SmartRent, the smart-home startup that went public via SPAC last summer, continues to use its access to the capital markets to swallow up competitors.
The company is buying maintenance and resident service software SightPlan for $135 million in an all-cash transaction, it announced just after releasing its earnings Thursday.
SmartRent estimates the acquisition will add $10 million to its revenues in the remainder of 2022, meaning the deal is happening at a revenue valuation multiple of roughly 10x. That’s in line with how the market tends to value high-growth SaaS business, but the deal will depend on how successfully SmartRent can scale a product that has been in the market since 2013, but struggled to post big numbers.
“Where their pipeline is today, and where they are in portfolio conversion, we feel very good about it,” SmartRent founder and CEO Lucas Haldeman said in an interview Thursday. The pandemic brought about what Haldeman called a “monumental shift” in how real estate operators adopt technology.
“We’re already integrated with them, we know this company intimately,” Haldeman said of SightPlan, which has about 6,000 properties – mostly multifamily but also some student and senior housing – under management and will continue to operate out of Orlando. The entire team is coming on board, including CEO Terry Danner and president Joseph Westlake, and Haldeman said he expects them to play a key role in the combined firm going forward.
“SightPlan was at a crossroads in its evolution, deciding between raising additional equity or joining forces with a complementary provider of real estate enterprise software,” Westlake said in a statement. The company was backed by RET Ventures, the same venture capital firm that was an early investor in SmartRent.
The deal, which follows SmartRent’s acquisition of rival smart-home firm iQuue for an undisclosed price in January, is part of a wave of consolidation happening in proptech.
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Founded in 2017 by Colony Starwood Homes alum Haldeman, SmartRent went public last summer in a $2.2 billion merger with a Fifth Wall-sponsored blank-check firm. The deal remains one of the largest in the proptech space, though many startups that went public via SPAC have taken a hit over the past year.
SmartRent reported that its revenue for Fiscal Year 2021 was $110 million, more than doubling its $52 million total for 2020. Haldeman said it now has over 300,000 units on the platform as of the end of 2021, also more than double the amount it had in the previous year. Its losses, however, also grew to $71 million.
SmartRent’s market capitalization as of Thursday was $1.2 billion. Its stock briefly traded at around $14 a share in September, but is down to just over $6 a share today.
When asked about SmartRent’s steep drop in share price, Haldeman pointed to the overall trend in the public markets, where many major tech firms and proptech firms are experiencing similar drops in value.
“The market is moving away from growth – you’ve seen it among all our peers and high-growth software companies,” he said. “We think this is an amazing business, and 100 percent growth is nothing to shake a stick at. We think the stock price will take care of itself as we continue to execute.”