Smart home company SmartRent (NYSE: SMRT) announced better-than-expected revenue in Q1 CY2026, but sales fell by 6.4% year on year to $38.68 million. Its GAAP loss of $0.02 per share was in line with analysts’ consensus estimates.

Is now the time to buy SMRT? Find out in our full research report (it’s free for active Edge members).

StockStory’s Take

SmartRent’s first quarter performance met Wall Street’s earnings expectations but prompted a significant negative market reaction, driven by concerns around top-line contraction and missed recurring revenue targets. Management highlighted a 10% expansion in its IoT footprint and continued cost alignment, noting that gross margin improved through lower hardware costs and a shift toward higher-margin services. CEO Frank Martell described the period as a “proof point” for SmartRent’s operational discipline, but acknowledged lingering headwinds from cautious customer capital deployment and the impact of contract renewal work on new bookings.

Looking forward, SmartRent’s guidance is underpinned by increased investment in sales capacity, expansion into mid-market segments via a new value-added reseller (VAR) program, and a strategic focus on deepening existing customer relationships. Management expects improved sales productivity and hardware refresh cycles to drive annual recurring revenue over time, with President and CEO Frank Martell stating, “We remain laser-focused on expanding our footprint of installed IoT units in line with our March to 1 million program.” However, the company cautioned that market headwinds could keep revenue growth muted in the near term until sales initiatives and contract resets take fuller effect.

Key Insights from Management’s Remarks

Management attributed the quarter’s performance to mix shifts in revenue, a disciplined approach to costs, and a focus on expanding its IoT installed base, while acknowledging that contract renewals and slower bookings weighed on reported growth.

• IoT installed base growth: SmartRent’s IoT deployments reached over 911,000 units, a 10% increase from last year, as the company sought to deepen penetration within its existing customer base and leverage the “March to 1 million” initiative to convert significant white space in customer portfolios.
• Contract renewal resets: The company prioritized renegotiating legacy contracts with early adopters, resulting in price uplifts—averaging a 33% increase on three major renewals. CFO Daryl Stemm explained that approximately one-third of deployed units are subject to similar renewals, which are expected to enhance SaaS average revenue per unit (ARPU) over time.
• VAR program launch: SmartRent rolled out a value-added reseller program to target small and medium multifamily owners, using established partner networks to efficiently address this segment without expanding the direct sales force. Early traction is positive, and management aims to scale to 8–10 partners over the next year.
• Margin improvement drivers: Gross margin improvement was largely attributed to lower cost of sales, a 32% reduction in operating expenses, and increased contribution from higher-margin SaaS and professional services revenue. Professional services margins, historically negative, have now been positive for three consecutive quarters due to improved deployment execution.
• Sales force ramp and market conditions: Management is doubling the on-staff sales team and actively hiring, but noted that new reps are still ramping. Broader market caution and the time-intensive process of contract renewal contributed to a 9% year-over-year bookings shortfall, effects which the company views as cyclical rather than structural.

Drivers of Future Performance

SmartRent’s forward guidance is shaped by its focus on driving recurring revenue through deeper customer penetration, hardware refresh cycles, and scaling sales and VAR channel productivity.

• Sales productivity ramp: Management expects that ramping the new sales team and onboarding additional VAR partners will drive bookings growth in the second half of the year. CEO Frank Martell stated that sales capacity expansion should have a more pronounced impact on bookings rates after Q2, but timing is contingent on full productivity.
• Contract renewal ARPU uplift: As legacy customer contracts come up for renewal, SmartRent anticipates a multi-year benefit to SaaS ARPU, with CFO Daryl Stemm highlighting that about 300,000 units (one-third of the base) are eligible for pricing resets that better reflect current market rates.
• Hardware refresh and new solutions: The company is focusing on hardware refresh cycles for aging IoT deployments and the introduction of AI-powered solutions, both of which are expected to expand revenue opportunities within the installed base. Management believes these initiatives will be key to accelerating annual recurring revenue as the platform matures.

Catalysts in Upcoming Quarters

In the coming quarters, the StockStory team will watch (1) the pace of sales productivity improvements as new hires and VAR partners ramp, (2) the cadence and financial impact of legacy contract renewals on SaaS ARPU, and (3) signs of hardware refresh cycles and AI-driven solution adoption within SmartRent’s installed base. Execution on these fronts will be critical to achieving management’s Vision 2028 ambitions.

SmartRent currently trades at $1.21, down from $1.41 just before the earnings. At this price, is it a buy or sell? See for yourself in our full research report (it’s free).

Our Favorite Stocks Right Now

ALSO WORTH WATCHING: Top 5 Momentum Stocks. The best time to own a great stock is when the market is finally noticing it. These aren't just high-quality businesses. Something is happening with them right now. Elite fundamentals meeting near-term momentum - both boxes checked at the same time.

Find out which stocks our AI platform is flagging this week. See this week's Strong Momentum stocks - FREE. Get Our Strong Momentum Stocks for Free HERE.

Stocks that have made our list include now familiar names such as Nvidia (+1,326% between June 2020 and June 2025) as well as under-the-radar businesses like the once-small-cap company Exlservice (+354% five-year return). Find your next big winner with StockStory today.