SMRT 10-K & 10-Q changes, risk factors and insider trading

We may not successfully manage the transition of leadership to our new President and Chief Executive Officer, which could have an adverse impact on us.

We experienced net losses in each year since inception, including a net loss of $34.6 million for 2023 and $33.6 million for 2024.2024 and $60.6 million for 2025. We believe we will continue to incur operating losses and negative cash flow in the near-term as we continue to invest significantly in our business. We expect to continue to devote significant resources to our future growth, including making meaningful investments in our customer acquisition teams, building out our technological capabilities, including internal business systems and tools, and exploring strategic acquisition opportunities.

We may continue to incur losses and will have to generate and sustain increased revenues to achieve future profitability. Achieving profitability will require us to increase revenues, manage our cost structure, and avoid significant liabilities. Revenue growth may slow, revenues may decline or grow at a slower rate relative to increasing costs, or we may incur significant losses in the future for a number of possible reasons, including general macroeconomic conditions, decreasingdecreased demand for our products, slow down in housing construction, increasingincreased competition (including competitive pricing pressures), a decrease in the growth of the markets in which we compete, and our failure to capitalize on growth opportunities. Additionally, we may encounter unforeseen operating expenses, difficulties, complications, delays, and quality problems, and other unknown factors that may result in losses in future periods. If these losses exceed our expectations or our revenue growth expectations are not met or these losses exceed our expectations in future periods, our business will be harmed and our stock price could decline.

We have limited control over our suppliers, manufacturers, and partners. These suppliers, manufacturers, and partners may operate in a way which harms our business. In addition, these suppliers, manufacturers, and partners may experience delay, disruption, or lapse in the quality of their operations,operations. whichOur woulduse of third-party suppliers, manufacturers and partners subject us to risks, including the following:

disagreements with suppliers, manufacturers, or logistics partners as to quality control, leading to a surplus of ineffectivedefective products;

The occurrence of any of these risks, especially during periods of peak demand, could cause us to experience a significant disruption in our ability to produce and deliver our products to our customers. For example, 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 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, in the past we experienced Hub Device production delays, which affected our ability to meet scheduled installations and facilitate customer upgrades to our higher-margin Hub Devices. The semiconductor supply chain is complex, with capacity constraints occurring throughout. We must compete with other industries to satisfy current and near-term requirements for semiconductors, and those allocations are not within our control even though we attempt various mitigating actions. An ongoing shortage of semiconductors or other key components can disrupt our production schedule and have an adverse effect on our business, profitability and results of operations.

Certain of our products are currently subject to tariffs, changes in trade policies or labor shortages, which could make delivery of supplies more expensive. For example, therecent newchanges U.S.have presidentialresulted administrationin has imposed additionalfluctuating tariffs on imports into the United States from certain European countries, Canada, China and Mexico, which could lead to increased expenses and delays in shipments. These potential delays and cost increases could have an adverse effect on our business, financial condition, and operating results.

If we experience a significant increase in demand for our products, or if we need to replace an existing supplier or partner, we may be unable to supplement or replace them on terms that are acceptable to us, which may undermine our ability to deliver our products to customers in a timely manner. For example, it may take a significant amount of time to identify a manufacturer that has the capability and resources to build our products to our specifications in sufficient volume. Identifying suitable suppliers, manufacturers, and partners is an extensive process that requires us to become satisfied with their quality control, technical capabilities, responsiveness and service, financial stability, regulatory compliance, and labor and other ethical practices. Accordingly, a loss of any of our significant suppliers, manufactures,manufacturers, or logistics partners could have an adverse effect on our business, financial condition, and operating results.

We may not successfully manage the transition of leadership to our new President and Chief Executive Officer, which could have an adverse impact on us.

On FebruaryJune 24,16, 2025, MichaelFrank Shane PaladinMartell became our new President and Chief Executive Officer. Our new President and Chief Executive Officer will beis critical to executing on our evolving business strategy. Our success will depend, in part, on the effectiveness of this transition, including the successful integration into his role and the continuity of leadership among the larger workforce. If we do not successfully manage this transition, it could be viewed negatively by our customers, employees, investors, and other third-party partners and could have an adverse impact on our business, results of operations, or our stock price. If Mr. PaladinMartell is unsuccessful at leading the management team or is unable to articulate and execute our strategy and vision, we may not be able to achieve our financial and operational goals, which could adversely affect our business and results of operations.

The market for smart home solutions is in an early stage of development, and it is uncertain how rapidly or how consistently this market will develop and the degree to which our products and solutions will be accepted into the single-family and multifamily rental markets in which we operate. Some residents, owners, or operators may be reluctant or unwilling to use our solutions for a number of reasons, including satisfaction with traditional solutions, concerns about additional costs, concerns about data privacy, and lack of awareness of the benefits of our solutions. In addition, macroeconomic conditions (including, for example, higher interest rates or fear of recession) may cause delays or reductions in the capital expenditures by our customers. Further, new regulations may cause our customers and potential customers to redirect capital expenditures to meet the requirements of such regulations. For example, some of our customers have indicated that they are delaying the deployment of our solutions in certain communities and are directing more of their capital expenditures to solar systems to meet ESG requirements - thus reducing our short-term revenue expectations. Our ability to expand the sales of our products and solutions into this market and new markets depends on several factors, including the reputation and recognition of our products and solutions, the timely completion, introduction and market acceptance of our products and solutions, the ability to attract, retain and effectively train sales and marketing personnel, the effectiveness of our marketing programs, the costs of our products and solutions and the success of our competitors. If we are unsuccessful in developing and marketing our products and solutions into new markets, or if customers do not perceive or value the benefits of our products and solutions, the market for our products and solutions might not continue to develop or might develop more slowly than we expect, either of which would harm our revenue and growth prospects.

the ability to effectively manage growth within existing and new markets domestically and internationally;

restrictions on international trade, such as tariffs and other controls on imports or exports of goods, technology or data; and the impact of other events or factors, including those resulting from natural disasters, pandemics, war,political or military conflict, including due to the war in Ukraine and Israel-Hamas conflict, acts of terrorism, or responses to these events.

