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 months
ended March 31, 2022.
“Demand for Latch-enabled spaces continues to
grow among multifamily real estate owners, operators, and
developers, and is reflected in our strong first quarter
performance,” said Luke Schoenfelder, Latch Co-Founder, CEO, and
Chairman of the Board of Directors. “As our company has matured, we
have honed our strategy to create powerful experiences for all
stakeholders through Latch’s intuitive software and sought-after
partnerships. We are pleased with our progress on these
initiatives, and after 88% year-over-year growth in software
revenue in the first quarter, we are raising software revenue
guidance for the year. In addition, to better reflect our momentum,
we are publicly introducing two important metrics: Spaces and ARR,
which have each grown over 100% year-over-year. Looking ahead, I am
confident that our focused approach will continue to pave the way
to make even more spaces better places to live, work, and
visit."
Key Business Metrics and Select
Financial Metrics
- Software
Revenue: Software revenue for the three months ended March
31, 2022 was $3.0 million, up 88% compared to $1.6 million for the
same period in 2021.
- Total
Revenue: Total revenue for the three months ended March
31, 2022 was $13.7 million, up 106% compared to $6.6 million for
the same period in 2021.
-
ARR: ARR for the three months ended March 31, 2022
was $7.9 million, up 137% compared to $3.3 million for the same
period in 2021.
-
Spaces: Spaces for the three months ended March
31, 2022 was 126,746, up 129% compared to 55,305 for the same
period in 2021.
- Net
Loss: Net loss for the three months ended March 31, 2022
was $44.2 million, up 16% compared to $38.1 million during the same
period in 2021.
- Adjusted
EBITDA: Adjusted EBITDA for the three months ended March
31, 2022 was $(36.8) million, down 165% compared to $(13.9) million
during the same period in 2021. 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.
- Cash
& Marketable Securities: Total cash plus marketable
securities for the three months ended March 31, 2022 was $335.0
million, including cash and cash equivalents of $91.0 million and
marketable securities of $244.0 million, up from $46.5 million of
total cash as of March 31, 2021. We had no marketable securities as
of March 31, 2021.
Financial Outlook
Latch is providing guidance for the second
quarter of 2022 and updating guidance for the full year 2022 as
follows:
- Second
Quarter 2022 Guidance: We expect software revenue to be in
the range of $3.3 million to $3.4 million, an 82% to 88%
year-over-year increase. We expect total revenue to be in the range
of $16.5 million to $18.5 million, an 83% to 105% year-over-year
increase. We expect Adjusted EBITDA to be in the range of ($40.0)
million to ($36.0) million.
- Full
Year 2022 Guidance: We are introducing full year 2022 ARR
guidance of $11.1 to $11.9 million, representing 74% to 87%
year-over-year growth, and Spaces guidance of 182,000 to 194,000,
representing 75% to 86% year-over-year growth. We expect software
revenue to be in the range of $14.3 million to $15.3 million, a 74%
to 86% year-over-year increase. We expect total revenue to be in
the range of $75.0 million to $100.0 million, an 81% to 142%
year-over-year increase. We expect Adjusted EBITDA to be in the
range of ($176.0) million to ($156.0) 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 March 31, 2022. To access the conference call, dial
(833) 562-0132 for the U.S. or Canada, or (661) 567-1107 for
callers outside the U.S. or Canada, with Conference ID: 9874409.
The webcast will be available live, and a recording will be
archived and accessible, on the Investor Relations section of
Latch’s website at https://investors.latch.com.
Additional Information
Latch’s condensed consolidated financial
statements are included for reference at the end of this release.
For additional information regarding Latch’s first quarter 2022
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. For
more information, please visit https://www.latch.com.
Key Business Metrics
Latch reviews key business metrics to measure
its performance, identify trends affecting its business, formulate
business plans, and make strategic decisions that will impact the
future operating results of the Company. For definitions of our key
business metrics, see our most recent Quarterly Report on Form 10-Q
or Annual Report on Form 10-K 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 include: (1) they might not accurately
predict the Company’s future financial results and (2) 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.
To better align our key business metrics with
our internal priorities and business plans for 2022 and beyond, we
are reporting new key business metrics beginning with the three
months ended March 31, 2022, including Annual Recurring Revenue
(“ARR”) and “Spaces.” Rather than focusing on our prior
bookings-related metrics that represented future target deliveries,
we are now focusing on the near-term execution and delivery of
software and the scale of our active platform. Accordingly, we have
also adjusted our internal sales compensation structure to
discontinue compensating our sales teams on bookings-related
metrics beginning in the second quarter of 2022. We are continuing
to report total revenue (GAAP) and net loss (GAAP) as key business
metrics, and we are also reporting software revenue (GAAP) as an
additional key business metric.
