SmartRent, Inc.

Previous wording

SmartRent is a category leader in the enterprise smart home solutions industry. As of March 31, 2025, we had 827,611 Units Deployed (as defined below) and over 650 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 7.6 million rental units; 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.

Current wording

SmartRent is a category leader in the enterprise smart home solutions industry. As of June 30, 2025, we had 847,956 Units Deployed (as defined below) and approximately 600 customers who either have an active subscription or have purchased any SmartRent product in the past twelve months, including many of the largest multifamily residential owners in the United States. As of June 30, 2025, we believe our customers owned an aggregate of approximately 7.0 million rental units; this represents approximately 14% 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.

Previous wording

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. 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 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. Subscription arrangements have contractual terms ranging from one month to ten years and the weighted average length of our recurring revenue contracts is 4.3 years.

Current wording

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. 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 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. Subscription arrangements have contractual terms ranging from one month to ten years and the weighted average length of our recurring revenue contracts is 4.2 years.

Previous wording

In April 2025, we announced the departure of Mr. Paladin, effective April 9, 2025. As part of the transition, Mr. Paladin resigned as a member of the board of directors, effective April 9, 2025. We have appointed John Dorman, our Board Chair, as our Interim CEO, effective as of April 9, 2025. Alison Dean, an independent member of the Board, has been appointed lead independent director of the Board. The Board has initiated a search to identify the next Chief Executive Officer of SmartRent and is working with a leading executive search firm to assist in the process of identifying and evaluating candidates.

Current wording

In April 2025, we announced the departure of Michael Shane Paladin as President and Chief Executive Officer, effective April 9, 2025. As part of the transition, Mr. Paladin also resigned as a member of the board of directors. We appointed John Dorman, our Board Chair, as our Interim CEO and President, effective as of April 9, 2025. Alison Dean, an independent member of the Board, was appointed lead independent director of the Board. In June 2025, we announced the appointment of Frank Martell as President and Chief Executive Officer (the “Appointment”). Effective as of the Appointment, Ms. Dean will continue to serve as a member of our Board and was removed as lead independent director of the Board and Mr. Martell replaced John Dorman, who had been serving as Interim Chief Executive Officer and President. Mr. Dorman will continue to serve as our Board Chair.

Previous wording

On May 2, 2025, we received a written notification from the NYSE that as of May 2, 2025, we are not in compliance with the continued listing standard set forth in Section 802.01C of the NYSE Listed Company Manual because the average closing price of our Class A common stock was less than $1.00 per share over a consecutive 30 trading-day period. Pursuant to Section 802.01C, we can regain compliance with the minimum share price requirement if, on the last trading-day of any calendar month during the cure period, the company has (i) a closing share price of at least $1.00 and (ii) an average closing share price of at least $1.00 over the 30 trading-day period ending on the last trading day of that month. If we do not regain compliance within six months, the NYSE may commence suspension and delisting procedures with respect to our Class A common stock. We intend to notify NYSE that we intend to cure the continued listing standard deficiency and to return to compliance with Section 802.01C. We intend to monitor the closing price of the Class A common stock and to consider available alternatives, including, but not limited to, a reverse stock split, subject to stockholder approval, if necessary to cure the stock price non-compliance.

Current wording

On May 2, 2025, we received a written notification from the NYSE that as of May 2, 2025, we are not in compliance with the continued listing standard set forth in Section 802.01C of the NYSE Listed Company Manual because the average closing price of our Class A common stock was less than $1.00 per share over a consecutive 30 trading-day period. Pursuant to Section 802.01C, we can regain compliance with the minimum share price requirement if, on the last trading-day of any calendar month during the cure period, the company has (i) a closing share price of at least $1.00 and (ii) an average closing share price of at least $1.00 over the 30 trading-day period ending on the last trading day of that month. On May 13, 2025 we notified the NYSE that we intend to cure the continued listing standard deficiency and to return to compliance with Section 802.01C. As of July 31, 2025 our closing share price was $1.01 and our average closing share price was greater than $1.00 over the 30-day trading period ending July 31, 2025. On August 1, 2025, we received a written notification from the NYSE that we have regained compliance with the minimum share price requirement under Section 802.01C of the NYSE Listed Company Manual as of July 31, 2025.

