Hello, and thank you for joining us today. My name is Brian Ruttenbur, Senior Vice President of Investor Relations for SmartRent. I'm joined today by Lucas Haldeman, Chairman and CEO; and Hiroshi Okamoto, Chief Financial Officer. They will be taking you through our results for the third quarter of 2023, as well as discussing guidance for the fourth quarter of the year. Before today's market opened, we issued an earnings release and filed our 10-Q for the three months ended September 30, 2023, both of which are available on the Investor Relations section of our website, smartrent.com. Before I turn the call over to Lucas, I’d like to remind everybody that the discussion today may contain 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 our quarterly report on Form 10-Q. We undertake no obligation to provide updates with regard to the forward-looking statements made during this call, and we recommend that all investors review these reports thoroughly before taking a financial position in SmartRent. 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 the third quarter earnings deck is available on the Investor Relations section of the website. And with that, let me turn the call over to Lucas to review our results.

Good morning. Thank you for joining our call. We reported a strong first nine months of 2023, marked by nearly 40% improvement in revenue and a decrease in our operating losses by more than $40 million. In the third quarter, we delivered both revenue and adjusted EBITDA within our guidance range. We grew total revenue by 22% year-over-year to more than $58 million and we improved adjusted EBITDA to negative $5 million, an increase of approximately $1.5 million sequentially and $12.6 million from the third quarter of 2022. This quarter marks our sixth consecutive quarter of improved adjusted EBITDA, primarily driven by higher gross margin. In the third quarter, we increased bookings from second-quarter levels by 57% to more than $49 million. We also expanded overall gross margin by nearly five percentage points from the second quarter to more than 23% and from 2.5% last year. Hardware and hosted services gross margin hit record highs. We increased our cash position by $14 million. We believe that we will achieve sustainable positive cash flow from operations within six months after reaching profitability on an adjusted EBITDA basis. SmartRent continues to lead in innovation, creating new products that pave the way for the next generation of smarter living and working in rental housing. This quarter, I'm pleased to share that we're launching a product that has been years in the making. We are bringing our Hub+ device to rental housing, the latest best-in-class solution that we have built from the ground up. It's sleek, it's modern, it's smart. It's the next level of smart technology for our customers and combines the power of our Smart Home hub and a smart thermostat into one single device. It's less hardware to install and offers all the benefits of our other hubs and thermostats. It powers remote capabilities, simplified automation, and more efficient operations. It's a product we are proud to bring to market and are encouraged by the positive feedback we're hearing from our customers. We are beginning to deploy the Hub+ and anticipate that we will see more meaningful results and revenue contributions in 2024. We are also moving forward with integrating new artificial intelligence applications into our products. The strategic application of AI is growing in importance for streamlining operations in rental housing. One example of how SmartRent is introducing AI to our solutions is a new feature in our work management product called Walk and Talk. This AI-powered feature enables users to use natural language to describe tasks that need to be completed, like any unit repairs, and automatically creates and assigns work orders. Walk and Talk saves site teams valuable time, empowering them to easily categorize and complete day-to-day tasks. SmartRent data shows that when utilizing Walk and Talk, maintenance technicians can create a work order 70% faster. The efficiencies realized from automating countless tasks result in hours and dollars saved while also contributing to higher team satisfaction. We continue to lead the industry by innovating new hardware and software solutions for the rental housing market. We are pleased with our results and our strengthening balance sheet. We remain on track to achieve adjusted EBITDA profitability by the end of the year and cash flow breakeven within the following six months. I will now turn the call over to Hiroshi to review the financials in more detail.

