10-Q: DOOR (Latch) Narrows Q3 Loss, Revenue Up Amid Rebrand

Sentiment:

Quarterly Report 11 February 2026 9:01 AM

Latch, Inc., now rebranded as DOOR, reported a significant reduction in net loss and increased revenue for the third quarter and first nine months of 2025, driven by professional services growth and cost discipline, despite ongoing internal control weaknesses and legal challenges.

Delay expectedThe company has not granted any Restricted Stock Units (RSUs) since August 10, 2022, due to the suspension of its S-8 Registration Statement, which is pending the company becoming current in its SEC filings.Approximately 0.1 million RSUs vested during the nine months ended September 30, 2025, but were not released upon vesting due to the suspension of the S-8 Registration Statement.

Better than expectedNet loss significantly improved by 61.4% in the three months ended September 30, 2025, and 46.1% for the nine months ended September 30, 2025.Total revenue increased by 16.6% in the three months ended September 30, 2025, and 30.9% for the nine months ended September 30, 2025.Adjusted EBITDA loss improved by 61.5% in the three months ended September 30, 2025, and 31.3% for the nine months.Net cash used in operating activities decreased by $33.8 million for the nine months ended September 30, 2025.General and administrative expenses decreased significantly, reflecting effective cost control.

Summary

Rebranded as DOOR in August 2025, with its primary operating entity, Latch Systems, Inc., changing its name to DOOR Systems, Inc.
Reported a net loss of $6.58 million for the three months ended September 30, 2025, a 61.4% improvement from $17.06 million in the prior year period.
Total revenue for the three months ended September 30, 2025, increased by 16.6% to $17.43 million, up from $14.94 million in the prior year period.
Professional services revenue saw a 10.5% increase in the three months ended September 30, 2025, to $6.91 million, and a 95.4% increase for the nine months ended September 30, 2025, to $21.38 million, largely due to the HelloTech acquisition and property management acquisitions in 2024.
Hardware revenue grew by 42.5% in the three months ended September 30, 2025, to $5.15 million and 9.1% for the nine months to $15.10 million, driven by higher shipments.
Software revenue increased by 5.8% in the three months ended September 30, 2025, to $5.37 million and 4.2% for the nine months to $15.77 million, reflecting continued subscription growth.
Adjusted EBITDA improved by 61.5% in the three months ended September 30, 2025, to a loss of $4.61 million, and by 31.3% for the nine months to a loss of $17.56 million.
General and administrative expenses decreased significantly by $7.8 million (60.9%) in the three months ended September 30, 2025, and $22.8 million (55.0%) for the nine months, primarily due to reduced legal, audit, consulting, and RSU expenses.
Cash and cash equivalents decreased to $42.58 million as of September 30, 2025, from $70.20 million at December 31, 2024.
Net cash used in operating activities improved to $28.14 million for the nine months ended September 30, 2025, from $61.97 million in the prior year period.
The company expects to fund operational cash requirements for at least 12 months from the filing date (February 11, 2026).

Sentiment

Score: 6

Explanation: StockSavvy.ai views this as a moderately positive report given the significant improvements in net loss and revenue growth, coupled with better cash management. However, ongoing material weaknesses, the SEC investigation, and the likely goodwill impairment temper the overall sentiment.

Positives

Net loss significantly improved by 61.4% in the three months ended September 30, 2025, and 46.1% for the nine months ended September 30, 2025.
Total revenue increased by 16.6% in the three months ended September 30, 2025, and 30.9% for the nine months ended September 30, 2025.
Professional services revenue nearly doubled for the nine-month period, growing by 95.4% to $21.38 million, largely due to strategic acquisitions.
Hardware revenue showed strong growth of 42.5% in the three months ended September 30, 2025.
Adjusted EBITDA loss improved by 61.5% in the three months ended September 30, 2025, and 31.3% for the nine months, indicating better operational efficiency.
Significant reduction in general and administrative expenses, reflecting cost discipline and reduced legal/audit fees.
Net cash used in operating activities decreased by $33.8 million for the nine months ended September 30, 2025, indicating improved cash management.
The company was in compliance with all covenants under its term loan agreement as of September 30, 2025.

