SmartRent Inc

Previous wording

SmartRent is positioned to be a category leader in the enterprise smart home solutions industry. As of March 31, 2024, we had 749,401 Units Deployed (as defined below) and 639 customers, including many of the largest multifamily residential owners in the United States. As of that date, our customers owned an aggregate of approximately 7.1 million rental 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.

Current wording

SmartRent is a category leader in the enterprise smart home solutions industry. As of June 30, 2024, we had 771,870 Units Deployed (as defined below) and over 600 customers, including many of the largest multifamily residential owners in the United States. As of that date, we believe our customers owned an aggregate of approximately 7.3 million rental units. This represents approximately 17% 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.

Previous wording

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. 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. We also generate professional services revenue from installing smart home hardware devices and hosted services revenue from monthly subscription revenue earned from the 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. 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 median recurring revenue contract term is one year.

Current wording

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. 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. We also generate professional services revenue from installing smart home hardware devices and hosted services revenue from monthly subscription revenue earned from the 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. 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 median recurring revenue contract term is one year.

Previous wording

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. We need to deliver solutions that enhance the resident experience and deliver value to our customers, rental property owners and operators, as well as homebuilders and developers, by providing products and solutions designed to enhance visibility and control over assets while providing additional revenue opportunities. In addition, our long-term growth depends in part on our ability to expand into international markets in the future.

Current wording

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. We need to deliver solutions that enhance the resident experience and deliver value to our customers, rental property owners and operators, as well as homebuilders and developers, by providing products and solutions designed to enhance visibility and control over assets while providing additional revenue opportunities.

Previous wording

We define Units Deployed as the aggregate number of Hub Devices that have been installed (including customer self-installations) and have an active subscription as of a stated measurement date. 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. 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. 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 March 31, 2024 and 2023, we had an aggregate of 749,401 and 602,556 Units Deployed, respectively. For the three months ended March 31, 2024 and 2023, we had 29,710 and 55,360 New Units Deployed, respectively.

Current wording

We define Units Deployed as the aggregate number of Hub Devices that have been installed (including customer self-installations) and have an active subscription as of a stated measurement date. 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. 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.

Previous wording

We define Units Shipped as the aggregate number of Hub Devices that have been shipped to customers during a stated measurement period. Units Shipped is used to assess the trajectory of our growth and is an indicator of our ability to acquire new customers and expand our relationships with our current customers. For the three months ended March 31, 2024 and 2023, we had 51,744 and 58,659 Units Shipped, respectively.

Current wording

We define Units Shipped as the aggregate number of Hub Devices that have been shipped to customers during a stated measurement period. Units Shipped is used to assess the trajectory of our growth and is an indicator of our ability to acquire new customers and expand our relationships with our current customers. However, we caution that Units Shipped also includes Hub Devices for upgrades and out of warranty replacements and may not be an indicator of New Units Deployed in future periods. For the three months ended June 30, 2024 and 2023, we had 48,780 and 55,516 Units Shipped, respectively. For the six months ended June 30, 2024 and 2023, we had 100,524 and 114,175 Units Shipped, respectively.

Previous wording

We define Units Booked as the aggregate number of Hub Device units subject to binding orders executed 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 three months ended March 31, 2024 and 2023 there were 46,290 and 65,108 Units Booked, respectively.

Current wording

We define Units Booked as the aggregate number of Hub Device units subject to binding orders executed 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 three months ended June 30, 2024 and 2023 there were 37,691 and 19,967 Units Booked, respectively. For the six months ended June 30, 2024 and 2023 there were 83,981 and 85,075 Units Booked, respectively.

Previous wording

We define Bookings as the contract value of hardware, professional services, and the first year of ARR for binding orders executed during a stated measurement period. We utilize Bookings to measure revenue expected to be earned in future periods from orders contracted during the current period. For the three months ended March 31, 2024 and 2023, Bookings were $38,761 and $37,305, respectively.

Current wording

We define Bookings as the contract value of hardware, professional services, and the first year of ARR for binding orders executed during a stated measurement period. We utilize Bookings to measure revenue expected to be earned in future periods from orders contracted during the current period. For the three months ended June 30, 2024 and 2023, Bookings were $45,511 and $31,539, respectively. For the six months ended June 30, 2024 and 2023, Bookings were $84,272 and $68,844, respectively.

