SmartRent slides 3% on mixed earnings as revenue growth returns
SaaS segment delivers double-digit growth while broader top line narrowly misses analyst forecasts
SmartRent shares fell nearly 3% in afternoon trading on Wednesday after the smart home software provider reported quarterly results that showed a return to revenue growth but narrowly missed analyst expectations.
The Scottsdale, Arizona-based company posted revenue of $36.0 million for the period, falling short of the $36.3 million consensus estimate by 0.8%, according to trading signal data. Despite the modest miss, the figures represent the first year-over-year revenue growth in seven quarters for a company that has struggled through a prolonged downturn in the property technology sector.
The mixed results highlight SmartRent's ongoing transformation from a hardware-heavy business to a software-focused model as it seeks to capture more recurring revenue from property managers and home builders. The company's SaaS segment delivered the strongest performance, climbing more than 10% year-over-year to reach $15.2 million to $15.5 million in sales.
"SmartRent, Inc. is a leading enterprise software provider based in Scottsdale, Arizona, specializing in smart home technology for the residential property management industry," according to the company's investor materials. The firm delivers an integrated operating system that optimizes operations for property owners, home builders, and institutional investors nationwide.
Perhaps most encouragingly for investors, SmartRent achieved a significant milestone on the profitability front, reaching run-rate positive adjusted EBITDA of $0 to $300,000 alongside cash flow neutrality. This marks a notable improvement from the adjusted EBITDA loss of $45.1 million reported over the trailing twelve months and suggests the company's restructuring efforts are bearing fruit.
The company strengthened its balance sheet during the quarter, with cash increasing by $5 million to reach $105 million. That liquidity position provides operational runway as management continues navigating the challenging commercial real estate environment. However, SmartRent remains unprofitable on a net basis, recording a loss of $3.3 million to $3.6 million for the period.
The stock's decline reflects investor ambivalence about the mixed performance. While the return to year-over-year revenue growth and positive EBITDA run rate represent important psychological milestones, the revenue miss and continued net losses underscore the difficult path ahead. Shares of SmartRent are currently trading at $1.66, down 2.9%, and have lost more than 20% over the past year despite trading well above their 52-week low of 67 cents.
Analysts have set a price target of $1.73 for the stock, according to market data, suggesting limited upside potential from current levels. The company carries a market capitalization of approximately $324 million and trades at 2.1 times trailing revenue—a premium multiple that investors will be watching closely given the execution risks ahead.
SmartRent's performance arrives amid broader challenges in the property technology sector, where rising interest rates and cooling commercial real estate demand have pressured companies that sell into the housing market. The shift toward SaaS revenue helps provide more predictable cash flows, but the company must demonstrate consistent execution to justify its valuation.
Investors will be focused on upcoming quarters to see whether the return to revenue growth represents a sustainable turnaround or merely a temporary respite. The company's ability to expand its SaaS margins while maintaining cash flow positivity will be critical factors in determining whether SmartRent can regain investor confidence after a prolonged period of underperformance.