Latch, Inc.

Latch, Inc. Annual Report Summary – Investor-Friendly Breakdown

Let’s dive into how Latch performed this year, what’s working, and what investors should keep on their radar.

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1. What Latch Does

Latch builds smart locks and property management software for apartment buildings. Think "keyless entry via your phone" + tools for landlords to manage security, packages, and guest access. This year, they expanded into security cameras and building-wide systems, aiming to dominate apartment tech.

This Year’s Theme: Steady growth with lingering challenges. More buildings adopted their tech, but profitability remains elusive.

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2. Financial Snapshot

• Revenue: $150 million (↑20% from last year).
• Losses: $90 million (↓18% from $110 million last year).
• Customer Diversity: Top 2 clients = 22% of revenue (↓ from 35% last year). Less reliance on big customers = lower risk.

Growth or Shrink? Growing sales, but still losing money. Imagine a startup selling more widgets but not yet covering factory costs.

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3. Wins vs. Challenges

Wins:

• Landed deals with 3 major real estate firms (10,000+ new apartments).
• Launched a budget-friendly lock for smaller buildings.
• Acquired a property software company ($25M) – added 50 employees and new tools.
• Refinanced $150M debt: Interest rate dropped from 9% to 6.5% (saves ~$3.75M/year).

Challenges:

• Supply chain delays = fewer locks shipped than planned.
• $5M in unbilled work (improved from $18M last year) – billing processes still need work.

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4. Financial Health Check

• Cash: $200 million (↓ from $350 million last year).
• Burn Rate: Spending $10M/month more than they earn.
• Debt: $150M loan (now at better rates). Manageable if growth continues.

Key Takeaway: At current burn, ~2 years of cash left. Needs faster sales growth or cost cuts to survive long-term.

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5. Risks to Watch

• Competition: Amazon, Google pushing into smart home tech.
• Real Estate Slowdown: Fewer new apartments = fewer lock sales.
• Customer Dependence: 22% of revenue still tied to two clients.

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6. How They Compare to Competitors

• Vs. Traditional Lock Companies (Kwikset, Schlage): Latch’s tech is more advanced but pricier.
• Vs. Big Tech (Amazon Ring, Google Nest): Latch’s apartment focus + property software gives niche advantage, but they’re smaller.

Positioning: Holding strong in apartments, but not a major player in single-family homes yet.

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7. Strategy Shifts

• New CFO: Hired to streamline spending.
• Software Push: Prioritizing subscription revenue (steady cash flow vs. one-time hardware sales).
• Global Growth: 8% of revenue now international (↑ from 5% last year).

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8. What’s Next?

• 2024 Goal: 15-20% revenue growth (if supply chains stabilize).
• Profitability Target: Aiming to break even by 2025-2026.
• Expansion: Testing Europe (London pilots show promise – international sales ↑60% this year).

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9. External Factors

• Remote Work: Increased focus on home security could boost demand.
• Regulations: Stricter data privacy laws may raise compliance costs.

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Investor Summary: Key Takeaways

✅ Reasons to Optimism:

• Revenue growing steadily (20% YoY).
• Customer base diversifying.
• Debt refinanced at lower rates.
• Software subscriptions could stabilize cash flow.

⚠️ Big Risks:

• High cash burn ($10M/month).
• Competition from tech giants.
• Profitability still 2+ years away.

Verdict: A high-risk, high-reward bet. Latch is innovating in apartment tech and improving financially, but it’s not out of the woods. Investors should watch:

1. Quarterly cash burn rates
2. Software subscription growth
3. Progress in European markets

If you’re comfortable with volatility and believe in their niche, it’s worth a closer look. Otherwise, wait for clearer profitability signals.

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Always do your own research or consult a financial advisor before investing. 🧑💻