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, 2025 and 2024, we had an aggregate of 827,611 and 749,401 Units Deployed, respectively. For the three months ended March 31, 2025 and 2024, we had 18,114 and 29,710 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. 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 June 30, 2025 and 2024, we had an aggregate of 847,956 and 771,870 Units Deployed, respectively. For the three months ended June 30, 2025 and 2024, we had 21,068 and 22,469 New Units Deployed, respectively. For the six months ended June 30, 2025 and 2024, we had 39,182 and 52,179 New Units Deployed, respectively.

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. 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 March 31, 2025 and 2024, we had 43,418 and 51,744 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, 2025 and 2024, we had 26,543 and 48,780 Units Shipped, respectively. For the six months ended June 30, 2025 and 2024, we had 69,961 and 100,524 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 that will result in a New Unit Deployed. 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, 2025 and 2024 there were 18,210 and 46,290 Units Booked, respectively. For the three months ended March 31, 2025 and 2024, ARR (as defined below) related to Units Booked was $2,246 and $3,980, 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 that will result in a New Unit Deployed. 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, 2025 and 2024 there were 24,319 and 37,691 Units Booked, respectively. For the six months ended June 30, 2025 and 2024 there were 42,529 and 83,981 Units Booked, respectively. For the three months ended June 30, 2025 and 2024, ARR (as defined below) related to Units Booked was $2,397 and $1,690, respectively. For the six months ended June 30, 2025 and 2024, ARR related to Units Booked was $4,643 and $5,310, 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, including renewals and upgrades. 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, 2025 and 2024, Bookings were $27,180 and $38,761, 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, including renewals and upgrades. 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, 2025 and 2024, Bookings were $30,460 and $45,511, respectively. For the six months ended June 30, 2025 and 2024, Bookings were $57,640 and $84,272, respectively.

Previous wording

We define SaaS Revenue as monthly subscription revenue from fees paid by customers for access to one or more of SmartRent's software applications, including access controls, asset monitoring and related services, and our Community WiFi solution. We believe that SaaS Revenue growth demonstrates our ability to acquire new customers and to maintain and expand our relationships with existing customers. More specifically, we monitor our SaaS Revenue to assess the general health and trajectory of our Hosted Services business. Arrangements with customers do not provide the customer with the right to take possession of SmartRent's software at any time. Customers are granted continuous access to the services over the contractual period. As of March 31, 2025, approximately 35% of our ARR had prepaid payment terms. 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. For the three months ended March 31, 2025 and 2024, we generated SaaS Revenue of $14.0 million and $11.9 million, respectively.

