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UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

 

Form 10-Q

 

QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

For the quarterly period ended September 30, 2023

or

TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

Commission file number: 001-39991

SMARTRENT, INC.

(Exact name of Registrant as specified in its charter)

 

Delaware

 

85-4218526

(State or Other Jurisdiction of
Incorporation or Organization)

 

(I.R.S. Employer Identification No.)

 

 

 

8665 E. Hartford Drive, Suite 200

Scottsdale, Arizona

(Address of Principal Executive Offices)

 

85255

(Zip Code)

 

(844) 479-1555

(Registrant’s Telephone Number)

Securities registered pursuant to Section 12(b) of the Act:

Title of each class

Trading Symbol(s)

Name of each exchange on which registered

Class A Common Stock, $0.0001 par value

SMRT

The New York Stock Exchange

 

Securities registered pursuant to Section 12(g) of the Act:

None

 

Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days. Yes ☒ No ☐

 

Indicate by check mark whether the registrant has submitted electronically every Interactive Data File required to be submitted pursuant to Rule 405 of Regulation S-T (§232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit such files). Yes ☒ No ☐

 

Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, a smaller reporting company or an emerging growth company. See the definitions of “large accelerated filer,” “accelerated filer,” “smaller reporting company” and “emerging growth company” in Rule 12b-2 of the Exchange Act.

Large accelerated filer

Accelerated filer

Non-accelerated filer

Smaller reporting company

Emerging growth company

If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act.

 

Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act): Yes ☐ No

 

As of November 3, 2023, there were 203,154,953 shares of the registrant’s Class A Common Stock outstanding, par value $0.0001 per share.

 


 

TABLE OF CONTENTS

 

 

 

Page

 

 

 

PART I - Financial Information

3

 

Item 1 - Financial Statements (Unaudited)

3

 

Condensed Consolidated Balance Sheets as of September 30, 2023 and December 31, 2022

3

 

Condensed Consolidated Statements of Operations and Comprehensive Loss for the three and nine months ended September 30, 2023 and 2022

4

 

Condensed Consolidated Statements of Convertible Preferred Stock and Stockholders' Deficit for the three and nine months ended September 30, 2023 and 2022

5

 

Condensed Consolidated Statements of Cash Flows for the nine months ended September 30, 2023 and 2022

7

 

Notes to the Condensed Consolidated Financial Statements (Unaudited)

9

 

Item 2 - Management's Discussion and Analysis of Financial Condition and Results of Operations

31

 

Item 3 - Quantitative and Qualitative Disclosures About Market Risk

44

 

Item 4 - Controls and Procedures

47

 

 

Part II - Other Information

45

 

Item 1 - Legal Proceedings

45

 

Item 1A - Risk Factors

45

 

Item 2 - Unregistered Sales of Equity Securities and Use of Proceeds

46

 

Item 3 - Defaults Upon Senior Securities

46

 

Item 4 - Mine Safety Disclosures

46

 

Item 5 - Other Information

46

 

Item 6 - Exhibits

47

 

 

Signatures

48

 

 


 


 

CAUTIONARY NOTE REGARDING FORWARD-LOOKING STATEMENTS

This Quarterly Report on Form 10-Q (“Report”) contains forward-looking statements within the meaning of Section 27A of the Securities Act of 1933, as amended (“Securities Act”), and Section 21E of the Securities Exchange Act of 1934, as amended (“Exchange Act”). All statements contained in this Report, other than statements of historical fact, are forward-looking statements, including statements regarding our future operating results and financial position, our business strategy and plans, products, services, and technology offerings, market conditions, growth, and expansion plans and opportunities. The words “believe,” “may,” “will,” “estimate,” “continue,” “anticipate,” “intend,” “expect,” “could,” “would,” “project,” “plan,” “potentially,” “preliminary,” “likely” and similar expressions, and the negatives of these expressions, are intended to identify forward-looking statements. We have based these forward-looking statements largely on our current expectations and projections about future events and trends that we believe may affect our financial condition, results of operations and business strategy.

