LA

Latch (Door.com) Financial Model

• LatchOS: Full-building enterprise SaaS platform covering Smart Access, Delivery & Guest Management, Smart Home & Sensors, Connectivity, and Resident Experience.
• Hardware: Latch R, M, and C Series smart locks; Latch C2 retrofit lock launched Q1'21 (20,000+ units booked, 1,000+ delivered).
• Pricing: $7–$12 per apartment per month for Smart Access, Smart Home, and Guest Management modules; 6+ year average contract term.
• Software prepayment: ~97% of customers prepay the full multi-year software contract value upfront on Day 1.
• Module upsell: Each additional LatchOS module (Intercom, Smart Home) increases ARPHU (Average Revenue per Home Unit) by ~30% each; roadmap modules could drive >150% cumulative ARPHU expansion.
• Value to building owners: Up to $200–$500/apt/year in incremental revenue and $100–$300/apt/year in expense savings from LatchOS.
• Resident engagement: Average resident uses the app 4.6x per day.
• Technology moat: Full-stack ownership (hardware + firmware + software); ~90 patents granted or pending.

• US residential rental market: ~$54B/year annual market for LatchOS modules (US rental apartment owners/operators).
• European market: 93M apartments in Europe add ~$90B+ annual incremental TAM; priority markets Germany (23.5M apts), France (9.9M), UK (4.2M).
• Combined US + Europe TAM: ~$144B+/year.
• As of end of 2025 (per projections), still <3% penetrated in North America and Europe combined.
• Additional verticals in view: commercial office, single-family rental.
• Real estate identified as largest asset class globally.
• 1 in 10 new US multifamily apartments built with Latch devices as of 2019; 7 in 10 of National Multifamily Housing Council's largest developers are customers.

Two revenue streams:

1. Hardware revenue - one-time sale of smart lock devices (Latch R, M, C Series, C2). Hardware is sold at a loss strategically (negative hardware contribution margin) to acquire long-term software contracts.
2. Software revenue - recurring annual subscription (LatchOS modules) billed upfront (~97% prepay full contract term). Contract term 6+ years avg. Price: $7–$12/apt/month depending on module bundle.

Revenue recognition note: Bookings (LOI-based, non-binding) are the leading indicator; revenue is recognized when hardware ships and software contracts deliver over the term. Booked ARR = cumulative annual recurring value of signed but undelivered software.

Channels:

• Direct enterprise sales (account-based; Key, National, SMB tiers).
• Indirect: partner installers and service providers for SMB and operational lift.
• Direct demand generation is primary; 8 reps → 19 reps from 2018–2020.

Historical financials:

Non-GAAP reconciliation (Adjusted EBITDA):

Q1 2021 preliminary:

• Bookings growth: 86–88% YoY (vs. 49% in FY'20)
• Revenue growth: 135–140% YoY (vs. 21% in FY'20)

Other traction metrics:

• Customer churn: 0% since inception (summer 2017 launch)
• Net Bookings Expansion (Q4'20 YoY): 154%
• Gross Dollar Retention: 100%
• Software Margin (FY2020): 92% (Software Revenue $3.8M; Software COGS $0.3M)
• LTV/CAC (FY2020, software-only): 6.8x
• LTV/CAC including hardware losses: 4.0x
• Multi-module attach rate: 44% of Q4'20 booked units; 75–80% of Q1'21 booked units
• Q1'21 expected booked LTV/CAC improvement (incl. hardware losses): 40–50%
• Opex mix (2020): R&D 43%, S&M 34%, G&A 23%
• Sales reps: 8 (2018) → 20 (2019) → 19 (2020)
• Annual Booked Home Units: ~35K (2018) → ~100K (2019) → ~160K (2020)

• LTV (initial term): SW revenues minus SW COGS over 6yr+ avg contract term
• LTV/CAC (SW only): 6.8x
• LTV/CAC (incl. hardware losses): 4.0x
• CAC: Sales & Marketing spend / Booked Unit (absolute $ not disclosed)
• Software Margin: 92% in FY2020
• Hardware Margin: Negative (hardware sold below cost; HW COGS = $20M vs HW revenue = $14M in 2020, ~−43% contribution margin)
• Payback: 97% of customers prepay full multi-year contract upfront → Day 1 cash positive on SW; hardware loss funded at deal close
• Contract length: 6+ year weighted average
• SW contract prepayment rate: ~97%
• ARPHU expansion path: +57% with Intercom + Smart Home add-on; >150% with full roadmap

• Competitive positioning: Single-vendor vs. 8+ fragmented traditional vendors; one contract, one interface for property managers and residents.
• Moat sources:
• Full hardware + firmware + software stack ownership (~90 patents)
• Zero customer churn since inception (2017)
• 6+ year contract lock-in with prepayment
• 4.6x/day app engagement = high resident switching cost
• "Works with Latch" partner ecosystem (Leviton, Jasco, Honeywell, Nest, Ecobee, Sonos, UPS)
• Direct relationship with building owners (not via resellers) → upsell ownership
• NFC Android unlock (one of first full-building deployments)
• Latch Lens program: licensing LatchOS to traditional lock manufacturers for markets Latch doesn't serve directly
• Named competitors: Not explicitly named in deck; comparative framing is "8+ traditional vendors" collectively.

