive strengths, and exceptional growth opportunities. Speaking on behalf of our board, We are as confident as ever in SmartRent's long-term potential and are focused on working with the management team to enhance our operations, provide increased value to our customers and their residents, and drive significant value for shareholders.

Speaker Change: since joined the board it's become very clear to me that this company is a category creator with a unique and leading market position compelling competitive strengths and exceptional growth opportunities

Speaker Change: speaking on behalf of our board.

Speaker Change: We are as confident as ever in SmartRent's long-term potential, and are focused on working with the management team to enhance our operations,

Speaker Change: provide increased value to our customers and their residents and to drive significant value for shareholders. Because we are in such a strong competitive position with significant opportunities and because we have such promise on the horizon,

Frank Martell: Because we are in such a strong competitive position with significant opportunities, and because we have such promise on the horizon, the board believes it now is a time for a change in leadership.

Frank Martell: Because we are in such a strong competitive position with significant opportunities and because we have such promise on the horizon, the board believes that now is the time for a change in leadership. As I'm sure you saw, last Tuesday, we announced that Lucas Haldeman had stepped down as CEO and resigned from the board. We commend Lucas on his achievements and thank him for everything that he's done.

Frank Martell: As I'm sure you saw last Tuesday, we announced that Lucas Haldeman has stepped down as CEO and resigned from the board. We commend Lucas on his achievements and thank him for everything that he's done. As SmartRent's founder, Lucas did an extraordinary job driving innovation and product development, building strong customer relationships and making the company the leader that it is today. We know that companies need different types of leadership at different stages of its development. As we evolve and scale SmartRent into its next phase of growth, we believe the company will benefit from a CEO with a different skill set and a fresh perspective.

Speaker Change: The board believes that now is the time for a change in leadership.

Speaker Change: As I'm sure you saw, last Tuesday we announced that Lucas Haldeman has stepped down as CEO and resigned from the board.

Frank Martell: As SmartRent's founder, Lucas did an extraordinary job driving innovation and product development, building strong customer relationships, and making the company the leader that it is today. We know that companies need different types of leadership at different stages of their development, as we evolve and scale SmartRent into its next phase of growth. We believe the company will benefit from a CEO with a different skill set and a fresh perspective. The board has initiated a comprehensive search for a new CEO who will lead SmartRent to the next level as we capitalize on the many compelling opportunities ahead of us. We formed a management committee of talented SmartRent executives to guide the company in this interim period.

Speaker Change: We commend Lucas on his achievements and thank him for everything that he's done.

Speaker Change: As SmartRent's founder, Lucas did an extraordinary job driving innovation and product development.

Speaker Change: building strong customer relationships and making the company the leader that it is today.

Speaker Change: We know that companies need different types of leadership at different stages of its development.

Speaker Change: as we evolve and scale SmartRent.

Speaker Change: and to its next phase of growth.

Speaker Change: We believe the company will benefit from a CEO with a different skill set and a fresh perspective.

Frank Martell: The board has initiated a comprehensive search for a new CEO who will lead SmartRent to the next level as we capitalize on the many compelling opportunities ahead of us.

Speaker Change: The board has initiated a comprehensive search for a new CEO who will lead SmartRent to the next level as we capitalize on the many compelling opportunities ahead of us.

Frank Martell: We formed a management committee of talented SmartRent executives to guide the company in this interim period. The management committee is comprised of the following individuals. Chief financial officer, Darryl Stem, co-founder and chief technology officer, Isaiah DeRose Wilson, executive vice president of operations, Y-Ren Babis, executive vice president of human resources, Heather Air, chief legal officer, Christen Lee, and our chief marketing officer, Robin Young. Darryl will act as our Principal Executive Officer in an interim period. This team is intimately familiar with our business and the industry and has decades of experience in technology services, software, product innovation, real estate, and rental housing.

Frank Martell: The Management Committee is comprised of the following individuals: Chief Financial Officer, Daryl Stemm. Co-founder and Chief Technology Officer, Isaiah DeRose-Wilson; Executive Vice President of Operations, Wyron Bobbis; and Executive Vice President of Human Resources, Heather Eyre. Our Chief Legal Officer, Kristen Lee, and our Chief Marketing Officer, Robin Young. Daryl will act as our principal executive officer in an interim period. This team is intimately familiar with our business and the industry and has decades of experience in technology services, including software, product innovation, real estate, and rental housing.

Speaker Change: We formed a management committee of talented SmartRent executives to guide the company in this interim period.

Speaker Change: The Management Committee is comprised of the following individuals.

Speaker Change: Chief Financial Officer Daryl Stemm, Co-Founder and Chief Technology Officer Isaiah DeRose-Wilson, Executive Vice President of Operations Wyren Bobbis, Executive Vice President of Human Resources Heather Eyre

Speaker Change: Chief Legal Officer, Kristen Lee, and our Chief Marketing Officer, Robin Young.

Speaker Change: Daryl will act as our principal executive officer in an interim period.

Speaker Change: This team is intimately familiar with our business and the industry, and has decades of experience in technology services, software, product innovation, real estate, and rental housing.

Frank Martell: One of the key reasons we are so confident in SmartRent's ability to capture the opportunities ahead is that we know we have an exceptional team at the helm.

Frank Martell: One of the key reasons we are so confident in SmartRent's ability to capture the opportunities ahead is that we know we have an exceptional team at the helm. The board has also formed an operating committee of independent directors that will oversee the company's operations and work closely with the management committee during this transition period. While we have a lot of work in front of us, we are confident in SmartRent's future. From a strong foundation of proven product quality and customer satisfaction, we are building our organization so that we have the tools and infrastructure necessary to enhance our winning value proposition for customers and drive long-term shareholder value.

Speaker Change: One of the key reasons we are so confident in SmartRent's ability to capture the opportunities ahead is that we know we have an exceptional team at the helm.

Frank Martell: The board has also formed an operating committee of independent directors that will oversee the company's operations and work closely with the management committee during this transition period. While we have a lot of work in front of us, we are confident in SmartRent's future. from a strong foundation of proven product quality and customer satisfaction, we are finding our organization so that we have the tools and infrastructure necessary to enhance our winning value proposition for customers and drive long-term shareholder value.

Speaker Change: The board has also formed an operating committee of independent directors that will oversee the company's operations and work closely with the management committee during this transition period.

Speaker Change: While we have a lot of work in front of us, we are confident in SmartRuns' future.

Speaker Change: From a strong foundation of proven product quality and customer satisfaction, we are finding our organization so that we have the tools and infrastructure necessary to enhance our winning value proposition for customers and drive long-term shareholder value.

Frank Martell: Finally, I want to thank every member of our dedicated SmartRent team who continue to work tirelessly to deliver on our goals and support our customers. Your hard-working commitment is deeply appreciated.

Speaker Change: Finally, I want to thank every member of our dedicated SmartRent team who continue to work tirelessly to deliver on our goals and support our customers. Your hard work and commitment are deeply appreciated.

Daryl Stemm: I'll now turn the call back over to Daryl. Thank you, Frank, and again, good morning, everyone. I'm pleased to provide an update on SmartRent's financial performance, and I'm proud of the momentum our team has built to position SmartRent for sustainable growth. This momentum has resulted in three consecutive quarters of positive adjusted EBITDA, reflecting our continued focus on improving profitability. Additionally, we're steadily driving growth and recurring revenue and enhancing gross margins, providing for greater stability and visibility in this evolving market. We continue to operate in a challenging economic landscape characterized by shifting capital expenditure patterns influenced by interest rate uncertainties and other macroeconomic factors.

Daryl Stemm: Thank you, Frank. And again, good morning, everyone.

Speaker Change: I'll now turn the call back over to Daryl.

Daryl Stemm: I'm pleased to provide an update on SmartRent's financial performance, and I'm proud of the momentum our team has built to position SmartRent for sustainable growth. This momentum has resulted in three consecutive quarters of positive adjusted EBITDA, reflecting our continued focus on improving profitability. Additionally, we're steadily driving growth in recurring revenue and enhancing gross margin, providing for greater stability and visibility in this evolving market. However, we continue to operate in a challenging economic landscape, characterized by shifting capital expenditure patterns, influenced by interest rate uncertainties and other macroeconomic factors.

Daryl Stemm: Thank you, Frank. And again, good morning, everyone.

Daryl Stemm: I'm pleased to provide an update on SmartRent's financial performance, and I'm proud of the momentum our team has built to position SmartRent for sustainable growth.

Daryl Stemm: This momentum has resulted in three consecutive quarters of positive adjusted EBITDA, reflecting our continued focus on improving profitability.

Daryl Stemm: Additionally, we're steadily driving growth and recurring revenue and enhancing gross margins, providing for greater stability and visibility in this evolving market.

