Latch (LTCH) Q1 2026 shows smaller loss and stronger software mix
Filing Impact
Filing Sentiment
Form Type
10-Q
Latch, Inc. (DOOR) reports Q1 2026 results showing flat revenue but a smaller loss. Total revenue was $15.7 million, roughly unchanged from Q1 2025, while software revenue grew to $6.1 million, a 19.1% increase, reflecting expansion of its SaaS platform.
Professional services revenue declined as project work and HelloTech activity softened, but overall cost of revenue and operating expenses fell sharply. Net loss improved to $5.9 million from $11.3 million, and Adjusted EBITDA improved to $(3.9) million from $(7.3) million, indicating better cost control.
Latch ended March 31 2026 with $27.9 million of cash and cash equivalents and $99.4 million in total assets. Deferred revenue of $24.9 million provides future visibility into subscription and service revenue. Subsequent events include a new $5.0 million revolving credit facility, repayment of its term loan, and $1.7 million of cash proceeds from a private investment sale.
Positive
- None.
Negative
- None.
Insights
Losses narrowed meaningfully as software revenue grew, but the business remains unprofitable.
Latch kept total Q1 2026 revenue essentially flat at $15.7 million, but shifted mix toward higher-margin software, which rose 19.1% to $6.1 million. Professional services fell, pulling overall revenue slightly lower versus Q1 2025.
Cost reductions drove most of the improvement. Operating expenses dropped from $18.5 million to $13.8 million, cutting net loss to $5.9 million and improving Adjusted EBITDA to $(3.9) million. Cash used in operations was $5.1 million, leaving $27.9 million of cash and equivalents.
Legal and regulatory matters remain a background factor, with accrued litigation and settlement-related costs included in expenses. Subsequent to quarter-end, a new $5.0 million revolving credit facility and repayment of the prior term loan altered the capital structure while adding a minimum cash balance requirement.
Key Figures
Total revenue: $15.7M
Software revenue: $6.1M
Net loss: $5.9M
+5 more
8 metrics
Total revenue
$15.7M
Three months ended March 31, 2026
Software revenue
$6.1M
Q1 2026, up 19.1% year over year
Net loss
$5.9M
Three months ended March 31, 2026
Adjusted EBITDA
$(3.9)M
Three months ended March 31, 2026
Cash and cash equivalents
$27.9M
Balance at March 31, 2026
Total assets
$99.4M
Balance at March 31, 2026
Deferred revenue
$24.9M
Current and non-current at March 31, 2026
Term loan principal
$4.3M
Outstanding at March 31, 2026 before refinance
Key Terms
Adjusted EBITDA, significant financing component, software-as-a-service ("SaaS"), warrant liability, +1 more
5 terms
Adjusted EBITDA financial
"We define Adjusted EBITDA as our net loss, excluding the impact of the following items"
Adjusted EBITDA is a way companies measure how much money they make from their core operations, like running a business, by removing certain costs or income that aren’t part of regular business activities. It helps investors see how well a company is doing without distractions from unusual expenses or gains, making it easier to compare companies or track performance over time.
significant financing component financial
"we determined that there is a significant financing component related to the time value of money"
software-as-a-service ("SaaS") financial
"through the license of its software-as-a-service (“SaaS”) cloud-based platform"
A software-as-a-service (SaaS) product is a program delivered over the internet that customers access by subscription instead of installing and running it on their own computers. For investors, SaaS matters because it creates recurring revenue, predictable cash flow and often higher customer retention—similar to a gym membership model—making it easier to forecast growth, value long-term customer relationships and assess profitability over time.
warrant liability financial
"Change in fair value of warrant liability | ( 37 ) | ( 37 )"
Warrant liability is the financial obligation a company records when it grants warrants—special options giving the holder the right to buy company shares at a set price in the future. It matters to investors because changes in this liability can affect a company's reported earnings and overall financial health, similar to how a pending contract can influence a company's future value.
performance-vesting stock options financial
"awards of performance-vesting stock options (“Performance Options”) and performance-vesting RSUs"
UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 10-Q
(Mark One)
| QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 | |||||
For the quarterly period ended March 31, 2026
OR
| TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 | |||||
For transition period from to
Commission File Number 001-39688
(Exact name of registrant as specified in its charter)
(State or other jurisdiction of incorporation or organization) | (I.R.S. Employer Identification Number) | |||||||
(314 ) 227-1100
Securities registered pursuant to Section 12(b) of the Act: None.
Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days. Yes ☒ No ☐
Indicate by check mark whether the registrant has submitted electronically every Interactive Data File required to be submitted pursuant to Rule 405 of Regulation S-T (§232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit such files). Yes ☒ No ☐
Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, a smaller reporting company or an emerging growth company. See the definitions of “large accelerated filer,” “accelerated filer,” “smaller reporting company” and “emerging growth company” in Rule 12b-2 of the Exchange Act.
| Large accelerated filer | ☐ | Accelerated filer | ☐ | ||||||||
| ☒ | Smaller reporting company | ||||||||||
| Emerging growth company | |||||||||||
If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act. ☐
Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act): Yes ☐ No ☒
As of May 13, 2026, there were 164,257,801 shares of the registrant’s common stock outstanding.
CAUTIONARY NOTE REGARDING FORWARD-LOOKING STATEMENTS
This Quarterly Report on Form 10-Q (this “Form 10-Q”) contains forward-looking statements. We intend such forward-looking statements to be covered by the safe harbor provisions for forward-looking statements contained in Section 27A of the Securities Act of 1933, as amended (the “Securities Act”), and Section 21E of the Securities Exchange Act of 1934, as amended (the “Exchange Act”). All statements other than statements of historical facts contained in this Form 10-Q, including statements concerning possible or assumed future actions, business strategies, events or results of operations, and any statements that refer to projections, forecasts or other characterizations of future events or circumstances, including any underlying assumptions, are forward-looking statements. These statements involve known and unknown risks, uncertainties and other important factors that may cause our actual results, performance or achievements to be materially different from any future results, performance or achievements expressed or implied by the forward-looking statements.
In some cases, you can identify forward-looking statements by terms such as “may,” “should,” “expect,” “plan,” “anticipate,” “could,” “intend,” “target,” “project,” “contemplate,” “believe,” “estimate,” “predict,” “potential” or “continue” or the negative of these terms or other similar expressions. We have based these forward-looking statements largely on our current expectations and projections about future events and financial trends that we believe may affect our business, financial condition and results of operations. These forward-looking statements speak only as of the date of this Form 10-Q and are subject to a number of important factors that could cause actual results to differ materially from those in the forward-looking statements, including the risks, uncertainties and assumptions described under the section in our Annual Report on Form 10-K for the year ended December 31, 2025 (the “2025 Annual Report”) filed with the Securities and Exchange Commission (the “SEC”), titled “Risk Factors,” as updated by Part II, Item 1A. “Risk Factors” in this Form 10-Q. These forward-looking statements are subject to numerous risks, including, without limitation, the following:
•our ability to remediate the material weaknesses we identified in our internal control over financial reporting or other findings in the Company’s 2022-2023 internal investigation, and the timing of such remediation;
•the performance of our common stock, particularly given the limited liquidity and depressed trading prices of our common stock, which is trading on OTC Markets Group Inc.’s (“OTC”) OTCID Basic Market (the “OTCID Market”), and may not be listed on the OTCQX or OTCQB markets or a national securities exchange;
•developments in the pending derivative actions or other legal proceedings;
•regulatory disputes and governmental inquiries, including the SEC Investigation (as defined below);
•privacy and data protection laws, privacy or data breaches, or the loss of data;
•the impact of changes in consumer spending patterns, consumer preferences, local, regional and national economic conditions, crime, weather, demographic trends and employee availability;
•increases in component costs, long lead times, supply shortages and other disruptions to our supply chain;
•delays in construction timelines at our customers’ building sites;
•any defects in new products or enhancements to existing products;
•our ability to continue to develop new products, services and innovations to meet constantly evolving customer demands;
•our ability to hire, retain, manage and motivate employees, including key personnel;
•the impact of workforce reductions on our business, financial condition and results of operations;
•our ability to improve operating and financial results and attain profitability;
•compliance with laws and regulations applicable to our business;
•the impact of macroeconomic conditions on our business, our suppliers and our existing and potential customers;
•our ability to upgrade and maintain our information technology systems;
•our ability to create, acquire and protect intellectual property;
•our ability to successfully identify, complete, integrate and realize synergies from acquisitions, including the ability to retain key personnel from such acquisitions; and
•the potential adverse impact of any future acquisitions, including the potential increase in risks already existing in our operations, poor performance or decline in value of acquired businesses and unexpected costs or liabilities that may arise.
Because forward-looking statements are inherently subject to risks and uncertainties, some of which cannot be predicted or quantified and some of which are beyond our control, you should not rely on these forward-looking statements as predictions of future events. The events and circumstances reflected in our forward-looking statements may not be achieved or occur, and actual results could differ materially from those projected in the forward-looking statements. Moreover, we operate in an evolving environment. New risk factors and uncertainties may emerge from time to time, and it is not possible for management to predict all risk factors and uncertainties. As a result of these factors, we cannot assure you that the forward-
looking statements in this Form 10-Q will prove to be accurate. Except as required by applicable law, we do not plan to publicly update or revise any forward-looking statements contained herein, whether as a result of any new information, future events, changed circumstances or otherwise.
You should read this Form 10-Q completely and with the understanding that our actual future results may be materially different from what we expect. We qualify all of our forward-looking statements by these cautionary statements.
Latch, Inc. and Subsidiaries
Form 10-Q
Table of Contents
| Page | |||||
Part I - Financial Information | 1 | ||||
Item 1. Financial Statements (unaudited) | 1 | ||||
Condensed Consolidated Balance Sheets (unaudited) as of March 31, 2026 and December 31, 2025 | 1 | ||||
Condensed Consolidated Statements of Operations and Comprehensive Loss (unaudited) for the three months ended March 31, 2026 and 2025 | 2 | ||||
Condensed Consolidated Statements of Stockholders’ Equity (unaudited) for the three months ended March 31, 2026 and 2025 | 3 | ||||
Condensed Consolidated Statements of Cash Flows (unaudited) for the three months ended March 31, 2026 and 2025 | 4 | ||||
Notes to Condensed Consolidated Financial Statements (unaudited) | 5 | ||||
Item 2. Management’s Discussion and Analysis of Financial Condition and Results of Operations | 24 | ||||
Item 3. Quantitative and Qualitative Disclosures About Market Risk | 33 | ||||
Item 4. Controls and Procedures | 33 | ||||
Part II - Other Information | 37 | ||||
Item 1. Legal Proceedings | 37 | ||||
Item 1A. Risk Factors | 37 | ||||
Item 2. Unregistered Sales of Equity Securities and Use of Proceeds | 37 | ||||
Item 3. Defaults Upon Senior Securities | 37 | ||||
Item 4. Mine Safety Disclosures | 37 | ||||
Item 5. Other Information | 37 | ||||
Item 6. Exhibits | 38 | ||||
Signatures | 39 | ||||
Part I. Financial Information
Item 1. Financial Statements
Latch, Inc. and Subsidiaries
Condensed Consolidated Balance Sheets (unaudited)
(in thousands, except share amounts)
| March 31, 2026 | December 31, 2025 | |||||||||||||
| Assets | ||||||||||||||
| Current assets | ||||||||||||||
| Cash and cash equivalents | $ | $ | ||||||||||||
| Available-for-sale securities | ||||||||||||||
| Accounts receivable, net | ||||||||||||||
| Inventories, net current | ||||||||||||||
| Prepaid expenses and other current assets | ||||||||||||||
| Total current assets | ||||||||||||||
| Property and equipment, net | ||||||||||||||
| Internally-developed software, net | ||||||||||||||
| Inventories, net non-current | ||||||||||||||
| Goodwill | ||||||||||||||
| Intangible assets, net | ||||||||||||||
| Other non-current assets | ||||||||||||||
| Total assets | $ | $ | ||||||||||||
| Liabilities and Stockholders’ Equity | ||||||||||||||
| Current liabilities | ||||||||||||||
| Accounts payable | $ | $ | ||||||||||||
| Current portion of long-term debt | ||||||||||||||
| Accrued expenses | ||||||||||||||
| Deferred revenue, current | ||||||||||||||
| Other current liabilities | ||||||||||||||
| Total current liabilities | ||||||||||||||
| Deferred revenue, non-current | ||||||||||||||
| Long-term debt | ||||||||||||||
| Other non-current liabilities | ||||||||||||||
| Total liabilities | ||||||||||||||
| Commitments and contingencies (see Note 14) | ||||||||||||||
| Stockholders' equity | ||||||||||||||
Common stock - $ | ||||||||||||||
| Treasury stock | ( | ( | ||||||||||||
| Additional paid-in capital | ||||||||||||||
| Accumulated other comprehensive income | ||||||||||||||
| Accumulated deficit | ( | ( | ||||||||||||
| Total stockholders’ equity | ||||||||||||||
| Total liabilities and stockholders’ equity | $ | $ | ||||||||||||
(1)Shares issued and outstanding exclude 738,000
See accompanying notes to the condensed consolidated financial statements.
1
Latch, Inc. and Subsidiaries
Condensed Consolidated Statements of Operations and Comprehensive Loss (unaudited)
(in thousands, except share and per share amounts)
| Three Months Ended March 31, | ||||||||||||||||||||||||||
| 2026 | 2025 | |||||||||||||||||||||||||
| Revenue | ||||||||||||||||||||||||||
| Hardware | $ | $ | ||||||||||||||||||||||||
| Software | ||||||||||||||||||||||||||
| Professional services | ||||||||||||||||||||||||||
| Total revenue | ||||||||||||||||||||||||||
Cost of revenue(1) | ||||||||||||||||||||||||||
| Hardware | ||||||||||||||||||||||||||
| Software | ||||||||||||||||||||||||||
| Professional services | ||||||||||||||||||||||||||
| Total cost of revenue | ||||||||||||||||||||||||||
| Operating expenses | ||||||||||||||||||||||||||
| Research and development | ||||||||||||||||||||||||||
| Sales and marketing | ||||||||||||||||||||||||||
| General and administrative | ||||||||||||||||||||||||||
| Depreciation and amortization | ||||||||||||||||||||||||||
| Total operating expenses | ||||||||||||||||||||||||||
| Loss from operations | ( | ( | ||||||||||||||||||||||||
| Other expense, net | ||||||||||||||||||||||||||
| Interest expense, net | ( | ( | ||||||||||||||||||||||||
| Change in fair value of warrant liability | ( | ( | ||||||||||||||||||||||||
| Other (expense) income, net | ( | |||||||||||||||||||||||||
| Total other expense, net | ( | ( | ||||||||||||||||||||||||
| Loss before income taxes | ( | ( | ||||||||||||||||||||||||
| Provision for income taxes | ||||||||||||||||||||||||||
| Net loss | $ | ( | $ | ( | ||||||||||||||||||||||
| Other comprehensive income (loss) | ||||||||||||||||||||||||||
| Unrealized loss on available-for-sale securities | ( | ( | ||||||||||||||||||||||||
| Foreign currency translation adjustment | ||||||||||||||||||||||||||
| Comprehensive loss | $ | ( | $ | ( | ||||||||||||||||||||||
| Net loss per common share: | ||||||||||||||||||||||||||
| Basic and diluted net loss per common share | $ | ( | $ | ( | ||||||||||||||||||||||
| Weighted average shares outstanding: | ||||||||||||||||||||||||||
| Basic and diluted | ||||||||||||||||||||||||||
(1)Exclusive of depreciation and amortization shown in operating expenses.