The markets in which we participate could become more competitive as many companies, including large technology companies, managed service providers and internet service, securityservice and WiFisecurity providers, may target the markets in which we do business. If we are unable to compete effectively with these potential competitors and sustain pricing levels for our products and solutions, our revenue and profitability could be adversely affected.

our success in utilizing new technologies to offer solutions and features previously not available in the marketplace our success in identifying new markets, applications and technologies such as our Community WiFi solution;

We face, and may in the future face, competition from large technology providers,providers and managed service providers and WiFi providers, that may have greater capital and resources than we do. Competitors that are larger in scale and have greater resources may benefit from greater economies of scale and other lower costs that permit them to offer more favorable terms to consumers (including lower service costs) than we offer, causing such consumers to choose to enter into contracts with such competitors. For instance, cable and telecommunications companies are expanding into the smart home and security industries and are bundling their existing offerings with automation and monitored security services. In some instances, it appears that certain components of such bundled offerings are significantly underpriced and, in effect, subsidized by the rates charged for the other product or services offered by these companies. These bundled pricing alternatives may influence customers’ desire to use our services at rates and fees we consider appropriate. These competitors may also benefit from greater name recognition and superior advertising, marketing, promotional and other resources. To the extent that such competitors utilize any competitive advantages in markets where our business is more highly concentrated, the negative impact on our business may increase over time. In addition to potentially reducing the number of new customers we are able to acquire, increased competition could also result in increased customer acquisition costs and higher attrition rates that would negatively impact us over time. The benefit offered to larger competitors from economies of scale and other lower costs may be magnified by an economic downturn in which customers put a greater emphasis on lower cost products or services. In addition, we face competition from regional competitors that concentrate their capital and other resources in targeting local markets.

As of December 31, 2024,2025, we had approximately $222.9$252.9 million of gross federal net operating loss carryforwards available to reduce future taxable income. Realization of any tax benefit from our carryforwards is dependent on our ability to generate future taxable income and the absence of certain “ownership changes.” An “ownership change,” as defined in the applicable federal income tax rules, could place significant limitations, on an annual basis, on the amount of our future taxable income that may be offset by our carryforwards. Such limitations could effectively eliminate our ability to utilize a substantial portion of our carryforwards. We have conductednot ancompleted analysisa underformal Section 382 ofstudy; thehowever, Codegiven its cumulative losses and valuation allowance position, management does not expect any potential limitation to determinehave whethera therematerial impact on our income tax provision. A formal analysis would be anyperformed limitationwhen ontaxable ourincome abilityis togenerated utilizein ourfuture taxperiods attributes. We have not experienced any limitations onand the abilityutilization to useof these tax attributes asbecome the result of our analysis. Other issuances of shares of our Class A Common Stock which could cause an “ownership change” include the issuance of shares of common stock upon future conversion or exercise of outstanding options and warrants or future common stock offerings. We continue to analyze any shifts in ownership which may limit our ability to use these tax attributes in the future.probable.

We are subject to tax laws, regulations and policies of several taxing jurisdictions. Changes in tax laws, as well as other factors, could cause us to experience fluctuations in our tax obligations and effective tax rates and otherwise adversely affect our tax positions and results of our operations. For example, legislation commonly known as the One Big Beautiful Bill Act (“OBBBA”), which made significant changes to U.S. tax law and related laws, was enacted in July 2025. In addition, in August 2022 the United States enacted a 1% excise tax on stock buybacks, which could impact our share repurchase program, and a 15% alternative minimum tax on adjusted financial statement income as part of the Inflation Reduction Act of 2022. Furthermore, beginning in 2022, the Code eliminates the right to deduct research and development expenditures currently and requires taxpayers to capitalize and amortize U.S. and foreign research and development expenditures over five and fifteen tax years, respectively. We have accounted for such changes in accordance with our understanding of guidance available as of the date of this filing as described in more detail in our financial statements. ManyFurther, many countries, as well as organizations such as the Organization for Economic Cooperation and Development,Development ("OECD"), have enacted or proposed changes to existing tax laws, including a proposed 15% global minimum tax.tax Any("Pillar 2"). The OECD and participating jurisdictions have agreed to a side-by-side arrangement that would exempt U.S. parented groups from certain provisions of thesePillar 2 for fiscal years beginning on or after January 1, 2026. These and other developments or changes in U.S. federal, state or international tax laws or tax rulings could adversely affect our effective tax rate and our operating results. There can be no assurance that our effective tax rates, tax payments or tax credits and incentives will not be adversely affected by these or other developments or changes in law.

Our business strategy may, from time to time, include acquiring or investing in complementary services, technologies or businesses. On March 21, 2022, we purchased all of the outstanding equity interests of SightPlan Holdings, Inc. ("SightPlan"). We cannot assure you that we will successfully identify suitable acquisition candidates, integrate or manage disparate technologies, lines of business, personnel and corporate cultures, realize our business strategy or the expected return on our investment, or manage a geographically dispersed company. Any such acquisition or investment could materially and adversely affect our results of operations. Acquisitions and other strategic investments involve significant risks and uncertainties, including:

We may require additional capital to pursue our business objectives and to respond to business opportunities, challenges, or unforeseen circumstances. If capital is not available to us,us on acceptable terms, our business, results of operations, and financial condition may be adversely affected.

To date, our operations and capital expenditures have been primarily funded by the net proceeds we received through the private issuance of our convertible SmartRent preferred stock, the net proceeds received as a result of the Business Combination, and payments collected from sales to our customers. During the year ended December 31, 2024, the Board committed to a strategic investment of $10 million over the next year to accelerate our momentum and deliver the results of our strategic initiatives more quickly. We may require additional capital to pursue our business objectives and respond to business opportunities, challenges, or unforeseen circumstances, including the need to develop new products or software or enhance our existing products and software, enhance our operating infrastructure, and acquire complementary businesses and technologies.

Accordingly, we may need to engage in equity or debt financings to secure additional funds. However, additional funds may not be available when we need them on terms, including interest rates, that are acceptable to us, or at all. For example, our credit facility terminates on December 10, 2026. We cannot assure you that such facility will be renewed or that we will be able to obtain additional funding on similar or acceptable terms.

We own fourseven issued U.S. patents, have fivefour pending U.S. patent applications, three foreign patent applications, and two pendingone international patent applicationsapplication that relate to smart home, security and wireless Internet technologies utilized in our business. We may file additional patent applications in the future in the U.S. and internationally. The process of obtaining patent protection is expensive and time-consuming, and we may not be able to prosecute all necessary or desirable patent applications at a reasonable cost or in a timely manner. We may choose not to seek patent protection for certain innovations and may choose not to pursue patent protection in certain jurisdictions. In addition, issuance of a patent does not guarantee that we have an absolute right to practice the patented invention.

Our policy is to require our employees that were hired and contractors that were engaged to develop material intellectual property included in our products to execute written agreements in which they assign to us their rights in potential inventions and other intellectual property created within the scope of their employment (or, with respect to consultants and service providers, their engagement to develop such intellectual property), but we cannot assure you that we have adequately protected our rights in every such agreement or that we have executed an agreement with every such party. Finally, in order to benefit from the protection of intellectual property rights, we must monitor and detect infringement, misappropriation or other violations of our intellectual property rights and pursue infringement, misappropriation or other claims in certain circumstances in relevant jurisdictions, all of which are costly and time-consuming. As a result, we may not be able to obtain adequate protection or to effectively enforce our intellectual property rights.