Previous wording

We define Annual Recurring Revenue (“ARR”) as the annualized value of our SaaS revenue earned in the current quarter, which we calculate by taking the total amount of SaaS revenue in the current quarter and multiplying that amount by four. 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 March 31, 2024 and 2023, ARR was approximately $47.6 million and $36.0 million, respectively.

Current wording

We define Annual Recurring Revenue (“ARR”) as the annualized value of our SaaS revenue earned in the current quarter, which we calculate by taking the total amount of SaaS revenue in the current quarter and multiplying that amount by four. 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 June 30, 2024 and 2023, ARR was approximately $51.2 million and $38.8 million, respectively.

Previous wording

We define Hardware ARPU as total hardware revenue during a given period divided by the total Units Shipped during the same period. Hardware ARPU is used to evaluate the effectiveness of our hardware pricing and assess our ability to market and sell our hardware offerings. For the three months ended March 31, 2024 and 2023, Hardware ARPU was $561.94 and $636.30, respectively.

Current wording

We define Hardware ARPU as total hardware revenue during a given period divided by the total Units Shipped during the same period. Hardware ARPU is used to evaluate the effectiveness of our hardware pricing and assess our ability to market and sell our hardware offerings. For the three months ended June 30, 2024 and 2023, Hardware ARPU was $506 and $501, respectively. For the six months ended June 30, 2024 and 2023, Hardware ARPU was $535 and $570, respectively.

Previous wording

We define Professional Services ARPU as total professional services revenue during a given period divided by the total New Units Deployed, excluding customer self-installations, during the same period. Professional Services ARPU is used to assess our ability to effectively price our installation services. For the three months ended March 31, 2024 and 2023, Professional Services ARPU was $221.43 and $249.66, respectively.

Current wording

We define Professional Services ARPU as total professional services revenue during a given period divided by the total New Units Deployed, excluding customer self-installations, during the same period. Professional Services ARPU is used to assess our ability to effectively price our installation services. For the three months ended June 30, 2024 and 2023, Professional Services ARPU was $333 and $265, respectively. For the six months ended June 30, 2024 and 2023, Professional Services ARPU was $281 and $256, respectively.

Previous wording

We define SaaS ARPU as total SaaS revenue during a given period divided by the average aggregate Units Deployed in the same period. Average aggregate Units Deployed is calculated as the Units Deployed as of the current period plus the Units Deployed as of the previous period divided by two. SaaS ARPU is used to evaluate the effectiveness of our SaaS pricing and assess our ability to market and sell our various software solutions. For the three months ended March 31, 2024 and 2023, SaaS ARPU was $5.41 and $5.21, respectively.

Current wording

We define SaaS ARPU as total SaaS revenue during a given period divided by the average aggregate Units Deployed in the same period. Average aggregate Units Deployed is calculated as the Units Deployed as of the current period plus the Units Deployed as of the previous period divided by two. SaaS ARPU is used to evaluate the effectiveness of our SaaS pricing and assess our ability to market and sell our various software solutions. For the three months ended June 30, 2024 and 2023, SaaS ARPU was $5.63 and $5.16, respectively. For the six months ended June 30, 2024 and 2023, SaaS ARPU was $5.53 and $5.20, respectively.

Previous wording

We define 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. Units Booked SaaS ARPU is used to evaluate the effectiveness of our SaaS pricing and assess our ability to market and sell our various software solutions for orders executed during the period. For the three months ended March 31, 2024 and 2023, Units Booked SaaS ARPU was $7.16 and $5.40, respectively.

Current wording

We define 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. Units Booked SaaS ARPU is used to evaluate the effectiveness of our SaaS pricing and assess our ability to market and sell our various software solutions for orders executed during the period. For the three months ended June 30, 2024 and 2023, Units Booked SaaS ARPU was $8.07 and $8.74, respectively. For the six months ended June 30, 2024 and 2023, Units Booked SaaS ARPU was $7.57 and $6.18, respectively.