Daryl Stemm: We continue to operate in a challenging economic landscape characterized by shifting capital expenditure patterns, influence by interest rate uncertainties and other macroeconomic factors.

Daryl Stemm: In response to these dynamics, we continue to actively position our company for long-term success. We're further enhancing our customer engagement. Better understanding and meeting the needs of our customers helps ensure that our products and services align more closely with their expectations. This includes making organizational changes and refining processes within our sales team. These adjustments are designed to improve our accuracy in predicting business trends and customer behaviors. We're refocusing back on direct sales. In 2023, we launched a channel partner sales program designed to leverage external partnerships to extend our reach within our market. Despite the strategic alignment and potential benefits we anticipated, the program did not meet our expectations.

Daryl Stemm: In response to these dynamics, we continue to actively position our company for long-term success.

Daryl Stemm: We're further enhancing our customer engagement.

Daryl Stemm: Better understanding and meeting the needs of our customers helps ensure that our products and services align more closely with their expectations.

Daryl Stemm: This includes making organizational changes and refining processes within our sales organization. These adjustments are designed to improve our accuracy in predicting business trends and customer behavior. We're refocusing back on direct sales. In 2023, we launched a channel partner sales program designed to leverage external partnerships to extend our reach within our market. However, despite the strategic alignment and potential benefits we anticipated, the program did not meet our expectations.

Daryl Stemm: This includes making organizational changes and refining processes within our sales team.

Daryl Stemm: These adjustments are designed to improve our accuracy in predicting business trends and customer behaviors.

Daryl Stemm: We're refocusing back on direct sales.

Daryl Stemm: In 2023, we launched a channel partner sales program designed to leverage external partnerships to extend our reach within our market.

Daryl Stemm: Despite the strategic alignment and potential benefits we anticipated, the program did not meet our expectations.

Daryl Stemm: In response, we're currently seeking a new sales leader to guide our sales efforts. Concurrently, we're also enhancing our sales operations organization to refocus and strengthen our direct sales efforts. These strategic adjustments are designed to better align with our core objectives and drive improved sales performance. Our approach to organic reinvestment prioritizes enhancements to our products. Significantly informed by customer and end user feedback. This deliberate focus is directly reflected in our low customer turn and our net revenue retention rate north of 100%. Both of which are contributing to increasing our recurring revenue. Our organic growth approach helps mitigate some of the market uncertainty, driving certain customer orders being pushed out from 2024 into 2025.

Daryl Stemm: In response, we're currently seeking a new sales leader to guide our sales effort. Concurrently, we're also enhancing our sales operations organization to refocus and strengthen our direct sales effort. These strategic adjustments are designed to better align with our core objectives and drive improved sales performance. Our approach to organic reinvestment prioritizes enhancements to our product, significantly informed by customer and end-user feedback.

Daryl Stemm: In response, we're currently seeking a new sales leader to guide our sales efforts.

Daryl Stemm: Concurrently, we're also enhancing our sales operations organization to refocus and strengthen our direct sales efforts.

Daryl Stemm: These strategic adjustments are designed to better align with our core objectives and drive improved sales performance.

Daryl Stemm: Our approach to organic reinvestment prioritizes enhancements to our products.

Daryl Stemm: Significantly informed by customer and end-user feedback.

Daryl Stemm: This deliberate focus is directly reflected in our low customer churn and our net revenue retention rate north of 100%, both of which are contributing to increasing our recurring revenue. Our organic growth approach helps mitigate some of the market uncertainty, driving certain customer orders being pushed out from 2024 into 2025. We are committed to ongoing enhancements to our operating model. This involves continuous improvement across the various aspects of our business. Through back-office enhancements, organizational realignment, supply chain optimization, and other operating initiatives, we're making incremental gains that bolster both profitability and improve customer satisfaction each quarter, and we continue to implement rigorous cost management. This approach is carefully calibrated to maintain our company's financial health without stripping away the essential capabilities needed for rapid scaling.

Daryl Stemm: This deliberate focus is directly reflected in our low customer churn and our net revenue retention rate north of 100 percent.

Daryl Stemm: both of which are contributing to

Daryl Stemm: Our organic growth approach helps mitigate some of the market uncertainty driving certain customer orders being pushed out from 2024 into 2025.

Daryl Stemm: We're committed to ongoing enhancements to our operating model. This involves continuous improvement across the various aspects of our business. Through back office enhancements, organizational realignment, supply chain optimization, and other operating initiatives, we're making incremental gains that both bolster both profitability and improve customer satisfaction each quarter. And we continue to implement rigorous cost management. This approach is carefully calibrated to maintain our company's financial health without stripping away the essential capabilities needed for rapid scaling. We're ensuring that while we manage costs effectively, we retain the agility to capitalize on market opportunities as conditions improve. At the same time as we are focusing on controlling costs, we continue to prioritize growing recurring revenue streams. Top-line recurring revenue growth will help enhance the predictability and stability of our earnings.

Daryl Stemm: We're committed to ongoing enhancements to our operating model.

Daryl Stemm: This involves continuous improvement across the various aspects of our business.

Daryl Stemm: through back office enhancements, organizational realignment, supply chain optimization, and other operating initiatives.

Daryl Stemm: We're making incremental gains that bolster both profitability and improve customer satisfaction each quarter.

Daryl Stemm: And we continue to implement rigorous cost management.

Daryl Stemm: This approach is carefully calibrated to maintain our company's financial health without stripping away the essential capabilities needed for rapid scaling.

Daryl Stemm: We're ensuring that while we manage costs effectively, we retain the agility to capitalize on market opportunities as conditions improve. At the same time as we are focusing on controlling costs, we continue to prioritize growing recurring revenues. This shift not only aligns with our long-term operational goals but also provides our investors with clear visibility. This quarter, we delivered record SAS annual recurring revenue of $51.2 million. This achievement is an affirmation of the trust our customers place in our innovative solutions and the relentless dedication of our team.

Daryl Stemm: We're ensuring that while we manage costs effectively, we retain the agility to capitalize on market opportunities as conditions improve.

Daryl Stemm: At the same time as we are focusing on controlling costs, we continue to prioritize growing recurring revenue streams.

Daryl Stemm: Top-line recurring revenue growth will help enhance the predictability and stability of our earnings.

Daryl Stemm: This shift not only aligns with our long-term operational goals, but also provides our investors with clear disability. This quarter, we delivered record staff annual recurring revenue of $51.2 million. This achievement is an affirmation of the trust our customers place in our innovative solutions and the relentless dedication of our team. Our recurring revenue growth combined with our operational initiatives has resulted in enhanced per-unit economics. SAS ARPU this quarter was $5.63 per unit, which is a 9% increase from last year, which was $5.16. Our ability to thrive, substantial growth in our SAS recurring revenue and improve our per-unit economics through scale and pricing improvements in the face of broader market uncertainties, underscores our commitment to delivering exceptional value and service to the rental housing industry.

Daryl Stemm: This shift not only aligns with our long-term operational goals, but also provides our investors with clear visibility.

Daryl Stemm: This quarter, we delivered record SAS annual recurring revenue of $51.2 million.

Daryl Stemm: This achievement is an affirmation of the trust our customers place in our innovative solutions and the relentless dedication of our team.

Daryl Stemm: Our recurring revenue growth, combined with our operational initiatives, has resulted in enhanced per-unit economics. SAS RPU this quarter was $5.63 per unit, which is a 9% increase from last year, which was $5.16. Our ability to drive substantial growth in our SAS recurring revenue and improve our per unit economics through scale and pricing improvements in the face of broader market uncertainties underscores our commitment to delivering exceptional value and service to the Rental Housing Institute, given the continued focus on SAS growth.

Daryl Stemm: Our recurring revenue growth, combined with our operational initiatives, has resulted in enhanced per-unit economics.

Daryl Stemm: SAS RPU this quarter was $5.63 per unit, which is a 9% increase from last year.

Daryl Stemm: which was $5.16.

Daryl Stemm: Our ability to drive substantial growth in our SAS recurring revenue and improve our per unit economics through scale and pricing improvements in the face of broader market uncertainties, underscores our commitment to delivering exceptional value and service

Daryl Stemm: Given the continued focus on SAS growth, we believe recurring revenue to be the best indicator of our company's future performance and potential. This focus area underscores our commitment to leveraging our market position and innovation capabilities to deliver in long-term value to our shareholders. We saw a significant 32% year-over-year increase in SAS revenue. Driven primarily by improvements in SAS ARPU and the number of units deployed. I'm going to say that again. Driven primarily by improvements in SAS ARPU and the number of units deployed. These are key metrics that underpin our strategy for delivering more predictable growth.

Daryl Stemm: to the rental housing industry.

