10q10k10q10k.net

What changed in SmartRent, Inc.'s 10-K — 2023 vs 2024

vs

Paragraph-level year-over-year comparison of SmartRent, Inc.'s 2023 and 2024 10-K annual filings, covering the Business, Risk Factors, Legal Proceedings, Cybersecurity, MD&A and Market Risk sections. Every new, removed and edited paragraph is highlighted side-by-side so you can see exactly what management changed in the 2024 report.

+368 added−345 removedSource: 10-K (2025-03-05) vs 10-K (2024-03-05)

Top changes in SmartRent, Inc.'s 2024 10-K

368 paragraphs added · 345 removed · 269 edited across 8 sections

Item 1. Business

Business — how the company describes what it does

62 edited+19 added−9 removed46 unchanged
Biggest changeResearch and Development Our near-term product roadmap includes new leasing solutions (including an online application for the leasing process and other applications for lease signing and customer relationship management), resident experience solutions (including applications for marketplaces, amenity reservations, rent payments, and work orders), home IoT solutions (including hubless systems, smart appliances, and video and security systems), and building IoT solutions (including energy, water, and air metering).
Biggest changeAdditionally, we provide dental, and vision for employees and their dependents, life insurance, flexible time off, paid parental leave, employee stock purchase plan and a 401(k) plan with a company match. 8 Research and Development Our near-term product roadmap includes new leasing solutions (including an online application for the leasing process and other applications for lease signing and customer relationship management), resident experience solutions (including applications for marketplaces, amenity reservations, rent payments, and work orders), home IoT solutions (including hubless systems, smart appliances, and video and security systems), building IoT solutions (including energy, water, and air metering), and property operations solutions (including centralized maintenance management, IoT-triggered predictive maintenance alerts for HVAC and plumbing, asset portfolio planning, vendor performance tracking, and energy reporting with Environmental, Social, and Governance ("ESG") dashboards and predictive analytics).
We believe our primary competitors are software companies, which have historically provided singular, point solutions to new development properties and used third-party installation services, and hardware companies, many of which have closed architectures. We believe these companies fail to provide a comprehensive solution that meets the enterprise management and security requirements of owners, operators, and residents.
We believe our primary competitors are software companies that have historically provided singular, point solutions to new development properties and used third-party installation services, and hardware companies, many of which have closed architectures. We believe these companies fail to provide a comprehensive solution that meets the enterprise management and security requirements of owners, operators, and residents.
Other regulations that may apply to us, for example, depending upon the circumstances, include the General Data Protection Regulation (GDPR) in the European Union, Canada’s Personal Information Protection and Electronic Documents Act (PIPEDA), and the Tenant Data Privacy Act (TPDA) in New York. Corporate History We were originally incorporated in Delaware on November 23, 2020 as Fifth Wall Acquisition Corp.
Other regulations that may apply to us depending upon the circumstances include, for example, the General Data Protection Regulation (GDPR) in the European Union, Canada’s Personal Information Protection and Electronic Documents Act (PIPEDA), and the Tenant Data Privacy Act (TPDA) in New York. 9 Corporate History We were originally incorporated in Delaware on November 23, 2020 as Fifth Wall Acquisition Corp.
Employee growth and development comes from receiving real-time, informal feedback, a formal performance review, career path transparency, and ongoing role-specific training. 7 The structure of our compensation programs endeavors to give employees peace of mind when it comes to health and financial benefits so that they can focus on doing their best work.
Employee growth and development comes from receiving real-time, informal feedback, a formal performance review, career path transparency, and ongoing role-specific training. The structure of our compensation programs endeavors to give employees peace of mind when it comes to health and financial benefits so that they can focus on doing their best work.
This solution provides an integrated software system and single-source database that allows owners and operators to assign and re-assign parking spaces, review interactive maps for live parking space availability (based on parking sensors for real-time occupancy), implement a proactive enforcement process, monitor parking management with resident parking decals, and install custom parking signs to monetize guest parking.
This solution provides an integrated software system and single-source database that allows owners and operators to automatically assign and re-assign parking spaces, review interactive maps for live parking space availability (based on parking sensors for real-time occupancy), implement a proactive enforcement process, monitor parking management with resident parking decals, and install custom parking signs to monetize guest parking.
We believe that rental owners may be able to increase, or maintain higher, rental rates (depending on the rental market and solutions offered) due to the differentiated resident experience and strong 2 demand for smart communities. Additionally, we believe our solutions can increase resident retention, accelerate leasing and re-leasing activities, and provide ancillary monetization opportunities. • Cost Reduction.
We believe that rental owners may be able to increase, or maintain higher, rental rates (depending on the rental market and solutions offered) due to the differentiated resident experience and strong demand for smart communities. Additionally, we believe our solutions can increase resident retention, accelerate leasing and re-leasing activities, and provide ancillary monetization opportunities. • Cost Reduction.
We expect this dynamic will drive demand for smart home technology as additional owners and operators evolve to meet this growing demand for integrated smart home solutions. Fragmented Technology Offerings The residential technology market remains fragmented, with offerings generally consisting of isolated point solutions and closed-architecture devices that do not integrate with one another.
We expect this dynamic will drive demand for smart home technology as additional owners and operators evolve to meet this growing demand for integrated smart home solutions. 3 Fragmented Technology Offerings The residential technology market remains fragmented, with offerings generally consisting of isolated point solutions and closed-architecture devices that do not integrate with one another.
Communities can create “Vacant Mode” automations to increase efficiencies, such as work orders for unit turns and activating energy-saving mode. SmartRent Manager Mobile, a native mobile application, allows owners and operators to remotely manage work orders and control access, including resident move-ins and outs. 4 o Resident App.
Communities can create “Vacant Mode” automations to increase efficiencies, such as work orders for unit turns and activating energy-saving mode. SmartRent Manager Mobile, a native mobile application, allows owners and operators to remotely manage work orders and control access, including resident move-ins and outs. o Resident App.
With various keyless entry options, including deadbolts, interconnected locks, lever locks, and patio locks, these products can be customized to meet each property’s needs. • Smart Thermostats, Sensors, Plugs, Switches, Dimmers, and Readers.
With various keyless entry options, including deadbolts, interconnected locks, lever locks, and patio locks, these products can be customized to meet each property’s needs. 7 • Smart Thermostats, Sensors, Plugs, Switches, Dimmers, and Readers.
Powered by the Resident App, the best-in-class smart home experience streamlines daily interactions with staff and delivers the modern living experience residents expect. • Access Control. Access Control is a community-wide, cloud-based access control system that protects building entry, common areas, and amenity spaces for multifamily residential properties using control panels, smart access locks, and intercoms.
Powered by the Resident App, the best-in-class smart home experience streamlines daily interactions with staff and delivers the modern living experience residents expect. • Access Control. Access Control is a community-wide, cloud-based access control system that protects building entry, common areas, and amenity spaces for multifamily residential properties using control panels, access readers, and intercoms.
Our platform can lower operating costs, increase revenues, mitigate operational friction and protect assets for owners and operators, while providing a differentiated, elevated living experience for residents. Through a central connected device ("Hub Device"), we enable the integration of our platform with third-party smart devices and other technology interfaces.
Our platform can lower operating costs, increase revenues, mitigate operational friction and protect assets for owners and operators, while providing a differentiated, elevated living experience for residents. Through a central connected device ("Hub Device"), we enable the integration of our platform with third-party smart devices, our own hardware devices and other technology interfaces.
We offer a holistic integrated solution that includes enterprise software, hardware, and resident applications. • Hardware Agnostic. Our solutions are compatible with a wide variety of other smart devices including, among others, Google Home, Amazon Alexa, Google Assistant, Honeywell thermostats, and Yale smart locks. 3 • Open Architecture.
We offer a holistic integrated solution that includes enterprise software, hardware, and resident applications. • Hardware Agnostic. Our solutions are compatible with a wide variety of other smart devices including, among others, Google Home, Amazon Alexa, Honeywell thermostats, and Yale smart locks. • Open Architecture.
As of December 31, 2023, we have not experienced any work stoppages and consider our relationship with our employees to be in good standing. None of our domestic or international employees are subject to a collective bargaining agreement or represented by a labor union.
As of December 31, 2024, we have not experienced any work stoppages and consider our relationship with our employees to be in good standing. None of our domestic or international employees are subject to a collective bargaining agreement or represented by a labor union.
SmartRent Solutions Our fully integrated, hardware-agnostic offerings, organized as Smart Communities Solutions and Smart Operations Solutions , include the following: Smart Communities Solutions. Smart Communities Solutions is a collection of interconnected hardware and software designed to enhance the functionality and integration of community environments. Through advanced technology, these solutions facilitate seamless connections among residents, site teams, and owners.
Our fully integrated, hardware-agnostic offerings, organized as Smart Communities Solutions and Smart Operations Solutions, include the following: Smart Communities Solutions. Smart Communities Solutions is a collection of integrated software and hardware designed to enhance community functionality and integration. Through advanced technology, these solutions facilitate seamless connections among residents, site teams, and owners.
Our total rewards program enables us to retain talent, reward high-performing employees at all levels and incentivize and motivate exceptional performance. In addition to competitive base pay, we have an annual bonus program for employees at all levels and a comprehensive variable compensation program specific to our revenue organization.
Our total rewards program enables us to retain talent, reward high-performing employees at all levels and incentivize and motivate exceptional performance. In addition to competitive base pay, we have an annual bonus program for employees at all levels, stock-based compensation for certain employees, and a comprehensive variable compensation program specific to our revenue organization.
Item 1: Business Our Company We are an enterprise real estate technology company that provides a comprehensive management platform designed for property owners, managers and residents. Our 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.
Item 1: Business Our Company We are an enterprise real estate technology company that provides a comprehensive management platform designed for property owners, managers and residents. Our suite of products and services, which includes cloud-based software-as-a-service ("SaaS") solutions many of which are enabled by smart building hardware, provide seamless visibility and control over real estate assets.
Human Capital Management Our employees are critical to our success. As of December 31, 2023, we had 526 total employees worldwide, all of which are full-time employees. We also engage consultants and contractors to supplement our permanent workforce. A majority of our employees are engaged in engineering, software and product development, sales, and related functions.
Human Capital Management Our employees are critical to our success. As of December 31, 2024, we had 494 total employees worldwide, all of which are full-time employees. We also engage consultants and contractors to supplement our workforce. A majority of our employees are engaged in engineering, software and product development, sales, and related functions.
Community WiFi can be installed in any property type, including new construction or retrofitting existing structures, and perform site surveys to customize the equipment best suited to each property and provide full technical support 24 hours a day, 365 days a year. • Self-Guided Tours.
Community WiFi can be installed in any property type, including new construction or retrofitting existing structures, and perform site surveys to customize the equipment best suited to each property and provide full technical support 24 hours a day, 365 days a year. • Package Management .
For example, we have adapted our software and applications to target opportunities in other residential real estate sectors, including single-family rental homes, student housing, senior housing, and new construction homes. In addition, we believe there is significant potential for growth beyond residential real estate to other commercial real estate asset classes, including, among others, office, hotels, retail, industrial, and self-storage.
We have adapted our software and applications to target opportunities in other residential real estate sectors, including single-family rental homes, student housing, senior housing, and new construction homes. In addition, we believe there could be significant potential for growth beyond residential real estate to other commercial real estate asset classes, including, among others, offices, hotels, retail, industrial, and self-storage.
The CCPA creates, among other things, new data privacy obligations for covered companies and provides new privacy rights to California residents, including the right to access and delete personal information, opt out of certain personal information sharing, and receive detailed information about how personal information is used.
The CCPA, among other things, created new data privacy obligations for covered companies and provided new privacy rights to California residents, including rights to access and delete personal information, opt out of certain personal information sharing, and receive detailed information about how personal information is used.
This represents approximately 16% of the U.S. market for institutionally owned multifamily rental units and single-family rental homes. In addition to multifamily residential owners, our customers include some of the largest homebuilders, single-family rental homeowners, and iBuyers in the U.S.
This represents approximately 15% of the U.S. market for institutionally owned multifamily rental units and single-family rental homes. In addition to multifamily residential owners and management companies, our customers include some of the largest single-family rental homeowners, homebuilders and iBuyers in the United States.
We believe that our customers realize several benefits from implementing our solutions, including: • Operating Efficiency. We believe that our customers can recognize cost savings on utilities through the utilization of our solutions, including our connected smart thermostats, smart lights, and leak sensors, as well as through more efficient management of vacant rental units. • Incremental Revenue Generation.
We believe that our customers can recognize cost savings on utilities through the utilization of our solutions, including our connected smart thermostats, smart lights, and leak sensors, as well as through more efficient management of vacant rental units. • Incremental Revenue Generation.
The hardware and software components work together to streamline community management, increase convenience for residents, and provide operational flexibility for site teams and owners. This unified platform raises the standard of living and working by optimizing daily operations for greater efficiency and responsiveness to the diverse needs of all users.
The components work together to streamline community management for owners and operators, increase convenience for residents, and provide operational flexibility for site teams and owners. This unified platform raises the standard of living and working by optimizing daily operations for greater efficiency and responsiveness to user needs.
The CPRA also creates a new California data protection agency specifically tasked to enforce the law, which would likely result in increased regulatory scrutiny of California businesses in the areas of data protection and security. The substantive requirements for businesses subject to the CPRA went into effect on January 1, 2023 and become enforceable on July 1, 2023.
The CPRA also created a new California data protection agency tasked to enforce the law, which is likely to result in increased regulatory scrutiny of California businesses in the areas of data protection and security. The substantive requirements for businesses subject to the CPRA went into effect on January 1, 2023.
We seek to foster a welcoming, inclusive work environment where employees can be themselves and do meaningful work that positively impacts our customers and communities. Our culture is supportive, engaging, and fast paced and facilitates partnerships among coworkers with diverse backgrounds and experiences.
We seek to foster a welcoming, inclusive work environment where employees can be themselves and do meaningful work that positively impacts our customers and communities. Our culture is supportive, engaging, and fast paced and facilitates partnerships among coworkers with diverse backgrounds and experiences. Our employees have opportunities to get involved in resource groups and give back to the community.
It encompasses physical hardware components such as smart locks, thermostats, Hub Devices, and sensors, that enhance the convenience and efficiency of community living. The platform utilizes a hardware-agnostic approach, allowing for seamless integration with leading third-party hardware providers such as Yale, Honeywell, Salto, and more.
It encompasses physical hardware components such as smart locks, thermostats, hub devices, and sensors, that enhance the convenience and efficiency of community living. The platform utilizes a hardware-agnostic approach, allowing for seamless integration with leading third-party hardware providers such as Yale, Honeywell, and Salto, operating primarily on Z-Wave technology for reliable remote management and to enable centralization efforts.
This data informs and supports our action plans, with the goal of enhancing workplace satisfaction and overall employee well-being and effectiveness. We attract and retain talent through our employer brand initiatives, employee referral programs, and through internal career growth.
We engage with our employees to gather insight, feedback, and data about their workplace experiences, and manager effectiveness. This data informs and supports our action plans, with the goal of enhancing workplace satisfaction and overall employee well-being and effectiveness. We attract and retain talent through market-based compensation, our employer brand initiatives, employee referral programs, and through internal career growth.
The application integrates with major property management systems to provide an up-to-date and personalized experience. • Answer Automation. Answer Automation reduces costs and improves on-site team efficiency through the automation of leasing and resident call handling.
Teams can also choose to export data into third party tools for deeper analysis. The application integrates with major property management systems to provide an up-to-date and personalized experience. 6 • Answer Automation . Answer Automation reduces costs and improves on-site team efficiency through the automation of leasing and resident call handling.
SmartRent Solutions and Products A SmartRent connected community is a “curb to couch” concept where an entire property utilizes a variety of our solutions and products, along with third-party smart devices and features that can be remotely managed to provide efficiency, automation, asset protection, and ancillary revenue opportunities.
SmartRent Solutions and Products A SmartRent connected community is a “curb to couch” concept where an entire property utilizes a variety of our solutions and products, along with third-party smart devices and features that can be remotely managed to provide efficiency, automation, asset protection, and ancillary revenue opportunities. 4 SmartRent Solutions SmartRent continually evolves its solutions to meet the dynamic needs of the rental housing industry, positioning itself as a leader with a comprehensive suite of integrated offerings.
The company will continue to utilize ADI as a strategic partner to procure inventory and meet the fulfillment needs of our customers. Intellectual Property We regard our intellectual property rights as critical to our success generally, with our trademarks, service marks, and domain names being especially critical to the continued development and awareness of our brands and marketing efforts.
Intellectual Property We regard our intellectual property rights as critical to our success generally, with our trademarks, service marks, and domain names being especially critical to the continued development and awareness of our brands and marketing efforts.
Offerings organized under the Smart Communities Solutions umbrella include Smart Apartments, Access Control, Community WiFi, Self-Guided Tours, Parking Management and Package Management. • Smart Apartment s. Smart Apartments is a solution that connects all the smart devices in a community to a single dashboard.
Offerings under the Smart Communities Solutions umbrella include Smart Apartments, Access Control, Self-Guided Tours, Community WiFi, Package Management and Parking Management. • Smart Apartment s.
Government Regulation We and our partners are subject to various federal, state, and local regulations related to access control products, such as state and local building and fire codes, the Americans with Disabilities Act of 1990, as amended, and requirements for certifications by Underwriters Laboratories, a global independent safety science company, and the Federal Communications Commission. 8 We, our customers, and our partners may be subject to numerous federal and state laws and regulations, including data breach notification laws, data privacy and security laws, and consumer protection laws and regulations (including Section 5 of the Federal Trade Commission Act of 1914 (the "FTC Act") that govern the collection, use, disclosure, and protection of personal information).
Government Regulation We and our partners are subject to various federal, state, and local regulations related to access control products, such as state and local building and fire codes, the Americans with Disabilities Act of 1990, as amended, and requirements for certifications by Underwriters Laboratories, a global independent safety science company, and the Federal Communications Commission.
In addition, because our software is hardware agnostic, customers can choose from a wide variety of device manufacturers and use their favorite devices together in one fully integrated smart home operating system. 6 The Hub Devices are a vital aspect of our smart home operating system that elevates the living experience for residents.
With our smart home operating system, residents can remotely control and manage their smart home devices and home settings through a single application. In addition, because our software is hardware agnostic, customers can choose from a wide variety of device manufacturers and use their favorite devices together in one fully integrated smart home operating system.
Work Management provides real-time tracking of assets, enabling owners to effectively manage the state of their assets and make informed decisions by giving on-site teams an easy way to scan assets and make updates from anywhere in the community. Advanced reporting capabilities allow for filtering and exporting of data into third-party tools for deeper analysis.
Work Management provides real-time tracking of assets, enabling owners to effectively manage the state of their assets and make informed decisions by giving on-site teams an easy way to scan assets and make updates from anywhere in the community. Advanced reporting visualizations through dashboards directly in the platform enable informed decision-making and simplified portfolio management.
Information contained on or accessible through the websites listed above is not incorporated by reference nor otherwise included in this report, and any references to these websites are intended to be inactive textual references only. 9
The SEC maintains an internet site (http://www.sec.gov) that contains reports, proxy and information statements, and other information regarding issuers that file electronically with the SEC. Information contained on or accessible through the websites listed above is not incorporated by reference nor otherwise included in this report, and any references to these websites are intended to be inactive textual references only.
Parking Management is available to communities as a stand-alone product or as part of our fully integrated smart home operating system. • Package Management. We've entered into a preferred reseller partnership with Position Imaging to offer Smart Package Room Ò which transforms package visibility, reduces labor demands, optimizes storage space and enhances resident satisfaction.
We've entered into a preferred reseller partnership with Position Imaging to offer Smart Package Room which transforms package visibility, reduces labor demands, optimizes storage space and enhances resident satisfaction.
The system features monitoring systems for visitor logs and real-time door lock activity alerts that can be managed remotely, providing flexibility and a safer community. Access Control can be implemented in new construction or retrofitted in existing properties. • Community WiFi. Community WiFi delivers secure, wireless, high-speed internet across an entire property.
The system features monitoring systems for visitor logs and real-time door lock activity alerts, providing transparency and a safer community. Access Control can be implemented in new construction or retrofitted in existing properties. 5 • Self-Guided Tours.
Self-Guided Tours integrates with many popular property management and customer relationship management systems, and other third-party software products, which enables owners and operators to manage all prospect and other actionable data from one platform. • Parking Management. Parking Management alleviates resident and guest parking issues faced by multifamily residential properties.
Self-Guided Tours integrates with many popular property management and customer relationship management systems, and other third-party software products, which enables owners and operators to manage all prospect and other actionable data from one platform. • Community WiFi . Community WiFi delivers secure, wireless, high-speed internet across an entire property.
The CCPA also creates a private right of action with statutory damages for certain data breaches, thereby potentially increasing risks associated with a data breach. Further, the California Privacy Rights Act (the "CPRA") imposes additional data protection obligations on covered companies doing business in California, including additional consumer rights processes and opt outs for certain uses of sensitive data.
Further, the California Privacy Rights Act (the "CPRA") amended and supplemented the CCPA, imposing additional data protection obligations on covered companies doing business in California, including additional consumer rights processes and opt outs for certain uses of sensitive data.
Where possible we utilize multiple sourcing methods to mitigate the risk of disruption from a single supplier. However, we also rely on a number of single source and limited source suppliers for components of our solutions. Replacing any single source or limited source suppliers could require the expenditure of significant resources and time to source these products.
Supply Chain Generally, our hardware device suppliers maintain a stock of devices and key components to cover any minor supply chain disruptions. Where possible we utilize multiple sourcing methods to mitigate the risk of disruption from a single supplier. However, we also rely on a number of single source and limited source suppliers for components of our solutions.
Our Hub Devices use reliable and secure Z-Wave communication for remote control of connected devices and allow users to remotely manage multiple device settings from one application. Certain Hub Devices combine a thermostat and touchscreen panel that allows users to control all of their devices from one location.
The Hub Devices are a vital aspect of our smart home operating system that elevates the living experience for residents. Our Hub Devices use reliable and secure Z-Wave communication for remote control of connected devices and allow users to remotely manage multiple device settings from one application.
In addition, we expect our solutions will help to eliminate or reduce rekeying and lockout expenses and other property management redundancies. • Asset Protection. We believe that customers utilizing our asset protection solutions, including our connected leak sensors and thermostats, may be able to realize a decrease of approximately 70% to 90% in water damage expenses and lower insurance costs.
We believe that customers utilizing our asset protection solutions, including our connected leak sensors and thermostats, may be able to realize a decrease of approximately 70% to 90% in water damage expenses and lower insurance costs over a three year period. We believe SmartRent is a category leader in the enterprise smart home solutions industry.
In addition, the application offers a mobile interface, allowing owners and operators to accomplish more on the go with access to the application available both online and offline.
Through work order and service request automations, the platform provides a simplified overview of on-site tasks and allows for easy scheduling of team members. In addition, the application offers a mobile interface, allowing owners and operators to accomplish more on the go with access to the application available both online and offline.
Seasonality Our business and related operating results have been, and we believe that they will continue to be, impacted by seasonal factors throughout the year. We typically experience greater demand for deployments in the Spring and Summer and lower demand in late Fall and Winter primarily due to inclement weather conditions in the Fall and Winter months.
We typically experience greater demand for deployments in the Spring and Summer and lower demand in late Fall and Winter primarily due to inclement weather conditions in the Fall and Winter months.
As of December 31, 2023, we had 719,691 Units Deployed and 593 customers, including many of the largest multifamily residential owners in the United States (the "U.S."). As of December 31, 2023, our customers own or operate an aggregate of approximately 7.0 million rental units.
As of December 31, 2024, we had 809,497 Units Deployed and over 650 customers, including many of the largest multifamily residential owners in the United States (the "U.S.").
Smart Operations Solutions is designed to modernize and simplify the operational aspects of community management, making it easier for teams to deliver high-quality service and support to residents. Offerings organized under the Smart Operations Solutions umbrella include Work Management, Answer Automation, Audit Management and Inspection Management. • Work Management.
It aims to enhance productivity among site teams by providing tools that facilitate better communication, coordination, and management of community tasks. Smart Operations Solutions is designed to modernize and simplify the operational aspects of community management, making it easier for teams to deliver high-quality service and support to residents.
Inspection Management automates the property inspection process so that teams can quickly access property and unit conditions, plan for capital improvement expenses, and monitor the performance of a portfolio. The mobile platform is available on iOS and Android and is accessible both online and offline.
With an intuitive design and customization options, Audit Management replaces outdated, manual processes with a modern, user-friendly platform. • Inspection Management . Inspection Management automates the property inspection process so that teams can quickly access property and unit conditions, plan for capital improvement expenses, and monitor the performance of a portfolio.
We use an open-architecture, brand-agnostic approach that allows owners, operators, and residents to manage their smart home systems through a single connected interface. Our solutions include smart apartments and homes, access control for buildings, common areas, and rental units, asset protection and monitoring, self-guided tours, parking management, and community and resident WiFi.
We use an open-architecture, brand-agnostic approach that allows owners, operators, and residents to manage their smart home systems through a single connected interface.
The platform captures community demographics to minimize risks and evaluate whether residents can meet pro forma rents and satisfy lender requirements by comparing the current rent roll to resident lease files. Users can build and edit templates on the fly to include custom forms and fields, streamlining the audit process and increasing efficiency for teams.
Audit Management allows for the quick and reliable determination of a community’s financial accuracy through a consolidated review of the rent roll, deposits, resident lease files, and more. The platform captures community demographics to minimize risks and evaluate whether residents can meet pro forma rents and satisfy lender requirements by comparing the current rent roll to resident lease files.
Inspection Management streamlines inspections with customizable fields and forms and simplifies documentation with team coordination, allowing for easy scheduling and assigning of tasks to team members, vendors, and contractors. The application enables teams to build accurate budgets with real-time cost-tracking capabilities based on pre-established standard costs.
The mobile platform is available on iOS and Android and is accessible both online and offline. Inspection Management streamlines inspections with customizable fields and forms and simplifies documentation with team coordination, allowing for easy scheduling and assigning of tasks to team members, vendors, and contractors.
A typical SmartRent rental unit or single-family rental home is equipped with a Hub Device, smart locks, thermostat, and leak sensors.
SmartRent Hardware We offer a variety of in-rental unit devices and common area devices that elevate the resident experience and provide multiple benefits to owners and operators. A typical SmartRent rental unit or single-family rental home is equipped with a Hub Device, smart locks, thermostat, and leak sensors.
We also partner with several manufacturers to offer a range of compatible hardware options for any property, including: • Video Doorbells. We partner with Ring to offer a selection of compatible video-enabled doorbells.
In addition, users can download the companion mobile application to remotely control their devices, such as manage their home temperature and grant access for guests and deliveries. We also partner with several manufacturers to offer a range of compatible hardware options for any property, including: • Video Doorbells. We partner with Ring to offer a selection of compatible video-enabled doorbells.
Smart Package Room complements SmartRent’s smart home line, expands the Company’s product offerings and solves a long-standing pain point for rental housing operators. 5 Smart Operations Solutions . Smart Operations Solutions encompasses integrated software solutions focused on centralizing community operations to improve efficiency and collaboration.
Smart Package Room complements SmartRent’s smart home line, expands the Company’s product offerings and solves a long-standing pain point for rental housing operators. • Parking Management . Parking Management alleviates resident and guest parking issues faced by multifamily residential properties.
Work Management enables on-site teams to manage tasks, respond quickly to inquiries, and engage in preventative maintenance all from a mobile device. Through work order and service request automations, the platform provides a simplified overview of on-site tasks and allows for easy scheduling of team members.
Offerings organized under the Smart Operations Solutions umbrella include Work Management, Answer Automation, Audit Management and Inspection Management. • Work Management. Work Management enables on-site teams to manage tasks, respond quickly to inquiries, and engage in preventative maintenance all from a mobile device.
Additionally, hardware solutions such as hubs and sensors are manufactured in-house under the Alloy SmartHome brand. These devices are managed and controlled through two primary software platforms: SmartRent Manager for owners, operators, and site teams, and the Resident App for residents. o SmartRent Manager.
The seamless integration of our hardware solutions with our evolving software platform facilitates new capabilities and improved processes that will provide greater value to users. These devices are managed and controlled through two primary software platforms: SmartRent Manager for owners, operators, and site teams, and the Resident App for residents. o SmartRent Manager.
Using the touchscreen device, users can, among other things, review settings, change the temperature, and lock or unlock doors. In addition, users can download the companion mobile application to remotely control their devices, such as manage their home temperature and grant access for guests and deliveries.
Certain Hub Devices combine a thermostat and touchscreen panel that allows users to control all of their devices from one location. Using the touchscreen device, users can, among other things, review settings, change the temperature, and lock or unlock doors.
We also have a professional services team that provides customers with training, installation, and support services. We have designed our smart home operating platform to make the residential real estate industry more efficient and effective. Importantly, our enterprise software integrates into most existing property management systems used by residential property owners and operators.
We also have a professional services team that provides customers and residents with training, installation, and support services. 2 We have designed our smart home operating platform to enable our customers to more efficiently and effectively manage their properties and interface with their residents.
SmartRent Manager is a web-based software that owners and operators use to administer and configure community settings related to SmartRent solutions. SmartRent Manager software integrates with many popular property management, customer relationship management, and other third-party software products, which enables owners and operators to manage all resident, prospect, access, and other actionable data from one platform.
SmartRent Manager is a web-based software enabling owners and operators to manage and configure SmartRent Solutions. It integrates with major property management, customer relationship management, and third-party proptech platforms, enabling centralized management of residents, prospects, access control, and automation.
Real-time variance tracking and reporting helps teams easily identify and correct common data entry errors, as well as analyze and share results. With an intuitive design and customization options, Audit Management replaces outdated, manual processes with a modern, user-friendly platform. • Inspection Management.
Users can build and edit templates on the fly to include custom forms and fields, streamlining the audit process and increasing efficiency for teams. Real-time variance tracking and reporting helps teams easily identify and correct common data entry errors, as well as analyze and share results.
Advanced reporting capabilities help site teams make informed decisions and bring attention to the most frequent call areas. • Audit Management. Audit Management allows for the quick and reliable determination of a community’s financial accuracy through a consolidated review of the rent roll, deposits, resident lease files, and more.
Answer Automation integrates with SmartRent’s Self-Guided Tours to provide an easier way for prospective renters to schedule tours and enhance on-site efficiency. Advanced reporting capabilities help site teams make informed decisions and bring attention to the most frequent call areas. • Audit Management.
Insightful reporting provides data using customized filters, allowing teams to easily analyze, export, and share findings to make informed decisions. SmartRent Hardware We offer a variety of in-rental unit devices that elevate the resident experience and provide multiple benefits to owners and operators.
The application enables teams to build accurate budgets with real-time cost-tracking capabilities based on pre-established standard costs. Insightful reporting provides data using customized filters, allowing teams to easily analyze, export, and share findings to make informed decisions.
This software suite is tailored to streamline management processes by consolidating various operational tasks onto a single platform. It aims to enhance productivity among site teams by providing tools that facilitate better communication, coordination, and management of community tasks.
Parking Management is available to communities as a stand-alone product or as part of our fully integrated smart home operating system. Smart Operations Solutions. Smart Operations Solutions encompasses integrated software solutions focused on centralizing community operations to improve efficiency and collaboration. This software suite is tailored to streamline management processes by consolidating various operational tasks onto a single platform.
Removed
We believe SmartRent is a category leader in the enterprise smart home solutions industry. We define Units Deployed as the aggregate number of Hub Devices that have been installed (including customer self-installations) as of a stated measurement date.
Added
Our Smart Community solutions include software and devices that power (i) smart apartments and homes, (ii) access control for buildings, common areas, and rental units, (iii) community and resident WiFi, and other solutions such as asset protection and monitoring, parking management and self-guided tours.
Removed
Furthermore, we believe there is an attractive opportunity to expand our smart home solutions into other markets globally. SaaS Model We enter into binding, recurring revenue contracts with customers ranging from one month to eight years; the majority of our recurring revenue contracts range from one month to one year and our average recurring revenue contract term is 1.6 years.
Added
Our Smart Operations solutions include work order management, the automation of leasing and resident call handling, audit management, and the automation of the inspection process.
Removed
In 2023, approximately 29% of our customers prepaid their software contracts. We believe that our customer base is inherently sticky given the barriers to entry associated with rolling out an integrated enterprise solution across a portfolio of rental units.
Added
Importantly, our enterprise software integrates into most existing property management systems used by residential property owners and operators. We believe that our customers realize several benefits from implementing our solutions, including: • Operating Efficiency.
Removed
With our smart home operating system, residents can remotely control and manage their smart home devices and home settings through a single application.
Added
In addition, we expect our solutions will help to eliminate or reduce rekeying and lockout expenses and other property management redundancies. • Asset Protection.
Removed
Our employees have opportunities to get involved in resource groups (e.g., Women’s Empowerment, People of Color, and PRISM) and give back to the community. We engage with our employees to gather insight, feedback, and data about their workplace experiences, and manager effectiveness.
Added
For more information about our “Units Deployed” and other metrics, refer to the section of this Report titled “Management’s Discussion and Analysis of Financial Condition and Results of Operations.” As of December 31, 2024, our customers own or operate an aggregate of approximately 7.4 million rental units.
Removed
Additionally, we provide dental, and vision for employees and their dependents, life insurance, flexible time off, paid parental leave, employee stock purchase plan and a 401(k) plan with a company match.
Added
We generate revenue primarily from sales of smart home systems that enable property owners and property managers to have visibility and control over assets, while providing all-in-one home control offerings for residents.
Removed
We also engage in ongoing activities in connection with enhancement of existing products, integration with new third-party products and services, and the development of internal applications to improve efficiency of our operations. Supply Chain Generally, our hardware device suppliers maintain a stock of devices and key components to cover any minor supply chain disruptions.
Added
Our revenue is generated from: (1) the direct sale to our customers of hosted services from monthly subscription fees collected from customers to provide access to one or more of our software applications (“Hosted Services”) including access controls, asset monitoring, WiFi, and related services; (2) the sale and delivery of smart home devices, which generally consist of a Hub Device, door-locks, thermostats, sensors, and light switches ; and (3) installation and implementation of smart home devices that enable our Hosted Services.
Removed
In August 2023 the Company entered into a Product Sales Agreement (the "Agreement") with ADI Global Distribution ("ADI"), pursuant to which, ADI will serve as our non-exclusive hardware fulfillment partner. In connection with the Agreement, the Company has agreed to transfer certain of its inventory to ADI, to fulfill our sales in exchange for cash.
Added
During the year ended December 31, 2024, to further focus and align our efforts, we defined four strategic pillars: Sustainable Annual Recurring Revenue ("ARR") Growth, Platform Superiority, Operational Excellence and Collaborative Innovation.
Removed
The SEC maintains an internet site (http://www.sec.gov) that contains reports, proxy and information statements, and other information regarding issuers that file electronically with the SEC.
Added
With a solid strategy in place and a clear focus on enhancing our competitive strengths, we believe SmartRent is positioned to capitalize on significant market opportunities, deliver high return on investment to our customers and create sustainable long-term value for our shareholders.