Current wording

We define SaaS Revenue as monthly subscription revenue from fees paid by customers for access to one or more of SmartRent's software applications, including access controls, asset monitoring and related services, and our Community WiFi solution. We believe that SaaS Revenue growth demonstrates our ability to acquire new customers and to maintain and expand our relationships with existing customers. More specifically, we monitor our SaaS Revenue to assess the general health and trajectory of our Hosted Services business. Arrangements with customers do not provide the customer with the right to take possession of SmartRent's software at any time. Customers are granted continuous access to the services over the contractual period. As of June 30, 2025, approximately 35% of our ARR had prepaid payment terms. 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. For the three months ended June 30, 2025 and 2024, we generated SaaS Revenue of $14.2 million and $12.8 million, respectively. For the six months ended June 30, 2025 and 2024, we generated SaaS Revenue of $28.2 million and $24.7 million, 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, 2025 and 2024, ARR was approximately $55.9 million and $47.6 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, 2025 and 2024, ARR was approximately $56.9 million and $51.2 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, 2025 and 2024, Hardware ARPU was $434 and $562, 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, 2025 and 2024, Hardware ARPU was $571 and $506, respectively. For the six months ended June 30, 2025 and 2024, Hardware ARPU was $486 and $535, 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. During the year ended December 31, 2024, we updated the denominator of the calculation to exclude self-installations as self-installations don't materially contribute to professional services revenue. For the three months ended March 31, 2025 and 2024, Professional Services ARPU was $427 and $223, respectively, per the new definition of Professional Services ARPU. Under the previous definition, Professional Services ARPU was $215 and $221 for the three months ended March 31, 2025 and 2024, 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. During the year ended December 31, 2024, we updated the denominator of the calculation to exclude self-installations as self-installations don't materially contribute to professional services revenue. For the three months ended June 30, 2025 and 2024, Professional Services ARPU was $365 and $327, respectively, per the new definition of Professional Services ARPU. Under the previous definition, Professional Services ARPU was $205 and $333 for the three months ended June 30, 2025 and 2024, respectively. For the six months ended June 30, 2025 and 2024, Professional Services ARPU was $392 and $278, respectively, per the new definition of Professional Services ARPU. Under the previous definition, Professional Services ARPU was $210 and $281 for the six months ended June 30, 2025 and 2024, 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 divided by the number of months in the 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, 2025 and 2024, SaaS ARPU was $5.69 and $5.41, 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 divided by the number of months in the 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, 2025 and 2024, SaaS ARPU was $5.66 and $5.63, respectively. For the six months ended June 30, 2025 and 2024, SaaS ARPU was $5.67 and $5.53, respectively.

Previous wording

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. 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, 2025 and 2024, Units Booked SaaS ARPU was $10.28 and $7.16, respectively.

Current wording

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. 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, 2025 and 2024, Units Booked SaaS ARPU was $8.21 and $8.07, respectively. For the six months ended June 30, 2025 and 2024, Units Booked SaaS ARPU was $9.10 and $7.57, 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 was 0.02% for the three months ended March 31, 2025 and March 31, 2024.

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 Units Deployed 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. For the three months ended June 30, 2025 and 2024, our Customer Churn for our Smart Communities Solutions was 0.08% and 0.03%, respectively. For the six months ended June 30, 2025 and 2024, our Customer Churn for our Smart Communities Solutions was 0.10% and 0.05%, respectively.

Previous wording

We define Property 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. 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 102% as of March 31, 2025 compared to 105% as of March 31, 2024.

Current wording

We define Property 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. 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 102% as of June 30, 2025 compared to 103% as of June 30, 2024.

Previous wording

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. A customer with SaaS Revenue is defined as an entity that has an active subscription during the stated period. Customer Net Revenue Retention includes additions to revenue from transfers of ownership, price increases on existing products and additions of new products at existing properties, offset by any reductions in revenue caused by cancellations or downgrades. Customer Net Revenue Retention was 114% as of March 31, 2025.

Current wording

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. A customer with SaaS Revenue is defined as an entity that has an active subscription during the stated period. Customer Net Revenue Retention includes additions to revenue from transfers of ownership, price increases on existing products and additions of new products at existing properties, offset by any reductions in revenue caused by cancellations or downgrades. Customer Net Revenue Retention was 108% as of June 30, 2025.

Previous wording

(1) For the three months ended March 31, 2025 and 2024, Hosted services revenue for our Smart Apartments solution included hub amortization revenue of $4,658 and $6,043, respectively.

Current wording

(1) For the three months ended June 30, 2025 and 2024, Hosted services revenue for our Smart Apartments solution included hub amortization revenue of $4,619 and $5,215, respectively. For the six months ended June 30, 2025 and 2024, Hosted services revenue for our Smart Apartments solution included hub amortization revenue of $9,277 and $11,257, respectively.