Daryl Stemm: We believe recurring revenue to be the best indicator of our company's future performance and potential. This focus area underscores our commitment to leveraging our market position and innovation capabilities to deliver long-term value to our shareholders. We saw a significant 32% year-over-year increase in SAS revenue, driven primarily by improvements in SAS RPU and the number of units deployed. I'm going to say that again, driven primarily by improvements in the SAS RPU and the number of units deployed.

Daryl Stemm: given the continued focus on SAS growth.

Daryl Stemm: We believe recurring revenue to be the best indicator of our company's future performance and potential.

Daryl Stemm: This focus area underscores our commitment to leveraging our market position and innovation capabilities to deliver long-term value to our shareholders.

Daryl Stemm: We saw a significant 32% year-over-year increase in SAS revenue.

Daryl Stemm: driven primarily by improvements in SAS RPU and the number of units deployed.

Daryl Stemm: I'm going to say that again. Driven primarily by improvements in SAS RPU and the number of units deployed.

Daryl Stemm: These are key metrics that underpin our strategy for delivering more predictable growth. Over the same period, our SAS ARR climbed to $51.2 million, up from $38.8 million in the second quarter of last year. Units booked SAS ARRPU saw a decrease of 8% to $8.07 per unit from $8.74 in Q2 2023, primarily attributable to customer and product mix changes.

Daryl Stemm: These are key metrics.

Daryl Stemm: that underpin our strategy for delivering more predictable growth.

Daryl Stemm: Over the same period, our SAS ARR climbed to $51.2 million, up from $38.8 million in the second quarter of last year. Units booked SAS ARPU saw a decrease of 8% to $8.7 per unit from $8.74 in Q2 2023. Primarily, it's repeatable to customer and product mixed changes. Turning now to our overall revenue streams, total revenue for the quarter was $48.5 million, a 9% decrease from the same quarter last year. Total revenues decreased primarily due to lower units deployed, which is primarily a result of the delayed capital investment spending we're seeing within our customer base. To be clear, we're not seeing any change in demand or the overall market opportunity.

Daryl Stemm: Over the same period, our SAS ARR climbed to $51.2 million, up from $38.8 million in the second quarter of last year.

Daryl Stemm: Units booked SAS ARPU saw a decrease of 8% to $8.07 per unit from $8.74 in Q2 2023, primarily attributable to customer and product mix changes.

Daryl Stemm: Turning now to our overall revenue stream, total revenue for the quarter was $48.5 million, a 9% decrease from the same quarter last year. Total revenues decreased primarily due to lower units deployed, which is primarily a result of the delayed capital investment spending we're seeing within our customers. To be clear, we're not seeing any change in demand or the overall market opportunity. Rather, we see certain customers that have deferred the deployment of units originally forecast for deployment in 2024 into calendar year 2025.

Daryl Stemm: Turning now to our overall revenue streams.

Daryl Stemm: Total revenue for the quarter was $48.5 million, a 9% decrease from the same quarter last year.

Daryl Stemm: Total revenues decreased primarily due to lower units deployed, which is primarily a result of the delayed capital investment spending we're seeing within our customer base.

Daryl Stemm: To be clear, we're not seeing any change in demand.

Daryl Stemm: Rather, we see certain customers that have deferred the deployment of units originally forecast for the deployment in 2024 into calendar year 2025. Posted services revenue saw a 16% increase to $18 million from $15.6 million last year. Hardware revenues decreased by $3 million for 11% to $24.7 million, and professional services revenue was $5.8 million, a decrease of $4.2 million for 42% from the prior year. On the deployment front, total units deployed have reached about 772,000 units and an increase of 19% with roughly 121,000 more units compared to the same point last year. We had a little over 22,000 new units deployed during the quarter, compared with approximately 48,000 in the same period prior year.

Daryl Stemm: or the overall market opportunity. Rather, we see certain customers that have deferred the deployment of units originally forecast for deployment in 2024 into calendar year 2025.

Daryl Stemm: Posted services revenue saw a 16% increase to $18 million from $15.6 million last year, hardware revenue decreased by $3 million, or 11%, to $24.7 million, and professional services revenue was $5.8 million, a decrease of 4.2 million, or 42%, from the prior year. On the deployment front, total units deployed have reached about 772,000 units, an increase of 19% with roughly 121,000 more units compared to the same point last year. We had a little over 22,000 new units deployed during the quarter, compared with approximately 48,000 in the same period last year.

Daryl Stemm: Posted services revenue saw a 16% increase to $18 million from $15.6 million last year.

Daryl Stemm: Hardware revenue decreased by $3 million, or 11%, to $24.7 million, and professional services revenue was $5.8 million, a decrease of $4.2 million, or 42% from the prior year.

Daryl Stemm: On the deployment front, total units deployed have reached about 772,000 units, an increase of 19% with roughly 121,000 more units compared to the same point last year.

Speaker Change: We had a little over 22,000 new units deployed during the quarter.

Speaker Change: compared with approximately 48,000 in

Daryl Stemm: Total bookings for the quarter amounted to $45.5 million, a $14 million or 44% increase from the same quarter last year. Gross margin improvements were a highlight this quarter. Total gross margin improved to 35.7% from 18.5% last year for roughly 1,700 basis points, driven primarily by cost management and improvements to our operating model. SAS gross margin improved to 75.5% from 75.1%. of 43 basis point improvement. Total gross profit increased significantly in the second quarter to $17.3 million from $9.9 million last year, or an increase of 75%. Hardware gross profit was $8.4 million, a 44% increase from $5.8 million due to product mix.

Daryl Stemm: Total bookings for the quarter amounted to $45.5 million, a $14 million or 44% increase from the same quarter last year. Gross margin improvements were a highlight this quarter. Total gross margin improved to 35.7% from 18.5% last year for roughly 1,700 basis points, driven primarily by cost management and improvements to our operating. SAS Gross Margin improved to 75.5% from 75.1%. A 43 basis point improvement. Total gross profit increased significantly in the second quarter, to $17.3 million from $9.9 million last year, or an increase of 75%.

Speaker Change: Total bookings for the quarter amounted to $45.5 million, a $14 million or 44% increase from the same quarter last year.

Speaker Change: Daryl Stemm, Lucas Haldeman, Kristen Lee

Speaker Change: Gross margin improvements were a highlight this quarter.

Speaker Change: Total gross margin improved to 35.7% from 18.5% last year, or roughly 1,700 basis points.

Speaker Change: driven primarily by cost management and

Speaker Change: SAS Gross Margin improved to 75.5% from 75.1%

Speaker Change: A 43 basis point improvement.

Speaker Change: Total gross profit increased significantly in the second quarter to $17.3 million from $9.9 million last year, or an increase of 75%.

Daryl Stemm: Hardware gross profit was $8.4 million, a 44% increase from $5.8 million due to product. The gross loss in professional services narrowed to $3 million from $5.8 million in the same quarter of the previous year, primarily due to a reduced volume in units deployed and followed by the benefits of cost management initiatives.

Speaker Change: Hardware gross profit was $8.4 million, a 44% increase from $5.8 million due to product mix.

Daryl Stemm: The gross loss in professional services narrowed to $3 million from $5.8 million in the same quarter of the previous year. Primarily due to reduced volume in units deployed, followed by the benefits of cost management initiatives. Hosted services gross profit increased to $12 million from $9.8 million in the same quarter of last year, and continues to be the company's most profitable revenue stream. Operating expenses were $24.2 million in the quarter, including a one-time $2.3 million in payment charge related to an investment. Compared to $29.9 million in the same quarter of last year, reflecting our continuance of work on our operating model and cost management.

Speaker Change: The gross loss in professional services narrowed to $3 million from $5.8 million in the same quarter of the previous year.

Speaker Change: primarily due to reduced volume in units deployed and followed by the benefits of cost management initiatives.

Daryl Stemm: Hosted services gross profit increased to $12 million from $9.8 million in the same quarter of last year and continues to be the company's most profitable revenue stream. Operating expenses for $24.2 million in the quarter, including a one-time $2.3 million impairment charge related to an investment, compared to $29.9 million in the same quarter of last year, reflecting our continued work on our operating model and cost management. Within the context of achieving a 32% increase in SAS revenue, these operating expenses demonstrate our commitment to cost management, and, more importantly, we believe they reflect our ability to effectively leverage our existing cost structure to accelerate revenue growth. Lastly, adjusted EBITDA for the quarter was approximately $900,000, a 114% improvement from a loss of $6.4 million in the same quarter of the prior year.

Speaker Change: Hosted Services gross profit increased to 12 million dollars from 9.8 million dollars in the same quarter of last year and continues to be the company's most profitable revenue stream.

Speaker Change: Operating expenses were $24.2 million in the quarter, including a one-time $2.3 million impairment charge related to an investment.