See accompanying notes to the condensed consolidated financial statements.
2
Latch, Inc. and Subsidiaries
Condensed Consolidated Statements of Stockholders’ Equity (unaudited)
(in thousands)
Common Stock(1) | Additional Paid-In Capital | Treasury Stock Amount | Accumulated Other Comprehensive Income (Loss) | Accumulated Deficit | Total Stockholders’ Equity | |||||||||||||||||||||||||||||||||||||||
| Shares | Amount | |||||||||||||||||||||||||||||||||||||||||||
| January 1, 2025 | $ | $ | $ | ( | $ | $ | ( | $ | ||||||||||||||||||||||||||||||||||||
| Stock-based compensation | — | — | — | — | — | |||||||||||||||||||||||||||||||||||||||
| Foreign currency translation adjustment | — | — | — | — | — | |||||||||||||||||||||||||||||||||||||||
| Unrealized loss on available-for-sale securities | — | — | — | — | ( | — | ( | |||||||||||||||||||||||||||||||||||||
| Net loss | — | — | — | — | — | ( | ( | |||||||||||||||||||||||||||||||||||||
| March 31, 2025 | $ | $ | $ | ( | $ | $ | ( | $ | ||||||||||||||||||||||||||||||||||||
(1)Shares issued and outstanding exclude 738,000
Common Stock(1) | Additional Paid-In Capital | Treasury Stock Amount | Accumulated Other Comprehensive Income (Loss) | Accumulated Deficit | Total Stockholders’ Equity | |||||||||||||||||||||||||||||||||||||||
| Shares | Amount | |||||||||||||||||||||||||||||||||||||||||||
| January 1, 2026 | $ | $ | $ | ( | $ | $ | ( | $ | ||||||||||||||||||||||||||||||||||||
| Stock-based compensation | — | — | — | — | — | |||||||||||||||||||||||||||||||||||||||
| Foreign translation adjustment | — | — | — | — | — | |||||||||||||||||||||||||||||||||||||||
| Unrealized loss on available-for-sale securities | — | — | — | — | ( | — | ( | |||||||||||||||||||||||||||||||||||||
| Net loss | — | — | — | — | — | ( | ( | |||||||||||||||||||||||||||||||||||||
| March 31, 2026 | $ | $ | $ | ( | $ | $ | ( | $ | ||||||||||||||||||||||||||||||||||||
(1)Shares issued and outstanding exclude 738,000
See accompanying notes to the condensed consolidated financial statements.
3
Latch, Inc. and Subsidiaries
Condensed Consolidated Statements of Cash Flows (unaudited)
(in thousands)
| Three Months Ended March 31, | ||||||||||||||
| 2026 | 2025 | |||||||||||||
| Operating activities | ||||||||||||||
| Net loss | $ | ( | $ | ( | ||||||||||
| Adjustments to reconcile net loss to net cash used by operating activities | ||||||||||||||
| Depreciation and amortization | ||||||||||||||
| Non-cash interest income | ( | ( | ||||||||||||
| Change in fair value of warrant liability | ||||||||||||||
| Change in unrealized loss on marketable securities | ( | ( | ||||||||||||
| Provision for expected credit losses, net of recoveries | ( | |||||||||||||
| Provision for credit losses on contract assets | ( | ( | ||||||||||||
| Stock-based compensation expense | ||||||||||||||
| Changes in assets and liabilities (excluding effects of acquisitions) | ||||||||||||||
| Accounts receivable | ( | |||||||||||||
| Inventories, net | ( | |||||||||||||
| Prepaid expenses and other current assets | ( | |||||||||||||
| Other non-current assets | ( | |||||||||||||
| Accounts payable | ( | |||||||||||||
| Accrued expenses | ( | ( | ||||||||||||
| Other current liabilities | ( | ( | ||||||||||||
| Other non-current liabilities | ( | ( | ||||||||||||
| Deferred revenue | ( | ( | ||||||||||||
| Net cash used in operating activities | ( | ( | ||||||||||||
| Investing activities | ||||||||||||||
| Purchase of available-for-sale securities | ( | ( | ||||||||||||
| Proceeds from sales and maturities of available-for-sale securities | ||||||||||||||
| Capitalized internally-developed software | ( | ( | ||||||||||||
| Net cash used in investing activities | ( | ( | ||||||||||||
| Financing activities | ||||||||||||||
| Repayment of term loan | ( | ( | ||||||||||||
| Net cash used in financing activities | ( | ( | ||||||||||||
| Effect of exchange rate on cash | ( | |||||||||||||
| Net change in cash and cash equivalents | ( | ( | ||||||||||||
| Cash and cash equivalents | ||||||||||||||
| Beginning of period | ||||||||||||||
| End of period | $ | $ | ||||||||||||
| Supplemental disclosure of non-cash investing and financing activities | ||||||||||||||
| Capitalization of stock-based compensation to internally developed software | $ | $ | ( | |||||||||||
See accompanying notes to the condensed consolidated financial statements.
4
Latch, Inc. and Subsidiaries
Notes to Condensed Consolidated Financial Statements (unaudited)
(in thousands, except share and per share data)
1.DESCRIPTION OF BUSINESS
Latch, Inc. (collectively with its subsidiaries, the “Company”) combines access control hardware and smart home technology into one unified platform connecting access, devices and property data to improve operations across portfolios, primarily serving the multifamily and student housing markets.
In August 2025, the Company rebranded as DOOR, although its legal name remains Latch, Inc. In connection with the rebrand to DOOR, Latch Systems, Inc., the Company’s primary operating entity and a wholly-owned subsidiary, changed its name to DOOR Systems, Inc. (“Legacy Latch” or “DOOR Systems,” as the context requires). The Company, referred to herein interchangeably as “Latch” or “DOOR” operates as one reportable segment and derives revenues primarily from operations in North America.
Basis of Presentation
The accompanying condensed consolidated financial statements have been prepared in accordance with generally accepted accounting principles in the United States of America (“GAAP”) for interim financial reporting and Article 10 of Regulation S-X. Accordingly, certain information and footnote disclosures normally included in financial statements prepared under GAAP have been condensed or omitted pursuant to the rules and regulations of the Securities and Exchange Commission (the “SEC”) for interim financial reporting. In the opinion of management, all adjustments considered necessary for a fair presentation of the Company’s financial position, results of operations and cash flows have been included and are of a normal and recurring nature.
The operating results presented for interim periods are not necessarily indicative of the results that may be expected for any other interim period or for the entire year. These financial statements should be read in conjunction with the Company’s consolidated financial statements and the notes thereto, which are included in the Annual Report on Form 10-K for the year ended December 31, 2025 (the “2025 Annual Report”).
Principles of Consolidation
The accompanying condensed consolidated financial statements include the accounts of the Company and its wholly-owned subsidiaries. All intercompany transactions have been eliminated in consolidation. Certain prior period amounts have been reclassified for consistency with the current period presentation. These reclassifications would not have a material effect on the reported financial results.
Use of Estimates
The preparation of condensed consolidated financial statements in accordance with GAAP requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities and disclosure of contingent assets and liabilities at the date of the condensed consolidated financial statements and the reported amounts of income and expense during the reporting period. Significant estimates are used when accounting for stock-based compensation, inventory valuation, goodwill and intangible asset impairments, business combinations and litigation. Management evaluates its estimates and assumptions on an ongoing basis using historical experience and other factors, including the current economic environment, and makes adjustments when facts and circumstances dictate. These estimates are based on information available as of the date of the condensed consolidated financial statements; actual results could differ from those estimates.
2.SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
There have been no material changes to the Company’s accounting policies since December 31, 2025, as described in Note 2. Summary of Significant Accounting Policies, in Part II, Item 8. “Financial Statements” in the 2025 Annual Report.
3.SEGMENT REPORTING
As of March 31, 2026, the Company had one one operating segment. The CODM does not distinguish among the Company’s principal business activities for the purpose of internal
5
Latch, Inc. and Subsidiaries
Notes to Condensed Consolidated Financial Statements (unaudited)
(in thousands, except share and per share data)
reporting and uses net loss to allocate resources in the annual budgeting and forecasting process, along with using that measure as a basis for evaluating financial performance quarterly. In addition, the CODM reviews the expense categories presented on the accompanying Condensed Consolidated Statements of Operations and Comprehensive Loss to manage the Company’s operations. The measure of segment assets is reported on the accompanying Condensed Consolidated Balance Sheets as total assets.
The accompanying Condensed Consolidated Statements of Operations and Comprehensive Loss for the three months ended March 31, 2026 and 2025 reflect the one
Geographic Information
A summary of revenues by geographic information is as follows:
| Three Months Ended March 31, | ||||||||||||||||||||||||||
| 2026 | 2025 | |||||||||||||||||||||||||
| United States | $ | $ | ||||||||||||||||||||||||
| Canada | ||||||||||||||||||||||||||
| Total | $ | $ | ||||||||||||||||||||||||
The Company does not have any long-lived assets located outside the United States.
4.REVENUE
Disaggregation of Revenue
The following table provides information about disaggregated revenue from customers into the nature of the products and services provided and the related timing of revenue recognition:
| Three Months Ended March 31, | ||||||||||||||||||||||||||
| 2026 | 2025 | |||||||||||||||||||||||||
| Point-in-time revenue: | ||||||||||||||||||||||||||
| Hardware | $ | $ | ||||||||||||||||||||||||
| Total point-in-time revenue | ||||||||||||||||||||||||||
| Period-of-time revenue: | ||||||||||||||||||||||||||
| Software | ||||||||||||||||||||||||||
| Hardware installation and activation services | ||||||||||||||||||||||||||
| HelloTech services | ||||||||||||||||||||||||||
| Property management services | ||||||||||||||||||||||||||
| Other | ||||||||||||||||||||||||||
| Total period-of-time revenue | ||||||||||||||||||||||||||
| Total revenue | $ | $ | ||||||||||||||||||||||||
The Company records a reserve as a component of cost of hardware revenue based on historical costs of replacement units for returns of defective products. For the three months ended March 31, 2026 and 2025, the reserve recorded for hardware warranties was approximately 2 % and 3 %, respectively, of cost of hardware revenue. The Company also provides certain customers a right of return for non-defective product, which is treated as a reduction of hardware revenue based on the Company’s expectations and historical experience. For the three months ended March 31, 2026 and 2025, the allowance for returns resulted in a recovery of revenue by $0.1 million and $0.04 million, respectively.
The Company generates software revenue primarily through the license of its software-as-a-service (“SaaS”) cloud-based platform to customers on a subscription-based arrangement, as well as from the resale of third-party software in connection with HelloTech services. Subscription fees vary depending on the features selected by customers as well as the term. SaaS arrangements generally have term lengths of one, two, five or ten years and include a fixed fee generally paid in advance, annually or monthly. When significant discounts are provided to customers on the longer-term software contracts paid in
6
Latch, Inc. and Subsidiaries
Notes to Condensed Consolidated Financial Statements (unaudited)
(in thousands, except share and per share data)
advance, the Company has determined that there is a significant financing component related to the time value of money and therefore has recorded the discount as interest expense, net on the accompanying Condensed Consolidated Statements of Operations and Comprehensive Loss. The interest expense related to the significant financing component is recorded using the effective interest method, which has higher interest expense at inception and declines over time to match the underlying economics of the transaction. The amount of interest expense related to this component was $0.5 million and $0.7 million for the three months ended March 31, 2026 and 2025, respectively.
Deferred Contract Costs
The following table represents a roll-forward of the Company’s deferred contract costs:
| Balance as of January 1, 2026 | $ | |||||||
| Additions to deferred contract costs | ||||||||
| Amortization of deferred contract costs | ( | |||||||
| Balance as of March 31, 2026 | $ | |||||||
5.ACCOUNTS RECEIVABLE, NET AND CONTRACT BALANCES
The Company classifies its right to consideration in exchange for deliverables as either a receivable or a contract asset.
Accounts Receivable, Net
The opening and closing balances of accounts receivable, net is as follows:
| March 31, 2026 | December 31, 2025 | |||||||||||||
| Balance at beginning of the year | $ | $ | ||||||||||||
| Ending balance | ||||||||||||||
| Change | $ | ( | $ | ( | ||||||||||
The Company recognizes an accounts receivable allowance based on estimates of expected credit losses. The following table represents a roll-forward of the Company’s allowance for expected credit losses:
| Three Months Ended March 31, | ||||||||||||||||||||||||||
| 2026 | 2025 | |||||||||||||||||||||||||
| Balance as of beginning of period | $ | $ | ||||||||||||||||||||||||
| Provision for expected credit losses | ( | |||||||||||||||||||||||||
| Recoveries | ( | |||||||||||||||||||||||||
| Write-offs charged against the allowance | ( | ( | ||||||||||||||||||||||||
| Balance as of end of period | $ | $ | ||||||||||||||||||||||||
Contract Balances
The opening and closing balances of contract assets (unbilled receivables) are as follows:
| March 31, 2026 | December 31, 2025 | |||||||||||||
| Balance at beginning of the year | $ | $ | ||||||||||||
| Ending balance | ||||||||||||||
| Change | $ | $ | ( | |||||||||||
The difference between the opening and closing balances of the Company’s contract assets (unbilled receivables) primarily results from timing differences between the Company’s performance and the customer’s payment as well as the number of active installation projects.
7
Latch, Inc. and Subsidiaries
Notes to Condensed Consolidated Financial Statements (unaudited)
(in thousands, except share and per share data)
The opening and closing balances of contract liabilities (deferred revenue) were as follows:
| March 31, 2026 | December 31, 2025 | |||||||||||||
| Balance at beginning of the year | $ | $ | ||||||||||||
| Ending balance | ||||||||||||||
| Change | $ | ( | $ | ( | ||||||||||
The difference between the opening and closing balances of the Company’s contract liabilities (deferred revenue) primarily related to a shift from multi-year contracts billed upfront to contracts billed on an annual basis, resulting in less deferred revenue being added upon invoice date. The ending contract liabilities balance represents advance consideration, net of discount, to be recognized as revenue over time, with the associated financing component recognized as interest expense.
The Company recognized $4.7 million and $4.4 million of prior year deferred software revenue during the three months ended March 31, 2026 and 2025, respectively.
The contract liabilities (deferred revenue) consisted of the following amounts that will be recorded as revenue, net of the discount:
| March 31, 2026 | December 31, 2025 | |||||||||||||
| Revenue | $ | $ | ||||||||||||
| Interest expense | ( | ( | ||||||||||||
| Total current deferred revenue | $ | $ | ||||||||||||
| Revenue | $ | $ | ||||||||||||
| Interest expense | ( | ( | ||||||||||||
| Total non-current deferred revenue | $ | $ | ||||||||||||
6.INVESTMENTS
Available-for-Sale Securities (Marketable Securities)
The Company’s marketable securities by security type are summarized as follows:
| As of March 31, 2026 | ||||||||||||||||||||
| Amortized Cost | Gross Unrealized Gain | Estimated Fair Value | ||||||||||||||||||
| U.S. Government debt securities | $ | $ | $ | |||||||||||||||||
| Total available-for-sale securities | $ | $ | $ | |||||||||||||||||
Contractual maturities of the Company’s available-for-sale and trading securities are summarized as follows:
| As of March 31, 2026 | ||||||||||||||
| Amortized Cost | Estimated Fair Value | |||||||||||||
| Due in less than one year | $ | $ | ||||||||||||
| Due in one to five years | ||||||||||||||
| Total investments | $ | $ | ||||||||||||
The Company did not have any investments in marketable securities as of December 31, 2025.
