SmartRent Announces CEO Transition Plan

Rhea-AI Summary

SmartRent (NYSE: SMRT) announced a CEO transition plan, with Lucas Haldeman stepping down as CEO and resigning from the Board of Directors. John Dorman has been appointed Chairman of the Board, and a Management Committee of current executives will guide the company during the transition. The Board has initiated a search for a new CEO.

Preliminary Q2 2024 results show Total Revenue of $48.5 million, a 9% decrease year-over-year, and slightly below guidance. Net Loss is expected to be $4.6 million, a 55% improvement. Adjusted EBITDA is projected at $0.9 million, above guidance. SaaS Revenue is expected to reach $12.8 million, a 32% increase.

Due to the CEO transition, scaling back of the channel partner program, and market headwinds, SmartRent has suspended its full-year 2024 outlook. The company will discuss Q2 2024 results in a conference call on August 7, 2024.

Positive

• Net Loss expected to improve by 55% year-over-year in Q2 2024
• Adjusted EBITDA projected at $0.9 million, above guidance range
• SaaS Revenue expected to increase by 32% year-over-year in Q2 2024
• Board working with Morgan Stanley & Co. for financial review focusing on shareholder value
• Recruiting new head of sales to reinvigorate growth strategy

Negative

• CEO Lucas Haldeman stepped down and resigned from the Board
• Q2 2024 Total Revenue expected to decrease by 9% year-over-year
• Q2 2024 Total Revenue slightly below guidance range
• Full-year 2024 outlook suspended due to CEO transition and market headwinds
• Scaling back of channel partner program

Insights

Corporate Governance Expert

The sudden departure of SmartRent's CEO and founder, Lucas Haldeman, signals a significant shift in the company's leadership strategy. This transition, coupled with the formation of a Management Committee and an Operating Committee, suggests a comprehensive restructuring of the company's governance structure.

The appointment of John Dorman as Chairman and the initiation of a CEO search indicate that the board is seeking to pivot the company's direction. This move is often seen when a company is looking to transition from a founder-led growth phase to a more mature operational stage. However, the lack of an immediate successor raises questions about succession planning and could potentially lead to short-term uncertainty.

The involvement of Morgan Stanley in a financial review focusing on shareholder value is particularly noteworthy. This could signal potential strategic alternatives being considered, such as a sale, merger, or significant restructuring. The recruitment of a new head of sales further emphasizes the company's focus on growth and market penetration.

Overall, these governance changes suggest that SmartRent is at a critical juncture. While the transition may bring fresh perspectives and potentially accelerate growth, it also introduces execution risks and potential strategic shifts that investors should monitor closely.

Financial Analyst

SmartRent's preliminary Q2 2024 results and the suspension of full-year guidance paint a complex financial picture. The $48.5 million in Total Revenue represents a 9% year-over-year decrease and falls short of the company's guidance, indicating challenges in revenue growth. However, the expected Net Loss of $4.6 million shows a substantial 55% improvement year-over-year, suggesting progress in cost management.

The projected Adjusted EBITDA of $0.9 million, exceeding the guidance range, is a positive sign of operational efficiency. The 32% growth in SaaS Revenue to $12.8 million is particularly encouraging, as it represents a high-margin, recurring revenue stream.

The suspension of full-year 2024 guidance is concerning and reflects significant uncertainty. This decision, coupled with mentions of market headwinds and customer capital spending delays, suggests potential volatility in near-term financial performance.

Key points for investors to consider:

• The shift in revenue mix towards higher-margin SaaS offerings could improve profitability over time.
• The scaling back of the channel partner program may impact growth rates but could lead to improved margins.
• The ongoing financial review with Morgan Stanley could result in strategic changes that significantly impact the company's financial outlook.

Investors should closely monitor the upcoming Q2 earnings call for more detailed insights into the company's financial health and strategic direction.

Tech Industry Analyst

SmartRent's position as a market leader in smart home technology for the rental housing industry remains strong, despite the leadership transition and market challenges. The company's suite of products that streamline operations, reduce costs and enhance resident experience continues to be a significant competitive advantage.

The mention of a large addressable market and significant growth potential within the existing customer base, which manages over seven million rental units, underscores the company's expansion opportunities. However, the scaling back of the channel partner program may impact the pace of this growth in the short term.

The focus on recruiting a new head of sales to reinvigorate the sales strategy is crucial. In the competitive smart home technology market, an effective sales approach is vital for capitalizing on the company's technological strengths and expanding market share.

Key technological considerations:

• The retention of Co-Founder and CTO Isaiah DeRose-Wilson on the Management Committee ensures continuity in product development and innovation.
• The company's ability to adapt its product offerings to address the mentioned market headwinds will be critical for maintaining its market position.
• The potential for integrating emerging technologies like AI and IoT to enhance SmartRent's value proposition should be closely watched.

While the leadership transition introduces some uncertainty, SmartRent's strong product foundation and market position provide a solid base for future growth. The company's ability to innovate and adapt its technology strategy during this transition will be important for long-term success in the dynamic smart home technology sector.

