Latch, Inc. (NASDAQ: LTCH) (“Latch” or the “Company”), maker of
LatchOS, the full-building enterprise software-as-a-service (SaaS)
platform, today reported financial results for the three and nine
months ended September 30, 2021.
“It was another record quarter for Latch, with
120% revenue growth year-over-year. This reflects our vast market
opportunity and the fierce industry demand for our products and the
experiences they deliver for real estate operators, residents, and
service providers,” said Luke Schoenfelder, Latch Co-Founder, CEO,
and Chairman of the Board of Directors. “As we continue to scale
the business, I remain proud of our team’s ability to remain agile
to meet customer demand despite unprecedented global supply chain
shortages.”
Three Months Ended September 30, 2021 and
2020 Financial Highlights
$ in thousands (unaudited)
|
|
Three months ended September 30, |
|
|
|
|
|
|
|
2021 |
|
|
|
2020 |
|
|
$ Change |
|
% Change |
Revenue |
|
$ |
11,197 |
|
|
$ |
5,095 |
|
|
$ |
6,102 |
|
|
120 |
% |
Cost of revenue |
|
$ |
11,153 |
|
|
$ |
5,890 |
|
|
$ |
5,263 |
|
|
89 |
% |
Operating expenses |
|
$ |
34,391 |
|
|
$ |
14,657 |
|
|
$ |
19,734 |
|
|
135 |
% |
Other income (expense) (1) |
|
$ |
108 |
|
|
$ |
(422 |
) |
|
$ |
530 |
|
|
126 |
% |
GAAP net loss |
|
$ |
(34,239 |
) |
|
$ |
(15,874 |
) |
|
$ |
(18,365 |
) |
|
(116 |
%) |
Nine Months Ended September 30, 2021 and
2020 Financial Highlights
$ in thousands (unaudited)
|
|
Nine months ended September 30, |
|
|
|
|
|
|
|
2021 |
|
|
|
2020 |
|
|
$ Change |
|
% Change |
Revenue |
|
$ |
26,838 |
|
|
$ |
10,573 |
|
|
$ |
16,265 |
|
|
154 |
% |
Cost of revenue |
|
$ |
25,557 |
|
|
$ |
12,391 |
|
|
$ |
13,166 |
|
|
106 |
% |
Operating expenses |
|
$ |
88,831 |
|
|
$ |
44,084 |
|
|
$ |
44,747 |
|
|
102 |
% |
Other income (expense) (1)(2) |
|
$ |
(24,861 |
) |
|
$ |
(899 |
) |
|
$ |
(23,962 |
) |
|
NM |
GAAP net loss |
|
$ |
(112,411 |
) |
|
$ |
(46,801 |
) |
|
$ |
(65,610 |
) |
|
(140 |
%) |
|
|
|
|
|
|
|
|
|
Net cash used in operations |
|
$ |
(63,679 |
) |
|
$ |
(40,803 |
) |
|
$ |
(22,876 |
) |
|
(56 |
%) |
Cash and Cash equivalents balance (3) |
|
$ |
240,306 |
|
|
$ |
26,364 |
|
|
|
|
|
NM: Not meaningful
- Other income (expense) includes income taxes.
- Other income (expense) for the nine months ended September 30,
2021 includes: (a) $12.6 million unfavorable change in the fair
value of the derivative liabilities related to our convertible
notes and warrants related to our term loan; (b) $3.7 million
unfavorable change in the fair value of our private placement
warrants; (c) $1.5 million loss on extinguishment of debt related
to the convertible notes and warrants related to our term loan; and
(d) $7.0 million interest expense primarily related to our
convertible notes.
- During the three months ended September 30, 2021, Latch
invested in marketable securities including high quality asset
backed securities, commercial paper, corporate bonds and U.S.
government agency debt securities. As of September 30, 2021, the
estimated fair value of Latch’s marketable securities was $192.3
million.