8
Latch, Inc. and Subsidiaries
Notes to Condensed Consolidated Financial Statements (unaudited)
(in thousands, except share and per share data)
The Company regularly reviews its investment portfolio to identify and evaluate investments that have indications of possible impairment. Investments that are impaired are those that are considered to have losses that are other-than-temporary. Factors considered in determining whether a loss is temporary include:
•the length of time and extent to which fair value has been lower than the cost basis;
•the financial condition, credit quality and near-term prospects of the investee; and
•whether it is more likely than not that the Company will be required to sell the investment prior to recovery.
As of March 31, 2026, the Company had not identified any impairment indicators in its investments.
For the three months ended March 31, 2026, the Company did not receive any proceeds from maturities and call redemptions. The Company received $3.6 million of proceeds from maturities and call redemptions for the three months ended March 31, 2025. Gains and losses are determined using the specific identification method, whereby realized gains and losses are calculated based on the historical cost of the specific available-for-sale securities sold, matured or redeemed.
Investment in Private Company
The Company holds an equity investment in a privately held company consisting of 654,000 shares of common stock. The investment does not have a readily determinable fair value and is accounted for under the measurement alternative in accordance with Accounting Standards Codification (“ASC”) 321, Equity Securities. Accordingly, the investment is carried at cost, adjusted for observable price changes in orderly transactions for the identical or a similar investment of the same issuer, less any impairment. See Note 7. Fair Value Measurements and Concentrations of Credit Risk.
On May 1, 2026, the Company received cash consideration of $1.7 million in connection with the acquisition by a third-party of a privately held company. See Note 22. Subsequent Events.
7.FAIR VALUE MEASUREMENTS AND CONCENTRATIONS OF CREDIT RISK
Financial instruments that potentially subject the Company to concentrations of credit risk consist primarily of cash and cash equivalents and trade accounts receivable. The Company primarily invests its excess cash in low-risk, highly liquid money market funds with major financial institutions as well as marketable securities.
Fair Value Measurements
The Company’s financial assets that are measured at fair value on a recurring basis are summarized as follows:
| As of March 31, 2026 | ||||||||||||||||||||||||||
Fair Value Measurements Using | ||||||||||||||||||||||||||
Level 1 | Level 2 | Level 3 | Total | |||||||||||||||||||||||
| Assets | ||||||||||||||||||||||||||
| Cash | $ | $ | $ | $ | ||||||||||||||||||||||
| Money market funds and other cash equivalents | ||||||||||||||||||||||||||
| Total cash and cash equivalents | ||||||||||||||||||||||||||
| Investment in private company | ||||||||||||||||||||||||||
| Total assets | $ | $ | $ | $ | ||||||||||||||||||||||
| Liabilities | ||||||||||||||||||||||||||
| Warrant liability | $ | $ | $ | $ | ||||||||||||||||||||||
| Total liabilities | $ | $ | $ | $ | ||||||||||||||||||||||
9
Latch, Inc. and Subsidiaries
Notes to Condensed Consolidated Financial Statements (unaudited)
(in thousands, except share and per share data)
| As of December 31, 2025 | ||||||||||||||||||||||||||
| Fair Value Measurements Using | ||||||||||||||||||||||||||
| Level 1 | Level 2 | Level 3 | Total | |||||||||||||||||||||||
| Cash | $ | $ | $ | $ | ||||||||||||||||||||||
| Money market funds and other cash equivalents | ||||||||||||||||||||||||||
| Total cash and cash equivalents | ||||||||||||||||||||||||||
| Investment in private company | ||||||||||||||||||||||||||
| Total assets | $ | $ | $ | $ | ||||||||||||||||||||||
| Liabilities | ||||||||||||||||||||||||||
| Warrant liability | $ | $ | $ | $ | ||||||||||||||||||||||
| Total liabilities | $ | $ | $ | $ | ||||||||||||||||||||||
The Company’s investments in cash, money market funds and other cash equivalents that are highly liquid and low-risk have been classified as Level 1 as they are valued utilizing quoted prices (unadjusted) in active markets for identical assets. Investments in other cash equivalents, asset-backed securities, commercial paper, corporate bonds and U.S. Government debt securities that are valued using quoted prices in less active markets or other directly or indirectly observable inputs are classified as Level 2. Fair values of corporate bonds and U.S. Government debt securities were derived from a consensus or weighted-average price based on input of market prices from multiple sources for the reporting period. With regard to commercial paper, all of the securities had high credit ratings and one year or less to maturity; therefore, fair value was derived from accretion of purchase price to face value over the term of maturity or quoted market prices for similar instruments, if available.
As of March 31, 2026 and December 31, 2025, respectively, the Company’s investment in private company was classified as Level 3 in the fair value hierarchy because it relied significantly on inputs that were unobservable in the market. The Company assessed the fair value of this investment by reviewing the private company’s recent operating results and trends and confirming the absence of any observable transactions of its equity securities and other publicly available data. Valuations of private companies are inherently more complex due to the lack of readily available market data. As such, the Company believes that providing a sensitivity analysis is not practicable.
During the three months ended March 31, 2026, there were no purchases, sales or transfers of financial assets between Level 1 and Level 2. There were no purchases, sales, or transfers of Level 3 instruments during the three months ended March 31, 2026.
Concentrations of Credit Risk
Financial instruments that potentially subject the Company to concentrations of credit risk consist primarily of cash and cash equivalents and trade accounts receivable. The Company primarily invests its excess cash in low-risk, highly liquid money market funds with major financial institutions as well as marketable securities. See Note 6. Investments.
Significant customers are those that represent more than 10% of the Company’s total revenue, gross accounts receivable balance or gross unbilled receivables balance at each balance sheet date. For the three months ended March 31, 2026 and 2025, the Company had one customer that accounted for $4.3 million and $4.9 million, or 28 % and 31 %, of total revenue, respectively. As of March 31, 2026, the Company had one customer that accounted for $1.9 million, or 30 %, of gross accounts receivable. As of December 31, 2025, the Company had one customer that accounted for $3.9 million, or 47 %, of gross accounts receivable. As of March 31, 2026, the Company had two customers that accounted for $1.0 million or 44 % of unbilled receivables. As of December 31, 2025, the Company had one customer that accounted for $0.7 million or 36 % of unbilled receivables.
10
Latch, Inc. and Subsidiaries
Notes to Condensed Consolidated Financial Statements (unaudited)
(in thousands, except share and per share data)
8.INVENTORIES, NET
Inventories, net consisted of the following:
| March 31, 2026 | December 31, 2025 | |||||||||||||
| Raw materials | $ | $ | ||||||||||||
| Finished goods | ||||||||||||||
| Total current inventories, net | ||||||||||||||
| Finished goods, non-current, net | ||||||||||||||
| Total inventories, net | $ | $ | ||||||||||||
The total excess and obsolete inventory reserve as of March 31, 2026 and December 31, 2025 was $10.6 million and $10.9 million, respectively.
9.PREPAID EXPENSES AND OTHER CURRENT ASSETS
Prepaid expenses and other current assets consisted of the following:
| March 31, 2026 | December 31, 2025 | |||||||||||||
| Prepaid inventory | $ | $ | ||||||||||||
| Unbilled receivables, net | ||||||||||||||
| Investment in private company | ||||||||||||||
| Prepaid capitalized incentives | ||||||||||||||
| Prepaid installation payments | ||||||||||||||
| Insurance receivable | ||||||||||||||
| Other prepaid expenses and other current assets | ||||||||||||||
| Total prepaid expenses and other current assets | $ | $ | ||||||||||||
10.INTERNALLY-DEVELOPED SOFTWARE, NET
Internally-developed software, net consisted of the following:
| March 31, 2026 | December 31, 2025 | |||||||||||||
| Internally-developed software | $ | $ | ||||||||||||
| Software-in-development | ||||||||||||||
| Less: accumulated amortization | ( | ( | ||||||||||||
| Total internally-developed software, net | $ | $ | ||||||||||||
The Company capitalized $0.8 million and $0.2 million in internally-developed software during the three months ended March 31, 2026 and 2025, respectively. Capitalized costs associated with software-in-development are not amortized until the related assets are put into service, and capitalized amounts are presented net of costs related to discontinued projects.
Total amortization expense related to internally-developed software for the three months ended March 31, 2026 and 2025 was $0.9 million and $1.4 million, respectively.
11
Latch, Inc. and Subsidiaries
Notes to Condensed Consolidated Financial Statements (unaudited)
(in thousands, except share and per share data)
11.GOODWILL AND INTANGIBLE ASSETS, NET
Goodwill
The following table represents a roll-forward of goodwill:
| March 31, 2026 | December 31, 2025 | |||||||||||||
| Balance, beginning of period | $ | $ | ||||||||||||
| Impairment | ( | |||||||||||||
| Balance, end of period | $ | $ | ||||||||||||
During the three months ended March 31, 2026 and 2025, management determined there were no triggering events or changes in circumstances that would indicate the carrying value of the Company’s goodwill is not recoverable. As such, no quantitative assessment for impairment was required. No
Intangible Assets, Net
Intangible assets, net consisted of the following:
| March 31, 2026 | ||||||||||||||||||||
| Gross Carrying Amount | Accumulated Amortization | Net Carrying Amount | ||||||||||||||||||
| Domain names | $ | $ | ( | $ | ||||||||||||||||
| Developed technology | ( | |||||||||||||||||||
| Customer relationships | ( | |||||||||||||||||||
| Patents | ( | |||||||||||||||||||
| Non-compete | ( | |||||||||||||||||||
| Licenses | ( | |||||||||||||||||||
| Total | $ | $ | ( | $ | ||||||||||||||||
| December 31, 2025 | ||||||||||||||||||||
| Gross Carrying Amount | Accumulated Amortization | Net Carrying Amount | ||||||||||||||||||
| Domain names | $ | $ | ( | $ | ||||||||||||||||
| Developed technology | ( | |||||||||||||||||||
| Customer relationships | ( | |||||||||||||||||||
| Patents | ( | |||||||||||||||||||
| Non-compete | ( | |||||||||||||||||||
| Licenses | ( | |||||||||||||||||||
| Total | $ | $ | ( | $ | ||||||||||||||||
Total amortization expense related to intangible assets was $0.1 million and $0.03 million for the three months ended March 31, 2026 and 2025, respectively.
12
Latch, Inc. and Subsidiaries
Notes to Condensed Consolidated Financial Statements (unaudited)
(in thousands, except share and per share data)
The estimated useful life of the intangible assets is as follows:
| Useful life in years | ||||||||
| Developed technology | ||||||||
| Domain names | ||||||||
| Customer relationships | ||||||||
| Patents | ||||||||
| Non-compete | ||||||||
| Licenses | ||||||||
There was no
12.ACCRUED EXPENSES
Accrued expenses consisted of the following:
| March 31, 2026 | December 31, 2025 | |||||||||||||
| Accrued litigation costs | $ | $ | ||||||||||||
| Accrued compensation | ||||||||||||||
| Accrued purchases | ||||||||||||||
| Accrued audit fees | ||||||||||||||
| Accrued warranties | ||||||||||||||
| Other accrued expenses | ||||||||||||||
| Total accrued expenses | $ | $ | ||||||||||||
As of March 31, 2026 and December 31, 2025, accrued litigation costs primarily included $6.8
13.DEBT
A summary of the Company’s debt is as follows:
| March 31, 2026 | December 31, 2025 | |||||||||||||
| Term loan | $ | $ | ||||||||||||
| Total debt | ||||||||||||||
| Less: Current portion of long-term debt | ( | ( | ||||||||||||
| Total long-term debt | $ | $ | ||||||||||||
On July 15, 2024, the Company entered into an Amended and Restated Loan and Security Agreement (the “Loan Agreement”) with Customers Bank. Pursuant to the Loan Agreement, Customers Bank issued a term loan in the principal amount of $6.0 million (the “Loan”). Interest is payable on the Loan at a rate equal to the greater of (a) the prime rate published in The Wall Street Journal or (b) 6.0 %, and the maturity date is July 15, 2029 (the “Maturity Date”).
The fair value of the Loan was $4.3 million and $4.6 million as of March 31, 2026 and December 31, 2025, respectively. The Company is required to pay equal monthly installments of principal plus accrued interest until the Maturity Date. There is no penalty for prepayment of the Loan.
Pursuant to the Loan Agreement, Customers Bank was granted security interest in substantially all of the Company’s assets, other than intellectual property, and the Loan Agreement contains customary affirmative and negative covenants, including a requirement to maintain a liquidity ratio equal to four times the outstanding principal balance. As of March 31, 2026, the Company was in compliance with the covenants under the Loan Agreement.
13
Latch, Inc. and Subsidiaries
Notes to Condensed Consolidated Financial Statements (unaudited)
(in thousands, except share and per share data)
The following table presents the future minimum principal payments on the total borrowings under all debt agreements as of March 31, 2026:
| Remainder of 2026 | $ | |||||||
| 2027 | ||||||||
| 2028 | ||||||||
| 2029 | ||||||||
| 2030 | ||||||||
| Total future minimum payments | ||||||||
| Less: debt discount | ( | |||||||
| Total | $ | |||||||
On May 11, 2026, the Loan Agreement was terminated. See Note 22. Subsequent Events.
14.COMMITMENTS AND CONTINGENCIES
Registration Rights Agreements
In connection with the 2021 business combination (the “2021 Business Combination”) with TS Innovation Acquisitions Corp. (“TSIA”), the Company and certain stockholders of Legacy Latch and TSIA entered into an amended and restated registration rights agreement (the “2021 Registration Rights Agreement”). Pursuant to the 2021 Registration Rights Agreement, in June 2021, the Company filed a registration statement on Form S-1 with respect to the registrable securities under the 2021 Registration Rights Agreement. Certain Legacy Latch stockholders and TSIA stockholders may each request to sell all or any portion of their registrable securities in an underwritten offering up to two times in any 12-month period, so long as the total offering price is reasonably expected to exceed $75.0 million. The Company also agreed to provide certain demand and “piggyback” registration rights. The 2021 Registration Rights Agreement also provides that the Company pays certain expenses relating to such registrations and indemnifies the stockholders against certain liabilities. The Company bears the expenses incurred in connection with the filing of any such registration statements. The 2021 Registration Rights Agreement does not provide for any penalties connected with delays in registering the Company’s common stock.