Brief descriptions of these new key business
metrics are provided below.
We use ARR to measure the recurring cash we
expect to collect from our customers. ARR is defined as the
annualized value of our active software contracts. A contract is
considered active if a signed contract is in effect as of the end
of the period. The contract value represents the cash value to
Latch, net of promotional, term, and any other discounts. ARR is
calculated as the total contract value divided by the contract term
in months, multiplied by twelve. We believe ARR provides useful
information to investors because it measures the health and growth
of our software business.
We use Spaces to measure the quantity of units
with active software contracts in buildings that generate ARR.
Units represent apartments, other dwelling units or commercial
spaces in a building. We believe Spaces provides useful information
to investors by indicating the size of the opportunity to grow
total revenue by increasing additional hardware, software and
services revenue generated by each Space.
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, warrant
liabilities and trading securities, 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.
|
|
Three Months Ended March 31, |
(in thousands) |
|
|
2022 |
|
|
|
2021 |
|
Net loss |
|
$ |
(44,231 |
) |
|
$ |
(38,101 |
) |
Depreciation and amortization |
|
|
1,506 |
|
|
|
653 |
|
Interest expense, net(1) |
|
|
864 |
|
|
|
3,318 |
|
Provision for income taxes |
|
|
17 |
|
|
|
— |
|
Change in fair value of derivative liabilities |
|
|
— |
|
|
|
3,597 |
|
Change in fair value of warrant liability |
|
|
(6,267 |
) |
|
|
— |
|
Change in fair value of trading securities |
|
|
(1,000 |
) |
|
|
— |
|
Transaction-related costs(2) |
|
|
538 |
|
|
|
2,148 |
|
Litigation costs(3) |
|
|
40 |
|
|
|
— |
|
Stock-based compensation(4) |
|
|
11,718 |
|
|
|
14,493 |
|
Adjusted
EBITDA |
|
$ |
(36,815 |
) |
|
$ |
(13,892 |
) |
(1) As a result of significant
discounts provided to our customers on our longer-term software
contracts paid upfront, the Company has determined that there is a
significant financing component related to the time value of money
and has therefore broken out the interest component and recorded it
as a component of interest income (expense), net on the condensed
consolidated statements of operations and comprehensive loss. The
interest expense is recorded using the effective interest method,
which has higher interest expense at inception and declines over
time to match the underlying economics of the transaction where the
outstanding principal balance decreases over time. Interest expense
associated with the significant financing component included in
interest (income) expense, net was $1.1 million and $0.7 million
for the three months ended March 31, 2022 and 2021,
respectively.
(2) Transaction costs related
to the business combination. These costs are included within sales
and marketing and general and administrative within the condensed
consolidated statements of operations and comprehensive loss.
(3) Legal and settlement fees
incurred in connection with non-ordinary course litigation and
other disputes. These costs are included within general and
administrative within the condensed consolidated statements of
operations and comprehensive loss.
(4) Stock-based compensation
expense associated with equity compensation plans including $11.3
million during the three months ended March 31, 2022 related to
RSUs granted since August 2021 and $13.8 million related to the
secondary purchase transaction during the three months ended March
31, 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 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 Annual
Report on Form 10-K filed with the SEC on March 1, 2022, 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:
press@latch.com
