I’m not sure I want to even post this today because there are so many posts I feel like it will get lost and is basically a waste of my time, but I promised to give an update after earnings for the few members who reached out to me at least… Just got off the earnings call and had time to finish putting this together.
“SmartRent is an enterprise smart home automation company developing software and hardware that empowers property owners, managers and homebuilders to effectively manage, protect and automate daily operational processes.”
Essentially a combination of hardware with ARR SaaS revenue for monitoring and operating units. As it currently stands hardware is still the vast majority of revenue-- which makes sense as they are growing and have to install the hardware before they can obtain the ARR.
That being said, the runway for ARR is tremendous and very sticky (0% churn)
SMRT hardware and technologies has a significant advantage over several of its competitors as it can be utilized in new construction, OR existing (very little impact from construction cycles). SMRT is partnered with some of the biggest names in the industry including 15 of the top 20 multifamily rental owners, and as such, benefit from institutions that have capital allocations for property improvements.
SMRT’s products generate value for the customer by reducing energy use, preventing / early alerting regarding water damage (the single most costly common and unforeseen expense as a rental owner)–
Some Q3 Highlights:
Partnered with AppFolio-- a cloud-basted complete property management solution. AppFolio has nearly 17,000 customers representing six million rental units.
SMRT has more than doubled in size with 587 employees (+137% YoY)
**Guidance for installs through Year-End did not change, however Revenue was revised slightly due to supply chain delays for two hardware products which account for the revenue reduction. **
Several student-housing facilities are in trial periods right now, representing another market opportunity for SMRT.
I was concerned about supply chain delays, but all-in-all I was impressed by the progress for Q3:
Revenue $35.1M (112% YoY, 62%QoQ)
Deferred Revenue $84.7M (14%QoQ)
ARR $8.7M (For Q3 only, a +24%QoQ.
Installs 59,347 (+111%YoY)
Booked units (signed for next quarter) 49,706 (+134%YoY)
Total Committed units (under contract within 24months) 704,000 (up 100,000 from last quarter, not including the 59,000 installs in Q3-- representing over 155,000 net new units committed)
There is a link below to my spreadsheet that may be a little easier to read. While there isn’t acceleration every quarter, the cash on the balance sheet ($450M vs. $35M Q3’20), employee expansion, and partnerships create an intriguing hypergrowth opportunity ahead.
The current installed units plus committed units (975,000) at the current reflected revenue per unit (actual number $10.71/month) reflects an ARR of nearly $10.5M / month, or $31.5 / quarter. this is an increase of 262% from current quarterly ARR without booking a single additional unit or upselling!
With new product offerings and upselling to existing customers, SMRT forecasts a product offering in a range of $14-$47/unit/month. At the nearly one million units listed above, at the midpoint of $30/unit that’s $90M ARR per quarter for the existing installed and committed units only. That’s 10x the current ARR by rolling out their new product lineup without booking a single additional unit. (Back of the Napkin Math)
Institutional partners account for over 4 Million units, plus 6 million accessible through the AppFolio partnership–
On top of this, Expansion into the Europe where 46% of residents rent and a market representing 90Million apartments.
Expansion into Student Housing / University partnerships, Class A Office Buildings, and the nice little ESG component with smart utilities / carbon footprint reduction-- I see a good business, a growing business, and a massive TAM with sticky ARR.
Share price is down 3.6%AH.
Doesn’t change my conviction personally-- there’s an awful lot happening in the market. In fact I think I just might be in this company a little too early-- Recent SPAC, recent analyst coverage initiated-- More to come for this company I think.
I’d love to hear your input directly via email**, please don’t respond to the board post unless you have something really vital.**
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Orange you glad this isn’t another Upstart Lamentation?