In connection with the consummation of the 2023 acquisition of Honest Day’s Work, Inc. (“HDW”), the Company and certain of HDW’s stockholders (the “Holders”) entered into that certain Registration Rights Agreement (the “2023 Registration Rights Agreement”), pursuant to which the Company agreed to file a shelf registration statement registering the resale of the Registrable Securities (as defined in the 2023 Registration Rights Agreement) as promptly as reasonably practicable after the date on which the Company files its Quarterly Report on Form 10-Q for the quarterly period ended June 30, 2023 (and no later than the 20th business day following the filing date of such Quarterly Report). Up to twice in any 12-month period, the Holders may request to sell all or any portion of their Registrable Securities in an underwritten offering so long as the total offering price is reasonably expected to exceed $25 million. The Company also agreed to provide customary “piggyback” registration rights to certain Holders designated as “Major Equityholders,” subject to certain requirements and customary conditions. The 2023 Registration Rights Agreement also provides that the Company will pay certain expenses relating to such registrations and indemnify the stockholders against certain liabilities. In the event the Company is unable to file a registration statement required by the 2023 Registration Rights Agreement, the Company is not required to repurchase or settle any Registrable Securities.
Legal Contingencies
Derivative Litigation
On February 15 and July 13, 2023, two alleged stockholders of Latch stock filed derivative actions purportedly on behalf of Latch in the United States District Court for the Southern District of New York: Manley v. Latch, Inc., et al., Case No. 1:23-cv-01273 (the “Manley Action”) and Gottlieb v. Latch, Inc., et al., Case No. 1:23-cv-06047 (the “Gottlieb Action”). The actions, which were consolidated under the caption In re Latch Inc. Derivative Litigation, Case No. 1:23-cv-01273 (together, the “Derivative Actions”), generally allege that certain directors and former officers of the Company breached their fiduciary duties and violated Section 14(a) of the Exchange Act by making false or misleading statements regarding the Company’s business, operations and prospects. The Gottlieb Action includes additional claims for unjust enrichment, abuse of control, gross mismanagement, waste of corporate assets and contribution against certain individual defendants named in Brennan v.
14
Latch, Inc. and Subsidiaries
Notes to Condensed Consolidated Financial Statements (unaudited)
(in thousands, except share and per share data)
Latch, Inc. et al., Case No. 1:22-cv-07473 (S.D.N.Y.) and Schwartz v. Latch, Inc., et al., Case No. 1:23-cv-00027 (D. Del.), two securities class actions which have been settled in exchange for the release of all claims against the defendants in those actions, along with consolidated class action complaints in the Court of Chancery of the State of Delaware. The Derivative Actions seek orders permitting plaintiffs to maintain each action derivatively on behalf of the Company, awarding unspecified damages allegedly sustained by the Company, awarding restitution from the individual defendants, requiring the Company to make certain reforms to its corporate governance and controls and awarding costs and attorneys’ fees. In March 2026, the Company agreed in principle to a settlement involving the implementation of certain governance reforms and the Company’s payment of $0.5 million in attorneys’ fees, for which the Company does not expect any insurance contribution. Accordingly, the Company accrued $0.5
Service Provider Demand
The Company was previously in discussions with a service provider related to a demand for payment under a prior agreement. The Company does not believe that the service provider is entitled to any fees under the prior agreement. However, the Company believes it is probable that an agreement with the service provider will be reached and that the amount the Company will pay the service provider in connection with the dispute and the resolution thereof can be reasonably estimated. As of March 31, 2026 and December 31, 2025, the Company had accrued approximately $6.8
SEC Investigation
As previously disclosed, since March 2023, the Company has been cooperating with an SEC investigation into issues related to the Company’s key performance indicators and revenue recognition practices that led to the Restatement and related issues (the “SEC Investigation”). Subsequent to March 31, 2026, the Company engaged in discussions with the Staff of the SEC regarding a potential resolution of the investigation and, based on available information to date, has recorded a $250,000 liability on the accompanying Condensed Consolidated Balance Sheets. See Note 22. Subsequent Events.
Other
The Company is and may become, from time to time, involved in other legal actions in the ordinary course of business, including governmental and administrative investigations, inquiries and proceedings concerning employment, labor, environmental and other claims. Although management is unable to predict with certainty the eventual outcome of any legal action, management believes the ultimate liability arising from such actions, individually and in the aggregate, which existed at March 31, 2026 (other than detailed above), will not materially affect the Company’s condensed consolidated results of operations, financial position or cash flows. Given the inherent unpredictability of these types of proceedings, however, it is possible that future adverse outcomes could have a material effect on the Company’s financial results.
15.EQUITY
The Company’s second amended and restated certificate of incorporation designates and authorizes the Company to issue 1.1 billion shares, consisting of (i) 1.0 billion shares of common stock, par value $0.0001 per share, and (ii) 100.0 million shares of preferred stock, par value $0.0001 per share.
15
Latch, Inc. and Subsidiaries
Notes to Condensed Consolidated Financial Statements (unaudited)
(in thousands, except share and per share data)
Common Stock Reserved for Future Issuance
The Company’s reserved shares for future issuance included the following:
| March 31, 2026 | December 31, 2025 | |||||||||||||
| Stock options issued and outstanding | ||||||||||||||
| Restricted stock units issued and outstanding | ||||||||||||||
| Public warrants outstanding | ||||||||||||||
| Private placement warrants outstanding | ||||||||||||||
| Bank warrant | ||||||||||||||
| 2021 Incentive Award Plan available shares | ||||||||||||||
| Total | ||||||||||||||
Public Warrants
Upon the closing of the 2021 Business Combination, 10.0 million public warrants sold during the 2020 initial public offering of TSIA (the “TSIA IPO”) converted into 10.0 million public warrants to purchase up to 10.0 million shares of common stock of the Company, which are exercisable at $11.50 per share. The warrants will expire on June 4, 2026 or earlier upon redemption or liquidation. The Company accounts for warrants as required under ASC 815, Derivatives and Hedging (“ASC 815”) and has concluded that equity classification would be met for the public warrants as the Company has a single class of equity, and thus all holders vote 100 % on all matters submitted to the Company’s stockholders and receive the same form of consideration in the event of a change of control (thus qualifying for the exception to the net cash settlement model), and the other conditions of equity classification would be met.
Private Placement Warrants
Upon the closing of the 2021 Business Combination, Legacy Latch assumed the private placement warrants that were originally issued in connection with the TSIA IPO (the “Private Placement Warrants”). The Private Placement Warrants will expire on June 4, 2026 or earlier upon redemption or liquidation. In response to SEC guidance, the Company determined to classify the Private Placement Warrants as derivative liabilities measured at fair value, with changes in fair value each period reported in earnings.
Bank Warrant
On July 15, 2024, in a private placement concurrent with the Company’s entry into the Loan Agreement, the Company issued a warrant to Customers Bank to purchase 1,000,000 shares of the Company’s common stock (the “Bank Warrant”). The Bank Warrant has an exercise price of $1.25 per share, is exercisable immediately and will expire on July 15, 2030. The Bank Warrant is classified as a liability under ASC 815 and is remeasured at fair value each reporting period, with changes recognized in other income (expense), net.
At issuance, the Bank Warrant was recorded at its fair value of $0.2 million, as determined by an independent valuation specialist and included in other non-current liabilities, with an equal amount recorded as a reduction of the term loan, non-current on the accompanying Condensed Consolidated Balance Sheets. The reduction of the term loan is being amortized to interest expense over the 60 -month loan term. The warrant liability is remeasured at fair value each reporting period, with changes recognized in other (expense) income, net on the accompanying Condensed Consolidated Statements of Operations and Comprehensive Loss.
16
Latch, Inc. and Subsidiaries
Notes to Condensed Consolidated Financial Statements (unaudited)
(in thousands, except share and per share data)
16.EARNINGS PER SHARE
The following table sets forth the computation of basic and diluted net loss per share for common stock:
| Three Months Ended March 31, | ||||||||||||||||||||||||||
| 2026 | 2025 | |||||||||||||||||||||||||
| Net loss | $ | ( | $ | ( | ||||||||||||||||||||||
Basic weighted-average common shares(1) | ||||||||||||||||||||||||||
| Effect of dilutive securities | ||||||||||||||||||||||||||
Diluted weighted-average common shares(1) | ||||||||||||||||||||||||||
| Basic and diluted net loss per common share | $ | ( | $ | ( | ||||||||||||||||||||||
(1)The basic and diluted weighted-average common shares exclude (i) the Sponsor Shares and (ii) shares held by Jamie Siminoff, the Company’s former Chief Strategy Officer, that were subject to a right of repurchase held by the Company.
The table below sets forth the number of potential common shares underlying outstanding common stock options, restricted common stock, restricted stock units (“RSUs”) and common stock warrants that were excluded from diluted net loss per share as the Company had net losses, and their inclusion would be anti-dilutive:
| March 31, 2026 | March 31, 2025 | |||||||||||||
| Stock options | ||||||||||||||
| Restricted common stock held by the Sponsor | ||||||||||||||
| Restricted common stock held by Jamie Siminoff | ||||||||||||||
| Restricted stock units | ||||||||||||||
| Warrants | ||||||||||||||
| Total | ||||||||||||||
17.STOCK-BASED COMPENSATION
The Company’s stock incentive plans provide for grants of stock options, performance-vesting stock options, RSUs, performance-vesting RSUs and shares of common stock as compensation for services received from service providers.
Stock Incentive Plans
In January 2016, Legacy Latch adopted the Latch, Inc. 2016 Stock Plan (the “2016 Plan” and, together with the Latchable, Inc. 2014 Stock Incentive Plan, the “Prior Plans”). Under the 2016 Plan, Legacy Latch’s board of directors was authorized (i) to grant either incentive stock options (“ISOs”) or non-qualified stock options (“NSOs”) to purchase shares of the Company’s common stock to its employees and (ii) to grant NSOs to purchase shares of the Company’s common stock to outside directors and consultants. When the 2021 Plan (defined below) became effective, 22,797,955 shares (adjusted for the exchange ratio of the 2021 Business Combination (the “Exchange Ratio”)) had been authorized for issuance under the 2016 Plan. Stock options under the 2016 Plan were granted with an exercise price equal to the stock’s fair market value at the grant date. Stock options outstanding under the 2016 Plan generally have ten-year four-year
The Latch, Inc. 2021 Incentive Award Plan (the “2021 Plan”) was approved by the TSIA stockholders on June 3, 2021 and became effective upon the closing of the 2021 Business Combination. The 2021 Plan provides for the grant of stock options, including ISOs and NSOs, stock appreciation rights, restricted stock, RSUs and other stock-based and cash-based awards. The 2021 Plan has a term of ten years . The aggregate number of shares of the Company’s common stock available for issuance under the 2021 Plan is equal to (i) 22,500,611 shares plus (ii) an annual increase for ten years on the first day of each calendar year beginning on January 1, 2022, equal to the lesser of (a) 5 % of the aggregate number of shares of the Company’s
17
Latch, Inc. and Subsidiaries
Notes to Condensed Consolidated Financial Statements (unaudited)
(in thousands, except share and per share data)
common stock outstanding on the last day of the immediately preceding calendar year and (b) such smaller amount of shares as determined by the Board. As of January 1, 2026, the total number of shares reserved for issuance under the 2021 Plan had increased by 39,647,714 . As of March 31, 2026, there were 47,161,950 shares available for future grants under the 2021 Plan.
On August 11, 2024 (the “Program Effective Date”), the Board approved a performance-based equity incentive program (the “Performance Equity Program”) pursuant to which awards of performance-vesting stock options (“Performance Options”) and performance-vesting RSUs (“PSUs”) were expected to be granted to Company officers and service providers, and the Company granted Performance Options to certain officers and key service providers.
The Performance Equity Program provided for the Company to grant awards under the 2021 Plan that would become eligible to vest based on the Company’s common stock reaching specified market trading prices (based on a trailing 60 -day volume-weighted average price (“VWAP”)) within seven years after the Program Effective Date. Awards under the Performance Equity Program were generally expected to be granted 50 % in the form of PSUs that would become eligible to vest, or “earned,” in three equally-sized tranches upon attaining a $1 , $2 and $3 stock price hurdle, and 50 % in the form of Performance Options that would become earned in three equally-sized tranches upon attaining a $4 , $5 and $6 stock price hurdle. Upon attainment of a stock price hurdle, 25 % of the earned tranche of PSUs and Performance Options would vest, with the remaining 75 % of such earned tranche vesting in three equal annual installments over the next three years , subject to the applicable participant’s continued service through the vesting date.
On the Program Effective Date, the Board granted Performance Options to certain officers and key service providers covering a total of 25.5 million shares (the “Initial Option Grant”). As described above, the Performance Options were eligible to be earned in three tranches based on the Company’s common stock reaching market trading prices (based on a trailing 60 -day VWAP) before the seventh anniversary of the Program Effective Date, as set forth in the following table:
Earned Tranche | Shares Subject to the Performance Option | Share Price Hurdle | ||||||||||||
| 1 | $ | |||||||||||||
2 | $ | |||||||||||||
3 | $ | |||||||||||||
Upon attainment of a stock price hurdle, 25 % of each earned tranche of Performance Options would vest, with the remaining 75 % of such earned tranche vesting in three equal annual installments over the next three years , subject to the applicable participant’s continued service through the vesting date. The Performance Options had an exercise price of $0.41 and a ten year term; however, any portion of the Performance Option corresponding to a tranche that had not become earned based on the achievement of a share price hurdle within seven years after the Program Effective Date would be cancelled and forfeited.
In addition to the performance-based and service-based vesting requirements described above, (i) the first tranche of the Performance Option would, to the extent vested, only become exercisable in four equal installments on the second, third, fourth and fifth anniversaries of the Program Effective Date, (ii) the second tranche of the Performance Option would, to the extent vested, only become exercisable in four equal installments on the third, fourth, fifth and sixth anniversaries of the Program Effective Date, and (iii) the third tranche of the Performance Option would, to the extent vested, only become exercisable in four equal installments on the fourth, fifth, sixth and seventh anniversaries of the Program Effective Date.
On September 13, 2024, the Company granted approximately 8.6 million Performance Options to employees, none of whom participated in the Initial Option Grant. Such Performance Options have an exercise price of $0.48 and are otherwise substantially identical to those granted in the Initial Option Grant.
Since issuance through March 31, 2026, 25.1 million Performance Options were forfeited in connection with certain officers, key service providers, and employee terminations, resulting in 9.0 million Performance Options outstanding.
To date, no PSUs have been granted under the Performance Equity Program.
18
Latch, Inc. and Subsidiaries
Notes to Condensed Consolidated Financial Statements (unaudited)
(in thousands, except share and per share data)
Stock Options
A summary of stock options as of March 31, 2026, and changes during the three months ended March 31, 2026, is presented below:
| Options Outstanding | Weighted Average Exercise Price | Weighted Average Remaining Contractual Term | Aggregate Intrinsic Value | |||||||||||||||||||||||
| Balance at December 31, 2025 | $ | |||||||||||||||||||||||||
| Options granted | $ | |||||||||||||||||||||||||
| Options exercised | $ | |||||||||||||||||||||||||
| Options forfeited | ( | $ | ||||||||||||||||||||||||
| Options expired | $ | |||||||||||||||||||||||||
| Balance at March 31, 2026 | $ | $ | ||||||||||||||||||||||||
| Exercisable at March 31, 2026 | $ | $ | ||||||||||||||||||||||||
There were no no 128,000 Performance Options were forfeited as a result of employee terminations.