Negatives

Cash and cash equivalents decreased by $27.63 million during the nine months ended September 30, 2025, to $42.58 million.
Net cash provided by investing activities decreased significantly by $70.3 million for the nine months ended September 30, 2025, primarily due to using investment proceeds to fund operating losses.
Goodwill impairment is likely as of December 31, 2025, which would negatively impact operating results.
The company continues to incur net losses, with an accumulated deficit of $684.40 million as of September 30, 2025.
Interest expense, net, increased to $(251)k in the three months ended September 30, 2025, from $405k income in the prior year period, and to $(785)k for the nine months from $1,372k income in the prior year, primarily due to lower average principal investment balances.

Risks

Ability to remediate material weaknesses identified in internal control over financial reporting or other findings in the company's 2022-2023 internal investigation, and the timing of such remediation.
The performance of the company's stock, particularly given the limited liquidity and depressed trading prices of the common stock as a result of delisting from The Nasdaq Stock Market LLC.
Uncertainty whether the company's common stock and warrants, which are trading on OTC Markets Group Inc.'s (OTC) Expert Market, may remain on the OTC Expert Market rather than be listed on other OTC markets.
Developments in the pending stockholder class action and derivative complaints or other legal proceedings.
Regulatory disputes and governmental inquiries, including the SEC Investigation.
Privacy and data protection laws, privacy or data breaches, or the loss of data.
The impact of changes in consumer spending patterns, consumer preferences, local, regional and national economic conditions, crime, weather, demographic trends and employee availability.
Increases in component costs, long lead times, supply shortages and other disruptions to the supply chain.
Delays in construction timelines at customer building sites.
Any defects in new products or enhancements to existing products.
Ability to continue to develop new products, services and innovations to meet constantly evolving customer demands.
Ability to hire, retain, manage and motivate employees, including key personnel.
The impact of workforce reductions on business, financial condition and results of operations.
Ability to improve operating and financial results and attain profitability.
Compliance with laws and regulations applicable to the business.
The impact of macroeconomic conditions on business, suppliers and existing and potential customers.
Ability to upgrade and maintain information technology systems.
Ability to create, acquire and protect intellectual property.
Ability to successfully identify, complete, integrate and realize synergies from acquisitions, including the ability to retain key personnel from such acquisitions.
The potential adverse impact of any future acquisitions, including the potential increase in risks already existing in operations, poor performance or decline in value of acquired businesses and unexpected costs or liabilities that may arise from any future acquisitions.
Likelihood that some or all of the company's goodwill could be impaired as of December 31, 2025, due to factors such as failure to achieve forecasted financial results, continued operating losses or cash usage, changes in discount rates, or adverse market/industry conditions.

Future Outlook

The company expects to resume granting Restricted Stock Units (RSUs) after becoming current in its SEC filings. Management believes it is likely that some or all of the company's goodwill could be impaired as of December 31, 2025, based on current forecasts and market conditions. The company anticipates being able to fund its operational cash requirements for at least 12 months from the filing date of this Form 10-Q.

Management Comments

"Management continues to focus on cost discipline, inventory management and liquidity preservation as it seeks to reduce operating cash usage."
"Management believes that these remediation actions [for internal control weaknesses] have resulted in meaningful improvements to our control environment and strengthened the Tone at the Top."
"Management believes the ultimate liability arising from legal actions, individually and in the aggregate, which existed at September 30, 2025 (other than detailed above), will not materially affect the Company’s condensed consolidated results of operations, financial position or cash flows."

Industry Context

StockSavvy.ai notes that Latch's rebranding to DOOR and expansion into broader smart home solutions, including property management and in-home services via HelloTech, aligns with a growing trend in the real estate technology sector towards integrated building intelligence platforms. This strategy aims to capture a larger share of the smart building market by offering comprehensive solutions beyond core access control, a move seen across competitors seeking to create more connected and efficient urban living spaces.

Management Changes

Role	Previous Person	New Person	Effective Date	Reason
Chief Strategy Officer	Jamie Siminoff	NA	2024-12-31	Mutual agreement to step down, followed by an advisory role which was later terminated.
Interim Chief Executive Officer	NA	Mr. Keyes	2023-01-01	Appointment to improve tone from executive management and reinforce commitment to integrity.
Interim Chief Financial Officer	NA	Mr. Landy	2023-01-01	Appointment to improve tone from executive management and reinforce commitment to integrity.
Chief Executive Officer	Mr. Keyes (interim)	Present Chief Executive Officer	2025-02-01	Appointment following completion of the Restatement, continuing to reinforce improved tone.
Chief Financial Officer	Mr. Landy (interim)	Present Chief Financial Officer	2025-02-01	Appointment following completion of the Restatement, continuing to reinforce improved tone.
Chief Strategy and Legal Officer	NA	Present Chief Strategy and Legal Officer	2025-02-01	Appointment following completion of the Restatement, continuing to reinforce improved tone.

