Latch announces further changes to improve operating efficiency

Rhea-AI Summary

Latch, Inc. (NASDAQ: LTCH) announced plans to enhance operational efficiency, including a workforce reduction affecting approximately 115 employees (37% of staff). This move aims to align the organizational structure with business focus and facilitate higher-margin activities. The company expects to achieve annualized operating savings of $85 million to $95 million, with revised operating expenses of $65 million to $75 million post-restructuring. Total cash restructuring charges are estimated between $2.5 million to $3.5 million, primarily for severance. Previous earnings guidance does not encompass these changes.

Positive

• Projected annualized operating savings of $85 million to $95 million.
• Focus on higher-margin activities to drive recurring revenue growth.

Negative

• Workforce reduction of 115 employees (37% of total staff) may impact morale.
• Estimated restructuring charges of $2.5 million to $3.5 million could strain short-term cash flow.

NEW YORK, Aug. 02, 2022 (GLOBE NEWSWIRE) -- Latch, Inc. (NASDAQ: LTCH), maker of LatchOS, the full-building enterprise software-as-a-service (SaaS) platform, today announced a plan to create further operating efficiencies, including through the completion of an additional workforce reduction. Under this plan, Latch will renew its focus on higher margin activities with customers, continue to grow new high margin recurring revenue, and more closely align its organizational structure with the size and focus of the business.

The expected increase in operating efficiencies under this plan, in conjunction with the changes announced in May 2022, are expected to result in approximately $85 million to $95 million in total annualized operating savings once fully completed. Latch estimates annualized operating expenses and capital expenditures of $65 million to $75 million following the completion of these changes.

The August workforce reduction impacts approximately 115 people, or approximately 37% of Latch’s current full-time employees. The reduction is expected to result in approximately $2.5 million to $3.5 million of total cash restructuring and related charges primarily related to severance and benefits costs (excluding the impact of share-based compensation), substantially all of which is expected to be incurred in the third quarter of 2022.

Latch’s guidance provided in its first quarter earnings release does not reflect the changes announced today or the workforce reduction and reorganization announced in May 2022. Accordingly, such previous guidance should not be relied upon. Latch intends to provide further information about these cost-savings efforts in connection with the release of Latch’s second quarter earnings.

About Latch, Inc.

Latch makes spaces better places to live, work, and visit through a system of software, devices, and services. For more information, please visit https://www.latch.com.

FORWARD-LOOKING STATEMENTS

This release contains certain forward-looking statements within the meaning of the federal securities laws, including statements regarding adoption of Latch’s technology and products. These forward-looking statements generally are identified by the words "believe," "project," "expect," "anticipate," "estimate," "intend," "strategy," "future," "opportunity," "plan," "may," "should," "would," "will continue," "will likely result," and similar expressions. Forward-looking statements are predictions, projections, and other statements about future events that are based on current expectations and assumptions and, as a result, are subject to risks and uncertainties. Forward-looking information includes, but is not limited to, statements regarding: the Company’s future products, performance, and operations, and the related benefits to shareholders, customers, and residents; the impact of the 2022 workforce reductions on the Company’s business; and the Company’s strategy. Many factors could cause actual future events to differ materially from the forward-looking statements in this document, including Latch’s ability to implement business plans and changes and developments in the industry in which Latch competes. The foregoing list of factors is not exhaustive. You should carefully consider the foregoing factors and the other risks and uncertainties described in the "Risk Factors" section of our Annual Report on Form 10-K filed with the SEC on March 1, 2022, and other documents filed by Latch from time to time with the SEC. These filings identify and address other important risks and uncertainties that could cause actual events and results to differ materially from those contained in the forward-looking statements. Forward-looking statements speak only as of the date they are made. Readers are cautioned not to put undue reliance on forward-looking statements, and the Company assumes no obligation to update or revise these forward-looking statements, whether as a result of new information, future events, or otherwise, except as required by law, including the securities laws of the United States and the rules and regulations of the SEC. The Company does not give any assurance that it will achieve its expectations.

CONTACTS:

Investors:

investors@latch.com 

Media:

press@latch.com 

FAQ

What is the workforce reduction plan announced by Latch on August 2, 2022?

Latch announced a workforce reduction affecting approximately 115 employees, representing 37% of its workforce, to enhance operational efficiency.

How much in annualized operating savings is Latch expecting from its efficiency plan?

Latch anticipates annualized operating savings between $85 million and $95 million as a result of its restructuring efforts.

What are Latch's projected annual operating expenses after the restructuring?

Post-restructuring, Latch estimates annual operating expenses and capital expenditures to be between $65 million and $75 million.

What financial impact will Latch's workforce reduction have?

The workforce reduction is expected to incur total cash restructuring charges of approximately $2.5 million to $3.5 million, primarily for severance costs.

Does Latch's recent announcement affect its previous earnings guidance?

Yes, the recent changes and workforce reduction announced on August 2, 2022, are not reflected in Latch's previous earnings guidance.