SmartRent, Inc.

There will be a question and answer session. If you would like to ask a question during this time, simply press star followed by the number one on your telephone keypad. If you would like to withdraw your question, press star one again. Thank you. I would now like to turn the conference over to Kristen Lee. You may begin.

Hello, and thank you for joining us today. My name is Kristen Lee, Chief Legal Officer for SmartRent. I'm joined today by Daryl Stem, CFO and Interim Principal Executive Officer, and John Dorman, Chairman of the Board. Before the market opened today, we issued an earnings release and filed our 10-Q with the SEC, both of which are available on the investor relations section of our website, smartrent.com. Before I turn the call over to John, I would like to remind everyone that the discussion today may contain certain forward-looking statements that involve risks and uncertainties. Various factors could cause our actual results to be materially different from any future results expressed or implied by such statements. These factors are discussed in our SEC filings, including our annual report on Form 10-K and quarterly reports on Form 10-Q. We undertake no obligation to provide updates regarding forward-looking statements made during this call, and we recommend that all investors review these reports thoroughly before taking a financial position in SmartRent. Also, during today's call, we will refer to certain non-GAAP financial measures. A discussion of these non-GAAP financial measures, along with the reconciliation to the most directly comparable GAAP measure, is included in today's earnings release. We would also like to highlight that a third quarter earnings presentation is available on the investor relations section of our website. And with that, I will turn the call over to John.

Good morning, and thank you all for joining us today. As we report on the third quarter at Smart Rent, I'd like to first acknowledge the substantial resilience and strategic focus our team has demonstrated during this period of significant change. It's been really exciting to see the level of passion, alignment, and commitment of the entire team during what is, by any definition, a challenging period. It's now been 14 weeks since we announced the board's decision to initiate a leadership transition at SmartRent. During this period, reflecting on the significant importance of this decision toward driving sustainable improvements in shareholder value, the board has been deeply engaged with the entire management team in assessing both the strategic direction and the operational effectiveness of the company so that we're all aligned around a viable plan for recovery. In order to inform our investors about our progress in this important transition, I'd like to cover four key topics this morning. First, I'll summarize what we've learned during this first quarter of transition. Second, I'll highlight some things that we've accomplished during this period. Third, I'll provide an update on our CEO search process. And finally, I'll recap our four pillars of strategic focus that are guiding both our transition plan and our CEO search. Everything we've learned since making the decision to initiate a transition in leadership has confirmed the key perspectives that framed the board's decision. That is, we've confirmed and strengthened our firm belief that the key issues affecting smart rent performance are execution issues, which are not too difficult to address. While the core business model, the growth potential of our market, our market leadership position and the differentiated value proposition for our customers all remain very compelling. We've concluded that our execution issues and growth challenges nearly all stemmed from four key factors. Number one, a lack of effective sales leadership to build and drive a scalable go-to-market organization. Number two, an over-reliance on hardware revenue to sustain high levels of total revenue while distracting focus from SaaS revenue growth which remains the primary driver of shareholder value. Number three, a distraction of focus on the central importance of operational excellence during the drive to profitability. And number four, the headwinds resulting from macroeconomic conditions and election uncertainty. To be clear, our North Star financial objective is to become a company that delivers both high sustained SAS revenue growth and profitable results. While we were only one quarter into this transition, we were able to highlight some key accomplishments delivered during this quarter. We stabilized the entire executive team, which has been described by some investors in the past as a revolving door. The team is highly energized by the transition and we're confident that we're building forward momentum even before concluding the CEO search. Two. We successfully recruited Natalie Cariola as our new chief revenue officer to lead the revitalization of our sales and account management teams. Three, we repurchased 9.8 million shares of stock for $17.1 million to return capital to shareholders while demonstrating the board's conviction that the stock is undervalued. Four, we made excellent progress on our CEO search, which I will summarize shortly. Five, we delivered 23% SAS year-over-year revenue growth despite the challenges I discussed earlier, thereby demonstrating the potential to deliver even higher growth as we address those challenges. Six, we have actively engaged with our customers to listen and learn about their priorities and concerns. We are deeply committed to customer alignment and service excellence and investing to address customer needs. Seven, We have lined the entire company around four strategic pillars, which I will expand on in a minute. Importantly, these pillars have been shared with our leading CEO candidates to help ensure that the individual selected can hit the ground running. When we launched the CEO search with an outside executive search firm, we cast a broad net to identify a long list of potential candidates. We placed particular importance on finding candidates who had turned around businesses with performance issues, had run successful high-growth SaaS businesses, and had successfully demonstrated general management skills at scale much larger than the current size of Smart Rent. We were quickly very pleasantly surprised by the quality of the candidates that we were able to attract to the opportunity. The general perception of these candidates was that Smart Rent's current challenges presented a significant opportunity for a new leader to be successful and drive an exciting value creation story. After interviewing several candidates, we narrowed our focus to multiple highly qualified individuals, all of whom clearly met or exceeded our search criteria and expressed strong interest in the position. We're in the final few weeks of that evaluation process and expect to select a final candidate and begin negotiating contract terms shortly thereafter. It's our hope that we will be able to announce a new CEO during the first quarter of 2025. This process of deep engagement by the entire board with multiple CEO candidates has been extremely helpful and has informed the board's work with the management team to crystallize the strategic pillars we are using to align and focus the entire company to execute more effectively during this transition. These pillars are, first, sustainable and predictable ARR growth. Second, platform superiority for the complete integration of our IoT and operations solutions. Third, operational excellence which includes a particular focus on world-class customer engagement and satisfaction. And fourth, collaborative innovation, which refers to our efforts at strategically enhancing our platform with AI to improve experiences for both residents and operators while forging strategic partnerships to maximize platform value. Through these four pillars, we can better align our focus and resource allocation around the key initiatives that will drive the highest value for shareholders. As we discuss these pillars with investors, I hope it will become increasingly clear that our strategic North Star is to build an industry-leading SaaS platform to meet our customers' needs and focus our hardware development efforts on only those products that create a differentiated and sustainable competitive advantage in achieving that goal. Taking all of what I've shared this morning together, I can enthusiastically state that the board is more excited and optimistic than ever, that we're on the path to restore the credibility of SmartRent as a public company and to deliver enhanced value to shareholders. We're well aware that we will only reestablish this trust over time as we deliver actual results. Toward that end, I'm pleased to announce today that the board is committing a strategic investment of $10 million over the next year to accelerate our momentum and deliver the results of our strategic transition more quickly. This investment will be directed to activities directly related to the four strategic pillars around ARR growth, platform superiority, operational excellence, and collaborative innovation. We have sufficient cash to continue returning capital to shareholders through share repurchases and make this strategic investment in the business at the same time. To be clear, investment does not mean that we plan to return to negative margins to drive higher growth. Rather, we're using our strong balance sheet to make targeted investments that we believe will accelerate our transition and progress. By making this investment now and carefully aligning it with our strategic pillars, We hope to demonstrate to our investors, customers, and other stakeholders that we're committed to reestablishing and accelerating our forward momentum. Thank you for your support and patience as we navigate this transition. We look forward to delivering the results that will justify that patience next year. I will now turn the call over to Daryl.