Founding team:

• Luke Schoenfelder, CEO & Co-founder
• Brian Jones, CTO & Co-founder
• Thomas Meyerhoffer, CDO & Co-founder
• Dhruva Rajendra, CPO & Co-founder
• Ali Hussain, COO
• Garth Mitchell, CFO
• Company founded 2014; >50% of employees are engineers

New Q1'21 hires:

• Deborah Josephs, Chief People Officer (ex-IAC, DoubleClick)
• Chris Lee, Chief Revenue Officer (ex-DocuSign, Salesforce)
• Tricia Han, Director Nominee (ex-MyFitnessPal)
• Peter Campbell, Director Nominee (ex-Mimecast)

SPAC Transaction / Capital Structure:

• TSIA trust: $300M
• PIPE: $190M (committed pre-announcement)
• Net proceeds to balance sheet: ~$450M
• Pre-transaction equity value: $1B
• Pro forma equity value: $1,558M (at $10/share, 155.8M shares)
• Pro forma enterprise value: ~$1,053M
• Pro forma cash on balance sheet: ~$510M (incl. existing ~$60M cash)
• Pro forma debt: ~$5M
• Ownership split: 64% existing shareholders / 24% SPAC + founder shares / 12% PIPE

Use of proceeds:

• Product development (new modules, next-gen hardware)
• Sales & marketing investment to accelerate bookings
• European market expansion (leveraging Tishman Speyer platform)
• New verticals (commercial office, single-family rental)
• Potential inorganic (M&A) opportunities

This is a SPAC / de-SPAC deck. The primary transaction context is a business combination between Latch and TSIA. However, the bulk of the deck (slides 4–82) is an operating company Analyst Day presentation with a full 5-year financial model already provided. The recommended approach is a de-SPAC operating model - an integrated operating forecast that also captures the SPAC transaction mechanics and pro forma capital structure.

• Archetype + why: De-SPAC operating model with hardware+SaaS P&L - hybrid of (1) SPAC transaction model (sources/uses, trust, redemptions, PIPE, pro forma cap structure) and (2) a bookings-to-revenue operating model that separates hardware and software streams, given the very different margin profiles and revenue recognition timing. The software stream is pure SaaS ARR logic; hardware is product revenue with negative gross margin managed as a CAC investment.

• Forecast horizon & granularity: 2020A–2025E (matches deck), annual. Optionally quarterly for 2021–2022 given Q1'21 actuals available.

• Key drivers & assumptions:

*Unit volume:*

• Annual Booked Home Units: 35K (2018) → 100K (2019) → 160K (2020) →; implies 2021E–2025E cumulative of 536K–3,711K
• Net new units booked per year = cumulative delta year-over-year
• Sales rep count × productivity

*Revenue per unit:*

• ARPHU (software) starting at implied ~$7–$12/month; growing with module attach rate
• Module attach rate: 44% of units with add-on modules in Q4'20, 75–80% in Q1'21
• Each additional module = ~+30% ARPHU
• Roadmap ARPHU path: +57% with Intercom+Smart Home; >150% with full roadmap
• Hardware revenue per unit:

*Revenue recognition:*

• Bookings → revenue lag: ~13 months avg LOI-to-PO
• HW revenue recognized when PO issued/delivered
• SW revenue: 97% prepaid upfront; GAAP recognition ratably over contract term
• Booked ARR: cumulative annual software value from signed LOIs within 24-month delivery window

*Margins:*

• Software COGS margin: 92% gross margin;
• Hardware COGS: currently ~−43% contribution margin (COGS $20M vs HW rev $14M in 2020);
• Overall COGS as % of Net Revenue: 112% (2020) → 74% (2021E) → 54% (2025E)

*Opex:*

• R&D: 43% of opex (2020);
• S&M: 34% of opex (2020);
• G&A: 23% of opex (2020);

*EBITDA:*

• 2020A: ($61M) / 2021E: ($88M) / 2022E: ($112M) / 2023E: ($67M) / 2024E: $3M / 2025E: $104M

*Free Cash Flow:*

• 2020A: ($59M) / 2021E: ($76M) / 2022E: ($59M) / 2023E: $63M / 2024E: $168M / 2025E: $249M
• FCF turns positive before EBITDA due to upfront software prepayments (favorable NWC)

*SPAC / transaction:*

• Trust: $300M / PIPE: $190M / Transaction costs: $40M / Net to BS: $450M
• Redemption scenario:
• Pro forma shares: 155.8M / founder warrants (5.3M at $11.50 strike) excluded from basic

• Scenarios (Base / Bull / Bear - which variables flex):
• Base: Deck projections as stated (2021E–2025E from slide 75); 65% 5-year revenue CAGR; no redemptions
• Bull: Faster module attach rate adoption (attach rate reaches 90%+ by 2023); European expansion begins 2023; hardware reaches breakeven by 2024; higher ARPHU from roadmap products
• Bear: COVID re-acceleration delays construction/retrofit pipeline; bookings growth decelerates toward 30–40% (vs. 84–123% in base 2021–2022); hardware margin improvement delayed; partial SPAC redemptions reduce cash runway

• Required sheets / outputs:

1. Transaction tab: SPAC sources & uses, trust + PIPE, redemption sensitivity, pro forma cap table and share count
2. Bookings model: Annual booked units × hardware + software bookings per unit; module attach rate driver; cumulative booked home units build
3. Revenue bridge: Bookings → delivered units → HW revenue (on delivery) → SW revenue (ratable GAAP or cash basis with prepayment timing)
4. P&L: Split HW / SW gross margin; total gross profit; R&D, S&M, G&A opex; EBITDA; D&A; net loss
5. Unit economics tab: CAC, LTV, LTV/CAC (SW only and incl. HW losses); ARPHU build; payback period
6. Cash flow / FCF: Operating CF + investing CF; highlight prepayment NWC benefit; runway vs. pro forma cash
7. Pro forma balance sheet: Cash post-close ($510M), debt ($5M), working capital dynamics
8. KPI dashboard: Cumulative booked home units, booked ARR, net bookings expansion, gross dollar retention, ARPHU, LTV/CAC