Previous wording

We define Customer Churn as cancelled deployed units during the measurement period divided by Units Deployed as of the beginning of the measurement period. Cancelled deployed units are the previously deployed units that have been cancelled during the same measurement period in which a customer cancels all product subscriptions. Our Hosted Services growth is driven by our ability to retain our customers and minimize Customer Churn. Our Customer Churn for our Smart Communities Solutions is 0.02% for the three months ended March 31, 2024 compared to 0.01% for the three months ended March 31, 2023.

Current wording

We define Customer Churn as cancelled deployed units during the measurement period divided by Units Deployed as of the beginning of the measurement period. Cancelled deployed units are the previously deployed units that have been cancelled during the same measurement period in which a customer cancels all product subscriptions. Our Hosted Services growth is driven by our ability to retain our customers and minimize Customer Churn. Our Customer Churn for our Smart Communities Solutions is 0.05% for the three months ended June 30, 2024. We did not experience churn for the three months ended June 30, 2023. Our Customer Churn for our Smart Communities Solutions is 0.05% for the six months ended June 30, 2024 compared to 0.01% for the six months ended June 30, 2023.

Previous wording

We define Net Revenue Retention as SaaS revenue at the end of the current period related to properties 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 properties. Net Revenue Retention includes any reductions in revenue caused by cancellations or downgrades, offset by additions to revenue from price increases on existing products, and additions of new products at existing properties. Net Revenue Retention was 105% for the three months ended March 31, 2024.

Current wording

We define Net Revenue Retention as SaaS revenue at the end of the current period related to properties 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 properties. Net Revenue Retention includes any reductions in revenue caused by cancellations or downgrades, offset by additions to revenue from price increases on existing products, and additions of new products at existing properties. Net Revenue Retention was 103% as of June 30, 2024.

Previous wording

The income tax expense on the Consolidated Statements of Operations and Comprehensive Loss is primarily related to the foreign and state taxes offset by a change in the valuation allowance. We established a full valuation allowance for net deferred U.S. federal and state tax assets, including net operating loss carryforwards. 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 in future periods if we report taxable income. We believe that we have established an adequate allowance for our uncertain tax positions, although it can provide no assurance that the final outcome of these matters will not be materially different. 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.

Current wording

The income tax expense on the Consolidated Statement of Operations and Comprehensive Loss is primarily related to the federal, state, and foreign taxes offset by a change in the valuation allowance. The Company established a full valuation allowance for net deferred U.S. federal and state tax assets, including net operating loss carryforwards. The Company expects to maintain this valuation allowance until it becomes more likely than not that the benefit of the federal and state deferred tax assets will be realized in future periods if it reports taxable income. The Company believes that it has established an adequate allowance for uncertain tax positions, although it can provide no assurance that the final outcome of these matters will not be materially different. 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.

Previous wording

Results of Operations for the Three Months Ended March 31, 2024 and 2023

Current wording

Results of Operations for the Three and Six Months Ended June 30, 2024 and 2023

Previous wording

Comparison of the three months ended March 31, 2024 and 2023

Current wording

Comparison of the three and six months ended June 30, 2024 and 2023

Previous wording

Total revenue decreased by $14.6 million, or 22%, to $50.5 million for the three months ended March 31, 2024, from $65.1 million for the three months ended March 31, 2023. The decrease was primarily driven by a $15.4 million decrease in revenue related to our Smart Apartments solution. The decrease in revenue resulted primarily from a 46% decrease in New Units Deployed to 29,710 units for the three months ended March 31, 2024 from 55,360 units for the three months ended March 31, 2023, a 12% decrease in Hardware ARPU, and a 12% decrease in Units Shipped to 51,744 for the three months ended March 31, 2024 from 58,659 for the three months ended March 31, 2023, partially offset by a 24% increase in the number of cumulative active subscriptions for our Hosted Services during 2024 compared to 2023.

Current wording

Total revenue decreased by $5.0 million, or 9%, to $48.4 million for the three months ended June 30, 2024, from $53.4 million for the three months ended June 30, 2023. The decrease was primarily driven by a $6.1 million decrease in revenue related to our Smart Apartments solution. The decrease in revenue resulted primarily from a 53% decrease in New Units Deployed to 22,469 units for the three months ended June 30, 2024 from 47,768 units for the three months ended June 30, 2023 and a 12% decrease in Units Shipped to 48,780 for the three months ended June 30, 2024 from 55,516 for the three months ended June 30, 2023, partially offset by a 19% increase in the number of cumulative active subscriptions for our Hosted Services during 2024 compared to 2023. Overall decreases in New Units Deployed and Units Shipped are primarily due to our customers' decisions to defer capital expenditures, influenced by the current interest rate environment and broader macroeconomic conditions.