… 10 more changes not shown on this page.

Item 1A. Risk Factors

Risk Factors — what could go wrong, per management

100 edited+30 added−23 removed284 unchanged
Biggest changeIn addition, these suppliers, manufacturers, and partners may experience delay, disruption, or lapse in the quality of their operations, which would subject us to risks, including the following: • inability to satisfy demand for our products; • reduced control over delivery timing and product reliability; • reduced ability to monitor the manufacturing process and components used in our products; • limited ability to develop comprehensive manufacturing specifications that take into account any materials or components shortages or substitutions; • variance in the manufacturing capability of our third-party manufacturers; • price increases; • failure of a significant supplier, manufacturer, or partner to perform its obligations to us for technical, market, or other reasons; • insolvency, bankruptcy or liquidation of a significant supplier, manufacturer, or partner; • difficulties in establishing additional supplier, manufacturer, or partner relationships if we experience difficulties with our existing suppliers, manufacturers, or partners; • shortages of materials or components; • disagreements with suppliers, manufacturers, or logistics partners as to quality control, leading to a surplus of ineffective products; • misappropriation of our intellectual property; • geopolitical uncertainty and instability, such as the ongoing geopolitical tensions related to conflicts in and around Ukraine, Israel and other areas of the world, or potential conflicts in the region surrounding the Taiwan Strait, which may lead to changes in U.S. or foreign trade policies and general economic conditions that impact our business; • foreign subsidiaries may operate in a way which harms our business including the violation of labor, environmental or other laws, or failure to follow ethical business practices; • exposure to natural catastrophes, political unrest, terrorism, labor disputes, and economic instability resulting in the disruption of manufacturing operations in or trade from foreign countries in which our products are manufactured or the components thereof are sourced; • changes in local economic conditions in the jurisdictions where our suppliers, manufacturers, and partners are located; 11 • the imposition of new laws and regulations, including those relating to labor conditions, quality and safety standards, imports, duties, tariffs, taxes, and other charges on imports, as well as trade restrictions and restrictions on currency exchange or the transfer of funds; and • insufficient warranties and indemnities on components supplied to our manufacturers or performance by our partners.
Biggest changeIn addition, these suppliers, manufacturers, and partners may experience delay, disruption, or lapse in the quality of their operations, which would subject us to risks, including the following: • inability to satisfy demand for our products; • reduced control over delivery timing and product reliability; • reduced ability to monitor the manufacturing process and components used in our products; • limited ability to develop comprehensive manufacturing specifications that take into account any materials or components shortages or substitutions; • variance in the manufacturing capability of our third-party manufacturers; • price increases; • failure of a significant supplier, manufacturer, or partner to perform its obligations to us for technical, market, or other reasons; • insolvency, bankruptcy or liquidation of a significant supplier, manufacturer, or partner; 11 • difficulties in establishing additional supplier, manufacturer, or partner relationships if we experience difficulties with our existing suppliers, manufacturers, or partners; • shortages of materials or components; • disagreements with suppliers, manufacturers, or logistics partners as to quality control, leading to a surplus of ineffective products; • the imposition of new laws and regulations, including those relating to labor conditions, quality and safety standards, imports, duties, tariffs, taxes, and other charges on imports, as well as trade restrictions and restrictions on currency exchange or the transfer of funds; • misappropriation of our intellectual property; • geopolitical uncertainty and instability, such as the ongoing geopolitical tensions related to conflicts in and around Ukraine, Israel and other areas of the world, or potential conflicts in the region surrounding the Taiwan Strait, which may lead to changes in U.S. or foreign trade policies and general economic conditions that impact our business; • foreign subsidiaries may operate in a way which harms our business including the violation of labor, environmental or other laws, or failure to follow ethical business practices; • exposure to natural catastrophes, political unrest, terrorism, labor disputes, and economic instability resulting in the disruption of manufacturing operations in or trade from foreign countries in which our products are manufactured or the components thereof are sourced; • changes in local economic conditions in the jurisdictions where our suppliers, manufacturers, and partners are located; and • insufficient warranties and indemnities on components supplied to our manufacturers or performance by our partners.
As we continue to expand our hardware and software technology offerings, the likelihood that third parties will claim that we, or our customers, infringe their intellectual property rights may increase. We have in the past received, and may in the future receive, notices of allegations of infringement, misappropriation or misuse of other parties’ proprietary rights.
As we continue to expand our software and hardware technology offerings, the likelihood that third parties will claim that we, or our customers, infringe their intellectual property rights may increase. We have in the past received, and may in the future receive, notices of allegations of infringement, misappropriation or misuse of other parties’ proprietary rights.
You may not be able to resell your shares at an attractive price due to a number of factors such as those listed in “- Risks Related to Our Business and Industry” and the following: • our operating and financial performance and prospects; • our quarterly or annual earnings or those of other companies in our industry compared to market expectations; • conditions that impact demand for our products and/or services; • future announcements concerning our business, our customers’ businesses or our competitors’ businesses; • the public’s reaction to our press releases, other public announcements and filings with the SEC; • the market’s reaction to our reduced disclosure and other requirements as a result of being an “emerging growth company” under the JOBS Act; • the size of our public float; • coverage by or changes in financial estimates by securities analysts or failure to meet their expectations; • market and industry perception of our success, or lack thereof, in pursuing our business strategy; • strategic actions by us or our competitors, such as acquisitions or restructurings; • changes in laws or regulations which adversely affect our industry or us; • privacy and data protection laws, privacy or data breaches or incidents, or the loss or other unavailability of data; • the impact of pandemics or epidemics, such as the COVID-19 pandemic, on our financial condition and the results of operations; • changes by the Financial Accounting Standards Board or other accounting regulatory bodies to generally accepted accounting principles, standards, guidance, interpretations or policies; • changes in senior management or key personnel; • issuances, exchanges, sales or purchases, or expected issuances, exchanges, sales or purchases of our capital stock; • changes in our dividend policy; • adverse resolution of new or pending litigation against us; and • changes in general market, economic and political conditions in the U.S. and global economies or financial markets, including those resulting from natural disasters, terrorist attacks, acts of war and responses to such events.
You may not be able to resell your shares at an attractive price due to a number of factors such as those listed in “- Risks Related to Our Business and Industry” and the following: • our operating and financial performance and prospects; • our quarterly or annual earnings or those of other companies in our industry compared to market expectations; • conditions that impact demand for our products and/or services; • future announcements concerning our business, our customers’ businesses or our competitors’ businesses; • the public’s reaction to our press releases, other public announcements and filings with the SEC; • the market’s reaction to our reduced disclosure and other requirements as a result of being an “emerging growth company” under the JOBS Act; • the size of our public float; 32 • coverage by or changes in financial estimates by securities analysts or failure to meet their expectations; • market and industry perception of our success, or lack thereof, in pursuing our business strategy; • strategic actions by us or our competitors, such as acquisitions or restructurings; • changes in laws or regulations which adversely affect our industry or us; • privacy and data protection laws, privacy or data breaches or incidents, or the loss or other unavailability of data; • the impact of pandemics or epidemics, such as the COVID-19 pandemic, on our financial condition and the results of operations; • changes by the Financial Accounting Standards Board or other accounting regulatory bodies to generally accepted accounting principles, standards, guidance, interpretations or policies; • changes in senior management or key personnel; • issuances, exchanges, sales or purchases, or expected issuances, exchanges, sales or purchases of our capital stock; • changes in our dividend policy; • adverse resolution of new or pending litigation against us; and • changes in general market, economic and political conditions in the U.S. and global economies or financial markets, including those resulting from natural disasters, terrorist attacks, acts of war and responses to such events.
In addition, we will face risks in doing business internationally that could materially and adversely affect our business, including: • our ability to comply with differing and evolving technical and environmental standards, telecommunications regulations, building and fire codes, and certification requirements outside the U.S.; • difficulties and costs associated with staffing and managing foreign operations; • our ability to effectively price our products and solutions in competitive international markets; • potentially greater difficulty collecting accounts receivable and longer payment cycles; • the need to adapt and localize our products and subscriptions for specific countries; • the need to offer customer care in various native languages; • reliance on third parties over which we have limited control; • availability of reliable network connectivity in targeted areas for expansion; • difficulties in understanding and complying with local laws, regulations, and customs in foreign jurisdictions; • restrictions on travel to or from countries in which we operate or inability to access certain areas; • changes in diplomatic and trade relationships, including tariffs and other non-tariff barriers, such as quotas and local content rules; • U.S. government trade restrictions, including those which may impose restrictions such as prohibitions, on the exportation, re-exportation, sale, shipment or other transfer of programming, technology, components, and/or services to foreign persons; • our ability to comply with different and evolving laws, rules, and regulations, including the European Union General Data Protection Regulation and other data privacy and data protection laws, rules and regulations; 30 • compliance with various anti-bribery and anti-corruption laws such as the Foreign Corrupt Practices Act and U.K.
In addition, we will face risks in doing business internationally that could materially and adversely affect our business, including: • our ability to comply with differing and evolving technical and environmental standards, telecommunications regulations, building and fire codes, and certification requirements outside the U.S.; • difficulties and costs associated with staffing and managing foreign operations; • our ability to effectively price our products and solutions in competitive international markets; • potentially greater difficulty collecting accounts receivable and longer payment cycles; • the need to adapt and localize our products and subscriptions for specific countries; • the need to offer customer care in various native languages; • reliance on third parties over which we have limited control; • availability of reliable network connectivity in targeted areas for expansion; • difficulties in understanding and complying with local laws, regulations, and customs in foreign jurisdictions; • restrictions on travel to or from countries in which we operate or inability to access certain areas; • changes in diplomatic and trade relationships, including tariffs and other non-tariff barriers, such as quotas and local content rules; • U.S. government trade restrictions, including those which may impose restrictions such as prohibitions, on the exportation, re-exportation, sale, shipment or other transfer of programming, technology, components, and/or services to foreign persons; • our ability to comply with different and evolving laws, rules, and regulations, including the European Union General Data Protection Regulation and other data privacy and data protection laws, rules and regulations; • compliance with various anti-bribery and anti-corruption laws such as the Foreign Corrupt Practices Act and U.K.
Fluctuations in our operating results and financial condition may arise due to a number of factors, including: • the proportion of our revenue attributable to SaaS, versus hardware and other revenues; • fluctuations in demand for our platform and solutions; • changes in our business and pricing policies or those of our competitors; • the ability of our hardware vendors to continue to manufacture high-quality products and to supply sufficient products to meet our demands; • the timing and success of introductions of new solutions, products or upgrades by us or our competitors; • our ability to control costs, including our operating expenses, the costs of the hardware we purchase or manufacture, the cost of the labor required to provide our professional services and the costs required to provide subscriptions for use of the Company's software; 13 • changes in business or macroeconomic conditions, including global supply chain issues, housing affordability, inflation, foreign currency exchange rate fluctuations, changing interest rates, recessionary conditions, political instability, volatility in the credit markets, regulatory requirements or market conditions in our industry; • the ability to accurately forecast revenue; • competition, including entry into the industry by new competitors and new offerings by existing competitors; • our ability to successfully manage any future acquisitions and integrations of businesses; • issues related to introductions of new or improved products, such as shortages of prior generation products or short-term decreased demand for next generation products; • the amount and timing of expenditures, including those related to expanding our operations, increasing research and development, introducing new solutions or paying litigation expenses; • the ability to effectively manage growth within existing and new markets domestically and internationally; • changes in the payment terms for our platform and solutions; • restrictions on international trade, such as tariffs and other controls on imports or exports of goods, technology or data; and • the impact of other events or factors, including those resulting from natural disasters, pandemics, war, including due to the war in Ukraine and Israel-Hamas conflict, acts of terrorism, or responses to these events.
Fluctuations in our operating results and financial condition may arise due to a number of factors, including: • the proportion of our revenue attributable to SaaS, versus hardware and other revenues; • fluctuations in demand for our platform and solutions; • changes in our business and pricing policies or those of our competitors; • the ability of our hardware vendors to continue to manufacture high-quality products and to supply sufficient products to meet our demands; • the timing and success of introductions of new solutions, products or upgrades by us or our competitors; • our ability to control costs, including our operating expenses, the costs of the hardware we purchase or manufacture, the cost of the labor required to provide our professional services and the costs required to provide subscriptions for use of the Company's software; 14 • changes in business or macroeconomic conditions, including global supply chain issues, housing affordability, inflation, foreign currency exchange rate fluctuations, changing interest rates, recessionary conditions, political instability, volatility in the credit markets, regulatory requirements or market conditions in our industry; • the ability to accurately forecast revenue; • competition, including entry into the industry by new competitors and new offerings by existing competitors; • our ability to successfully manage any future acquisitions and integrations of businesses; • issues related to introductions of new or improved products, such as shortages of prior generation products or short-term decreased demand for next generation products; • the amount and timing of expenditures, including those related to expanding our operations, increasing research and development, introducing new solutions or paying litigation expenses; • the ability to effectively manage growth within existing and new markets domestically and internationally; • changes in the payment terms for our platform and solutions; • restrictions on international trade, such as tariffs and other controls on imports or exports of goods, technology or data; and • the impact of other events or factors, including those resulting from natural disasters, pandemics, war, including due to the war in Ukraine and Israel-Hamas conflict, acts of terrorism, or responses to these events.
We will cease to be an “emerging growth company” upon the earliest of (i) the first fiscal year following the fifth anniversary of the initial public offering by FWAA (the "FWAA IPO"), which closed on February 9, 2021, (ii) the first fiscal year after our annual gross revenues are $1.235 billion or more, (iii) the date on which we have, during the previous three-year period, issued more than $1.0 billion in non-convertible debt securities or (iv) as of the end of any fiscal year in which the market value of our common stock held by non-affiliates exceeded $700.0 million as of the end of the second quarter of that fiscal year.
We will cease to be an “emerging growth company” upon the earliest of (i) the first fiscal year following the fifth anniversary of the initial public offering by FWAA, which closed on February 9, 2021, (ii) the first fiscal year after our annual gross revenues are $1.235 billion or more, (iii) the date on which we have, during the previous three-year period, issued more than $1.0 billion in non-convertible debt securities or (iv) as of the end of any fiscal year in which the market value of our common stock held by non-affiliates exceeded $700.0 million as of the end of the second quarter of that fiscal year.
We expect to continue to devote significant resources to our future growth, including making meaningful investments in our customer acquisition teams, building out our technological capabilities, including internal business systems and tools, and exploring strategic acquisition opportunities. 10 We may continue to incur losses and will have to generate and sustain increased revenues to achieve future profitability.
We expect to continue to devote significant resources to our future growth, including making meaningful investments in our customer acquisition teams, building out our technological capabilities, including internal business systems and tools, and exploring strategic acquisition opportunities. We may continue to incur losses and will have to generate and sustain increased revenues to achieve future profitability.
For example, in 2020 and 2021 we identified a deficiency with batteries contained in certain hardware sold which we acquired from a supplier. As of December 31, 2023 we've accrued $864,000 in hardware cost of goods sold on the Consolidated Statements of Operations related to the battery deficiencies.
For example, in 2020 and 2021 we identified a deficiency with batteries contained in certain hardware sold which we acquired from a supplier. As of December 31, 2023 we accrued $864,000 in hardware cost of goods sold on the Consolidated Statements of Operations related to the battery deficiencies.
Any changes in our effective tax rate could adversely affect our results of operations. 23 Our business is subject to the risk of earthquakes, fires, power outages, floods, pandemics and other health events and other catastrophic events, and to interruption by manmade problems such as terrorism.
Any changes in our effective tax rate could adversely affect our results of operations. Our business is subject to the risk of earthquakes, fires, power outages, floods, pandemics and other health events and other catastrophic events, and to interruption by manmade problems such as terrorism.
Bribery Act of 2010; • more limited protection for intellectual property rights in some countries; • adverse tax consequences; • fluctuations in currency exchange rates; • exchange control regulations, which might restrict or prohibit our conversion of other currencies into U.S.
Bribery Act of 2010; • more limited protection for intellectual property rights in some countries; • adverse tax consequences; • fluctuations in currency exchange rates; 31 • exchange control regulations, which might restrict or prohibit our conversion of other currencies into U.S.
For example, if the outputs that our AI technology assists in producing are or are alleged to be deficient, inaccurate, or biased, or if such outputs or their development or deployment, including the collection, use, or other processing of data used to train or create such AI technology, are held or alleged to infringe upon or to have misappropriated third-party intellectual property rights or to violate applicable laws, regulations, or other actual or asserted legal obligations to which we are or may become subject, our business, operating results, financial condition, and growth prospects could be adversely affected.
For example, if the outputs that our AI technology assists in producing are or are alleged to be deficient, inaccurate, or biased, or if such outputs or their development or deployment, including the collection, use, or other processing of data used to train or develop such AI technology, are held or alleged to infringe upon or to have misappropriated third-party intellectual property rights or to violate applicable laws, regulations, or other actual or asserted legal obligations to which we are or may become subject, our business, operating results, financial condition, and growth prospects could be adversely affected.
If we become the subject of certain forms of shareholder activism, such a concerted short squeeze, threatened or actual proxy contest or a hostile bid, the attention of our management and our board of directors may be diverted from executing our strategy.
If we become the subject of certain forms of shareholder activism, such a concerted short squeeze, threatened or actual proxy contest or a hostile bid, the attention of our management and the Board may be diverted from executing our strategy.
As a public company, we are required to comply with the SEC’s rules implementing Sections 302 and 404 of the Sarbanes-Oxley Act, which require management to certify financial and other information in our quarterly and annual reports and provide an annual management report on the effectiveness of controls over financial reporting. 28 Effective internal controls are necessary to provide reliable financial reports and to assist in the effective prevention of fraud.
As a public company, we are required to comply with the SEC’s rules implementing Sections 302 and 404 of the Sarbanes-Oxley Act, which require management to certify financial and other information in our quarterly and annual reports and provide an annual management report on the effectiveness of controls over financial reporting. 29 Effective internal controls are necessary to provide reliable financial reports and to assist in the effective prevention of fraud.
Any failure or perceived failure by us to comply with our privacy policies, our obligations to our customers, or any of our other actual or asserted legal or contractual obligations relating to privacy, data protection, or security may result in governmental investigations or enforcement actions, claims, demands, and litigation by private parties, claims or public statements against us by consumer advocacy groups or others, and could result in significant fines, penalties, and other liabilities, loss of relationships with key third parties, or cause our customers to lose trust in us, which could lead to a loss of customers and difficulties attracting new customers, all of which could have an adverse effect on our reputation, business, financial condition, and operating results.
Any failure or perceived failure by us to comply with our relevant policies, our obligations to our customers, or any of our other actual or asserted legal or contractual obligations relating to privacy, data protection, or cybersecurity may result in governmental investigations or enforcement actions, claims, demands, and litigation by private parties, claims or public statements against us by consumer advocacy groups or others, and could result in significant fines, penalties, and other liabilities, loss of relationships with key third parties, or cause our customers to lose trust in us, which could lead to a loss of customers and difficulties attracting new customers, all of which could have an adverse effect on our reputation, business, financial condition, and operating results.
In March 2024, we announced that our board of directors authorized the repurchase of up to $50 million of our Class A common stock from time to time through a stock repurchase program.
In March 2024, we announced that the Board authorized the repurchase of up to $50 million of our Class A common stock from time to time through a stock repurchase program.
Our future effective tax rates could be subject to volatility or adversely affected by a number of factors, including: • changes in the valuation of our deferred tax assets and liabilities; • expiration or non-utilization of net operating loss carryforwards; • tax effects of share-based compensation; • expansion into new jurisdictions; • potential challenges to and costs related to implementation and ongoing operation of our intercompany arrangements; • increases in U.S. state or federal statutory tax rates on corporate income; • changes in tax laws and regulations and accounting principles, or interpretations or applications thereof; and • certain non-deductible expenses as a result of acquisitions.
Our future effective tax rates could be subject to volatility or adversely affected by a number of factors, including: • changes in the valuation of our deferred tax assets and liabilities; • expiration or non-utilization of net operating loss carryforwards; • tax effects of share-based compensation; • expansion into new jurisdictions; • potential challenges to and costs related to implementation and ongoing operation of our intercompany arrangements; • increases in state or federal statutory tax rates on corporate income; 23 • changes in tax laws and regulations and accounting principles, or interpretations or applications thereof; and • certain non-deductible expenses as a result of acquisitions.
Although we have implemented policies and procedures designed to ensure compliance with anti-corruption laws, there can be no assurance that all of our employees, representatives, contractors, partners, and agents will comply with these laws and policies. 29 Our operations require us to import from Asia and Europe, which geographically stretches our compliance obligations.
Although we have implemented policies and procedures designed to ensure compliance with anti-corruption laws, there can be no assurance that all of our employees, representatives, contractors, partners, and agents will comply with these laws and policies. 30 Our operations require us to import from Asia and Europe, which geographically stretches our compliance obligations.
For example, we plan to extend our offerings to current customers by introducing new software, services, and products and may explore opportunities for international expansion.
We plan to extend our offerings to current customers by introducing new software, services, and products and may explore opportunities for international expansion.
If there is price compression in the market after these decisions are made, it could have a negative effect on our business. 16 If we fail to continue to develop our brand or our reputation is harmed, our business may suffer.
If there is price compression in the market after these decisions are made, it could have a negative effect on our business. 17 If we fail to continue to develop our brand or our reputation is harmed, our business may suffer.
The scope of laws and regulations relating to privacy and cybersecurity is rapidly changing. We also maintain privacy policies and other notices, and are subject to contractual obligations to third parties, related to privacy, data protection, and cybersecurity. We strive to comply with applicable laws, regulations, policies, and other legal obligations relating to privacy, data protection, and cybersecurity.
The scope of laws and regulations relating to privacy and cybersecurity is evolving rapidly. We also maintain privacy policies and other notices, and are subject to contractual obligations to third parties, related to privacy, data protection, and cybersecurity. We strive to comply with applicable laws, regulations, policies, and other legal obligations relating to privacy, data protection, and cybersecurity.
Although we have taken precautionary measures to prepare for these threats and challenges, there is no guarantee that our precautions will fully protect our systems or the data maintained or otherwise processed in our business. 25 Although we have established security procedures designed to protect customers and their resident information, our or our partners’ security and testing measures may not prevent security breaches or incidents.
Although we have taken precautionary measures to prepare for these threats and challenges, there is no guarantee that our precautions will fully protect our systems or the data maintained or otherwise processed in our business. 26 Although we have established security procedures designed to protect our information systems and our customers and their resident information, our or our partners’ security and testing measures may not prevent security breaches or other incidents.
In addition, third parties, including our third-party partners and other third parties upon which we rely, could also be sources of security risks to us in the event of a failure of their own security systems and infrastructure.
In addition, third parties, including our third-party partners and other third parties upon which we rely, could also be sources of security risks to us in the event of a failure of their own technology, security systems, or infrastructure.
With data privacy and security laws and regulations imposing new and relatively burdensome obligations, and with substantial uncertainty over the interpretation and application of these and other laws and regulations, we may face challenges in addressing their requirements and making necessary changes to our policies and practices, and may incur significant costs and expenses in an effort to do so.
With laws and regulations addressing privacy, data protection, and cybersecurity imposing new and relatively burdensome obligations, and with substantial uncertainty over the interpretation and application of these and other laws and regulations, we may face challenges in addressing their requirements and making necessary changes to our policies and practices, and may incur significant costs and expenses in an effort to do so.
These factors could also make it more difficult for us to attract and retain qualified members of the Company's Board of Directors ("Board"), particularly to serve on our audit committee and compensation committee, and qualified executive officers.
These factors could also make it more difficult for us to attract and retain qualified members of the Board, particularly to serve on our audit committee and compensation committee, and qualified executive officers.
For example, some of our customers have indicated that they are delaying the deployment of our solutions in certain communities and are directing more of their capital expenditures to solar systems to meet Environmental, Social, and Governance ("ESG") requirements - thus reducing our short-term revenue expectations.
For example, some of our customers have indicated that they are delaying the deployment of our solutions in certain communities and are directing more of their capital expenditures to solar systems to meet ESG requirements - thus reducing our short-term revenue expectations.
The CCPA went into effect on January 1, 2020 and gives California residents expanded rights to access and require deletion of their personal information, opt out of certain personal information sharing and receive detailed information about how their personal information is used.
The CCPA went into effect on January 1, 2020 and, among other things, gives California residents expanded rights to access and require deletion of their personal information, opt out of certain personal information sharing and receive detailed information about how their personal information is used.
Our solutions and the networks and information systems we utilize in our business are at risk for security breaches and incidents as a result of third-party action, employee or partner error, malfeasance, or other factors.
Our solutions and the networks and information systems we utilize in our business are at risk for security breaches and other incidents as a result of third-party action, employee or partner error, technical outages and errors, malfeasance, or other factors.
Although we maintain cyber liability insurance, we cannot be certain that our coverage will be adequate for liabilities actually incurred or that insurance will continue to be available to us on economically reasonable terms, or at all. 26 If we are unable to successfully implement AI to our SmartRent Solutions, our business could be harmed.
Although we maintain cyber liability insurance, we cannot be certain that our coverage will be adequate for liabilities actually incurred or that insurance will continue to be available to us on economically reasonable terms, or at all. 27 If we are unable to successfully implement AI technology into our SmartRent Solutions, our business could be harmed.
Among other things, our Charter and/or bylaws include the following provisions: • a staggered board, which means that the Board is classified into three classes of directors, with staggered three-year terms and directors are only able to be removed from office for cause; • limitations on convening special stockholder meetings, which could make it difficult for our stockholders to adopt desired governance changes; • a prohibition on stockholder action by written consent, which means that our stockholders are only able to take action at a meeting of stockholders and are not be able to take action by written consent for any matter; • a forum selection clause, which means certain litigation against us can only be brought in Delaware; • the authorization of undesignated preferred stock, the terms of which may be established and shares of which may be issued without further action by our stockholders; and • advance notice procedures, which apply for stockholders to nominate candidates for election as directors or to bring matters before an annual meeting of stockholders.