Thank you, Lucas. Q3 marked a quarter of internal changes and operational improvements to reposition the company for sustainable future profitability and growth. Amidst this backdrop of changes, it was a quarter of solid revenue, expanding margins, and narrowing adjusted EBITDA loss. As Lucas reiterated, we are on track to become adjusted EBITDA positive in Q4. In discussing the highlights for the quarter, I will group my points into the following categories: first, revenue and bookings growth; second, operational improvements and margin expansion; and third, profitability and cash optimization. Total revenue for the quarter was $58.1 million, up 9% from Q2 and 22% from Q3 of last year. This was the second highest quarter for revenue in the company's history following Q1 of this year. The first three quarters of the year totaled $177 million, up 39% from $127 million for the first three quarters of 2022, and already surpassing our total fiscal 2022 revenue of $168 million. By revenue stream, hardware revenue was $35.6 million, professional services was $6 million, and hosted services was $16.5 million. The composition of our revenue continues to evolve as our expanded product line is being adopted by our customers. ARPU for hardware continues on an upward trajectory of 8% year-over-year. Professional services ARPU increased 32% year-over-year. SaaS ARR increased from $39 million in Q2 to $43 million in Q3, as we topped $10 million in quarterly SaaS revenue for the first time. This was an increase of 12% sequentially and a 35% increase year-over-year. Total deployed units increased to 683,000 with 32,000 units being deployed this quarter. Bookings for the quarter were $49.7 million and 46,000 units, up 57% and 132% respectively from the previous quarter. Although we expect bookings to continue to be nonlinear from quarter to quarter, we are encouraged not only by the increases in bookings and booked units this quarter, but by bookings ARR ARPU being above $8 for the second quarter in a row. This demonstrates how our efforts to cross-sell and upsell the suite of products are starting to flow through in our performance metrics. Operational improvements continued to drive gross margin expansion for hardware and hosted services. Total gross profit was $13.5 million, compared to $10 million last quarter and $1 million a year ago. Hardware margin increased to 23%, up from 21% last quarter, and 5% a year ago, and in absolute dollars contributed $8.1 million. Efficiencies in manufacturing, logistics, and distribution continue to drive expanded margins in hardware. Hosted services contributed $10.6 million of gross profit compared to $10 million last quarter and $7 million a year ago. Hosted services margin increased to 64%, up from 63% last quarter and 51% a year ago. SaaS margins, a part of hosted services, held steady at 74%, an increase from 57% a year ago. Professional services gross margin declined in Q3 due to lower deployment volumes. However, I want to highlight that we have continued to invest in technology initiatives over the past several quarters to allow our teams to be more efficient with installations and further our collaboration with trusted partners to augment our teams. The operational improvements we have implemented transform our professional services to a more variable cost model. As we evolve the model toward generating a positive margin, we believe that we will have improved professional services margin in Q4 with continued improvement throughout 2024. Adjusted EBITDA for the quarter was negative $5 million, an improvement of 22% from Q2 of negative $6.4 million. Total operating expenses were $23.5 million, a decrease of 16% from $27.8 million a year ago and an incremental increase from $22 million in Q2, as we continue to grow our operations. The significant changes we made to our operating model in the pursuit of efficiency gains in optimizing processes allow us to scale for long-term growth and profitability. In addition to our focus on operational profitability, getting the business to generate cash has been equally important. Our cash balance increased to $211 million from approximately $197 million at the end of Q2, an increase of about $14 million. The increase in cash this quarter is not a result of the ADI arrangement, but is primarily due to improved inventory management and demand forecasting to reduce our inventory levels as we gradually transition to ADI over the next year. We continue to have no debt and maintain an undrawn credit facility of $75 million, and we reiterate that we expect to be free cash flow positive from operations in the first half of next year. Guidance for Q4 and full year 2023 are as follows. We are narrowing Q4 guidance for revenue to $58 million to $63 million from $58 million to $70 million. We are reiterating adjusted EBITDA to be breakeven to positive $2 million for the quarter. Accordingly, we are narrowing full-year guidance for revenue to $235 million to $240 million from $233 million to $250 million. We are narrowing adjusted EBITDA toward the higher end of the range to negative $20 million to negative $18 million from negative $22 million to negative $18 million. I will now pass the call back to Lucas for closing remarks.

