Latch Inc.

01/13/2026 | Press release | Distributed by Public on 01/13/2026 15:09

Quarterly Report for Quarter Ending March 31, 2025 (Form 10-Q)

Management's Discussion and Analysis of Financial Condition and Results of Operations
The following discussion and analysis of our financial condition and results of operations should be read in conjunction with the accompanying condensed consolidated financial statements and the related notes of Latch, Inc. and its subsidiaries included elsewhere in this Form 10-Q. Some of the information contained in this discussion and analysis contains forward-looking statements that involve risks and uncertainties. As a result of many factors, such as those set forth in the section captioned "Risk Factors" in the 2024 Annual Report, actual results may differ materially from those anticipated in these forward-looking statements. References in this subsection to "we," "our," "Latch," "DOOR" and the "Company" refer to the business and operations of Latch, Inc. and its consolidated subsidiaries.
Overview
Latch is a technology company delivering an integrated ecosystem of hardware, software and services designed to enhance operations and experiences within buildings, primarily serving the multifamily rental market. In August 2025, we rebranded as DOOR, although our legal name remains Latch, Inc.
Our core offering is built around a proprietary, cloud-based software-as-a-service ("SaaS") platform (the "DOOR Platform"), which powers and manages our suite of smart access control devices (including locks, readers and intercoms) and smart home devices and integrates with other connected devices within a building.
We provide solutions that streamline building management for property owners and operators, offer modern convenience and security for residents and simplify interactions for visitors and service providers. While our foundation remains smart access control, we are actively expanding the DOOR Platform and our device integrations to encompass broader smart home solutions, managing devices such as sensors, thermostats and lighting. This ongoing expansion leverages our established platform to create more connected and efficient buildings as we lay the groundwork for a building intelligence platform, automating and streamlining building operations, including work order management and automation, property maintenance and unit inspections and repairs.
Our customers, which include real estate developers, builders, owners and property managers in the United States and Canada, typically purchase our hardware devices (directly or indirectly through our channel partner network) and directly license our SaaS platform. Residents interact with the DOOR Platform through the DOOR mobile application and its predecessor Latch mobile application (together, the "DOOR App"). Through the DOOR App, residents access common areas and unlock residential doors, provide guest access, manage smart home devices and book services.
Our professional services offerings are integral to ensuring successful deployment of the DOOR Platform and ongoing support for our customers and their residents. This includes connecting our multifamily property customers with our partners for installation of Latch and third-party smart access and smart home hardware, ensuring that solutions are implemented efficiently and correctly.
Complementing our multifamily installation capabilities, our HelloTech, Inc. ("HelloTech") business provides a scalable, nationwide network of skilled independent technicians. HelloTech connects these service providers with residents and property managers seeking a wide range of on-demand technical services, such as TV mounting and smart home device installation and set-up, as well as broader home services, such as furniture assembly, handyman services and home cleaning.
Additionally, we offer a comprehensive property management service in and around Boston, Massachusetts.
We operate in one operating and reporting segment.
Business Update
Following the December 2024 filing of the Company's Annual Report on Form 10-K for the year ended December 31, 2022 and completion of the restatement of certain of the Company's historical financial statements (the "Restatement"), on February 4, 2025, Jason Keyes, Interim Chief Executive Officer, and Marc Landy, Interim Chief Financial Officer, provided notice of their resignations from their positions with the Company effective as of February 6, 2025 (the "Transition Date"). Messrs. Keyes and Landy were serving in such capacities pursuant to an agreement between the Company and an affiliate of AlixPartners, LLP, a global consulting firm. On the Transition Date, the Board appointed David Lillis as Chief Executive Officer, Jeff Mayfield as Chief Financial Officer and Priyen Patel as Chief Strategy and Legal Officer.
Key Business Metrics
We are presenting software revenue (prepared in accordance with generally accepted accounting principles in the United States of America ("GAAP")), total revenue (GAAP), net loss (GAAP) and Adjusted EBITDA (non-GAAP) as key business metrics, as we believe each of those metrics is important in measuring our performance, identifying trends affecting our business, formulating business plans and making strategic decisions that will impact our future operational results.