Speaker Change: compared to 29.9 million dollars in the same quarter of last year, reflecting our continuance of work on our operating model and cost management.

Daryl Stemm: Within the context of achieving a 32% increase in SaaS revenue, these operating expenses demonstrate our commitment to cost management, and more importantly, we believe they reflect our ability to effectively leverage our existing cost structure to accelerate revenue growth. Lastly, adjusted EBITDA for the quarter was approximately $900,000, a 114% improvement from a loss of $6.4 million in the same quarter from the prior year. This is our third consecutive quarter of positive adjusted EBITDA. As we conclude the quarter with a cash balance of $187 million, we remain well positioned to pursue our growth initiatives and navigate the evolving economic landscape and invest in the business.

Speaker Change: Within the context of achieving a 32% increase in SAS revenue, these operating expenses demonstrate our commitment to cost management and, more importantly,

Speaker Change: We believe they reflect our ability to effectively leverage our existing cost structure to accelerate revenue growth.

Speaker Change: Lastly, adjusted EBITDA for the quarter was approximately $900,000, a 114% improvement from a loss of $6.4 million in the same quarter from the prior year.

Daryl Stemm: This is our third consecutive quarter of positive adjusted EBITDA. As we conclude the quarter with a cash balance of $187 million, we remain well positioned to pursue our growth initiatives and navigate the evolving economic landscape and invest in the business, as communicated last week. We've made the difficult decision to suspend financial guidance. This decision stems from a confluence of factors. Given the ongoing CEO transition, current market conditions, known and anticipated customer capital spending delays, and the scaling back of SmartRent's channel partner sales program. We determined it was appropriate to suspend guidance at this time.

Speaker Change: This is our third consecutive quarter of Positive Adjusted EBITDA.

Speaker Change: As we conclude the quarter with a cash balance of $187 million, we remain well positioned to pursue our growth initiatives and navigate the evolving economic landscape and invest in the business.

Daryl Stemm: As communicated last week, we've made the difficult decision to suspend financial guidance. This decision stems from a confluence of factors, given the ongoing CEO transition, current market conditions, known and anticipated customer capital spending delays, and the scaling back of Smartman's channel partner sales program. We determined it was appropriate to suspend guidance at this time. In addition, recent internal reviews have highlighted the need to build greater discipline within our sales organization. In response, the management committee and I are committed to implementing more rigorous methods to enhance our forecasting accuracy and reliability. We intend to reinstate guidance with a clear, comprehensive outlook as soon as visibility into our operations and market conditions improved.

Speaker Change: As communicated last week,

Speaker Change: We've made the difficult decision to suspend financial guidance.

Speaker Change: This decision stems from a confluence of factors.

Speaker Change: Given the ongoing CEO transition,

Speaker Change: current market conditions, known and anticipated customer capital spending delays, and the scaling back of SmartRent's channel partner sales program.

Daryl Stemm: In addition, recent internal reviews have highlighted the need to build greater discipline within our sales organization. In response, the Management Committee and I are committed to implementing more rigorous methods to enhance our forecasting accuracy and reliability. We intend to reinstate guidance with a clear, comprehensive outlook as soon as visibility into our operations and market conditions improve. Our commitment is to transparency and precision in our forward-looking statements, ensuring we meet the expectations of our shareholders and pave the way for the company's long-term growth.

Speaker Change: We determined it was appropriate to suspend guidance at this time.

Speaker Change: In addition, recent internal reviews have highlighted the need to build greater discipline within our sales organization.

Speaker Change: In response, the Management Committee and I are committed to implementing more rigorous methods to enhance our forecasting accuracy and reliability.

Speaker Change: We intend to reinstate guidance with a clear, comprehensive outlook as soon as visibility into our operations and market conditions improve.

Daryl Stemm: Our commitment is to transparency and precision in our forward-looking statements, ensuring we meet the expectations of our shareholders and pave the way for the company's long-term growth. Our balance sheet remains strong with substantial cash reserves and no debt, which positions us well to capitalize on opportunities and handle potential challenges. Our capital allocation strategy is focused primarily on organic reinvestment in high-return projects that strengthen our market position. Let me also give you a brief update on our existing share repurchase program. In the quarter, we purchased roughly 765,000 shares, and following the close of the quarter, we purchased an additional 842,000 shares.

Speaker Change: Our commitment is to transparency and precision in our forward-looking statements.

Speaker Change: ensuring we meet the expectations of our shareholders and pave the way for the company's long-term growth.

Daryl Stemm: Our balance sheet remains strong with substantial cash reserves and no debt, which positions us well to capitalize on opportunities and handle potential challenges. Our capital allocation strategy is focused primarily on organic reinvestment in high-return projects that strengthen our market position. Let me also give you a brief update on our existing share repurchase program. In the quarter, we purchased roughly 765,000 shares. And following the close of the quarter, we purchased an additional 842,000 shares going forward.

Speaker Change: Our balance sheet remains strong with substantial cash reserves and no debt, which positions us well to capitalize on opportunities and handle potential challenges.

Speaker Change: Our capital allocation strategy is focused primarily on organic reinvestment in high return projects that strengthen our market position.

Speaker Change: Let me also give you a brief update on our existing share repurchase program.

Speaker Change: In the quarter, we purchased roughly 765,000 shares.

Speaker Change: And following the close of the quarter, we purchased an additional 842,000 shares.

Daryl Stemm: The board has reaffirmed our existing share repurchase authorization, and we have approximately 42 million dollars available for future purchases under the program. Going forward, we will opportunistically make purchases in the open market, given the substantial disconnect we see between the current share price and the long-term value of the business.

Speaker Change: The board has reaffirmed our existing share repurchase authorization and we have approximately 42 million dollars available for future purchases under the program.

Daryl Stemm: We will opportunistically make purchases in the open market, given the substantial disconnect we see between the current share price and the long-term value of the business. In conclusion, we recognize the uncertain environment in which we operate, especially as delayed capital expenditures among their customers impact the business in the near term. Again, the primary impact of this environment is a delay in anticipated 2024 deployments that our customers have pushed to 2025. The overall long-term opportunity is unchanged and remains extremely compelling. Thank you for your time today, and now we can open the line and take your questions.

Speaker Change: Going forward, we will opportunistically make purchases in the open market, given the substantial disconnect we see between the current share price and the long-term value of the business.

Daryl Stemm: In conclusion, we recognize the uncertain environment in which we operate, especially as delayed capital expenditures among our customers impact the business in the near term. Again, the primary impact of this environment is a delay in anticipated 2024 deployments that our customers have pushed to 2025. The overall long-term opportunity is unchanged and remains extremely compelling. Thank you for your time today, and now we can open the line and take your questions. Thank you.

Speaker Change: In conclusion, we recognize the uncertain environment in which we operate.

Speaker Change: Especially as delayed capital expenditures among their customers impact the business in the near term.

Speaker Change: Again, the primary impact of this environment is a delay in anticipated 2024 deployments that our customers have pushed to 2025.

Speaker Change: The overall long-term opportunity is unchanged.

Speaker Change: and remains extremely compelling.

Speaker Change: Thank you for your time today, and now we can open the line and take your questions.

Operator: Thank you. We will now begin the question and answer session. If you've dialed in and would like to ask a question, please press star 1 on your telephone keypad to raise your hand and join the queue. If you'd like to withdraw your question, simply press star 1 again. If you're called upon to ask your question and are listening via loudspeaker on your device, please pick up your handset and ensure that your phone is not on mute when asking your question. Again, press star 1 to join. Our first question comes from the line of Ryan Tomasello with KBW. Please go ahead. Hi,

Mon-Deep: We will now begin the question and answer session. If you've done all, then would like to ask a question, please press star one on your telephone keypad to raise your hand and join the queue. If you'd like to withdraw your question, simply press star one again.

Speaker Change: Thank you. We will now begin the question and answer session. If you've dialed in and would like to ask a question, please press star 1 on your telephone keypad to raise your hand and join the queue. If you'd like to withdraw your question, simply press star 1 again.

Mon-Deep: If you're called upon to ask your question and are listening via loudspeaker on your device, please pick up your handset and ensure that your phone is not on mute when asking your question. Again, press star one to join the queue.

Speaker Change: If you are called upon to ask your question and are listening via loudspeaker on your device, please pick up your handset and ensure that your phone is not on mute when asking your question.

Speaker Change: Again, press star 1 to join the queue.

Ryan Tomasello: Our first question comes from the line of Ryan Tomasello with KBW. Please go ahead.

Speaker Change: Our first question comes from the line of Ryan Tomasello with KBW. Please go ahead.