Lucas Haldeman Steps Down as CEO and Resigns from Board

Board of Directors Forms Operating Committee to Oversee Company’s Operations

Management Committee of Current SmartRent Executives to Guide Company on Interim Basis

Company Suspends Full-Year 2024 Outlook

SCOTTSDALE, Ariz.--(BUSINESS WIRE)-- SmartRent, Inc. (NYSE: SMRT) (“SmartRent” or the “Company”), a leading provider of smart communities and smart operations solutions for the rental housing industry, today announced a CEO transition plan under which Lucas Haldeman has stepped down from his position as Chief Executive Officer and resigned from the Board of Directors, effective July 29, 2024. John Dorman, the Board’s lead independent director, has been appointed Chairman of the Board, and the Board has formed a Management Committee of current executives to guide the Company through the transition period. The Board has initiated a search to identify the next CEO of SmartRent and is working with a leading executive search firm to assist in the process of identifying and evaluating candidates.

“SmartRent is a market leader with an outstanding suite of products, technology and services that provide enormous value to our customers,” said Dorman. “The Company successfully developed and deployed a range of products and services that customers love and depend on because of the way they streamline operations, reduce costs, protect assets, and provide convenience and an overall improved resident experience.”

Dorman continued, “SmartRent has a leading market position in a large addressable market, proven product quality, deep customer loyalty, and significant growth potential in penetrating our existing customer base, which owns and/or manages over seven million rental units. The Board is working with the talented team at the Company to capitalize on these unique strengths and create long-term value for our shareholders. On behalf of the full Board, I want to thank Lucas for his dedication to SmartRent, which he founded, took public, and built into the innovator and leader in smart home technology it is today. As we scale and mature the Company into a new phase of growth, the Board decided that SmartRent will benefit from a CEO with a different skill set and fresh perspective.”

The Management Committee is composed of Chief Financial Officer Daryl Stemm, Executive Vice President of Human Resources Heather Auer, Executive Vice President of Operations Wyron Bobis, Co-Founder and Chief Technology Officer Isaiah DeRose-Wilson, Chief Legal Officer Kristen Lee and Chief Marketing Officer Robyn Young. Daryl Stemm will act as Principal Executive Officer of SmartRent on an interim basis. The Management Committee will report to John Dorman as Chairman of the Board. Additionally, the Board has formed an Operating Committee of the Board chaired by Frank Martell and composed of Alison Dean, Ann Sperling, and Fred Tuomi. The Operating Committee will serve under the direction of the Board and oversee the Company’s operations. The Board is also working with Morgan Stanley & Co. LLC as part of an ongoing financial review focusing on shareholder value. Additionally, the Company is recruiting a new head of sales to reinvigorate and refocus the sales strategy and drive further growth across existing and new customers.

Preliminary Second Quarter 2024 Results

On a preliminary basis, the Company expects second quarter 2024 Total Revenue of $48.5 million, a decrease of 9% from the same period last year and slightly below the guidance range of $49 million to $55 million. The Company expects a Net Loss in the second quarter of $4.6 million, a 55% improvement year over year. Adjusted EBITDA is expected to be $0.9 million for the quarter, above the guidance range of $(0.5) million to $0.5 million. SaaS Revenue is expected to be $12.8 million for the quarter, an increase of 32% over the same period last year.

Full-Year 2024 Outlook

In light of the pending CEO transition, the scaling back of SmartRent’s channel partner program and continued, increasing market headwinds, including known and anticipated customer capital spending delays, the Company is suspending its previous guidance for full-year 2024. The Company advises investors they should not rely on the outlook previously provided by management.

The Company will hold a conference call on August 7, 2024, to discuss second quarter 2024 financial results (details below).

Date: Wednesday, August 7, 2024
Time: 11:30 a.m. ET
Dial-in: To access the conference call via telephone, please register here to be provided with dial-in details. To avoid delays, participants are encouraged to dial into the conference call 15 minutes ahead of the scheduled start time.

Webcast: A live and archived webcast of the conference call will be accessible from the Events and Presentations section of the Company’s Investor Relations website at https://investors.smartrent.com.

About SmartRent

Founded in 2017, SmartRent, Inc. (NYSE: SMRT) is a leading provider of smart communities solutions and smart operations solutions to the rental housing industry. SmartRent’s end-to-end ecosystem powers smarter living and working in rental housing by automating operations, protecting assets, reducing energy consumption and more. The company’s differentiators – purpose-built software and hardware, and end-to-end implementation and support – create an exceptional experience, with 15 of the top 20 multifamily operators and millions of users leveraging SMRT solutions daily. For more information, please visit smartrent.com.