Previous wording

We generate hosted services revenue 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 including access controls, asset monitoring, WiFi, and related services (“Hosted Services”) and (2) the amortization of non-distinct Hub Devices. The subscription arrangements have contractual terms ranging from one month to ten years and include recurring fixed plan subscription fees. The weighted average length of our recurring revenue contracts is 4.3 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. 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.

Current wording

We generate hosted services revenue 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 including access controls, asset monitoring, WiFi, and related services (“Hosted Services”) and (2) the amortization of non-distinct Hub Devices. The subscription arrangements have contractual terms ranging from one month to ten years and include recurring fixed plan subscription fees. The weighted average length of our recurring revenue contracts is 4.2 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. 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.

Previous wording

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 continue to monitor changes in policy impacting global trade, including tariff regulation. For example, the U.S. 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.

Current wording

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 continue to monitor changes in policy impacting global trade, including tariff regulation. For example, the U.S. administration has implemented and threatened further increases to tariffs this year on imports from countries such as Canada, Mexico and China. Such actions may increase our cost of hardware revenue and reduce our hardware revenue margins in the future.

Previous wording

Results of Operations for the Three Months Ended March 31, 2025 and 2024

Current wording

Results of Operations for the Three and Six Months Ended June 30, 2025 and 2024

Previous wording

Comparison of the three months ended March 31, 2025 and 2024

Current wording

Comparison of the three and six months ended June 30, 2025 and 2024

Previous wording

Total revenue decreased by approximately $9.1 million, or 18%, to $41.3 million for the three months ended March 31, 2025, from $50.5 million for the three months ended March 31, 2024. The decrease was primarily driven by a $9.1 million decrease in revenue related to our Smart Apartments solution which resulted primarily from a decrease in New Units Deployed to 18,114 units for the three months ended March 31, 2025 from 29,710 units for the three months ended March 31, 2024 and a 16% decrease in Units Shipped to 43,418 for the three months ended March 31, 2025 from 51,744 for the three months ended March 31, 2024, partially offset by a 10% increase in the number of cumulative active subscriptions for our Hosted Services during the three months ended March 31, 2025 compared to the three months ended March 31, 2024. Overall decreases in New Units Deployed and Units Shipped are primarily attributable to our customers' decisions to defer capital expenditures, driven by broader macroeconomic conditions. In addition, changes in leadership and the structure of our sales organization have adversely impacted sales and overall volumes.

Current wording

Total revenue decreased by $10.2 million, or 21%, to $38.3 million for the three months ended June 30, 2025, from $48.5 million for the three months ended June 30, 2024. The decrease was primarily driven by a $8.8 million decrease in revenue related to our Smart Apartments solution which resulted primarily from a decrease in Units Shipped to 26,543 for the three months ended June 30, 2025 from 48,780 for the three months ended June 30, 2024 and a decrease in New Units Deployed to 21,068 units for the three months ended June 30, 2025 from 22,469 units for the three months ended June 30, 2024, partially offset by a 10% increase in the number of cumulative active subscriptions for our Hosted Services during the three months ended June 30, 2025 compared to the three months ended June 30, 2024. Overall decreases in Units Shipped and New Units Deployed are primarily attributable to our customers' decisions to defer capital expenditures, driven by broader macroeconomic conditions. In addition, changes in leadership and the structure of our sales organization have adversely impacted sales and overall volumes.

Previous wording

Hardware revenue decreased by $10.2 million, or 35%, to $18.8 million for the three months ended March 31, 2025, from $29.1 million for the three months ended March 31, 2024. This decrease in hardware revenue was driven by a decrease in revenue related to our Smart Apartments Solutions which resulted from a 16% decrease in Units Shipped to 43,418 for the three months ended March 31, 2025 from 51,744 for the three months ended March 31, 2024, and a Hardware ARPU decrease of 23% to $434 for the 2025 period from $562 for the 2024 period. The Hardware ARPU decrease was primarily attributable to a change in customer mix.