Previous wording

Hardware revenue decreased by $8.2 million, or 22%, to $29.1 million for the three months ended March 31, 2024, from $37.3 million for the three months ended March 31, 2023. This decrease in hardware revenue was driven by a decrease in revenue related to our Smart Apartments Solutions and resulted from a 12% decrease in Units Shipped to 51,744 for the three months ended March 31, 2024 from 58,659 for the three months ended March 31, 2023, and a Hardware ARPU decrease of 12% to $561.94 for the 2024 period from $636.30 for the 2023 period. The ARPU decrease was primarily attributable to a change in product mix which was more heavily weighted to our Alloy SmartHome hardware. The impact of the decrease in hardware revenue was mitigated by an increase in hardware gross margin, primarily driven by the product mix change in the current period.

Current wording

Hardware revenue decreased by $11.4 million, or 17%, to approximately $53.7 million for the six months ended June 30, 2024, from $65.1 million for the six months ended June 30, 2023. This decrease in hardware revenue was driven by a decrease in revenue related to our Smart Apartments Solutions and resulted from a 12% decrease in Units Shipped to 100,524 for the six months ended June 30, 2024 from 114,175 for the six months ended June 30, 2023, and a Hardware ARPU decrease of 6% to $535 for the 2024 period from $570 for the 2023 period. The Hardware ARPU decrease was primarily attributable to a change in product mix which was more heavily weighted to our Alloy SmartHome hardware. The impact of the decrease in hardware revenue was mitigated by an increase in hardware gross margin, primarily driven by the product mix change in the current period.

Previous wording

Hosted Services revenue increased by $3.0 million, or 20%, to $18.0 million for the three months ended March 31, 2024, from $15.0 million for the three months ended March 31, 2023. Of the $18.0 million revenue in 2024, $11.9 million is related to SaaS revenue and $6.1 million is related to hub amortization. Revenue increased from hub amortization and SaaS by $0.1 million and $2.9 million, respectively, from the three months ended March 31, 2023 to the three months ended March 31, 2024. The increase of Hosted Services revenue resulted primarily from a 24% increase in the aggregate number of Units Deployed, primarily of our Smart Apartment solution, from 602,556 units at March 31, 2023 to 749,401 units at March 31, 2024 and an increase in SaaS ARPU of 4% to $5.41 for the three months ended March 31, 2024 from $5.21 for the three months ended March 31, 2023.

Current wording

Hosted Services revenue increased by approximately $2.4 million, or 16%, to $18.0 million for the three months ended June 30, 2024, from $15.6 million for the three months ended June 30, 2023. Of the $18.0 million revenue in 2024, $12.8 million is related to SaaS revenue and $5.2 million is related to hub amortization. Revenue increased from SaaS by $3.1 million and decreased from hub amortization by $0.7 million from the three months ended June 30, 2023 to the three months ended June 30, 2024. The increase of Hosted Services revenue resulted primarily from a 19% increase in the aggregate number of Units Deployed, primarily of our Smart Apartment solution, from 650,324 units at June 30, 2023 to 771,870 units at June 30, 2024 and an increase in SaaS ARPU of 9% to $5.63 for the three months ended June 30, 2024 from $5.16 for the three months ended June 30, 2023.

Previous wording

(1) Q1 2024 amounts are actuals

Current wording

(1) Q1 and Q2 2024 amounts are actuals

Previous wording

Total cost of revenue decreased by $24.9 million, or 44%, to $31.1 million for the three months ended March 31, 2024, from $56.0 million for the three months ended March 31, 2023. The decrease in cost of revenue resulted primarily from a favorable product mix of our hardware devices (more heavily weighted to Alloy SmartHome hardware), a 46% decrease in New Units Deployed and a 12% decrease in Units Shipped of our Smart Apartment solution hardware devices.