Key Business Metrics
- Total Bookings: Total Bookings for the three
months ended September 30, 2021 were $96.0 million, up 181%
compared to $34.1 million for the same period in 2020.
- Booked ARR: Booked ARR for the three months
ended September 30, 2021 was $59.8 million, up 126% compared to
$26.4 million for the same period in 2020.
- Cumulative Booked Home Units: Cumulative
Booked Home Units for the three months ended September 30, 2021
were 531,657, up 101% compared to 264,947 for the same period in
2020.
- Adjusted EBITDA: Adjusted EBITDA for the three
months ended September 30, 2021 was $(26.2) million, down as
compared to $(14.6) million during the same period in 2020. Please
see below for a reconciliation of Adjusted EBITDA to our closest
GAAP metric, net loss, as well as a discussion of why we view
Adjusted EBITDA as an important metric.
Recent Business Highlights
- In the third quarter, Latch announced the new Latch M, which is
its latest mortise lock built for retrofits and new construction.
The product is designed to be easy to install without any added
infrastructure and brings all of the benefits of the new Latch Lens
to the mortise format. The updated Latch M further broadens Latch’s
ability to provide more buildings of all shapes and sizes with the
experience of LatchOS, our full-building operating system of
software, products, and services.
- Also in the third quarter, Latch hired Lee Odess as General
Manager of New Market Development to help strengthen its focus on
new markets. Odess is a proven leader in the industry with nearly
20 years of experience driving sales growth, product innovation and
geographic expansion for leading companies in the smart access and
security space, including Lutron, Brivo, and Allegion. Immediately
prior to joining Latch, he was the founder and CEO of Group337, a
consulting and content firm specializing in the security, access
control, and IoT space. Odess’s team of industry experts has also
joined Latch, and their combined expertise will be invaluable as
Latch continues to innovate and provide scalable technology
solutions to its customers’ operating problems.
Financial Outlook
Latch is providing guidance for fourth quarter
2021 and updated guidance for full year 2021 as follows:
- Fourth Quarter 2021 Guidance: We expect
revenue to be in the range of $11.2 million to $15.2 million, a 49%
to 102% year-over-year increase. We expect Total Bookings to be in
the range of $91.5 million to $101.5 million, a 102% to 124%
year-over-year increase. We expect Adjusted EBITDA to be in the
range of ($47.5) million to ($32.5) million.
- Full Year 2021 Guidance: We are reiterating
our full year revenue guidance of $38 million to $42 million, a
111% to 133% year-over-year increase. We have updated our Total
Bookings guidance from $325 million to $340 million to be in the
range of $355 million to $365 million, a 115% to 121%
year-over-year increase. We have updated our Adjusted EBITDA
guidance from ($115) million to ($95) million to be in the range of
($105) million to ($90) million.
Quarterly Conference Call
Latch will host a conference call today at 5:00
p.m. Eastern Time to review the Company’s financial results for the
quarter ended September 30, 2021. To access this call, dial (833)
562-0132 for the United States or Canada, or (661) 567-1107 for
callers outside the United States or Canada, with Conference ID:
7987726. A live webcast of the conference call will be accessible
from the Investor Relations section of Latch’s website at
https://investors.latch.com, and a recording will be archived and
accessible at https://investors.latch.com.
Additional Information
For additional information regarding Latch’s
third quarter 2021 financial results that management believes to be
useful for investors, please refer to the presentation posted on
the Investor Relations section of Latch’s website at
https://investors.latch.com.
About Latch, Inc.
Latch makes spaces better places to live, work,
and visit through a system of software, devices, and services. More
than one in ten new apartments in the U.S. are currently being
built with Latch products, serving customers in more than 43 states
through its flagship full-building operating system, LatchOS. For
more information, please visit https://www.latch.com.
