COVER
COVER - shares | 3 Months Ended | |
Mar. 31, 2022 | May 03, 2022 | |
Document Information [Line Items] | ||
Document Type | 10-Q | |
Document Quarterly Report | true | |
Document Period End Date | Mar. 31, 2022 | |
Document Transition Report | false | |
Entity File Number | 001-39688 | |
Entity Registrant Name | Latch, Inc. | |
Entity Incorporation, State or Country Code | DE | |
Entity Tax Identification Number | 85-3087759 | |
Entity Address, Address Line One | 508 West 26th Street | |
Entity Address, Address Line Two | Suite 6G | |
Entity Address, City or Town | New York | |
Entity Address, State or Province | NY | |
Entity Address, Postal Zip Code | 10001 | |
City Area Code | 917 | |
Local Phone Number | 338-3915 | |
Entity Current Reporting Status | Yes | |
Entity Interactive Data Current | Yes | |
Entity Filer Category | Large Accelerated Filer | |
Entity Small Business | false | |
Entity Emerging Growth Company | false | |
Entity Shell Company | false | |
Entity Common Stock, Shares Outstanding | 143,621,160 | |
Entity Central Index Key | 0001826000 | |
Current Fiscal Year End Date | --12-31 | |
Document Fiscal Year Focus | 2022 | |
Document Fiscal Period Focus | Q1 | |
Amendment Flag | false | |
Common stock, par value $0.0001 per share | ||
Document Information [Line Items] | ||
Title of 12(b) Security | Common stock, par value $0.0001 per share | |
Trading Symbol | LTCH | |
Security Exchange Name | NASDAQ | |
Warrants, each whole warrant exercisable for one share of common stock at an exercise price of $11.50 per share | ||
Document Information [Line Items] | ||
Title of 12(b) Security | Warrants, each whole warrant exercisable for one share of common stock at an exercise price of $11.50 per share | |
Trading Symbol | LTCHW | |
Security Exchange Name | NASDAQ |
Condensed Consolidated Balance
Condensed Consolidated Balance Sheets - USD ($) $ in Thousands | Mar. 31, 2022 | Dec. 31, 2021 | |
Current assets | |||
Cash and cash equivalents | $ 90,959 | $ 124,782 | |
Available-for-sale securities - current | 172,993 | 158,973 | |
Accounts receivable, net | 28,967 | 25,642 | |
Inventories, net | 18,996 | 11,615 | |
Prepaid expenses and other current assets | 12,047 | 11,606 | |
Total current assets | 323,962 | 332,618 | |
Property and equipment, net | 2,755 | 2,039 | |
Available-for-sale securities - non-current | 71,058 | 102,878 | |
Internally developed software, net | 14,411 | 12,475 | |
Other non-current assets | 2,929 | 2,294 | |
Total assets | 415,115 | 452,304 | |
Current liabilities | |||
Accounts payable | 5,757 | 6,229 | |
Accrued expenses | 24,687 | 24,184 | |
Deferred revenue - current | 7,211 | 6,016 | |
Other current liabilities | 2,935 | 4,342 | |
Total current liabilities | 40,590 | 40,771 | |
Deferred revenue - non-current | 28,484 | 24,190 | |
Warrant liability | 3,520 | 9,787 | |
Other non current liabilities | 178 | 0 | |
Total liabilities | 72,772 | 74,748 | |
Commitments and contingencies (see Note 11) | |||
Stockholders’ equity (deficit) | |||
Common stock - $0.0001 par value, 1,000,000,000 shares authorized; 142,237,954 and 141,592,388 shares issued and outstanding as of March 31, 2022 and December 31, 2021, respectively(1) | [1] | 32 | 25 |
Additional paid-in capital | 718,305 | 706,713 | |
Accumulated other comprehensive loss | (2,292) | (676) | |
Accumulated deficit | (373,702) | (328,506) | |
Total stockholders’ equity (deficit) | 342,343 | 377,556 | |
Total liabilities and stockholders’ equity (deficit) | $ 415,115 | $ 452,304 | |
[1] | Shares issued and outstanding as of March 31, 2022 and December 31, 2021 exclude 738,000 shares subject to vesting requirements. See Note 1, Description of Business . |
Condensed Consolidated Balanc_2
Condensed Consolidated Balance Sheets (Parenthetical) - $ / shares | Mar. 31, 2022 | Dec. 31, 2021 | Jun. 04, 2021 |
Statement of Financial Position [Abstract] | |||