Our key business metrics are as follows for the periods presented (in thousands):
Three months ended March 31,
2025 2024
$ Change
% Change
GAAP Measures:
Software revenue $ 5,159 $ 5,037 $ 122 2.4 %
Total revenue
$ 15,774 $ 12,035 $ 3,739 31.1 %
Net loss
$ (11,250) $ (13,637) $ 2,387 (17.5 %)
Non-GAAP Measure:
Adjusted EBITDA
$ (7,384) $ (6,077)
(1)
$ (1,307) 21.5 %
(1) The previously reported Adjusted EBITDA of $(7.4) million for the three months ended March 31, 2024 has been corrected to $(6.1) million herein to exclude an additional $1.3 million in non-ordinary course legal fees and settlement reserves.
Adjusted EBITDA
To supplement our financial statements presented in accordance with GAAP and to provide investors with additional information regarding our financial results, we have presented in this Form 10-Q 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 the following items, if applicable: (i) depreciation and amortization expense, (ii) net interest income or expense, (iii) provision for income taxes, (iv) change in fair value of warrant liability, trading securities, or derivative instruments, (v) restructuring costs, (vi) transaction-related costs, (vii) net impairment of intangible assets, (viii) non-ordinary course legal fees and settlement reserves, (ix) stock-based compensation expense and (x) gain or loss on extinguishment of debt. The most directly comparable GAAP measure is net loss. We believe excluding the impact of these items in calculating Adjusted EBITDA can provide a useful measure for period-to-period comparisons of our core operating performance. We monitor, and have presented in this Form 10-Q, Adjusted EBITDA because it is a key measure used by our management and Board to understand and evaluate our operating performance, to establish budgets and to develop operational goals for managing our business. 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. The following table reconciles Adjusted EBITDA to net loss, the most directly comparable financial measure calculated and presented in accordance with GAAP (in thousands):
Three months ended March 31,
2025 2024
Net loss $ (11,250) $ (13,637)
Depreciation and amortization 1,522 1,896
Interest expense (income), net(1)
135 (446)
Provision for income taxes - 2
Change in fair value of warrant liability 37 54
Restructuring costs (58) 75
Non-ordinary course legal fees and settlement reserves(2)
1,979 3,909
Stock-based compensation(3)
251 2,070
Adjusted EBITDA $ (7,384) $ (6,077)
(4)
(1)As a result of significant discounts provided to our customers on certain long-term software contracts paid in advance, 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 (expense) income, net on the accompanying Condensed Consolidated Statements of Operations and Comprehensive Loss. Interest (expense) income, net includes interest expense associated with the significant financing component of $0.7 million and $1.0 million for the three months ended March 31, 2025 and 2024, respectively.
(2)Amounts primarily represent legal fees related to securities and derivative litigation and the SEC's ongoing investigation into issues related to the Company's key performance indicators and revenue recognition practices (the "SEC Investigation"). The previously reported amount of $2.6 million for the three months ended March 31, 2024 has been corrected to $3.9 million herein to include an additional $1.3 million in non-ordinary course legal fees and settlement reserves, consistent with the current-period presentation. While the Company is involved in various litigation and legal disputes in the ordinary course of its business, the Company believes the non-ordinary course legal fees and settlement reserves included in our calculation of Adjusted EBITDA do not represent normal operating expenses. See Note 15.Commitments and Contingencies, in Part I, Item 1. "Financial Statements." These costs are included within general and administrative on the accompanying Condensed Consolidated Statements of Operations and Comprehensive Loss.
(3)See Note 18.Stock-Based Compensation, in Part I, Item 1. "Financial Statements."
(4)The previously reported Adjusted EBITDA of $(7.4) million for the three months ended March 31, 2024 has been corrected to $(6.1) million herein to exclude an additional $1.3 million in non-ordinary course legal fees and settlement reserves.
