8-K: Latch Inc. Files 2023 SEC Reports, Provides Cash Position Update, and Continues Path to SEC Compliance

Latch Inc. announces the filing of its 2023 SEC reports and provides an update on its cash position as it works towards becoming current with its SEC filing obligations.

Summary

• Latch Inc. filed its 2023 Annual Report on Form 10-K and Quarterly Reports on Form 10-Q on March 26, 2025.
• The company is working towards becoming current with its SEC filing obligations and obtaining quotation of its securities on the OTC Markets.
• Software revenue for 2023 was $17.8 million, a 37% year-over-year increase.
• Total revenue for 2023 was $45.0 million, a 5% year-over-year increase.
• Net loss for 2023 was $(107.5) million, a 34% year-over-year improvement.
• Adjusted EBITDA for 2023 was $(68.5) million, a 42% year-over-year improvement.
• As of December 31, 2024, the company's total cash and cash equivalents and available-for-sale securities were approximately $75 million.
• The company estimates it had approximately $28 million in total inventory as of December 31, 2024.
• Cash and cash equivalents decreased by approximately $104 million during 2024, primarily due to non-ordinary course activities and events.
• The company anticipates continued elevated cash outflows in 2025 but expects cash outflows related to operating and other non-ordinary activities to be meaningfully lower.
• Latch is focused on generating positive cash flow through its operations during 2026, excluding non-ordinary course activities and events.

Sentiment

Score: 6

Explanation: The sentiment is moderately positive due to the improvements in revenue, net loss, and Adjusted EBITDA, as well as the progress towards SEC compliance. However, the negative cash flow and ongoing litigation remain concerns.

Positives

• Software revenue increased by 37% year-over-year to $17.8 million in 2023.
• Total revenue increased by 5% year-over-year to $45.0 million in 2023.
• Net loss improved by 34% year-over-year to $(107.5) million in 2023.
• Adjusted EBITDA improved by 42% year-over-year to $(68.5) million in 2023.
• Operating expenses were reduced by $38.7 million, a 24% improvement.

Negatives

• The company experienced a net loss of $(107.5) million in 2023.
• Adjusted EBITDA was still negative at $(68.5) million in 2023.
• Cash and cash equivalents decreased by approximately $104 million during 2024.
• The company anticipates continued elevated cash outflows in 2025.

Risks

• The company's ability to implement its business plans and achieve revenue forecasts is subject to risks and uncertainties.
• Unexpected delays, difficulties, or expenditures could impact the company's performance.
• Ongoing stockholder litigation and the pending SEC investigation could result in significant costs.
• The company's ability to become current with its SEC filing obligations is uncertain.
• The company's ability to generate positive cash flow in 2026 is not guaranteed.

Future Outlook

The company anticipates continued elevated cash outflows in 2025 associated with ongoing litigation, the SEC investigation, and becoming current with SEC filings, but expects cash outflows related to operating and other non-ordinary activities to be meaningfully lower in 2025. Latch is focused on generating positive cash flow through its operations during 2026, excluding non-ordinary course activities and events.

Management Comments

• David Lillis, Chief Executive Officer, stated that the company increased total revenue year-over-year while simultaneously reducing operating expenses by 24%.
• David Lillis expressed pride in the team's resilience amidst adversity and excitement about the future of Latch.
• David Lillis stated that the company's priorities are getting current with SEC reporting obligations, maintaining operational excellence, and continuing to innovate and deliver solutions that will benefit customers.

Industry Context

This announcement reflects Latch's efforts to regain compliance with SEC reporting requirements after a period of restatement and reorganization. The focus on operational efficiency and cost reduction aligns with broader trends in the technology sector, where companies are prioritizing profitability and cash flow generation.

Comparison to Industry Standards

• It's difficult to directly compare Latch's performance to industry standards without knowing specific competitors and their financial results for the same period.
• However, the company's focus on software revenue growth and cost reduction is a common theme among SaaS companies.
• Companies like SmartRent and Allegion's residential segment could be considered peers, but a detailed comparison would require analyzing their respective financial statements and business models.
• Latch's Adjusted EBITDA margin is still negative, which is not uncommon for growth-stage companies, but the improvement year-over-year is a positive sign.
• The company's cash burn rate is a concern, and its ability to generate positive cash flow in 2026 will be a key indicator of its long-term sustainability.

Legal Proceedings

• The company is involved in ongoing stockholder litigation and a pending SEC investigation.

Stakeholder Impact

• Shareholders will be impacted by the company's progress towards SEC compliance and its financial performance.
• Employees may be affected by the company's restructuring and cost reduction efforts.
• Customers will benefit from the company's continued innovation and delivery of solutions.
• Suppliers and creditors will be impacted by the company's cash flow and financial stability.

Next Steps

• The company is working diligently to complete its outstanding SEC filings for the year ended December 31, 2024.
• The company intends to provide its comprehensive financial position in connection with becoming current with its SEC filing obligations.
• The company is focused on generating positive cash flow through its operations during 2026, excluding non-ordinary course activities and events.

Key Dates

Keywords

SEC filings, financial results, revenue, net loss, Adjusted EBITDA, cash position, Latch Inc.