SmartRent’s Q2 2026 Earnings Call: Deployment Timelines and 1M Unit Target Clash

Date of Call: Aug 5, 2026

Financials Results

• Revenue: $40 million, up 4% (core revenue up 14%)
• Gross Margin: 41%, up 760 basis points YOY

Guidance:

• Revenue, profitability, and cash flow in the second half of 2026 are expected to be stronger than the first half.
• Expect to exceed 1 million installed IoT units during the first half of next year.
• A repeatable data and analytics business is expected to be a sizable part of the revenue stream in coming years.

Business Commentary:

Revenue and Core Revenue Growth:

• SmartRent reported total revenue of $40 million for Q2 2026, up 4%. Core revenue, excluding non-cash hub amortization, was $38 million, up 14%.
• The growth was driven by the expansion of their installed IoT footprint and increased adoption of access control and self-guided tour solutions.

SaaS Revenue and ARR Expansion:

• SAS revenue grew 13% to $16 million, representing over 40% of total revenue. ARR increased to approximately $65 million.
• This was attributed to the continued expansion of the installed base and increased adoption of high-demand solutions like access control and self-guided tours.

Bookings and Installed Base Growth:

• Units booked totaled over 48,000 in the quarter, with a trailing 12-month basis increase of 40% to approximately 112,000 units.
• The growth in bookings was supported by investments in the sales team and go-to-market strategy, as well as increased orders for higher-margin solutions like access control.

Gross Margin Improvement:

• Total gross margin expanded to 41%, a 760 basis point increase. SAS gross margin improved to 75%, up from 70% a year ago.
• Margin improvement was driven by ARPU growth, operational improvements in professional services, and structural cost reduction programs.

Strategic Partnerships and Future Opportunities:

• SmartRent announced partnerships with Hexaware and Databricks to enhance operational leverage and accelerate AI deployment.
• These partnerships aim to support the development of a data and analytics practice, which is expected to become a significant revenue stream in the coming years.

Sentiment Analysis:

Overall Tone: Positive

• Management stated 'SmartRent delivered strong progress' and 'clear proof points of our progress, both strategically and operationally.' They expressed confidence in accelerating growth, expanding margins, and achieving key milestones while noting 'we've never been better positioned to execute on the opportunities ahead.'

Q&A:

• Question from Ryan Tomasello (KBW): In terms of bookings, can you put a finer point on specific factors you'd attribute that strong result to in the quarter, any large outsized deals or seasonal factors? And in terms of the second half of the year, any guardrails around the trajectory of unit deployments and bookings?
  Response: Attributed strong bookings to a couple of solid orders that timing-wise fell in Q2, investments in sales team yielding traction, and an uptick in higher-margin solutions like access control and self-guided tours. For H2, suggested normalizing trailing 12-month units booked to monthly basis as a proxy, but not all increase will occur in Q3.

• Question from Ryan Tomasello (KBW): Can you elaborate on the data and analytics build out? Is this for existing IoT customers or new monetization? And what is the investment cycle and timing?
  Response: Focused on existing installed base, with the million-unit milestone expected early next year as an inflection point. Partnering with Hexaware for operating leverage and AI, and with Databricks to build infrastructure for a repeatable data & analytics revenue stream in coming years.

• Question from Ryan Tomasello (KBW): What is the update on renewal pricing trending with legacy customers and how much longer that cycle will take? Any macro updates on customer budget tightening and CapEx plans?
  Response: Renewals completed by end of year expected to add ~$50k/month incremental revenue, with benefits growing in future years via escalations. Cycle is ongoing as base expands. Macro conditions show less friction, more solution discussions, and growing footprint strengthens customer engagement and ROI visibility.

Contradiction Point 1

Trajectory and Timing for Unit Deployments in H2 2026

Guidance on the pace of deployment growth for Q3 appears inconsistent.