Among other things, our Charter and/or bylaws include the following provisions: • a staggered board, which means that the Board is classified into three classes of directors, with staggered three-year terms and directors are only able to be removed from office for cause; • limitations on convening special stockholder meetings, which could make it difficult for our stockholders to adopt desired governance changes; • a prohibition on stockholder action by written consent, which means that our stockholders are only able to take action at a meeting of stockholders and are not be able to take action by written consent for any matter; • a forum selection clause, which means certain litigation against us can only be brought in Delaware; • the authorization of undesignated preferred stock, the terms of which may be established and shares of which may be issued without further action by our stockholders; and • advance notice procedures, which apply for stockholders to nominate candidates for election as directors or to bring matters before an annual meeting of stockholders. 35 These provisions, alone or together, could delay or prevent hostile takeovers and changes in control or changes in our management.
We expect to rely on AI to help drive future growth in our business, but there can be no assurance that we will realize the desired or anticipated benefits from AI technology or at all. We may also fail to properly implement or market our use of AI technology.
We expect to rely on AI to help drive future growth in our business, but there can be no assurance that we will realize the desired or anticipated benefits from AI technology or at all. We may also fail to properly implement AI technology or to effectively promote our use of it.
In the event that we are unable to comply with these covenants in the future, we would seek an amendment or waiver of the covenants. We cannot assure you that any such waiver or amendment would be granted.
We cannot assure you that we will be able to comply with any such restrictive covenants. In the event that we are unable to comply with these covenants in the future, we would seek an amendment or waiver of the covenants. We cannot assure you that any such waiver or amendment would be granted.
Risks Related to Our Business and Industry We have a history of net losses and may not be able to achieve or maintain profitability in the future. We experienced net losses in each year since inception, including a net loss of $96.3 million for 2022 and $34.6 million for 2023.
Risks Related to Our Business and Industry We have a history of net losses and may not be able to achieve or maintain profitability in the future. We experienced net losses in each year since inception, including a net loss of $34.6 million for 2023 and $33.6 million for 2024.
Our attrition rate could increase in the future if customers are not satisfied with our products and solutions, the value proposition of our solutions or our ability to otherwise meet their needs and expectations.
Our attrition rate could increase in the future if customers are not satisfied with our products and solutions, the support we provide related to our solutions, the value proposition of our solutions or our ability to otherwise meet their needs and expectations.
A cyber-attack may cause additional costs, such as investigative and remediation costs, legal fees, and the costs of any additional fraud detection activities required by law, a court, or a third party.
A cybersecurity incident may cause additional costs, such as investigative and remediation costs, legal fees, and the costs of any additional fraud detection activities required by law, a court, or a third party.
From time to time, we may be subject to claims, lawsuits, government investigations, and other proceedings involving products liability, competition and antitrust, intellectual property, privacy, consumer protection, securities, tax, labor and employment, commercial disputes, and other matters that could adversely affect our business operations and financial condition.
We have been and continue to be subject to claims, lawsuits, government investigations, and other proceedings involving products liability, competition and antitrust, intellectual property, privacy, consumer protection, securities, tax, labor and employment, commercial disputes, and other matters that could adversely affect our business operations and financial condition.
Because our products are installed in homes, there is an elevated risk of property damage, personal injury, or death in the event of a product malfunction, such as a smart lock failing, our Hub Device overheating or catching fire, or leak sensor defects.
Because our products are installed in homes, there is an elevated risk of property damage, personal injury, or death in the event of a product malfunction, such as a smart lock failing, our Hub Device overheating or catching fire, or leak sensor defects. Any judgment or settlement for property damage, personal injury, or wrongful death could prove expensive to contest.
We own one issued U.S. patent, have three pending U.S. patent applications, and three pending provisional patent applications that relate to smart home, security and wireless Internet technologies utilized in our business. We may file additional patent applications in the future in the U.S. and internationally.
We own four issued U.S. patents, have five pending U.S. patent applications, and two pending international patent applications that relate to smart home, security and wireless Internet technologies utilized in our business. We may file additional patent applications in the future in the U.S. and internationally.
In addition, the restrictive covenants in credit facilities we may secure in the future may restrict us from being able to conduct our operations in a manner required for our business and may restrict our growth, which could have an adverse effect on our business, financial condition, or results of operations. 19 We cannot assure you that we will be able to comply with any such restrictive covenants.
In addition, the restrictive covenants in credit facilities we may secure in the future may restrict us from being able to conduct our operations in a manner required for our business and may restrict our growth, which could have an adverse effect on our business, financial condition, or results of operations.
These and other outcomes may: • result in the loss of a substantial number of existing customers or prohibit the acquisition of new customers; • cause us to pay license fees for intellectual property we are deemed to have infringed; • cause us to incur costs and devote valuable technical resources to redesigning our products or solutions; • cause our cost of revenues to increase; • cause us to accelerate expenditures to preserve existing revenues; • materially and adversely affect our brand in the marketplace and cause a substantial loss of goodwill; • cause us to change our business methods; and • require us to cease certain business operations or offering certain products or features.
We could also be prohibited from using or selling certain subscriptions, prohibited from using certain processes, or required to redesign certain products, each of which could have a material adverse effect on our business and results of operations. 21 These and other outcomes may: • result in the loss of a substantial number of existing customers or prohibit the acquisition of new customers; • cause us to pay license fees for intellectual property we are deemed to have infringed; • cause us to incur costs and devote valuable technical resources to redesigning our products or solutions; • cause our cost of revenues to increase; • cause us to accelerate expenditures to preserve existing revenues; • materially and adversely affect our brand in the marketplace and cause a substantial loss of goodwill; • cause us to change our business methods; and • require us to cease certain business operations or offering certain products or features.
As of December 31, 2023, we had approximately $204.6 million of gross federal net operating loss carryforwards available to reduce future taxable income.
As of December 31, 2024, we had approximately $222.9 million of gross federal net operating loss carryforwards available to reduce future taxable income.
For example, some of our customers have indicated that they are delaying the deployment of our solutions in certain communities and are directing more of their capital expenditures budget to purchase solar systems to meet ESG requirements - thus having an adverse impact on our short-term revenue expectations. 22 Uncertain commercial banking conditions could materially adversely affect our results of operations and financial condition.
For example, some of our customers have indicated that they are delaying the deployment of our solutions in certain communities and are directing more of their capital expenditures budget to purchase solar systems to meet ESG requirements - thus having an adverse impact on our short-term revenue expectations.
Our customers have no obligation to renew their contracts for our software services after the expiration of the initial term. Our contract terms range from one month to eight years, and our average contract term is 1.6 years.
Our customers have no obligation to renew their contracts for our software services after the expiration of the initial term. Our recurring revenue contract terms range from one month to ten years and the weighted average length of our recurring revenue contracts is 4.4 years.
For example, Virginia, Colorado, Utah, and Connecticut have adopted such legislation that became effective in 2023, Texas, Montana, Oregon, and Florida have adopted such legislation that will become effective in 2024, Delaware, Iowa, and Tennessee have adopted such legislation that will become effective in 2025, and Indiana has adopted such legislation that will become effective in 2026.
For example, Virginia, Colorado, Utah, and Connecticut have adopted such legislation that became effective in 2023, Texas, Montana, Oregon, and Florida have adopted such legislation that became effective in 2024, Delaware, Iowa, Maryland, Minnesota, Nebraska, New Hampshire, New Jersey and Tennessee have adopted such legislation that has or will become effective in 2025, and Indiana, Kentucky, and Rhode Island have adopted such legislation that will become effective in 2026.
During weak or uncertain economic times, the available pool of potential customers and the amount of capital expenditures that our existing customers deploy may decline as the prospects for residential building renovation projects and new multifamily apartment and single-family rental construction diminish, which may have a corresponding impact on our growth prospects.
These and other economic factors can materially adversely affect our business, results of operations, financial condition and stock price. 22 During weak or uncertain economic times, the available pool of potential customers and the amount of capital expenditures that our existing customers deploy may decline as the prospects for residential building renovation projects and new multifamily apartment and single-family rental construction diminish, which may have a corresponding impact on our growth prospects.
If a significant number of customers terminate, reduce, or fail to renew their contracts, we may be required to incur significantly higher sales and marketing expenditures than we currently anticipate in order to increase the number of new customers or to upsell existing customers, and such additional sales and marketing expenditures could harm our business. 15 Our future success also depends in part on our ability to sell additional solutions to our current customers and to sell into our customers’ future projects.
If a significant number of customers terminate, reduce, or fail to renew their contracts, we may be required to incur significantly higher sales and marketing expenditures than we currently anticipate in order to increase the number of new customers or to upsell existing customers, and such additional sales and marketing expenditures could harm our business.
If we fail to promote and maintain our brand, our business could be materially and adversely affected. The loss of one or more key members of our management team or personnel, or our failure to attract, integrate and retain additional personnel in the future, could harm our business and negatively affect our ability to successfully grow our business.
The loss of one or more key members of our management team or personnel, or our failure to attract, integrate and retain additional personnel in the future, could harm our business and negatively affect our ability to successfully grow our business.
We currently intend to retain all available funds and any future earnings to fund the development and growth of our business. As a result, we do not anticipate declaring or paying any cash dividends on our Class A Common Stock in the foreseeable future.
We do not intend to pay dividends on our Class A Common Stock for the foreseeable future. We currently intend to retain all available funds and any future earnings to fund the development and growth of our business.
Interruptions to, or other problems with, our website and interactive user interface, information technology systems, manufacturing processes or other operations could damage our reputation and brand and substantially harm our business.
If we fail to promote and maintain our brand, our business could be materially and adversely affected. Interruptions to, or other problems with, our website and interactive user interface, information technology systems, manufacturing processes or other operations could damage our reputation and brand and substantially harm our business.
The shares registered under such registration statements are available for sale in the open market. 33 In the future, we may obtain financing to further increase our capital resources by issuing additional shares of our capital stock or offering debt or other equity securities, including senior or subordinated notes, debt securities convertible into equity, or shares of preferred stock.
In the future, we may obtain financing to further increase our capital resources by issuing additional shares of our capital stock or offering debt or other equity securities, including senior or subordinated notes, debt securities convertible into equity, or shares of preferred stock.
In addition, our inability to successfully operate and integrate newly acquired businesses appropriately, effectively, and in a timely manner could impair our ability to take advantage of future growth opportunities and other advances in technology, as well as on our revenues, gross margins and expenses.
In addition, our inability to successfully operate and integrate newly acquired businesses appropriately, effectively, and in a timely manner could impair our ability to take advantage of future growth opportunities and other advances in technology, as well as on our revenues, gross margins and expenses. 19 We may require additional capital to pursue our business objectives and to respond to business opportunities, challenges, or unforeseen circumstances.
Our stock price could be subject to significant fluctuation or otherwise be adversely affected by the events, risks and uncertainties of any shareholder activism. 34 Anti-takeover provisions in our governing documents and under Delaware law could make an acquisition of us more difficult, limit attempts by our stockholders to replace or remove our current management and limit the market price of our Class A Common Stock.
Anti-takeover provisions in our governing documents and under Delaware law could make an acquisition of us more difficult, limit attempts by our stockholders to replace or remove our current management and limit the market price of our Class A Common Stock.
In addition, if any of our products or components in our products are, or are alleged to be, defective, we may be required to participate in a recall of that product or component if the defect or alleged defect relates to safety. Any such recall and other claims could be costly to us and require substantial management attention.
In addition, if any of our products or components in our products are, or are alleged to be, defective, we may be required to participate in a recall of that product or component if the defect or alleged defect relates to safety.
Our management has limited experience in operating a public company. Our executive officers have limited experience in the management of a publicly traded company. Our management team may not successfully or effectively manage its transition to a public company that will be subject to significant regulatory oversight and reporting obligations under federal securities laws.
Our management team may not successfully or effectively manage its transition to a public company that will be subject to significant regulatory oversight and reporting obligations under federal securities laws.
Risk Factor Summary Our business operations are subject to numerous risks and uncertainties, including those outside of our control, that could cause our business to be harmed, including risks regarding the following: Risks Related to Our Business and Industry • We have a history of net losses and may not be able to achieve or maintain profitability in the future. • Any delay, disruption or quality control problems experienced by our third-party suppliers, manufacturers, and partners, could cause us to lose market share and our results of operations may suffer. • We rely on a limited number of third-party suppliers and manufacturers for our products, and a loss of any one of them could negatively affect our business. • If we are unable to successfully manage any of our recent or future acquisitions and integrations of businesses, our results of operations may be materially and adversely affected. • The occurrence of health epidemics, pandemics and similar outbreaks, such as the COVID-19 pandemic, could adversely affect our business.
Risk Factor Summary Our business operations are subject to numerous risks and uncertainties, including those outside of our control, that could cause our business to be harmed, including risks regarding the following: Risks Related to Our Business and Industry • We have a history of net losses and may not be able to achieve or maintain profitability in the future. • Any delay, disruption or quality control problems experienced by our third-party suppliers, manufacturers, and partners, could cause us to lose market share and our results of operations may suffer. • We rely on a limited number of third-party suppliers and manufacturers for our products, and a loss of any one of them could negatively affect our business. 10 • We may not successfully manage the transition of leadership to our new Chief Executive Officer, which could have an adverse impact on us.
However, the regulatory framework for privacy, data protection, and information security is, and is likely to remain, uncertain for the foreseeable future, and it is possible that these or other actual or alleged obligations may be interpreted and applied in a manner that is inconsistent from one jurisdiction to another and may conflict with other rules or our practices.
However, the regulatory framework for privacy, data protection, and information security is, and is likely to remain, uncertain for the foreseeable future, and it is possible that these or other actual or alleged obligations may be interpreted and applied in a manner that is inconsistent from one jurisdiction to another and may conflict with other actual or alleged obligations or our practices. 24 We also expect that there will continue to be new laws, regulations, and industry standards concerning privacy, data protection, and cybersecurity proposed and enacted in various jurisdictions.
There can be no assurance that our expectations will prove correct, and even if these matters are resolved in our favor or without significant cash settlements, these matters, and the time and resources necessary to litigate or resolve them, could harm our business. 31 Risks Related to Ownership of Our Class A Common Stock Our Class A Common Stock price may be volatile or may decline regardless of our operating performance.
There can be no assurance that our expectations will prove correct, and even if these matters are resolved in our favor or without significant cash settlements, these matters, and the time and resources necessary to litigate or resolve them, could harm our business.
These and other new and evolving laws and regulations relating to privacy in the U.S. could increase our potential liability and adversely affect our business. 24 Additionally, interpretations of federal and state consumer protection laws relating to online collection, use, dissemination, security, and other processing of personal information adopted by the FTC, state attorneys general, private plaintiffs, and courts have evolved, and may continue to evolve, over time.
Additionally, interpretations of federal and state consumer protection laws relating to online collection, use, dissemination, security, and other processing of personal information adopted by the FTC, state attorneys general, private plaintiffs, and courts have evolved, and may continue to evolve, over time.
Following enactment of the CCPA, many other states have adopted or considered privacy legislation, many of which are comprehensive laws similar to the CCPA and CPRA.
The CPRA’s primary substantive requirements went into effect on January 1, 2023. Following enactment of the CCPA, many other states have adopted or considered privacy legislation, many of which are comprehensive laws similar to the CCPA and CPRA.
The terms of many open-source licenses to which we are subject have not been interpreted by U.S. or foreign courts, and there is a risk that open-source software licenses could be construed in a manner that imposes unanticipated conditions or restrictions on our ability to provide or distribute our products or services. 21 Additionally, we could face claims from third parties claiming ownership of, or demanding release of, the open-source software or derivative works that we developed using such software, which could include our source code, or otherwise seeking to enforce the terms of the applicable open-source license.
The terms of many open-source licenses to which we are subject have not been interpreted by U.S. or foreign courts, and there is a risk that open-source software licenses could be construed in a manner that imposes unanticipated conditions or restrictions on our ability to provide or distribute our products or services.
If we experience a significant increase in demand for our products, or if we need to replace an existing supplier or partner, we may be unable to supplement or replace them on terms that are acceptable to us, which may undermine our ability to deliver our products to customers in a timely manner.
A change in the central processing unit would necessitate an extensive printed circuit board redesign, also resulting in production and deployment delays. 12 If we experience a significant increase in demand for our products, or if we need to replace an existing supplier or partner, we may be unable to supplement or replace them on terms that are acceptable to us, which may undermine our ability to deliver our products to customers in a timely manner.
Our policy is to require our employees that were hired and contractors that were engaged to develop material intellectual property included in our products to execute written agreements in which they assign to us their rights in potential inventions and other intellectual property created within the scope of their employment (or, with respect to consultants and service providers, their engagement to develop such intellectual property), but we cannot assure you that we have adequately protected our rights in every such agreement or that we have executed an agreement with every such party.
The loss of protection for our intellectual property rights could reduce the market value of our brands and our products and solutions, reduce new customer originations or upgrade sales to existing customers, lower our profits, and could have a material adverse effect on our business, financial condition, cash flows, or results of operations. 20 Our policy is to require our employees that were hired and contractors that were engaged to develop material intellectual property included in our products to execute written agreements in which they assign to us their rights in potential inventions and other intellectual property created within the scope of their employment (or, with respect to consultants and service providers, their engagement to develop such intellectual property), but we cannot assure you that we have adequately protected our rights in every such agreement or that we have executed an agreement with every such party.
We cannot assure you that we will successfully identify suitable acquisition candidates, integrate or manage disparate technologies, lines of business, personnel and corporate cultures, realize our business strategy or the expected return on our investment, or manage a geographically dispersed company. Any such acquisition or investment could materially and adversely affect our results of operations.
On March 21, 2022, we purchased all of the outstanding equity interests of SightPlan Holdings, Inc. ("SightPlan"). We cannot assure you that we will successfully identify suitable acquisition candidates, integrate or manage disparate technologies, lines of business, personnel and corporate cultures, realize our business strategy or the expected return on our investment, or manage a geographically dispersed company.
The trading price of our Class A Common Stock may be volatile. The stock market has historically experienced extreme volatility. This volatility often has been unrelated or disproportionate to the operating performance of particular companies.
Risks Related to Ownership of Our Class A Common Stock Our Class A Common Stock price may be volatile or may decline regardless of our operating performance. The trading price of our Class A Common Stock may be volatile. The stock market has historically experienced extreme volatility.
In addition, if we expand the geography of our service offerings, the laws of some foreign countries where we may do business in the future may not protect intellectual property rights and technology to the same extent as the laws of the U.S., and these countries may not enforce these laws as diligently as government agencies and private parties in the U.S. 20 From time to time, legal action by us may be necessary to enforce our intellectual property rights, to protect our trade secrets, to determine the validity and scope of the intellectual property rights of others, or to defend against claims of infringement, misappropriation, or invalidity.
In addition, if we expand the geography of our service offerings, the laws of some foreign countries where we may do business in the future may not protect intellectual property rights and technology to the same extent as the laws of the U.S., and these countries may not enforce these laws as diligently as government agencies and private parties in the U.S.
These factors could also make it more difficult for us to raise additional funds through future offerings of our shares of Class A Common Stock or other securities.
These factors could also make it more difficult for us to raise additional funds through future offerings of our shares of Class A Common Stock or other securities. 34 Our management has limited experience in operating a public company. Our executive officers have limited experience in the management of a publicly traded company.
The markets in which we participate could become more competitive as many companies, including large technology companies, managed service providers and WiFi providers, may target the markets in which we do business. If we are unable to compete effectively with these potential competitors and sustain pricing levels for our products and solutions, our revenue and profitability could be adversely affected.
If we are unable to compete effectively with these potential competitors and sustain pricing levels for our products and solutions, our revenue and profitability could be adversely affected. The smart home technology industry in which we participate may become more competitive and competition may intensify in the future.
Our reliance on a limited number of manufacturers for our products increases our risks, since we do not currently have alternative or replacement manufacturers beyond these key parties.
We rely on a limited number of suppliers to manufacture and transport our products, including in some cases only a single supplier for some of our products and components. Our reliance on a limited number of manufacturers for our products increases our risks, since we do not currently have alternative or replacement manufacturers beyond these key parties.
We may require additional capital to pursue our business objectives and to respond to business opportunities, challenges, or unforeseen circumstances. If capital is not available to us, our business, results of operations, and financial condition may be adversely affected.
If capital is not available to us, our business, results of operations, and financial condition may be adversely affected.
We believe that our future success will also depend in part on our continued ability to identify, hire, train, and motivate qualified personnel. We may be unable to attract and retain suitably qualified individuals who are capable of meeting our growing operational, managerial and other requirements, or we may be required to pay increased compensation in order to do so.
We may be unable to attract and retain suitably qualified individuals who are capable of meeting our growing operational, managerial and other requirements, or we may be required to pay increased compensation in order to do so. Our failure to attract, hire, integrate, and retain qualified personnel could impair our ability to achieve our business objectives.
As our business grows, we may see a rise in the number and significance of these disputes and inquiries. Litigation and regulatory proceedings, and particularly the intellectual property infringement matters that we could face, may be protracted and expensive, and the results are difficult to predict. Additionally, our litigation costs could be significant.
Litigation and regulatory proceedings that we are currently facing or could face, and particularly the intellectual property infringement matters that we could face, may be protracted and expensive, and the results are difficult to predict. Additionally, our litigation costs could be significant.
We may not realize the anticipated long-term stockholder value of our stock repurchase program, and any failure to repurchase our Class A common stock after we have announced our intention to do so may negatively impact our stock price.
Moreover, if one or more of the analysts who cover us downgrades our Class A Common Stock, or if our reporting results do not meet their expectations, the market price of our Class A Common Stock could decline. 33 We may not realize the anticipated long-term stockholder value of our stock repurchase program, and any failure to repurchase our Class A common stock after we have announced our intention to do so may negatively impact our stock price.
If we overestimate customer demand, we may allocate resources to products that we may not be able to sell when we expect or at all. As a result, we may have excess inventory which could increase our net losses. Conversely, if we underestimate customer demand, we may lose revenue opportunities and market share and may damage our customer relationships.
Our sales process requires us to estimate the expected customer demand and place firm product orders accordingly. If we overestimate customer demand, we may allocate resources to products that we may not be able to sell when we expect or at all. As a result, we may have excess inventory which could increase our net losses.
Our key operating metrics are not based on any standardized industry methodology and are not necessarily calculated in the same manner or comparable to similarly titled measures presented by other companies. Similarly, our key operating metrics may differ from estimates published by third parties or from similarly titled metrics of our competitors due to differences in methodology.
We rely on assumptions and estimates to calculate certain of our key operating metrics, such as Units Deployed and New Units Deployed, Units Booked, and ARR. Our key operating metrics are not based on any standardized industry methodology and are not necessarily calculated in the same manner or comparable to similarly titled measures presented by other companies.
Future sales, or the perception of future sales, of our Class A Common Stock by us or our existing stockholders in the public market could cause the market price for our common stock to decline. As of December 31, 2023, we had 203,326,820 shares of Class A Common Stock outstanding.
Future sales, or the perception of future sales, of our Class A Common Stock by us or our existing stockholders in the public market could cause the market price for our common stock to decline. We may issue additional securities in the future and from time to time.
We also rely exclusively on a single source to supply the main central processing unit used in our Hub Devices. A change in the central processing unit would necessitate an extensive printed circuit board redesign, also resulting in production and deployment delays.
We also rely exclusively on a single source to supply the main central processing unit used in our Hub Devices.
The numbers that we use to calculate Units Deployed and New Units Deployed, Units Booked, and ARR are based on internal data. While these numbers are based on what we believe to be reasonable judgments and estimates for the applicable period of measurement, there are inherent challenges in measuring usage.
While these numbers are based on what we believe to be reasonable judgments and estimates for the applicable period of measurement, there are inherent challenges in measuring usage. We regularly review and may adjust our processes for calculating our internal metrics to improve their accuracy.
Alternatively, if a court were to find the choice of forum provision contained in our Charter to be inapplicable or unenforceable in an action, we may incur additional costs associated with resolving such action in other jurisdictions, which could harm our business. 35 Additionally, Section 22 of the Securities Act creates concurrent jurisdiction for federal and state courts over all suits brought to enforce any duty or liability created by the Securities Act or the rules and regulations thereunder.
Alternatively, if a court were to find the choice of forum provision contained in our Charter to be inapplicable or unenforceable in an action, we may incur additional costs associated with resolving such action in other jurisdictions, which could harm our business.
Although we maintain product and general liability insurance of the types and in the amounts that we believe are customary for the industry, we are not fully insured against all such potential claims.
During the year ended December 31, 2024, we determined the battery replacements were complete and released the remaining warranty accrual of $864,000 related to the battery deficiency. Although we maintain product and general liability insurance of the types and in the amounts that we believe are customary for the industry, we are not fully insured against all such potential claims.
The CCPA also provides for a private right of action for data breaches that may increase data breach litigation. The CPRA, which significantly amends the CCPA, was adopted by California voters in 2020. The CPRA imposes additional privacy obligations on covered companies doing business in California, including additional consumer rights processes and opt outs for certain uses of sensitive data.
The CCPA also provides for a private right of action for data breaches that may increase data breach litigation. The CPRA, which significantly amended and supplemented the CCPA, was adopted by California voters in 2020.
If we were involved in securities litigation, it could have a substantial cost and divert resources and the attention of executive management from our business regardless of the outcome of such litigation. 32 We do not intend to pay dividends on our Class A Common Stock for the foreseeable future.
In the past, following periods of market volatility, stockholders have instituted securities class action litigation. If we were involved in securities litigation, it could have a substantial cost and divert resources and the attention of executive management from our business regardless of the outcome of such litigation.