Latch, Inc. and
SubsidiariesCondensed Consolidated Balance
Sheets(in thousands, except share
amounts)
|
As of March 31, 2022 (unaudited) |
|
As of December 31, 2021 |
Assets |
|
|
|
Current assets |
|
|
|
Cash and cash equivalents |
$ |
90,959 |
|
|
$ |
124,782 |
|
Available-for-sale securities - current |
|
172,993 |
|
|
|
158,973 |
|
Accounts receivable, net |
|
28,967 |
|
|
|
25,642 |
|
Inventories, net |
|
18,996 |
|
|
|
11,615 |
|
Prepaid expenses and other current assets |
|
12,047 |
|
|
|
11,606 |
|
Total current assets |
|
323,962 |
|
|
|
332,618 |
|
Property and equipment,
net |
|
2,755 |
|
|
|
2,039 |
|
Available-for-sale securities
- non-current |
|
71,058 |
|
|
|
102,878 |
|
Internally developed software,
net |
|
14,411 |
|
|
|
12,475 |
|
Other non-current assets |
|
2,929 |
|
|
|
2,294 |
|
Total assets |
$ |
415,115 |
|
|
$ |
452,304 |
|
|
|
|
|
Liabilities and Stockholders’ Equity
(Deficit) |
|
|
Current liabilities |
|
|
|
Accounts payable |
$ |
5,757 |
|
|
$ |
6,229 |
|
Accrued expenses |
|
24,687 |
|
|
|
24,184 |
|
Deferred revenue - current |
|
7,211 |
|
|
|
6,016 |
|
Other current liabilities |
|
2,935 |
|
|
|
4,342 |
|
Total current liabilities |
|
40,590 |
|
|
|
40,771 |
|
Deferred revenue -
non-current |
|
28,484 |
|
|
|
24,190 |
|
Warrant liability |
|
3,520 |
|
|
|
9,787 |
|
Other non current
liabilities |
|
178 |
|
|
|
— |
|
Total liabilities |
|
72,772 |
|
|
|
74,748 |
|
Commitments and contingencies
(see Note 11) |
|
|
|
|
|
|
|
Stockholders’ equity
(deficit) |
|
|
|
Common stock - $0.0001 par value, 1,000,000,000 shares authorized;
142,237,954 and 141,592,388 shares issued and outstanding as of
March 31, 2022 and December 31, 2021,
respectively(1) |
|
32 |
|
|
|
25 |
|
Additional paid-in capital |
|
718,305 |
|
|
|
706,713 |
|
Accumulated other comprehensive loss |
|
(2,292 |
) |
|
|
(676 |
) |
Accumulated deficit |
|
(373,702 |
) |
|
|
(328,506 |
) |
Total stockholders’ equity (deficit) |
|
342,343 |
|
|
|
377,556 |
|
Total liabilities and
stockholders’ equity (deficit) |
$ |
415,115 |
|
|
$ |
452,304 |
|
(1) Shares issued and outstanding as of
March 31, 2022 and December 31, 2021 exclude 738,000
shares subject to vesting requirements.
Latch, Inc. and
SubsidiariesCondensed Consolidated Statements of
Operations and Comprehensive Loss
(unaudited)(in thousands, except
share and per share amounts)
|
|
Three Months Ended March 31, |
|
|
|
2022 |
|
|
|
2021 |
|
Revenue: |
|
|
|
|
Hardware |
|
$ |
9,055 |
|
|
$ |
5,014 |
|
Software |
|
|
3,039 |
|
|
|
1,615 |
|
Services |
|
|
1,561 |
|
|
|
— |
|
Total revenue |
|
|
13,655 |
|
|
|
6,629 |
|
Cost of revenue(1)(2): |
|
|
|
|
Hardware |
|
|
10,992 |
|
|
|
6,028 |
|
Software |
|
|
323 |
|
|
|
134 |
|
Services |
|
|
1,718 |
|
|
|
— |
|
Total cost of revenue |
|
|
13,033 |
|
|
|
6,162 |
|
Operating expenses: |
|
|
|
|
Research and development(2) |
|
|
18,257 |
|
|
|
9,615 |
|
Sales and marketing(2) |
|
|
17,296 |
|
|
|
3,750 |
|
General and administrative(2) |
|
|
14,178 |
|
|
|
17,696 |
|
Depreciation and amortization |
|
|
1,506 |
|
|
|
653 |
|
Total operating expenses |
|
|
51,237 |
|
|
|
31,714 |
|
Loss from operations |
|
|
(50,615 |
) |
|
|
(31,247 |
) |
Other income (expense) |
|
|
|
|
Change in fair value of warrant liability |
|
|
6,267 |
|
|
|
— |
|
Change in fair value of trading securities |
|
|
1,000 |
|
|
|
— |
|
Interest expense, net |
|
|
(864 |
) |
|
|
(3,318 |
) |
Other expense |
|
|
(2 |
) |
|
|
(3,536 |
) |
Total other income (expense), net |
|
|
6,401 |
|
|
|
(6,854 |
) |
Loss before income taxes |
|
|
(44,214 |
) |
|
|
(38,101 |
) |
Provision for income
taxes |
|
|
17 |
|
|
|
— |
|
Net loss |
|
$ |
(44,231 |
) |
|
$ |
(38,101 |
) |
Other comprehensive loss |
|
|
|
|
Unrealized loss on available-for-sale securities |
|
|
(1,618 |
) |
|
|
— |
|
Foreign currency translation adjustment |
|
|
2 |
|