Ryan Tomasello (KBW) - Ryan Tomasello (KBW)

2026Q2: Recent quarters have seen about 20,000 units deployed per quarter; normalizing the TTM to a monthly basis provides a good proxy for future deployment, but not all the increase is expected in Q3. - Daryl Stem(CFO)

Can you specify the factors contributing to the strong quarterly bookings, including any large deals or seasonal factors, and provide guidance on the trajectory of unit deployments and bookings in the second half, along with the timing of bookings to actual deployments? - Ryan Tomasello (KBW)

2026Q2: The TTM... provides a good proxy, but a full swing to closer to 30,000 units per quarter is not expected to occur entirely in Q3. - Daryl Stemm(CFO)

Contradiction Point 2

Timeline for Data & Analytics Revenue Stream Impact

The expected timeline for when the new data & analytics business becomes a "sizable revenue stream" is presented differently.

Ryan Tomasello (KBW) - Ryan Tomasello (KBW)

2026Q2: This new practice is expected to become a sizable revenue stream in coming years. - Frank Martel(CEO)

Can you elaborate on how your data and analytics initiatives will unlock monetization opportunities—specifically whether they target existing IoT customers or new markets—and provide details on the expected P&L impact and timeline for the investment cycle? - Ryan Tomasello (KBW)

2026Q2: The goal is for this new revenue stream to become a sizable part of the company's overall revenue in the coming years. - Frank Martell(CEO)

Contradiction Point 3

Sales Team Expansion Targets

Contradiction in the stated target for sales team growth.

Ryan Tomasello (KBW) - Ryan Tomasello (KBW)

2026Q2: [Daryl Stem: Bookings can be non-linear; the trailing 12-month (TTM) units booked (112,000, up 40%) is a better indicator of underlying demand. Recent quarters have seen about 20,000 units deployed per quarter; normalizing the TTM to a monthly basis provides a good proxy for future deployment, but not all the increase is expected in Q3.] - Daryl Stem(CFO)

Can you specify the factors driving the strong bookings in the quarter, including any large deals or seasonal influences, and provide guidance on the trajectory of unit deployments and bookings in the second half, including the flow through and timing of bookings to deployments? - Ryan Tomasello (Keefe, Bruyette, & Woods, Inc., Research Division)

2026Q1: [SmartRent plans to double its on-staff sales team, aiming to add about 25% in the next 3 months. The company is focusing on hiring high-quality candidates. They are also renegotiating legacy customer contracts, which frees up sales capacity. A new VAR (Value-Added Reseller) program has been launched to target the small and mid-market segment, with plans to add 8-10 partners over the next 4 quarters. These initiatives are expected to impact bookings positively starting in Q2.] - Frank Martell(CEO)

Contradiction Point 4

Timeline for Reaching 1 Million Deployed Units

The expected timeframe for achieving this key milestone has changed between quarters.

Ryan Tomasello (KBW) - Ryan Tomasello (KBW)

2026Q2: Bookings can be non-linear; the trailing 12-month (TTM) units booked (112,000, up 40%) is a better indicator of underlying demand. Recent quarters have seen about 20,000 units deployed per quarter; normalizing the TTM to a monthly basis provides a good proxy for future deployment, but not all the increase is expected in Q3. - Daryl Stem(CFO)

What specific factors contributed to the strong bookings in the quarter, and what guardrails can you provide for unit deployments and bookings in the second half? - Ryan Tomasello (KBW)

20260304-2025 Q4: For 2026, the company expects to reach 1 million deployed units within 4 to 5 quarters and to be adjusted EBITDA profitable and positive from a free cash flow basis for the full year. - Daryl Stemm(CFO)

Contradiction Point 5

Primary Driver of Unit Growth

The main source of unit increases appears to be shifting from a consistent historical trend to a new stated focus.

Ryan Tomasello (KBW) - Ryan Tomasello (KBW)

2026Q2: The strong bookings were driven by a couple of solid orders that had been in progress, timing of customer decisions, and increased sales traction from recent investments. - Frank Martel(CEO)

What specific factors contributed to the strong bookings result in the quarter? - Ryan Tomasello (KBW)

20260304-2025 Q4: Historically, short-term unit growth comes from existing customers, and this trend is expected to continue for Vision 2028. - Daryl Stemm(CFO)