Our revenue, results of operations and cash flows depend on the overall demand for our products and solutions. Adverse macroeconomic conditions, including inflation, slower growth or recession, barriers to trade, changes to fiscal and monetary policy, tighter credit, higher interest rates, high unemployment, currency fluctuations, regulatory requirements and other events beyond our control, such as economic sanctions, tariffs, natural disasters, pandemics, including the COVID-19 pandemic, epidemics, political instability, including in regions such as Venezuela, armed conflicts and wars, including the Russia-Ukraine war and Israel-Hamas war,conflict, can materially adversely affect demand for our products and solutions. In addition, consumer spending and activities can be materially adversely affected in response to financial market volatility, negative financial news, conditions in the real estate and mortgage markets, declines in income or asset values, energy shortages and cost increases, labor and healthcare costs and other economic factors, all of which may have a negative effect on our business and results of operations.

During weak or uncertain economic times, the available pool of potential customers and the amount of capital expenditures that our existing customers deploy may decline as the prospects for residential building renovation projects and new multifamily apartment and single-family rental construction diminish, which may have a corresponding impact on our growth prospects. In addition, there is an increased risk during these periods that an increased percentage of property developers will file for bankruptcy protection, which may harm our business. In addition, we may determine that the cost of pursuing any claim may outweigh the recovery potential of such claim. Prolonged economic slowdowns and reductions in renovation projects and new residential and commercial building construction have resulted and may continue to result in diminished sales of our software, services and products. Further worsening, broadening or protracted extension of an economic downturn could have a negative impact on our business, revenue, results of operations and cash flows. Additionally, regulatory requirements may cause our customers to decrease the amount of capital expenditure directed to purchase our products and solutions. For example, some of our customers have indicated that they are delaying the deployment of our solutions in certain communities and are directing more of their capital expenditures budget to purchase solar systems to meet ESG requirements - thus having an adverse impact on our short-term revenue expectations.

Actual events involving limited liquidity, defaults, non-performance or other adverse developments that affect financial institutions, other companies in the financial services industry or the financial services industry generally, or concerns or rumors about any events of these kinds or other similar risks, have in the past and may in the future lead to market-wide liquidity problems, which may in turn effect our financial condition. For example, we have a banking relationship with Silicon Valley Bank ("SVB") and also are a party with SVB to the $75,000 Senior Revolving facility with a five-year term (the "Senior Revolving Facility"). On March 10, 2023, SVB was closed by the California Department of Financial Protection and Innovation, which appointed the FDIC as receiver. On March 12, 2023, the U.S. Treasury, Federal Reserve, and the FDIC announced that SVB depositors would have access to all of their money starting March 13, 2023. SVB’s closure did not have a material impact on our operations, and we did not experience any losses.

Changes in effective tax rates, or adverse outcomes resulting from examination of our incomeincome, sales or other tax returns, could adversely affect our results of operations and financial condition.

Our business is subject to the risk of earthquakes, fires, power outages, floods, pandemics and other health events and other catastrophic events, and to interruption by manmade problems such as political or military actions and acts of terrorism.

Our business is vulnerable to damage or interruption from earthquakes, fires, floods, power losses, telecommunications failures, terrorist attacks, actspolitical ofor war,military conflicts, human errors, break-ins, and similar events. The third-party systems and operations and manufacturers we rely on are subject to similar risks. For example, a significant natural disaster, such as an earthquake, fire, or flood, could have an adverse effect on our business, financial condition and operating results, and our insurance coverage may be insufficient to compensate us for losses that may occur. Acts of terrorism, which may be targeted at metropolitan areas that have higher population density than rural areas, or geopolitical unrest or armed conflict, such as the war in Ukraine and the Israel-Hamas conflict, could also cause disruptions in our or our suppliers’ and manufacturers’ businesses or the economy as a whole. Our suppliers and manufacturers in China may be reactive to pandemics and other health events, resulting in restrictions on shipping or manufacturing. If our suppliers or manufacturers are impacted by such events, it could adversely affect our ability to manufacture product and meet demand. We may not have sufficient protection or recovery plans in some circumstances, such as natural disasters affecting locations that store significant inventory of our products or that house our servers. As we rely heavily on our computer and communications systems, and the internet to conduct our business and provide high-quality customer service, these disruptions could negatively impact our ability to run our business and either directly or indirectly disrupt suppliers’ and manufacturers’ businesses, which could have an adverse effect on our business, financial condition, and operating results.

We collect, store, use, and otherwise process a wide variety of data from current and prospective customers and their residents, including personal information, such as home addresses and geolocation. Federal, state, and international laws and regulations governing privacy, data protection, and e-commerce transactions require us to safeguard our customers’ personal information. The scope of laws and regulations relating to privacy and cybersecurity is evolving rapidly. We also maintain privacy policies and other notices, and are subject to contractual obligations to third parties, related to privacy, data protection, and cybersecurity. We strive to comply with applicable laws, regulations, policies, and other legal obligations relating to privacy, data protection, and cybersecurity. However, the regulatory framework for privacy, data protection, and information security is, and is likely to remain, uncertain for the foreseeable future, and it is possible that these or other actual or alleged obligations may be interpreted by regulators or asserted as tort claims in civil litigation and applied in a manner that is inconsistent from one jurisdiction to another and may conflict with other actual or alleged obligations or our practices.

We also expect that there will continue to be new laws, regulations, and industry standards concerning privacy, data protection, and cybersecurity proposed and enacted in various jurisdictions. Various states throughout the U.S. are increasingly adopting or revising privacy, information security, and data protection laws and regulations that could have a significant impact on our current and planned privacy, data protection, and cybersecurity-related practices, our collection, use, sharing, retention, safeguarding, and processing of customer, consumer, resident, employee, or any other third-party information we receive, and some of our current or planned business activities. For example, California enacted the CCPA, which affords California resident consumers expanded privacy protections and control over the collection, use and sharing of their personal information. The CCPA went into effect on January 1, 2020 and, among other things, gives California residents expanded rights to access and require deletion of their personal information, opt out of certain personal information sharing and receive detailed information about how their personal information is used. The CCPA also provides for a private right of action for data breaches that may increase data breach litigation. The CPRA, which significantly amended and supplemented the CCPA, was adopted by California voters in 2020. The CPRA imposes additional privacy obligations on covered companies doing business in California, including additional consumer rights processes and opt outs for certain uses of sensitive data. It also creates a new California agency tasked to enforce the law, which is likely to result in increased regulatory scrutiny of California businesses in the areas of privacy and cybersecurity. The CPRA’s primary substantive requirements went into effect on January 1, 2023. Following enactment of the CCPA, many other states have adopted or considered privacy legislation, many of which are comprehensive laws similar to the CCPA and CPRA. For example, Virginia, Colorado, Utah, and Connecticut have adopted such legislation that became effective in 2023, Texas, Montana, Oregon, and Florida have adopted such legislation that became effective in 2024, Delaware, Iowa, Maryland, Minnesota, Nebraska, New Hampshire, New Jersey and Tennessee have adopted such legislation that has or will becomebecame effective in 2025, and Indiana, Kentucky, and Rhode Island have adopted such legislation that willhas become effective in 2026. Numerous U.S. states also have considered, and in certain cases enacted, legislation addressing particular subject matter such as biometrics and health-related information. Broad federal privacy legislation has also been proposed. These and other new and evolving laws and regulations relating to privacy in the U.S. could increase our potential liability and adversely affect our business.