Components of Results of Operations
Revenue
Hardware Revenue. We generate hardware revenue primarily from the sale of our portfolio of devices for our smart access and smart home solutions. We sell hardware to customers, which include real estate developers, builders, building owners and property managers, directly or through our channel partners, who act as intermediaries, installers or wholesalers. The Company recognizes hardware revenue when there is evidence a contract exists and control of the hardware has been transferred to the customer. The Company provides warranties that its hardware will be substantially free from defects in materials and workmanship, generally for a period of one or two years for electronic components depending on the hardware product, and five years for mechanical components. The Company determines in its sole discretion whether to replace or refund warrantable devices. The Company records a reserve as a component of cost of hardware revenue based on historical costs of replacement units for returns of defective products.
Software Revenue. We generate software revenue primarily through the license of our SaaS over our cloud-based platform on a subscription-based arrangement. Subscription fees vary depending on the features selected by customers. SaaS arrangements generally have term lengths between one and ten years. When significant discounts are provided to customers on the longer-term software contracts paid in advance, the Company has determined that there is a significant financing component related to the time value of money and therefore has recorded the interest expense in interest expense, net on the accompanying Condensed Consolidated Statements of Operations and Comprehensive Loss. The SaaS provided by the Company is considered a stand-ready performance obligation where customers benefit from the service evenly throughout the service period. Revenue is recognized ratably over the subscription period beginning when or as control of the promised services is transferred to the customer.
Professional Services Revenue. We generate professional services revenue in three primary ways: (i) by facilitating project-based hardware installation and activation services for enterprise customers, (ii) through fees generated by technology and home services performed for residents and consumers, and (iii) through property management services performed by the Company's subsidiary, Door Property Management, LLC ("DPM"), for its multifamily building customers.
We facilitate hardware installation and activation services to select customers. The revenues associated with these services are recognized over time based on a percentage of installation performed and completed and represent a transfer of services to a customer under contract.
Through our HelloTech platform, a network of independent contractors provides in-home technology services such as installation, repair, troubleshooting and technical support. Orders placed through the HelloTech platform are recognized as revenue as services are completed over time. We also offer a subscription service through the HelloTech platform that includes discounted home services and other technical support such as 24/7 online support, home technology checkups and antivirus and password manager software support. Subscription revenues are recognized ratably over the subscription period.
DPM's property management activities include operating DPM customers' buildings, which involves maintenance and repair, construction management, leasing and administrative services. Property management service revenues are recognized ratably over the service period.
Cost of Revenue
Cost of hardware revenue consists primarily of product costs, including manufacturing costs, duties and other applicable importing costs, shipping and handling costs, packaging costs, warranty costs, assembly costs and warehousing costs, as well as other non-inventoriable costs, including personnel-related expenses associated with supply chain logistics and direct deployment and outsourced labor costs. We expect hardware cost of revenue to move in-line with our hardware revenue. Our hardware costs have been and may continue to be impacted by any supply chain constraints, shipping cost volatility and changes in import tariffs.
Cost of software revenue consists primarily of outsourced hosting costs, other outsourced cloud-based service costs and personnel-related expenses associated with monitoring and managing outsourced hosting service providers.
Cost of professional services revenue consists primarily of (i) third-party installation labor costs and parts and materials associated with deployment of our hardware, (ii) labor costs associated with HelloTech independent technicians and credit card fees, and (iii) costs related to third-party property service providers.
Cost of revenue excludes depreciation and amortization shown in operating expenses.
Operating Expenses
Operating expenses consist of research and development, sales and marketing, general and administrative and depreciation and amortization expenses. We have not granted any restricted stock units ("RSUs") since the suspension of our registration statement on Form S-8 under the Securities Act (the "S-8 Registration Statement") on August 10, 2022. However, we expect to resume granting RSUs pursuant to the S-8 Registration Statement once we are current in our SEC filings. Any such grants will increase the Company's stock-based compensation expense.
