LATCH(US:LTCH)2024-12-19 21:45Financial Performance - Software revenue for Q3 2022 was $3,403,000, a 73% increase from $1,965,000 in Q3 2021[272] - Total revenue for Q3 2022 reached $8,839,000, up 29% from $6,850,000 in Q3 2021[272] - Net loss for Q3 2022 was $34,809,000, a 4% increase from a net loss of $33,450,000 in Q3 2021[272] - Adjusted EBITDA for Q3 2022 improved to $(21,502,000), a 19% increase from $(26,560,000) in Q3 2021[272] - For the nine months ended September 30, 2022, total revenue was $32,225,000, a 74% increase from $18,569,000 in the same period of 2021[272] - Total revenue increased by $2.0 million to $8.839 million for the three months ended September 30, 2022, compared to $6.850 million for the same period in 2021, driven by a 73.2% increase in software revenue and a 145.9% increase in installation services revenue[295] - Total revenue for the nine months ended September 30, 2022, was $32.2 million, a 73.5% increase from $18.6 million in the same period of 2021[304] - The net loss for the nine months ended September 30, 2022, was $133.3 million, a 17.4% increase from a net loss of $113.5 million in the same period of 2021[304] Revenue Breakdown - Hardware revenue is primarily generated from the sale of smart access devices, with revenue recognized upon contract evidence and control transfer[278] - Hardware revenue increased by $5.3 million (41.3%), software revenue increased by $4.3 million (84.4%), and installation services revenue increased by $4.1 million (552.9%) compared to the prior year[306] Expenses and Costs - Cost of revenue decreased by $0.6 million to $6.805 million for the three months ended September 30, 2022, primarily due to a $1.6 million decrease in hardware costs, offset by increases in installation services and software costs[298] - Research and development expenses decreased by $0.7 million to $10.991 million for the three months ended September 30, 2022, mainly due to a $1.2 million decrease in personnel-related expenses[299] - Sales and marketing expenses decreased by $2.1 million to $7.028 million for the three months ended September 30, 2022, primarily due to a $3.7 million decrease in personnel-related expenses[300] - General and administrative expenses increased by $3.6 million to $15.077 million for the three months ended September 30, 2022, primarily due to a $4.5 million increase in professional fees related to investigations[301] - Depreciation and amortization expenses increased by $0.6 million to $1.386 million for the three months ended September 30, 2022, primarily due to increased amortization of capitalized internally-developed software[302] - Total cost of revenue rose by $14.8 million (77.4%) to $33.8 million, driven by a $10.4 million increase in hardware costs and a $3.8 million increase in installation services costs[307] - Research and development expenses increased by $17.9 million (62.7%) to $46.5 million, primarily due to higher personnel-related expenses and restructuring costs[308] - Sales and marketing expenses surged by $23.3 million (129.6%) to $41.3 million, largely due to increased personnel-related expenses and restructuring costs[309] - General and administrative expenses rose by $3.3 million (8.4%) to $42.9 million, influenced by increased public company insurance and restructuring costs[310] Cash Flow and Liquidity - As of September 30, 2022, the company's unrestricted cash and cash equivalents were approximately $256.8 million, indicating a strong liquidity position[314] - The company reported a net cash used in operating activities of $113.6 million for the nine months ended September 30, 2022, an increase of $49.5 million compared to the same period in 2021[329] - Net cash provided by investing activities was $107.2 million for the nine months ended September 30, 2022, a significant increase of $311.4 million from net cash used in investing activities of $204.3 million in the prior year[330] - Net cash provided by financing activities decreased by $454.1 million, primarily due to net proceeds of $448.0 million from a Business Combination in the previous year[331] Restructuring and Future Outlook - The company anticipates a decrease in R&D expenses for 2023 due to restructuring initiatives, including reductions in force[287] - The company expects sales and marketing expenses to decrease in 2023 due to restructuring initiatives, including recent reductions in force[288] - General and administrative expenses are expected to increase at least through 2024 due to ongoing professional services costs related to investigations and remediation activities[290] - The company incurred $8.8 million in restructuring costs during the nine months ended September 30, 2022, as part of efforts to streamline operations[316] - Future growth is dependent on consumer adoption of hardware and software products that enhance resident experiences[269] Debt and Covenants - The company is required to maintain a liquidity ratio of at least 4.00, tested monthly, calculated as unrestricted cash and cash equivalents divided by all outstanding indebtedness owed to Customers Bank[327] - The New Loan issued by Customers Bank amounts to $6.0 million, with interest payable at the greater of the prime rate or 6.0%, maturing on July 15, 2029[325] - The company has granted Customers Bank security interests in substantially all of its assets, excluding intellectual property[327] - There are various covenants in the Loan Agreement that limit the company's ability to engage in certain transactions, including asset dispositions and incurring additional indebtedness[328] Accounting and Reporting - The company has restated certain historical financial statements, impacting the presentation of key business metrics[264] - The company had no off-balance sheet arrangements as of September 30, 2022, that would materially affect its financial condition[332] - There have been no material changes to the company's critical accounting policies and estimates as disclosed in the 2022 Annual Report[333]