We have incorporated and may continue to incorporate additional AI technology into certain of our SmartRent Solutions, and AI technology may become more important to our operations or to our future growth over time. We expect to rely on AI to help drive future growth in our business, but there can be no assurance that we will realize the desired or anticipated benefits from AI technology or at all. The use of AI and AI-related technologies involves complexities and requires specialized expertise. We may not be able to attract and retain talent to support our AI initiatives and maintain our systems and infrastructure. Any disruptive or failure in our systems or infrastructure could result in delays and operational issues. We may also fail to properly implement AI technology or to effectively promote our use of it. Our competitors or other third parties may incorporate AI technology into their products, offerings, and solutions more quickly or more successfully than us, which could impair our ability to compete effectively and adversely affect our results of operations. As AI technologies continue to improve in the future, we may be required to make significant capital expenditures to remain competitive, which may increase our overall expenses. Furthermore, the adoption of AI technologies with the rental industry has introduced, and will likely continue to increase risk of disintermediation, as future AI technologies might be able to provide our customers with direct access to information or capabilities that currently require assistance from service providers such as SmartRent. If this disintermediation occurs, the demand for our services or the price customers are willing to pay for our services could decline. Additionally, our use of AI technology may expose us to additional claims, demands, and proceedings by private parties and regulatory authorities and subject us to legal liability as well as brand and reputational harm. For example, if the outputs that our AI technology assists in producing are or are alleged to be deficient, inaccurate, or biased, or if such outputs or their development or deployment, including the collection, use, or other processing of data used to train or develop such AI technology, are held or alleged to infringe upon or to have misappropriated third-party intellectual property rights or to violate applicable laws, regulations, or other actual or asserted legal obligationsobligations, including privacy rights, to which we are or may become subject, our business, operating results, financial condition, and growth prospects could be adversely affected. The legal, regulatory, and policy environments around AI technology are evolving rapidly, and we may become subject to new and evolving legal and other obligations. These and other developments may require us to make significant changes to ourOur use of AIAI-related technology,technologies includingmight byalso limitingexpand our vulnerability to cybersecurity attacks and heighten the risk of data breaches or restricting our usemisuse of AIproprietary technology, and which may require us to make significant changes to our policies and practices, which may necessitate expenditure of significant time, expense, andor other resources,sensitive the use of AI technology also presents emerging ethical issues that could harm our reputation and business if our use of AI technology becomes controversial.information.

We offer complex solutions involving advanced software and web-based interactive user interfaces and hardware products and services that can be affected by design and manufacturing defects. Sophisticated software, applications, and web-based interactive user interfaces, such as those offered by us, have issues that can unexpectedly interfere with the intended operation of hardware or software products. We manufacture Hub Devices, some of which include thermostat functionality, and sensors,Devices which may be impacted by manufacturing defects. Defects may also exist in components and products that we source from third parties. Any such defects could cause our products and solutions to create a risk of property damage and personal injury, and subject us to the hazards and uncertainties of product liability claims and related litigation. In addition, from time to time, we may experience outages, service slowdowns, or errors that affect our software, applications, and web-based interactive user interfaces. As a result, our solutions may not perform as anticipated and may not meet customer expectations. There can be no assurance that we will be able to detect and fix all issues and defects in the hardware, software, and services we offer as part of our products and solutions. Failure to do so could result in widespread technical and performance issues affecting our products and solutions and could lead to claims against us. We maintain general liability insurance; however, design and manufacturing defects, and claims related thereto, may subject us to judgments or settlements that result in damages materially in excess of the limits of our insurance coverage. In addition, we may be exposed to recalls, product replacements or modifications, write-offs of inventory, property, plant and equipment, or intangible assets, and significant warranty and other expenses such as litigation costs and regulatory fines. If we cannot successfully defend any large claim, maintain our general liability insurance on acceptable terms, or maintain adequate coverage against potential claims, our financial results could be adversely impacted. Further, given that our customers deploy our products and solutions to provide a safe and secure living space to their residents, quality problems could subject us to substantial liability, adversely affect the experience for users of our products and solutions and result in harm to our reputation, loss of competitive advantage, poor market acceptance, reduced demand for our products and solutions, delay in new product and solution introductions, higher costs and lost revenue. For example, in 2020 and 2021 we identified a deficiency with batteries contained in certain hardware sold which we acquired from a supplier. As of December 31, 2023 we accrued $864,000 in hardware cost of goods sold on the Consolidated Statements of Operations related to the battery deficiencies. During the year ended December 31, 2024, we determined the battery replacements were complete and released the remaining warranty accrual of $864,000 related to the battery deficiency.

As a public company, we are subject to the reporting requirements of the Exchange Act, the Sarbanes-Oxley Act of 2002 (the "Sarbanes-Oxley Act"), the Dodd-Frank Wall Street Reform and Consumer Protection Act, the listing requirements of the NYSE, and other applicable securities rules and regulations. Compliance with these rules and regulations has increased our legal and financial compliance costs, made some activities more difficult, time-consuming or costly and increased demand on our systems and resources. The Exchange Act requires, among other things, that we file annual, quarterly, and current reports with respect to our business and results of operations. The Sarbanes-Oxley Act requires, among other things, that we maintain effective disclosure controls and procedures and internal control over financial reporting. In order to maintain and, if required, improve our disclosure controls and procedures and internal control over financial reporting to meet this standard, significant resources and management oversight may be required. Although we have already hired additional employees to comply with these requirements, we may need to hire more employees in the future or engage additional outside consultants, which will increase our costs and expenses. As a result, management’s attention may be diverted from other business concerns, which could harm our business.

New rulesRules and regulations applicable to public companies may also make it more expensive for us to obtain director and officer liability insurance, and we may be required to accept reduced coverage or incur substantially highersubstantial costs to obtain coverage. These factors could also make it more difficult for us to attract and retain qualified members of the Board, particularly to serve on our audit committee and compensation committee, and qualified executive officers.

Through a Hub Device,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, parking managementmonitoring 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.

SmartRent is a category leader in the enterprise smart home solutions industry. As of December 31, 2024,2025, we had 809,497890,870 Units Deployed (as defined below) and overapproximately 650600 customers,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 thatDecember date,31, 2025, we believe our customers owned an aggregate of approximately 7.46.6 million rental units. This represents approximately 15%13% 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.

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 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 4.43.9 years.