Common stock, par value (in dollars per share) | $ 0.0001 | $ 0.0001 | $ 0.0001 |
Common stock, authorized (in shares) | 1,000,000,000 | 1,000,000,000 | 1,000,000,000 |
Common stock outstanding (in shares) | 142,237,954 | 141,592,388 | 140,500,000 |
Common stock, issued (in shares) | 142,237,954 | 141,592,388 | 140,500,000 |
Shares subject to vesting restrictions (in shares) | 738,000 | 738,000 |
Condensed Consolidated Statemen
Condensed Consolidated Statements of Operations and Comprehensive Loss (unaudited) - USD ($) $ in Thousands | 3 Months Ended | ||
Mar. 31, 2022 | Mar. 31, 2021 | ||
Revenue: | |||
Total revenue | $ 13,655 | $ 6,629 | |
Cost of revenue | |||
Total cost of revenue | [1],[2] | 13,033 | 6,162 |
Operating expenses: | |||
Research and development | [1] | 18,257 | 9,615 |
Sales and marketing | [1] | 17,296 | 3,750 |
General and administrative | [1] | 14,178 | 17,696 |
Depreciation and amortization | 1,506 | 653 | |
Total operating expenses | 51,237 | 31,714 | |
Loss from operations | (50,615) | (31,247) | |
Other income (expense) | |||
Change in fair value of warrant liability | 6,267 | 0 | |
Change in fair value of trading securities | 1,000 | 0 | |
Interest expense, net | (864) | (3,318) | |
Other expense | (2) | (3,536) | |
Total other income (expense), net | 6,401 | (6,854) | |
Loss before income taxes | (44,214) | (38,101) | |
Provision for income taxes | 17 | 0 | |
Net loss | (44,231) | (38,101) | |
Other comprehensive loss | |||
Unrealized loss on available-for-sale securities | (1,618) | 0 | |
Foreign currency translation adjustment | 2 | (7) | |
Comprehensive loss | $ (45,847) | $ (38,108) | |
Net loss per common share | |||
Basic net loss per common share (in dollars per share) | $ (0.31) | $ (3.65) | |
Diluted net loss per common share (in dollars per share) | $ (0.31) | $ (3.65) | |
Weighted average shares outstanding | |||
Basic weighted average shares outstanding (in shares) | 141,970,190 | 10,438,778 | |
Diluted weighted average shares outstanding (in shares) | 141,970,190 | 10,438,778 | |
Hardware | |||
Revenue: | |||
Total revenue | $ 9,055 | $ 5,014 | |
Cost of revenue | |||
Total cost of revenue | [1],[2] | 10,992 | 6,028 |
Software | |||
Revenue: | |||
Total revenue | 3,039 | 1,615 | |
Cost of revenue | |||
Total cost of revenue | [1],[2] | 323 | 134 |
Services | |||
Revenue: | |||
Total revenue | 1,561 | 0 | |
Cost of revenue | |||
Total cost of revenue | [1],[2] | $ 1,718 | $ 0 |
[1] | Stock-based compensation expense included in cost of revenue and operating expenses is as follows: Cost of revenue $ 272 $ 14 Research and development 4,501 3,999 Sales and marketing 2,322 161 General and administrative 4,623 10,319 Total stock-based compensation $ 11,718 $ 14,493 | ||
[2] | Exclusive of depreciation and amortization shown in operating expense below. |
Condensed Consolidated Statem_2
Condensed Consolidated Statements of Operations and Comprehensive Loss (unaudited) (Parenthetical) - USD ($) $ in Thousands | 3 Months Ended | |
Mar. 31, 2022 | Mar. 31, 2021 | |
Total stock-based compensation | $ 11,718 | $ 14,493 |
Cost of revenue | ||
Total stock-based compensation | 272 | 14 |
Research and development | ||
Total stock-based compensation | 4,501 | 3,999 |
Sales and marketing | ||
Total stock-based compensation | 2,322 | 161 |
General and administrative | ||
Total stock-based compensation | $ 4,623 | $ 10,319 |
Condensed Consolidated Statem_3
Condensed Consolidated Statements of Redeemable Convertible Preferred Stock and Stockholders' Equity (Deficit) (unaudited) - USD ($) $ in Thousands | Total | Cumulative Effect, Period of Adoption, Adjustment | Previously Reported | Revision of Prior Period, Adjustment | Common Stock | Common StockPreviously Reported | Common StockRevision of Prior Period, Adjustment | Additional Paid-In Capital | Additional Paid-In CapitalPreviously Reported | Accumulated Other Comprehensive Income (Loss) | Accumulated Other Comprehensive Income (Loss)Previously Reported | Accumulated Deficit | Accumulated DeficitCumulative Effect, Period of Adoption, Adjustment | Accumulated DeficitPreviously Reported |