 

These forward-looking statements are subject to a number of risks, uncertainties, and assumptions, including those described in Part II, Item 1A "Risk Factors" of this Report and in Part I, Item 1A “Risk Factors” of our Annual Report on Form 10-K for the year ended December 31, 2022, filed on March 8, 2023, as amended. Moreover, we operate in a very competitive and rapidly changing environment. New risks emerge from time to time. It is not possible for our management to predict all risks, nor can we assess the effect of all factors on our business or the extent to which any factor, or combination of factors, may cause actual results to differ materially from those contained in any forward-looking statements we may make. In light of these risks, uncertainties, and assumptions, the future events and trends discussed in this Report may not occur and actual results could differ materially and adversely from those anticipated or implied in the forward-looking statements.

 

Factors that could cause actual results to differ materially from those expressed or implied in forward-looking statements include, among other things, our ability to:

accelerate adoption of our products and services;
anticipate the uncertainties inherent in the development of new business lines and business strategies;
manage risks associated with our third-party suppliers and manufacturers and partners for our products;
manage risks associated with adverse macroeconomic conditions, including inflation, slower growth or recession, barriers to trade, changes to fiscal and monetary policy, tighter credit, higher interest rates, high unemployment, and currency fluctuations;
attract, train, and retain effective officers, key employees and directors;
develop, design, manufacture, and sell products and services that are differentiated from those of competitors;
realize the benefits expected from our acquisitions;
acquire or make investments in other businesses, patents, technologies, products or services to grow the business;
successfully pursue, defend, resolve or anticipate the outcome of pending or future litigation matters;
comply with laws and regulations applicable to our business, including privacy regulations; and
maintain key strategic relationships with partners and distributors.

 

You should not rely on forward-looking statements as predictions of future events. We cannot assure you that the events and circumstances reflected in the forward-looking statements will occur. Although we believe that the expectations reflected in the forward-looking statements are reasonable, we cannot guarantee future results, levels of activity, performance or achievements. Except as required by law, we undertake no obligation to update any forward-looking statements for any reason after the date of this Report or to conform these statements to actual results or to changes in our expectations. You should read this Report and the documents that we reference in this Report and have filed as exhibits to this Report with the understanding that our actual future results, levels of activity, performance and achievements may be materially different from what we expect. We qualify all of our forward-looking statements by these cautionary statements.

 

Investors and others should note that we may announce material business and financial information to our investors using our investor relations website (investors.smartrent.com), SEC filings, webcasts, press releases, and conference calls. We use these mediums to communicate with investors and the general public about our company, our products and services, and other issues. It is possible that the information that we make available may be deemed to be material information. We therefore encourage investors, the media and others interested in our company to review the information that we post on our investor relations website.

SmartRent, the SmartRent logo and other trade names, trademarks or service marks of SmartRent appearing in this Report are the property of SmartRent. Trade names, trademarks and service marks of other companies appearing in this Report are the property of their respective holders.

1


 


 

 

Unless the context indicates otherwise, the terms “SmartRent,” the “Company,” “we,” “us,” and “our” as used in this Report refer to SmartRent, Inc., a Delaware corporation, and its subsidiaries taken as a whole.

2


Part I. Financial Information

 

Item 1 - Financial Statements (Unaudited)

SMARTRENT, INC.

CONDENSED CONSOLIDATED BALANCE SHEETS

(Unaudited)

(in thousands, except per share amounts)

 

 

 

 

 

 

 

 

September 30, 2023

 

 

December 31, 2022

 

ASSETS

 

 

 

 

 

 

Current assets

 

 

 

 

 

 

Cash and cash equivalents

 

$

211,000

 

 

$

210,409

 

Restricted cash, current portion

 

 

247

 

 

 

7,057

 

Accounts receivable, net

 

 

63,546

 

 

 

62,442

 

Inventory

 

 

47,521

 

 

 

75,725

 

Deferred cost of revenue, current portion

 

 

12,229

 

 

 

13,541

 

Prepaid expenses and other current assets

 

 

9,573

 

 

 

9,182

 

Total current assets

 

 

344,116

 

 

 

378,356

 

Property and equipment, net

 

 

1,589

 

 

 

2,069

 

Deferred cost of revenue

 

 

13,891

 

 

 

22,508

 

Goodwill

 

 

117,268

 

 

 

117,268

 

Intangible assets, net

 

 

28,217

 

 

 

31,123

 

Other long-term assets

 

 

10,516

 

 

 

9,521

 

Total assets

 

$

515,597

 

 

$

560,845

 

 

 

 

 

 

 

 