Research and Development Expenses. Research and development expenses consist primarily of personnel and related expenses for our employees working on our product, design and engineering teams, including salaries, bonuses, benefits, payroll taxes, travel and stock-based compensation. Also included are non-personnel costs such as amounts paid to our third-party contract manufacturers for tooling, engineering and prototype costs of our hardware products, fees paid to third-party consultants, research and development supplies and rent.
Sales and Marketing Expenses. Sales and marketing expenses consist primarily of personnel and related expenses for our employees working on our sales, customer success, deployment and marketing teams, including salaries, bonuses, benefits, payroll taxes, travel, commissions and stock-based compensation. Also included are non-personnel costs such as marketing activities (trade shows and events, conferences and digital advertising), professional fees, rent and customer support.
General and Administrative Expenses. General and administrative expenses consist primarily of personnel and related expenses for our executive, legal, human resources, finance and IT functions, including salaries, bonuses, benefits, payroll taxes, travel and stock-based compensation. Additional expenses included in this category are non-personnel costs such as legal fees, rent, professional fees, audit fees, bad debt expense and insurance costs.
Depreciation and Amortization Expenses. Depreciation and amortization expenses consist primarily of depreciation expenses related to investments in property and equipment and internally-developed capitalized software.
Other Income, Net
Other income, net consists of interest expense associated with the significant financing component of our longer-term software contracts, interest expense associated with our debt financing arrangements, interest income on highly liquid short-term investments, gain or loss on extinguishment of debt and gain or loss on change in fair value of derivative liabilities, warrant liabilities and trading securities.
Interest (expense) income, net is summarized as follows:
Three Months Ended March 31,
2025 2024
Interest income
$ 614 $ 2,002
Interest expense (749) (1,556)
Interest (expense) income, net $ (135) $ 446
Income Taxes
The provision for income taxes consists primarily of income taxes related to foreign jurisdictions in which we conduct business. We maintain a full valuation allowance on our deferred tax assets as we have concluded that it is more likely than not that the deferred assets will not be utilized.
Results of Operations
The following table and accompanying information sets forth our historical operating results for the periods indicated. The period-to-period comparison of operating results is not necessarily indicative of results for future periods.
Three months ended March 31,
(in thousands, except share and per share data) 2025 2024 $ Change % Change
Revenue
Hardware $ 4,037 $ 4,643 $ (606) (13.1) %
Software 5,159 5,037 122 2.4 %
Professional services 6,578 2,355 4,223 179.3 %
Total revenue 15,774 12,035 3,739 31.1 %
Cost of revenue(1)
Hardware 3,303 3,025 278 9.2 %
Software 551 357 194 54.3 %
Professional services 4,441 2,199 2,242 102.0 %
Total cost of revenue 8,295 5,581 2,714 48.6 %
Operating expenses
Research and development 5,633 4,201 1,432 34.1 %
Sales and marketing 3,535 2,499 1,036 41.5 %
General and administrative 7,931 11,849 (3,918) (33.1) %
Depreciation and amortization 1,522 1,896 (374) (19.7) %
Total operating expenses 18,621 20,445 (1,824) (8.9) %
Loss from operations (11,142) (13,991) 2,849 (20.4) %
Other (expense) income, net
Interest (expense) income, net (135) 446 (581) N.M.
Change in fair value of warrant liability (37) (54) 17 (31.5) %
Other income (expense), net 64 (36) 100 N.M.
Total other (expense) income, net (108) 356 (464) (130.3) %
Loss before income taxes (11,250) (13,635) 2,385 17.5 %
Provision for income taxes - 2 (2) N.M.
Net loss $ (11,250) $ (13,637) $ 2,387 17.5 %
Other comprehensive income (loss)
Unrealized loss on available-for-sale securities (14) (35) 21 60.0 %
Foreign currency translation adjustment 4 6 (2) (33.3) %
Comprehensive loss $ (11,260) $ (13,666) $ 2,406 17.6 %
Net loss per common share:
Basic and diluted net loss per common share $ (0.07) $ (0.09) $ 0.02 22.2 %
Weighted average shares outstanding:
Basic and diluted 160,272,142 156,386,470
(1)Exclusive of depreciation and amortization shown in operating expenses below.
