SmartRent, Inc.

Previous wording

Through a Hub Device, we enable the integration of our platform with third-party smart devices, our own hardware devices and other technology interfaces. We use an open-architecture, brand-agnostic approach that allows owners, operators, and residents to manage their smart home systems through a single connected interface. Our Smart Community solutions include software and devices that power (i) smart apartments and homes, (ii) access control for buildings, common areas, and rental units, (iii) community and resident WiFi, and other solutions such as asset protection and monitoring, parking management and self-guided tours. Our Smart Operations solutions include work order management, the automation of leasing and resident call handling, audit management, and the automation of the inspection process. We also have a professional services team that provides customers with training, installation, and support services.

Current wording

Through centrally connected devices ("Hub Devices"), which integrate our enterprise software with third party smart devices, we enable the integration of our platform with third-party smart devices, our own hardware devices and other technology interfaces. We use an open-architecture, brand-agnostic approach that allows owners, operators, and residents to manage their smart home systems through a single connected interface. Our Smart Community solutions include software and devices that power (i) smart apartments and homes, (ii) access control for buildings, common areas, and rental units, (iii) community and resident WiFi, and other solutions such as asset protection and monitoring and self-guided tours. Our Smart Operations solutions include work order management, the automation of leasing and resident call handling, audit management, and the automation of the inspection process. We also have a professional services team that provides customers with training, installation, and support services.

Previous 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.

Current wording

SmartRent is a category leader in the enterprise smart home solutions industry. As of September 30, 2025, we had 870,230 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 September 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 4.2 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 services including access controls, asset monitoring, WiFi, and related services ("Hosted 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 4.1 years.

Previous wording

We continue to experience improvements in the challenges related to the global supply chain. In prior periods, the increased demand for electronics as a result of the COVID-19 pandemic, U.S. trade relations with China and certain other factors in recent periods led to a global shortage of semiconductors, including Z‑wave chips, which are a central component of our Hub Devices. Due to this shortage in prior periods, we experienced Hub Device production delays, which affected our ability to meet scheduled installations and facilitate customer upgrades to our higher-margin Hub Devices. We also experienced shortages and shipment delays related to components for Access Control and made-to-order specialty locks.

Current wording

We continue to experience improvements in the challenges related to the global supply chain. In prior periods, the increased demand for electronics as a result of the COVID-19 pandemic, U.S. trade relations with China and certain other factors in recent periods led to a global shortage of semiconductors, including Z‑wave chips, which are a central component of our Hub Devices. Due to this shortage in prior periods, we experienced Hub Device production delays, which affected our ability to meet scheduled installations and facilitate customer upgrades to our higher-margin Hub Devices. We also experienced shortages and shipment delays related to components for access control systems and made-to-order specialty locks.

Previous wording

We are evolving our business into a more diverse platform with new products, features and functionality that enhance the value of our smart home operating system. We have introduced a number of SaaS product enhancements and features, including Answer Automation and Work Management solutions, that streamline property management operations. We have also introduced Community WiFi, which provides communities with a private, device-dedicated WiFi network to power Hub Devices and other in-home smart devices, and Smart Package Room, which is a smart package management solution that transforms package visibility, reduces labor demands, optimizes storage space and enhances resident satisfaction. Our Smart Operations Solutions enhance our overall platform offering and customer value proposition by providing a comprehensive one-stop platform that broadens our support of property operations, enhancing the experience for residents, property owners and managers. We offer an open-API architecture that enables a myriad of third-party partner integrations, resulting in a multi-functional platform that enhances property management workflow efficiencies, empowers teams to get more done, elevates resident interactions, and improves resident living experiences. In the future, we intend to continue to release new products and solutions and enhance our existing products and solutions, and we expect that our operating results will be impacted by these releases.

Current wording

We are evolving our business into a more diverse platform with new products, features and functionality that enhance the value of our smart home operating system. We have introduced a number of SaaS product enhancements and features, including Answer Automation and Work Management solutions, that streamline property management operations. We have also introduced Community WiFi, which provides communities with a private, device-dedicated WiFi network to power Hub Devices and other in-home smart devices, and Smart Package Room, which is a smart package management solution that transforms package visibility, reduces labor demands, optimizes storage space and enhances resident satisfaction. Our Smart Operations Solutions enhance our overall platform offering and customer value proposition by providing a comprehensive one-stop platform that broadens our support of property operations, enhancing the experience for residents, property owners and managers. We offer an open-API architecture that enables third-party partner integrations, resulting in a multi-functional platform that enhances property management workflow efficiencies, empowers team productivity, elevates resident interactions, and improves resident living experiences. In the future, we intend to continue to release new products and solutions and enhance our existing products and solutions, and we expect that our operating results will be impacted by these releases.

