LATCH(LTCH) - 2024 Q4 - Annual Report

Revenue Performance - Software revenue increased by 14.0% to $20,255,000 in 2024 from $17,775,000 in 2023[318] - Total revenue rose by 26.0% to $56,630,000 in 2024 compared to $44,961,000 in 2023[318] - Total revenue increased by $11.7 million to $56.63 million for the year ended December 31, 2024, a 26.0% increase compared to 2023[343] - Professional services revenue rose by $10.6 million, driven by $8.3 million from HelloTech and $2.4 million from DPM, both new revenue sources in 2024[343] - Hardware revenue decreased by $1.5 million to $18.29 million, a 7.4% decline, despite an increase in hardware shipments[343] Financial Performance - Net loss improved by 46.4%, decreasing to $(57,596,000) in 2024 from $(107,540,000) in 2023[318] - Adjusted EBITDA showed a significant improvement, narrowing to $(40,741,000) in 2024 from $(68,459,000) in 2023, a 40.5% reduction[318] - Net loss improved by $49.94 million to $57.60 million, a 46.4% reduction compared to the previous year[343] Cost Management - Total cost of revenue decreased by $1.0 million to $31.64 million, a 3.1% decline, primarily due to an $8.8 million reduction in hardware costs[344] - Research and development expenses decreased by $16.5 million to $17.32 million, a 48.7% reduction, mainly due to lower personnel-related expenses[345] - General and administrative expenses decreased by $21.7 million to $44.47 million, a 32.8% decline, largely due to reduced personnel-related and consulting expenses[347] Cash Flow and Liquidity - The Company had approximately $75.4 million in unrestricted cash and cash equivalents as of December 31, 2024[352] - The Company incurred a net cash used in operating activities of $75.4 million in 2024, an increase of $9.8 million compared to $65.6 million in 2023[371] - Net cash provided by investing activities increased by $22.4 million in 2024, totaling $72.9 million, primarily due to a $106.9 million decrease in purchases of available-for-sale securities[372] - The Company is closely monitoring its cash flow forecast and may implement cost-saving measures to preserve liquidity[360] Debt and Financing - The company repaid $23.9 million in principal and accrued interest on promissory notes in April 2024[357] - The Company repaid $22.0 million in Promissory Notes during the year ended December 31, 2024, with no financing activities conducted in 2023[373] - The Company entered into a Loan Agreement with Customers Bank for a term loan of $6.0 million on July 15, 2024, with a maturity date of July 15, 2029[365] - The Borrowers are required to maintain a liquidity ratio of at least 4.00, tested monthly, under the Loan Agreement[367] Asset Valuation - As of December 31, 2024, the Company reported goodwill of $30.2 million and intangible assets of $2.6 million, compared to $25.3 million and $4.8 million, respectively, as of December 31, 2023[390] - The Company's business enterprise value (BEV) was determined to be $68.5 million as of December 31, 2024, with an equity fair value (Equity FV) of $135.7 million, exceeding the carrying value by $24.5 million, or 22.1%[394] - The Company conducted an annual impairment test of goodwill, determining that no impairment was necessary as of December 31, 2024, as the Equity FV exceeded the carrying value[396] - For the year ended December 31, 2023, the Company reported an Equity FV of $204.0 million, exceeding the carrying value of $169.1 million by $34.9 million, or 20.6%[397] Market Capitalization - The Company's market capitalization as of December 31, 2023, was $118.1 million, approximately 73% less than the Equity FV of $204.0 million, attributed to low trading volume and stock price volatility[398] - A sensitivity analysis indicated a fair value of $192.5 million as of December 31, 2023, exceeding the carrying value by $23.4 million, or 14%, confirming no goodwill impairment[399] Legal and Regulatory Matters - The Company is subject to various legal proceedings and claims, with accruals for contingencies based on an analysis of potential exposure and legal advice[401] Business Operations - The company operates in one segment, focusing on the multifamily rental market in the United States and Canada[316] - The company is expanding its DOOR Platform to include broader smart home solutions, integrating devices such as sensors and thermostats[312] - The HelloTech business provides a nationwide network of independent technicians for on-demand technical services, enhancing customer support[315] - Hardware revenue is generated primarily from the sale of smart access and smart home devices, with revenue recognized upon transfer of control to customers[324] - The company maintains a full valuation allowance on deferred tax assets, indicating uncertainty in utilizing these assets[339] Interest Income and Expense - Interest income decreased to $5,892,000 in 2024 from $8,099,000 in 2023, while interest expense also decreased to $(4,476,000) from $(5,790,000)[338]