SmartRent Q2 2026 earnings: Gross margin expansion turns adjusted EBITDA positive

SmartRent (NYSE: SMRT) reported Q2 2026 revenue of $39.8 million, up 4% from $38.3 million a year earlier, while its GAAP diluted loss per share narrowed to $0.03 from $0.06. Gross margin increased 760 basis points to 40.7%, and adjusted EBITDA turned positive at $0.7 million as SaaS growth, professional-services installations, and lower costs offset weaker hardware revenue. The results cover the three months ended June 30, 2026.

Core earnings data

Reported revenue growth understated the increase in underlying business volume. Core Revenue, which excludes non-cash hub amortization associated with products shipped in prior years, rose 14% to $38.4 million, compared with total revenue growth of 4%.

Profitability improved faster than revenue. Gross profit increased by approximately 28%, operating expenses declined 7%, and the GAAP net loss narrowed by 48%, although the company remained unprofitable under GAAP.

Business and operating performance

SmartRent’s revenue streams moved in different directions. Professional-services revenue doubled to $8.6 million, primarily because of more hardware-refresh installations and higher Access Control volume. Those activities also increased professional-services average revenue per unit.

Hardware revenue declined 10% to $13.6 million from $15.1 million. Hosted-services revenue fell to $17.6 million from $18.8 million, but that comparison includes declining hub amortization from products shipped in earlier years. The underlying SaaS component increased 13% to $16.1 million and represented 40% of total revenue.

Annual recurring revenue rose 13% to $64.5 million, while SaaS ARPU increased to $5.84 from $5.66. SmartRent defines ARR as current-quarter SaaS revenue multiplied by four, rather than as a measure of contracted backlog.

Demand indicators strengthened, but deployments did not yet follow the same trajectory. Second-quarter Units Booked increased 98% to 48,254, and trailing-12-month Units Booked rose 40% to 112,560. Total deployed units reached 929,487, up 10%, while New Units Deployed during the quarter declined to 18,857 from 21,068.

SaaS mix and cost reductions lifted margins faster than revenue

The central development in the quarter was the gap between modest total revenue growth and much faster profit improvement. Structural cost reductions implemented during the second half of 2025, tighter operating discipline, and a higher contribution from SaaS lifted gross margin for a third consecutive quarter.

SaaS gross profit increased 22% to $12.1 million, and SaaS gross margin reached 75.3%. At the same time, total operating expenses declined to $22.7 million from $24.4 million. This combination moved adjusted EBITDA into positive territory, but the $6.5 million operating loss and $5.6 million net loss show that adjusted profitability has not yet translated into GAAP profitability.

Cash flow and balance sheet

SmartRent did not provide a separate quarterly cash-flow figure. For the six months ended June 30, operating cash outflow improved to $6.2 million from $27.1 million in the comparable 2025 period. Lower accounts receivable and inventory helped cash flow, while a $16.3 million reduction in deferred revenue was a significant offset.

Cash declined by $11.9 million from the end of 2025 to $92.7 million. The company had no debt and maintained an undrawn $75 million credit facility. Capitalized software spending and share repurchases also contributed to the decline in cash.

During Q2, SmartRent repurchased 2.8 million shares, equal to 1.5% of shares outstanding, for $3.4 million. On July 24, the board replaced the previous repurchase plan, which had $13.4 million remaining, with a new authorization of up to $25 million.

Management’s perspective

CEO Frank Martell attributed the growth in Core Revenue and ARR to demand for SmartRent’s products, expansion of its installed base, and investments in sales execution. With approximately 930,000 deployed units, management expects to surpass one million installed units during the first half of 2027. That would require approximately 70,500 additional deployed units from the June 30 level.

CFO Daryl Stemm said the strength of recent bookings, margin expansion, and operating discipline should make second-half Core Revenue and profitability substantially stronger than in the second half of 2025. The company did not provide a quantified revenue or earnings guidance range.

Recent insider transactions

Detailed insider records list four purchases during May and June 2026, including two indirect purchases by CEO Frank Martell. These transactions should not, by themselves, be interpreted as a statement about SmartRent’s valuation or future results.

The supplied insider dataset’s six-month aggregate shows zero purchases, which conflicts with these detailed records. The underlying regulatory filings would be the appropriate source for resolving that discrepancy.

Risks investors need to watch

• Bookings must convert into deployments. Quarterly booked units nearly doubled, but New Units Deployed declined by approximately 10%. The timing and execution of installations will affect when hardware, services, and recurring revenue are recognized.
• Hardware revenue remains under pressure. The 10% decline in hardware sales limited overall growth despite gains in SaaS and professional services.
• GAAP losses continue. Positive adjusted EBITDA represents progress, but SmartRent still reported operating and net losses, making further cost control and operating leverage important.
• Cash consumption has not ended. Six-month operating cash flow remained negative, and cash declined from year-end. The debt-free balance sheet and undrawn credit facility provide liquidity, but investments and repurchases also use cash.

Summary

SmartRent’s Q2 2026 results showed improving operating leverage: Core Revenue and SaaS expanded, professional-services activity accelerated, and cost reductions helped adjusted EBITDA turn positive. The main remaining tests are whether higher bookings translate into deployments and recognized revenue, whether hardware stabilizes, and whether margin gains can move the company from adjusted profitability to positive GAAP earnings and cash flow.