Thank you, Hiroshi. In the latter half of 2023, we have remained focused on optimizing our operations to become adjusted EBITDA positive. Improvements in gross margin and tight control of operating expenses led to improved profitability, with adjusted EBITDA hitting a quarterly record since becoming a public company. We implemented technology initiatives and further augmented our implementation team with trusted partners to transform our professional services to more of a variable cost model, which we believe will improve our professional services margin in Q4 and into 2024. We have a strong balance sheet and cash position and have clear visibility on cash flow in the near term. We will continue to evaluate our best uses of cash moving forward. Our IoT solutions are now deployed in more than 680,000 rental units. The total addressable opportunity in rental housing in the US stands at more than 40 million units, offering ample room for growth. Each quarter, we penetrate more of the market by anticipating and responding to the needs our customers share with us. Our customers are generating strong returns from our solutions through enhancing their operations, protecting assets, generating revenues, and improving the quality of living and working in their communities. As I shared earlier in our call, innovation is a cornerstone of our approach. We create, invest in, and deploy offerings that add unparalleled value for our clients. It remains important for us to pursue both SaaS and hardware opportunities, as our customers demand and benefit from the integration of Volt Solutions. Our powerful combination of our hardware and software products has allowed us to scale and lead the proptech industry. The ROI of our platform provides our customers ongoing incentive to roll out our solutions as property owners seek to optimize business operations. From protecting assets with our leak sensor technology to creating connected communities with community Wi-Fi to automating workflows and tasks for site teams, our intentionally designed solutions power a better world and make living and working easier for all. Operator, please open the call for questions.

Hi, this is Nikhil Vijay on for Ryan Tomasello. Thank you for taking my questions. I have two for you. First, can you provide more color around what you are seeing in terms of macro and apartment end market conditions? Just curious how have customer conversations and overall demand been trending in light of the headwinds that the apartment operators have been facing. And secondly, have you seen any changes in the M&A landscape in terms of the deal flow and valuations? And is that something you would still consider at the right price and strategic fit?

Thanks, Nikhil. I'll take both of those. First, on the macro environment, I think we're definitely seeing a softening rent environment. We saw that from the latest public reports. It actually continues to be a tailwind for us as owners and managers are really focused on reducing expenses and driving ancillary revenue, something that our platform does both of those things. And so while we are seeing some softening in the market around rents, it's not hurting our demand at all. And then in terms of changes in the M&A environment, we continue to look as things come to market. We have not seen anything that we believe is an opportunity we should pursue at the moment, but always looking, and I think certainly as you see us move from adjusted EBITDA positive to free cash flow, I think that will open up some of the cash on the balance sheet to look at those opportunities. So, nothing to guide you to Nikhil, but feeling good about where the market is. And I do think we're starting to see private company valuations come into line. Thanks for the question.

Awesome. Good morning guys. Thank you very much for taking my questions. I'm going to try to sneak in three if I can. The first one maybe for you Lucas is just kind of bigger picture. Your unit deployments have trended lower in the last two quarters. I know that you are trying to kind of balance profitability and growth, but with you guiding down full-year revenue slightly this quarter, it's a little hard to parse out what of this kind of deployment slowdown is maybe intentional versus a product of the environment and demand from your customers. So, is there any additional color that you can share with us? So just kind of help us gain comfort in the longevity of the different headwinds you're seeing to deployments especially about when we think about deployments maybe getting back to growth. What we need to see to unlock that growth lever? Just a little more color would be very helpful. Thank you.

Thank you for the question, Erik. Last year, during this time, we aimed to communicate to investors and analysts that we are shifting away from focusing primarily on new units. Our main goal now is to increase revenue while also achieving profitability, which involves growing profitable revenue. Our focus is on identifying opportunities to expand profitable revenue rather than merely increasing top-line figures. I want to emphasize that we are aiming for the higher end of adjusted EBITDA positivity, which may result in slightly lower total revenue. However, we believe, based on feedback from the investment community, that achieving and maintaining profitability is more crucial than simply boosting top-line results. Therefore, the current pace of new unit deployment is a deliberate strategy as we work towards becoming free cash flow positive.

Okay. Very clear. Thank you. And then maybe my second question is for Hiroshi, but it's obviously great to see and to reiterate what you just said Lucas to see you guys expecting to reach EBITDA profitability in Q4. I think the revenue guide implies a fairly similar level of revenue in Q4 to 3Q. But obviously we need to see some improvement in the PS gross margins to reach EBITDA profitability. I think a fairly sizable tick up in PS gross margins. Can you just make sure help us understand how we should think about professional services gross margins in Q4? And really what are the tools or the levers that will help you improve that margin profile in really this three months? That would be helpful for us.