We believe that our success is dependent on many factors, including those further discussed below. Our operating results and cash flows are dependent upon a number of opportunities, challenges and other factors, including our ability to grow our customer and installed base in a cost-effective manner, expand our hardware and hosted service offerings to generate increased revenue per Unit Deployed (as defined below), and provide high quality hardware products and hosted service applications to maximize revenue and improve the leverage of our business model. While these areas represent opportunities for us, they also represent challenges and risks that we must successfully address in order to operate our business.

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 Accessaccess Controlcontrol systems and made-to-order specialty locks.

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 teamsteam to get more done,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.

OnIn January 27,June 2025, we announced the appointment of MichaelFrank Shane PaladinMartell as President and Chief Executive Officer and member of the Board.Officer. Mr. Paladin’sMartell employmentreplaced commencedJohn on February 24, 2025 (the "Start Date"). Mr. Paladin replaces Daryl StemmDorman, who had been serving as Interim PrincipalChief Executive Officer sinceand July 29, 2024.President. Mr. StemmDorman will continue to serve as our Chief Financial Officer. The Management Committee of SmartRent and the Operating Committee of the Board dissolved effective as of the Start Date.Chair.

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 years ended December 31, 2024,2025, 20232024 and 20222023 there were 121,670,90,243, 173,195121,670 and 282,512173,195 Units Booked, respectively. For the yearyears ended December 31, 2025 and 2024, ARR (as defined below) related to Units Booked was $8,410.$9,102 and 8,410, respectively.

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 December 31, 2024,2025, approximately 35%34% 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 years ended December 31, 2024,2025, 20232024 and 2022,2023, we generated SaaS Revenue of $51.6$57.8 million, $41.1$51.6 million and $27.8$41.1 million, respectively.

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 December 31, 2024,2025, 20232024 and 2022,2023, ARR was approximately $54.4$61.6 million, $46.2$54.4 million and $32.3$46.2 million, respectively.

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 previouslyprevious deployedUnits unitsDeployed 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 is 0.07%0.15% for the year ended December 31, 20242025 compared to 0.02%0.07% and 0.01%0.02% for the years ended December 31, 20232024 and 2022,2023, respectively.

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 108% as of December 31, 2025 compared to 101% as of December 31, 2024 compared toand 105% as of December 31, 2023.

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 110% as of December 31, 2025 compared to 111% as of December 31, 2024.

We generate revenue from the direct sale to our customers of hardware smart home devices, which devices generally consist of a Hub Device, door-locks, thermostats, sensors, and light switches. These hardware devices provide features that function independently without subscription to our software, and the performance obligation for hardware revenue is considered satisfied and revenue is recognized at a point in time when the hardware device is shipped to the customer. Certain previous versions of our Hub Devices do not function independently without the subscription, and therefore, the revenue for those Hub Devices is recognized in Hosted Services revenue. We generally provide a one-year warranty period on hardware devices that are delivered and installed. We record the cost of the warranty as a component of cost of hardware revenue.

HostedWe Servicesgenerate primarilyhosted consistservices revenue from (1) the direct sale to our customers of monthlyhosted subscription revenue earnedservices from thesubscription fees collected from customers to provide access to one or more of our software applications including access controls, asset monitoringmonitoring, WiFi, and related services.services (“Hosted Services”) and (2) the amortization of non-distinct Hub Devices. These 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 4.43.9 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.

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.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.

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.periods commensurate with increases in revenue.

InTariffs 2019,imposed by the U.S. administrationgovernment imposedsince significant2019, changes to U.S. trade policyespecially with respect to China. TariffsChina, have subjected certain SmartRent products manufactured overseas to additional import duties. The amount of the import tariff has changed numerous times based on actionactions by the U.S. administrationgovernment. The U.S. government has implemented and newthreatened presidentialfurther administrationincreases recently announced additionalto tariffs in 2025 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 theand changeevaluate changes in tariffs.policy impacting global trade, including tariff regulations.

Our sales and marketing expenses consist of costs directly associated with our sales and marketing activities, which primarily include personnel-related costs, sales commissions, marketing programs, trade shows, and promotional materials. Our sales and marketing expenses may increase over time as we hire additional sales and marketing personnel, increase our marketinglead generation activities, grow our operations, and continue to build brand awareness.

General and administrative expenses consist primarily of personnel-related costs associated with our general and administrative organization, professional fees for legal, accounting and other consulting services, office facility, insurance, information technology costs, legal settlements, and expenses incurred as a result of operating as a public company, including expenses related to compliance with the rules and regulations of the SEC and stock exchange listing requirements, additional insurance expense, investor relations activities and other administrative and professional services. We may also increase the size of our general and administrative staff in order to support the growth of our business but at a rate that is lower than the corresponding increase in total revenue.

The income tax expense on the Consolidated Statement of Operations and Comprehensive Loss is primarily related to state minimum and franchise taxes. We have established a full valuation allowance for net deferred U.S. federal and state tax assets, including net operating loss carryforwards. We expect to maintain this valuation allowance until it becomes more likely than not that the benefit of our federal and state deferred tax assets will be realized.realized in future periods. We believe that we have established an adequate allowance for our uncertain tax positions, although we can provide no assurance that the final outcome of these matters will not be materially different. To the extent that the final outcome of these matters is different than the amounts recorded, such differences will affect the provision for income taxes in the period in which such determination is made.

Total revenue decreased by approximately $61.9$22.6 million, or 26%,13%, to $152.3 million for the year ended December 31, 2025, from $174.9 million for the year ended December 31, 2024, from $236.8 million for the year ended December 31, 2023.2024. The decrease was primarily driven by a $66.0 million35% decrease in revenueUnits relatedShipped to our Smart Apartments solution and resulted primarily from a decrease in New Units Deployed to 89,806 units110,011 for the year ended December 31, 20242025 from 172,495 units for the year ended December 31, 2023 and a 25% decrease in Units Shipped to 169,476 for the year ended December 31, 20242024, froman 226,7228% decrease in New Units Deployed to 82,626 for the year ended December 31, 2023,2025 partiallyfrom offset by a 12% increase in the number of cumulative active subscriptions89,806 for our Hosted Services during the year ended December 31, 20242024, comparedand a $6.2 million decrease in hub amortization, partially offset by a 20% increase in Professional Services ARPU to $413 for the year ended December 31, 2023.2025 Overallfrom decreases$344 for the year ended December 31, 2024. The decrease in New Units Deployed and Units Shipped areis primarily attributable to our customers' decisionsdecision to deferdiscontinue capitalbulk expenditures,hardware driven by broader macroeconomic conditions.shipments. In addition, changes in leadership and the structure of our sales organization have adversely impacted sales and overall volumes.