Total compensation expense not yet recognized related to unvested stock options was $0.04 million as of March 31, 2026, which was expected to be recognized over a weighted-average period of 4.0 years. Stock options granted prior to 2024 had no material impact on the accompanying condensed consolidated financial statements. As of March 31, 2026, total compensation expense not yet recognized related to the unvested performance stock options granted in 2024 was $1.5 million, which was expected to be recognized over a weighted-average period of 1.1 years.
Restricted Stock Units
The Company estimates the fair value of RSUs using the last trading price of its common stock as of the grant date. The Company’s RSUs are settled in shares of common stock after vesting and vest over a period of one to four years . The Company has the option, but not the obligation, to treat a participant’s failure to provide timely payment of any withholding tax arising in connection with RSUs as such participant’s election to satisfy all or any portion of the withholding tax by requesting the Company retain shares otherwise issuable pursuant to the RSU. In connection with the Restatement, the Company suspended use of its registration statement on Form S-8 under the Securities Act (the “S-8 Registration Statement”) on August 10, 2022. Following the filing of the Form 10-K for the year ended December 31, 2025 on March 31, 2026, the S-8 Registration Statement became effective again on April 2, 2026.
A summary of equity-based RSU activity is presented below:
| Number of RSUs | Weighted Average Grant Date Fair Value (per unit) | |||||||||||||
| Balance at December 31, 2025 | $ | |||||||||||||
| Granted | $ | |||||||||||||
| Vested and released | $ | |||||||||||||
| Forfeited | $ | |||||||||||||
| Balance at March 31, 2026 | $ | |||||||||||||
Approximately 0.1 million and 0.05 million RSUs vested during the three months ended March 31, 2026 and 2025, respectively, but were not released upon vesting due to the suspension of the S-8 Registration Statement. The S-8 Registration Statement became effective again on April 2, 2026. See Note 22. Subsequent Events.
19
Latch, Inc. and Subsidiaries
Notes to Condensed Consolidated Financial Statements (unaudited)
(in thousands, except share and per share data)
Jamie Siminoff Restricted Common Stock
In November 2024, the Company and Mr. Siminoff mutually agreed that he would step down as the Company’s Chief Strategy Officer on December 31, 2024, after which he began serving in an advisory role that was expected to continue through December 31, 2026. For the three months ended March 31, 2025, the Company recognized $0.1 million of compensation expense for the post-combination services rendered. Total unrecognized stock-based compensation expense as of March 31, 2025 was $0.5 million and was expected to be recognized over a period of 2.8 years. The Company terminated the advisory services of Jamie Siminoff, the Company’s former Chief Strategy Officer, in May 2025.
Stock-Based Compensation Expense
The components of stock-based compensation expense were as follows:
| Three Months Ended March 31, | ||||||||||||||||||||||||||
| 2026 | 2025 | |||||||||||||||||||||||||
| Stock options | $ | $ | ||||||||||||||||||||||||
Restricted common stock(1) | ||||||||||||||||||||||||||
| Restricted stock units | ||||||||||||||||||||||||||
Capitalized costs(2) | ( | |||||||||||||||||||||||||
| Total stock-based compensation expense | $ | $ | ||||||||||||||||||||||||
(1) Shares of common stock issued to the Holders as merger consideration in the HDW acquisition that were treated as replacement awards of unvested HDW common stock.
(2) Included in internally-developed software, net on the accompanying Condensed Consolidated Balance Sheets.
Stock-based compensation expense is included in cost of revenue, research and development, sales and marketing and general and administrative on the accompanying Condensed Consolidated Statements of Operations and Comprehensive Loss as follows:
| Three Months Ended March 31, | ||||||||||||||||||||||||||
| 2026 | 2025 | |||||||||||||||||||||||||
| Cost of revenue | $ | $ | ||||||||||||||||||||||||
| Research and development | ||||||||||||||||||||||||||
| Sales and marketing | ||||||||||||||||||||||||||
| General and administrative | ||||||||||||||||||||||||||
| Total stock-based compensation expense | $ | $ | ||||||||||||||||||||||||
18.INTEREST EXPENSE, NET
The components of interest expense, net include interest expense associated with the significant financing component of the Company’s longer-term software contracts and interest expense associated with the Company’s debt financing arrangements, offset by interest income on highly liquid short-term investments.
Interest expense, net is summarized as follows:
| Three Months Ended March 31, | ||||||||||||||||||||||||||
| 2026 | 2025 | |||||||||||||||||||||||||
Interest income | $ | $ | ||||||||||||||||||||||||
| Interest expense | ( | ( | ||||||||||||||||||||||||
| Interest expense, net | $ | ( | $ | ( | ||||||||||||||||||||||
20
Latch, Inc. and Subsidiaries
Notes to Condensed Consolidated Financial Statements (unaudited)
(in thousands, except share and per share data)
19.INCOME TAXES
The income tax provision for the three months ended March 31, 2026 and 2025 was zero and zero , respectively.
For the three months ended March 31, 2026 and 2025, the Company’s effective tax rate was different from the U.S. federal statutory rate. This difference is primarily attributable to the effect of foreign, state and local income taxes and permanent differences between expenses deductible for financial reporting purposes offset by the valuation allowances placed on the Company’s deferred tax assets.
As of March 31, 2026, no liability for unrecognized tax benefits was required to be recorded by the Company. Management does not expect any significant changes in its unrecognized tax benefits in the next 12 months.
To date, the Company has incurred cumulative net losses and maintains a full valuation allowance on its net deferred tax assets as the Company has determined that it is more likely than not that these assets will not be fully realized.
20.RELATED-PARTY TRANSACTIONS
The Company has customers who are also stockholders and directors, or affiliates thereof, in the Company. The Company charges market rates for products and services that are offered to these customers. As of March 31, 2026 and December 31, 2025, the Company had $0.3 million and $0.2 million, respectively, of receivables due from these customers, which are included within accounts receivable on the accompanying Condensed Consolidated Balance Sheets. For the three months ended March 31, 2026, the Company had $0.002 million of hardware revenue, $0.03 million of software revenue, and $0.3 million of services revenue from these customers, which was included on the accompanying Condensed Consolidated Statements of Operations and Comprehensive Loss. For the three months ended March 31, 2025, the Company had $0.001 million of hardware revenue and $0.05 million of software revenue from these customers, which is included on the accompanying Condensed Consolidated Statements of Operations and Comprehensive Loss.
21.RECENTLY ISSUED ACCOUNTING STANDARDS
Recently Adopted Pronouncements
No new accounting standards that were material to the Company were adopted in the three months ended March 31, 2026.
Accounting Pronouncements Not Yet Adopted
In October 2023, the Financial Accounting Standards Board (the “FASB”) issued Accounting Standards Update (“ASU”) 2023-06, Disclosure Improvements: Codification Amendments in Response to the SEC’s Disclosure Update and Simplification Initiative (“ASU 2023-06”). ASU 2023-06 was intended to align the requirements of the ASC with overlapping SEC requirements. The guidance in ASU 2023-06 is required to be applied prospectively, and the ASC amendments will be effective only upon the removal of the overlapping SEC disclosure requirements. If, however, the SEC does not act to remove the relevant overlapping requirements by June 30, 2027, the FASB amendments will not be effective. The Company does not anticipate that the adoption of ASU 2023-06 will have a material impact on its consolidated financial statements.
In November 2024, the FASB issued ASU 2024-03, Disaggregation of Income Statement Expenses (Subtopic 220-40) (“ASU 2024-03”). ASU 2024-03 requires additional disclosure of the nature of expenses included in the income statement as well as disclosures about specific types of expenses included in the expense captions presented in the income statement. In addition, the FASB issued ASU 2025-01, Income Statement - Reporting Comprehensive Income - Expense Disaggregation Disclosures (Subtopic 220-40): Clarifying the Effective Date in January 2025 to clarify the requirement to adopt ASU 2024-03 in annual reporting periods beginning after December 15, 2026 and interim periods within annual reporting periods beginning after December 15, 2027. The Company is currently evaluating these standards to determine the impact on its consolidated financial statements and related disclosures.
In September 2025, the FASB issued ASU 2025-06, Intangibles - Goodwill and Other - Internal-Use Software (Subtopic 350-40): Targeted Improvements to the Accounting for Internal-Use Software (“ASU 2025-06”). ASU 2025-06 amends the guidance in ASC 350-40, Intangibles—Goodwill and Other—Internal-Use Software. The amendments modernize the recognition and disclosure framework for internal-use software costs, removing the previous “development stage” model and introducing a more judgment-based approach. ASU 2025-06 is effective for fiscal years beginning after December 15, 2027
21
Latch, Inc. and Subsidiaries
Notes to Condensed Consolidated Financial Statements (unaudited)
(in thousands, except share and per share data)
and for interim periods within those annual reporting periods, with early adoption permitted. The Company is currently evaluating the impact of ASU 2025-06 on its consolidated financial statements.
In November 2025, the FASB issued ASU 2025-08, Financial instruments – Credit Losses (Topic 326): Purchased Loans (“ASU 2025-08:), which amends the guidance in ASC 326 on the accounting for certain purchased loans. Under ASU 2025-08, entities must account for acquired loans, excluding credit card, that meet certain criteria at acquisition (purchased seasoned loans) by recognizing them at their purchase price plus an allowance for expected credit losses. Purchased seasoned loans are defined as either: (i) non-purchased credit deteriorated loans that are obtained in a business combination, or (ii) non-purchased credit deteriorated loans that (a) are obtained in an asset acquisition or upon consolidation of a variable interest entity that is not a business and (b) are acquired more than 90 days after their origination date by a transferee that was not involved in their origination. The Company is currently evaluating the impact of ASU 2025-08 on its consolidated financial statements.
In December 2025, the FASB issued ASU 2025-11, Interim Reporting (Topic 270): Narrow-Scope Improvements (“ASU 2025-11”). ASU 2025-11 clarifies the applicability of the interim reporting guidance, the types of interim reporting, and the form and content of interim financial statements in accordance with GAAP. Per the FASB, this ASU is not intended to change the fundamental nature of interim reporting or expand or reduce current interim disclosure requirements but rather provide clarity and improve navigability of the existing interim reporting requirements. This guidance is effective for interim reporting periods within annual reporting periods beginning after December 15, 2027. Early adoption is permitted. The Company is currently evaluating the impact of ASU 2025-11 on its consolidated financial statements.
In December 2025, the FASB issued ASU 2025-12, Codification Improvements (“ASU 2025-12”). ASU 2025-12 addresses suggestions received from stakeholders regarding the ASC and makes other incremental improvements to GAAP. The update represents changes to the ASC that clarify, correct errors in or make other improvements to a variety of topics that are intended to make it easier to understand and apply. This guidance is effective for annual periods beginning after December 15, 2026, including interim reporting periods within those fiscal years, with early adoption permitted. Entities are required to apply the amendments to ASC 260, Earnings Per Share, retrospectively. All other amendments may be applied prospectively or retrospectively. The Company is currently evaluating the impact of ASU 2025-12 on its consolidated financial statements.
Management has evaluated other recently issued accounting pronouncements and does not believe that any of these pronouncements will have a significant impact on the Company’s consolidated financial statements and related disclosures.
22.SUBSEQUENT EVENTS
The Company has evaluated subsequent events through the date of these financial statements and determined that there have been no events that have occurred that would require adjustments to its disclosures in the accompanying condensed consolidated financial statements.
Registration Statement
The Company filed a S-8 Registration Statement to register shares of its common stock or securities convertible into or exchangeable for shares of common stock issued pursuant to the 2021 Plan. The S-8 Registration Statement automatically became effective upon filing on August 9, 2021, but the Company suspended use of the S-8 Registration Statement commencing with the Company’s filing of a Notification of Late Filing on Form 12b-25 on August 10, 2022.
Upon the filing of the Form 10-K for the year ended December 31, 2025 on March 31, 2026, the Company became current in its reporting obligations and the S-8 Registration Statement became effective again on April 2, 2026.
SEC Investigation
Subsequent to March 31, 2026, the Company engaged in discussions with the Staff of the SEC regarding a potential resolution of the investigation and, based on available information to date, has recorded a $250,000 liability on the accompanying Condensed Consolidated Balance Sheets. As the Company continues its discussions with the SEC, the amount of the resolution could exceed this accrual. The Company cannot predict whether a resolution with the SEC will be reached, the timing of any such resolution, the duration, or outcome of the SEC investigation, or whether the SEC will bring an enforcement action.
22
Latch, Inc. and Subsidiaries
Notes to Condensed Consolidated Financial Statements (unaudited)
(in thousands, except share and per share data)
Investment in Private Company
On May 1, 2026, the Company received cash consideration of $1.7 million in connection with the acquisition by a third-party of a privately held company. The Company held an investment in the privately held company of 654,000 shares of common stock as described in Note 6. Investments. As a result of this transaction, the Company will recognize a realized gain of $0.8 million.
Debt Refinance
Entry into a Material Definitive Agreement.
On May 11, 2026, DOOR Systems entered into a revolving credit facility (the “Credit Facility”) with Truist Bank (the “Lender”), providing for borrowing of up to $5.0 million. The Credit Facility matures in May 2028, bears interest at a variable rate equal to one-month term Secured Overnight Financing Rate plus 1.75 % per annum. The Credit Facility requires monthly interest-only payments, with all principal due at maturity, and includes customary fees, reporting requirements and events of default.
The Credit Facility is governed by a promissory note (the “Promissory Note”) and related loan documents. To secure the Credit Facility, the Company is required to maintain a minimum cash balance of $5.25 million in a restricted deposit account with the Lender. Borrowing under the Credit Facility is secured by certain cash deposit accounts and/or certificates of deposit of the Company, including all funds held therein.
The Promissory Note contains customary covenants and events of default, including covenants relating to:
•delivery of periodic financial reporting to the lender;
•maintenance of the lender’s security interest in collateral;
•compliance with applicable sanctions, anti-corruption and other laws;
•restrictions on certain mergers, liquidations and other fundamental transactions; and
•use of loan proceeds for permitted business purposes.
If an event of default exists under the Promissory Note, the Lender will be able to accelerate the maturity of the loan and exercise other rights and remedies. Events of default include, but are not limited to, the following events:
•failure to pay any principal or interest within three business days of the due date;
•failure to perform or otherwise comply with the covenants and obligations in the Promissory Note, subject, in certain instances, to certain grace periods;
•bankruptcy or insolvency events involving the Company; or
•any lien or security interest of the Lender in the collateral, or any portion thereof, terminates, fails for any reason to have the priority agreed to by the Lender on the date granted, or becomes unenforceable, unperfected or invalid for any reason.
The foregoing description of the Credit Facility and the Promissory Note does not purport to be complete and is qualified in its entirety by reference to the full text of the Promissory Note filed as Exhibits 10.3 to this Quarterly Report on Form 10-Q, each of which is incorporated herein by reference.
Termination of a Material Definitive Agreement
In connection with entering into the Credit Facility, the Company borrowed approximately $4.4 million under the Credit Facility to repay all outstanding principal, accrued interest, and fees under the Loan. Upon repayment, all amounts and other obligations under the Loan Agreement were satisfied, and the Loan Agreement and all commitments thereunder were terminated. No material early termination penalties were incurred.
