Latch, Inc.
Key Highlights
- Landed deals with 3 major real estate firms (10,000+ new apartments)
- Debt refinanced at lower interest rates (9% to 6.5%, saving ~$3.75M/year)
- Acquired property software company ($25M) adding 50 employees and new tools
Financial Analysis
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.
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.
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.
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.
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.
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.
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.
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).
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).
9. External Factors
- Remote Work: Increased focus on home security could boost demand.
- Regulations: Stricter data privacy laws may raise compliance costs.
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:
- Quarterly cash burn rates
- Software subscription growth
- 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.
Always do your own research or consult a financial advisor before investing. 🧑💻
Risk Factors
- Competition from Amazon and Google in smart home tech
- Real estate slowdown reducing new apartment construction
- 22% of revenue still tied to two major clients
Why This Matters
Latch, Inc.'s latest 10-K filing offers a critical look into a company at a pivotal stage. As a leader in smart locks and property management software for apartment buildings, Latch is expanding its market presence and product offerings, including security cameras and building-wide systems. This report is crucial for investors to understand if the company's aggressive growth strategy is sustainable given its current financial health.
The report highlights significant revenue growth of 20% to $150 million, coupled with an 18% reduction in losses to $90 million. Key operational wins, such as landing deals with major real estate firms, acquiring a property software company, and refinancing $150 million in debt at a lower 6.5% interest rate (saving $3.75M annually), demonstrate strategic execution. These moves are designed to strengthen its market position and improve financial efficiency, making the company more attractive to potential long-term investors.
However, the filing also underscores substantial risks. With a cash balance of $200 million and a burn rate of $10 million per month, Latch has approximately two years of cash runway. This necessitates rapid sales growth or significant cost-cutting measures to avoid further dilution or financial distress. Investors must weigh the promising growth and strategic acquisitions against the urgent need for profitability and the intense competition from tech giants like Amazon and Google.
What Usually Happens Next
Following the release of this 10-K, investors and analysts will closely scrutinize Latch's strategic direction and financial performance. The market will be looking for management's commentary during subsequent investor calls and presentations to elaborate on how they plan to address the high cash burn and accelerate the path to profitability. Expect increased analyst coverage, with updated price targets and recommendations based on the detailed financial disclosures and future outlook provided in the report.
For investors, the immediate focus should be on Latch's upcoming quarterly earnings reports. Key metrics to monitor include the cash burn rate, progress on software subscription revenue growth, and the success of international expansion efforts, particularly in Europe. The company's ability to stabilize supply chains and meet its 2024 revenue growth target of 15-20% will be critical. Any updates on their profitability target for 2025-2026 will also be a significant indicator of their operational efficiency and market traction.
Beyond the financial numbers, investors should watch for strategic announcements, such as new major real estate partnerships or further acquisitions that align with their software push. The next 10-Q filings will provide interim updates on these crucial areas, offering insights into whether Latch is effectively executing its strategy to convert its growth into sustainable financial health and navigate the competitive landscape.
Financial Metrics
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Document Information
SEC Filing
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November 6, 2025 at 08:54 AM
This AI-generated analysis is for informational purposes only and does not constitute financial or investment advice. Always consult with qualified professionals and conduct your own research before making investment decisions.