LATCH(LTCH) - 2025 Q4 - Annual Report

Revenue Performance - Software revenue for the year ended December 31, 2025, was $22,140,000, representing a 9.3% increase from $20,255,000 in 2024[300] - Total revenue for the year ended December 31, 2025, reached $70,117,000, a 23.8% increase from $56,630,000 in 2024[300] - Total revenue increased by $13.5 million to $70.1 million for the year ended December 31, 2025, representing a 23.8% increase compared to 2024[326] - Professional services revenue rose by $10.1 million, driven by a full year of revenue from the 2024 HelloTech Merger, installation revenue, and property management revenue[328] Financial Loss and Adjustments - The net loss for the year ended December 31, 2025, was $(53,747,000), a decrease of 6.7% compared to $(57,596,000) in 2024[300] - Adjusted EBITDA for the year ended December 31, 2025, was $(27,089,000), improving by 24.7% from $(35,966,000) in 2024[300] Revenue Sources - Hardware revenue is generated primarily from the sale of smart access and smart home devices, with revenue recognized upon transfer of control to customers[308] - Professional services revenue is derived from project-based hardware installation, technology services, and property management services, recognized over time[310] Expenses Overview - Research and development expenses consist mainly of personnel costs for product design and engineering teams, including salaries and related expenses[319] - Sales and marketing expenses include personnel costs for sales and customer success teams, as well as marketing activities and professional fees[320] - General and administrative expenses encompass costs related to executive, legal, and finance functions, including salaries and legal fees[321] - Total cost of revenue increased by $11.6 million to $43.3 million, a 36.8% increase, primarily due to higher professional services costs and a write-off of prepaid inventory deposits[329] - Operating expenses decreased by $4.8 million to $79.6 million, a 5.7% decrease, with significant reductions in general and administrative expenses[326] Cash and Liquidity - Unrestricted cash and cash equivalents were approximately $34.6 million as of December 31, 2025, down from $75.4 million in 2024[338] - The company expects to use current cash and cash equivalents to fund operational cash requirements for at least 12 months beyond the filing date[342] - The company has incurred significant professional fees related to ongoing investigations and litigation, impacting liquidity[340] - Total cash and cash equivalents decreased from $75.4 million at December 31, 2024, to $34.6 million at December 31, 2025[370] Debt and Financing - A term loan of $6.0 million was secured from Customers Bank on July 15, 2024, with a maturity date of July 15, 2029, and interest payable at a minimum of 6.0%[345] - As of December 31, 2025, the outstanding principal of the loan was $4.8 million, down from $6.0 million in 2024, with compliance to loan covenants maintained[349] - The company issued $22.0 million in unsecured promissory notes as part of the acquisition of Honest Day's Work, Inc., with a total repayment of $23.9 million including interest by April 2024[344] - Net cash used in financing activities decreased by $20.8 million in 2025, reflecting a significant repayment of $22.0 million in promissory notes in 2024[354] Goodwill and Impairment - A $16.6 million impairment of goodwill was recorded, reducing the goodwill balance to $13.6 million as of December 31, 2025[334] - The estimated business enterprise value (BEV) was approximately $28.3 million as of December 31, 2025, leading to a goodwill impairment charge of $16.6 million due to a decline in estimated fair value[369] - The company recorded a goodwill balance of $13.6 million as of December 31, 2025, after the impairment charge[370] Legal and Regulatory Matters - The company is subject to various legal proceedings and claims, with potential exposure being assessed regularly[376] - Accruals related to Derivative Actions are based on a settlement amount that requires court approval, indicating potential changes in expenses if approval is not granted[376] - As a smaller reporting company, the company is not required to disclose quantitative and qualitative market risk information[378]