LATCH(LTCH) - 2025 Q3 - Quarterly Report

Financial Performance - Software revenue for Q3 2025 was $5,370,000, an increase of $293,000 or 5.8% compared to Q3 2024[147] - Total revenue for Q3 2025 reached $17,426,000, up by $2,483,000 or 16.6% from $14,943,000 in Q3 2024[147] - Net loss for Q3 2025 improved to $(6,582,000), a reduction of $10,474,000 or 61.4% compared to $(17,056,000) in Q3 2024[147] - Adjusted EBITDA for Q3 2025 was $(4,605,000), an improvement of $7,361,000 or 61.5% from $(11,966,000) in Q3 2024[147] - Total revenue for the nine months ended September 30, 2025 was $52,255,000, an increase of $12,339,000 or 30.9% from $39,916,000 in the same period of 2024[148] - Net loss for the nine months ended September 30, 2025 was $(25,681,000), a decrease of $21,949,000 or 46.1% compared to $(47,630,000) in the same period of 2024[148] - Adjusted EBITDA for the nine months ended September 30, 2025 was $(17,560,000), an improvement of $8,000,000 or 31.3% from $(25,560,000) in the same period of 2024[148] Revenue Breakdown - Total revenue for the three months ended September 30, 2025, increased by $2.5 million (16.6%) to $17.4 million compared to the same period in 2024, driven by a $1.5 million increase in hardware revenue and a $0.7 million increase in professional services revenue[174][177] - Revenue for the nine months ended September 30, 2025, increased by $12.3 million (30.9%) to $52.3 million compared to the same period in 2024, largely due to a $10.4 million increase in professional services revenue from the HelloTech acquisition[184][186] Operating Expenses - Total operating expenses decreased by $9.4 million (40.1%) to $14.0 million for the three months ended September 30, 2025, primarily due to a $7.8 million reduction in general and administrative expenses[174][181] - Research and development expenses decreased by $1.1 million (22.9%) to $3.8 million for the three months ended September 30, 2025, mainly due to a reduction in third-party expenses and RSU expenses[174][179] - General and administrative expenses for the nine months ended September 30, 2025, decreased by $22.8 million (55.0%) to $18.6 million compared to the same period in 2024[184][181] - Sales and marketing expenses increased by $3.0 million for the nine months ended September 30, 2025, largely related to HelloTech, including a $2.5 million increase in compensation expense[189] - General and administrative expenses decreased by $22.8 million for the nine months ended September 30, 2025, primarily due to an $8.4 million decrease in legal and settlement fees[190] Cost of Revenue - Total cost of revenue for the three months ended September 30, 2025, increased by $0.8 million (9.5%) to $9.7 million, primarily due to higher hardware and professional services costs[174][178] - Cost of revenue increased by $7.4 million for the nine months ended September 30, 2025, primarily due to a $6.8 million increase in professional services costs following the HelloTech merger and property management acquisitions[187] Cash Flow and Liquidity - Net cash used in operating activities decreased by $33.8 million for the nine months ended September 30, 2025, compared to the same period in 2024[206] - Net cash provided by investing activities decreased by $70.3 million for the nine months ended September 30, 2025, primarily due to the use of investment proceeds to fund operating losses[207] - As of September 30, 2025, the company had approximately $29.7 million in net inventory, with short-term liquidity needs primarily for working capital and component inventory purchases[195] - The company expects to use its current cash and cash equivalents and available-for-sale securities to fund operational cash requirements for at least 12 months from the date of this report[198] Company Operations - The company is expanding its DOOR Platform to include broader smart home solutions, integrating devices such as sensors, thermostats, and lighting[141] - The company operates in one reporting segment, focusing on the multifamily rental market in the United States and Canada[145] - The company’s professional services include connecting multifamily property customers with partners for installation of smart access and smart home hardware[143] Other Financial Metrics - Interest expense income, net for the three months ended September 30, 2025, was $(251,000), a decrease of $656,000 (162.0%) compared to the same period in 2024[171][174] - Total other income (expense), net decreased by $2.3 million for the nine months ended September 30, 2025, primarily due to a $3.7 million decrease in interest income[192] - The provision for income taxes remains unchanged, with a full valuation allowance on deferred tax assets due to uncertainty in utilization[172] - The company expects to resume granting restricted stock units (RSUs) after becoming current in SEC filings, which will increase stock-based compensation expenses[165]