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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, 2025

☐ 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.)

6811 E. Mayo Blvd., 4th Floor Phoenix, Arizona (Address of Principal Executive Offices)		85054 (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

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, 2025, there were 189,200,722 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, 2025 and December 31, 2024	3
	Condensed Consolidated Statements of Operations and Comprehensive Loss for the three and nine months ended September 30, 2025 and 2024	4
	Condensed Consolidated Statements of Convertible Preferred Stock and Stockholders' Deficit for the three and nine months ended September 30, 2025 and 2024	5
	Condensed Consolidated Statements of Cash Flows for the nine months ended September 30, 2025 and 2024	7
	Notes to the Condensed Consolidated Financial Statements (Unaudited)	9
	Item 2 - Management's Discussion and Analysis of Financial Condition and Results of Operations	35
	Item 3 - Quantitative and Qualitative Disclosures About Market Risk	53
	Item 4 - Controls and Procedures	53

PART II - Other Information		53
	Item 1 - Legal Proceedings	53
	Item 1A - Risk Factors	53
	Item 2 - Unregistered Sales of Equity Securities and Use of Proceeds	54
	Item 3 - Defaults Upon Senior Securities	54
	Item 4 - Mine Safety Disclosures	54
	Item 5 - Other Information	54
	Item 6 - Exhibits	55
Signatures		56

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”) that express our opinions, expectations, beliefs, plans, objectives, assumptions or projections regarding future events or future results and therefore are, or may be deemed to be, “forward-looking statements.” Words such as “believe,” “may,” “will,” “estimate,” “continue,” “anticipate,” “intend,” “expect,” “could,” “would,” “project,” “plan,” “potentially,” “preliminary,” “likely,” “aim” and similar expressions, and the negatives of these expressions, are intended to identify forward-looking statements. Forward-looking statements appear in a number of places throughout this Report and include statements regarding our intentions, beliefs, or current expectations concerning, among other things, our results of operations, financial condition, liquidity, prospects, growth, strategies, and the markets in which we operate. Forward-looking statements contained in this Report include statements about:

•

our future financial performance, including our expectations regarding revenue, cost of revenue, operating expenses, capital expenditures, cash flows, and ability to achieve profitability;

•

our future operational performance, including our expectations regarding our metrics, including, among others, Annual Recurring Revenue, Average Revenue per Unit, Customer Churn, Property Net Revenue Retention, Customer Net Revenue Retention, Bookings, the number of Units Deployed, New Units Deployed, Units Shipped, and Units Booked;

•

the impact of macroeconomic conditions and geopolitical events on our business;

•

our anticipated investments in sales and marketing and research and development;

•

our recent leadership changes;

•

our ability to attract new customers, sell into new and existing markets, upsell customers, and develop new products;

•

our ability to maintain our brand;

•

the impact of international trade restrictions, such as tariffs and other controls on imports or exports of goods, technology, or data;

•

our ability to successfully defend litigation brought against us;

•

the sufficiency of our cash, cash equivalents and investments to meet our liquidity needs;

•

our ability to achieve or maintain profitability;

•

our ability to effectively manage our growth and future expenses;

•

our ability to manage our supply chain;

•

our investment strategy, business strategy and growth strategy, including the use of acquisitions to grow our business;

•

management’s plans, beliefs and objectives for future operations;

•

our expectations about competition and our ability to compete effectively with new and existing competitors in new and existing markets and offerings;

•

the impact of our acquisitions and our ability to successfully integrate acquired businesses;

•

the impact of seasonal factors on our business;

•

our ability to successfully expand in our existing markets and into new markets;

•

our ability to maintain the security and availability of our platform and products;

•

potential harm caused by significant disruptions of service, or the actual or perceived failure of our products to prevent security incidents;

•

our ability to prevent serious errors or defects across, and to otherwise maintain the uninterrupted operation of our network;

•

our expectations regarding our share repurchase program;

•

our ability to satisfy certain New York Stock Exchange (“NYSE”) listing requirements;

•

our ability to maintain, protect and enhance our intellectual property;

•

our expectations of the impact of, and our ability to comply with existing, modified or new laws and regulations applicable to our business; and

•

our ability to correctly estimate our tax obligations.

The foregoing list may not contain all of the forward-looking statements made in this Report.

You should not rely on forward-looking statements as predictions of future events. 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. 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.

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, 2024, filed on March 5, 2025. 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 from those anticipated or implied in the forward-looking statements.

The forward-looking statements made in this Report relate only to events as of the date on which the statements were made. 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.

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.

PART I. Financial Information

Item 1 - Financial Statements (Unaudited)

SMARTRENT, INC.