Corporate Governance

Change Type	Description	Effective Date	Impact Assessment
Internal Control Weaknesses	Ongoing material weaknesses in internal control over financial reporting (Legacy Material Weaknesses) related to control environment, risk assessment, control activities (revenue recognition, personnel changes), information and communication, and monitoring activities. Remediation efforts are ongoing.	NA	These weaknesses could adversely affect the ability to record, process, summarize, and report financial information accurately and timely, posing a risk to financial integrity and investor confidence.
Tone at the Top Improvement	Appointment of new interim and then permanent executive officers (CEO, CFO, Chief Strategy and Legal Officer) to improve executive management's tone, reinforce integrity, and promote accurate record keeping and ethical values.	2023-01-01	A stronger 'Tone at the Top' is crucial for establishing an effective control environment and is expected to positively impact the company's governance and financial reporting reliability, though full validation is pending.
Sarbanes-Oxley Compliance Program Review	Actively reviewing, reevaluating, and improving the Sarbanes-Oxley compliance program, including governance, risk assessment, testing methodologies, and corrective action.	NA	Expected to enhance the effectiveness of internal controls and compliance with regulatory requirements, reducing the risk of financial misstatements.
Enterprise Risk Committee Reestablishment	Reestablished an enterprise risk committee that meets regularly and enhanced procedures for a comprehensive enterprise risk assessment.	NA	A more robust risk assessment process should improve the identification and mitigation of business risks, contributing to more stable operations and financial performance.

Legal Proceedings

Schwartz Action (Stockholder Class Action): Filed January 11, 2023, alleging violations of Sections 11 and 15 of the Securities Act of 1933. Settled in principle in December 2024 for $1.95 million, which was paid in November 2025 after court approval in December 2025.
Derivative Litigation (Manley Action & Gottlieb Action): Filed February 15 and July 13, 2023, consolidated August 1, 2023. Allege breach of fiduciary duties and Section 14(a) of the Exchange Act. Company is negotiating a potential settlement and has accrued $0.2 million as of September 30, 2025.
Service Provider Demand: Discussions ongoing with a service provider for a $6.8 million payment under a prior agreement. Company believes it is probable an agreement will be reached and has accrued the amount. No legal proceedings initiated.
SEC Investigation: Ongoing since March 2023, investigating issues related to key performance indicators and revenue recognition practices that led to the Restatement. Outcome and duration are unpredictable.

Related Party Transactions

As of September 30, 2025, $0.3 million of receivables were due from customers who are also stockholders and directors, or affiliates thereof.
For the three months ended September 30, 2025, $0.001 million in hardware revenue, $0.05 million in software revenue, and $0.4 million in services revenue were generated from these related parties.
For the nine months ended September 30, 2025, $0.004 million in hardware revenue, $0.1 million in software revenue, and $0.9 million in services revenue were generated from these related parties.

Stakeholder Impact

Shareholders: Potential positive impact from improved financial performance (reduced losses, increased revenue), but negative impact from ongoing legal proceedings, SEC investigation, and likely goodwill impairment. Limited liquidity and depressed trading prices on OTC Expert Market remain a concern.
Employees: Workforce reductions have occurred, impacting employee availability and potentially morale. New leadership team appointments and ongoing training efforts aim to stabilize the workforce and improve internal controls.
Customers: Continued growth in hardware, software, and professional services revenue suggests ongoing customer adoption and satisfaction, particularly with the expanded HelloTech and property management offerings. The rebranding to DOOR aims to enhance customer perception.
Creditors: The company is in compliance with its term loan covenants, which is positive for creditors. However, declining cash balances and potential goodwill impairment could be monitored.
Suppliers: Supply chain constraints, long lead times, and component cost increases could impact relationships and operational efficiency.

Next Steps

Resume granting Restricted Stock Units (RSUs) after becoming current in SEC filings.
Perform annual goodwill impairment assessment as of December 31, 2025, with impairment likely.
Continue remediation efforts for Legacy Material Weaknesses in internal control over financial reporting.
Continue negotiations for a potential settlement in the derivative litigation.
Monitor the SEC Investigation and other legal proceedings.
Continue to focus on cost discipline, inventory management, and liquidity preservation.