Current wording

Hardware revenue decreased by $19.8 million, or 37%, to $34.0 million for the six months ended June 30, 2025, from $53.8 million for the six months ended June 30, 2024. This decrease in hardware revenue was driven by a decrease in revenue related to our Smart Apartments Solutions which resulted from a 30% decrease in Units Shipped to 69,961 for the six months ended June 30, 2025 from 100,524 for the six months ended June 30, 2024, and a Hardware ARPU decrease of 9% to $486 for the 2025 period from $535 for the 2024 period. The Hardware ARPU decrease was primarily attributable to a change in product mix.

Previous wording

Professional services revenue increased by $0.4 million, or 13%, to $3.9 million for three months ended March 31, 2025, from $3.5 million for the three months ended March 31, 2024. The increase in professional services revenue was driven by $1.1 million related to the installation of upgraded Hub Devices, which are not counted as New Units Deployed. This was partially offset by a $0.8 million decrease in revenue related to our Smart Apartments solutions. New Units Deployed decreased by 39% to 18,114 units for the three months ended March 31, 2025 from 29,710 units for the three months ended March 31, 2024.

Current wording

Professional services revenue decreased by $1.1 million, or 11%, to $8.2 million for six months ended June 30, 2025, from $9.3 million for the six months ended June 30, 2024. The decrease in professional services revenue was driven by a $0.8 million decrease in revenue related to Access Control, as we deployed fewer Access Control projects during the six months ended June 30, 2025 compared to the previous year, and a $0.4 million decrease related to our Smart Apartments solutions. New Units Deployed decreased by 25% to 39,182 units for the six months ended June 30, 2025 from 52,179 units for the six months ended June 30, 2024.

Previous wording

Hosted Services revenue increased by $0.6 million, or 4%, to $18.6 million for the three months ended March 31, 2025, from $18.0 million for the three months ended March 31, 2024. Of the $18.6 million revenue in 2025, $14.0 million is related to SaaS Revenue and $4.6 million is related to hub amortization. Revenue from SaaS increased by $2.1 million, or 17%, and revenue from hub amortization decreased by $1.4 million from the three months ended March 31, 2024 to the three months ended March 31, 2025. The increase of Hosted Services revenue resulted primarily from a 10% increase in the aggregate number of Units Deployed, primarily of our Smart Apartment solution, from 749,401 units at March 31, 2024 to 827,611 units at March 31, 2025 and an increase in SaaS ARPU of 5% to $5.69 for the three months ended March 31, 2025 from $5.41 for the three months ended March 31, 2024.

Current wording

Hosted Services revenue increased by $1.5 million, or 4%, to $37.5 million for the six months ended June 30, 2025, from $36.0 million for the six months ended June 30, 2024. Of the $37.5 million revenue in 2025, $28.2 million is related to SaaS Revenue and $9.3 million is related to hub amortization. Revenue from SaaS increased by $3.5 million, or 13%, and revenue from hub amortization decreased by $1.9 million from the six months ended June 30, 2024 to the six months ended June 30, 2025. The increase of Hosted Services revenue resulted primarily from a 10% increase in the aggregate number of Units Deployed, primarily of our Smart Apartment solution, from 771,870 units at June 30, 2024 to 847,956 units at June 30, 2025 and an increase in SaaS ARPU of 2% to $5.67 for the six months ended June 30, 2025 from $5.53 for the six months ended June 30, 2024.

Previous wording

Total cost of revenue decreased by $3.3 million, or 11%, to $27.8 million for the three months ended March 31, 2025, from $31.1 million for the three months ended March 31, 2024. The decrease in cost of revenue resulted primarily from a 39% decrease in New Units Deployed and a 16% decrease in Units Shipped of our Smart Apartment solution hardware devices.

Current wording

Total cost of revenue decreased by $5.6 million, or 18%, to $25.6 million for the three months ended June 30, 2025, from $31.2 million for the three months ended June 30, 2024. The decrease in cost of revenue resulted primarily from a 46% decrease in Units Shipped of our Smart Apartment solution hardware devices and a 6% decrease in New Units Deployed.