… 73 more changes not shown on this page.

Item 1C. Cybersecurity

Cybersecurity — threats and controls disclosure

4 edited+1 added−0 removed12 unchanged
Biggest changeOn an annual basis, the Audit Committee reviews our approach to cybersecurity risk management with the members of our executive management team, including the Chief Executive Officer ("CEO"), Chief Financial Officer ("CFO"), General Counsel, Senior Vice President of Finance and Controller. 36 Management’s Role in Assessing and Managing our Material Risks from Cybersecurity Threats We maintain an Incident Response Plan (the “Plan”) that involves a Security Incident Management Team (“SIMT”), comprised of members of our executive management, who work collaboratively across the Company to assess and respond to any cybersecurity incidents in accordance with the Plan.
Biggest changeManagement’s Role in Assessing and Managing our Material Risks from Cybersecurity Threats We maintain an Incident Response Plan (the “Plan”) that involves a Security Incident Management Team (“SIMT”), comprised of members of our executive management, who work collaboratively across the Company to assess and respond to any cybersecurity incidents in accordance with the Plan.
We did not identify any cybersecurity threats that have materially affected our business, including our business strategy, results of operations or financial condition in the calendar year ended December 31, 2023. However, despite our best efforts, we cannot eliminate all risks from cybersecurity threats or provide assurance that we have not experienced undetected cybersecurity events.
We did not identify any cybersecurity threats that have materially affected our business, including our business strategy, results of operations or financial condition in the calendar year ended December 31, 2024. However, despite our best efforts, we cannot eliminate all risks from cybersecurity threats or provide assurance that we have not experienced undetected cybersecurity events .
We maintain a risk-based approach to identifying and overseeing cybersecurity risks presented by third parties, including vendors, service providers, and other external users of our systems, as well as the systems of third parties that could adversely impact our business in the event of a cybersecurity incident affecting those third-party systems.
We have established and maintain an incident response and recovery plan that addresses the Company’s response to cybersecurity incidents, and such plans are tested and evaluated on a periodic basis. 36 We maintain a risk-based approach to identifying and overseeing cybersecurity risks presented by third parties, including vendors, service providers, and other external users of our systems, as well as the systems of third parties that could adversely impact our business in the event of a cybersecurity incident affecting those third-party systems.
We deploy technical safeguards that are designed to protect our information systems from cybersecurity threats, which are evaluated and improved through vulnerability assessments and cybersecurity threat intelligence. We have established and maintain an incident response and recovery plan that addresses the Company’s response to cybersecurity incidents, and such plans are tested and evaluated on a periodic basis.
We deploy technical safeguards that are designed to protect our information systems from cybersecurity threats, which are evaluated and improved through vulnerability assessments and cybersecurity threat intelligence.
Added
On an annual basis, the Audit Committee reviews our approach to cybersecurity risk management with the members of our executive management team, including the Chief Financial Officer ("CFO"), Chief Legal Officer, Senior Vice President of Finance and Controller.

Item 2. Properties

Properties — owned and leased real estate

2 edited+1 added−0 removed0 unchanged
Biggest changeIn addition to our facilities located in the U.S., we lease 4,101 square feet of office space and 2,110 square feet of warehouse space in Zagreb, Croatia. We believe that our facilities are adequate to meet our needs for the immediate future and that suitable additional space will be available to accommodate any expansion of our operations as needed.
Biggest changeWe believe that our facilities are adequate to meet our needs for the immediate future and that suitable additional space will be available to accommodate any expansion of our operations as needed.
Item 2. Properties Our corporate headquarters are located in Scottsdale, Arizona, where we lease 40,893 square feet of office space. We also lease 9,928 square feet of office space in Orlando, Florida and 60,820 square feet of warehouse space in Avondale, Arizona.
Item 2. Properties Our corporate headquarters are located in Scottsdale, Arizona, where we lease 40,893 square feet of office space. In August 2024, we entered into a new lease agreement for 38,820 square feet of office space in Phoenix, Arizona that will be our new corporate headquarters starting March 2025.
Added
We also lease 60,820 square feet of warehouse space in Avondale, Arizona. In addition to our facilities located in the U.S., we lease 4,101 square feet of office space and 2,110 square feet of warehouse space in Zagreb, Croatia.