Professional services revenue decreasedincreased by $16.7$2.3 million, or 47%,12%, to $18.8$21.1 million for year ended December 31, 2024,2025, from $35.5$18.8 million for the year ended December 31, 2023.2024. The decreaseincrease in professional services revenue was primarily driven by a $17.520% millionincrease in Professional services ARPU to $413 for the year ended December 31, 2025 from $344 for the year ended December 31, 2024. The increase in ARPU was partially offset by an 8% decrease in revenue related to our Smart Apartments solution. New Units Deployed decreasedto by82,626 48%units tofor the year ended December 31, 2025 from 89,806 units for the year ended December 31, 2024 from 172,495 units for the year ended December 31, 2023. This was partially offset by an increase in Professional services ARPU of 35% to $344 for the year ended December 31, 2024 from $255 for the year ended December 31, 2023.2024.

Hosted Services revenue increasedwas byflat $9.0 million, or 14%, toat $73.2 million for the yearyears ended December 31, 2024,2025 from $64.2 million for the year endedand December 31, 2023.2024. Of the $73.2 million revenue in 2024,2025, $51.6$57.8 million is related to SaaS Revenue and $21.6$15.4 million is related to hub amortization. Revenue from SaaS increased by $10.5$6.2 millionmillion, or 12%, and revenue from hub amortization decreased by $1.5$6.2 million from the year ended December 31, 20232024 to the year ended December 31, 2024.2025. The increase ofin Hosted ServicesSaaS revenue resulted primarily from a 12%10% increase in the aggregate number of Units Deployed, primarily of our Smart Apartment solution,Deployed from 719,691 units at December 31, 2023 to 809,497 units at December 31, 2024 and an increase in SaaS ARPU of 4% to $5.63890,870 forunits the year endedat December 31, 2024 from $5.40 for the year ended December 31, 2023.2025.

We don’t expect to deploy any more non-distinct Hub Devices, thus, the revenue contribution from hub amortization should continue to decrease in future periods until the non-distinct Hub Devices are fully amortized. As noted above, revenue from hub amortization decreased by $6.2 million from the year ended December 31, 2024 to the year ended December 31, 2025. In the year ending December 31, 2026, hub amortization is expected to further decrease by $10.6 million. The table below shows the expected revenue contribution from hub amortization.

Total cost of revenue decreased by $72.8$12.1 million, or 39%,11%, to approximately $102.4 million for the year ended December 31, 2025, from $114.5 million for the year ended December 31, 2024, from $187.3 million for the year ended December 31, 2023.2024. The decrease in cost of revenue resulted primarily from a 48%35% decrease in Units Shipped, an 8% decrease in New Units Deployed, a favorable product mix of our hardware devices (more heavily weighted to Alloy SmartHome hardware),Deployed and a 25%27% decrease in Unitshub Shipped of our Smart Apartment solution hardware devices.amortization.

HardwareProfessional services cost of revenue decreased by $50.0$5.0 million, or 46%,16%, to $58.8$26.2 million for the year ended December 31, 2024,2025, from $108.8$31.2 million for the year ended December 31, 2023.2024. ThisThe decrease in hardwareprofessional services cost of revenue wasis primarily attributable to a favorabledecrease productof mix$3.3 (more heavily weighted to Alloy SmartHome hardware), resultingmillion in improvedpersonnel-related hardwarecosts grossand margin compared to the prior period,travel and a 25%$1.6 million decrease in third-party contractors driven by an 8% decrease in New Units Shipped.Deployed.

Research and development expenses increaseddecreased by $0.6$3.1 million, or 2%,11%, to $26.2 million for the year ended December 31, 2025, from $29.4 million for the year ended December 31, 2024, from $28.8 million for the year ended December 31, 2023, primarily related to ana increasedecrease of $0.3 million in business applications and software and $0.2$2.0 million in personnel-related expenses. We believe our researchexpenses and development costs will increase$1.0 in absolutestock dollars as we increase our investment in product development to enhance the capabilities of our solutions and introduce new products and features.compensation.

Sales and marketing expenses decreasedincreased by $0.8$1.0 million, or 4%,5%, to approximately $19.4 million for the year ended December 31, 2025 from $18.4 million for the year ended December 31, 2024 from $19.2 million for the year ended December 31, 2023,2024, resulting primarily from a decrease of approximately $1.2 million in personnel-related expenses, partially offset by an increase of $0.3$1.0 million in businessthird applicationsparty and software.consultants. 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.

For the year ended December 31, 2024,2025, general and administrative expenses increaseddecreased by $9.6$11.1 million, or 22%,20%, to $54.3$43.2 million, from $44.7$54.3 million for the year ended December 31, 2023,2024, resulting primarily from $11.3a $6.8 million decrease in legal fees and settlementssettlements, duringa the year ended December 31, 2024, including $5.0$2.5 million fromdecrease thein settlement ofseverance, a dispute with a supplier which resulted in returning $5.0$2.3 million ofdecrease inventoryrelated to the supplier.impairment Seeof Notean 12.investment "Commitmentsin a non-affiliate in the prior year, and Contingencies" - Legal Matters for a discussion$0.8 ofmillion legal proceedingsdecrease in whichbusiness we are involved. Additionally, severance expense increased by $2.5 million. These increases wereinsurance, partially offset by a decrease of $4.5$2.6 million increase in personnel-related expenses.

Interest income, netincome decreased by approximately $0.4$4.3 million to $8.2$4.3 million for the year ended December 31, 2024,2025, from $8.6 million for the year ended December 31, 2023.2024. 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 throughout the year.

We define Adjusted EBITDA as EBITDA before expenses related to non-recurring legal matters, stock-based compensation, impairment of investment in a non-affiliate, goodwill impairment, inventory write-off, non-employee warrant expense, non-recurring warranty provisions, asset impairment, compensation expense in connection with acquisitions, other acquisition expenses, and other expenses caused by non-recurring, or unusual, events that are not indicative of our ongoing business.

(24) During the year ended December 31, 2025 other non-operating expenses includes severance expense of $2,211. During the year ended December 31, 2024, other non-operating expenses includes $3,183 of severance expense and $1,065 of CEO transition expenses. During the year ended December 31, 2023, other non-operating expenses includes $1,070 of severance expense. ThereSeverance expenses were noprimarily suchrelated expensesto duringexecutive thedepartures yearand endedother Decemberstaff 31,terminations 2022.that are not reflective of our ongoing operating results.

Following the maturity of our Revolving Facility (as defined below) inIn December 2021, we entered into a $75.0 million senior secured revolving credit facility with a five-year term (the "Senior Revolving Facility"). Interest rates for draws upon the Senior Revolving Facility are determined by whether thewe Company electselect a secured overnight financing rate loan (“SOFR Loan”) or alternate base rate loan (”ABR Loan”). For SOFR Loans, the interest rate is based upon the forward-looking term rate based on SOFR as published by the CME Group Benchmark Administration Limited (CBA) plus 0.10%, subject to a floor of 0.00%, plus an applicable margin. For ABR Loans, the interest rate is based upon the highest of (i) the Prime Rate, (ii) the Federal Funds Effective Rate plus 0.50%, or (iii) 3.25%, plus an applicable margin. As of December 31, 2024,2025, the applicable margins for SOFR Loans and ABR Loans under the Senior Revolving Facility were 1.75% and (0.50%), respectively. The Senior Revolving Facility is secured by substantially all of the Company’sour assets and guaranteed by each of the Company’sour material domestic subsidiaries.