In connection with the termination of the Loan Agreement, liens and security interests previously granted in favor of Customers Bank will be released subject to customary payoff documentation, including lien releases and UCC termination statements.
23
Item 2. Management’s Discussion and Analysis of Financial Condition and Results of Operations
The following discussion and analysis of our financial condition and results of operations should be read in conjunction with the accompanying condensed consolidated financial statements and the related notes of Latch, Inc. and its subsidiaries included elsewhere in this Form 10-Q. Some of the information contained in this discussion and analysis contains forward-looking statements that involve risks and uncertainties. As a result of many factors, such as those set forth in the section captioned “Risk Factors” in the 2025 Annual Report, as updated in this Form 10-Q, actual results may differ materially from those anticipated in these forward-looking statements. Unless the context otherwise requires, references in this subsection to “we,” “our,” “Latch,” “DOOR” and the “Company” refer to the business and operations of Latch, Inc. and its consolidated subsidiaries.
Overview
Latch combines access control hardware and smart home technology into one unified platform, connecting access, devices, and property data to improve operations across portfolios, primarily serving the multifamily and student housing markets. In August 2025, we rebranded as DOOR, although our legal name remains Latch, Inc.
Our core offering is built around a proprietary, cloud-based software-as-a-service (“SaaS”) platform (the “DOOR Platform”), which powers and manages our suite of smart access control devices (including locks, readers and intercoms) and smart home devices and integrates with other connected devices within a building.
We provide solutions that streamline building management for property owners and operators, offer modern convenience and security for residents and simplify interactions for visitors and service providers. While our foundation remains smart access control, we are actively expanding the DOOR Platform and our device integrations to encompass broader smart home solutions, managing devices such as sensors, thermostats and lighting. This ongoing expansion leverages our established platform to create more connected and efficient buildings as we lay the groundwork for a building intelligence platform, automating and streamlining building operations, including work order management and automation, property maintenance and unit inspections and repairs.
Our customers, which include real estate developers, builders, owners and property managers in the United States and Canada, typically purchase our hardware devices and license our SaaS platform (directly or indirectly through our channel partner network). Residents interact with the DOOR Platform through the DOOR mobile application and its predecessor Latch mobile application (together, the “DOOR App”). Through the DOOR App, residents access common areas and unlock residential doors, provide guest access, manage smart home devices and book services.
Our professional services offerings are integral to ensuring successful deployment of the DOOR Platform and ongoing support for our customers and their residents. This includes connecting our multifamily property customers with our partners for installation of Latch and third-party smart access and smart home hardware, ensuring that solutions are implemented efficiently and correctly.
Complementing our multifamily installation capabilities, our HelloTech, Inc. (“HelloTech”) business provides a scalable, nationwide network of skilled independent technicians. HelloTech connects these service providers with residents and property managers seeking a wide range of on-demand technical services, such as TV mounting and smart home device installation and set-up, as well as broader home services, such as furniture assembly and handyman services.
Additionally, we offer a comprehensive property management service in and around Boston, Massachusetts.
We operate in one operating and reporting segment.
Key Business Metrics
We are presenting software revenue (prepared in accordance with generally accepted accounting principles in the United States of America (“GAAP”)), total revenue (GAAP), net loss (GAAP) and Adjusted EBITDA (non-GAAP) as key business metrics, as we believe each of those metrics is important in measuring our performance, identifying trends affecting our business, formulating business plans and making strategic decisions that will impact our future operational results.
24
Our key business metrics are as follows for the periods presented (in thousands):
| Three Months Ended March 31, | ||||||||||||||||||||||||||
| 2026 | 2025 | $ Change | % Change | |||||||||||||||||||||||
GAAP Measures: | ||||||||||||||||||||||||||
| Software revenue | $ | 6,143 | $ | 5,159 | $ | 984 | 19.1 | % | ||||||||||||||||||
Total revenue | $ | 15,702 | $ | 15,774 | $ | (72) | (0.5 | %) | ||||||||||||||||||
Net loss | $ | (5,938) | $ | (11,250) | $ | 5,312 | (47.2 | %) | ||||||||||||||||||
Non-GAAP Measure: | ||||||||||||||||||||||||||
Adjusted EBITDA | $ | (3,947) | $ | (7,266) | $ | 3,319 | (45.7 | %) | ||||||||||||||||||
Adjusted EBITDA
To supplement our financial statements presented in accordance with GAAP and to provide investors with additional information regarding our financial results, we have presented in this Form 10-Q Adjusted EBITDA, a non-GAAP financial measure. Adjusted EBITDA is not based on any standardized methodology prescribed by GAAP and is not necessarily comparable to similarly titled measures presented by other companies.
We define Adjusted EBITDA as our net loss, excluding the impact of the following items, if applicable: (i) depreciation and amortization expense, (ii) net interest income or expense, (iii) provision for income taxes, (iv) change in fair value of warrant liability, trading securities, or derivative instruments, (v) restructuring costs, (vi) transaction-related costs, (vii) impairment of assets, (viii) non-ordinary course legal fees and settlement reserves, (ix) stock-based compensation expense and (x) gain or loss on extinguishment of debt. The most directly comparable GAAP measure is net loss. We believe excluding the impact of these items in calculating Adjusted EBITDA can provide a useful measure for period-to-period comparisons of our core operating performance. We monitor, and have presented in this Form 10-Q, Adjusted EBITDA because it is a key measure used by our management and Board to understand and evaluate our operating performance, to establish budgets and to develop operational goals for managing our business. We believe Adjusted EBITDA helps identify underlying trends in our business that could otherwise be masked by the effect of the expenses that we include in net loss. Accordingly, we believe Adjusted EBITDA provides useful information to investors, analysts and others in understanding and evaluating our operating results, enhancing the overall understanding of our past performance.
Adjusted EBITDA is not prepared in accordance with GAAP and should not be considered in isolation of, or as an alternative to, measures prepared in accordance with GAAP. There are a number of limitations related to the use of Adjusted EBITDA rather than net loss, which is the most directly comparable financial measure calculated and presented in accordance with GAAP. In addition, the expenses and other items that we exclude in our calculations of Adjusted EBITDA may differ from the expenses and other items, if any, that other companies may exclude from Adjusted EBITDA when they report their operating results.
25
In addition, other companies may use other measures to evaluate their performance, all of which could reduce the usefulness of Adjusted EBITDA as a tool for comparison. The following table reconciles Adjusted EBITDA to net loss, the most directly comparable financial measure calculated and presented in accordance with GAAP (in thousands):
| Three Months Ended March 31, | ||||||||||||||||||||||||||
| 2026 | 2025 | |||||||||||||||||||||||||
| Net loss | $ | (5,938) | $ | (11,250) | ||||||||||||||||||||||
| Depreciation and amortization | 1,007 | 1,522 | ||||||||||||||||||||||||
Interest expense, net(1) | 323 | 253 | ||||||||||||||||||||||||
| Change in fair value of warrant liability | 37 | 37 | ||||||||||||||||||||||||
| Restructuring costs | — | (58) | ||||||||||||||||||||||||
Non-ordinary course legal fees and settlement reserves(2) | 470 | 1,979 | ||||||||||||||||||||||||
Stock-based compensation expense(3) | 154 | 251 | ||||||||||||||||||||||||
| Adjusted EBITDA | $ | (3,947) | $ | (7,266) | ||||||||||||||||||||||
(1)As a result of significant discounts provided to our customers on certain long-term software contracts paid in advance, we determined that there is a significant financing component related to the time value of money and have therefore broken out the interest component and recorded it as a discount in interest expense, net on the accompanying Condensed Consolidated Statements of Operations and Comprehensive Loss. Interest expense, net includes interest expense associated with the significant financing component of $0.5 million and $0.7 million for the three months ended March 31, 2026 and 2025, respectively.
(2)The amounts primarily represent legal fees related to stockholder lawsuits and the SEC’s ongoing investigation into issues related to our key performance indicators and revenue recognition practices (the “SEC Investigation”). While we are involved in various litigation and legal disputes in the ordinary course of our business, we believe the non-ordinary course legal fees and settlement reserves included in our calculation of Adjusted EBITDA do not represent normal operating expenses. See Note 14. Commitments and Contingencies, in Part I, Item 1. “Financial Statements.” These costs are included within general and administrative on the accompanying Condensed Consolidated Statements of Operations and Comprehensive Loss.
(3)See Note 17. Stock-Based Compensation, in Part I, Item 1. “Financial Statements.”
Components of Results of Operations
Revenue
Hardware Revenue. We generate hardware revenue primarily from the sale of our portfolio of devices for our smart access and smart home solutions. We sell hardware to customers, which include real estate developers, builders, building owners and property managers, directly or through our channel partners, who act as intermediaries, installers or wholesalers. We recognize hardware revenue when there is evidence a contract exists and control of the hardware has been transferred to the customer. We provide warranties that our hardware will be substantially free from defects in materials and workmanship, generally for a period of one or two years for electronic components depending on the hardware product, and five years for mechanical components. We determine in our sole discretion whether to replace or refund warrantable devices. We record a reserve as a component of cost of hardware revenue based on historical costs of replacement units for returns of defective products.
Software Revenue. We generate software revenue primarily through the license of our SaaS over our cloud-based platform on a subscription-based arrangement. Subscription fees vary depending on the features selected by customers. SaaS arrangements generally have term lengths between one and ten years. When significant discounts are provided to customers on the longer-term software contracts paid in advance, we determined that there is a significant financing component related to the time value of money and therefore have recorded the discount as interest expense, net on the accompanying Condensed Consolidated Statements of Operations and Comprehensive Loss. Our SaaS is considered a stand-ready performance obligation where customers benefit from the service evenly throughout the service period. Revenue is recognized ratably over the subscription period beginning when or as control of the promised services is transferred to the customer.
Professional Services Revenue. We generate professional services revenue in three primary ways: (i) by facilitating project-based hardware installation and activation services for enterprise customers, (ii) through fees generated by technology and home services performed for residents and consumers, and (iii) through property management services performed by our subsidiary, Door Property Management, LLC (“DPM”), for our multifamily building customers.
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We facilitate hardware installation and activation services to select customers. The revenues associated with these services are recognized over time based on a percentage of installation performed and completed and represent a transfer of services to a customer under contract.
Through our HelloTech platform, a network of independent contractors provides in-home technology services such as installation, repair, troubleshooting and technical support. Orders placed through the HelloTech platform are recognized as revenue as services are completed over time. We also offer a subscription service through the HelloTech platform that includes discounted home services and other technical support such as 24/7 online support, home technology checkups, and antivirus and password manager software support. Subscription revenues are recognized ratably over the subscription period.
DPM’s property management activities include operating DPM customers’ buildings, which involves maintenance and repair, construction management, leasing and administrative services. Property management service revenues are recognized ratably over the service period.
Cost of Revenue
Cost of hardware revenue consists primarily of product costs, including manufacturing costs, duties and other applicable importing costs, shipping and handling costs, packaging costs, warranty costs, assembly costs and warehousing costs, as well as other non-inventoriable costs, including personnel-related expenses associated with supply chain logistics and direct deployment and outsourced labor costs. We expect hardware cost of revenue to move in-line with our hardware revenue. Our hardware costs have been and may continue to be impacted by any supply chain constraints, shipping cost volatility and changes in import tariffs.
Cost of software revenue consists primarily of outsourced hosting costs, other outsourced cloud-based service costs and personnel-related expenses associated with monitoring and managing outsourced hosting service providers.
Cost of professional services revenue consists primarily of (i) third-party installation labor costs and parts and materials associated with deployment of our hardware, (ii) labor costs associated with HelloTech independent technicians and credit card fees, and (iii) costs related to third-party property service providers.
Cost of revenue excludes depreciation and amortization shown in operating expenses.
Operating Expenses
Operating expenses consist of research and development, sales and marketing, general and administrative and depreciation and amortization expenses. We have not granted any restricted stock units (“RSUs”) since the suspension of our registration statement on Form S-8 under the Securities Act (the “S-8 Registration Statement”) on August 10, 2022. However, the S-8 Registration Statement became effective again on April 2, 2026 and we expect to resume granting RSUs. Any such grants will increase stock-based compensation expense.
Research and Development Expenses. Research and development expenses consist primarily of personnel and related expenses for our employees working on our product, design and engineering teams, including salaries, bonuses, benefits, payroll taxes, travel and stock-based compensation. Also included are non-personnel costs such as amounts paid to our third-party contract manufacturers for tooling, engineering and prototype costs of our hardware products, fees paid to third-party consultants, research and development supplies and rent.
Sales and Marketing Expenses. Sales and marketing expenses consist primarily of personnel and related expenses for our employees working on our sales, customer success, deployment and marketing teams, including salaries, bonuses, benefits, payroll taxes, travel, commissions and stock-based compensation. Also included are non-personnel costs such as marketing activities (trade shows and events, conferences and digital advertising), professional fees, rent and customer support.
General and Administrative Expenses. General and administrative expenses consist primarily of personnel and related expenses for our executive, legal, human resources, finance and IT functions, including salaries, bonuses, benefits, payroll taxes, travel and stock-based compensation. Additional expenses included in this category are non-personnel costs such as legal fees, rent, professional fees, audit fees, bad debt expense and insurance costs.
Depreciation and Amortization Expenses. Depreciation and amortization expenses consist primarily of depreciation expenses related to investments in property and equipment and internally-developed capitalized software.
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Other (Expense) Income, Net
Other (expense) income, net consists of interest expense associated with the significant financing component of our longer-term software contracts, interest expense associated with our debt financing arrangements, interest income on highly liquid short-term investments, gain or loss on extinguishment of debt and gain or loss on change in fair value of derivative liabilities, warrant liabilities and trading securities.
Interest expense, net is summarized as follows:
| Three Months Ended March 31, | ||||||||||||||||||||||||||
| 2026 | 2025 | |||||||||||||||||||||||||
Interest income | $ | 245 | $ | 614 | ||||||||||||||||||||||
| Interest expense | (568) | (867) | ||||||||||||||||||||||||
| Interest expense, net | $ | (323) | $ | (253) | ||||||||||||||||||||||
Income Taxes
The provision for income taxes consists primarily of income taxes related to foreign jurisdictions in which we conduct business. We maintain a full valuation allowance on our deferred tax assets as we have concluded that it is more likely than not that the deferred assets will not be utilized.
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Results of Operations
The following tables and accompanying information set forth our historical operating results for the periods indicated. The period-to-period comparison of operating results is not necessarily indicative of results for future periods.