Previous wording

Hardware cost of revenue decreased by $4.7 million, or 25%, to $14.0 million for the three months ended March 31, 2025, from $18.7 million for the three months ended March 31, 2024. This decrease in hardware cost of revenue was primarily attributable to a 16% decrease in Units Shipped.

Current wording

Hardware cost of revenue decreased by approximately $3.4 million, or 21%, to $12.9 million for the three months ended June 30, 2025, from $16.3 million for the three months ended June 30, 2024. This decrease in hardware cost of revenue was primarily attributable to a 46% decrease in Units Shipped.

Previous wording

Professional services cost of revenue increased by $0.9 million, or 13%, to $7.3 million for the three months ended March 31, 2025, from $6.4 million for the three months ended March 31, 2024. The increase in professional services cost of revenue is primarily attributable to an increase of approximately $1.4 million in third-party direct labor costs primarily related to the installation of upgraded Hub Devices, partially offset by a decrease of $0.5 million in personnel-related costs and travel driven by a 39% decrease in New Units Deployed.

Current wording

Professional services cost of revenue decreased by approximately $2.7 million, or 30%, to $6.2 million for the three months ended June 30, 2025, from $8.9 million for the three months ended June 30, 2024. The decrease in professional services cost of revenue is primarily attributable to a decrease of approximately $2.3 million in third-party direct labor costs and a decrease of $0.2 million in personnel-related costs and travel driven by a 6% decrease in New Units Deployed.

Previous wording

Hosted Services cost of revenue increased by approximately $0.6 million, or 10%, to $6.5 million for the three months ended March 31, 2025, from $5.9 million for the three months ended March 31, 2024. The increase resulted from a 10% 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 $0.4 million, partially offset by a $0.4 million decrease in hub amortization.

Current wording

Hosted Services cost of revenue increased by approximately $1.1 million, or 9%, to $13.1 million for the six months ended June 30, 2025, from $12.0 million for the six months ended June 30, 2024. The increase resulted from a 10% increase in the aggregate number of Units Deployed resulting in a greater number of active subscriptions for our software service applications and an increase in personnel-related costs of $0.5 million, partially offset by a $1.0 million decrease in hub amortization.

Previous wording

Research and development expenses decreased by $0.1 million, or 1%, to $8.3 million for the three months ended March 31, 2025, from $8.4 million for the three months ended March 31, 2024, primarily related to an decrease of $0.5 million in personnel-related expenses, partially offset by an increase of $0.2 million in stock compensation and an increase of $0.2 million third-party consultants.

Current wording

Research and development expenses decreased by $1.1 million, or 7%, to $14.7 million for the six months ended June 30, 2025, from $15.8 million for the six months ended June 30, 2024, primarily related to a decrease of $1.2 million in personnel-related expenses.

Previous wording

Sales and marketing expenses increased by $0.2 million, or 5%, to $4.8 million for the three months ended March 31, 2025 from $4.6 million for the three months ended March 31, 2024, resulting primarily from an increase of $0.1 million in stock compensation and $0.1 million in advertising. We believe our sales and marketing expenses will increase in future periods as we continue to invest in building a scalable sales team, which began with hiring our new Chief Revenue Officer in September 2024.

Current wording

Sales and marketing expenses increased by approximately $1.8 million, or 20%, to $11.1 million for the six months ended June 30, 2025 from $9.3 million for the six months ended June 30, 2024, resulting primarily from an increase of $1.1 million in third-party consultants and $0.4 million in advertising. We believe our marketing expenses will decrease in future periods, however, we believe this will be offset in part by increased sales expenses as we continue to invest in building a scalable sales team, which began with hiring our new Chief Revenue Officer in September 2024.

Previous wording

During the three months ended March 31, 2025, we identified certain indicators of impairment, which resulted in a goodwill impairment charge of $24.9 million. See Note 2 - Significant Accounting Policies for additional information.