CONDENSED CONSOLIDATED BALANCE SHEETS

(Unaudited)

(in thousands, except per share amounts)


	As of
	September 30, 2025			December 31, 2024
ASSETS
Current assets
Cash and cash equivalents	$	100,022		$	142,482
Accounts receivable, net		52,195			59,299
Inventory		28,087			35,261
Deferred cost of revenue, current portion		4,356			8,727
Prepaid expenses and other current assets		16,805			11,881
Total current assets		201,465			257,650
Property and equipment, net		5,378			2,451
Deferred cost of revenue		374			3,073
Goodwill		92,339			117,268
Intangible assets, net		20,470			23,375
Other long-term assets		15,771			16,359
Total assets	$	335,797		$	420,176

LIABILITIES, CONVERTIBLE PREFERRED STOCK AND STOCKHOLDERS' EQUITY
Current liabilities
Accounts payable	$	10,811		$	8,716
Accrued expenses and other current liabilities		25,617			27,245
Deferred revenue, current portion		36,195			35,071
Total current liabilities		72,623			71,032
Deferred revenue		22,561			52,588
Other long-term liabilities		6,201			7,121
Total liabilities		101,385			130,741

Commitments and contingencies (Note 12)
Convertible preferred stock, $0.0001 par value; 50,000 shares authorized as of September 30, 2025 and December 31, 2024; no shares of preferred stock issued and outstanding as of September 30, 2025 and December 31, 2024		-			-

Stockholders' equity
Class A common stock, $0.0001 par value; 500,000 shares authorized as of September 30, 2025 and December 31, 2024, respectively; 189,196 and 192,049 shares issued and outstanding as of September 30, 2025 and December 31, 2024, respectively		19			19
Additional paid-in capital		643,830			637,361
Accumulated deficit		(410,060	)		(347,847	)
Accumulated other comprehensive loss		623			(98	)
Total stockholders' equity		234,412			289,435
Total liabilities, convertible preferred stock and stockholders' equity	$	335,797		$	420,176

See accompanying Notes to Condensed Consolidated Financial Statements.

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,
	2025			2024			2025			2024
Revenue
Hardware	$	11,506		$	18,707		$	45,479		$	72,460
Professional services		7,035			3,308			15,255			12,582
Hosted services		17,661			18,495			55,120			54,475
Total revenue		36,202			40,510			115,854			139,517

Cost of revenue
Hardware		13,836			13,843			40,664			48,845
Professional services		6,800			6,840			20,330			22,157
Hosted services		5,997			6,370			19,061			18,330
Total cost of revenue		26,633			27,053			80,055			89,332

Operating expense
Research and development		6,149			6,596			20,872			22,442
Sales and marketing		4,354			4,444			15,499			13,714
General and administrative		6,093			14,154			34,500			42,843
Total operating expense		16,596			25,194			70,871			78,999

Impairment charge		-			-			24,929			-

Loss from operations		(7,027	)		(11,737	)		(60,001	)		(28,814	)

Interest income, net		891			2,019			3,103			6,718
Other (expense) income, net		(78	)		(187	)		(285	)		7
Loss before income taxes		(6,214	)		(9,905	)		(57,183	)		(22,089	)

Income tax expense		56			18			131			131
Net loss	$	(6,270	)	$	(9,923	)	$	(57,314	)	$	(22,220	)
Other comprehensive loss
Foreign currency translation adjustment		(6	)		270			721			265
Comprehensive loss	$	(6,276	)	$	(9,653	)	$	(56,593	)	$	(21,955	)
Net loss per common share
Basic and diluted	$	(0.03	)	$	(0.05	)	$	(0.30	)	$	(0.11	)
Weighted-average number of shares used in computing net loss per share
Basic and diluted		188,376			198,731			189,835			201,391


See accompanying Notes to Condensed Consolidated Financial Statements.

SMARTRENT, INC.

CONDENSED CONSOLIDATED STATEMENTS OF STOCKHOLDERS' EQUITY

(Unaudited)

(in thousands)