Sure. Thanks, Erik. In order to achieve adjusted EBITDA profitability in Q4, it's essential for us to enhance our professional services margins. We have been focused on this in recent quarters and have a clear understanding of the actions we need to take to reach that goal. The margins for professional services can vary depending on deployment volume. However, we have made advancements in technology and operational processes to shift some of those costs to a more variable basis. One example is the ability to monitor project progress remotely rather than being on-site. We implemented these improvements toward the end of Q3, which positions us well for enhancements in Q4. This gives us confidence that we can achieve our targets.

Okay, very clear. My last question is about the significant increase in hardware revenue per new unit deployed in the third quarter, both compared to last year and the previous quarter. I want to confirm my understanding of this trend and gain insights into the key factors driving such strong hardware pricing. This suggests that hardware prices and new deployments have effectively doubled in the last three months, so I’m looking to understand the underlying elements behind this change. Thank you.

Yes. I think the underlying factor is that we are selling more products for customers that we're selling to. And examples of that would be the Alloy Access and self-guided tour of some of the products that we are selling in terms of cross-sell.

Erik, I'll just add a little color to that as well. I think what we're seeing this year is also a byproduct of not being supply constrained with Alloy Access. And so a lot of our new deployments – and for a while, our customers' deployments are both IoT hardware and common area access control hardware. You're also seeing a little bit of Wi-Fi hardware coming in there. So some of what's driving it is not so much that the same-store IoT hardware is dramatically different, but it's more hardware because of more products being adopted by our customer set.

Okay. Very clear. Thank you very much and congrats on the good quarter guys.

Great. Thanks, Erik.

Hey, great. Thank you. Good morning. I have a follow-up question to the prior question on the gross margin for Professional Services. You talked about that improving in Q4 based on the actions you are taking. Can you give us a sense of where gross margin could be in Q4, particularly? But also at what revenue level should we think about that business being breakeven from a gross margin perspective?

Hey, Sidney, thanks for the question. I'll give an answer, and Hiroshi can add some color if he has anything else to say. I mean I think what we said in some of the prepared remarks, and I'll just kind of reiterate, is really this was – Q3 was sort of a culmination of a lot of internal development of technology to improve how we deploy resources as well as a transformation of how we actually go about doing the install. And so as you've seen sort of a stair-step function, I feel like this is coming into Q4 is the first quarter where you're not going to see that sort of stair step. It's a – we've deployed a new strategy that's materially different. And the whole idea around this Sidney is that we can achieve breakeven or slightly positive margins on professional services, regardless of the volume of installs that we're doing. And so it's a transformation, driven by technology of moving from a heavy fixed cost installation model to a much more variable cost model, so that we don't have to think about it in the same ways like to your question we think about it as I have to achieve x to hit breakeven. That really can move as the pace of install moves up and down.

Yes. I think just to add to that. Sorry, we're not providing guidance on our gross margins, but I think you could see a significant improvement in Q4. We hope to get that positive sometime in 2024, Professional Services I'm talking about.

Got it. I got it. That's very clear. Thanks. My follow-up question is it's great to see that your booking units improved a lot this quarter. I think last quarter you talked about some customers not willing to put in new orders until the existing orders are fulfilled. How have those conversations changed to drive that unit kind of booking unit growth that you saw? And along the same line, I noticed that booking dollars didn't grow as much as units. Can you talk about that dynamic as well?

Yes, we believe we had a strong quarter in terms of bookings. To clarify, bookings can be unpredictable and do not consistently reflect our demand. Various factors influence this, depending on the customer. The reason for the robust bookings this quarter in Q3 was largely because we completed several customer projects and secured new orders, along with a successful quarter of acquiring new customers.

Okay. Maybe if I just squeeze in one more. Understanding it's too early to give guidance for next year, but considering the several changes in strategy that you guys are going through this year, conceptually how should we think about what's driving revenue growth next year? Maybe revenue is not the focus like you mentioned earlier Lucas. Is it more unit deployment? Is it higher hardware ARPU, or mainly on software SaaS? Maybe broadly speaking, what are the top priorities for the management team?