LIABILITIES, CONVERTIBLE PREFERRED STOCK AND STOCKHOLDERS' EQUITY

 

 

 

 

 

 

Current liabilities

 

 

 

 

 

 

Accounts payable

 

$

9,022

 

 

$

18,360

 

Accrued expenses and other current liabilities

 

 

21,144

 

 

 

34,396

 

Deferred revenue, current portion

 

 

93,445

 

 

 

80,020

 

Total current liabilities

 

 

123,611

 

 

 

132,776

 

Deferred revenue

 

 

44,134

 

 

 

59,928

 

Other long-term liabilities

 

 

4,600

 

 

 

3,941

 

Total liabilities

 

 

172,345

 

 

 

196,645

 

 

 

 

 

 

 

 

Commitments and contingencies (Note 12)

 

 

 

 

 

 

Convertible preferred stock, $0.0001 par value; 50,000 shares authorized as of September 30, 2023 and December 31, 2022; no shares of preferred stock issued and outstanding as of September 30, 2023 and December 31, 2022

 

 

-

 

 

 

-

 

 

 

 

 

 

 

 

Stockholders' equity

 

 

 

 

 

 

Common stock, $0.0001 par value; 500,000 shares authorized as of September 30, 2023 and December 31, 2022, respectively; 203,076 and 198,525 shares issued and outstanding as of September 30, 2023 and December 31, 2022, respectively

 

 

20

 

 

 

20

 

Additional paid-in capital

 

 

625,713

 

 

 

615,281

 

Accumulated deficit

 

 

(282,212

)

 

 

(250,925

)

Accumulated other comprehensive loss

 

 

(269

)

 

 

(176

)

Total stockholders' equity

 

 

343,252

 

 

 

364,200

 

Total liabilities, convertible preferred stock and stockholders' equity

 

$

515,597

 

 

$

560,845

 

 

 

 

 

 

 

 

See accompanying Notes to Consolidated Financial Statements.

 

 

3


SMARTRENT, INC.

CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS AND COMPREHENSIVE LOSS

(Unaudited)

(in thousands, except per share amounts)

 

 

 

 

For the three months ended September 30,

 

 

For the nine months ended September 30,

 

 

 

2023

 

 

2022

 

 

2023

 

 

2022

 

Revenue

 

 

 

 

 

 

 

 

 

 

 

 

Hardware

 

$

35,631

 

 

$

26,683

 

 

$

100,744

 

 

$

69,692

 

Professional services

 

 

5,962

 

 

 

7,478

 

 

 

28,781

 

 

 

23,510

 

Hosted services

 

 

16,511

 

 

 

13,341

 

 

 

47,060

 

 

 

34,068

 

Total revenue

 

 

58,104

 

 

 

47,502

 

 

 

176,585

 

 

 

127,270

 

 

 

 

 

 

 

 

 

 

 

 

 

Cost of revenue

 

 

 

 

 

 

 

 

 

 

 

 

Hardware

 

 

27,556

 

 

 

25,417

 

 

 

82,118

 

 

 

68,226

 

Professional services

 

 

11,130

 

 

 

14,386

 

 

 

44,573

 

 

 

43,668

 

Hosted services

 

 

5,887

 

 

 

6,516

 

 

 

17,365

 

 

 

17,949

 

Total cost of revenue

 

 

44,573

 

 

 

46,319

 

 

 

144,056

 

 

 

129,843

 

 

 

 

 

 

 

 

 

 

 

 

 

Operating expense

 

 

 

 

 

 

 

 

 

 

 

 

Research and development

 

 

7,573

 

 

 

7,610

 

 

 

21,340

 

 

 

22,086

 

Sales and marketing

 

 

4,636

 

 

 

4,901

 

 

 

14,626

 

 

 

16,202

 

General and administrative

 

 

11,269

 

 

 

15,337

 

 

 

33,891

 

 

 

41,120

 

Total operating expense

 

 

23,478

 

 

 

27,848

 

 

 

69,857

 

 

 

79,408

 

 

 

 

 

 

 

 

 

 

 

 

 

Loss from operations

 

 

(9,947

)

 

 

(26,665

)

 

 

(37,328

)

 

 

(81,981

)

 

 

 

 

 

 

 

 

 

 

 

 

Interest income, net

 

 

2,233

 

 

 

506

 

 

 