Key Business Metrics
Latch reviews Key Business Metrics, including
those detailed above, to measure its performance, identify trends
affecting its business, formulate business plans, and make
strategic decisions that will impact the future operational results
of the Company. For definitions of our Key Business Metrics, see
our most recent quarterly report on Form 10-Q filed with the
Securities and Exchange Commission (the “SEC”). Increases or
decreases in the Company’s Key Business Metrics may not correspond
with increases or decreases in its revenue.
The limitations these Key Business Metrics have
as an analytical tool are: (1) they might not accurately predict
the Company’s future financial results, (2) the Company might not
realize all or any part of the anticipated value reflected in its
Total Bookings and (3) other companies, including companies in
Latch’s industry, may calculate Key Business Metrics or similarly
titled measures differently, which reduces their usefulness as
comparative measures.
Non-GAAP Financial Measures
To supplement our financial statements presented
in accordance with generally accepted accounting principles
(“GAAP”) and to provide investors with additional information
regarding our financial results, we have presented in this press
release Adjusted EBITDA, a non-GAAP financial measure. Adjusted
EBITDA is not based on any standardized methodology prescribed by
GAAP and is not necessarily comparable to similarly titled measures
presented by other companies.
We define Adjusted EBITDA as our net loss,
excluding the impact of stock-based compensation expense,
depreciation and amortization expense, interest income, interest
expense, provision for income taxes, restructuring, one-time
litigation expenses, loss on extinguishment of debt, gain or loss
on change in fair value of derivative instruments and warrant
liabilities, and our transaction related expenses. The most
directly comparable GAAP measure is net loss. We monitor, and have
presented in this press release, Adjusted EBITDA because it is a
key measure used by our management and Board of Directors to
understand and evaluate our operating performance, to establish
budgets, and to develop operational goals for managing our
business. In particular, we believe excluding the impact of these
expenses in calculating Adjusted EBITDA can provide a useful
measure for period-to-period comparisons of our core operating
performance. We believe Adjusted EBITDA helps identify underlying
trends in our business that could otherwise be masked by the effect
of the expenses that we include in net loss. Accordingly, we
believe Adjusted EBITDA provides useful information to investors,
analysts, and others in understanding and evaluating our operating
results, enhancing the overall understanding of our past
performance.
Adjusted EBITDA is not prepared in accordance
with GAAP and should not be considered in isolation of, or as an
alternative to, measures prepared in accordance with GAAP. There
are a number of limitations related to the use of Adjusted EBITDA
rather than net loss, which is the most directly comparable
financial measure calculated and presented in accordance with GAAP.
In addition, the expenses and other items that we exclude in our
calculations of Adjusted EBITDA may differ from the expenses and
other items, if any, that other companies may exclude from Adjusted
EBITDA when they report their operating results.
In addition, other companies may use other
measures to evaluate their performance, all of which could reduce
the usefulness of Adjusted EBITDA as a tool for comparison.
Latch has not reconciled its Adjusted EBITDA
guidance metrics to GAAP net earnings or loss because certain of
the reconciling items cannot be reasonably calculated or predicted
at this time. Accordingly, a reconciliation is not available
without unreasonable effort.
The following table reconciles Adjusted EBITDA
to net loss, the most directly comparable financial measure
calculated and presented in accordance with GAAP.