	Convertible Preferred Stock				Class A 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, 2024		-	$	-		192,049		$	19	$	637,361		$	(347,847	)	$	(98	)	$	289,435
Stock-based compensation		-		-		-			-		2,836			-			-			2,836
Issuance of Class A common stock upon vesting of equity awards		-		-		906			-		-			-			-			-
Tax withholdings related to net share settlement of equity awards		-		-		(328	)		-		(478	)		-			-			(478	)
ESPP purchases		-		-		140			-		175			-			-			175
Repurchases of Class A common stock						(1,018	)		-		-			(1,202	)		-			(1,202	)
Net loss		-		-		-			-		-			(40,184	)		-			(40,184	)
Other comprehensive income		-		-													88			88
Balance, March 31, 2025		-		-		191,749			19		639,894			(389,233	)		(10	)		250,670
Stock-based compensation		-		-		-			-		2,161			-			-			2,161
Issuance of common stock upon vesting of equity awards		-		-		438			-		-			-			-			-
Tax withholdings related to net share settlement of equity awards		-		-		(57	)		-		(45	)		-			-			(45	)
Repurchases of Class A common stock		-		-		(4,066	)		-					(3,716	)		-			(3,716	)
Net loss		-		-		-			-		-			(10,860	)		-			(10,860	)
Other comprehensive loss		-		-		-			-		-			-			639			639
Balance, June 30, 2025		-	$	-		188,064		$	19	$	642,010		$	(403,809	)	$	629		$	238,849
Stock-based compensation		-		-		-			-		2,084			-			-			2,084
Issuance of common stock upon vesting of equity awards		-		-		1,272			-		-			-			-			-
Tax withholdings related to net share settlement of equity awards		-		-		(268	)		-		(374	)		-			-			(374	)
Exercise of options		-		-		-			-		-			-			-			-
Net settlement related to exercise of options		-		-		-			-		-			-			-			-
ESPP purchases		-		-		128			-		110			-			-			110
Repurchases of Class A common stock						-			-		-			19			-			19
Net Loss		-		-		-			-		-			(6,270	)		-			(6,270	)
Other comprehensive income		-		-		-			-		-			-			(6	)		(6	)
Balance, September 30, 2025		-	$	-		189,196		$	19	$	643,830		$	(410,060	)	$	623		$	234,412

SMARTRENT, INC.

CONDENSED CONSOLIDATED STATEMENTS OF STOCKHOLDERS' EQUITY

(Unaudited)

(in thousands)


	Convertible Preferred Stock				Class A 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, 2023		-	$	-		203,327		$	20		$	628,156		$	(285,512	)	$	(216	)	$	342,448
Stock-based compensation		-		-		-			-			3,281			-			-			3,281
Issuance of Class A common stock upon vesting of equity awards		-		-		775			-			-			-			-			-
Tax withholdings related to net share settlement of equity awards		-		-		(291	)		-			(898	)		-			-			(898	)
Exercise of options		-		-		192			-			2			-			-			2
Net settlement related to exercise of options		-		-		(31	)								-			-			-
ESPP purchases		-		-		134			-			337			-			-			337
Repurchases of Class A common stock						(1,595	)		-			-			(4,397	)		-			(4,397	)
Net loss		-		-		-			-			-			(7,692	)		-			(7,692	)
Other comprehensive income		-		-														6			6
Balance, March 31, 2024		-		-		202,511			20			630,878			(297,601	)		(210	)		333,087
Stock-based compensation		-		-		-			-			3,284			-			-			3,284
Issuance of common stock upon vesting of equity awards		-		-		568			-			-			-			-			-
Tax withholdings related to net share settlement of equity awards		-		-		(145	)		-			(369	)		-			-			(369	)
Repurchases of Class A common stock		-		-		(765	)		-			-			(2,003	)		-			(2,003	)
Net loss		-		-		-			-			-			(4,605	)		-			(4,605	)
Other comprehensive loss		-		-		-			-			-			-			(11	)		(11	)
Balance, June 30, 2024		-	$	-		202,169		$	20		$	633,793		$	(304,209	)	$	(221	)	$	329,383
Stock-based compensation		-		-		-			-			2,958			-			-			2,958
Issuance of common stock upon vesting of equity awards		-		-		669			-			-			-			-			-
Tax withholdings related to net share settlement of equity awards		-		-		(259	)		-			(582	)		-			-			(582	)
ESPP purchases		-		-		159			-			249			-			-			249
Repurchases of Class A common stock						(9,767	)		(1	)		-			(17,213	)		-			(17,214	)
Net Loss		-		-		-			-			-			(9,923	)		-			(9,923	)
Other comprehensive income		-		-		-			-			-			-			270			270
Balance, September 30, 2024		-	$	-		192,971		$	19		$	636,418		$	(331,345	)	$	49		$	305,141

See accompanying Notes to Condensed Consolidated Financial Statements.

SMARTRENT, INC.

CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS

(Unaudited)

(in thousands)