During the year ended December 31, 2024,2025, we repurchased 15.25.1 million shares of our Class A common stock under the stock repurchase program at an average price of approximately $1.89$0.96 per share for a total of $28.6$4.9 million, including $0.2 million of broker fees.million. As of December 31, 2024,2025, approximately $21.6$16.8 million remained available for stock repurchases pursuant to our stock repurchase program.

We are an enterprise real estate technology company that provides a comprehensive management platform designed for property owners, managers and residents. Our suite of products and services, which includes cloud-based SaaS solutionssolutions, many of which are enabled by smart building hardware, provide seamless visibility and control over real estate assets. Our platform can lower operating costs, increase revenues, mitigate operational friction and protect assets for owners and operators, while providing a differentiated, elevated living experience for residents.

SmartRent is a category leader in the enterprise smart home solutions industry. As of MarchJune 31,30, 2026, we had 911,244929,487 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 MarchJune 31,30, 2026, we believe our customers owned an aggregate of approximately 6.66.8 million rental units. This represents approximately 13%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.

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 more 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.

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 MarchJune 31,30, 2026 and 2025, we had an aggregate of 911,244929,487 and 827,611847,956 Units Deployed, respectively. For the three months ended MarchJune 31,30, 2026 and 2025, we had 20,66218,857 and 18,11421,068 New Units Deployed, respectively. For the six months ended June 30, 2026 and 2025, we had 39,519 and 39,182 New Units Deployed, respectively.

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 MarchJune 31,30, 2026 and 2025, we had 33,46623,249 and 43,41826,543 Units Shipped, respectively. For the six months ended June 30, 2026 and 2025, we had 56,715 and 69,961 Units Shipped, respectively.

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 the 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 MarchJune 31,30, 2026 and 20252025, there were 16,59248,254 and 18,21024,319 Units Booked, respectively. For the six months ended June 30, 2026 and 2025, there were 64,846 and 42,529 Units Booked, respectively. We have a long sales cycle, and the timing of customer decisions and orders doesn’t always align with our reporting periods. As a result, we are increasingly focused on trailing twelve-month Units Booked, which we believe provides a more meaningful view of underlying customer demand and the progress we’re making in executing our go-to-market strategy. For the trailing twelve months ended June 30, 2026 and 2025, there were 112,560 and 80,218 Units Booked, respectively. For the three months ended MarchJune 31,30, 2026 and 2025, ARR related to Units Booked was $1,895$3,227 and $2,246,$2,397, respectively. For the six months ended June 30, 2026 and 2025, ARR related to Units Booked was $5,122 and $4,643, respectively.

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 MarchJune 31,30, 2026 and 2025, Bookings were $18,471$48,194 and $27,180,$30,460, respectively. For the six months ended June 30, 2026 and 2025, Bookings were $66,665 and $57,640, respectively. For the trailing twelve months ended June 30, 2026 and 2025, Bookings were $124,676 and $107,203, respectively.

We define SaaS Revenue as 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 MarchJune 31,30, 2026, approximately 33%31% 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 MarchJune 31,30, 2026 and 2025, we generated SaaS Revenue of $15.2$16.1 million and $14.0$14.2 million, respectively. For the six months ended June 30, 2026 and 2025, we generated SaaS Revenue of $31.3 million and $28.2 million, respectively.

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 MarchJune 31,30, 2026 and 2025, ARR was $60.9$64.5 million and approximately $55.9$56.9 million, respectively.

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 MarchJune 31,30, 2026 and 2025, Hardware ARPU was $460$586 and $434,$571, respectively. For the six months ended June 30, 2026 and 2025, Hardware ARPU was $511 and $486, respectively.

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 MarchJune 31,30, 2026 and 2025, Professional Services ARPU was $378$580 and $427,$365, respectively. For the six months ended June 30, 2026 and 2025, Professional Services ARPU was $475 and $392, respectively.

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 MarchJune 31,30, 2026 and 2025, SaaS ARPU was $5.63$5.84 and $5.69,$5.66, respectively. For the six months ended June 30, 2026 and 2025, SaaS ARPU was $5.74 and $5.67, respectively.

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 MarchJune 31,30, 2026 and 2025, Units Booked SaaS ARPU was $9.52$5.57 and $10.28,$8.21, respectively. For the six months ended June 30, 2026 and 2025, Units Booked SaaS ARPU was $6.58 and $9.10, respectively. For the trailing twelve months ended June 30, 2026 and 2025, Units Booked SaaS ARPU was $7.09 and $9.08, respectively.

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 previous 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 MarchJune 31,30, 2026 and 2025, our Customer Churn for our Smart Communities Solutions was 0.00% and 0.08%, respectively. For the six months ended June 30, 2026 and 2025, our Customer Churn for our Smart Communities Solutions was 0.05% and 0.02%,0.10%, respectively.

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 106%99% as of MarchJune 31,30, 2026 compared to 102% as of MarchJune 31,30, 2025.

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 105%111% as of MarchJune 31,30, 2026 compared to 114%108% as of MarchJune 31,30, 2025.

(1) During the threefirst monthsquarter ended March 31,of 2026, we revised the presentation of the above table by aggregating Community WiFi revenue in Other as revenue from our Community WiFi solution is becoming less significant. The revised presentation has been applied retrospectively for the comparative periodperiods ended MarchJune 31,30, 2025. For the three months ended MarchJune 31,30, 2026,2026 and 2025, total revenue attributable to Community WiFi was $190.$262 and $304, respectively. For the three months ended MarchJune 31,30, 2025, revenue attributable to Community WiFi was $3$54 related to Hardware, $219$41 related to Professional Services and $193$209 related to Hosted Services. For the six months ended June 30, 2026 and 2025, total revenue attributable to Community WiFi was $452 and $718, respectively. For the six months ended June 30, 2025, revenue attributable to Community WiFi was $57 related to Hardware, $259 related to Professional Services and $402 related to Hosted Services.

(2) For the three months ended MarchJune 31,30, 2026 and 2025, Hosted services revenue for our Smart Apartments solution included hub amortization revenue of $2,050$1,456 and $4,658,$4,619, respectively. For the six months ended June 30, 2026 and 2025, Hosted services revenue for our Smart Apartments solution included hub amortization revenue of $3,506 and $9,277, respectively.