Item 3. Legal Proceedings

Legal Proceedings — active lawsuits and investigations

1 edited+1 added−1 removed1 unchanged
Biggest changeWhile it is not feasible to predict the outcome of these matters with certainty, we do not believe that any asserted or unasserted legal claims or proceedings, individually or in the aggregate, will have a material adverse effect on our business, financial condition, results of operations or prospects.
Biggest changeWhile it is not feasible to predict the outcome of these matters with certainty, we do not believe that any asserted or unasserted legal claims or proceedings, individually or in the aggregate, will have a material adverse effect on our business, financial condition, results of operations or prospects. 37 For a discussion of legal and other proceedings in which we are involved, see Note 12 - Commitments and Contingencies in the Notes to Consolidated Financial Statements in Part II, Item 8 of this Report.
Removed
For a discussion of legal and other proceedings in which we are involved, see Note 12 - Commitments and Contingencies in the Notes to Consolidated Financial Statements in Part II, Item 8 of this Report. Item 4. Mine Safety Disclosures Not applicable. PART II
Added
Item 4. Mine Safety Disclosures Not applicable. PART II

Item 5. Market for Registrant's Common Equity

Market for Common Equity — stock, dividends, buybacks

4 edited+5 added−2 removed3 unchanged
Biggest changeThe chart assumes $100 was invested on February 9, 2021, in the Class A Common Stock of SmartRent Inc., the S&P 500 Index, and the Russell 2000 Index, and assumes the reinvestment of any dividends.
Biggest changeThe chart assumes $100 was invested on February 9, 2021 (the date our Class A Common Stock commenced trading on NYSE), in the Class A Common Stock of SmartRent, Inc., the S&P 500 Index, and the Russell 2000 Index, and assumes the reinvestment of any dividends. 38 The comparisons in the graph below are based upon historical data and are not indicative of, nor intended to forecast, future performance of our Class A Common Stock.
Stock Performance Graphs and Cumulative Total Return The following shall not be deemed incorporated by reference into any of our other filings under the Exchange Act or the Securities Act. 37 The graph below compares the cumulative total stockholder return on our Class A Common Stock with the cumulative total return on the Standard & Poor’s 500 Index and the Russell 2000 Index.
Stock Performance Graphs and Cumulative Total Return The following shall not be deemed incorporated by reference into any of our other filings under the Exchange Act or the Securities Act.
Item 5. Market for Registrant’s Common Equity, Related Stockholder Matters and Issuer Purchases of Equity Securities Market Information Our Class A Common Stock is listed on the NYSE under the ticker symbol “SMRT.” FWAA's Class A Common Stock was listed on Nasdaq under the ticker symbol "FWAA" prior to the Business Combination.
Item 5. Market for Registrant’s Common Equity, Related Stockholder Matters and Issuer Purchases of Equity Securities Market Information Our Class A Common Stock is listed on the NYSE under the ticker symbol “SMRT.” Holders of Record As of December 31, 2024, there were 13 stockholders of record of our Class A Common Stock.
Holders of Record As of December 31, 2023, there were 17 stockholders of record of our Class A Common Stock. Dividend Policy We have never declared or paid any dividends on our Class A Common Stock.
The actual number of stockholders is greater than this number of holders of record and includes stockholders who are beneficial owners but whose shares are held in street name by brokers and other nominees. Dividend Policy We have never declared or paid any dividends on our Class A Common Stock.
Removed
The comparisons in the graph below are based upon historical data and are not indicative of, nor intended to forecast, future performance of our Class A Common Stock.
Added
The graph below compares the cumulative total stockholder return on our Class A Common Stock with the cumulative total return on the Standard & Poor’s 500 Index and the Russell 2000 Index.
Removed
Securities Authorized for Issuance Under Equity Compensation Plans The information required by this item with respect to our equity compensation plans is incorporated by reference to our Proxy Statement for the 2024 Annual Meeting of Stockholders. Unregistered Sales of Equity Securities None. Issuer Purchases of Equity Securities None. Item 6. [Reserved]
Added
Unregistered Sales of Equity Securities None. Issuer Purchases of Equity Securities The following table summarizes the share repurchase activity for the three months ended December 31, 2024.
Added
Period Total Number of Shares Purchased (1) Average Price Paid Per Share (2) Total Number of Shares Purchased as Part of Publicly Announced Plans or Programs (1) Approximate Dollar Value of Shares that May Yet Be Purchased Under the Plans or Programs (1) (in thousands, except per share amounts) October 1 - October 31, 2024 2,300 $ 1.72 2,300 $ 22,728 November 1 - November 30, 2024 723 $ 1.59 723 $ 21,587 December 1 - December 31, 2024 - $ - - $ 21,587 Total 3,023 3,023 (1) In March 2024, our board of directors authorized the repurchase of up to $50,000,000 of our Class A common stock.
Added
Repurchases under the program can be made through open market transactions, privately negotiated transactions and other means in compliance with applicable federal securities laws, including through Rule 10b5-1 plans. We have discretion in determining the conditions under which shares may be repurchased from time to time.
Added
The repurchase program does not have an expiration date and may be suspended at any time at our discretion. Refer to Note 7 — Convertible Preferred Stock and Equity in Part I, Item 8, of this Report for additional information related to share repurchases. (2) Average price paid per share includes costs associated with the repurchases. Item 6. [Reserved] 39

