SmartRent (NYSE:SMRT) Posts Better-Than-Expected Sales In Q3, Stock Soars

Smart home company SmartRent (NYSE:SMRT) reported Q3 CY2025 results beating Wall Street’s revenue expectations, but sales fell by 10.6% year on year to $36.2 million. Its GAAP loss of $0.03 per share was $0.02 above analysts’ consensus estimates.

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"The third quarter was a period of substantial progress for SmartRent on many fronts. We continued to grow our Annual Recurring Revenue and significantly narrowed our operating loss in line with the commitments made on the previous earnings call. Importantly, we continued to expand our deployed base which now includes more than 870,000 units, up 11% from the prior year," commented Frank Martell, President and CEO of SmartRent.

Company Overview

Founded by an employee at a real estate rental company, SmartRent (NYSE:SMRT) provides smart home devices and software for multifamily residential properties, single-family rental homes, and student housing communities.

Revenue Growth

A company’s long-term performance is an indicator of its overall quality. Even a bad business can shine for one or two quarters, but a top-tier one grows for years. Over the last five years, SmartRent grew its sales at an incredible 24.4% compounded annual growth rate. Its growth beat the average industrials company and shows its offerings resonate with customers.

We at StockStory place the most emphasis on long-term growth, but within industrials, a half-decade historical view may miss cycles, industry trends, or a company capitalizing on catalysts such as a new contract win or a successful product line. SmartRent’s recent performance marks a sharp pivot from its five-year trend as its revenue has shown annualized declines of 16.5% over the last two years.

SmartRent also reports its annual recurring revenue (ARR), or the revenue it expects to generate from its existing customer base in the next 12 months. SmartRent’s ARR reached $56.9 million in the latest quarter and averaged 22.9% year-on-year growth over the last two years. Because this number is better than its normal revenue growth, we can see the company generated more revenue from its existing customers than new customers. Holding everything else constant, this is a positive sign as it should lead to lower sales and marketing expenses.

This quarter, SmartRent’s revenue fell by 10.6% year on year to $36.2 million but beat Wall Street’s estimates by 1.8%.

Looking ahead, sell-side analysts expect revenue to grow 13% over the next 12 months, an improvement versus the last two years. This projection is admirable and indicates its newer products and services will spur better top-line performance.

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Operating Margin

SmartRent’s high expenses have contributed to an average operating margin of negative 40.5% over the last five years. Unprofitable industrials companies require extra attention because they could get caught swimming naked when the tide goes out. It’s hard to trust that the business can endure a full cycle.

On the plus side, SmartRent’s operating margin rose by 15 percentage points over the last five years, as its sales growth gave it operating leverage. Still, it will take much more for the company to reach long-term profitability.

In Q3, SmartRent generated a negative 19.4% operating margin.

Earnings Per Share

We track the long-term change in earnings per share (EPS) for the same reason as long-term revenue growth. Compared to revenue, however, EPS highlights whether a company’s growth is profitable.

Although SmartRent’s full-year earnings are still negative, it reduced its losses and improved its EPS by 53.7% annually over the last five years. The next few quarters will be critical for assessing its long-term profitability.

Like with revenue, we analyze EPS over a more recent period because it can provide insight into an emerging theme or development for the business.

For SmartRent, its two-year annual EPS declines of 15.5% mark a reversal from its (seemingly) healthy five-year trend. We hope SmartRent can return to earnings growth in the future.

In Q3, SmartRent reported EPS of negative $0.03, up from negative $0.05 in the same quarter last year. This print easily cleared analysts’ estimates, and shareholders should be content with the results. Over the next 12 months, Wall Street expects SmartRent to improve its earnings losses. Analysts forecast its full-year EPS of negative $0.35 will advance to negative $0.14.

Key Takeaways from SmartRent’s Q3 Results

It was good to see SmartRent beat analysts’ EPS expectations this quarter. We were also excited its EBITDA outperformed Wall Street’s estimates by a wide margin. On the other hand, its ARR missed. Overall, this print had some key positives. The stock traded up 7% to $1.46 immediately after reporting.

Sure, SmartRent had a solid quarter, but if we look at the bigger picture, is this stock a buy? The latest quarter does matter, but not nearly as much as longer-term fundamentals and valuation, when deciding if the stock is a buy. We cover that in our actionable full research report which you can read here, it’s free for active Edge members.