The priorities remain consistent. We've indicated that we expect to achieve free cash flow positivity within six months of next year. Our focus is on driving the most profitable revenue rather than just increasing new units. We emphasize growth levers, with cross-selling and upselling proving to be effective ways to sell additional products to new customers. Additionally, we've introduced a new product, the smart package room. As we assess the broader market, we see a significant number of customers utilizing IoT only, and now we can provide access control Wi-Fi, smart package rooms, work order management, and property operations software. Optimizing these offerings for our customers while simultaneously driving new growth is a strong strategy for profitability.

Great. Thank you very much.

Thanks, Sidney.

Perfect. Hi, Lucas. Hi, Hiroshi. Thanks for taking my question. Maybe if we look at SaaS ARPU, it was a nice kind of sequential growth there. Could you maybe go into the drivers behind that? More specifically into your existing deployment base. What new products were they taking up in the quarter? Have you been more focused on kind of upselling then? Obviously, relative to the new units deployed. So I'm curious to what products you're seeing really drive the improvement in SaaS ARPU.

Hey, Brett, yes, thanks for the question. So I think it's a good question. I think we're seeing a lot of customers adding additional products. Access Control and self-guided tour are the two that come to mind as really a package IoT. Access Control and self-guided tour. That helps owners unlock savings and efficiencies in labor, and really with the macro backdrop that I took in the first question from Nikhil, that's become a real focus. And so we're having a lot of success saying hey to be able to save on labor costs, these three products work in harmony together. And you're seeing that come out in the ARPU. All three of those help drive ARPU growth.

Perfect. And then maybe a question for Hiroshi on professional services. Obviously, with the changes you're making in that segment, revenue decline this quarter. How should we think directionally about professional services revenue in the fourth quarter and maybe as we look at 2024? Should we expect that revenue to be down next year?

I think in terms of revenues, for professional services for Q4 would probably be similar to Q3. And Q4 2024, we haven't given guidance yet, but we think it will be slightly up.

Yes. I would like to point you, Brett, towards the fact that professional services will fluctuate based on new unit deployment. Internally, we believe that once we reach breakeven or a slight profit, it will become less of a central focus for the company. That's why we have intentionally decided not to accelerate new unit growth as quickly as we have in the past, as we are concentrating on the profitability of cross-selling and upselling. Therefore, it is no longer as significant of an internal benchmark as it used to be.

Understood. Appreciate it guys. Congrats on the quarter.

Thanks, Brett.

Thanks for taking the question. I'm not sure if I heard an update on WiFi in the prepared remarks. I realize it's still early and it's going to be longer in sales segment. But just curious, how do you guys see traction there? And then just secondarily on the new integrated hub, I miss that. Can you just maybe talk a little bit more about sort of how that might impact the financial model over the coming quarters? Is it a revenue opportunity? Is it about unlocking additional efficiencies for customers?

We believe that WiFi will significantly contribute to our revenue in 2025, and we are very enthusiastic about the demand for this product. We have generated a large number of quotes and are actively working on many jobs. We see WiFi as a crucial component of our platform moving forward. Recently, at a National Multi-Housing Council show, I engaged with numerous customers, and the interest in WiFi, in general, was evident. This is an exciting time for the industry, and we aim to take advantage of that. Regarding the new ALLOY HUB PLUS, while it won't dramatically affect top-line revenue, we anticipate an increase in gross margin. This is because, instead of relying on a third-party thermostat where we act as a hardware distributor, we are now creating the hub ourselves. The margins on the thermostat are expected to be higher. Therefore, we foresee an increase in gross margins for hardware as we install the Hub Plus. More importantly, this product results from years of R&D, bringing the innovation to market with significant strategic value related to connectivity, reduced hardware needs, and faster installation times, which I am very excited about.

Yes. Just to add to that, I think we're introducing it right now. We won't see a meaningful improvement in gross margin in Q4, but really a driver for 2024.

Thanks, Tom.

Our first question comes from Nikhil Vijay from KBW. Your line is now open. Thank you for everyone joining in today's session. We hope you found it useful. Have a wonderful day and stay safe.