Item 7. Management's Discussion & Analysis

Management's Discussion & Analysis (MD&A) — revenue / margin commentary

92 edited+41 added−41 removed73 unchanged
Biggest changeYears ended December 31, 2023 vs 2022 Change 2022 vs 2021 Change 2023 2022 2021 $ % $ % (dollars in thousands) Revenue Hardware $ 137,201 $ 87,372 $ 69,629 $ 49,829 57 % $ 17,743 25 % Professional services 35,473 32,301 22,732 3,172 10 % 9,569 42 % Hosted services 64,164 48,148 18,276 16,016 33 % 29,872 163 % Total revenue 236,838 167,821 110,637 69,017 41 % 57,184 52 % Cost of revenue Hardware 108,780 83,289 70,448 25,491 31 % 12,841 18 % Professional services 55,495 59,547 38,189 (4,052 ) (7 )% 21,358 56 % Hosted services 23,034 23,637 12,073 (603 ) (3 )% 11,564 96 % Total cost of revenue 187,309 166,473 120,710 20,836 13 % 45,763 38 % Operating expense Research and development 28,805 29,422 21,572 (617 ) (2 )% 7,850 36 % Sales and marketing 19,209 20,872 14,017 (1,663 ) (8 )% 6,855 49 % General and administrative 44,674 55,305 25,990 (10,631 ) (19 )% 29,315 113 % Total operating expenses 92,688 105,599 61,579 (12,911 ) (12 )% 44,020 71 % Loss from operations (43,159 ) (104,251 ) (71,652 ) 61,092 (59 )% (32,599 ) 45 % Other income (expense) Interest income (expense), net 8,580 1,946 (249 ) 6,634 341 % 2,195 882 % Other (expense) income, net (116 ) 595 55 (711 ) (119 )% 540 982 % Loss before income taxes (34,695 ) (101,710 ) (71,846 ) 67,015 66 % (29,864 ) (42 )% Income tax (benefit) expense (108 ) (5,388 ) 115 5,280 98 % (5,503 ) (4785 )% Net Loss $ (34,587 ) $ (96,322 ) $ (71,961 ) $ 61,735 64 % $ (24,361 ) (34 )% 45 Comparison of the Years ended December 31, 2023 and 2022 Revenue Years ended December 31, Change Change 2023 2022 $ % (dollars in thousands) Revenue Hardware $ 137,201 $ 87,372 $ 49,829 57 % Professional services 35,473 32,301 3,172 10 % Hosted services 64,164 48,148 16,016 33 % Total revenue $ 236,838 $ 167,821 $ 69,017 41 % Total revenue increased by $69.0 million, or 41%, to $236.8 million for the year ended December 31, 2023, from $167.8 million for the year ended December 31, 2022.
Biggest changeYears ended December 31, 2024 vs 2023 Change 2023 vs 2022 Change 2024 2023 2022 $ % $ % (dollars in thousands) Revenue Hardware $ 82,844 $ 137,201 $ 87,372 $ (54,357 ) (40 )% $ 49,829 57 % Professional services 18,803 35,473 32,301 (16,670 ) (47 )% 3,172 10 % Hosted services 73,238 64,164 48,148 9,074 14 % 16,016 33 % Total revenue 174,885 236,838 167,821 (61,953 ) (26 )% 69,017 41 % Cost of revenue Hardware 58,833 108,780 83,289 (49,947 ) (46 )% 25,491 31 % Professional services 31,160 55,495 59,547 (24,335 ) (44 )% (4,052 ) (7 )% Hosted services 24,554 23,034 23,637 1,520 7 % (603 ) (3 )% Total cost of revenue 114,547 187,309 166,473 (72,762 ) (39 )% 20,836 13 % Operating expense Research and development 29,369 28,805 29,422 564 2 % (617 ) (2 )% Sales and marketing 18,446 19,209 20,872 (763 ) (4 )% (1,663 ) (8 )% General and administrative 54,295 44,674 55,305 9,621 22 % (10,631 ) (19 )% Total operating expenses 102,110 92,688 105,599 9,422 10 % (12,911 ) (12 )% Loss from operations (41,772 ) (43,159 ) (104,251 ) 1,387 3 % 61,092 (59 )% Other income (expense) Interest income, net 8,242 8,580 1,946 (338 ) (4 )% 6,634 (341 )% Other income (expense), net 154 (116 ) 595 270 233 % (711 ) (119 )% Loss before income taxes (33,376 ) (34,695 ) (101,710 ) 1,319 4 % 67,015 66 % Income tax expense (benefit) 267 (108 ) (5,388 ) 375 (347 )% 5,280 (98 )% Net Loss $ (33,643 ) $ (34,587 ) $ (96,322 ) $ 944 3 % $ 61,735 64 % 48 Comparison of the years ended December 31, 2024 and 2023 Revenue Years ended December 31, Change Change 2024 2023 $ % (dollars in thousands) Revenue Hardware $ 82,844 $ 137,201 $ (54,357 ) (40 )% Professional services 18,803 35,473 (16,670 ) (47 )% Hosted services 73,238 64,164 9,074 14 % Total revenue $ 174,885 $ 236,838 $ (61,953 ) (26 )% Total revenue decreased by approximately $61.9 million, or 26%, to $174.9 million for the year ended December 31, 2024, from $236.8 million for the year ended December 31, 2023.
Category Adoption and Market Growth Our future growth depends in part on the continued consumer adoption of hardware and software products which improve the resident experience and the growth of this market.
Category Adoption and Market Growth Our future growth depends in part on the continued consumer adoption of software and hardware products which improve the resident experience and the growth of this market.
Investing Activities For the year ended December 31, 2023, we used $6.0 million of cash for investing activities, resulting primarily from cash paid of $3.6 million for capitalized internal-use software development costs and $2.3 million cash paid for investment in non-affiliate.
For the year ended December 31, 2023, we used $6.0 million of cash for investing activities, resulting primarily from cash paid of $3.6 million for capitalized internal-use software development costs and $2.3 million cash paid for investment in non-affiliate.
Financing Activities For the year ended December 31, 2023, our financing activities used $1.9 million of cash, resulting primarily from $1.7 million used for earnout payments related to the iQuue acquisition. For the year ended December 31, 2022, our financing activities used $2.8 million of cash primarily for taxes paid related to net share settlements of stock-based compensation awards.
For the year ended December 31, 2023, our financing activities used $1.9 million of cash, resulting primarily from $1.7 million used for earnout payments related to the iQuue acquisition. For the year ended December 31, 2022, our financing activities used $2.8 million of cash primarily for taxes paid related to net share settlements of stock-based compensation awards.
We will remain an “emerging growth company” under the JOBS Act until the earliest of (a) the first fiscal year following the fifth anniversary of the initial public offering by FWAA (the "FWAA IPO"), which closed on February 9, 2021, (b) the last date of our fiscal year in which we have total annual gross revenue of at least $1.235 billion, (c) the last date of our fiscal year in which we are deemed to be a “large accelerated filer” under the rules of the SEC with at least $700.0 million of outstanding securities held by non-affiliates or (d) the date on which we have issued more than $1.0 billion in non- convertible debt securities during the previous three years.
We will remain an “emerging growth company” under the JOBS Act until the earliest of (a) the first fiscal year following the fifth anniversary of the initial public offering by FWAA, which closed on February 9, 2021, (b) the last date of our fiscal year in which we have total annual gross revenue of at least $1.235 billion, (c) the last date of our fiscal year in which we are deemed to be a “large accelerated filer” under the rules of the SEC with at least $700.0 million of outstanding securities held by non-affiliates or (d) the date on which we have issued more than $1.0 billion in non- convertible debt securities during the previous three years.
The extended transition period exemptions afforded by our emerging growth company status may make it difficult or impossible to compare our financial results with the financial results of another public company that is either not an emerging growth company 53 or is an emerging growth company that has chosen not to take advantage of this exemption because of the potential differences in accounting standards used.
The extended transition period exemptions afforded by our emerging growth company status may make it difficult or impossible to compare our financial results with the financial results of another public company that is either not an emerging growth company or is an emerging growth company that has chosen not to take advantage of this exemption because of the potential differences in accounting standards used.
All historic non-GAAP financial measures have been reconciled with the most directly comparable GAAP financial measures - these non-GAAP financial measures are not intended to supersede or replace our GAAP results. We define EBITDA as net income or loss computed in accordance with GAAP before interest income/expense, income tax expense and depreciation and amortization.
All historic non-GAAP financial measures have been reconciled with the most directly comparable GAAP financial measures - these non-GAAP financial measures are not intended to supersede or replace our GAAP results. We define EBITDA as net income (loss) computed in accordance with GAAP before interest income, net, income tax expense (benefit) and depreciation and amortization.
We must continually develop and introduce innovative new software services and hardware products, and integrate with third-party products and services, mobile applications and other new offerings. 39 New Products, Features and Functionality We are evolving our business into a more diverse platform with new products, features and functionality that enhance the value of our smart home operating system.
We must continually develop and introduce innovative new software services and hardware products, and integrate with third-party products and services, mobile applications and other new offerings. New Products, Features and Functionality We are evolving our business into a more diverse platform with new products, features and functionality that enhance the value of our smart home operating system.
The GAAP measure most directly comparable to EBITDA and Adjusted EBITDA is net income or loss. 49 EBITDA and Adjusted EBITDA are not used as measures of our liquidity and should not be considered alternatives to net income or loss or any other measure of financial performance presented in accordance with GAAP.
The GAAP measure most directly comparable to EBITDA and Adjusted EBITDA is net income (loss). EBITDA and Adjusted EBITDA are not used as measures of our liquidity and should not be considered alternatives to net income (loss) or any other measure of financial performance presented in accordance with GAAP.
A change in our estimates could have a significant impact on the value of our inventory and our results of operations. Stock-Based Compensation Our stock-based compensation relates to stock options and restricted stock units ("RSUs") granted to our employees and directors. Stock-based awards are measured based on the grant date fair value.
A change in our estimates could have a significant impact on the value of our inventory and our results of operations. 55 Stock-Based Compensation Our stock-based compensation relates to stock options and restricted stock units ("RSUs") granted to our employees and directors. Stock-based awards are measured based on the grant date fair value.
The hardware performance obligation includes the delivery of hardware, and the Hosted Services performance obligation allows the 52 customer use of our software during the contracted-use term. The subscription for the software and certain Hub Devices combine as one performance obligation, and there is no support or ongoing subscription for other device hardware.
The hardware performance obligation includes the delivery of hardware, and the Hosted Services performance obligation allows the customer use of our software during the contracted-use term. The subscription for the software and certain Hub Devices combine as one performance obligation, and there is no support or ongoing subscription for other device hardware.
While these areas represent opportunities for us, they also represent challenges and risks that we must successfully address in order to operate our business. Active Supply Chain Management We continue to experience improvements in the challenges related to the global supply chain.
While these areas represent opportunities for us, they also represent challenges and risks that we must successfully address in order to operate our business. 40 Active Supply Chain Management We continue to experience improvements in the challenges related to the global supply chain.
Payments we receive by credit card, check, or automated clearing house payments, and payment terms are determined by individual contracts and 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.
Payments we receive by check or automated clearing house payments, and payment terms are determined by individual contracts and 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.
Hosted Services Revenue Hosted Services primarily consist of monthly subscription revenue earned from the fees collected from customers to provide access to one or more of our software applications including access controls, asset monitoring and related services. These subscription arrangements have contractual terms ranging from one month to eight years and include recurring fixed plan subscription fees.
Hosted Services Revenue Hosted Services primarily consist of monthly subscription revenue earned from the fees collected from customers to provide access to one or more of our software applications including access controls, asset monitoring and related services. These subscription arrangements have contractual terms ranging from one month to ten years and include recurring fixed plan subscription fees.
For ABR Loans, the interest rate is based upon the highest of (i) the Prime Rate, (ii) the Federal Funds Effective Rate plus 0.50%, or (iii) 3.25%, plus an applicable margin. As of December 31, 2023, the applicable margins for SOFR Loans and ABR Loans under the Senior Revolving Facility were 1.75% and (0.50%), respectively.
For ABR Loans, the interest rate is based upon the highest of (i) the Prime Rate, (ii) the Federal Funds Effective Rate plus 0.50%, or (iii) 3.25%, plus an applicable margin. As of December 31, 2024, the applicable margins for SOFR Loans and ABR Loans under the Senior Revolving Facility were 1.75% and (0.50%), respectively.
We believe the presentation of both GAAP and non-GAAP financial measures provides investors with increased transparency into financial measures used by our management team, and it also improves investors’ understanding of our underlying operating performance and their ability to analyze our ongoing operating trends.
We believe the presentation of both GAAP and non-GAAP financial measures provides investors with increased transparency into financial measures used by our management team and improves investors’ understanding of our underlying operating performance and their ability to analyze our ongoing operating trends.
Our Business Model We generate revenue primarily from sales of smart home systems which enable property owners and property managers to have visibility and control over assets, while providing all-in-one home control offerings for residents.
Our Business Model We generate revenue primarily from sales of smart home systems that enable property owners and property managers to have visibility and control over assets, while providing all-in-one home control offerings for residents.
To the extent that the final outcome of these matters is different than the amounts recorded, such differences will affect the provision for income taxes in the period in which such determination is made. 44 Results of Operations for the Years Ended December 31, 2023, 2022 and 2021 The results of operations presented below should be reviewed together with the consolidated financial statements and notes included elsewhere in this Report.
To the extent that the final outcome of these matters is different than the amounts recorded, such differences will affect the provision for income taxes in the period in which such determination is made. 47 Results of Operations for the Years Ended December 31, 2024, 2023 and 2022 The results of operations presented below should be reviewed together with the consolidated financial statements and notes included elsewhere in this Report.
For comparison of the fiscal years ended December 31, 2022 and 2021, refer to Part II, Item 7 "Management's discussion and analysis of financial condition and results of operations" on Form 10-K for our fiscal year ended December 31, 2022 filed with the SEC on March 8, 2023, under the subheading "Comparison of the years ended December 31, 2022 and 2021".
For comparison of the fiscal years ended December 31, 2023 and 2022, refer to Part II, Item 7 "Management's discussion and analysis of financial condition and results of operations" on Form 10-K for our fiscal year ended December 31, 2023 filed with the SEC on March 5, 2024, under the subheading "Comparison of the years ended December 31, 2023 and 2022".
We utilize the Units Deployed metric to assess the health of our business and measure the trajectory of our growth. We define New Units Deployed as the aggregate number of Hub Devices that were installed (including customer self-installations) during a stated measurement period.
We utilize the Units Deployed metric to assess the health of our business and measure the trajectory of our growth. We define New Units Deployed as the aggregate number of Hub Devices that were installed (including customer self-installations) and resulted in a new active subscription during a stated measurement period.
We utilize the concept of Units Booked to measure estimated near-term resource demand and the resulting approximate range of post-delivery revenue that we will earn and record. Units Booked represent binding orders only. For the years ended December 31, 2023, 2022 and 2021 there were 173,195, 282,512, and 219,901 Units Booked, respectively.
We utilize the concept of Units Booked to measure estimated near-term resource demand and the resulting approximate range of post-delivery revenue that we will earn and record. Units Booked represent binding orders only. For the years ended December 31, 2024, 2023 and 2022 there were 121,670, 173,195 and 282,512 Units Booked, respectively.
We believe our research and development costs will increase in absolute dollars as we increase our investment in product development to broaden the capabilities of our solutions and introduce new products and features – in particular, as we enhance our WiFi offering.
We believe our research and development costs will increase in absolute dollars as we increase our investment in product development to broaden the capabilities of our solutions and introduce new products and features.
Although the correlation has decreased, New Units Deployed is still an indicator of our ability to acquire new customers and expand our relationships with our current customers. As of December 31, 2023, 2022 and 2021, we had an aggregate of 719,691, 547,196, and 339,485 Units Deployed, respectively.
Although the correlation has decreased, New Units Deployed is still an indicator of our ability to acquire new customers and expand our relationships with our current customers. As of December 31, 2024, 2023 and 2022, we had an aggregate of 809,497, 719,691 and 547,196 Units Deployed, respectively.
In August 2021, the Company completed the merger with FWAA, which met the liquidity event vesting condition and triggered the recognition of compensation expense for RSUs for which the time-based vesting condition had been satisfied or partially satisfied.
In August 2021, the Company completed the merger with FWAA, which met the liquidity event vesting condition and triggered the recognition of compensation expense for awards of RSUs, or applicable portions of such awards, for which the time-based vesting condition had been satisfied.
Off-Balance Sheet Arrangements We did not have any off-balance sheet arrangements as of December 31, 2023. Critical Accounting Policies and Estimates We prepare our consolidated financial statements in accordance with GAAP.
Off-Balance Sheet Arrangements We did not have any off-balance sheet arrangements as of December 31, 2024. 54 Critical Accounting Estimates We prepare our consolidated financial statements in accordance with GAAP.
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. 42 We sell certain Hub Devices, which only function with the subscription to our software applications and related hosting services.
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. We sold certain Hub Devices, which only function with the subscription to our software applications and related hosting services ("non-distinct Hub Devices").
Although our revenue is primarily driven by New Units Deployed and the aggregate number of Units Deployed, due to the expansion of our products and services that don't require a Hub Device, the correlation between New Units Deployed and revenue is not as strong as it was historically.
Although our revenue is primarily driven by New Units Deployed and the number of Units Deployed, due to the expansion of our products and services that don't require a Hub Device, and Hub Device upgrades that do not result in net new active subscriptions, the correlation between New Units Deployed and revenue is not as strong as it was historically.
Provision for Income Taxes The income tax benefit on the Consolidated Statement of Operations and Comprehensive Loss is primarily related to the federal, state, and international taxes offset by a change in the valuation allowance. We have established a full valuation allowance for net deferred U.S. federal and state tax assets, including net operating loss carryforwards.
Provision for Income Taxes The income tax expense on the Consolidated Statement of Operations and Comprehensive Loss is primarily related to state minimum and franchise taxes. We have established a full valuation allowance for net deferred U.S. federal and state tax assets, including net operating loss carryforwards.
We expect an increase in cost of hardware revenue in absolute dollars in future periods. In 2019, the U.S. administration imposed significant changes to U.S. trade policy with respect to China. Tariffs have subjected certain SmartRent products manufactured overseas to additional import duties. The amount of the import tariff has changed numerous times based on action by the U.S. administration.
We expect an increase in cost of hardware revenue in absolute dollars in future periods. In 2019, the U.S. administration imposed significant changes to U.S. trade policy with respect to China. Tariffs have subjected certain SmartRent products manufactured overseas to additional import duties.
The decrease resulted from the decrease in personnel related costs, partially offset by the increase in the aggregate number of Units Deployed and the resulting increase in hub amortization and the number of active subscriptions for our software service applications.
The increase resulted from a 12% increase in the aggregate number of Units Deployed and the resulting increase in the number of active subscriptions for our software service applications and an increase in personnel-related costs of $0.8 million, partially offset by a $1.4 million decrease in hub amortization.
As of that date, our customers owned an aggregate of approximately 7.0 million units. This represents approximately 16% of the United States market for institutionally owned multifamily rental units and single-family rental homes. In addition to multifamily residential owners, our customers include some of the leading homebuilders, single-family rental homeowners, and iBuyers in the United States.
This represents approximately 15% of the United States market for institutionally owned multifamily rental units and single-family rental homes. In addition to multifamily residential owners, our customers include some of the leading single-family rental homeowners, homebuilders, and iBuyers in the United States.
Subscription arrangements have contractual terms ranging from one month to eight years; the majority of our recurring revenue contracts range from one month to one year and our average recurring revenue contract term is 1.6 years. Key Factors Affecting Our Performance We believe that our success is dependent on many factors, including those further discussed below.
Subscription arrangements have contractual terms ranging from one month to ten years and the weighted average length of our recurring revenue contracts is 4.4 years. Key Factors Affecting Our Performance We believe that our success is dependent on many factors, including those further discussed below.
Our cash equivalents are comprised primarily of money market funds. To date, our principal sources of liquidity have been the net proceeds received as a result of the Business Combination, and payments collected from sales to our customers.
To date, our principal sources of liquidity have been the net proceeds received as a result of the Business Combination, and payments collected from sales to our customers.
We had 172,495, 207,711, and 167,743 New Units Deployed during the years ended December 31, 2023, 2022 and 2021, respectively. We define Units Shipped as the aggregate number of Hub Devices that have been shipped from warehouse locations during a stated measurement period.
For the years ended December 31, 2024, 2023 and 2022, we had 89,806, 172,495 and 207,711 New Units Deployed, respectively. Units Shipped We define Units Shipped as the aggregate number of Hub Devices that have been shipped to customers during a stated measurement period.
For the years ended December 31, 2023 2022 (dollars in thousands) SmartRent Solutions Hardware Professional Services Hosted Services Total 2023 Hardware Professional Services Hosted Services Total 2022 Smart Communities Solutions Smart Apartments $ 130,894 $ 30,546 $ 49,696 $ 211,135 $ 82,799 $ 30,419 $ 37,605 $ 150,823 Access Control 3,607 3,527 912 8,047 3,440 1,799 316 5,555 Community WiFi 395 996 688 2,078 179 44 257 480 Other 2,305 404 1,534 4,243 954 39 1,537 2,529 Smart Operations Solutions - - 11,334 11,334 - - 8,433 8,433 Total Revenue $ 137,201 $ 35,473 $ 64,164 $ 236,838 $ 87,372 $ 32,301 $ 48,148 $ 167,821 Hardware Revenue We generate revenue from the direct sale to our customers of hardware smart home devices, which devices generally consist of a Hub Device, door-locks, thermostats, sensors, and light switches.
For the years ended December 31, 2024 2023 2022 (dollars in thousands) SmartRent Solutions Hardware Professional Services Hosted Services (1) Total 2024 Hardware Professional Services Hosted Services (1) Total 2023 Hardware Professional Services Hosted Services (1) Total 2022 Smart Communities Solutions Smart Apartments $ 74,754 $ 13,095 $ 57,335 $ 145,184 $ 130,894 $ 30,546 $ 49,696 $ 211,135 $ 82,799 $ 30,419 $ 37,605 $ 150,823 Access Control 3,791 2,378 1,722 7,891 3,607 3,527 912 8,047 3,440 1,799 316 5,555 Community WiFi 287 1,041 701 2,029 395 996 688 2,078 179 44 257 480 Other 4,012 2,289 2,100 8,401 2,305 404 1,534 4,243 954 39 1,537 2,529 Smart Operations Solutions - - 11,380 11,380 - - 11,334 11,334 - - 8,433 8,433 Total Revenue $ 82,844 $ 18,803 $ 73,238 $ 174,885 $ 137,201 $ 35,473 $ 64,164 $ 236,838 $ 87,372 $ 32,301 $ 48,148 $ 167,821 (1) For the years ended December 31, 2024, 2023, and 2022, Hosted services revenue for our Smart Apartments solution included hub amortization revenue of $21,600, $23,097, and $20,360, respectively. 45 Hardware Revenue We generate revenue from the direct sale to our customers of hardware smart home devices, which devices generally consist of a Hub Device, door-locks, thermostats, sensors, and light switches.
The increase from both components of Hosted Services revenue resulted primarily from a 32% increase in the aggregate number of Units Deployed, primarily of our Smart Apartment solution, from 547,196 units at December 31, 2022 to 719,691 units at December 31, 2023 and an increase in SaaS ARPU of 2% to $5.40 for the year ended December 31, 2023 from $5.32 for the year ended December 31, 2022.
The increase of Hosted Services revenue resulted primarily from a 12% increase in the aggregate number of Units Deployed, primarily of our Smart Apartment solution, from 719,691 units at December 31, 2023 to 809,497 units at December 31, 2024 and an increase in SaaS ARPU of 4% to $5.63 for the year ended December 31, 2024 from $5.40 for the year ended December 31, 2023.
The majority of our recurring revenue contracts range from one month to one year and our average recurring revenue contract term is 1.6 years. Our arrangements do not provide the customer with the right to take possession of our software at any time. Customers are granted continuous access to the services over the contractual period.
The weighted average length of our recurring revenue contracts is 4.4 years. Our arrangements do not provide the customer with the right to take possession of our software at any time. Customers are granted continuous access to the services over the contractual period.
We define Adjusted EBITDA as EBITDA before the following items: stock-based compensation expense, non-employee warrant expense, non-recurring warranty provisions, asset impairment, loss on extinguishment of debt, non-recurring expenses in connection with acquisitions, severance charges, and other expenses caused by non-recurring or unusual events that are not indicative of our ongoing business.