6,064

 

 

 

747

 

Other (expense) income, net

 

 

(42

)

 

 

290

 

 

 

(45

)

 

 

566

 

Loss before income taxes

 

 

(7,756

)

 

 

(25,869

)

 

 

(31,309

)

 

 

(80,668

)

 

 

 

 

 

 

 

 

 

 

 

 

Income tax benefit (expense)

 

 

33

 

 

 

(81

)

 

 

22

 

 

 

5,735

 

Net loss

 

$

(7,723

)

 

$

(25,950

)

 

$

(31,287

)

 

$

(74,933

)

Other comprehensive loss

 

 

 

 

 

 

 

 

 

 

 

 

Foreign currency translation adjustment

 

 

(188

)

 

 

(493

)

 

 

(93

)

 

 

(1,083

)

Comprehensive loss

 

$

(7,911

)

 

$

(26,443

)

 

$

(31,380

)

 

$

(76,016

)

Net loss per common share

 

 

 

 

 

 

 

 

 

 

 

 

Basic and diluted

 

$

(0.04

)

 

$

(0.13

)

 

$

(0.16

)

 

$

(0.38

)

Weighted-average number of shares used in computing net loss per share

 

 

 

 

 

 

 

 

 

 

 

 

Basic and diluted

 

 

201,584

 

 

 

196,486

 

 

 

199,858

 

 

 

195,090

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

See accompanying Notes to Consolidated Financial Statements.

 

 

4


SMARTRENT, INC.

CONDENSED CONSOLIDATED STATEMENTS OF STOCKHOLDERS' EQUITY

(Unaudited)

(in thousands)

 

 

 

Convertible Preferred Stock

 

 

 

Common Stock

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Shares

 

 

Amount (Par Value $0.0001)

 

 

 

Shares

 

 

Amount (Par Value $0.0001)

 

 

Additional Paid In Capital

 

 

Accumulated Deficit

 

 

Accumulated other comprehensive (loss) income

 

 

Total Stockholders' Equity

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Balance, December 31, 2022

 

 

-

 

 

$

-

 

 

 

 

198,525

 

 

$

20

 

 

$

615,281

 

 

$

(250,925

)

 

$

(176

)

 

$

364,200

 

Stock-based compensation

 

 

-

 

 

 

-

 

 

 

 

-

 

 

 

-

 

 

 

3,680

 

 

 

-

 

 

 

-

 

 

 

3,680

 

Issuance of common stock upon vesting of equity awards

 

 

-

 

 

 

-

 

 

 

 

751

 

 

 

-

 

 

 

-

 

 

 

-

 

 

 

-

 

 

 

-

 

Tax withholdings related to net share settlement of equity awards

 

 

-

 

 

 

-

 

 

 

 

(246

)

 

 

-

 

 

 

(661

)

 

 

-

 

 

 

-

 

 

 

(661

)

Exercise of options

 

 

-

 

 

 

-

 

 

 

 

151

 

 

 

-

 

 

 

71

 

 

 

-

 

 

 

-

 

 

 

71

 

ESPP purchases

 

 

-

 

 

 

-

 

 

 

 

176

 

 

 

-

 

 

 

438

 

 

 

-

 

 

 

-

 

 

 

438

 

Net loss

 

 

-

 

 

 

-

 

 

 

 

-

 

 

 

-

 

 

 

-

 

 

 

(13,215

)

 

 

-

 

 

 

(13,215

)

Other comprehensive income

 

 

-

 

 

 

-

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

104

 

 

 

104

 

Balance, March 31, 2023

 

 

-

 

 

 

-

 

 

 

 

199,357

 

 

 

20

 

 

 

618,809

 

 

 

(264,140

)

 

 

(72

)

 

 

354,617

 

Stock-based compensation

 

 

-

 

 

 

-

 

 

 

 

-

 

 

 

-

 

 

 

3,276

 

 

 

-

 

 

 

-

 

 

 

3,276

 

Issuance of common stock upon vesting of equity awards

 

 

-

 

 

 

-

 

 

 

 

652

 

 

 

-

 

 

 

-

 

 

 

-

 

 

 

-

 

 

 

-

 

Tax withholdings related to net share settlement of equity awards

 

 

-

 

 

 

-

 

 

 

 

(140

)

 

 

-

 

 

 

(424

)