Daryl Stemm: Hi everyone. Thanks for taking the questions. One is a start by asking about how the Wi-Fi strategy fits into all of the recent developments and changes at the management level. Has the outlook and optimism there changed at all? Obviously, 2024 included a step up in the investment to build out that opportunity. So, curious how the investment plans there might be changing going forward in light of these recent developments. Thanks. Yeah, thank you, Ryan.

Ryan Tomasello: Hi, everyone. Thanks for taking the questions. Wanted to start by asking about how the Wi-Fi strategy fits into all of the recent developments and changes at the management level. Has the outlook and optimism there changed at all? Obviously, 2024 included a step up in the investment to build out that opportunity. So curious how the investment plans there might be changing going forward in light of these recent developments. Thanks.

Ryan Tomasello: Hi everyone, thanks for taking the questions.

Ryan Tomasello: I wanted to start by asking about how the Wi-Fi strategy fits into all of the recent developments and changes.

Speaker Change: at the management level. Has the outlook and optimism there changed at all?

Speaker Change: Obviously, 2024 included a step up in the investment to build out that opportunity, so curious how the investment plans there might be changing going forward in light of these recent developments.

Daryl Stemm: The Wi-Fi component remains a very bullish opportunity in our minds, and we continue to invest in the Wi-Fi program. However, as you're aware, we have a limited number of Wi-Fi projects that are currently underway, and we did not expect much of an impact from Wi-Fi on 2024 results. We are, as I said, continuing to invest in the Wi-Fi line. We might expect that a new CEO who would come in with a fresh perspective might consider some changes. But fundamentally, we believe very strongly in the Wi-Fi opportunity, and it will remain a compelling part of our offering to our customers.

Daryl Stemm: The Wi-Fi component remains a very bullish opportunity in our minds, and we continue to invest in the Wi-Fi program.

Speaker Change: Yeah, thank you, Ryan.

Speaker Change: The Wi-Fi component remains a very bullish opportunity in our minds, and we continue to invest in the Wi-Fi program.

Daryl Stemm: As you're aware, we have a limited number of Wi-Fi projects that are currently underway, and we did not expect much of an impact from Wi-Fi on 2024 results. We are, as I said, continuing to invest in the Wi-Fi line.

Speaker Change: As you're aware, we have a limited number of Wi-Fi projects that are currently underway, and we did not expect much of an impact.

Speaker Change: from Wi-Fi on 2024 results.

Speaker Change: We are, as I said, continuing to invest.

Daryl Stemm: We might expect that a new CEO who would come in with a fresh perspective might consider some changes, but I would say fundamentally, we believe very strongly in the Wi-Fi opportunity, and it will remain a compelling part of our offerings to our customers.

Speaker Change: in the Wi-Fi line.

Speaker Change: We might expect that a new CEO

Speaker Change: who would come in with a fresh perspective might consider some changes, but I would say fundamentally we believe very strongly in the Wi-Fi opportunity, and it will remain a compelling part of our offering to our customers.

Ryan Tomasello: Great, and then in terms of these headwinds you're calling out from customers delaying these capital projects, is there a way to quantify the cumulative amount of unit deployments or bookings that you think are being pushed out here out of 2024? As we think about next year, it seems like there's a high degree of confidence that those deployments and bookings will ultimately come through. It's hoping you can just put a finer point around the confidence level there, and what you think ultimately needs to play out for apartment operators and your customers over the next, I don't know, call it six to nine months to alleviate some of those headwinds and get these projects back on track.

Ryan Tomasello: Great And then, in terms of these headwinds you're calling out from, customers delaying these capital projects. Is there a way to quantify the cumulative amount of unit deployments or bookings that you think are being pushed out here after 2024? About next year, it seems like there's a high degree of confidence that those deployments and bookings will ultimately come through. I was hoping you could just put a finer point around the confidence level there and what you think ultimately needs to play out for apartment operators and your customers over the next, I don't know, call it six to nine months to alleviate some of those headwinds and get these projects back on track.

Speaker Change: Great, and then in terms of.

Speaker Change: These headwinds you're calling out from...

Speaker Change: customers delaying these capital projects.

Speaker Change: Is there a way to quantify the cumulative amount of unit deployments or bookings that you think are being pushed out here out of 2024? As we think

Speaker Change: about next year, it seems like there's a high degree of confidence that those deployments and bookings will ultimately come through.

Speaker Change: I was hoping you can just put a finer point around the confidence level there and what you think ultimately needs to play out for apartment operators and your customers over the next, I don't know, call it six to nine months, to alleviate some of those headwinds.

Daryl Stemm: We do have a high degree of confidence that these deployments will occur in 2025, but in terms of what we are looking to see in the macroeconomic conditions, I would say that the persistently high interest rates have had an adverse impact on the acquisition disposition market in particular, and it may not be directly intuitive, but many of our customers, when they're making acquisitions of new communities, underwrite technology improvements, amongst other improvements, into the purchase price. So the high persistently high interest rates have had an impact on our forecast deployment, and that would be the first thing that I would look for, Ryan, to occur between now and the end of the year that would increase our confidence in the actual deployments that are being pushed out to 2025.

Daryl Stemm: We do have a high degree of confidence that these deployments will occur in 2025. But in terms of what we are looking to see in macroeconomic conditions, I would say that the persistently high interest rates have had an adverse impact on the acquisition disposition market, in particular. And it may not be directly intuitive, but many of our customers, when they're making acquisitions of new communities, underwrite technology improvements, amongst other improvements, into the purchase price.

Speaker Change: and get these projects back on track.

Speaker Change: We do have a high degree of confidence that these deployments will occur in 2025. But in terms of what we...

Speaker Change: are looking to see in the macroeconomic conditions, I would say that the persistently high interest rates have had an adverse

Speaker Change: impact on the acquisition disposition market in particular. And it may not be directly intuitive, but many of our customers, when they're making acquisitions of new communities, underwrite

Daryl Stemm: So the high, persistently high interest rates have had an impact on our forecast deployments. And that would be the first thing that I would look for, Ryan, to occur between now and the end of this year that would increase our confidence in the actual deployments that are being pushed out to 2025.

Speaker Change: technology improvements amongst other improvements into the purchase price. So the high persistently high interest rates

Speaker Change: have had an impact.

Ryan Tomasello: on our forecast deployment, and that would be the first thing that I would look for, Ryan, to occur between now and the end of this year that would increase our confidence in the actual deployments that are being pushed out to 2025.

Ryan Tomasello: Okay, thanks for taking the questions.

Daryl Stemm: Thank you, Ryan.

Ryan Tomasello: Okay, thanks for taking the questions.

Eric Woodring: Our next question comes from a line of Eric Woodring with Morgan Stanley. Please go ahead.

Erik Woodring: Our next question comes from a line from Erik Woodring with Morgan Stanley. Please go ahead.

Ryan Tomasello: Thank you, Ryan.

Speaker Change: Our next question comes from a line of Erik Woodring with Morgan Stanley . Please go ahead.

Erik Woodring: Good morning, guys. Thank you for taking my questions. I have a few as well.

Eric Woodring: Good morning, guys. Thank you for protecting my questions. I have a few as well. Maybe if we could just double-click on the comment that you just made to Ryan, you know, again, you say you have a high degree of confidence that would get to push from 24 lands in 2025. Obviously, this is a very dynamic environment. Things, obviously, probably higher probability of shifting relatively rapidly.

Eric Woodbring: Good morning, guys. Thank you for taking my questions. I have a few as well. Daryl, maybe we could just double click on the comment that you just made to Ryan. You know, again, you say you have a high degree of confidence that what gets put from 24 lands in 2025.

Daryl Stemm: Daryl, maybe we could just double-click on the comment that you just made to Ryan. You know, again, you say you have a high degree of confidence that what gets pushed in 2024 lands in 2025. Obviously, this is a very dynamic environment, things obviously have a higher probability of shifting relatively rapidly. So my specific question is, why do you have that confidence? Is it contractual terms? Is it spending that you see?

Speaker Change: Obviously, this is a very dynamic environment, things obviously probably higher probability of shifting relatively rapidly. So my specific question is, why do you have that confidence? Is it contractual terms? Is it spending that you see? I'd just love to really understand what leads you to say that you have that high degree of confidence.

Daryl Stemm: So my specific question is: why do you have that confidence? Is it contractual terms? Is it spending that you see? I just love to really understand what leads you to say that you have that high degree of confidence?

Erik Woodring: I'd just love to really understand what leads you to say that you have that high degree of confidence. And then there is a follow-up, please. Thank you so much.

Eric Woodring: And I have a follow-up, please.

Daryl Stemm: Thank you so much. Yeah, the first point that I would make is one that I made to Ryan as well, which is we believe that the likelihood of interest rates of the mean is more likely than it has been in the past roughly one year.