Current wording

Total cost of revenue decreased by $37.2 million, or 37%, to $62.3 million for the six months ended June 30, 2024, from $99.5 million for the six months ended June 30, 2023. The decrease in cost of revenue resulted primarily from a favorable product mix of our hardware devices (more heavily weighted to Alloy SmartHome hardware), a 49% decrease in New Units Deployed and a 12% decrease in Units Shipped of our Smart Apartment solution hardware devices.

Previous wording

Hardware cost of revenue decreased by $13.9 million, or 43%, to $18.7 million for the three months ended March 31, 2024, from $32.6 million for the three months ended March 31, 2023. This decrease in hardware cost of revenue was primarily attributable to a favorable product mix and a 12% decrease in Units Shipped.

Current wording

Hardware cost of revenue decreased by $5.7 million, or 26%, to $16.3 million for the three months ended June 30, 2024, from $22.0 million for the three months ended June 30, 2023. This decrease in hardware cost of revenue was primarily attributable to a favorable product mix, resulting in improved hardware gross margin compared to the prior period, and a 12% decrease in Units Shipped.

Previous wording

Professional services cost of revenue decreased by $11.2 million, or 63%, to $6.4 million for the three months ended March 31, 2024, from $17.6 million for the three months ended March 31, 2023. The decrease in professional services cost of revenue is primarily attributable to a decrease of approximately $8.9 million in third-party direct labor costs due to a 46% decrease in New Units Deployed, and a decrease of $1.7 million in personnel-related costs, and related travel. 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. As a result, we believe we will continue to improve efficiency in future periods.

Current wording

Professional services cost of revenue decreased by $6.9 million, or 44%, to $8.9 million for the three months ended June 30, 2024, from $15.8 million for the three months ended June 30, 2023. The decrease in professional services cost of revenue is primarily attributable to a decrease of approximately $5.7 million in third-party direct labor costs due to a 53% decrease in New Units Deployed, and a decrease of $0.8 million in personnel-related costs, and related travel. 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.

Previous wording

Hosted Services cost of revenue increased by $0.2 million, or 3%, to approximately $6.0 million for the three months ended March 31, 2024, from $5.8 million for the three months ended March 31, 2023. The increase resulted from a 24% increase in the aggregate number of Units Deployed and the resulting increase in the number of active subscriptions for our software service applications, partially offset by a $0.4 million decrease in hub amortization. Our Hosted Services gross margin improved when compared to the same period in the prior year primarily driven by economies of scale related to our SaaS products. 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.

Current wording

Hosted Services cost of revenue increased by $0.3 million, or 5%, to $6.0 million for the three months ended June 30, 2024, from $5.7 million for the three months ended June 30, 2023. The increase resulted from a 19% 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 $0.3 million, partially offset by a $0.4 million decrease in hub amortization. Our Hosted Services gross margin improved when compared to the same period in the prior year primarily driven by economies of scale related to our SaaS products. 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.

Previous wording

Research and development expenses increased by $1.1 million, or 16%, to approximately $8.3 million for the three months ended March 31, 2024, from $7.2 million for the three months ended March 31, 2023, resulting primarily from an increase of approximately $1.3 million of personnel-related expenses, primarily related to the employee retention credit, which were refundable employment tax credits provided by The Coronavirus Aid, Relief, and Economic Security Act (the “CARES Act”), recorded during the three months ended March 31, 2023. 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.

Current wording

Research and development expenses increased by $0.9 million, or 15%, to approximately $7.4 million for the three months ended June 30, 2024, from $6.5 million for the three months ended June 30, 2023, primarily related to the employee retention credits recorded in the three months ended June 30, 2023, which were refundable employment tax credits provided by The Coronavirus Aid, Relief, and Economic Security Act (the “CARES Act”). 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.

Previous wording

Sales and marketing expenses decreased by $0.6 million, or 12%, to $4.6 million for the three months ended March 31, 2024 from $5.2 million for the three months ended March 31, 2023, resulting primarily from a decrease of approximately $0.5 million in personnel-related expenses.

Current wording

Sales and marketing expenses decreased by $0.1 million, or 2%, to $4.7 million for the three months ended June 30, 2024 from $4.8 million for the three months ended June 30, 2023, resulting primarily from a decrease of approximately $0.1 million in travel expenses.