We define Adjusted EBITDA as EBITDA before expenses related to non-recurring legal matters, stock-based compensation, impairment of investment in a non-affiliate, non-employee warrant expense, non-recurring warranty provisions, asset impairment, compensation expense in connection with acquisitions, other acquisition expenses, and other expenses caused by non-recurring, or unusual, events that are not indicative of our ongoing business.
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.
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. We do not expect to deploy any more non-distinct Hub Devices.
Recent Accounting Pronouncements See Note 2, “Significant Accounting Policies” - Recent Accounting
Recent Accounting Pronouncements See Note 2, “Significant Accounting Policies” - Recent Accounting Guidance for more information.
We had 226,722, 200,169, and 192,867 Units shipped during the years ended December 31, 2023, 2022 and 2021, respectively. Units Booked We define Units Booked as the aggregate number of Hub Device units associated with binding orders executed during a stated measurement period.
For the years ended December 31, 2024, 2023 and 2022, we had 169,476, 226,722 and 200,169 Units Shipped, respectively. Units Booked We define Units Booked as the aggregate number of Hub Device units subject to binding orders executed during a stated measurement period that will result in a New Unit Deployed.
Key Operating and Financial Metrics We regularly monitor a number of operating and financial metrics, which include certain non-GAAP financial measures in order to evaluate our operating performance, identify trends affecting our business, formulate business plans, measure our progress and make strategic decisions. Non-GAAP financial measures may not provide accurate predictions of future GAAP financial results.
Key Metrics We regularly monitor a number of operating metrics in order to evaluate our operating performance, identify trends affecting our business, formulate business plans, measure our progress and make strategic decisions.
Factors that could cause or contribute to such differences include those identified below and those discussed in the section titled “Risk Factors” and other parts of this Report.
Factors that could cause or contribute to such differences include those identified below and those discussed in the section titled “Risk Factors” and other parts of this Report. Our historical results are not necessarily indicative of the results that may be expected for any period in the future.
See “Non-GAAP Financial Measures” for additional information and reconciliations of these measures. 41 Components of Results of Operations Revenue We generate revenue primarily from sales of systems that consist of hardware devices, professional installation services and Hosted Services enabling property owners and property managers to have visibility and control over assets, while providing all-in-one home control offerings for residents.
Customer Net Revenue Retention was 111% as of December 31, 2024. 44 Components of Results of Operations Revenue We generate revenue primarily from sales of systems that consist of hardware devices, professional installation services and Hosted Services enabling property owners and property managers to have visibility and control over assets, while providing all-in-one home control offerings for residents.
Hosted Services Cost of Hosted Services revenue consists primarily of the amortization of the direct costs of certain Hub Devices consistent with the revenue recognition period noted above in “Hosted Services Revenue” and infrastructure costs associated with providing our software applications together with the indirect cost of customer care and support over the life of the service arrangement.
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 installation of our products, and indirect costs that are also primarily personnel-related expenses in connection with training of and ongoing support for customers and residents. 46 Hosted Services Cost of Hosted Services revenue consists primarily of the amortization of the direct costs of certain Hub Devices consistent with the revenue recognition period noted above in “Hosted Services Revenue” and infrastructure costs associated with providing our software applications together with the indirect cost of customer care and support over the life of the service arrangement.
Net Revenue Retention includes any reductions in revenue caused by cancellations or downgrades, offset by additions to revenue from price increases on existing products, additions of new products at existing properties and subscription upgrades.
Property Net Revenue Retention includes additions to revenue from price increases on existing products, additions of new products at existing properties and transfers of ownership, offset by any reductions in revenue caused by cancellations or downgrades. Property Net Revenue Retention was 101% as of December 31, 2024 compared to 105% as of December 31, 2023.
This increase in hardware revenue was driven by our Smart Communities Solutions and resulted from a 13% increase in units shipped to 226,722 for the year ended December 31, 2023 from 200,169 for the year ended December 31, 2022, and an ARPU increase of 39% to $605.15 for the 2023 period from $436.49 for the 2022 period.
This decrease in hardware revenue was driven by a decrease in revenue related to our Smart Apartments Solutions and resulted from a 25% decrease in Units Shipped to 169,476 for the year ended December 31, 2024 from 226,722 for the year ended December 31, 2023, and a Hardware ARPU decrease of 19% to $489 for the 2024 period from $605 for the 2023 period.
We define SaaS ARPU as total SaaS revenue during a given period divided by the average aggregate Units Deployed in the same period. For the years ended December 31, 2023, 2022 and 2021, SaaS ARPU was $5.40, $5.32 and $2.76, respectively.
Under the previous definition, Professional Services ARPU was $209, $206 and $156 for the years ended December 31, 2024, 2023 and 2022, respectively. We define SaaS ARPU as total SaaS Revenue during a given period divided by the average aggregate Units Deployed in the same period divided by the number of months in the period.
We believe that we have established an adequate allowance for our uncertain tax positions, although we can provide no assurance that the final outcome of these matters will not be materially different.
We expect to maintain this valuation allowance until it becomes more likely than not that the benefit of our federal and state deferred tax assets will be realized. We believe that we have established an adequate allowance for our uncertain tax positions, although we can provide no assurance that the final outcome of these matters will not be materially different.
Repurchases under the program may be made from time to time through open market purchases or through privately negotiated transactions subject to market conditions, applicable legal requirements and other relevant factors. The repurchase program does not obligate us to acquire any particular amount of our Class A common stock and may be suspended at any time at our discretion.
Stock Repurchase Program In March 2024, the Board authorized a stock repurchase program pursuant to which we may repurchase up to $50 million of our Class A common stock. Repurchases under the program may be made from time to time through open market purchases or through privately negotiated transactions subject to market conditions, applicable legal requirements and other relevant factors.
Hardware cost of revenue increased by $25.5 million, or 31%, to $108.8 million for the year ended December 31, 2023, from $83.3 million for the year ended December 31, 2022.
Hardware cost of revenue decreased by $50.0 million, or 46%, to $58.8 million for the year ended December 31, 2024, from $108.8 million for the year ended December 31, 2023.
The timing and number of shares repurchased will depend on a variety of factors, including the stock price, business and market conditions, corporate and regulatory requirements, alternative investment opportunities, acquisition opportunities, and other factors. To date, we have not made any repurchases under our stock repurchase program, and $50 million remains available for future repurchases.
The timing and number of shares repurchased will depend on a variety of factors, including the stock price, business and market conditions, corporate and regulatory requirements, alternative investment opportunities, acquisition opportunities, and other factors.
Cash Flow Summary - Years Ended December 31, 2023, 2022 and 2021 The following table summarizes our cash flows for the periods presented: Years ended December 31, 2023 2022 2021 (dollars in thousands) Net cash provided by (used in) Operating activities $ 5,981 $ (77,833 ) $ (70,376 ) Investing activities (6,023 ) (133,993 ) (9,373 ) Financing activities (1,905 ) (2,801 ) 473,926 Operating Activities For the year ended December 31, 2023, our operating activities resulted in net proceeds of $6.0 million in cash resulting primarily from $27.8 million provided by non-cash expenses and $12.8 million provided by changes in our operating assets and liabilities, partially offset by our net loss of $34.6 million.
Years ended December 31, 2024 2023 2022 (dollars in thousands) Net cash (used in) provided by Operating activities $ (32,913 ) $ 5,981 $ (77,833 ) Investing activities (7,599 ) (6,023 ) (133,993 ) Financing activities (32,962 ) (1,905 ) (2,801 ) 53 Operating Activities For the year ended December 31, 2024, our operating activities used $32.9 million in cash resulting primarily from our net loss of $33.6 million and $28.4 million used in changes in our operating assets and liabilities, partially offset by approximately $29.1 million provided by non-cash expenses.
Income Taxes Years ended December 31, Change Change 2023 2022 $ % (dollars in thousands) Loss before income taxes $ (34,695 ) $ (101,710 ) $ 67,015 66 % Income tax benefit (108 ) (5,388 ) 5,280 98 % We provided a full valuation allowance on our net U.S. federal and state deferred tax assets at December 31, 2023, and December 31, 2022.
Income Taxes Years ended December 31, Change Change 2024 2023 $ % (dollars in thousands) Loss before income taxes $ (33,376 ) $ (34,695 ) $ 1,319 4 % Income tax expense (benefit) 267 (108 ) 375 347 % We provided a full valuation allowance on our net U.S. federal and state deferred tax assets as of December 31, 2024, and December 31, 2023.
Through a Hub Device, we enable the integration of our platform with third-party smart devices, our own hardware devices and other technology interfaces. We use an open-architecture, brand-agnostic approach that allows owners, operators, and residents to manage their smart home systems through a single connected interface.
We use an open-architecture, brand-agnostic approach that allows owners, operators, and residents to manage their smart home systems through a single connected interface.
We monitor our ARR to assess the general health and trajectory of our Hosted Services business. Our ARR was approximately $46.2 million, $32.3 million, and $10.6 million as of December 31, 2023, 2022 and 2021 respectively.
We believe that ARR growth demonstrates our ability to acquire new customers and to maintain and expand our relationships with existing customers. More specifically, we monitor our ARR to assess the general health and trajectory of our Hosted Services business. As of December 31, 2024, 2023 and 2022, ARR was approximately $54.4 million, $46.2 million and $32.3 million, respectively.
Of the $64.1 million revenue in 2023, $23.0 million is related to hub amortization and $41.1 million is related to SaaS revenue. Revenue increased from hub amortization and SaaS by $2.7 million and $13.3 million, respectively, from the year ended December 31, 2022 to the year ended December 31, 2023.
Of the $73.2 million revenue in 2024, $51.6 million is related to SaaS Revenue and $21.6 million is related to hub amortization. Revenue from SaaS increased by $10.5 million and revenue from hub amortization decreased by $1.5 million from the year ended December 31, 2023 to the year ended December 31, 2024.
Our solutions include smart apartments and homes, access control for buildings, common areas, and rental units, asset protection and monitoring, parking management, self-guided tours, and community and resident WiFi. We also have a professional services team that provides customers with training, installation, and support services.
Our Smart Community solutions include software and devices that power (i) smart apartments and homes, (ii) access control for buildings, common areas, and rental units, (iii) community and resident WiFi, and other solutions such as asset protection and monitoring, parking management and self-guided tours.
Investing in Research and Development Our performance is significantly dependent on the investments we make in research and development, including our ability to attract and retain highly skilled research and development personnel.
The incremental improvements in the global supply chain are evidenced by our reduction of backlogged Units Deployed for Access Control and made-to-order locks. Investing in Research and Development Our performance is significantly dependent on the investments we make in research and development, including our ability to attract and retain highly skilled research and development personnel.
Sales and marketing expenses decreased by $1.7 million, or 8%, to $19.2 million for the year ended December 31, 2023 from $20.9 million for the year ended December 31, 2022, resulting primarily from a decrease of approximately $0.8 million in stock-based compensation, and $0.5 million in conference and trade show expenses.
Sales and marketing expenses decreased by $0.8 million, or 4%, to $18.4 million for the year ended December 31, 2024 from $19.2 million for the year ended December 31, 2023, resulting primarily from a decrease of approximately $1.2 million in personnel-related expenses, partially offset by an increase of $0.3 million in business applications and software.
For the years ended December 31, 2023 2022 2021 (dollars in thousands) Net loss $ (34,587 ) $ (96,322 ) $ (71,961 ) Interest (income) expense, net (8,580 ) (1,946 ) 249 Income tax (benefit) expense (108 ) (5,388 ) 115 Depreciation and amortization 5,533 4,262 463 EBITDA (37,742 ) (99,394 ) (71,134 ) Stock-based compensation 13,271 13,716 8,131 Non-employee warrant expense (193 ) 289 931 Compensation expense in connection with acquisitions 2,010 5,042 - Asset impairment - 4,441 - Severance charges 1,070 - - Other acquisition expenses 651 1,197 - Loss on extinguishment of debt - - 27 Non-recurring warranty provision 1,746 - 6,430 Adjusted EBITDA $ (19,187 ) $ (74,709 ) $ (55,615 ) Liquidity and Capital Resources Sources of Liquidity As of December 31, 2023, we had cash and cash equivalents of $215.2 million, which were held for working capital and general corporate purposes.
For the years ended December 31, 2024 2023 2022 (dollars in thousands) Net loss $ (33,643 ) $ (34,587 ) $ (96,322 ) Interest income, net (8,242 ) (8,580 ) (1,946 ) Income tax expense (benefit) 267 (108 ) (5,388 ) Depreciation and amortization 6,495 5,533 4,262 EBITDA (35,123 ) (37,742 ) (99,394 ) Legal matter (1) 8,325 - Stock-based compensation 10,766 13,271 13,716 Impairment of investment in non-affiliate 2,250 - - Non-employee warrant expense - (193 ) 289 Non-recurring warranty provision 291 1,746 - Asset impairment - - 4,441 Compensation expense in connection with acquisitions - 2,010 5,042 Other acquisition expenses (725 ) 651 1,197 Other non-operating expenses (2) 4,334 1,070 - Adjusted EBITDA $ (9,882 ) $ (19,187 ) $ (74,709 ) (1) Refer to Note 12 "Commitments and Contingencies".
We calculate Units Booked SaaS ARPU as the first year ARR for binding orders executed during the stated measurement period divided by the total Units Booked in the same period. We don’t expect to deploy any more non-distinct Hub Devices, thus, the revenue contribution from hub amortization should decrease in future periods until the non-distinct Hub Devices are fully amortized.
We don’t expect to deploy any more non-distinct Hub Devices, thus, the revenue contribution from hub amortization should continue to decrease in future periods until the non-distinct Hub Devices are fully amortized.
Non-GAAP Financial Measures To supplement the consolidated financial statements, which are prepared and presented in accordance with GAAP, we present EBITDA and Adjusted EBITDA, described below, as non-GAAP measures.
We do not currently expect the Inflation Reduction Act to have a material impact on our financial results, including on our annual estimated effective tax rate. 51 Non-GAAP Financial Measures To supplement the consolidated financial statements, which are prepared and presented in accordance with GAAP, we present EBITDA and Adjusted EBITDA, described below, as non-GAAP measures.
Currently, the majority of our revenue is generated from the direct sale to our customers of hardware smart home devices, which devices generally consist of a Hub Device, door-locks, thermostats, sensors, and light switches.
Our revenue is generated from: (1) the direct sale to our customers of hosted services from monthly subscription fees collected from customers to provide access Hosted Services including access controls, asset monitoring, WiFi, and related services; (2) the sale and delivery of smart home devices, which generally consist of a Hub Device, door-locks, thermostats, sensors, and light switches ; and (3) installation and implementation of smart home devices that enable our Hosted Services.
We believe our research and development costs will increase in absolute dollars as we increase our investment in product development to broaden the capabilities of our solutions and introduce new products and features - in particular as we enhance our WiFi offering. 43 Sales and Marketing Expenses Our sales and marketing expenses consist of costs directly associated with our sales and marketing activities, which primarily include personnel-related costs, sales commissions, marketing programs, trade shows, and promotional materials.
We believe our research and development costs will increase in absolute dollars as we increase our investment in product development to enhance the capabilities of our solutions and introduce new products and features.
As of December 31, 2023, we had U.S. federal net operating losses of $3.7 million that begin to expire in 2032 and $200.9 million which will be carried forward indefinitely. As of December 31, 2023, we had $193.4 million of state net operating loss carryforwards that expire on varying dates.
As of December 31, 2024, we had $222.9 million of U.S. federal and $215.4 million of state gross net operating loss carryforwards available to reduce future taxable income, which will be carried forward indefinitely for U.S. federal tax purposes and will expire between 2032 and 2044 for state tax purposes.
For the year ended December 31, 2021, our operating activities used $70.4 million in cash resulting primarily from our net loss of $72.0 million, which was partially offset by $18.0 million of non-cash expenses consisting primarily of $8.1 million for stock-based compensation and $7.6 million for the provision for warranty expenses.
For the year ended December 31, 2023, our operating activities resulted in net proceeds of $6.0 million in cash resulting primarily from $27.8 million provided by non-cash expenses and $12.8 million provided by changes in our operating assets and liabilities, partially offset by our net loss of $34.6 million.
Additionally, business insurance and third-party consulting expenses decreased by $2.3 million and $2.0 million, respectively. 48 Other Income Years ended December 31, Change Change 2023 2022 $ % (dollars in thousands) Interest income, net $ 8,580 $ 1,946 $ 6,634 341 % Other (expense) income, net (116 ) 595 (711 ) (119 )% Interest income, net increased by $6.6 million to approximately $8.5 million for the year ended December 31, 2023, from $1.9 million for the year ended December 31, 2022.
Other Income Years ended December 31, Change Change 2024 2023 $ % (dollars in thousands) Interest income, net $ 8,242 $ 8,580 $ (338 ) (4 )% Other income (expense), net 154 (116 ) 270 233 % Interest income, net decreased by approximately $0.4 million to $8.2 million for the year ended December 31, 2024, from $8.6 million for the year ended December 31, 2023.
Professional services cost of revenue decreased by $4.1 million, or 7%, to $55.5 million for the year ended December 31, 2023, from $59.6 million for the year ended December 31, 2022. The decrease in professional services cost of revenue is primarily attributable to a decrease in personnel-related costs, and related travel, of $7.1 million.
Professional services cost of revenue decreased by $24.3 million, or 44%, to $31.2 million for the year ended December 31, 2024, from $55.5 million for the year ended December 31, 2023.
Approximately $2.9 million of the 2023 increase in SaaS was contributed from our Smart Operations Solutions. Additionally, our Hosted Services growth is driven by our ability to retain our customers and minimize Customer Churn.
Our Hosted Services growth is driven by our ability to retain our customers and minimize Customer Churn.
New Units Deployed decreased by 17% to 172,495 units for the year ended December 31, 2023 from 207,711 units for the year ended December 31, 2022. 46 Hosted Services revenue increased by $16.0 million, or 33%, to approximately $64.1 million for the year ended December 31, 2023, from $48.1 million for the year ended December 31, 2022.
Hosted Services cost of revenue increased by approximately $1.6 million, or 7%, to $24.6 million for the year ended December 31, 2024, from $23.0 million for the year ended December 31, 2023.
The increase in cost of revenue resulted primarily from a 13% increase in units shipped of our Smart Apartment solution hardware devices and the shipment of distinct Hub Devices in the current period.
The decrease in cost of revenue resulted primarily from a 48% decrease in New Units Deployed, a favorable product mix of our hardware devices (more heavily weighted to Alloy SmartHome hardware), and a 25% decrease in Units Shipped of our Smart Apartment solution hardware devices.
Our suite of products and services, which includes both smart building hardware and cloud-based SaaS solutions, provides seamless visibility and control over real estate assets. Our platform can lower operating costs, increase revenues, mitigate operational friction and protect assets for owners and operators, while providing a differentiated, elevated living experience for residents.
Our platform can lower operating costs, increase revenues, mitigate operational friction and protect assets for owners and operators, while providing a differentiated, elevated living experience for residents. Through a Hub Device, we enable the integration of our platform with third-party smart devices, our own hardware devices and other technology interfaces.
Years ended December 31, Change 2023 2022 % Hardware Hardware units shipped 226,722 200,169 13 % Hardware ARPU $ 605.15 $ 436.49 39 % Professional Services New units deployed 172,495 207,711 (17 )% Professional services ARPU $ 205.65 $ 155.51 32 % Hosted Services Units deployed 719,691 547,196 32 % Average aggregate units deployed 633,444 443,341 43 % Non-distinct hub amortization ARPU $ 3.04 $ 3.83 (21 )% SaaS ARPU $ 5.40 $ 5.32 2 % Bookings Units booked 173,195 282,512 (39 )% Bookings (in thousands) $ 158,453 $ 242,957 (35 )% Units booked SaaS ARPU $ 8.32 $ 4.60 81 % Hardware revenue increased by $49.8 million, or 57%, to approximately $137.2 million for the year ended December 31, 2023, from $87.4 million for the year ended December 31, 2022.
Years ended December 31, 2024 2023 Change % Hardware Hardware Units Shipped 169,476 226,722 (25 )% Hardware ARPU $ 489 $ 605 (19 )% Professional Services New Units Deployed 89,806 172,495 (48 )% Professional services ARPU $ 344 $ 255 35 % Hosted Services Units Deployed 809,497 719,691 12 % Average aggregate units deployed 764,594 633,444 21 % SaaS ARPU $ 5.63 $ 5.40 4 % Bookings Units Booked 121,670 173,195 (30 )% Bookings (in thousands) $ 133,836 $ 158,453 (16 )% Units Booked SaaS ARPU $ 6.44 $ 8.32 (23 )% Hardware revenue decreased by $54.4 million, or 40%, to $82.8 million for the year ended December 31, 2024, from $137.2 million for the year ended December 31, 2023.
We calculate non-distinct hub amortization ARPU as total revenue contribution from non-distinct hub amortization during a given period divided by the average aggregate Units Deployed in the same period. Bookings represent the contract value of hardware, professional services, and the first year of ARR for binding orders executed during a stated measurement period.
We define Units Booked SaaS ARPU as the first year ARR for binding orders with Units Booked executed during the stated measurement period divided by the total Units Booked in the same period divided by the number of months in the period.
We define Hardware ARPU as total hardware revenue during a given period divided by the total units shipped during the same period. For the years ended December 31, 2023, 2022 and 2021, Hardware ARPU was $605.15, $436.49 and $361.02, respectively.
Hardware Average Revenue per Unit ("ARPU"), Professional Services ARPU, SaaS ARPU, and Units Booked SaaS ARPU We define Hardware ARPU as total hardware revenue during a given period divided by the total Units Shipped during the same period.
We continue to monitor the change in tariffs. If tariffs are increased, such actions may increase our cost of hardware revenue and reduce our hardware revenue margins in the future.
The amount of the import tariff has changed numerous times based on action by the U.S. administration and new presidential administration recently announced additional tariffs on imports from Canada, Mexico and China. Such actions may increase our cost of hardware revenue and reduce our hardware revenue margins in the future. We continue to monitor the change in tariffs.
Operating Expenses Years ended December 31, Change Change 2023 2022 $ % (dollars in thousands) Research and development $ 28,805 $ 29,422 $ (617 ) (2 )% Sales and marketing 19,209 20,872 (1,663 ) (8 )% General and administrative 44,674 55,305 (10,631 ) (19 )% Research and development expenses decreased by $0.6 million, or 2%, to $28.8 million for the year ended December 31, 2023, from $29.4 million for the year ended December 31, 2022, resulting primarily from a decrease of approximately $0.5 million of personnel-related expenses recorded during the year ended December 31, 2023.
Additionally, Hosted Services attributable to hub amortization, which has a lower margin than our SaaS products, continues to represent a smaller portion of our Hosted Services cost of revenue. 50 Operating Expenses Years ended December 31, Change Change 2024 2023 $ % (dollars in thousands) Research and development $ 29,369 $ 28,805 $ 564 2 % Sales and marketing 18,446 19,209 (763 ) (4 )% General and administrative 54,295 44,674 9,621 22 % Research and development expenses increased by $0.6 million, or 2%, to $29.4 million for the year ended December 31, 2024, from $28.8 million for the year ended December 31, 2023, primarily related to an increase of $0.3 million in business applications and software and $0.2 million in personnel-related expenses.
This was partially offset by an increase of approximately $3.8 million resulting from an increase in third-party direct labor costs. This year we have invested in technology initiatives to allow our teams to be more efficient and furthered our collaboration with third-party partners to augment our professional services.
Additionally, we have invested in technology initiatives to allow our teams to be more efficient and furthered our collaboration with third-party partners to augment our professional services, resulting in improved professional services gross margin compared to the previous period. We believe we will continue to improve efficiency in future periods.
We calculate our Net Revenue Retention as of the end of a given period by dividing monthly recurring revenue ("MRR") at the end of the period (excluding MRR from properties deployed during the current period) by MRR for the same period in the prior year.
Customer Net Revenue Retention We define Customer Net Revenue Retention as SaaS Revenue at the end of the current period related to customers which had SaaS Revenue at the end of the same period in the prior year, divided by SaaS Revenue at the end of the same period in the prior year for those same customers.