|
|
For the three months ended September 30, |
|
For the nine months ended September 30, |
(In thousands) |
|
|
2021 |
|
|
|
2020 |
|
|
|
2021 |
|
|
|
2020 |
|
Net loss |
|
$ |
(34,239 |
) |
|
$ |
(15,874 |
) |
|
$ |
(112,411 |
) |
|
$ |
(46,801 |
) |
Depreciation and amortization |
|
|
825 |
|
|
|
321 |
|
|
|
2,167 |
|
|
|
907 |
|
Interest (income)/expense, net |
|
|
780 |
|
|
|
458 |
|
|
|
6,971 |
|
|
|
809 |
|
Income taxes |
|
|
90 |
|
|
|
3 |
|
|
|
100 |
|
|
|
3 |
|
Loss on extinguishment of debt |
|
|
- |
|
|
|
- |
|
|
|
1,469 |
|
|
|
- |
|
Change in fair value of derivative liability |
|
|
- |
|
|
|
15 |
|
|
|
12,588 |
|
|
|
15 |
|
Change in fair value of warrant liability |
|
|
(1,067 |
) |
|
|
- |
|
|
|
3,728 |
|
|
|
- |
|
Restructuring costs (1) |
|
|
- |
|
|
|
84 |
|
|
|
- |
|
|
|
970 |
|
Transaction-related costs (2) |
|
|
462 |
|
|
|
- |
|
|
|
6,030 |
|
|
|
- |
|
Litigation costs (3) |
|
|
- |
|
|
|
- |
|
|
|
- |
|
|
|
1,046 |
|
Stock-based compensation and warrant expense (4) |
|
|
6,948 |
|
|
|
363 |
|
|
|
21,865 |
|
|
|
1,070 |
|
Adjusted EBITDA |
|
$ |
(26,201 |
) |
|
$ |
(14,630 |
) |
|
$ |
(57,493 |
) |
|
$ |
(41,981 |
) |
(1) The Company initiated a restructuring plan
in the first quarter of 2020 as part of its efforts to reduce
operating expenses and preserve liquidity due to the uncertainty
and challenges stemming from the COVID-19 pandemic. The
restructuring included a reduction in force involving an
approximate 25% reduction in headcount, which resulted in severance
and benefit costs for affected employees and other miscellaneous
direct costs. These costs are primarily included within research
and development, sales and marketing, and general and
administrative based on the department to which the expense
relates.
(2) Transaction costs related to the business
combination of TS Innovation Acquisitions Corp. (“TSIA”) and Latch.
These costs are included within operating expenses.
(3) Legal and settlement fees incurred in
connection with non-ordinary course litigation and other disputes.
These costs are included within operating expenses.
(4) Stock-based compensation and warrant expense
associated with equity compensation plans including RSUs granted
during the three months ended September 30, 2021 and $13.8 million
related to the secondary purchase transaction during the nine
months ended September 30, 2021.
FORWARD-LOOKING STATEMENTS
This release contains certain forward-looking
statements within the meaning of the federal securities laws,
including statements regarding adoption of Latch’s technology and
products. These forward-looking statements generally are identified
by the words "believe," "project," "expect," "anticipate,"
"estimate," "intend," "strategy," "future," "opportunity," "plan,"
"may," "should," "would," "will continue," "will likely result,"
and similar expressions. Forward-looking statements are
predictions, projections, and other statements about future events
that are based on current expectations and assumptions and, as a
result, are subject to risks and uncertainties. Forward-looking
information includes, but is not limited to, statements regarding:
the use of proceeds received in connection with the business
combination with TSIA, the Company’s future products, performance,
and operations, and the related benefits to shareholders,
customers, and residents; and the Company’s strategy. Many factors
could cause actual future events to differ materially from the
forward-looking statements in this document, including Latch’s
ability to implement business plans and changes and developments in
the industry in which Latch competes. The foregoing list of factors
is not exhaustive. You should carefully consider the foregoing
factors and the other risks and uncertainties described in the
"Risk Factors" section of our Registration Statement on Form S-1
filed with the SEC on June 25, 2021 and other documents filed by
Latch from time to time with the SEC. These filings identify and
address other important risks and uncertainties that could cause
actual events and results to differ materially from those contained
in the forward-looking statements. Forward-looking statements speak
only as of the date they are made. Readers are cautioned not to put
undue reliance on forward-looking statements, and the Company
assumes no obligation to update or revise these forward-looking
statements, whether as a result of new information, future events,
or otherwise, except as required by law, including the securities
laws of the United States and the rules and regulations of the SEC.
The Company does not give any assurance that it will achieve its
expectations.
CONTACTS:Investors:investors@latch.com
Media:Angela Maglionepress@latch.com
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