Previous wording

For the three months ended March 31, 2024, general and administrative expenses increased by $4.6 million, or 39%, to approximately $16.6 million, from $12.0 million for the three months ended March 31, 2023, resulting primarily from a $5.3 million legal accrual recorded as of March 31, 2024, in which the Company has made a substantive offer to settle a dispute with a supplier by returning $5.0 million of inventory and paying a portion of the supplier’s costs and fees.

Current wording

For the six months ended June 30, 2024, general and administrative expenses increased by $6.1 million, or 27%, to $28.7 million, from $22.6 million for the six months ended June 30, 2023, resulting primarily from a $5.3 million legal accrual recorded as of June 30, 2024, in which the Company agreed to settle a dispute with a supplier by returning $5.0 million of inventory and paying a portion of the supplier’s costs and fees, and a $2.3 million impairment of an investment in a non-affiliate, partially offset by a decrease of $2.5 million of personnel-related expenses.

Previous wording

Interest income, net increased by $0.4 million to $2.4 million for the three months ended March 31, 2024, from $2.0 million for the three months ended March 31, 2023. The increase in net interest income for both periods is primarily attributable to interest earned on interest-bearing cash balances.

Current wording

Interest income, net increased by $0.5 million to $2.3 million for the three months ended June 30, 2024, from $1.8 million for the three months ended June 30, 2023. The increase in net interest income for both periods is primarily attributable to interest earned on interest-bearing cash balances.

Previous wording

The income tax expense is related to the foreign and state taxes offset by a change in the valuation allowance.

Current wording

The income tax expense is related to the federal, state, and foreign taxes offset by a change in the valuation allowance.

Previous wording

We define Adjusted EBITDA as EBITDA before expenses related to non-recurring legal matters, stock-based compensation, compensation expense in connection with acquisitions, severance charges, other acquisition expenses, and other expenses caused by non-recurring, or unusual, events that are not indicative of our ongoing business.

Current wording

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-recurring warranty provisions, 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.

Previous wording

As of March 31, 2024, we had cash and cash equivalents of $204.7 million, which were held for working capital and general corporate purposes. 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.

Current wording

As of June 30, 2024, we had cash and cash equivalents of $187.4 million, which were held for working capital and general corporate purposes. 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.

Previous wording

During the three months ended March 31, 2024, we repurchased 1.6 million shares of our Class A common stock under the stock repurchase program at an average price of approximately $2.74 per share for a total of $4.4 million. As of March 31, 2024, approximately $45.6 million remained available for stock repurchases pursuant to our stock repurchase program.

Current wording

During the three months ended June 30, 2024, we repurchased 0.8 million shares of our Class A common stock under the stock repurchase program at an average price of approximately $2.62 per share for a total of $2.0 million. During the six months ended June 30, 2024, we repurchased 2.4 million shares of our Class A common stock under the stock repurchase program at an average price of approximately $2.70 per share for a total of $6.4 million. As of June 30, 2024, approximately $43.6 million remained available for stock repurchases pursuant to our stock repurchase program.

Previous wording

For the three months ended March 31, 2024, our operating activities used $3.3 million in cash resulting primarily from our net loss of $7.7 million and $6.7 million used in changes in our operating assets and liabilities, partially offset by $11.1 million provided by non-cash expenses. Changes in our operating assets and liabilities primarily resulted from a $7.4 million decrease in accounts payable, $6.7 million decrease in accrued expenses and other liabilities, and a $3.6 million decrease in deferred revenue, partially offset by a $5.6 million decrease in inventory, $2.7 million decrease in accounts receivable, and a $2.7 million decrease in deferred cost of revenue. Non-cash expenses consisted primarily of a non-cash legal accrual for $5.0 million in which the Company has made a substantive offer to settle a dispute with a supplier by returning $5.0 million of inventory, stock-based compensation of $3.3 million, depreciation and amortization of $1.5 million, and provision for doubtful accounts of $1.2 million.