	For the nine months ended September 30,
	2025			2024
CASH FLOWS FROM OPERATING ACTIVITIES
Net loss	$	(57,314	)	$	(22,220	)
Adjustments to reconcile net loss to net cash used by operating activities
Depreciation and amortization		6,210			4,730
Impairment of investment in non-affiliate		-			2,250
Goodwill impairment		24,929			-
Provision for warranty expense		618			(837	)
Non-cash lease expense		599			1,079
Stock-based compensation		7,081			9,523
Change in fair value of earnout related to acquisition		(294	)		140
Non-cash interest expense		104			107
Provision for excess and obsolete inventory		3,852			2,697
Provision for expected credit losses		(328	)		804
Non-cash legal expense (Note 12 "Commitments and Contingencies")		-			7,255
Change in operating assets and liabilities
Accounts receivable		7,861			(1,739	)
Inventory		3,390			(2,020	)
Deferred cost of revenue		7,071			8,175
Prepaid expenses and other assets		(4,617	)		4,474
Accounts payable		1,950			(5,581	)
Accrued expenses and other liabilities		(1,131	)		(5,338	)
Deferred revenue		(28,911	)		(23,189	)
Lease liabilities		(302	)		(1,208	)
Net cash used in operating activities		(29,232	)		(20,898	)
CASH FLOWS FROM INVESTING ACTIVITIES
Purchase of property and equipment		(3,552	)		(524	)
Capitalized software costs		(3,389	)		(4,501	)
Net cash used in investing activities		(6,941	)		(5,025	)
CASH FLOWS FROM FINANCING ACTIVITIES
Payments for repurchases of Class A common stock		(4,918	)		(23,462	)
Proceeds from options exercise		-			2
Proceeds from ESPP purchases		285			586
Taxes paid related to net share settlements of stock-based compensation awards		(897	)		(1,849	)
Payment of earnout related to acquisition		(1,466	)		(1,530	)
Net cash used in financing activities		(6,996	)		(26,253	)
Effect of exchange rate changes on cash and cash equivalents		709			117
Net decrease in cash, cash equivalents, and restricted cash		(42,460	)		(52,059	)
Cash, cash equivalents, and restricted cash - beginning of period		142,482			215,709
Cash, cash equivalents, and restricted cash - end of period	$	100,022		$	163,650

Reconciliation of cash, cash equivalents, and restricted cash to the condensed consolidated balance sheets
Cash and cash equivalents	$	100,022		$	163,403
Restricted cash, current portion		-			247
Total cash, cash equivalents, and restricted cash	$	100,022		$	163,650

See accompanying Notes to Condensed Consolidated Financial Statements.

SMARTRENT, INC.

CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS - CONTINUED

(Unaudited)

(in thousands)


	For the nine months ended September 30,
	2025		2024
Supplemental disclosure of cash flow information
Interest paid	$	128	$	182
Cash paid for income taxes		340		165
Schedule of non-cash investing and financing activities
Right-of-use ("ROU") assets obtained in exchange for new lease liabilities		-		6,235
Accrued property and equipment at period end		8		83
Stock repurchases excise tax charged to equity		13		151

See accompanying Notes to Condensed Consolidated Financial Statements.

SMARTRENT, INC.

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

(in thousands, except per share amounts)

NOTE 1. DESCRIPTION OF BUSINESS

SmartRent, Inc., and its wholly owned subsidiaries (collectively, the "Company"), is an enterprise real estate technology company that provides comprehensive management software and applications designed for property owners, managers and residents. Its suite of products and services, which includes both smart building hardware and cloud-based software-as-a-service ("SaaS") solutions, provides seamless visibility and control over real estate assets. The Company’s solutions can help lower operating costs, increase revenue, mitigate operational friction and protect assets for owners and operators, while providing a differentiated, elevated living experience for residents. The Company is headquartered in Phoenix, Arizona.

NOTE 2. SIGNIFICANT ACCOUNTING POLICIES

Unaudited Interim Financial Information

The accompanying condensed consolidated financial statements have been prepared in accordance with accounting principles generally accepted in the United States of America ("GAAP") and include the consolidated accounts of the Company and its wholly owned subsidiaries. All intercompany transactions and balances have been eliminated upon consolidation. The Condensed Consolidated Balance Sheet at December 31, 2024 has been derived from the audited consolidated financial statements as of December 31, 2024, as presented in the Company’s Annual Report on Form 10-K for the year ended December 31, 2024, which was filed with the SEC on March 5, 2025. Certain notes and other information have been condensed or omitted from the interim financial statements presented herein. The financial data and other information disclosed in these Notes to Condensed Consolidated Financial Statements related to the three and nine months ended September 30, 2025 and 2024 are unaudited. The unaudited interim financial statements have been prepared on the same basis as the annual consolidated financial statements and, in the opinion of management, reflect all adjustments, which are of a normal recurring nature, necessary for a fair statement of the Company’s financial condition and results of operations and cash flows for the interim period presented. The results for the three and nine months ended September 30, 2025 are not necessarily indicative of the results to be expected for the full year ending December 31, 2025 or any future period.

Foreign Currency

SmartRent, Inc.'s functional and reporting currency is United States Dollars (“USD”) and its foreign subsidiaries have a functional currency other than USD. Financial position and results of operations of the Company's international subsidiaries are measured using local currencies as the functional currency. Assets and liabilities of these operations are translated at the exchange rates in effect at the end of each reporting period. The Company's international subsidiaries' statements of operations accounts are translated at the weighted-average rates of exchange prevailing during each reporting period. Translation adjustments arising from the use of differing currency exchange rates from period to period are included in accumulated other comprehensive loss in stockholders’ equity. Gains and losses on foreign currency exchange transactions, as well as translation gains or losses on transactions denominated in currencies other than an entity’s functional currency, are reflected in the Condensed Consolidated Statements of Operations and Comprehensive Loss.