|
|
(7 |
) |
Comprehensive
loss |
|
$ |
(45,847 |
) |
|
$ |
(38,108 |
) |
|
|
|
|
|
Net loss per common share |
|
|
|
|
Basic and diluted net loss per common share |
|
$ |
(0.31 |
) |
|
$ |
(3.65 |
) |
Weighted average shares
outstanding |
|
|
|
|
Basic and diluted |
|
|
141,970,190 |
|
|
|
10,438,778 |
|
|
|
|
|
|
(1) Exclusive of depreciation and amortization
shown in operating expenses below. |
(2) Stock-based compensation expense included in
cost of revenue and operating expenses is as follows: |
Cost of revenue |
|
$ |
272 |
|
|
$ |
14 |
|
Research and development |
|
|
4,501 |
|
|
|
3,999 |
|
Sales and marketing |
|
|
2,322 |
|
|
|
161 |
|
General and administrative |
|
|
4,623 |
|
|
|
10,319 |
|
Total stock-based compensation |
|
$ |
11,718 |
|
|
$ |
14,493 |
|
Latch, Inc. and
SubsidiariesCondensed Consolidated Statements of
Cash Flows (unaudited)(in
thousands)
|
Three Months Ended March 31, |
|
|
2022 |
|
|
|
2021 |
|
Operating
activities |
|
|
|
Net loss |
$ |
(44,231 |
) |
|
$ |
(38,101 |
) |
Adjustments to reconcile net loss to net cash used by operating
activities |
|
|
|
Depreciation and amortization |
|
1,506 |
|
|
|
653 |
|
Non-cash interest expense |
|
994 |
|
|
|
1,934 |
|
Change in fair value of derivative liabilities |
|
— |
|
|
|
3,597 |
|
Change in fair value of warrant liability |
|
(6,267 |
) |
|
|
— |
|
Change in fair value of trading securities |
|
(1,000 |
) |
|
|
— |
|
Provision for excess and obsolete inventory |
|
665 |
|
|
|
9 |
|
Allowance (reversal) for doubtful accounts |
|
(50 |
) |
|
|
171 |
|
Stock-based compensation |
|
11,718 |
|
|
|
14,493 |
|
Changes in assets and liabilities |
|
|
|
Accounts receivable |
|
(4,241 |
) |
|
|
(1,108 |
) |
Inventories |
|
(8,046 |
) |
|
|
537 |
|
Prepaid expenses and other current assets |
|
811 |
|
|
|
(2,424 |
) |
Other non-current assets |
|
(713 |
) |
|
|
(53 |
) |
Accounts payable |
|
(471 |
) |
|
|
1,732 |
|
Accrued expenses |
|
199 |
|
|
|
1,331 |
|
Other current liabilities |
|
(344 |
) |
|
|
— |
|
Other non-current liabilities |
|
178 |
|
|
|
620 |
|
Deferred revenue |
|
5,489 |
|
|
|
2,279 |
|
Net cash used in operating activities |
|
(43,803 |
) |
|
|
(14,330 |
) |
Investing
activities |
|
|
|
Purchase of available-for-sale securities |
|
(24,367 |
) |
|
|
— |
|
Proceeds from maturities of available-for-sale securities |
|
39,587 |
|
|
|
— |
|
Purchase of trading securities |
|
(250 |
) |
|
|
— |
|
Purchase of property and equipment |
|
(736 |
) |
|
|
(290 |
) |
Development of internal software |
|
(2,069 |
) |
|
|
(1,446 |
) |
Net cash provided by (used in) investing activities |
|
12,165 |
|
|
|
(1,736 |
) |
Financing
activities |
|
|
|
Proceeds from issuance of common stock |
|
180 |
|
|
|
2,035 |
|
Payments for tax withholding on net settlement of equity
awards |
|
(1,293 |
) |
|
|
— |
|
Proceeds from revolving credit facility |
|
1,345 |
|
|
|
53 |
|
Repayment of revolving credit facility |
|
(2,409 |
) |
|
|
— |
|
Net cash (used in) provided by financing activities |
|
(2,177 |
) |
|
|
2,088 |
|
Effect of exchange rate on
cash |
|
(8 |
) |
|
|
(9 |
) |
Net change in cash and cash
equivalents |
|
(33,823 |
) |
|
|
(13,987 |
) |
Cash and cash
equivalents |
|
|
|
Beginning of period |
|
124,782 |
|
|
|
60,529 |
|
End of period |
$ |
90,959 |
|
|
$ |
46,542 |
|
|
|
|
|
Supplemental
disclosure of non-cash investing and financing
activities |
|
|
|
Capitalization of stock-based compensation to internally developed
software |
$ |
1,019 |
|
|
$ |
21 |
|
Capitalization of transaction costs |
$ |
— |
|
|
$ |
3,412 |
|
Accrued issuance costs |
$ |
25 |
|
|
$ |
— |
|
Accrued fixed assets |
$ |
251 |
|
|
$ |
67 |
|
Receivable from option exercises |
$ |
— |
|
|
$ |
781 |
|
Latch (NASDAQ:LTCH)
Historical Stock Chart
From Jun 2024 to Jul 2024
Latch (NASDAQ:LTCH)
Historical Stock Chart
From Jul 2023 to Jul 2024