Current wording

For the six months ended June 30, 2024, our operating activities used $17.2 million in cash resulting primarily from our net loss of $12.3 million and $23.4 million used in changes in our operating assets and liabilities, partially offset by approximately $18.5 million provided by non-cash expenses. Changes in our operating assets and liabilities primarily resulted from an $11.2 million decrease in deferred revenue, an $8.7 million decrease in accounts payable, a $4.7 million increase in accounts receivable and a $3.5 million decrease in accrued expenses and other liabilities, partially offset by a $5.2 million decrease in deferred cost of revenue. Non-cash expenses consisted primarily of stock-based compensation of $6.6 million, a non-cash legal accrual for $5.0 million in which the Company agreed to settle a dispute with a supplier by returning $5.0 million of inventory, depreciation and amortization of $3.1 million, an impairment of an investment in non-affiliate of $2.3 million and provision for expected credit losses of $1.4 million.

Previous wording

For the three months ended March 31, 2023, our operating activities used $10.3 million in cash resulting primarily from our net loss of $13.2 million and $4.0 million used in changes in our operating assets and liabilities, partially offset by $6.9 million provided by non-cash expenses. Changes in our operating assets and liabilities primarily resulted from a $11.1 million decrease in accrued expenses and other liabilities, a $6.7 million decrease in accounts payable and a $4.6 million increase in prepaid expenses and other assets, partially offset by a $8.9 million decrease in inventory, a $3.5 million decrease in accounts receivable, a $3.3 million decrease in deferred cost of revenue, and a $3.0 million increase in deferred revenue. Non-cash expenses consisted primarily of stock-based compensation of $3.7 million, compensation expense related to acquisitions of $1.6 million, and depreciation and amortization of $1.3 million. Of the total cash used for our operating activities, $6.0 million was attributable to payments related to our acquisitions.

Current wording

For the six months ended June 30, 2023, our operating activities used $15.7 million in cash resulting primarily from our net loss of $23.6 million and $4.3 million used in changes in our operating assets and liabilities, partially offset by $12.2 million provided by non-cash expenses. Changes in our operating assets and liabilities primarily resulted from a $13.2 million decrease in accrued expenses and other liabilities, a $12.1 million decrease in accounts payable and a $6.3 million increase in prepaid expenses and other assets, partially offset by a $15.2 million decrease in inventory, a $7.3 million decrease in deferred cost of revenue, a $2.9 million increase in deferred revenue and a $2.4 million decrease in accounts receivable. Non-cash expenses consisted primarily of stock-based compensation of $7.0 million, depreciation and amortization of $2.6 million, and compensation expense related to acquisitions of $1.8 million. Of the total cash used for our operating activities, $6.0 million was attributable to payments related to the SightPlan acquisition. We believe the ADI agreement will have a positive impact on cash flow in future periods due to supply chain optimization and a reduced inventory balance.

Previous wording

For the three months ended March 31, 2023, we used $1.2 million of cash for investing activities, resulting primarily from cash paid of $1.1 million for capitalized internal-use software development costs.

Current wording

For the six months ended June 30, 2024, we used $2.0 million of cash from investing activities, resulting primarily from cash paid of $1.7 million for capitalized internal-use software development costs and $0.3 million for the purchase of property and equipment.

Previous wording

For the three months ended March 31, 2024, we used $1.0 million of cash for investing activities, resulting primarily from cash paid of $0.9 million for capitalized internal-use software development costs.

Current wording

For the six months ended June 30, 2023, we used $2.3 million of cash for investing activities, resulting primarily from cash paid for capitalized internal-use software development costs.

Previous wording

For the three months ended March 31, 2024, our financing activities used $6.5 million of cash, resulting primarily from $4.4 million used for repurchases of Class A common stock, $1.5 million used for earnout payments related to the iQuue acquisition, and $0.9 million used for taxes paid related to net share settlements of stock-based compensation awards.

Current wording

For the six months ended June 30, 2024, our financing activities used $8.8 million of cash, resulting primarily from $6.4 million used for repurchases of Class A common stock, $1.5 million used for earnout payments related to the iQuue acquisition, and $1.3 million used for taxes paid related to net share settlements of stock-based compensation awards.

Previous wording

For the three months ended March 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.

Current wording

For the six months ended June 30, 2023, our financing activities used $2.3 million of cash, resulting primarily from $1.7 million used for earnout payments related to the iQuue acquisition.