SmartRent’s first quarter saw a negative market reaction, reflecting cautious investor sentiment despite management’s efforts to reposition the business. Leadership pointed to an ongoing transition away from low-margin hardware sales towards a software-as-a-service (SaaS) model as a central factor behind the year-on-year revenue decline. Interim CEO John Dorman highlighted recent operational restructuring, noting, “Hardware implementation revenues have declined over the past year, our SaaS revenues grew by more than 17%.” Management also addressed the impact of non-cash charges and legal accruals, which contributed to wider losses.
Is now the time to buy SMRT? Find out in our full research report (it’s free).
SmartRent (SMRT) Q1 CY2025 Highlights:
- Revenue: $41.34 million vs analyst estimates of $40.08 million (18.1% year-on-year decline, 3.1% beat)
- Adjusted EPS: -$0.05 vs analyst estimates of -$0.01 (significant miss)
- Adjusted EBITDA: -$6.37 million vs analyst estimates of -$4.57 million (-15.4% margin, 39.4% miss)
- Operating Margin: -99.9%, down from -20.1% in the same quarter last year
- Annual Recurring Revenue: $55.9 million at quarter end, up 17.4% year on year
- Billings: $25.28 million at quarter end, down 46.1% year on year
- Market Capitalization: $186.3 million
While we enjoy listening to the management's commentary, our favorite part of earnings calls are the analyst questions. Those are unscripted and can often highlight topics that management teams would rather avoid or topics where the answer is complicated. Here is what has caught our attention.
Our Top 5 Analyst Questions SmartRent’s Q1 Earnings Call
- Ryan Tomasello (KBW) asked for clarity on whether the $10 million in cost savings is fully reflected in current results. CFO Daryl Stemm explained that most savings will show up in Q3, with Q2 remaining neutral due to one-time charges.
- Ryan Tomasello (KBW) inquired about the scalability of the sales organization and operational reorganization’s impact on customer success. Interim CEO John Dorman said the initial build-out is complete, but full benefits will take time to materialize.
- Ryan Tomasello (KBW) questioned if any strategic initiatives are paused pending the permanent CEO hire. Dorman asserted that all changes are moving forward and the CEO transition will be smooth, with no delays to execution.
- Yi Fu Lee (Cantor Fitzgerald) asked about qualities sought in the new CEO and the reasoning for the quick leadership change. Dorman reiterated the need for operational expertise in scaling recurring revenue businesses and said the change was a Board decision unrelated to strategy or performance.
- Yi Fu Lee (Cantor Fitzgerald) sought detail on mitigating tariff impacts and the timeline for seeing tangible results from the revamped go-to-market team. Stemm outlined potential mitigation strategies, while Dorman indicated 2025 will largely be a foundation-building year, with clear progress expected by 2026.
Catalysts in Upcoming Quarters
Looking ahead, our analysts will focus on (1) evidence of sustained SaaS revenue growth and improved net revenue retention, (2) realization of cost savings and operating leverage in the second half of the year, and (3) the successful onboarding of a new permanent CEO capable of accelerating SmartRent’s transition to a recurring revenue model. Monitoring the company’s ability to mitigate tariff impacts and adapt to evolving customer investment cycles will also be important.
SmartRent currently trades at $0.97, up from $0.90 just before the earnings. At this price, is it a buy or sell? The answer lies in our full research report (it’s free).
The Best Stocks for High-Quality Investors
The market surged in 2024 and reached record highs after Donald Trump’s presidential victory in November, but questions about new economic policies are adding much uncertainty for 2025.
While the crowd speculates what might happen next, we’re homing in on the companies that can succeed regardless of the political or macroeconomic environment. Put yourself in the driver’s seat and build a durable portfolio by checking out our Top 5 Growth Stocks for this month. This is a curated list of our High Quality stocks that have generated a market-beating return of 183% over the last five years (as of March 31st 2025).
Stocks that made our list in 2020 include now familiar names such as Nvidia (+1,545% between March 2020 and March 2025) as well as under-the-radar businesses like the once-small-cap company Comfort Systems (+782% five-year return). Find your next big winner with StockStory today.