Previous 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.

Current wording

In June 2025, we announced the appointment of Frank Martell as President and Chief Executive Officer. 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

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.

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 September 30, 2025 and 2024, we had an aggregate of 870,230 and 787,038 Units Deployed, respectively. For the three months ended September 30, 2025 and 2024, we had 22,644 and 15,168 New Units Deployed, respectively. For the nine months ended September 30, 2025 and 2024, we had 61,826 and 67,347 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 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.

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 September 30, 2025 and 2024, we had 20,047 and 44,763 Units Shipped, respectively. For the nine months ended September 30, 2025 and 2024, we had 90,008 and 145,287 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 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.

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 September 30, 2025 and 2024 there were 22,080 and 17,048 Units Booked, respectively. For the nine months ended September 30, 2025 and 2024 there were 64,609 and 101,029 Units Booked, respectively. For the three months ended September 30, 2025 and 2024, ARR (as defined below) related to Units Booked was $2,110 and $1,991, respectively. For the nine months ended September 30, 2025 and 2024, ARR related to Units Booked was $6,753 and $7,301, 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 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.

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 September 30, 2025 and 2024, Bookings were $23,955 and $19,582, respectively. For the nine months ended September 30, 2025 and 2024, Bookings were $81,595 and $103,864, 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 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.

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 September 30, 2025, approximately 33% 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 September 30, 2025 and 2024, we generated SaaS Revenue of $14.2 million and $13.3 million, respectively. For the nine months ended September 30, 2025 and 2024, we generated SaaS Revenue of $42.4 million and $38.0 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 June 30, 2025 and 2024, ARR was approximately $56.9 million and $51.2 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 September 30, 2025 and 2024, ARR was approximately $56.9 million and approximately $53.2 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 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.

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 September 30, 2025 and 2024, Hardware ARPU was $574 and $418, respectively. For the nine months ended September 30, 2025 and 2024, Hardware ARPU was $505 and $499, 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 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.

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 September 30, 2025 and 2024, Professional Services ARPU was $449 and $443, respectively. For the nine months ended September 30, 2025 and 2024, Professional Services ARPU was $416 and $310, 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 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.

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 September 30, 2025 and 2024, SaaS ARPU was $5.52 and $5.70, respectively. For the nine months ended September 30, 2025 and 2024, SaaS ARPU was $5.61 in both periods.

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 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.

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 September 30, 2025 and 2024, Units Booked SaaS ARPU was $7.96 and $9.73, respectively. For the nine months ended September 30, 2025 and 2024, Units Booked SaaS ARPU was $8.71 and $9.48, 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 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.

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 September 30, 2025 and 2024, our Customer Churn for our Smart Communities Solutions was 0.05% and 0.01%, respectively. For the nine months ended September 30, 2025 and 2024, our Customer Churn for our Smart Communities Solutions was 0.15% and 0.06%, 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 June 30, 2025 compared to 103% as of June 30, 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 104% as of September 30, 2025 compared to 101% as of September 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 108% as of June 30, 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 113% as of September 30, 2025.

Previous 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.

Current wording

(1) For the three months ended September 30, 2025 and 2024, Hosted services revenue for our Smart Apartments solution included hub amortization revenue of $3,424 and $5,177, respectively. For the nine months ended September 30, 2025 and 2024, Hosted services revenue for our Smart Apartments solution included hub amortization revenue of $12,701 and $16,435, 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 4.2 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.

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 4.1 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

Cost of revenue consists primarily of direct costs of products and services together with the indirect cost of estimated warranty expense and customer care and support over the life of the service arrangement. We expect the cost of revenue to increase in absolute dollars in future periods. We record any change to cost of job performance and job conditions in the period during which the revision is identified.

Current wording

Cost of revenue consists primarily of direct costs of products and services together with the indirect cost of estimated warranty expense and customer care and support over the life of the service arrangement. We expect the cost of revenue to increase in absolute dollars in future periods commensurate with increases in revenue. We record any change to cost of job performance and job conditions in the period during which the revision is identified.

Previous wording

Cost of hardware revenue consists primarily of direct costs of products, Hub Devices, hardware devices and supplies purchased from third-party providers, shipping costs, warehouse facility (including depreciation and amortization of capitalized assets and right-of-use assets) and infrastructure costs, personnel-related costs associated with the procurement and distribution of our products and estimated warranty expenses together with the indirect cost of customer care and support. We expect an increase in cost of hardware revenue in absolute dollars in future periods.