SMARTRENT, INC.

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

(in thousands, except per share amounts)

Liquidity

The accompanying financial statements have been prepared assuming the Company will continue as a going concern, which contemplates the realization of assets and liabilities and commitments in the normal course of business. Management believes that currently available resources will provide sufficient funds to enable the Company to meet its obligations for at least one year past the issuance date of these financial statements. The Company may need to raise additional capital through equity or debt financing to fund future operations until it generates positive operating cash flows. There can be no assurance that such additional equity or debt financing will be available on terms acceptable to the Company, or at all.

Use of Estimates

The preparation of financial statements in conformity with GAAP requires management to make estimates, judgments and assumptions that affect the reported amounts of assets and liabilities and disclosure of contingent assets and liabilities at the date of the financial statements, as well as the reported amounts of revenue and expense during the reporting period. These estimates made by management include performing impairment testing of recorded goodwill, intangible assets, and long-lived assets, valuing the Company’s inventories on hand, allowance for expected credit losses, intangible assets, earnout liabilities, warranty liabilities, stand-alone selling price of items sold, and certain assumptions used in the valuation of equity awards, including the estimated fair value of common stock warrants, and assumptions used to estimate the fair value of stock-based compensation expense. Actual results could differ materially from those estimates.

Net Loss Per Share Attributable to Common Stockholders

The Company follows the two-class method to include the dilutive effect of securities that participated in dividends, if and when declared, when computing net income per common share. The two-class method determines net income per common share for each class of common stock and participating securities according to dividends, if and when declared or accumulated and participation rights in undistributed earnings. The two-class method requires income available to common stockholders for the period to be allocated between common stock and participating securities based upon their respective rights to receive dividends as if all income for the period had been distributed. The anti-dilutive effect of potentially dilutive securities is excluded from the computation of net loss per share because inclusion of such potentially dilutive shares on an as-converted basis would have been anti-dilutive.

The Company considers any unvested common shares subject to repurchase to be participating securities because holders of such shares have non-forfeitable dividend rights in the event a dividend is paid on common stock. The holders of unvested shares of common stock subject to repurchase do not have a contractual obligation to share in losses.

Basic net loss per share attributable to common stockholders is calculated by dividing the net loss attributable to common stockholders by the weighted-average number of shares of common stock outstanding during the period, adjusted for outstanding shares that are subject to repurchase and any shares issuable by the exercise of warrants for nominal consideration.

Diluted net loss per share is computed by giving effect to all potentially dilutive securities outstanding for the period using the treasury stock method or the if-converted method based on the nature of such securities. For periods in which the Company reports a net loss, the diluted net loss per common share attributable to common stockholders is the same as basic net loss per common share attributable to common stockholders, because inclusion of such potentially dilutive shares on an as-converted basis would have been anti-dilutive.

Cash and Cash Equivalents

The Company considers financial instruments with an original maturity of three months or less to be cash and cash equivalents. The Company maintains cash and cash equivalents at multiple financial institutions, and, at times, these balances exceed federally insurable limits. As a result, there is a concentration of credit risk related to amounts on deposit. The Company believes any risks are mitigated through the size and security of the financial institution at which its cash balances are held.

SMARTRENT, INC.

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

(in thousands, except per share amounts)

Restricted Cash

The Company considers cash to be restricted when withdrawal or general use is legally restricted. The Company reports the current portion of restricted cash as a separate item in the Condensed Consolidated Balance Sheets and the non-current portion is a component of other long-term assets in the Condensed Consolidated Balance Sheets. The Company determines current or non-current classification based on the expected duration of the restriction.

Accounts Receivable, net

Accounts receivable consist of balances due from customers resulting from the sale of hardware, professional services and Hosted Services. Accounts receivable are recorded at invoiced amounts, are non-interest bearing and are presented net of the associated allowance for expected credit losses on the Condensed Consolidated Balance Sheets. The allowance for expected credit losses totaled $2,468 and $2,797 as of September 30, 2025, and December 31, 2024, respectively. The provision for expected credit losses is recorded in general and administrative expenses in the accompanying Condensed Consolidated Statements of Operations and Comprehensive Loss. The provision for expected credit losses totaled $(469) for the three months ended September 30, 2025. There was no provision for expected credit losses for the three months ended September 30, 2024. The provision for expected credit losses totaled $(328) and $804 for the nine months ended September 30, 2025 and 2024, respectively. The Company evaluates the collectability of the accounts receivable balances and has determined the allowance for expected credit losses based on a combination of factors, which include the nature of the relationship and the prior collection experience the Company has with the account and an evaluation for current and projected economic conditions as of the Condensed Consolidated Balance Sheets date. Accounts receivable determined to be uncollectible are charged against the allowance for expected credit losses. Actual collections of accounts receivable could differ from management’s estimates.