Daryl Stemm: Yeah, the first point that I would make is one that I made to Ryan as well, which is that we believe that the likelihood of interest rate softening is more likely than it has been in the past roughly one year. And so I would be looking specifically for a rate reduction as early as September and perhaps multiple decreases to the interest rate between now and the end of the year. Our customers, we've had discussions with, as you might expect, and we have ongoing discussions with them on a regular basis, and they're expressing a higher degree of confidence in returning to more normalized capex investment in 2025. What's changed over the course of the last happy year to nine months is that the statements with regard to what might have been deployed in 2024 have said definitively will be pushed out to 2025.

Speaker Change: and then I have a follow-up, please. Thank you so much.

Speaker Change: Yeah, the first point that I would make is one that I made to Ryan as well, which is

Erik Woodring: OK, that's really helpful. Thank you for that.

Speaker Change: We believe that the likelihood of interest rates softening is more likely than it has been in the past roughly one year.

Daryl Stemm: And so I would be looking specifically for a rate reduction as early as September and perhaps multiple decreases to the interest rate between now and the end of the year. Out of customers, we've had discussions with, as you might expect, and we have ongoing discussions with them on a regular basis. And they're expressing a higher degree of confidence in returning to a more normalized CAPEX investment in 2025.

Speaker Change: And so I would be looking specifically for a rate reduction as early as September and perhaps multiple

Speaker Change: decreases to the interest rate between now and the end of the year.

Speaker Change: Our customers.

Speaker Change: We've had discussions with, as you might expect, and we have ongoing discussions with them on a regular basis.

Speaker Change: And they're expressing a higher degree of confidence in returning to more normalized CapEx investment in 2025.

Daryl Stemm: What's changed over the course of the last half a year to nine months most recently is that the statements with regards to what might have been deployed in 2024. The customers have said definitively will be pushed out to 2025.

Speaker Change: what's changed over the course of the last

Speaker Change: Happy Year to 9 Months!

Speaker Change: Most recently is that the statements with regards to what might have been deployed in 2024, the customers have said definitively will be pushed out to 2025.

Eric Woodring: Okay, that's really helpful. Thank you for that. And then maybe as a follow-up, you know, what I hear from you is a focus on SaaS, on RPU, on recurring revenue.

Erik Woodring: And then maybe as a follow-up, Daryl, what I hear from you is a focus on SaaS, on ARPU, on recurring revenue. You know, I would say over the last handful of quarters, maybe that messaging was a bit lost with a bit of a focus on hardware. Are you suggesting, again, to the degree that you can disclose now before you've gone through any changes and obviously hired a new permanent CEO, but are you suggesting that there could be maybe a change in the hardware approach and maybe get back to the roots of where SmartRent started, which was less of a focus on hardware and more of a focus on software and connecting the platform together?

Speaker Change: Okay, that's really helpful. Thank you for that. And then maybe as a follow-up.

Speaker Change: Yeah, Daryl, what I hear from you is a focus on SAS, on ARPU, on recurring revenue.

Daryl Stemm: You know, I would say over the last handful of quarters, maybe that messaging was a bit lost with a bit of a focus on hardware. But are you suggesting, again, to the degree that you can disclose now before you've gone through any changes and obviously hired a new permanent CEO?

Speaker Change: You know, I would say over the last handful of quarters, maybe that messaging was a bit lost with a bit of a focus on hardware.

Speaker Change: Are you suggesting, again, to the degree that you can disclose now before you've gone through?

Daryl Stemm: But are you suggesting that there could be maybe in a pre- a change in the hardware approach and maybe get back to the roots of where smart rent started, which was less of a focus on hardware, more of a focus on software and connecting the platform together? Well, our platform is comprehensive. The hardware and the software are equally important, where I think you'll see renewed focus and a return really to our core philosophy is how we're approaching the market. I repeated the statements about midway through my prepared remarks so that the primary drivers behind increasing SASS revenue are in both improvements to the SASS RPU and the number of units deployed.

Speaker Change: Daryl Stemm, Lucas Haldeman, Kristen Lee

Speaker Change: less of a focus on hardware and more of a focus on software and connecting the platform together.

Daryl Stemm: Well, our platform is comprehensive, and the hardware and the software are equally important. Where I think you'll see renewed focus and a return to our core philosophy is in how we're approaching the market. I repeated the statement about midway through my prepared remarks that the primary driver behind increasing SAS revenue is both improvements to the SAS RPU and the number of units deployed. What I'm really saying there, Erik, point blank, is that we are renewing our focus on deployed units.

Speaker Change: Well, our platform is comprehensive, and the hardware and the software are equally important.

Erik Woodring: Okay, that's very clear. And then, maybe just the last one for me.

Speaker Change: Where I think you'll see renewed focus and a return really to our core philosophy is how we're approaching the market.

Speaker Change: I repeated the statement about midway through my prepared remarks that the primary drivers

Speaker Change: behind increasing SAS revenue are both improvements to the SAS RPU and the number of units deployed. So

Daryl Stemm: So, what I'm really saying there, Eric, point blank, is we are renewing our focus on deployed units.

Speaker Change: What I'm really saying there, Erik, point blank, is we are renewing our focus on deployed units.

Eric Woodring: Okay, that's very clear.

Erik Woodring: And this could be for anyone on the call: just, you know, as you think about the next person that you want to bring in to lead this company, what are some of the characteristics or what's the type of background that you're looking for in a new CEO? Is this a real estate industry person? Is this a tech person? Is this an operational person? Just love, you know, general comments on what you're looking for in the next leader for SmartRent. And that's it for me. Thanks. Yeah, well.

Eric Woodring: And then maybe just the last one for me, and this could be for anyone on the call, is just, you know, as you think about the next person that you want to bring into this company. What are some of the characteristics or what's the type of background that you're looking for in a new CEO? Is this a real estate industry person? Is this a tech person? Is this an operational person? Just love, you know, general comments on what you're looking for in the next leader for Smart Rent, and that's it for me.

Speaker Change: Daryl Stemm, Lucas Haldeman, Kristen Lee

Speaker Change: Okay, that's very clear. And then maybe just the last one from me, and this could be for anyone on the call, is just, you know, as you think about the next person that you want to bring in to lead this company, what are some of the characteristics or what's the type of background that you're looking for in a new CEO ? Is this a real estate industry person? Is this a tech person? Is this an operational person? Just love, you know, general comments on what you're looking for in the next leader for SmartRent. And that's it for me. Thanks.

Daryl Stemm: Yeah, well, Erik, thank you for the question. I think what you described would be our unicorn applicant for the position. But a very important point that Frank made and we made in our prior release is that we've really reached the point where scale is very important. So one of the primary characteristics that we would be looking for in our next CEO is someone who can bring a history of successful scaling.

Daryl Stemm: Well, Erik, thank you for the question. I think what you described would be our unicorn applicant to the physician, but a very important point that Frank made and we made in our prior to these is that we've really reached a point where scale, scale is very important.

Speaker Change: Yeah, well, Erik, thank you for the question. I think what you described would be our unicorn applicant to the position.

Speaker Change: But a very important point that Frank made, and we made in our prior release, is that we've really reached the point where scale

Daryl Stemm: So one of the primary characteristics that we would be looking for in our next CEO is someone who can bring a history of successful scaling. Lucas did a wonderful job of building this company to a $200 million a year company, but the skill set that's required to get a company from 200 to say a billion is different than the skill set required to get you from zero. So 200. Great.

Speaker Change: Scale is very important. So one of the primary characteristics that we would be looking for in our next CEO is someone who can bring a history of successful scaling.

Daryl Stemm: Lucas did a wonderful job of building this company to a $200 million-a-year company, but the skill set that's required to get a company from $200 to, say, a billion is different than the skill set required to get you from zero to $200.

Speaker Change: Lucas did a wonderful job of building this company to a top 200 million dollar a year company, but the skill set that's required to get a company from 200 to say a billion.

Speaker Change: is different than the skill set required to get you from 0 to 200.

Erik Woodring: Great. Thanks so much for the color. Good luck, guys.

Eric Woodring: Thanks so much for the color. Good luck, guys.

Daryl Stemm: Thank you.

Speaker Change: Great. Thanks so much for the color. Good luck, guys.

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

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

Speaker Change: Thank you.

Speaker Change: Our next question comes from the line of Brett Knoblauch with Cantor Fitzgerald. Please go ahead.

Brett Knoblauch: Hi guys, thanks for taking my question. If we could start on AR, it grew nicely, sequentially on lower units. I guess, was it a relatively stronger upsell period, and like what really drove that big sequential improvement?

Brett Knoblauch: Hi guys. Thanks for taking my questions.