Current wording

Cost of hardware revenue consists primarily of direct costs of products, Hub Devices, hardware devices and supplies purchased from third-party providers, shipping costs, warehouse facility (including depreciation and amortization of capitalized assets and right-of-use assets) and infrastructure costs, personnel-related costs associated with the procurement and distribution of our products and estimated warranty expenses together with the indirect cost of customer care and support. We expect an increase in cost of hardware revenue in absolute dollars in future periods commensurate with increases in revenue.

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 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.

Current wording

Tariffs imposed by the U.S. government since 2019, especially with respect to China, have subjected certain SmartRent products manufactured overseas to additional import duties. The amount of the import tariff has changed numerous times based on actions by the U.S. government. The U.S. government 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. We continue to monitor and evaluate changes in policy impacting global trade, including tariff regulations.

Previous wording

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

Current wording

Results of Operations for the Three and Nine Months Ended September 30, 2025 and 2024

Previous wording

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

Current wording

Comparison of the three and nine months ended September 30, 2025 and 2024

Previous 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.

Current wording

Total revenue decreased by $4.3 million, or 11%, to $36.2 million for the three months ended September 30, 2025, from $40.5 million for the three months ended September 30, 2024. The decrease was primarily driven by a decrease in Units Shipped to 20,047 for the three months ended September 30, 2025 from 44,763 for the three months ended September 30, 2024, partially offset by an increase in New Units Deployed to 22,644 units for the three months ended September 30, 2025 from 15,168 units for the three months ended September 30, 2024. The overall decrease in Units Shipped is 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

Total revenue decreased by approximately $19.3 million, or 20%, to $79.7 million for the six months ended June 30, 2025, from $99.0 million for the three months ended June 30, 2024. The decrease was primarily driven by a $17.9 million decrease in revenue related to our Smart Apartments solution which resulted primarily 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 decrease in New Units Deployed to 39,182 units for the six months ended June 30, 2025 from 52,179 units for the six months ended June 30, 2024, partially offset by a 10% increase in the number of cumulative active subscriptions for our Hosted Services during the six months ended June 30, 2025 compared to the six months ended June 30, 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 approximately $23.6 million, or 17%, to $115.9 million for the nine months ended September 30, 2025, from $139.5 million for the three months ended September 30, 2024. The decrease was primarily driven by a 38% decrease in Units Shipped to 90,008 for the nine months ended September 30, 2025 from 145,287 for the nine months ended September 30, 2024 and a decrease in New Units Deployed to 61,826 units for the nine months ended September 30, 2025 from 67,347 units for the nine months ended September 30, 2024, partially offset by revenue generated from the installation of Hub Device upgrades and a 11% increase in the number of cumulative active subscriptions for our Hosted Services during the nine months ended September 30, 2025 compared to the nine months ended September 30, 2024. The overall decrease in Units Shipped and New Units Deployed is 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

Hosted Services revenue increased by $0.8 million, or 5%, to $18.8 million for the three months ended June 30, 2025, from $18.0 million for the three months ended June 30, 2024. Of the $18.8 million revenue in 2025, $14.2 million is related to SaaS Revenue and approximately $4.6 million is related to hub amortization. Revenue from SaaS increased by $1.4 million, or 10%, and revenue from hub amortization decreased by $0.6 million from the three months ended June 30, 2024 to the three 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.

Current wording

Hosted Services revenue decreased by $0.8 million, or 5%, to $17.7 million for the three months ended September 30, 2025, from $18.5 million for the three months ended September 30, 2024. Of the $17.7 million revenue in 2025, $14.2 million is related to SaaS Revenue and approximately $3.5 million is related to hub amortization. Revenue from SaaS increased by $0.9 million, or 7%, and revenue from hub amortization decreased by $1.7 million from the three months ended September 30, 2024 to the three months ended September 30, 2025. The increase of Hosted Services revenue resulted primarily from a 11% increase in the aggregate number of Units Deployed from 787,038 units at September 30, 2024 to 870,230 units at September 30, 2025.

Previous 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.

Current wording

Hosted Services revenue increased by $0.6 million, or 1%, to $55.1 million for the nine months ended September 30, 2025, from $54.5 million for the nine months ended September 30, 2024. Of the $55.1 million revenue in 2025, $42.4 million is related to SaaS Revenue and $12.7 million is related to hub amortization. Revenue from SaaS increased by $4.4 million, or 12%, and revenue from hub amortization decreased by $3.8 million from the nine months ended September 30, 2024 to the nine months ended September 30, 2025. The increase of Hosted Services revenue resulted primarily from a 11% increase in the aggregate number of Units Deployed from 787,038 units at September 30, 2024 to 870,230 units at September 30, 2025.

Previous 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.