Key Dates

Date	Description
2021-06-01	Company and certain stockholders entered into an amended and restated registration rights agreement in connection with the 2021 business combination.
2021-06-03	The Latch, Inc. 2021 Incentive Award Plan was approved by TSIA stockholders.
2021-06-04	10.0 million public warrants sold during TSIA's initial public offering converted into public warrants to purchase common stock; Legacy Latch assumed private placement warrants.
2022-01-01	Number of shares reserved for future issuance under the 2021 Plan increased by 7,116,177 shares.
2022-08-10	Company suspended use of its registration statement on Form S-8 under the Securities Act due to the Restatement.
2023-01-01	Number of shares reserved for future issuance under the 2021 Plan increased by 7,267,376 shares.
2023-01-11	Stockholder class action complaint (Schwartz v. Latch, Inc., et al.) filed in the United States District Court for the District of Delaware.
2023-02-01	Appointment of Messrs. Keyes and Landy as interim Chief Executive Officer and interim Chief Financial Officer, respectively.
2023-02-15	Derivative action (Manley v. Latch, Inc., et al.) filed in the United States District Court for the Southern District of New York.
2023-03-01	SEC Staff contacted the Company, initiating an investigation into issues related to key performance indicators and revenue recognition practices.
2023-05-15	Stock restriction agreement dated for Jamie Siminoff shares upon HDW acquisition.
2023-07-03	Closing of the acquisition of Honest Days Work, Inc. (HDW).
2023-07-13	Derivative action (Gottlieb v. Latch, Inc., et al.) filed in the United States District Court for the Southern District of New York.
2023-08-01	Manley Action and Gottlieb Action consolidated under In re Latch Inc. Derivative Litigation.
2024-01-01	Number of shares reserved for future issuance under the 2021 Plan increased by 8,810,007 shares.
2024-02-01	Entered into a three-year advisory agreement with a partner for Door Property Management, LLC's property management business.
2024-07-15	Entered into an Amended and Restated Loan and Security Agreement with Customers Bank for a $6.0 million term loan and issued a warrant to Customers Bank.
2024-09-27	Company filed a motion to transfer the Schwartz Action complaint.
2024-11-13	Motion to transfer Schwartz Action complaint was denied.
2024-11-18	Company and Mr. Siminoff mutually agreed he would step down as Chief Strategy Officer on December 31, 2024, and entered into a Separation and Advisory Agreement and Release.
2024-12-01	Parties agreed in principle to a settlement for the Schwartz Action.
2024-12-31	Mr. Siminoff stepped down as Chief Strategy Officer.
2025-01-01	Number of shares reserved for future issuance under the 2021 Plan increased by 8,241,264 shares.
2025-01-15	Interest-only payments on the term loan ended; principal plus accrued interest payments began.
2025-02-01	Following completion of the Restatement, present Chief Executive Officer, Chief Financial Officer, and Chief Strategy and Legal Officer were appointed.
2025-05-01	Company terminated Jamie Siminoff's Advisory Services.
2025-06-01	Parties filed a final stipulation of settlement for the Schwartz Action.
2025-08-01	Company rebranded as DOOR.
2025-09-30	End of the quarterly reporting period.
2025-11-01	Company paid the settlement amount for the Schwartz Action.
2025-12-01	Final stipulation of settlement for the Schwartz Action was approved by the court.
2025-12-31	Annual goodwill impairment test will be performed; goodwill impairment is likely.
2026-02-09	164,257,801 shares of the registrant's common stock outstanding.
2026-02-11	Filing date of the 10-Q report.
2026-12-31	Expected end date for Jamie Siminoff's advisory role.
2027-12-15	Effective date for ASU 2025-06 (Intangibles Goodwill and Other Internal-Use Software) for fiscal years beginning after this date.
2029-07-15	Maturity date of the term loan with Customers Bank.
2030-07-15	Expiration date of the Bank Warrant issued to Customers Bank.

Recommendation

hold

The company shows promising signs of operational improvement with significant reductions in net loss and increased revenue, particularly in professional services. Cost control measures are yielding positive results. However, the persistent material weaknesses in internal controls, the ongoing SEC investigation, and the high probability of goodwill impairment introduce substantial uncertainty and risk. While the company has sufficient liquidity for the next 12 months, the overall financial health remains fragile. A 'hold' recommendation is appropriate as investors should monitor the remediation of internal control issues and the outcome of legal and regulatory matters before considering further investment, despite the recent operational improvements.

Keywords

Smart Access, SaaS, Property Management, HelloTech, Hardware, Software, Multifamily Rental, IoT, Smart Home, SEC Filing, 10-Q, Financial Results, DOOR, Latch

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