N.M.: Not meaningful
Comparison of three months ended March 31, 2025 and March 31, 2024
Revenue
Revenue increased by $3.7 million for the three months ended March 31, 2025 compared to the three months ended March 31, 2024. The increase was driven primarily by a $4.2 millionrise in professional services revenue due in large part to the 2024 acquisition of HelloTech, partially offset by a $0.6 million decrease in hardware revenue primarily attributable to the impact of the Restatement, which shifted revenue from prior periods into 2024. The first quarter of 2024 was the final period in which revenues were directly impacted by the Restatement.
Cost of Revenue
Cost of revenue increased by $2.7 millionfor the three months ended March 31, 2025 compared to the three months ended March 31, 2024. The increase was driven primarily by a $2.2 millionrise in professional services costs due primarily to the 2024 acquisition of HelloTech, a $0.3 millionincrease in hardware related costs driven by excess inventory reserves and a $0.3 million increase in software related costs.
Research and Development Expenses
Research and development expenses increased by $1.4 million for the three months ended March 31, 2025 compared to the three months ended March 31, 2024, primarily due to a $1.0 million rise in third-party expense associated with overlapping costs related to the transition of engineering contractors in the first half of 2025.
Sales and Marketing Expenses
Sales and marketing expenses increased by $1.0 million for the three months ended March 31, 2025 compared to the three months ended March 31, 2024. The increase was primarily due to a $0.8 million rise in compensation expense resulting from the expansion of internal sales and marketing teams.
General and Administrative Expenses
General and administrative expenses decreased by $3.9 million for the three months ended March 31, 2025 compared to the three months ended March 31, 2024. The decrease was primarily due to a (i) $1.9 million reduction in non-ordinary course investigation, legal and settlement fees, (ii) $1.6 million decrease in RSU expense primarily related to the separation of Jamie Siminoff, the Company's former Chief Strategy Officer, (iii) $1.0 million decrease in professional fees related to accounting services, (iv) $0.5 million decrease in compensation expense, and (v) $0.5 million sales tax refund from prior years. These decreases were partially offset by a $1.0 million decrease in net gains from bad debt recoveries and asset disposals and a $0.6 million increase in insurance expense and SaaS expenses related to acquisitions.
Depreciation and Amortization Expenses
Depreciation and amortization expenses decreased by $0.4 million for the three months ended March 31, 2025 compared to the three months ended March 31, 2024. The decrease was primarily due to lower amortization expense of capitalized internally-developed software and lower depreciation expense.
Total Other (Expense) Income, Net
Total other (expense) income, net decreased by $0.5 million for the three months ended March 31, 2025 compared to the three months ended March 31, 2024. The decrease was primarily due to a $1.3 million reduction in interest income resulting from lower average principal investment balances, partially offset by a $0.6 million decrease in interest expense related to the payoff of promissory notes in early 2024 and a $0.3 million reduction in interest expense related to the significant financing component of longer-term software contracts.
Liquidity and Capital Resources
We have incurred losses since our inception. To date, the Company's principal sources of liquidity have been the net proceeds received as a result of the Company's 2021 business combination and payments received from our customers.
As of December 31, 2025 and March 31, 2025, the Company's unrestricted cash and cash equivalents and current and non-current available-for-sale securities were approximately $34.7 million and $64.7 million, respectively. The Company's available-for-sale securities investment portfolio is primarily invested in highly rated securities, with the primary objective of minimizing the potential risk of principal loss. The Company's investment policy generally requires securities to be investment grade and limits the amount of credit exposure to any one issuer.
As of March 31, 2025, the Company also had approximately $33.5 million in net inventory.