Temporary equity, beginning balance (in shares) at Dec. 31, 2020 | 63,756,000 | 71,069,000 | (7,313,000) | |||||||||||
Temporary equity, beginning balance at Dec. 31, 2020 | $ 160,605 | $ 160,605 | ||||||||||||
Temporary equity, ending balance (in shares) at Mar. 31, 2021 | 63,756,000 | |||||||||||||
Temporary equity, ending balance at Mar. 31, 2021 | $ 160,605 | |||||||||||||
Beginning balance (in shares) at Dec. 31, 2020 | 8,169,000 | 9,106,000 | (937,000) | |||||||||||
Beginning balance at Dec. 31, 2020 | (154,277) | $ (154,277) | $ 0 | $ 0 | $ 7,901 | $ 7,901 | $ 9 | $ 9 | $ (162,187) | $ (162,187) | ||||
Increase (Decrease) in Stockholders' Equity [Roll Forward] | ||||||||||||||
Exercises of common stock options (in shares) | 5,428,000 | |||||||||||||
Exercises of common stock options | 2,816 | 2,816 | ||||||||||||
Stock-based compensation | 14,513 | 14,513 | ||||||||||||
Foreign currency translation adjustment | (7) | (7) | ||||||||||||
Unrealized loss on available-for-sale securities | 0 | |||||||||||||
Net loss | (38,101) | (38,101) | ||||||||||||
Ending balance (in shares) at Mar. 31, 2021 | 13,597,000 | |||||||||||||
Ending balance at Mar. 31, 2021 | $ (175,056) | $ 0 | 25,230 | 2 | (200,288) | |||||||||
Temporary equity, beginning balance (in shares) at Dec. 31, 2020 | 63,756,000 | 71,069,000 | (7,313,000) | |||||||||||
Temporary equity, beginning balance at Dec. 31, 2020 | $ 160,605 | $ 160,605 | ||||||||||||
Temporary equity, ending balance (in shares) at Dec. 31, 2021 | 0 | |||||||||||||
Temporary equity, ending balance at Dec. 31, 2021 | $ 0 | |||||||||||||
Beginning balance (in shares) at Dec. 31, 2020 | 8,169,000 | 9,106,000 | (937,000) | |||||||||||
Beginning balance at Dec. 31, 2020 | $ (154,277) | $ (154,277) | $ 0 | $ 0 | 7,901 | $ 7,901 | 9 | $ 9 | (162,187) | $ (162,187) | ||||
Ending balance (in shares) at Dec. 31, 2021 | 141,592,388 | 141,593,000 | ||||||||||||
Ending balance at Dec. 31, 2021 | $ 377,556 | $ (965) | $ 25 | 706,713 | (676) | (328,506) | $ (965) | |||||||
Increase (Decrease) in Stockholders' Equity [Roll Forward] | ||||||||||||||
Accounting Standards Update [Extensible Enumeration] | Accounting Standards Update 2016-13 [Member] | |||||||||||||
Temporary equity, ending balance (in shares) at Mar. 31, 2022 | 0 | |||||||||||||
Temporary equity, ending balance at Mar. 31, 2022 | $ 0 | |||||||||||||
Increase (Decrease) in Stockholders' Equity [Roll Forward] | ||||||||||||||
Exercises of common stock options (in shares) | 364,980 | 365,000 | ||||||||||||
Exercises of common stock options | $ 175 | $ 4 | 171 | |||||||||||
Issuance of common stock upon settlement of restricted stock units (in shares) | 490,000 | |||||||||||||
Issuance of common stock upon settlement of restricted stock units | 5 | $ 5 | ||||||||||||
Tax withholdings on settlement of equity awards (in shares) | (210,000) | |||||||||||||
Tax withholdings on settlement of equity awards | (1,293) | $ (2) | (1,291) | |||||||||||
Payments of Reverse Recapitalization Transaction Costs And Advisory Fees | (25) | (25) | ||||||||||||
Stock-based compensation | 12,737 | 12,737 | ||||||||||||
Foreign currency translation adjustment | 2 | 2 | ||||||||||||
Unrealized loss on available-for-sale securities | (1,618) | (1,618) | ||||||||||||
Net loss | $ (44,231) | (44,231) | ||||||||||||
Ending balance (in shares) at Mar. 31, 2022 | 142,237,954 | 142,238,000 | ||||||||||||
Ending balance at Mar. 31, 2022 | $ 342,343 | $ 32 | $ 718,305 | $ (2,292) | $ (373,702) |
Condensed Consolidated Statem_4
Condensed Consolidated Statements of Redeemable Convertible Preferred Stock and Stockholders' Equity (Deficit) (unaudited) (Parenthetical) - shares shares in Thousands | Mar. 31, 2022 | Dec. 31, 2021 |
Statement of Stockholders' Equity [Abstract] | ||
