Walk into many newer apartment buildings and you may never need a metal key. Residents unlock their doors with a phone, prospective tenants tour empty units on their own schedule, and maintenance crews come and go without anyone handing over a key ring. Behind that convenience is a growing category of property technology, and it is changing how landlords run their buildings.
SmartRent, Inc. (NYSE: SMRT) is one of the companies building that layer. The Phoenix company sells what it calls building intelligence: connected hardware such as smart locks and access control systems, paired with software that property owners and managers use for self-guided tours and daily operations. Its customers are rental housing operators, and the goal is to make large portfolios of apartments easier and cheaper to manage.Â
The business makes money in two ways. It sells and installs equipment, and it charges ongoing subscription fees for the software that runs on top of that equipment. That mix matters. Hardware sales tend to rise and fall with customer projects, while subscriptions build a steadier base of income over time.
SmartRent reported its third quarter results today, and the headline numbers were stronger than a year ago. Total revenue came in at $41.6 million, up about 15% from $36.2 million in the third quarter of 2025. Core revenue, which the company tracks separately, rose about 24% to $40.7 million. Management credited growth in access control, equipment upgrades and refreshes, higher hardware shipments, and a larger installed base.Â
It is worth looking at where that growth came from. Hardware revenue jumped 61% to $18.5 million, compared with $11.5 million a year earlier. Annual recurring revenue, the subscription income the company expects to collect over a year, grew a slower 11% to $62.9 million. In other words, a large share of the quarter’s gain came from equipment sales rather than from subscriptions.Â
The bigger change was in profitability. Gross margin, the share of each sales dollar left after paying for the products and services delivered, rose to 41.2% from 26.4%. That is an increase of 1,470 basis points and the fourth quarter in a row of improvement. Gross profit climbed about 79% to $17.1 million. The gain is notable because equipment usually carries thinner margins than software, yet margins widened even as hardware sales surged. [Stock Titan]
Further down the income statement, adjusted EBITDA, a measure of operating earnings before items like interest, taxes and depreciation, came in at $1.1 million. That compares with a loss of $2.9 million a year earlier and marks the fourth straight quarter in positive territory. The company still lost money on a standard accounting basis, but its net loss narrowed about 38% to $3.9 million from $6.3 million. Operating cash flow was positive at $2.9 million.Â
The balance sheet gives the company room to work. SmartRent ended the quarter with about $89.2 million in cash and an undrawn $75 million credit facility. It also bought back 2.5 million of its own shares, about 1% of those outstanding, at a cost of $3.4 million.
The operating figures show a company still adding customers. As of September 30th, SmartRent had 941,977 units deployed, up 8% from a year earlier. Units booked over the past twelve months, which reflect new commitments from customers, rose 44% to 122,510. The company is aiming to pass one million installed units in the first half of 2027, and it expects fourth quarter revenue to grow between 15% and 20% from a year earlier.Â
What stands out in this quarter is the shift from growth at any cost toward growth that pays for itself. SmartRent is still not profitable on a net basis, and its recurring revenue is growing more slowly than its equipment sales. Even so, wider margins, positive cash flow and a steady climb toward one million connected units suggest the business is maturing. The next few quarters will show whether subscription growth can catch up with the hardware being installed.
