SmartRent CEO Is Out As Problems Mount
With nearly a billion dollars of funding raised a few years ago, the multi-family residential access control market boomed. But significant problems are showing.
Scottsdale, Arizona-based SmartRent announced its CEO's resignation and its search for a successor a week before releasing poor second-quarter results. In this note, we examine the company's CEO announcement, SmartRent's latest financial results, and factors contributing to the slowdown.
For background, see SmartRent Goes Public, Raises ~$500 Million at $2.2 Billion USD Valuation and contrast to Latch Goes Public, Raises ~$500 Million At $1.56 Billion Valuation plus Latch CEO Is Forced Out, More Layoffs.
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Board ****** ******** ** ********
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*** **** ******* ** ********:
** *'* **** *** ***, **** Tuesday, ** ********* **** ***** ******** has ******* **** ** *** *** resigned **** *** *****.We ******* ***** ** *** ************ *** ***** *** *** ********** **** **'* ****. As Smart Runs founder, Lucas did an extraordinary job driving innovation and product development, building strong customer relationships and making the company the leader that it is today.
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SmartRent ***** ***** ****
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*****'***-******* *** ****** *** **** *********** resigned***** **** *** *******'* ***** ********** officer *** ******* *** ** ***** 2023 **** *** ******* ******.
Q2 *******, ******* *******
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$187.4 ******* ****
* ******** *** *** ******* ** that ** ******** ***** ****** $***.* million ** **** *********, ** ***** they **** ****** ~$*** ******* ** date, **** **** ********** **** *** executing ********* *******. ********, ** ** 2024, **** ****** ~$** ******* ** cash, ** *** **** ****, **** if *********, ***** ******** *********** ******.
Management **********
***** *****, ***, *** ******* ********* ********* officer, **** ********* ****** *** ********** call:
** ******** ** ******* ** *challenging ******** ********* ************* ** ******** ******* *********** ******** ********** ** ******** **** ************* *** ***** ************* *******. In response to these dynamics, we continue to actively position our company for long-term success.
**'** ******* ********* *** ******** **********. Better ************* *** ******* *** ***** of *** ********* ***** ****** **** our ******** *** ******** ***** **** closely **** ***** ************.This ******** ****** ************** ******* *** ******** ********* ****** *** ***** ****. [Emphasis Added.]
*****'* ******** ******* ** *****:
Delayed **** ***********
***** ***** ******* *********** ** *** primary ****** ****** *** **** ** revenue. ** **** *** ******* *** not **** "*** ****** ** ******," however. ** **** *********:
***** ******** ********* ********* *** **lower ***** ******** ***** ** ********* * ****** ** *** ******* ******* ********** ******** **'** ****** ****** *** ******** ****. To be clear, we're not seeing any change in demand or the overall market opportunity Rather, we see certain customers that have ******** *** ********** ** ***** ********** ******** *** ********** ** **** **** ******** **** ****. [Emphasis Added.]
** ***** **** *** "****-**** ***********" remains "********* **********."
** ********* *** ********* *********** ** which ** *******, ********** **delayed ******* ************ ***** *** ********* impact the business in the near term. Again, the primary impact of this environment is a delay in anticipated 2024 deployments that our customers have pushed to 2025. The overall ****-**** *********** ** ********* *** *** ******* ********* **********. [Emphasis Added.]
Suspending ****-**** *******
***** ********* *** *******'* ******** ** suspend *** ****-**** **** ********. ** said:
**** ******** ***** ****a ********** ** *******. Given the ongoing CEO transition, current market conditions, known and anticipated customer capital spending delays and the scaling back of SmartRent's channel partner sales program, we determined it was appropriate to suspend guidance at this time. [Emphasis Added.]
** ******** **** *** ******* *** conducted "******** *******" **** ****** ** issues **** *** ***** ****. ** said:
** ********,recent ******** ******* **** *********** *** **** ** ***** ******* ********** ****** *** ***** ************. In response, the management committee and I are committed to implement more rigorous methods to enhance our forecasting accuracy and reliability. We intend to reinstate guidance with a clear, comprehensive outlook as soon as visibility into our operations and market conditions improve. [Emphasis Added.]
Confidence "*********** **** *****"
***** ***** **** *** ******* *** "a **** ****** ** **********" **** the ******* *********** "**** ***** ** 2025." *******, ** **** "************ **** interest *****" **** ******** *** *******'* forecasts *** *********** ** *********** ***** when *********** **** *****. ** **** indicated **** * **** *** **** year ***** ******* *********. ** ****:
We ** **** * **** ****** ** ********** **** ***** *********** **** ***** ** ****. But in terms of what we are looking to see in the macroeconomic conditions, I would say that the persistently high interest rates have had an adverse impact on the acquisition disposition market, in particular.
*** ** *** *** ** ******** intuitive, *** **** ** *** ********* when ****'** ****** ************ ** *** communities ********** ********** ************ ******* ***** improvements **** *** ******** *****.So *** **** -- ************ **** ******** ***** **** *** ** ****** ** *** ******** **********. And that would be the first thing that I would look for...to occur between now and the end of this year that would ******** *** ********** ** *** ****** *********** that are being pushed out to 2025. [Emphasis Added.]
***** ******** ***** *** ************ ********* are ********* ** *********'* ********, *** challenges *** **** ***** *** ********* indicate ******* ********** ** ***** ********.
***********, ** *** **** ****, **** more ******* ******, ** ** **** cloud-based ****** ******* *** *****-****** ********** as ***** ********.