During the three months ended March 31, 2025, the Company (i) received $14.0 million of proceeds from the sale of a maturing available-for-sale security and (ii) reinvested the proceeds by purchasing an equal amount of new securities prior to such date. The Company uses trade-date accounting and, as such, the new securities position of $14.0 million is included in the balance of available-for-sale securities on the accompanying Condensed Consolidated Balance Sheet as of March 31,
2025, and a liability of $14.0 million presented as investment purchases payable is included in accrued expenses on the accompanying Condensed Consolidated Balance Sheet as of March 31, 2025. The funds were deducted from the Company's account in April 2025. Accordingly, the sum of the Company's cash and cash equivalents as of March 31, 2025 is $14.0 million higher than it would have been had the funds been deducted from the Company's account prior to March 31, 2025.
Our short-term liquidity needs have primarily included working capital for salaries, including sales and marketing and research and development, as well as component inventory purchases from our contract manufacturers.
Beginning in the second quarter of 2022 and continuing through the date of this Form 10-Q, we have incurred, and may continue to incur, significant professional fees, primarily consisting of legal, forensic accounting, management consulting and related advisory services as a result of the Company's 2022-2023 internal investigation (the "Investigation") and the SEC Investigation, as well as accounting related consulting services, independent registered accounting firm fees and advisory services related to the Restatement. Additionally, we have incurred significant costs in connection with various pending litigation. See Note 15. Commitments and Contingencies, in Part I, Item 1. "Financial Statements." Such litigation involves significant defense and other costs and, if decided adversely to us or settled, has resulted or could result in significant monetary damages or expenditures. Although we maintain insurance coverage in amounts and with deductibles that we believe are appropriate for our operations, our insurance coverage does not cover all claims that have been or may be brought against us.
Our future capital requirements will depend on many factors, including our business plans, our levels of revenue, the expansion of sales and marketing activities, market acceptance of our products, the results of business initiatives, the timing of new product introductions and overall economic conditions.
Based on our current business plan, we expect to be able to use our current cash and cash equivalents and available-for-sale securities to fundour operational cash requirements for at least 12 months from the date of this Form 10-Q. Other significant factors that affect our overall management of liquidity include certain actions controlled by management such as capital expenditures and acquisitions. See Note 15. Commitments and Contingencies, in Part I, Item 1. "Financial Statements."
Commitments and Contractual Obligations
We are obligated to make payments as part of certain contracts that we have entered into during the normal course of business. Following the 2024 property management acquisitions, in February 2024 we entered into a three-year advisory agreement with a partner pursuant to which the partner provides DPM with certain management and advisory services related to DPM's property management business. Pursuant to such agreement, we are required to pay the partner $0.5 million annually. As of March 31, 2025, the Company had a remaining obligation of $1.0 million under the advisory agreement.
Indebtedness
On July 15, 2024, the Company entered into a loan agreement with Customers Bank (the "Loan Agreement"). Pursuant to the Loan Agreement, Customers Bank issued a term loan in the principal amount of $6.0 million (the "Loan"). The Loan Agreement, which was entered into in connection with the 2024 acquisition of HelloTech, did not result in the Company receiving any loan proceeds. Interest is payable on the Loan at a rate equal to the greater of (a) the prime rate published in The Wall Street Journal or (b) 6.0%, and the maturity date is July 15, 2029 (the "Maturity Date").
Payments under the Loan were interest-only through January 15, 2025. Thereafter, the Company is required to pay equal monthly installments of principal plus accrued interest until the Maturity Date. There is no penalty for prepayment of the Loan.
Pursuant to the Loan Agreement, Customers Bank was granted security interests in substantially all of the Company's assets, excluding intellectual property, and the Loan Agreement contains customary affirmative and negative covenants.
HelloTech is required to maintain an operating account with Customers Bank with a sufficient balance to support monthly payments. Additionally, the Company is required to maintain a liquidity ratio of at least 4.00, tested monthly, which is calculated as the quotient of unrestricted cash and cash equivalents of the Company and its subsidiaries (subject to certain limitations with respect to cash of foreign subsidiaries), divided by all outstanding indebtedness owed to Customers Bank.