Brett Knobloch: Hi guys, thanks for for taking my questions. If we could start on ARR, it grew nicely sequentially on on lower units. I guess was it a relatively stronger upsell period and like what really drove that big sequential improvement in SASR2?

Daryl Stemm: That's our two. Yeah, you may recall we had a bit of a mathematical anomaly on Q1 actually, and the primary reason for that was that the timing, the timing of the new deployments in Q1 were relatively late in the corner. And so we didn't receive; we can receive anywhere from effectively zero to three full months of SAS revenue when we deployed new units in any particular quarter. So to one, we deployed more units, but received relatively new low amount of revenue. On top of that, I would point to the booking SAS R poo. Although the number in Q2 was down from a year ago, at $8.7 per unit, it still remains above our existing SAS R pool.

Brett Knoblauch: If we could start with ARR, it grew nicely sequentially on lower units. I guess, was it a relatively stronger upsell period? And like, what really drove that big sequential improvement in SASR2?

Brett Knobloch: yes

Speaker Change: You may recall, we had a bit of a mathematical anomaly on Q1, actually, and the primary reason for that was that the timing

Daryl Stemm: Yeah, you may recall, we had a bit of a mathematical anomaly in Q1, actually. And the primary reason for that was that the timing of the new deployments in Q1 was relatively late in the corner, and so we didn't receive, we can receive anywhere from effectively zero to three full months of SAS revenue when we deploy new units in any particular quarter. So in Q1, we deployed more units but received a relatively new low amount of revenue.

Speaker Change: The timing of the new deployments in Q1 were relatively late in the corner, and so we didn't receive, we can receive anywhere from effectively zero to three full months of

Speaker Change: TAS Revenue when we deploy new units in any particular quarter. So Q1

Speaker Change: We deployed more units, but received relatively new low amount of revenue. On top of that, I would point to the bookings SAS ARPU.

Daryl Stemm: On top of that, I would point to the booking SAS ARPU. Although the number in Q2 was down from a year ago, at $8.07 per unit, it still remains above our existing SAS RPU, and it's a clear indicator that as we deploy new units, and continue to deploy new units, they'll come on at higher prices, which will incrementally grow the SAS RPU from quarter to quarter. Thank you.

Brett Knoblauch: Got it. That's helpful.

Speaker Change: Although the number in Q2 was down from a year ago at $8.07 per unit,

Daryl Stemm: And it's a clear indicator that as we deployed new units and continue to deploy new units, they'll come on at higher prices, which will incrementally grow the SAS R poo from quarter to quarter.

Speaker Change: It still remains above our existing SAS ARPU, and it's a clear indicator that as we deploy new units,

Speaker Change: and continue to deploy new units, they'll come on at higher prices, which will incrementally grow the SAS RPU from quarter to quarter.

Brett Knoblauch: Got it, that's helpful.

Brett Knoblauch: Then, secondly, on hosted services gross margins, step back a little bit sequentially. And this is with the hub revenue within that declining by 800,000 and the SAS revenue increasing by 900,000. So, 75% gross margin went up, and 20% gross margin went down. I guess, why didn't the hosted services gross margin go up in the quarter?

Brett Knoblauch: Then secondly on hosted services, gross margins. It's, you know, stepped back a little bit sequentially. And this is with the hub revenue within that declining by, you know, call 800,000 in the SAS revenue increasing by 900,000. So 75% gross margin went up. We've some first margin went down.

Speaker Change: Got it, that's helpful.

Speaker Change: Then, secondly, on hosted services gross margins, it, you know, steps back a little bit sequentially.

Speaker Change: and this...

Speaker Change: is with the hub revenue within that declining by, you know, call it 800,000 and the SAS revenue increasing by 900,000. So 75% gross margin went up, 40% gross margin went down. I guess how did both services gross margin not go up in the quarter?

Daryl Stemm: I guess how did both services' gross margin not go up in the quarter? Post-and-Services margin was relatively flat during the quarter. It did come down by about three tenths of 1%, and I would say that that's not necessarily a statistically significant change. It is up year over year, and I would expect that generally it's going to approach 75% breath over time because the hub amortization portion of it is going down. During Q2, roughly two-thirds of the total Post-and-Services revenue came from SaaS revenue, which is running at about 75%, so not overly concerned about the small drop sequentially.

Daryl Stemm: Posted services margin was relatively flat during the quarter, although it did come down by about three tenths of one percent. And I would say that that's not necessarily a statistically significant change. It is up year over year, and I would expect that, generally, it's going to approach 75% breadth over time because the hub amortization portion of it is going down. During Q2, roughly two-thirds of the total hosted services revenue came from SAS revenue, which is running at about 75%. So, I am not overly concerned about the small drop sequentially. It is up year-over-year from 63% to about 65%.

Speaker Change: i

Speaker Change: Posted services margin was relatively flat during the quarter. It did come down by about three-tenths of one percent. And I would say that that's not necessarily a

Speaker Change: statistically significant change. It is up year over year and I would expect that generally it's going to approach 75% breath over time because

Speaker Change: The hub amortization portion of it is going down.

Speaker Change: During Q2, roughly two-thirds of the total hosted services revenue came from SAS revenue, which is running at about 75%. So, not overly concerned about the small drop sequentially.

Daryl Stemm: It is up year over year from 63% to about 66%.

Speaker Change: It is up year over year from 63% to about 66%.

Brett Knoblauch: Got it. I know you guys are with your own guidance, but could you just help frame what you're expecting for the rest of the year? If we look at the performance in the second quarter, our deployment is really lower in the back half than what we saw in the second quarter. Any insights to how we should think about revenue and profitability over the next six months?

Brett Knoblauch: Got it. And then I know you guys have your own guidance. But could you just help frame what you're expecting for the rest of the year? Like, if we look at deployments in the second quarter, our deployments will be lower in the back half than what we saw in the second quarter. Any insights into how we should think about revenue and profitability over the next six months?

Speaker Change: Percent.

Speaker Change: Got it. And then I know you guys are with your own guidance, but could you just help frame what you're expecting for the rest of the year? Like.

Speaker Change: If we look at deployments in the second quarter, are deployments going to be lower in the back half than what we saw in the second quarter? Any insights to how we should think about revenue and profitability over the next six months?

Daryl Stemm: We're not prepared to give any specific guidance at this particular point. As our visibility improved and as the market, macroeconomic climate does change, or as we expected to, we would anticipate providing some specific guidance later this year and also around 2025.

Daryl Stemm: that we're not prepared to give any specific guidance at this particular point. As our visibility improves and as the market macroeconomic climate does change, or as we expect it to, we would anticipate providing some specific guidance later this year and also around 2020.

Speaker Change: We're not prepared to give any specific guidance at this particular point as our visibility improves and as the market macroeconomic

Speaker Change: climate does change or as we expected to, we would anticipate providing some specific guidance later this year and also around 2025.

Brett Knoblauch: Okay, maybe this is lastly a timing from a new CEO. I know the search is underway, but is that something we should expect over the next couple of months before year end? We have put your base case there. Yeah, thank you. The boards were presently engaged with a leading executive search firm to identify candidates and also evaluate those candidates, and we're really focused on making this smooth and orderly transition, and we're not setting any particular timeline because of those factors. We really want to focus on getting the right candidate to leave this company going forward because we believe the long term, the long-term value is so very compelling.

Brett Knoblauch: Okay, maybe lastly, timing from a new CEO. I know that the search is underway, but you know, is that something we should expect? I'll call it in over the next couple of months before the year ends. I guess, what's your base case there? Yeah, thanks.

Speaker Change: Okay, maybe lastly, timing from a new CEO . I know that the search is underway, but you know, is that something we should expect, you know, call it over the next couple of months before year-end?

Daryl Stemm: Yeah, thank you. The board's working, presently engaged with a leading executive search firm to identify candidates and also evaluate those candidates. And we're really focused on making this a smooth and orderly transition. And we're not setting any particular timeline because of those factors. We really want to focus on getting the right candidate to lead this company going forward because we believe the long-term value is so very compelling.

Speaker Change: I guess what's your base case there?

Speaker Change: Yeah, thank you. The board's working, presently engaged with a leading executive search firm.

Speaker Change: to identify candidates and also evaluate those candidates. And we're really focused on making this a smooth and orderly transition. And we're not setting any particular timeline because of those factors. We really wanna.

Speaker Change: focus on getting the right candidate to lead this company going forward because we believe the long-term value is so very compelling.

Daryl Stemm: Thank you.

Brett Knoblauch: Thank you. I really appreciate it, guys.

Brett Knoblauch: I really appreciate it, guys.

Daryl Stemm: Thank you, Brett.

Speaker Change: Thank you. Really appreciate it, guys.

Tom White: Our next question comes from a line of Tom White with DA Davidson. Please go ahead.