Comparison of three months ended March 31, 2026 and March 31, 2025
| Three Months Ended March 31, | ||||||||||||||||||||||||||
(in thousands, except share and per share data) | 2026 | 2025 | $ Change | % Change | ||||||||||||||||||||||
| Revenue | ||||||||||||||||||||||||||
| Hardware | $ | 4,357 | $ | 4,037 | $ | 320 | 7.9 | % | ||||||||||||||||||
| Software | 6,143 | 5,159 | 984 | 19.1 | % | |||||||||||||||||||||
| Professional services | 5,202 | 6,578 | (1,376) | (20.9 | %) | |||||||||||||||||||||
| Total revenue | 15,702 | 15,774 | (72) | (0.5 | %) | |||||||||||||||||||||
Cost of revenue(1) | ||||||||||||||||||||||||||
| Hardware | 3,218 | 3,303 | (85) | (2.6 | %) | |||||||||||||||||||||
| Software | 531 | 551 | (20) | (3.6 | %) | |||||||||||||||||||||
| Professional services | 3,734 | 4,441 | (707) | (15.9 | %) | |||||||||||||||||||||
| Total cost of revenue | 7,483 | 8,295 | (812) | (9.8 | %) | |||||||||||||||||||||
| Operating expenses | ||||||||||||||||||||||||||
| Research and development | 3,793 | 5,633 | (1,840) | (32.7 | %) | |||||||||||||||||||||
| Sales and marketing | 4,272 | 3,577 | 695 | 19.4 | % | |||||||||||||||||||||
| General and administrative | 4,691 | 7,771 | (3,080) | (39.6 | %) | |||||||||||||||||||||
| Depreciation and amortization | 1,007 | 1,522 | (515) | (33.8 | %) | |||||||||||||||||||||
| Total operating expenses | 13,763 | 18,503 | (4,740) | (25.6 | %) | |||||||||||||||||||||
| Loss from operations | (5,544) | (11,024) | 5,480 | (49.7 | %) | |||||||||||||||||||||
| Other expense, net | ||||||||||||||||||||||||||
| Interest expense, net | (323) | (253) | (70) | 27.7 | % | |||||||||||||||||||||
| Change in fair value of warrant liability | (37) | (37) | — | — | % | |||||||||||||||||||||
Other (expense) income, net | (34) | 64 | (98) | (153.1 | %) | |||||||||||||||||||||
| Total other expense, net | (394) | (226) | (168) | 74.3 | % | |||||||||||||||||||||
| Loss before income taxes | (5,938) | (11,250) | 5,312 | (47.2 | %) | |||||||||||||||||||||
| Provision for income taxes | — | — | — | N.M. | ||||||||||||||||||||||
| Net loss | $ | (5,938) | $ | (11,250) | $ | 5,312 | (47.2 | %) | ||||||||||||||||||
| Other comprehensive income (loss) | ||||||||||||||||||||||||||
Unrealized gain on available-for-sale securities | (3) | (14) | 11 | N.M. | ||||||||||||||||||||||
| Foreign currency translation adjustment | 33 | 4 | 29 | N.M. | ||||||||||||||||||||||
| Comprehensive loss | $ | (5,908) | $ | (11,260) | $ | 5,352 | (47.5 | %) | ||||||||||||||||||
| Net loss per common share: | ||||||||||||||||||||||||||
| Basic and diluted net loss per common share | $ | (0.04) | $ | (0.07) | $ | 0.03 | (42.9) | % | ||||||||||||||||||
| Weighted average shares outstanding: | ||||||||||||||||||||||||||
| Basic and diluted | 160,658,450 | 160,272,142 | ||||||||||||||||||||||||
(1)Exclusive of depreciation and amortization shown in operating expenses below.
N.M.: Not meaningful
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Revenue
Revenue decreased by $0.1 million for the three months ended March 31, 2026 compared to the three months ended March 31, 2025. The decrease was primarily due to a $1.4 million reduction in professional services revenue related to (i) a $0.7 million decrease in HelloTech services, (ii) a $0.4 million decline in hardware activation and installation services, and (iii) a $0.3 million decrease in property maintenance services, partially offset by a $1.0 million increase in software revenue due to continued growth in subscriptions and a $0.3 million increase in hardware revenue due to higher hardware shipments in 2026 compared to 2025.
Cost of Revenue
Cost of revenue decreased by $0.8 million for the three months ended March 31, 2026 compared to the three months ended March 31, 2025. The decrease was primarily due to a $0.7 million reduction in professional services cost related to a decline in installation projects.
Research and Development Expenses
Research and development expenses decreased by $1.8 million for the three months ended March 31, 2026 compared to the three months ended March 31, 2025. The decrease was primarily due to (i) a $1.0 million reduction in third-party expense associated with overlapping costs related to the transition of engineering contractors beginning in the first half of 2025, (ii) a $0.8 million decrease in expenses related to abandoned capitalized internally-developed software, and (iii) a $0.4 million decrease in personnel-related expenses. These decreases were partially offset by a $0.3 million increase in software license costs and a $0.2 million increase in compensation expense resulting from lower capitalization of internally-developed software costs.
Sales and Marketing Expenses
Sales and marketing expenses increased by $0.7 million for the three months ended March 31, 2026 compared to the three months ended March 31, 2025. The increase was primarily related to a $0.3 million increase in compensation expense due to expansions of the sales team and a $0.2 million increase in digital marketing expense related to HelloTech.
General and Administrative Expenses
General and administrative expenses decreased by $3.1 million for the three months ended March 31, 2026 compared to the three months ended March 31, 2025. The decrease was primarily due to (i) a $1.7 million decrease in investigation, legal and settlement fees, (ii) a $0.7 million decrease in audit fees, (iii) a $0.7 million decrease in professional and consulting fees primarily related to accounting services, (iv) a $0.3 million decrease in insurance related expense, and (v) a $0.2 million decrease in software license expense. These increases were partially offset by a $0.5 million increase in tax expense as a result of a sales tax refund in 2025.
Depreciation and Amortization Expenses
Depreciation and amortization expenses decreased by $0.5 million for the three months ended March 31, 2026 compared to the three months ended March 31, 2025. The decrease was primarily due to lower amortization expense of capitalized internally-developed software and lower depreciation expense.
Total Other Expense, Net
Total other expense, net increased by $0.2 million for the three months ended March 31, 2026 compared to the three months ended March 31, 2025. The decrease was primarily due to a $0.4 million decrease in interest income resulting from lower average principal investment balances, partially offset by a $0.3 million decrease in interest expense related to the significant financing component of longer term software contracts.
Liquidity and Capital Resources
We have incurred losses since our inception. To date, our principal sources of liquidity have been the net proceeds received as a result of the 2021 business combination and payments received from our customers.
As of March 31, 2026 and December 31, 2025, our unrestricted cash and cash equivalents and current and non-current available-for-sale securities were approximately $28.5 million and $34.6 million, respectively. Our available-for-sale
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securities investment portfolio is primarily invested in highly rated securities, with the primary objective of minimizing the potential risk of principal loss. Our investment policy generally requires securities to be investment grade and limits the amount of credit exposure to any one issuer.
As of March 31, 2026 and December 31, 2025, we also had approximately $25.0 million and $28.9 million, respectively, in net inventory.
Our short-term liquidity needs have primarily included working capital for salaries, including sales and marketing and research and development, as well as inventory purchases from our contract manufacturers.
Beginning in the second quarter of 2022 and continuing through the date of this Form 10-Q, we have incurred, and may continue to incur, significant professional fees, primarily consisting of legal, forensic accounting, management consulting and related advisory services as a result of our 2022-2023 internal investigation (the “Investigation”) and the SEC Investigation, as well as accounting related consulting services, independent registered accounting firm fees and advisory services related to the Restatement and comprehensive review of our previously issued financial statements. Additionally, we have incurred significant costs in connection with stockholder lawsuits. See Note 14. Commitments and Contingencies, in Part I, Item 1. “Financial Statements.” Such litigation involves significant defense and other costs and, if decided adversely to us or settled, has resulted or could result in significant monetary damages or expenditures. Although we maintain insurance coverage in amounts and with deductibles that we believe are appropriate for our operations, our insurance coverage does not cover all claims that have been or may be brought against us.
Near-Term Liquidity Position
The following risks and uncertainties associated with our liquidity position may adversely affect our ability to sustain our operations as of the Filing Date:
•The continued incurrence of significant expenses related to legal and other professional services in connection with the SEC Investigation and the possibility that the SEC may levy civil penalties or fines;
•Potential expenditures associated with defending, negotiating or resolving the service provider demand described in See Note 14. Commitments and Contingencies, in Part I, Item 1. “Financial Statements;”
•Unexpected expenditures related to the Derivative Actions;
•The incurrence of significant expenses related to other legal or regulatory proceedings, whether actual or threatened;
•The failure to achieve revenue expectations, including as a result of:
◦Pricing compression for our products;
◦Market adoption of the DOOR application;
◦The success of the HelloTech business;
◦The impact of elevated interest rates on potential customers, who may eliminate or delay expenditures for the products or services we offer; and
◦Market perception of our offerings;
•Costs of revenue and operating expenses exceeding expectations;
•The failure to maintain the liquidity ratio required by the Loan Agreement;
•The inability to fully leverage prepaid inventory; or
•The catastrophic loss of inventory due to theft, natural disaster or otherwise.
Due to the risks and uncertainties described above, we continue to monitor our liquidity position. We recognize the challenge of maintaining sufficient liquidity to sustain our operations and remain in compliance with the liquidity ratio required by the Loan Agreement. However, notwithstanding our liquidity position as of the Filing Date, and while it is difficult to predict our future liquidity requirements with certainty, we expect to be able to use our current cash and cash equivalents and available-for-sale securities to fund our operational cash requirements for at least 12 months beyond the Filing Date. Other significant factors that affect our overall management of liquidity include certain actions controlled by management, such as capital expenditures and acquisitions. See Note 13. Debt and Note 14. Commitments and Contingencies, in Part I, Item 1. “Financial Statements.”
In response to the risks and uncertainties described above, we may attempt to secure additional outside capital. However, we can provide no assurance we will be able to secure any outside capital in the future at all, or on terms that are acceptable. Additionally, our securities are currently traded on the OTCID Market. Because of applicable restrictions, there is a minimal public market for our securities, and our ability to raise additional capital may be impaired because of the less liquid nature of
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the over-the-counter markets. We plan to continue to closely monitor our cash flow forecast and, if necessary, may implement certain incremental cost savings measures to preserve liquidity.
Commitments and Contractual Obligations
We are obligated to make payments as part of certain contracts that we have entered into during the normal course of business. Following the 2024 property management acquisitions, in February 2024 we entered into a three-year advisory agreement with a partner pursuant to which the partner provides DPM with certain management and advisory services related to DPM’s property management business. Pursuant to such agreement, we are required to pay the partner $0.5 million annually. As of March 31, 2026, we had a remaining obligation of $0.5 million under the advisory agreement.
Indebtedness
On July 15, 2024, we entered into a loan agreement with Customers Bank (the “Loan Agreement”). Pursuant to the Loan Agreement, Customers Bank issued a term loan in the principal amount of $6.0 million (the “Loan”). The Loan Agreement, which was entered into in connection with the acquisition of HelloTech, did not result in our receipt of any loan proceeds. Interest is payable on the Loan at a rate equal to the greater of (a) the prime rate published in The Wall Street Journal or (b) 6.0%, and the maturity date is July 15, 2029 (the “Maturity Date”).
Payments under the Loan were interest-only through January 15, 2025. Thereafter, we are required to pay equal monthly installments of principal plus accrued interest until the Maturity Date. There is no penalty for prepayment of the Loan.
Pursuant to the Loan Agreement, Customers Bank was granted security interests in substantially all of our assets, excluding intellectual property, and the Loan Agreement contains customary affirmative and negative covenants.
HelloTech is required to maintain an operating account with Customers Bank with a sufficient balance to support monthly payments. Additionally, we are required to maintain a liquidity ratio of at least 4.00, tested monthly, which is calculated as the quotient of our unrestricted cash and cash equivalents (subject to certain limitations with respect to cash of foreign subsidiaries), divided by all outstanding indebtedness owed to Customers Bank.
The Loan Agreement contains various covenants that, among other things, limit our ability to:
• engage in certain asset dispositions;
• permit a change in control;
• merge or consolidate;
• incur indebtedness or grant liens on our assets;
• declare or pay dividends, distributions or redemptions;
• make loans or investments; and
• engage in certain transactions with affiliates.
If an event of default exists under the Loan Agreement, Customers Bank will be able to accelerate the maturity of the Loan and exercise other rights and remedies. Events of default include, but are not limited to, the following events:
• failure to pay any principal or interest within three business days of the due date;
• failure to perform or otherwise comply with the covenants and obligations in the Loan Agreement, subject, in certain instances, to certain grace periods;
• bankruptcy or insolvency events; or
• the rendering of judgments that remain undischarged, unvacated, unbonded, unsatisfied or unstayed for a certain period.
As of March 31, 2026 and December 31, 2025, the outstanding principal of the Loan (excluding debt discount) was $4.4 million and $4.8 million, respectively. We were in compliance with the covenants under the Loan Agreement as of March 31, 2026 and December 31, 2025.
On July 15, 2024, in a private placement concurrent with the Loan Agreement, we issued a warrant to Customers Bank to purchase 1,000,000 shares of our common stock. The warrant has an exercise price of $1.25 per share, was exercisable upon issuance and will expire six years from the date of issuance, or July 15, 2030.
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Cash Flows
The following table sets forth a summary of our cash flows for the three months ended March 31, 2026 and 2025 (in thousands):
| Three Months Ended March 31, | ||||||||||||||
| 2026 | 2025 | |||||||||||||
Net cash used in operating activities | $ | (5,143) | $ | (10,137) | ||||||||||
Net cash used in investing activities | (1,395) | (935) | ||||||||||||
Net cash used in financing activities | (333) | (223) | ||||||||||||
Effect of exchange rates on cash | 196 | (191) | ||||||||||||
Net change in cash and cash equivalents | $ | (6,675) | $ | (11,486) | ||||||||||
Operating Activities. Net cash used in operating activities for the three months ended March 31, 2026 decreased by $5.0 million compared to the three months ended March 31, 2025. The decrease was primarily attributable to a $7.6 million favorable change in working capital primarily related to accounts receivable, accounts payable and other current liabilities, a $6.8 million decrease of cash payments related to accrued litigation settlements, a $4.7 million reduction in net loss adjusted for non-cash items, and a $2.1 million decrease in inventory purchases. These favorable changes were partially offset by the timely settlement of investment payables of $14.0 million and $1.7 million decrease in unbilled receivables. Management continues to focus on cost discipline, inventory management and liquidity preservation as it seeks to reduce operating cash usage.
Investing Activities. Net cash provided by investing activities increased by $0.5 million for the three months ended March 31, 2026 compared to the three months ended March 31, 2025. Cash flows from investing activities primarily consist of the net purchases and sales of available-for-sale securities. The decrease was primarily attributable to the use of investment proceeds to fund operating losses.
Financing Activities. For the three months ended March 31, 2026, net cash used in financing activities increased by $0.1 million compared to the three months ended March 31, 2025 attributable to the repayment of the Loan.
Off-Balance Sheet Arrangements
We had no off-balance sheet arrangements as of March 31, 2026 and December 31, 2025 that had, or were reasonably likely to have, a current or future effect on our financial condition, changes in financial condition, revenues or expenses, results of operations, liquidity, capital expenditures or capital resources that would be material to investors.
Critical Accounting Estimates
There have been no material changes to our critical accounting estimates as disclosed in the 2025 Annual Report.
Recent Accounting Pronouncements
See Note 21. Recently Issued Accounting Standards, in Part I, Item 1. “Financial Statements” for information about recent accounting pronouncements.
Item 3. Quantitative and Qualitative Disclosures About Market Risk
As a smaller reporting company, as defined in Rule 12b-2 of the Exchange Act, we are not required to provide the information required by this Item.