Forward-Looking Statements

This press release contains forward-looking statements which address the Company's expected future business and financial performance, statements regarding the Company’s executive transition, expected growth, prospects and strategies, expected Total Revenue, Adjusted EBITDA, Net Loss and SaaS Revenue for the second quarter, and other future events. Forward-looking statements may contain words such as "goal," "target," "future," "estimate," "expect," "anticipate," "intend," "plan," "believe," "seek," "project," "may," "should," "will" or similar expressions. Examples of forward-looking statements include, among others, statements regarding the expected financial results, the Company’s executive transition, expected growth, prospects, strategies and opportunities and earnings guidance related to financial and operational metrics. Forward-looking statements involve risks and uncertainties that could cause actual results to differ materially from those currently anticipated. Some of the factors that could cause actual results to differ materially from those expressed or implied by the forward-looking statements include, among other things, our ability to: (1) accelerate adoption of our products and services; (2) anticipate the uncertainties inherent in the development of new business lines and business strategies; (3) manage risks associated with our third-party suppliers and manufacturers and partners for our products; (4) manage risks associated with adverse macroeconomic conditions, including inflation, slower growth or recession, barriers to trade, changes to fiscal and monetary policy, tighter credit, higher interest rates, high unemployment, and currency fluctuations; (5) attract, train, and retain effective officers, key employees and directors; (6) develop, design, manufacture, and sell products and services that are differentiated from those of competitors; (7) realize the benefits expected from our acquisitions; (8) acquire or make investments in other businesses, patents, technologies, products or services to grow the business; (9) successfully pursue, defend, resolve or anticipate the outcome of pending or future litigation matters; (10) comply with laws and regulations applicable to our business, including privacy regulations; (11) realize the benefits expected from our stock repurchase program; and (12) maintain key strategic relationships with partners and distributors. The forward-looking statements herein represent the judgment of the Company, as of the date of this release, and SmartRent disclaims any intent or obligation to update forward-looking statements. This press release should be read in conjunction with the information included in the Company's other press releases, reports and other filings with the SEC. Understanding the information contained in these filings is important in order to fully understand the Company's reported financial results and our business outlook for future periods.

Use of Non-GAAP Financial Measures

In addition to disclosing financial results that are determined in accordance with GAAP, SmartRent also discloses certain non-GAAP financial measures in this press release, including EBITDA and Adjusted EBITDA. These financial measures are not recognized measures under GAAP and should not be considered in isolation or as a substitute for, or superior to, the financial information prepared and presented in accordance with GAAP.

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 EBITDA as net income or loss computed in accordance with GAAP before interest income/expense, income tax expense and depreciation and amortization.

EBITDA and Adjusted EBITDA may be determined or calculated differently by other companies. Reconciliations of these non-GAAP measures to the most directly comparable GAAP financial measures have been provided in the financial statement tables included in this press release, and investors are encouraged to review the reconciliations.

EBITDA and Adjusted EBITDA are not used as measures of SmartRent’s liquidity and should not be considered alternatives to net income or loss or any other measure of financial performance presented in accordance with GAAP.

SmartRent’s management uses EBITDA and Adjusted EBITDA in a number of ways to assess the Company’s financial and operating performance and believes that these measures provide useful information to investors regarding financial and business trends related to SmartRent’s results of operations. EBITDA and Adjusted EBITDA are also used to identify certain expenses and make decisions designed to help SmartRent meet its current financial goals and optimize its financial performance, while neutralizing the impact of expenses included in its operating results which could otherwise mask underlying trends in its business. SmartRent’s management believes that investors are provided with a more meaningful understanding of SmartRent’s ongoing operating performance when non-GAAP financial information is viewed with GAAP financial information.

SMARTRENT, INC. RECONCILIATION OF NON-GAAP MEASURES PRELIMINARY UNAUDITED
		For the three months ended June 30, 2024
		(dollars in thousands)
Net loss		$	(4,605	)
Interest income, net			(2,290	)
Income tax expense			68
Depreciation and amortization			1,585
EBITDA			(5,242	)
Stock-based compensation			3,284
Impairment of investment in non-affiliate			2,250
Non-recurring warranty provision			463
Other acquisition expenses			117
Other non-operating expenses			30
Adjusted EBITDA		$	902

 

View source version on businesswire.com: https://www.businesswire.com/news/home/20240730774755/en/

Investor Contact

Kelly Reisdorf

Head of Investor Relations investors@smartrent.com

Media Contact

Amanda Chavez

Senior Director, Corporate Communications media@smartrent.com

Source: SmartRent

FAQ

Why did SmartRent (SMRT) announce a CEO transition?

SmartRent announced a CEO transition to scale and mature the company into a new phase of growth. The Board decided that SmartRent would benefit from a CEO with a different skill set and fresh perspective.

What are SmartRent's (SMRT) preliminary Q2 2024 financial results?

SmartRent's preliminary Q2 2024 results show Total Revenue of $48.5 million (9% decrease YoY), Net Loss of $4.6 million (55% improvement YoY), Adjusted EBITDA of $0.9 million, and SaaS Revenue of $12.8 million (32% increase YoY).

Has SmartRent (SMRT) suspended its full-year 2024 outlook?

Yes, SmartRent has suspended its full-year 2024 outlook due to the pending CEO transition, scaling back of the channel partner program, and increasing market headwinds, including customer capital spending delays.

When will SmartRent (SMRT) discuss its Q2 2024 financial results?

SmartRent will hold a conference call to discuss Q2 2024 financial results on August 7, 2024, at 11:30 a.m. ET.