… 94 more changes not shown on this page.

Item 7A. Quantitative and Qualitative Disclosures About Market Risk

Market Risk — interest-rate, FX, commodity exposure

4 edited+1 added−0 removed4 unchanged
Biggest changeThe effect of a hypothetical 10% change in foreign currency exchange rates applicable to our business would not have a material impact on our historical consolidated financial statements. To date, we have not engaged in any hedging strategies. As our international operations grow, we will continue to reassess our approach to manage our risk relating to fluctuations in currency rates.
Biggest changeThe effect of a hypothetical 10% change in foreign currency exchange rates applicable to our business would not have a material impact on our historical consolidated financial statements. To date, we have not engaged in any hedging strategies.
A hypothetical 10% change in interest rates would increase our annual interest income by $21.6 million, or decrease our annual interest income by $8.5 million, based on our cash position as of December 31, 2023. Foreign Currency Exchange Rate Risk Our results of operations and cash flows are subject to fluctuations due to changes in foreign currency exchange rates.
A hypothetical 10% change in interest rates would increase our annual interest income by $14.3 million, or decrease our annual interest income by $8.2 million, based on our cash position as of December 31, 2024. Foreign Currency Exchange Rate Risk Our results of operations and cash flows are subject to fluctuations due to changes in foreign currency exchange rates.
Nonetheless, if our costs were to become subject to significant inflationary pressures, we may not be able to fully offset such higher costs. Our inability or failure to do so could harm our business, results of operations or financial condition.
Nonetheless, if our costs were to become subject to significant inflationary pressures, we may not be able to fully offset such higher costs.
Interest Rate Fluctuation Risk As of December 31, 2023, we had cash, cash equivalents, and restricted cash of approximately $215.7 million, which consisted primarily of institutional money market funds, which carries a degree of interest rate risk.
Our inability or failure to do so could harm our business, results of operations or financial condition. 56 Interest Rate Fluctuation Risk As of December 31, 2024, we had cash, cash equivalents, and restricted cash of approximately $142.5 million, which consisted primarily of institutional money market funds, which carries a degree of interest rate risk.
Added
As our international operations grow, we will continue to reassess our approach to manage our risk relating to fluctuations in currency rates. 57

Other SMRT 10-K year-over-year comparisons