Significant Customers

A significant customer represents 10% or more of the Company’s total revenue or net accounts receivable balance at each respective Condensed Consolidated Balance Sheet date. Revenue as a percentage of total revenue and accounts receivable as a percentage of total accounts receivable for each significant customer follows.

            
           Accounts Receivable

           Revenue

           Revenue

            
           As of

           For the three months ended

           For the nine months ended

            
           September 30, 2025

           December 31, 2024

           September 30, 2025

           September 30, 2024

           September 30, 2025

           September 30, 2024

* Total less than 10% for the respective period

Inventory

Inventories, which are comprised of smart home equipment and components, are stated at the lower of cost or net realizable value with cost determined under the first-in, first-out method. The Company adjusts the inventory balance based on anticipated obsolescence, usage and historical write-offs.

In August 2023, the Company entered into a Product Sales Agreement (the "Agreement") with ADI Global Distribution ("ADI"), pursuant to which, ADI agreed to serve as the Company's non-exclusive hardware fulfillment partner throughout the United States, Canada, and Puerto Rico. The Company was subject to certain buy-back provisions relating to the transferred inventory. As of December 31, 2024, the Company recorded $537 in connection with the buy-back provision, which is recorded in other current liabilities on the Condensed Consolidated Balance Sheets. As of September 30, 2025, there was no amount recorded in connection with the buy-back provision.

SMARTRENT, INC.

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

(in thousands, except per share amounts)

Goodwill

Goodwill represents the excess of cost over net assets of the Company's completed business combinations. The Company tests for potential impairment of goodwill on an annual basis as of September 30 to determine if the carrying value is less than the fair value. The Company will conduct additional tests between annual tests if there are indications of potential goodwill impairment. During the three months ended March 31, 2025, the Company experienced a sustained decline in stock price, resulting in a significant decrease in market capitalization. As a result, the Company conducted an interim impairment test utilizing the qualitative approach and determined that impairment is more likely than not. As a result, the Company then performed an interim quantitative impairment test which resulted in an indication of impairment.

The fair value of the reporting unit used in this impairment test was determined using the combination of an income approach and market-based approach. The mix between the two approaches requires significant judgement, however, the Company engaged a third-party valuation specialist to assist with its assessment. As a result of this test, the Company recorded a goodwill impairment charge of $24,929 during the three months ended March 31, 2025.

The Company conducted its annual goodwill impairment test as of September 30, 2025. As part of its annual assessment, the Company performed a market capitalization reconciliation, along with other procedures, which indicated that the fair value of the reporting unit sufficiently exceeded the carrying value. As a result, the Company concluded there were no indications of impairment and therefore no impairment charge was recorded for the three months ended September 30, 2025. There was also no such charge recorded during the three and nine months ended September 30, 2024.


	September 30, 2025			December 31, 2024
Balance at beginning of period	$	117,268		$	117,268
Impairment charge		(24,929	)		-
Balance at end of period	$	92,339		$	117,268

The significant assumptions used in determining the fair value of the reporting unit under the income approach primarily relate to revenue growth rate, forecasted EBITDA and the selected discount rate used in the discounted cash flow model. The significant assumptions used in the market-based approach primarily relate to the forecasted EBITDA margin, the selected control premium, and selected revenue and EBITDA multiples, which require significant judgement.

To the extent that inputs and assumptions used in the analysis change, such as an increased discount rate, updated cash flow projections, or decreases to Guideline companies’ multiples, additional impairment charges may be recorded in the future. In addition, a further decrease in the Company’s common stock share price and market capitalization could be an indicator of a decrease in the fair value of the Company’s equity.

Intangible Assets

The Company recorded intangible assets with finite lives, including customer relationships and developed technology, as a result of acquisitions made in prior years. Intangible assets are amortized on a straight-line basis based on their estimated useful lives. The estimated useful life of these intangible assets are as follows.


		Estimated useful life (in years)
Trade name		5
Customer relationships		10 - 13
Developed technology		1 - 7

SMARTRENT, INC.

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

(in thousands, except per share amounts)

Warranty Allowance

The Company provides its customers with limited-service warranties associated with product replacement and related services. The warranty typically lasts one year following the installation of the product. The estimated warranty costs, which are expensed at the time of sale and included in hardware cost of revenue, are based on the results of product testing, industry and historical trends and warranty claim rates incurred and are adjusted for identified current or anticipated future trends as appropriate. Actual warranty claim costs could differ from these estimates. For the three months ended September 30, 2025 and 2024, warranty expense included in cost of hardware revenue was $(220) and $(693), respectively. For the nine months ended September 30, 2025 and 2024, warranty expense included in cost of hardware revenue was $206 and $(650), respectively. As of September 30, 2025, and December 31, 2024, the Company’s warranty allowance was $515 and $1,077, respectively, and is recorded in other current liabilities on the Condensed Consolidated Balance Sheets.