The Loan Agreement contains various covenants that, among other things, limit the Company's ability to:
• engage in certain asset dispositions;
• permit a change in control;
• merge or consolidate;
• incur indebtedness or grant liens on its assets;
• declare or pay dividends, distributions or redemptions;
• make loans or investments; and
• engage in certain transactions with affiliates.
If an event of default exists under the Loan Agreement, Customers Bank will be able to accelerate the maturity of the Loan and exercise other rights and remedies. Events of default include, but are not limited to, the following events:
• failure to pay any principal or interest within three business days of the due date;
• failure to perform or otherwise comply with the covenants and obligations in the Loan Agreement, subject, in certain instances, to certain grace periods;
• bankruptcy or insolvency events involving the Company; or
• the rendering of judgments against the Company that remain undischarged, unvacated, unbonded, unsatisfied or unstayed for a certain period.
As of March 31, 2025 and December 31, 2025, the outstanding principal of the Loan was $5.8 million and $4.8 million, respectively. The Company was also in compliance with the covenants under the Loan Agreement as of March 31, 2025 and December 31, 2025.
On July 15, 2024, in a private placement concurrent with the Company's entry into the Loan Agreement, the Company issued a warrant to Customers Bank to purchase 1,000,000 shares of the Company's common stock. The warrant has an exercise price of $1.25 per share, was exercisable upon issuance and will expire six years from the date of issuance, or July 15, 2030.
Cash Flows
The following table sets forth a summary of our cash flows for the three months ended March 31, 2025 and 2024 (in thousands):
Three months ended March 31,
2025 2024
Net cash used in operating activities
$ (10,137) $ (31,100)
Net cash (used in) provided by investing activities
(935) 45,162
Net cash used in financing activities
(223) -
Effect of exchange rates on cash
(191) (137)
Net change in cash and cash equivalents
$ (11,486) $ 13,925
Operating Activities. Net cash used in operating activities for the three months ended March 31, 2025 decreased by $21.0 million compared to the three months ended March 31, 2024. The decrease was primarily attributable to a $20.6 million reduction in cash outflows related to litigation and restructuring activities and a $2.5 million decrease in inventory prepayments and purchases. These decreases were partially offset by a $2.9 million unfavorable change in working capital, primarily related to accounts receivable and other current liabilities. Management continues to focus on cost discipline, inventory management and liquidity preservation as it seeks to reduce operating cash usage.
Investing Activities. Net cash used in investing activities was $0.9 million for the three months ended March 31, 2025 compared to net cash provided by investing activities of $45.2 million for the three months ended March 31, 2024. Cash flows from investing activities primarily consist of the net purchases and sales of available-for-sale securities. The $46.1 million decrease was primarily attributable to the use of investment proceeds to fund operating losses, with the remaining proceeds reinvested in shorter-term securities classified as cash equivalents to maintain liquidity and preserve capital.
Financing Activities. For the three months ended March 31, 2025, net cash used in financing activities consisted of the $0.2 million repayment of the Loan. The Company did not conduct any financing activities for the three months ended March 31, 2024.
Off-Balance Sheet Arrangements
We had no off-balance sheet arrangements as of March 31, 2025 and December 31, 2024 that had, or were reasonably likely to have, a current or future effect on our financial condition, changes in financial condition, revenues or expenses, results of operations, liquidity, capital expenditures or capital resources that would be material to investors.
Critical Accounting Estimates
There have been no material changes to our critical accounting estimates as disclosed in the 2024 Annual Report.
Recent Accounting Pronouncements
See Note 22. Recently Issued Accounting Standards, in Part I, Item 1. "Financial Statements" for information about recent accounting pronouncements.
Latch Inc. published this content on January 13, 2026, and is solely responsible for the information contained herein. Distributed via EDGAR on January 13, 2026 at 21:09 UTC. If you believe the information included in the content is inaccurate or outdated and requires editing or removal, please contact us at [email protected]