 

 

-

 

 

 

-

 

 

 

(424

)

Exercise of options

 

 

-

 

 

 

-

 

 

 

 

200

 

 

 

-

 

 

 

94

 

 

 

-

 

 

 

-

 

 

 

94

 

Net loss

 

 

-

 

 

 

-

 

 

 

 

-

 

 

 

-

 

 

 

-

 

 

 

(10,349

)

 

 

-

 

 

 

(10,349

)

Other comprehensive loss

 

 

-

 

 

 

-

 

 

 

 

-

 

 

 

-

 

 

 

-

 

 

 

-

 

 

 

(9

)

 

 

(9

)

Balance, June 30, 2023

 

 

-

 

 

 

-

 

 

 

 

200,069

 

 

 

20

 

 

 

621,755

 

 

 

(274,489

)

 

 

(81

)

 

 

347,205

 

Stock-based compensation

 

 

-

 

 

 

-

 

 

 

 

-

 

 

 

-

 

 

 

3,273

 

 

 

-

 

 

 

-

 

 

 

3,273

 

Issuance of common stock upon vesting of equity awards

 

 

-

 

 

 

-

 

 

 

 

481

 

 

 

-

 

 

 

-

 

 

 

-

 

 

 

-

 

 

 

-

 

Tax withholdings related to net share settlement of equity awards

 

 

-

 

 

 

-

 

 

 

 

(126

)

 

 

-

 

 

 

(421

)

 

 

-

 

 

 

-

 

 

 

(421

)

Exercise of options

 

 

-

 

 

 

-

 

 

 

 

2,662

 

 

 

-

 

 

 

735

 

 

 

-

 

 

 

-

 

 

 

735

 

Net settlement related to exercise of options

 

 

-

 

 

 

-

 

 

 

 

(148

)

 

 

-

 

 

 

-

 

 

 

-

 

 

 

-

 

 

 

-

 

ESPP purchases

 

 

-

 

 

 

-

 

 

 

 

138

 

 

 

-

 

 

 

371

 

 

 

-

 

 

 

-

 

 

 

371

 

Net Loss

 

 

-

 

 

 

-

 

 

 

 

-

 

 

 

-

 

 

 

-

 

 

 

(7,723

)

 

 

-

 

 

 

(7,723

)

Other comprehensive loss

 

 

-

 

 

 

-

 

 

 

 

-

 

 

 

-

 

 

 

-

 

 

 

-

 

 

 

(188

)

 

 

(188

)

Balance, September 30, 2023

 

 

-

 

 

$

-

 

 

 

 

203,076

 

 

$

20

 

 

$

625,713

 

 

$

(282,212

)

 

$

(269

)

 

$

343,252

 

 

 

5


SMARTRENT, INC.

CONDENSED CONSOLIDATED STATEMENTS OF STOCKHOLDERS' EQUITY

(Unaudited)

(in thousands)

 

 

Convertible Preferred Stock

 

 

 

Common Stock

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Shares

 

 

Amount (Par Value $0.0001)

 

 

 

Shares

 

 

Amount (Par Value $0.0001)

 

 

Additional Paid In Capital

 

 

Accumulated Deficit

 

 

Accumulated other comprehensive (loss) income

 

 

Total Stockholders' Equity (Deficit)

 

Balance, December 31, 2021

 

 

-

 

 

$

-

 

 

 

 

193,864

 

 

$

19

 

 

$

604,077

 

 

$

(154,603

)

 

$

9

 

 

$

449,502

 

Stock-based compensation

 

 

 

 

 

 

 

 

 

-

 

 

 

-

 

 

 

3,523

 

 

 

-

 

 

 

-

 

 

 

3,523

 

Common stock warrants issued to customers as consideration

 

 

-

 

 

 

-

 

 

 

 

-

 

 

 

-

 

 

 

2

 

 

 

-

 

 

 

-

 

 

 

2

 

Common stock warrants related to marketing expense

 

 

-

 

 

 

-

 

 

 

 

-

 

 

 

-

 

 

 

217

 

 

 

-

 

 

 

-

 

 

 

217

 

Reverse recapitalization, net of transaction costs

 

 

-

 

 

 

-

 

 

 

 

-

 

 

 

-

 

 

 

(70

)

 

 

-

 

 

 

-

 

 

 

(70

)