Fair Value of Financial Instruments

Fair value is based on the price that would be received to sell an asset or paid to transfer a liability in an orderly transaction between market participants at the measurement date. Assets and liabilities subject to on-going fair value measurement are categorized and disclosed into one of three categories depending on observable or unobservable inputs employed in the measurement. These two types of inputs have created the following fair value hierarchy.

Level 1: Quoted prices in active markets that are accessible at the measurement date for assets and liabilities.

Level 2: Observable prices that are based on inputs not quoted in active markets but corroborated by market data.

Level 3: Unobservable inputs are used when little or no market data is available.

SMARTRENT, INC.

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

(in thousands, except per share amounts)

This hierarchy requires the Company to minimize the use of unobservable inputs and to use observable market data, if available, when determining fair value. The Company recognizes transfers between levels of the hierarchy based on the fair values of the respective financial measurements at the end of the reporting period in which the transfer occurred. There were no transfers between levels of the fair value hierarchy during the three or nine months ended September 30, 2025 or 2024. The carrying amounts of the Company’s accounts receivable, accounts payable and accrued and other liabilities approximate their fair values due to their short maturities.

Revenue Recognition

The Company derives its revenue primarily from sales of systems that consist of hardware devices, professional services and Hosted Services to assist property owners and property managers with visibility and control over assets, while providing all-in-one home control offerings for residents. Revenue is recorded when control of these products and services is transferred to the customer in an amount that reflects the consideration the Company expects to be entitled to receive in exchange for those products and services.

The Company may enter into contracts that contain multiple distinct performance obligations. The transaction price for a typical arrangement includes the price for: smart home hardware devices, professional services, and a subscription for use of the Company's software (“Hosted Services”). Included in these contracts are centrally connected devices ("Hub Devices"), which integrate the Company’s enterprise software with third party smart devices. Historically, the Company only sold non-distinct Hub Devices which only functioned with a subscription to its software ("non-distinct Hub Devices"). During the year ended December 31, 2022, the Company began shipping Hub Devices with features that function independently from its software subscription ("distinct Hub Devices"). Non-distinct Hub Devices are recognized as a single performance obligation with the Company’s software in Hosted Services revenue, while distinct Hub Devices are recognized as a separate performance obligation in hardware revenue. When distinct Hub Devices are included in a contract, the Hosted Services performance obligation is comprised of only the Company’s software. We do not expect to deploy any more non-distinct Hub Devices.

The Company considers delivery for each of the hardware, professional services and Hosted Services to be separate performance obligations. The hardware performance obligation includes the delivery of smart home hardware and distinct Hub Devices. The professional services performance obligation includes the services to install the hardware. The Hosted Services performance obligation provides a subscription that allows the customer access to software during the contracted-use term when the promised service is provided to the customer. Also included in the hosted service performance obligation are non-distinct Hub Devices that only function with a subscription to the Company’s software.

Payments are received by the Company by check or automated clearing house payments and payment terms are determined by individual contracts and generally range from due upon receipt to net 30 days. Taxes collected from customers and remitted to governmental authorities are not included in reported revenue. Payments received from customers in advance of revenue recognition are reported as deferred revenue. The Company has elected the following practical expedients following the adoption of ASC 606:

•

Shipping and handling costs: the Company elected to account for shipping and handling activities that occur after the customer has obtained control of a good as fulfillment activities (i.e., an expense) rather than as a promised service and are recorded as hardware cost of revenue. Amounts billed for shipping and handling fees are recorded as revenue.

•

Sales tax collected from customers: the Company elected to exclude from the measurement of transaction price all taxes assessed by a government authority that are both imposed on and concurrent with a specific revenue-producing transaction and collected by us from a customer.

•

Measurement of the transaction price: the Company applies the practical expedient that allows for inclusion of the future auto-renewals in the initial measurement of the transaction price. The Company only applies these steps when it is probable that it will collect the consideration to which it is entitled in exchange for the goods or services it transfers to a customer.

SMARTRENT, INC.

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

(in thousands, except per share amounts)

•

Significant financing component: the Company elected not to adjust the promised amount of consideration for the effects of a significant financing component when the period between the transfer of promised goods or services and when the customer pays for the goods or services will be one year or less.

Timing of Revenue Recognition is as follows.

•

Hardware Revenue

Hardware revenue results from the direct sale to customers of hardware smart home devices, which devices generally consist of a distinct Hub Device, door locks, thermostats, sensors, and light switches. These hardware devices provide features that function independently without subscription to the Company's software, and the performance obligation for hardware revenue is considered satisfied, and revenue is recognized at a point in time when the hardware device is shipped to the customer. The Company generally provides a one-year warranty period on hardware devices that are delivered and installed. The cost of the warranty is recorded as a component of cost of hardware revenue.