Tom White: Our next question comes from a line from Tom White with DA Davidson. Please go ahead.

Brett Knobloch: Thank you, Brett.

Speaker Change: Our next question comes from the line of Tom White with D.A. Davidson. Please go ahead.

Tom White: Hi Daryl. Hi everyone. Thanks for taking my question. Two, if I could.

Tom White: Hi, everyone. Thanks for taking my question. Two, if I could.

Daryl Stemm: I hopped on a little bit late, so apologies if this was covered, but the press release announcing Lupus' departure made reference sort of a move away from kind of the channel partner strategy. I hope you could just maybe provide a little bit more detail about what's happening there, what's prompted that change, and why is that the right move?

Tom White: Hi Daryl, hi everyone. Thanks for taking my question. Two if I could. I hopped on a little bit late so apologies if this was covered, but you know the press release announcing Lucas's departure made reference to, you know, sort of a move away from kind of the channel partner strategy.

Tom White: I hopped on a little bit late, so apologies if this was covered, but, you know, the press release announcing Lucas's departure made reference to, you know, sort of a move away from kind of the channel partner strategy. So I was hoping you could just maybe provide a little bit more detail about what, you know, what's happening there, what prompted that change, why is that the right move? And then, Daryl, you mentioned expecting kind of a renewed focus on deployed units.

Speaker Change: Daryl Stemm, Lucas Haldeman, Kristen Lee

Daryl Stemm: Then secondarily, you mentioned expecting a renewed focus on deployed units, and I'm curious whether that means also doing that profitably, or is there a potential that, you know? I'll focus on deployed units. Could see you guys kind of get back into maybe a little bit of a cash burn period as you prioritize deployed units. Thanks.

Tom White: And I'm curious whether that means also doing that profitably, or is there a potential that, you know, focus on deployed units could see you guys kind of dip back into, you know, maybe a little bit of a cash burn period as you prioritize deployed units. Thanks.

Speaker Change: And I'm curious whether that means also doing that profitably, or is there a potential that, you know...

Speaker Change: focused on deployed units could see you guys kind of dip back into you know maybe a little bit of a cash burn period as you prioritize deployed units. Thanks.

Daryl Stemm: Thank you for your questions, Tom. With regard to the channel partner program, we're scaling back the program. We're not totally eliminating the program. And one of the primary reasons for putting in place in the first place was really, we feel like it could be an effective way to address the long tail of our market rather than SmartRent directly engaging, fully engaging with smaller customers. We think it might be a more economical way to address the lower, lower unit customers. So we're scaling it back.

Daryl Stemm: Thank you for your questions, Tom. With regard to the Channel Partner Program, we're scaling back the program. We're not totally eliminating the program, and one of the primary reasons for putting it in place in the first place was that we felt like it could be an effective way to address the long tail of our market rather than SmartRent directly engaging with, and fully engaging with smaller customers. We think it might be a more economical way to address the lower unit customers, so we're scaling it back. Last year, it did not work.

Speaker Change: Thank you for your questions, Tom.

Speaker Change: With regard to the Channel Partner Program, we're scaling back the program. We're not totally eliminating the program and one of the primary reasons for putting in place in the first place was really we feel like

Speaker Change: It could be an effective way to address the long tail of our market rather than SmartRent directly

Speaker Change: directly engaging, fully engaging with smaller customers, we think it might be a more economical way to address the lower unit customers.

Daryl Stemm: Last year did not work again. We've got a phenomenal, I think, organic opportunity in front of us and that our existing customers own and operate more than seven million units. So what we're really doing is we're refocusing our team to directly sail to these customers so that we can maintain those deep customer relationships and enhance our service to them. And with regards to remaining or profitability on deployment of units, I think that we've actually positioned ourselves very well to be able to expand our unit deployment volumes on a profitable basis. We've done a lot of investment internally on back office as well as field services and done some realignment of our teams. And I think we could ourselves in a position where we can expand deployed unit volume comfortably.

Daryl Stemm: And we've got a phenomenal, I think, organic opportunity in front of us in that our existing customers own and operate more than 7 million units. So what we're really doing is we're refocusing our team to directly sell to these customers so that we can maintain those deep customer relationships and enhance our service to them. With regard to remaining or profitability on the deployment of units, I think that we've actually positioned ourselves very well to be able to expand our unit deployment volumes on a profitable basis.

Speaker Change: So we're scaling it back. Last year, it did not work.

Speaker Change: We've got a phenomenal, I think, organic opportunity in front of us in that our existing customers own and operate more than 7 million units. So what we're really doing is we're refocusing our team.

Speaker Change: to directly sale to these customers so that we can maintain those deep customer relationships and enhance our service to them.

Speaker Change: With regards to remaining or profitability on deployment of units, I think that we've actually positioned ourselves very well

Speaker Change: to be able to expand our unit deployment volumes on a profitable basis. We've done a lot of investment internally on back office as well as field services.

Daryl Stemm: We've done a lot of investment internally in back office as well as field services and done some realignment of our teams, and I think we've put ourselves in a position where we can expand deployed unit volume profitably.

Speaker Change: and done some realignment of our teams and I think we've put ourselves in a position where we can expand deployed unit volume profitably.

Tom White: Great. Thank you.

Speaker Change: i

Daryl Stemm: Thank you again, Tom, and thank you all for joining us today. As we conclude this call, I'd like to reiterate a couple of...

Daryl Stemm: Thank you again, Tom. And thank you all for joining us today as we conclude this call. I'd like to reiterate a couple of points. Despite the broader economic uncertainty, our solid foundation and strategic foresight have accelerated our innovation path, leading to three consecutive quarters of positive adjusted EBITDA while growing task return revenue north of 30% to a record of 51.2 million dollars. This was accomplished all while keeping operating expenses effectively flat.

Speaker Change: Great. Thank you, Daryl.

Speaker Change: Thank you again, Tom, and thank you all for joining us today. As we conclude this call, I'd like to reiterate a couple of points.

Daryl Stemm: Despite the broader economic uncertainty, our solid foundation and strategic foresight have accelerated our innovation path, leading to three consecutive quarters of positive adjusted EBITDA while growing fast-returning revenue north of 30 percent to a record of $51.2 million. This was accomplished all while keeping operating expenses effectively flat.

Speaker Change: Despite the broader economic uncertainty, our solid foundation and strategic foresight have accelerated our innovation path, leading to three consecutive quarters of positive adjusted EBITDA, while growing SAS recurring revenue north of 30 percent.

Speaker Change: to a record of $51.2 million.

Speaker Change: This was accomplished all while keeping operating expenses effectively flat and these results speak to the early yearnings of creating a platform for value creation.

Daryl Stemm: And these results speak to the early yearnings of creating a platform for value creation. However, the current economic conditions, marked by delayed customer cap activity, impact the near-term performance of the business. But as I stated earlier, the primary impact of this environment is a delay in anticipated 2024 deployments that our customers have pushed to 2025. The long-term overall opportunity remains unchanged and remains extremely compelling. Our commitment to innovation remains strong, informed by customer feedback, which has been instrumental in maintaining our impressive net revenue retention rate north of 100 percent. As we move forward, We believe we are well prepared to capitalize on market opportunities and continue to serve our customers and drive long-term value for our shareholders. Thank you all for your time today.

Daryl Stemm: And these results speak to the early innings of creating a platform for value creation. The current economic conditions marked by delayed customer tactics impact the near term performance of the business. But, as I stated earlier, the primary impact of this environment is a delay in anticipated 2024 deployments that our customers have pushed to 2025. The long-term, overall opportunity remains unchanged and remains extremely compelling. Our commitment to innovation remains strong, informed by customer feedback, which has been instrumental in maintaining our impressive net revenue retention rate, north of 100%.

Speaker Change: The current economic conditions marked by delayed customer CapEx impact the near-term performance of the business.

Speaker Change: But as I stated earlier, the primary impact of this environment is a delay in anticipated 2024 deployments that our customers have pushed to 2025.

Speaker Change: The long-term overall opportunity remains unchanged and remains extremely compelling.

Speaker Change: Our commitment to innovation remains strong, informed by customer feedback, which has been instrumental in maintaining our impressive net revenue retention rate, north of 100%.

Daryl Stemm: As we move forward, we believe we're well prepared to capitalize on market opportunities and continue to serve our customers and drive long-term value for our shareholders. Thank you all for your time today. This concludes today's call. You may now disconnect.

Speaker Change: As we move forward, we believe we're well prepared to capitalize on market opportunities and continue to serve our customers and drive long-term value for our shareholders.

Operator: This concludes today's call. You may now disconnect.

Speaker Change: Thank you all for your time today.

Speaker Change: This concludes today's call. You may now disconnect.

Q2 2024 SmartRent Inc Earnings Call

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