Latch, Inc. Reports Q2 2023 Revenue Growth and Strategic Acquisition

Latch, Inc. reported its financial results for the second quarter of 2023, revealing a total revenue of $10.2 million, a 3.5% increase from $9.8 million in the same period last year. The growth was primarily driven by a 36.2% rise in software revenue, which reached $4.4 million, compared to $3.2 million in the prior year. However, hardware revenue declined by 9.5% to $4.3 million, and installation services revenue fell by 20.1% to $1.5 million. The company recorded a net loss of $30.9 million, a significant improvement from a loss of $51.6 million in the previous year, reflecting a 40.2% reduction in losses.

In terms of operational metrics, Latch's total operating expenses decreased by 25.4% to $35.3 million, down from $47.3 million in the prior year. This reduction was largely attributed to significant cuts in research and development and sales and marketing expenses, which fell by 48.2% and 74.0%, respectively. The company has been undergoing restructuring efforts, including a reduction in workforce, to align its operations with current market conditions and improve efficiency.

Strategically, Latch completed the acquisition of Honest Day’s Work (HDW) on July 3, 2023, which involved issuing $22 million in unsecured promissory notes and approximately 29 million shares of common stock as merger consideration. This acquisition is expected to enhance Latch's service offerings and expand its market presence. Additionally, the company has relocated its headquarters to Olivette, Missouri, as part of its restructuring strategy.

As of June 30, 2023, Latch reported total assets of $278 million, down from $316.7 million at the end of 2022. The decrease in assets was primarily due to a reduction in cash and cash equivalents, which increased to $119.9 million from $109.8 million, and a decline in available-for-sale securities. The company also noted a significant increase in accrued expenses, which rose to $43.3 million from $25.6 million, largely due to ongoing litigation and restructuring costs.

Looking ahead, Latch anticipates continued challenges in the market, particularly related to customer relationships and brand reputation following recent investigations and restatements of financial results. The company aims to leverage its recent acquisitions and restructuring efforts to stabilize its operations and improve financial performance. Management remains focused on enhancing its product offerings and expanding its customer base in the multifamily rental market.