Current wording

Hardware cost of revenue decreased by approximately $8.1 million, or 17%, to $40.7 million for the nine months ended September 30, 2025, from $48.8 million for the nine months ended September 30, 2024. This decrease in hardware cost of revenue was primarily attributable to a 38% decrease in Units Shipped.

Previous 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.

Current wording

Professional services cost of revenue was flat at $6.8 million for the three months ended September 30, 2025 and 2024. Third-party direct labor costs increased approximately $1.0 million, driven by a 49% increase in New Units Deployed. This was offset by a decrease of $1.0 million in personnel-related costs and travel expenses.

Previous wording

Professional services cost of revenue decreased by $1.8 million, or 12%, to $13.5 million for the six months ended June 30, 2025, from $15.3 million for the six months ended June 30, 2024. The decrease in professional services cost of revenue is primarily attributable to a decrease of approximately $1.0 million in third-party direct labor costs and a decrease of $0.7 million in personnel-related costs and travel driven by a 25% decrease in New Units Deployed.

Current wording

Professional services cost of revenue decreased by $1.9 million, or 8%, to $20.3 million for the nine months ended September 30, 2025, from $22.2 million for the nine months ended September 30, 2024. The decrease in professional services cost of revenue is primarily attributable to a decrease of $1.7 million in personnel-related costs and travel driven by a 8% decrease in New Units Deployed.

Previous 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.

Current wording

Hosted Services cost of revenue increased by approximately $0.8 million, or 4%, to $19.1 million for the nine months ended September 30, 2025, from $18.3 million for the nine months ended September 30, 2024. The increase resulted from a 11% 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 $0.9 million, partially offset by a $1.9 million decrease in hub amortization.

Previous wording

Research and development expenses decreased by $1.0 million, or 14%, to $6.5 million for the three months ended June 30, 2025, from $7.5 million for the three months ended June 30, 2024, primarily related to a decrease of $0.9 million in personnel-related expenses and stock compensation.

Current wording

Research and development expenses decreased by $0.4 million, or 7%, to approximately $6.2 million for the three months ended September 30, 2025, from $6.6 million for the three months ended September 30, 2024, primarily related to a decrease of $0.2 million in personnel-related expenses.

Previous 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.

Current wording

Research and development expenses decreased by approximately $1.5 million, or 7%, to $20.9 million for the nine months ended September 30, 2025, from $22.4 million for the nine months ended September 30, 2024, primarily related to a decrease of $1.2 million in personnel-related expenses.

Previous wording

Sales and marketing expenses increased by $1.7 million, or 35%, to $6.4 million for the three months ended June 30, 2025 from $4.7 million for the three months ended June 30, 2024, resulting primarily from an increase of $0.9 million in non-recurring, third-party consultants and $0.3 million in personnel-related expenses. 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.

Current wording

Sales and marketing expenses were approximately flat at $4.4 million for the three months ended September 30, 2025 and 2024. Personnel-related expenses increased by $0.4 million, offset small decreases in other sales and marketing expenses such as conferences and trade shows, advertising, and business applications and software. 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.

Previous 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.

Current wording

Sales and marketing expenses increased by approximately $1.8 million, or 13%, to $15.5 million for the nine months ended September 30, 2025 from $13.7 million for the nine months ended September 30, 2024, resulting primarily from an increase of $1.1 million in third-party consultants and $0.6 million in personnel-related expenses. 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.

Previous wording

General and administrative expenses were flat at $28.7 million for the six months ended June 30, 2025 compared to the six months ended June 30, 2024. Key variances include a $2.2 million increase related to legal matters, partially offset by a $2.3 million impairment of an investment in a non-affiliate in the prior year and a $1.5 million decrease in stock compensation. Our legal expenses incurred during the six months ended June 30, 2025 included $3.5 million of legal fees and $11.4 million of accrued settlement costs, offset by committed insurance and third-party contributions of $7.5 million. See Note 12 - Commitments and Contingencies for more information.

Current wording

General and administrative expenses decreased by $8.3 million, or 19%, to $34.5 million for the nine months ended September 30, 2025 from $42.8 million for the nine months ended September 30, 2024. This was primarily driven by a $4.3 million decrease in legal expenses, a $2.5 million decrease in severance expense, and a $2.3 million decrease related to the impairment of an investment in a non-affiliate in the prior year. Our legal expenses incurred during the nine months ended September 30, 2025 included $4.6 million of legal fees and $11.4 million of accrued settlement costs, offset by committed insurance and third-party contributions of $11.2 million. See Note 12 - Commitments and Contingencies for more information.

Previous 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.

Current wording

During the nine months ended September 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.