Item 4. Controls and Procedures
Background
In 2022, the Audit Committee, with the assistance of independent legal and accounting advisors, conducted an internal investigation of matters relating to the Company’s key performance indicators and revenue recognition practices for certain transactions, including the accounting treatment, financial reporting and internal controls related to such transactions.
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As a result of the accounting, financial reporting and internal control deficiencies identified by the Investigation and their material impact on the Company’s previously issued financial statements and related disclosures, the Audit Committee determined that the Company’s financial statements for 2019, 2020, 2021 and the first quarter of 2022 should be restated. Following the Investigation, the Company conducted a comprehensive review of its previously issued financial statements and, in its Annual Report on Form 10-K for the year ended December 31, 2022 (the “2022 Annual Report”), restated those financial statements to correct the identified errors.
As further detailed below, the Company identified material weaknesses in its internal control over financial reporting related to deficiencies in the control environment, risk assessment, control activities, information and communication, and monitoring activities. These deficiencies contributed to errors in the Company’s accounting and financial reporting processes, including matters affecting: (i) revenue recognition on hardware and software sales, (ii) revenue recognition and billing on software licenses, (iii) recognition of various expenses, (iv) internally developed software, (v) stock-based compensation and (vi) errors in certain key performance indicators, including “bookings” and related metrics.
A material weakness is a deficiency, or a combination of deficiencies, in internal control over financial reporting, such that a reasonable possibility exists that a material misstatement of annual or interim financial statements would not be prevented or detected on a timely basis.
Evaluation of Disclosure Controls and Procedures
Our current management, including our Chief Executive Officer and Chief Financial Officer, evaluated the effectiveness of our disclosure controls and procedures, as defined in Rules 13a-15(e) and 15d-15(e) under the Exchange Act, in connection with the preparation of this Form 10-Q. Based on this evaluation, our Chief Executive Officer and Chief Financial Officer concluded that the Company’s disclosure controls and procedures were not effective as of March 31, 2026 because of material weaknesses in our internal control over financial reporting, as described below.
Notwithstanding that conclusion, based on review, analysis and inquiries conducted subsequent to March 31, 2026, management believes that the condensed consolidated financial statements and related financial information included in this Form 10-Q fairly present in all material respects the Company’s financial condition, results of operations and cash flows as of the dates presented, and for the periods ended on such dates, in conformity with GAAP.
Previously Disclosed Material Weakness
In our Annual Report on Form 10-K for the year ended December 31, 2021, we initially identified a material weakness related to the selection and development of control activities, including over information technology related to certain account balances. As a result of the Investigation, management identified additional deficiencies that were primarily attributable to limitations in resources, the absence of formally designed processes and controls, and insufficient personnel with the appropriate level of accounting and internal control expertise. Accordingly, we reported additional material weaknesses as of December 31, 2022.
These material weaknesses existed across the five components of the COSO Framework: control environment, risk assessment, control activities, information and communication, and monitoring activities.
Management has implemented and continues to implement remediation measures designed to address these deficiencies and strengthen the Company’s overall control environment. However, as of March 31, 2026, the material weaknesses have not yet been fully remediated. Remediation efforts remain ongoing, and the related controls must operate for a sufficient period of time and be subject to validation through testing before management can conclude that any control is operating effectively.
The material weaknesses described below reflect management’s current assessment of the underlying deficiencies within the Company’s internal control framework.
Material Weaknesses in Internal Control Over Financial Reporting
Management identified material weaknesses in ICFR as of March 31, 2026, related to deficiencies in all five components of the COSO Framework, as described below.
Control Environment: The Company did not maintain an effective control environment to support ICFR. The Company lacked appropriate policies and resources to develop and operate ICFR, which contributed to the Company’s inability to properly analyze, record and disclose accounting matters timely and accurately.
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These deficiencies contributed to inadequate oversight of control responsibilities, insufficient reinforcement of expectations related to internal control, and inconsistent execution of certain control activities.
Risk Assessment. Management did not design and implement an effective risk assessment and identified a material weakness relating to: (i) identifying, assessing, and communicating appropriate objectives, (ii) identifying and analyzing risks to achieve these objectives, and (iii) identifying and assessing changes in the business that could impact the system of internal controls.
Control Activities: The Company did not design and implement effective control activities and identified the following material weaknesses:
–Revenue Recognition Controls: The Company did not design or maintain certain control activities to respond to potential risks of material misstatement of revenue. In particular, management failed to: (i) ensure that relevant terms sales representatives had negotiated with customers were identified and communicated to the accounting department, resulting in a failure to properly account for such terms, (ii) fully consider the impact of certain terms of sales agreements on the amount and timing of revenue to be recognized and (iii) identify and account for extended payment terms.
As a result of these control design deficiencies, policies and controls related to revenue recognition were not effective in ensuring that (a) revenue was recorded at the correct amount and in the correct period and (b) the accounting department was informed of all elements and deliverables of certain arrangements. These design deficiencies led to inaccuracies in amounts and timing of revenue recognition and allowances for uncollectible accounts that contributed to material accounting errors in 2022 and prior years.
–Financial Reporting Close Controls: Management further identified ineffective design and operation of certain control activities. Control deficiencies, which aggregate to a material weakness, occurred within the following areas: order to cash, inventory, financial close, sales commissions, procure-to-pay, capitalized software and information and technology general controls.
Information and Communication: Management did not design and implement effective information and communication activities. As a result, management identified a material weakness in the processes and controls for communicating information among the accounting, finance, sales and customer success teams, which were not adequate to support the proper functioning of internal controls impacting revenue-related accounts to ensure accurate revenue recognition.
Monitoring Activities: Management did not design and implement effective monitoring activities and identified the following material weaknesses: (i) failure to adequately monitor compliance with accounting policies, procedures and controls related to revenue recognition and accounts receivable; and (ii) failure to properly select, develop and perform ongoing evaluations of various components of internal controls.
Status of Remediation of the Material Weaknesses
Management, with oversight from the Audit Committee of the Board of Directors, continues to devote significant time, attention and resources to the remediation of the remaining material weaknesses and to strengthening the Company’s internal control over financial reporting. In the interim, management has implemented additional mitigating procedures and deployed additional resources, to help ensure that the consolidated financial statements and related financial information included in this Form 10-K are fairly presented, in all material respects, in accordance with GAAP.
The remaining material weaknesses cannot be considered fully remediated until the applicable controls have been implemented and have operated effectively for a sufficient period of time such that management can conclude, through testing, that the controls are operating effectively. The following summarizes the Company’s remediation initiatives to address the remaining material weaknesses.
Strengthening the Control Environment and Finance Organization
Management has taken steps to strengthen the finance and accounting organization, including evaluating and modifying the organizational design of the controllership function, hiring accounting personnel with requisite experience and technical expertise in GAAP and internal controls and providing training related to internal control responsibilities.
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As the Company has returned its financial reporting to a current and timely status, management is focused on reestablishing a consistent financial close and reporting process and stabilizing foundational recurring processes that support the execution of internal controls.
Enhancing Risk Assessment and SOX Governance
Management has enhanced enterprise risk assessment processes and continues to refine the scope and focus of the Company’s Sarbanes-Oxley compliance program. These efforts include improving documentation of financial reporting risks and implementing processes to ensure that risk assessments are updated as business conditions change.
Improving Control Design and Financial Reporting Processes
Management continues to develop and implement formal policies, procedures and internal controls designed to address key financial reporting risks. These actions include enhancing internal control documentation and engaging third-party specialists with technical accounting and internal control expertise to assist control design and implementation.
Management has also implemented enhancements to the review and approval of customer contract terms and revised policies and procedures related to revenue recognition.
Enhancing Information Flow and Monitoring Activities
Management has taken steps to improve communication across operational and finance teams and has enhanced monitoring procedures over internal control execution, including implementing a governance, risk and compliance platform designed to support SOX compliance and internal control monitoring.
Changes in Internal Control Over Financial Reporting
Other than described above, there have not been any changes in our internal control over financial reporting (as such term is defined in Rules 13a-15(f) and 15d-15(f) under the Exchange Act) during the three months ended March 31, 2026 that have materially affected, or are reasonably likely to materially affect, our internal control over financial reporting.
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Part II - Other Information
Item 1. Legal Proceedings
We are and may become, from time to time, involved in legal actions in the ordinary course of business, including governmental and administrative investigations, inquiries and proceedings concerning employment, labor, environmental and other claims. Although management is unable to predict with certainty the eventual outcome of any legal action, management believes the ultimate liability arising from such actions, individually and in the aggregate, which existed at March 31, 2026, will not materially affect our condensed consolidated results of operations, financial position or cash flows, except as set forth in Note 14. Commitments and Contingencies, in Part I, Item 1. “Financial Statements.” Given the inherent unpredictability of these types of proceedings, however, it is possible that future adverse outcomes could have a material effect on our financial results.
Item 1A. Risk Factors
We are subject to various risks and uncertainties in the course of our business. For a discussion of such risks and uncertainties, please see the section in the 2025 Annual Report filed with the SEC on March 31, 2026 titled “Risk Factors.” There have been no material changes to the risk factors disclosed therein.
Item 2. Unregistered Sales of Equity Securities and Use of Proceeds
None.
Item 3. Defaults Upon Senior Securities
None.
Item 4. Mine Safety Disclosures
Not applicable.
Item 5. Other Information
(c) Insider Adoption or Termination of Trading Arrangements
No director or officer adopted terminated
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Item 6. Exhibits
| Incorporated by Reference | ||||||||||||||||||||||||||
| Exhibit | Exhibit Description | Form | Exhibit | Filing Date | ||||||||||||||||||||||
| 2.1* | Agreement and Plan of Merger, dated as of January 24, 2021, by and among TSIA, Lionet Merger Sub Inc. and Legacy Latch. | S-4/A | 2.1 | 5/12/2021 | ||||||||||||||||||||||
| 2.2 | Agreement and Plan of Merger, dated as of May 15, 2023, by and among Latch, Inc., LS Key Merger Sub 1, Inc., LS Key Merger Sub 2, LLC and Honest Day’s Work, Inc. | 8-K | 2.1 | 5/16/2023 | ||||||||||||||||||||||
| 2.3 | Amendment to Agreement and Plan of Merger, dated as of June 23, 2023, by and among Latch, Inc., LS Key Merger Sub 1, Inc., LS Key Merger Sub. | 10-K | 2.3 | 12/19/2024 | ||||||||||||||||||||||
2.4* | Agreement and Plan of Merger, by and among Latch, Inc., LS HT Merger Sub, Inc. and HelloTech, Inc., dated as of June 21, 2024. | 8-K | 2.1 | 6/24/2024 | ||||||||||||||||||||||
| 3.1 | Second Amended and Restated Certificate of Incorporation. | 8-K | 3.1 | 6/10/2021 | ||||||||||||||||||||||
| 3.2 | Amended and Restated Bylaws. | 8-K | 3.2 | 6/10/2021 | ||||||||||||||||||||||
| 10.1† | Employment Agreement, dated as of April 10, 2026, by and between Latch and James Malone (filed herewith). | 10-Q | 10.1 | 5/15/2026 | ||||||||||||||||||||||
| 10.2† | Employment Agreement, dated as of April 13, 2026, by and between Latch and Ryan Salmons (filed herewith). | 10-Q | 10.2 | 5/15/2026 | ||||||||||||||||||||||
| 10.3 | Form of Promissory Note (filed herewith). | 10-Q | 10.3 | 5/15/2026 | ||||||||||||||||||||||
| 31.1 | Certification of Principal Executive Officer as adopted pursuant to Section 302 of the Sarbanes-Oxley Act of 2002 (filed herewith). | |||||||||||||||||||||||||
| 31.2 | Certification of Principal Financial Officer as adopted pursuant to Section 302 of the Sarbanes-Oxley Act of 2002 (filed herewith). | |||||||||||||||||||||||||
| 32.1 | Certification of Principal Executive Officer pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002 (furnished herewith). | |||||||||||||||||||||||||
| 32.2 | Certification of Principal Financial Officer pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002 (furnished herewith). | |||||||||||||||||||||||||
| 101 | The following financial information from Latch, Inc.’s Quarterly Report on Form 10-Q for the three months ended March 31, 2026, formatted in Inline XBRL (Inline eXtensible Business Reporting Language): (i) the Condensed Consolidated Balance Sheets - Unaudited, (ii) the Condensed Consolidated Statements of Operations and Comprehensive Loss - Unaudited, (iii) the Condensed Consolidated Statements of Stockholders’ Equity - Unaudited, (iv) the Condensed Consolidated Statements of Cash Flows - Unaudited and (v) the Notes to Condensed Consolidated Financial Statements - Unaudited (submitted electronically herewith). | |||||||||||||||||||||||||
| 104 | Cover Page Interactive Data File, formatted in Inline XBRL (included as Exhibit 101). | |||||||||||||||||||||||||
| * | Certain of the exhibits and schedules to this Exhibit have been omitted in accordance with Regulation S-K Item 601(a)(5). The Company agrees to furnish a copy of all omitted exhibits and schedules to the SEC upon its request. | |||||||||||||||||||||||||
† | Indicates a management contract or compensatory plan or arrangement. | |||||||||||||||||||||||||
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SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned thereunto duly authorized:
| LATCH, INC. | |||||
| By: | /s/ David Lillis | ||||
| David Lillis | |||||
| Chief Executive Officer | |||||
| May 15, 2026 | |||||
| By: | /s/ Jeff Mayfield | ||||
| Jeff Mayfield | |||||
| Chief Financial Officer | |||||
| May 15, 2026 | |||||
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FAQ
How did Latch (LTCH) perform financially in Q1 2026?
Latch posted Q1 2026 revenue of $15.7 million, essentially flat year over year. Net loss improved to $5.9 million from $11.3 million as operating expenses declined, leading to better Adjusted EBITDA of $(3.9) million versus $(7.3) million.
How fast did Latch’s software revenue grow in Q1 2026?
Software revenue grew to $6.1 million in Q1 2026, up 19.1% from $5.2 million a year earlier. This reflects increased adoption of Latch’s SaaS platform and longer-term subscription contracts across multifamily and student housing customers.
What was Latch’s cash position and debt at March 31, 2026?
Latch held $27.9 million of cash and cash equivalents and total assets of $99.4 million at March 31, 2026. Term loan principal totaled $4.3 million before being refinanced after quarter-end through a new $5.0 million revolving credit facility.
How much recurring revenue has Latch deferred for future periods?
Deferred revenue totaled $24.9 million at March 31, 2026, down from $26.4 million at year-end 2025. This balance represents advance billings for software and services that will be recognized as revenue over future contract periods.
What is Latch’s Adjusted EBITDA and why is it used?
Adjusted EBITDA was $(3.9) million in Q1 2026 versus $(7.3) million a year earlier. Latch adjusts net loss for depreciation, interest, tax, warrant fair-value changes, certain legal costs, restructuring and stock-based compensation to highlight underlying operating performance trends.
Did Latch report any significant legal or regulatory accruals?
Latch recorded $0.5 million of settlement-related costs for derivative litigation and maintained about $6.8 million accrued for a service provider dispute. After March 31, 2026 it also booked a $250,000 liability related to discussions over resolving an ongoing SEC investigation.