# Latch (Door.com) Financial Model

Latch is an enterprise proptech company selling LatchOS, a full-building smart-access and SaaS operating system for multifamily residential buildings, going public via SPAC merger with TS Innovation Acquisitions Corp. (TSIA).

- Canonical: https://finamodel.com/startups/latch-doorcom
- Excel download: https://finamodel.com/startup-models/latch-doorcom.xlsx
- Category: PropTech
- Model type: SaaS ARR / Valuation
- Funding round: SPAC

- Founded: 2021
- Geography: US (operations in 35+ states); near-term European expansion targeted (Germany, France, UK). [DECK slides 58, 52]
- Customer: B2B

## About the company

Latch sells LatchOS, a smart-access and SaaS operating system for multifamily residential buildings. It combines hardware access products with recurring building software, treating hardware as a means of securing longer-term software relationships.

The company pursued a SPAC merger with TS Innovation Acquisitions Corp. in 2021, at a pre-transaction equity value of $1 billion. It operated in more than 35 US states and identified Germany, France, and the UK as near-term international expansion markets.

The model forecasts buildings, units, hardware ASP, software ARR, installation, service, expansion, and churn. Hardware COGS, recurring gross margin, sales capacity, R&D, and SPAC proceeds or redemptions show the economics and capital effects of the transaction.

## What's included

- 5-year monthly revenue build with stage-appropriate growth assumptions
- Full P&L, headcount plan, and operating-expense schedule
- Cash-flow statement, runway, and burn-rate tracking
- Valuation via exit multiple with a DCF cross-check
- Returns analysis with MOIC and IRR
- Unit economics including CAC, LTV, payback, and cohort retention

## Product & value proposition

- **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.

---

## Market

- 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.

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## Revenue model

**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.

---

## Traction & metrics

**Historical financials**:

| ($ millions) | 2018A | 2019A | 2020A |
| -- | -- | -- | -- |
| Hardware Bookings | $14 | $41 | $73 |
| Software Bookings | $15 | $70 | $92 |
| **Total Bookings** | **$29** | **$111** | **$165** |
| YoY Bookings Growth | - | 285% | 49% |
| Cumulative Booked Home Units (000s) | 45 | 145 | 305 |
| Booked ARR | $4 | $14 | $31 |
| Net Hardware Revenue | $4 | $14 | $14 |
| Net Software Revenue | $0 | $1 | $4 |
| **Net Revenue** | **$4** | **$15** | **$18** |
| YoY Net Revenue Growth | - | 237% | 21% |
| Hardware COGS | $6 | $17 | $20 |
| Software COGS | $0 | $0 | $0 |
| Total COGS | $6 | $17 | $20 |
| COGS % of Net Revenue | 143% | 116% | 112% |
| EBITDA | ($25) | ($50) | ($61) |
| Free Cash Flow | ($23) | ($51) | ($59) |

**Non-GAAP reconciliation (Adjusted EBITDA)**:

| ($ millions) | 2018A | 2019A | 2020A |
| -- | -- | -- | -- |
| Net Loss | ($25) | ($50) | ($66) |
| D&A | $0 | $1 | $1 |
| Interest Expense | $0 | $0 | $3 |
| EBITDA | ($25) | ($50) | ($61) |
| Adjusted EBITDA | ($24) | ($45) | ($55) |

**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)

---

## Unit economics

- **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

---

## Competition / moat

- **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.

---

## Team & funding ask / use of funds

**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

---

## Recommended financial model

**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

## Frequently asked questions

### Is the Latch (Door.com) financial model free?

Yes. The Latch (Door.com) model is a free Excel download with live formulas.

### Can I change the assumptions?

Yes. The workbook is editable and its live formulas recalculate when assumptions change.