SmartRent Q3 2026 Earnings: Core Revenue Growth Lifts Gross Margin

SmartRent (NYSE: SMRT) reported Q3 2026 revenue of $41.6 million, up 15% from $36.2 million a year earlier, while its GAAP diluted loss per share narrowed to $0.02 from $0.03. A 1,470-basis-point gross margin expansion and 61% hardware revenue growth moved adjusted EBITDA to positive $1.1 million and supported $2.9 million of quarterly operating cash flow, although the company remained unprofitable on a GAAP basis.

Core Financial Results

For the quarter ended September 30, 2026, underlying business volume grew faster than reported revenue. Core Revenue, a non-GAAP measure that excludes non-cash hub amortization associated with hubs shipped in prior years, rose 24% to $40.7 million versus total revenue growth of 15%.

Profitability improved primarily through higher gross profit and margin rather than lower spending. Operating expenses increased as SmartRent expanded its sales organization and invested in technology, AI-related capabilities and other Vision 2028 initiatives.

Business and Segment Performance

Hardware was the main revenue growth engine, supported by higher shipment volumes, Access Control adoption, and equipment upgrades and refreshes. Professional services declined, while hosted services decreased despite continued SaaS growth.

Access Control revenue rose 171% to $4.7 million, including a 242% increase in Access Control hardware revenue to $2.5 million. Hardware and installation revenue tied to upgrade and refresh deployments increased 6.3% to $2.4 million.

The recurring business also continued to expand. Annual recurring revenue reached $62.9 million, up 11%, while total deployed units increased 8% to 941,977. Trailing-12-month units booked rose 44% to 122,510, supporting SmartRent’s objective of exceeding one million installed units during the first half of 2027.

Gross Margin Expansion Outpaced Higher Investment

Gross profit increased 79%, substantially faster than revenue, as gross margin rose from 26.4% to 41.2%. SmartRent attributed the improvement to cost-reduction measures, operating discipline and SaaS growth. SaaS gross profit increased 17% to $11.7 million, with a 74.6% SaaS gross margin.

Operating expenses increased to $21.9 million from $16.6 million. The prior-year quarter included a $2.5 million non-recurring accrual reversal; excluding that benefit, operating expenses rose approximately 15%. Management linked the increase to supporting 24% Core Revenue growth and investing in sales, technology and AI capabilities. The gross profit increase nevertheless exceeded the rise in operating costs, narrowing the GAAP operating loss to $4.8 million.

Cash generation also improved, but the quarterly and year-to-date results remain different. SmartRent produced $2.9 million of operating cash flow in Q3, while the first nine months still used $3.4 million, compared with $29.2 million used in the prior-year period. The company ended September with $89.2 million in cash and an undrawn $75 million credit facility, versus $104.6 million in cash at the end of 2025.

SmartRent repurchased 2.5 million shares during the quarter for $3.4 million, representing approximately 1% of shares outstanding.

Q4 2026 Guidance

SmartRent issued percentage-based guidance calling for Core Revenue to continue growing faster than total revenue in Q4. The adjusted EBITDA range also points to faster growth than revenue, although the company did not provide absolute dollar targets.

Management said demand for Access Control and Self-Guided Tour products, equipment upgrades and refreshes, and a larger installed base were supporting growth. At the same time, the company plans to continue funding its platform, data infrastructure and product development initiatives.

Recent Insider Transactions

Recent transaction-level records list six insider purchases between June 5 and August 20, 2026, with reported values totaling approximately $530,311. However, a separate six-month aggregate field showed zero purchases, creating a source inconsistency that should be resolved before using the records to draw broader conclusions.

Risks Investors Need to Watch

• GAAP profitability remains unproven: Adjusted EBITDA was positive, but SmartRent still reported a $4.8 million operating loss and a $3.9 million net loss. Continued spending on sales and technology could delay GAAP profitability if gross profit growth slows.
• Growth was concentrated in hardware: Hardware revenue rose 61%, while professional services fell 8% and total hosted services declined. Sustaining SaaS growth is important because SaaS generated a 74.6% gross margin during the quarter.
• Positive quarterly cash flow has not yet translated into positive year-to-date cash flow: The business generated cash in Q3, but operating activities still used $3.4 million over the first nine months, and cash declined from the end of 2025.
• Bookings must convert into deployments: Trailing-12-month units booked increased 44%, but reaching more than one million installed units in the first half of 2027 depends on successful shipment, installation and subscription activation.

Conclusion

SmartRent’s Q3 2026 results showed faster Core Revenue growth, a substantial gross margin increase and improving adjusted profitability, led by hardware, Access Control and SaaS expansion. The next test is whether the company can sustain these margin and cash-flow improvements while funding higher sales and technology investment, converting booked units into deployments, and delivering its Q4 growth outlook.