•

Professional Services Revenue

Professional services revenue results from installing smart home hardware devices, which does not result in significant customization of the product and is generally performed over a period from two to four weeks. Installations can be performed by the Company's employees, contracted out to a third-party with the Company's employees managing the engagement, or the customer can perform the installation themselves. The Company’s professional services contracts are generally arranged on a fixed price basis, and revenue is recognized over the period in which the installations are completed.

•

Hosted Services Revenue

Hosted Services revenue primarily consists of monthly subscription revenue generated from fees that provide customers access to one or more of the Company’s software applications including access controls, asset monitoring and related services, and our Community WiFi solution, which provides communities with a private, device-dedicated WiFi network. These subscription arrangements have contractual terms ranging from one month to ten years and include recurring fixed plan subscription fees. Arrangements with customers do not provide the customer with the right to take possession of the Company’s software at any time. Customers are granted continuous access to the services over the contractual period. Accordingly, fees collected for subscription services are recognized on a straight-line basis over the contract term beginning on the date the subscription service is made available to the customer. Variable consideration is immaterial.

Also included in Hosted Services revenue are non-distinct Hub Devices. The Company considers those devices and hosting services subscription a single performance obligation and therefore defers the recognition of revenue for those devices upon shipment to the customer. The revenue is then amortized over its average service life. When a non-distinct Hub Device is included in a contract that does not require a long-term service commitment, the customer obtains a material right to renew the service because purchasing a new device is not required upon renewal. If a contract contains a material right, proceeds are allocated to the material right and recognized over the period of benefit, which is generally four years.

SMARTRENT, INC.

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

(in thousands, except per share amounts)

Cost of Revenue

Cost of revenue consists primarily of direct costs of products and services together with the indirect cost of estimated warranty expense and customer care and support over the life of the service arrangement.

•

Hardware

Cost of hardware revenue consists primarily of direct costs of products, such as the distinct Hub Device, hardware devices, supplies purchased from third-party providers, and shipping costs, together with indirect costs related to warehouse facilities (including depreciation and amortization of capitalized assets and right-of-use assets), infrastructure costs, personnel-related costs associated with the procurement and distribution of products and warranty expenses together with the indirect cost of customer care and support.

•

Professional Services

Cost of professional services revenue consists primarily of direct costs related to personnel-related expenses for installation and supervision of installation services, general contractor expenses and travel expenses associated with the installation of products and indirect costs that are also primarily personnel-related expenses in connection with training of and ongoing support for customers and residents.

•

Hosted Services

Cost of Hosted Services revenue consists primarily of the amortization of the direct costs of non-distinct Hub Devices, consistent with the revenue recognition period noted above in "Hosted Services Revenue", and infrastructure costs associated with providing software applications together with the indirect cost of customer care and support over the life of the service arrangement.

Deferred Cost of Revenue

Deferred cost of revenue includes all direct costs included in cost of revenue for Hosted Services and non-distinct Hub Devices that have been deferred to future periods.

Stock-Based Compensation

Our stock-based compensation consists of stock options and restricted stock units ("RSUs") granted to our employees and directors during the periods presented. Stock-based awards are measured based on the grant date fair value. We estimate the fair value of stock option awards on the grant date using the Black-Scholes option-pricing model. The fair value of RSUs is based on the grant date fair value of the stock price. The fair value of these awards is recognized as compensation expense on a straight-line basis over the requisite service period in which the awards are expected to vest. Forfeitures are recognized as they occur by reversing previously recognized compensation expense.

The Black-Scholes model considers several variables and assumptions in estimating the fair value of stock-based awards. These variables include the per share fair value of the underlying common stock, exercise price, expected term, risk-free interest rate, expected annual dividend yield, and the expected stock price volatility over the expected term and forfeitures, which are recognized as they occur. For all stock options granted, we calculated the expected term using the simplified method for “plain vanilla” stock option awards.

The grant date fair value is also utilized with respect to RSUs which vest based on performance and time based service conditions. For RSUs with a performance condition which vest based on a liquidity event, as well as a time-based service condition, no compensation expense is recognized until the performance condition has been satisfied. Subsequent to the liquidity event, compensation expense is recognized to the extent the requisite service period has been completed and compensation expense thereafter is recognized on an accelerated attribution method. Under the accelerated attribution method, compensation expense is recognized over the remaining requisite service period for each service condition tranche as though each tranche is, in substance, a separate award.

SMARTRENT, INC.

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

(in thousands, except per share amounts)

Research and Development

These expenses relate to the research and development of new products and services and enhancements to the Company’s existing product offerings. The Company accounts for the cost of research and development by capitalizing qualifying costs, which are incurred during the product development stage, and amortizing those costs over the product’s estimated useful life, which generally ranges from three to five years depending on the type of application. The Company expenses preliminary evaluation costs as they are incurred before the product development stage, as well as post development implementation and operation costs, such as training, maintenance and minor upgrades. During the three months ended September 30, 2025 and 2024, the Company capitalized $1,009 and $3,209<

SmartRent, Inc. 10-Q