Latch, Inc. Annual Report - How They Did This Year

I’ve put together a plain-English guide to help you understand how Latch, Inc. performed this year. Instead of digging through dense financial filings, we’re breaking down what’s actually happening so you can decide if the company fits your investment goals.

1. What does this company do?

Latch is a "smart building" technology company. They provide software and hardware—like smart locks, intercoms, and cameras—that let residents manage their homes from a smartphone.

In August 2025, the company rebranded as DOOR. They are shifting their identity to focus on a broader "building intelligence" platform. They aren't just selling locks; they want to automate everything from work orders to unit repairs. By moving toward a subscription model, they aim to generate steady monthly income from property managers instead of relying on one-time hardware sales.

2. Major Strategic Moves

The company is in a massive rebuilding phase. Here are the biggest changes from the past year:

• HelloTech Merger: They acquired HelloTech to handle the final step of their business: installing devices and providing tech support. This gives them a nationwide network of technicians. Now, Latch can scale installations without keeping a massive internal workforce. It helps them become a one-stop shop for property owners.
• The "DOOR" Strategy: They are targeting 27 million multifamily rental units in North America. Their goal is to get into new construction projects and "retrofit" older buildings that need a tech upgrade. By focusing on retrofits, they are expanding their potential market beyond just new luxury developments.
• Financing: They secured a $6 million loan that doesn't come due until 2029. However, they gave the lender the right to buy 1 million shares of stock at $1.25. If the stock price rises above this, the lender will likely buy these shares. This creates more shares, which reduces your ownership percentage in the company.

3. Financial Health & Risks

The company is still spending more than it earns, reporting a loss of about $100 million this past year. They are using a mix of cash and debt to stay in business.

• The "Concentration" Problem: A large portion of their revenue—over 20%—comes from just three big property developers. If one of these major clients struggles or switches to a competitor, the company could face a significant drop in revenue that its cash reserves might not cover.
• Legal & Accounting Hurdles: They are working through an SEC investigation regarding how they previously recorded revenue. They also admitted to "material weaknesses" in their accounting, meaning their internal processes lacked the controls to ensure accuracy. While they are fixing these issues, the process has increased their legal and audit costs.
• Regulatory Minefield: Because they handle sensitive resident data, they face strict rules. Laws like the California Consumer Privacy Act make compliance expensive. If they suffer a data breach, they could face fines of up to $750 per user—a cost that could total millions.

4. Future Outlook

The company is betting everything on the "DOOR Platform." They believe their advantage is the combination of hardware, software, and the HelloTech service network. They own about 100 patents to protect this technology, which they hope will keep competitors like Amazon or Google at bay.

The big question for investors is whether they can pivot into a service company without running out of cash. The company must prove that the high costs of the HelloTech integration and legal repairs are worth the long-term subscription income they expect to capture.

Investor Takeaway: When deciding if this is right for your portfolio, ask yourself: Do I believe their new "DOOR" subscription model will generate enough cash to cover their $100 million annual losses and legal expenses? If you are comfortable with high-risk, long-term turnarounds, this is a company to watch closely. If you prefer steady, profitable businesses, you may want to look elsewhere.