Current wording

During the six months ended June 30, 2025, we identified certain indicators of impairment, which resulted in a goodwill impairment charge of $24.9 million. See Note 2 - Significant Accounting Policies for additional information.

Previous wording

Interest income, net decreased by approximately $1.3 million to $1.2 million for the three months ended March 31, 2025, from $2.4 million for the three months ended March 31, 2024. The decrease in net interest income is primarily attributable to a lower cash balance on which we’re earning interest, and a decrease in interest rates.

Current wording

Interest income, net decreased by $1.3 million to $1.0 million for the three months ended June 30, 2025, from $2.3 million for the three months ended June 30, 2024. The decrease in net interest income is primarily attributable to a lower cash balance on which we’re earning interest, and a decrease in interest rates.

Previous wording

We define Adjusted EBITDA as EBITDA before expenses related to non-recurring legal matters, stock-based compensation, goodwill impairment, non-recurring warranty provisions, 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 non-affiliate, goodwill impairment, non-recurring warranty provisions, other acquisition expenses, and other expenses caused by non-recurring, or unusual, events that are not indicative of our ongoing business.

Previous wording

(3) During the three months ended March 31, 2025 and 2024, other non-operating expenses includes severance expense of $169 and $231, respectively.

Current wording

(3) During the three months ended June 30, 2025 and 2024, other non-operating expenses includes severance expense of $1,247 and $19, respectively. During the six months ended June 30, 2025 and 2024 other non-operating expenses includes severance expense of $1,416 and $250, respectively.

Previous wording

As of March 31, 2025, we had cash and cash equivalents of $125.6 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, 2025, we had cash and cash equivalents of $105.0 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, 2025, we repurchased 1.0 million shares of our Class A common stock under the stock repurchase program at an average price of approximately $1.18 per share for a total of $1.2 million. As of March 31, 2025, approximately $20.4 million remained available for stock repurchases pursuant to our stock repurchase program.

Current wording

During the three months ended June 30, 2025, we repurchased 4.1 million shares of our Class A common stock under the stock repurchase program at an average price of approximately $0.91 per share for a total of $3,684 million. During the six months ended June 30, 2025, we repurchased 5.1 million shares of our Class A common stock under the stock repurchase program at an average price of approximately $0.96 per share for a total of $4.9 million. As of June 30, 2025, approximately $16.8 million remained available for stock repurchases pursuant to our stock repurchase program.

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.

Previous wording

For the three months ended March 31, 2025, our operating activities used $12.2 million in cash resulting primarily from our net loss of $40.2 million and $2.6 million used in changes in our operating assets and liabilities, partially offset by approximately $30.6 million provided by non-cash expenses. Changes in our operating assets and liabilities primarily resulted from a $16.1 million decrease in deferred revenue and a $2.6 million decrease in accrued expenses and other liabilities, partially offset by a $9.4 million decrease in accounts receivable, a $2.8 million decrease in deferred cost of revenue, a $2.5 million increase in accounts payable and a $1.9 decrease in inventory. Non-cash expenses consisted primarily of a $24.9 million goodwill impairment - refer to Note 2 Significant Accounting Policies, $2.8 million of stock compensation and $1.9 million of depreciation and amortization.

Current wording

For the six months ended June 30, 2025, our operating activities used $27.1 million in cash resulting primarily from our net loss of $51.0 million and $11.5 million used in changes in our operating assets and liabilities, partially offset by approximately $35.4 million provided by non-cash expenses. Changes in our operating assets and liabilities primarily resulted from a $21.3 million decrease in deferred revenue, partially offset by a $5.1 million decrease in deferred cost of revenue, and a $2.6 increase in accrued expenses and other liabilities. Non-cash expenses consisted primarily of a $24.9 million goodwill impairment - refer to Note 2 Significant Accounting Policies, $5.0 million of stock compensation and $4.0 million of depreciation and amortization.