The income tax expensebenefit on the Condensed Consolidated Statement of Operations and Comprehensive Loss is primarily related to thecurrent year foreign losses offset by foreign and state taxes. We established a full valuation allowance for net deferred U.S. federal and state tax assets, including U.S. net operating loss carryforwards. We expect to maintain this valuation allowance until it becomes more likely than not that the benefit of the U.S. federal and state deferred tax assets will be realized in future periods.periods if we report U.S. taxable income. We believe that we have established an adequate allowance for uncertain tax positions, although we can provide no assurance that the final outcome of these matters will not be materially different. To the extent that the final outcome of these matters is different than the amounts recorded, such differences will affect the provision for income taxes in the period in which such determination is made.

Results of Operations for the Three and Six Months Ended MarchJune 31,30, 2026 and 2025

Comparison of the three and six months ended MarchJune 31,30, 2026 and 2025

HardwareTotal revenue decreased by $3.4approximately $1.2 million, or 18%,1%, to $15.4$78.5 million for the threesix months ended MarchJune 31,30, 2026, from $18.8$79.7 million for the threesix months ended MarchJune 31,30, 2025. ThisHosted Services revenue from hub amortization decreased by approximately $5.7 million. Further, the decrease in hardwaretotal revenue was primarily driven by a 23%19% decrease in Units Shipped to 33,46656,715 for the threesix months ended MarchJune 31,30, 2026 from 43,41869,961 for the threesix months ended MarchJune 31,30, 2025.2025, Theoffset decreaseby a 21% increase in UnitsProfessional ShippedServices isARPU to $475 for the six months ended June 30, 2026 from $392 for the six months ended June 30, 2025 primarily attributabledriven by an increase of $3.0 million related to athe particularlyinstallation strongof customerhub orderupgrades. thatHosted contributedServices revenue from SaaS increased by $3.1 million from the six months ended June 30, 2025 to anthe elevatedsix priormonths yearended comparison.June 30, 2026.

Professional servicesHardware revenue increaseddecreased by $2.1$1.5 million, or 55%,10%, to $6.0 million for three months ended March 31, 2026, from $3.9$13.6 million for the three months ended MarchJune 31,30, 2026, from $15.1 million for the three months ended June 30, 2025. TheThis increasedecrease in professional serviceshardware revenue was primarily driven by a 14%12% increasedecrease in New Units DeployedShipped to 20,662 units from 18,114 units23,249 for the three months ended MarchJune 31,30, 2025,2026 andfrom a26,543 $0.5 million increase related tofor the installationthree ofmonths hubended upgrades.June 30, 2025.

Hosted Services revenue decreased by approximately $1.3$1.2 million, or 7%, to $17.3$17.6 million for the three months ended MarchJune 31,30, 2026, from $18.6$18.8 million for the three months ended MarchJune 31,30, 2025. Of the $17.3$17.6 million revenue in 2026, $15.2$16.1 million is related to SaaS Revenue and $2.1$1.5 million is related to hub amortization. Revenue from hub amortization decreased by $2.6$3.1 million and revenue from SaaS increased by $1.2$1.9 million, or 9%,13%, from the three months ended MarchJune 31,30, 2025 to the three months ended MarchJune 31,30, 2026. The increase of SaaS revenue resulted primarily from a 10% increase in the aggregate number of Units Deployed from 827,611847,956 units at MarchJune 31,30, 2025 to 911,244929,487 units at MarchJune 31,30, 2026, partially offset by decreased SaaS revenue earned for Smart Operations solutions.2026.

We don’t expect to deploy any more non-distinct Hub Devices, thus, the revenue contribution from hub amortization should continue to decrease in future periods until the non-distinct Hub Devices are fully amortized. As noted above, revenue from hub amortization decreased by $2.6approximately $5.7 million from the threesix months ended MarchJune 31,30, 2025 to the threesix months ended MarchJune 31,30, 2026. During the remainder of 2026, hub amortization is expected to further decrease by $8.1$4.8 million compared to the same periods in 2025. The table below shows the expected revenue contribution from hub amortization.

(1) Q1 and Q2 2026 isare actual.

Professional servicesTotal cost of revenue decreased by $1.4$2.0 million, or 19%,8%, to $5.9$23.6 million for the three months ended MarchJune 31,30, 2026, from $7.3$25.6 million for the three months ended MarchJune 31,30, 2025. The decrease in professional services cost of revenue isresulted primarily attributablefrom toa $1.4 million decrease in hub amortization, and a 12% decrease in Units Shipped. The decreases were partially offset by a $2.1 million increase in third-party direct labor costs, partially offset by a decrease of $1.4 million in fixed, professional services personnel-related and travel costs resulting from actions executed in the second half of 2025 and improved installation efficiencies.2025.

Hosted ServicesTotal cost of revenue decreased by $1.4$6.2 million, or 22%,12%, to $5.1$47.2 million for the threesix months ended MarchJune 31,30, 2026, from $6.5$53.4 million for the threesix months ended MarchJune 31,30, 2025. The decrease in cost of revenue resulted primarily from a $1.2$2.7 million decrease in hub amortizationamortization, expense.and a 19% decrease in Units Shipped.

Research and development expenses decreased by approximately $2.2$0.9 million, or 26%,14%, to $6.1$5.6 million for the three months ended MarchJune 31,30, 2026, from $8.3$6.5 million for the three months ended MarchJune 31,30, 2025, primarily related to a decrease of $1.4$1.2 million in personnel-related expenses and a $0.5 million decrease in stock compensation.expenses. We believe our research and development expenses will increase in future periods in connection with expenses required to execute Vision 2028.

GeneralResearch and administrativedevelopment expenses decreased by $7.3$3.0 million, or 43%,20%, to $9.6$11.7 million for the threesix months ended MarchJune 31,30, 20262026, from $16.9$14.7 million for the threesix months ended MarchJune 31,30, 2025. This was2025, primarily drivenrelated byto a $7.1decrease of $3.1 million decrease in legalpersonnel-related fees and settlements.expenses.

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. No such charges were recorded during the remainder of 2025 or during the three or six months ended MarchJune 31,30, 2026. See Note 2 - Significant Accounting Policies for additional information.

Interest income decreased by $0.4$0.3 million to $0.9$0.8 million for the three months ended MarchJune 31,30, 2026, from $1.3$1.1 million for the three months ended MarchJune 31,30, 2025. The decrease in interest income is primarily attributable to a lower cash balance on which we are earning interest, and a decrease in interest rates.

OtherInterest (expense) income, netincome decreased by $0.1$0.7 million to $(0.1)$1.7 million for the threesix months ended MarchJune 31,30, 2026, from $13$2.4 thousandmillion for the threesix months ended MarchJune 31,30, 2025. The decrease in otherinterest (expense) income, netincome is primarily attributable to changesa lower cash balance on which we are earning interest, and a decrease in foreign exchangeinterest rates.