Shares subject to vesting restrictions (in shares) | 738 | 738 |
Condensed Consolidated Statem_5
Condensed Consolidated Statement of Cash Flows (unaudited) - USD ($) $ in Thousands | 3 Months Ended | |
Mar. 31, 2022 | Mar. 31, 2021 | |
Operating activities | ||
Net loss | $ (44,231) | $ (38,101) |
Adjustments to reconcile net loss to net cash used by operating activities | ||
Depreciation and amortization | 1,506 | 653 |
Non-cash interest expense | 994 | 1,934 |
Change in fair value of derivative liabilities | 0 | 3,597 |
Change in fair value of warrant liability | (6,267) | 0 |
Change in fair value of trading securities | (1,000) | 0 |
Provision for excess and obsolete inventory | 665 | 9 |
Allowance (reversal) for doubtful accounts | (50) | 171 |
Stock-based compensation | 11,718 | 14,493 |
Changes in assets and liabilities | ||
Accounts receivable | (4,241) | (1,108) |
Inventories | (8,046) | 537 |
Prepaid expenses and other current assets | 811 | (2,424) |
Other non-current assets | (713) | (53) |
Accounts payable | (471) | 1,732 |
Accrued expenses | 199 | 1,331 |
Other current liabilities | (344) | 0 |
Other non-current liabilities | 178 | 620 |
Deferred revenue | 5,489 | 2,279 |
Net cash used in operating activities | (43,803) | (14,330) |
Investing activities | ||
Purchase of available-for-sale securities | (24,367) | 0 |
Proceeds from maturities of available-for-sale securities | 39,587 | 0 |
Purchase of trading securities | (250) | 0 |
Purchase of property and equipment | (736) | (290) |
Development of internal software | (2,069) | (1,446) |
Net cash provided by (used in) investing activities | 12,165 | (1,736) |
Financing activities | ||
Proceeds from issuance of common stock | 180 | 2,035 |
Payments for tax withholding on net settlement of equity awards | (1,293) | 0 |
Proceeds from revolving credit facility | 1,345 | 53 |
Repayment of revolving credit facility | (2,409) | 0 |
Net cash (used in) provided by financing activities | (2,177) | 2,088 |
Effect of exchange rate on cash | (8) | (9) |
Net change in cash and cash equivalents | (33,823) | (13,987) |
Beginning of period | 124,782 | 60,529 |
End of period | 90,959 | 46,542 |
Supplemental disclosure of non-cash investing and financing activities | ||
Capitalization of stock-based compensation to internally developed software | 1,019 | 21 |
Capitalization of transaction costs | 0 | 3,412 |
Accrued issuance costs | 25 | 0 |
Accrued fixed assets | 251 | 67 |
Receivable from option exercises | $ 0 | $ 781 |
DESCRIPTION OF BUSINESS
DESCRIPTION OF BUSINESS | 3 Months Ended |
Mar. 31, 2022 | |
Organization, Consolidation and Presentation of Financial Statements [Abstract] | |
DESCRIPTION OF BUSINESS | DESCRIPTION OF BUSINESS Latch, Inc. (referred to herein, collectively with its subsidiaries, as “Latch” or the “Company”) is an enterprise technology company focused on revolutionizing the way people experience spaces by making spaces better places to live, work and visit through a system of software, devices and services. Latch has created a full-building operating system, LatchOS, that addresses the essential needs of modern buildings by streamlining building operations, enhancing the resident experience and enabling more efficient interactions with service providers. On June 4, 2021 (the “Closing Date”), the Company consummated the previously announced merger pursuant to that certain Agreement and Plan of Merger, dated as of January 24, 2021 (the “Merger Agreement”), by and among the Company (formerly known as TS Innovation Acquisitions Corp. (“TSIA”)), Latch Systems, Inc. (formerly known as Latch, Inc. (“Legacy Latch”)) and Lionet Merger Sub Inc., a wholly owned subsidiary of TSIA (“Merger Sub”), pursuant to which Merger Sub merged with and into Legacy Latch, with Legacy Latch becoming a wholly owned subsidiary of the Company (the “Business Combination” and, collectively with the other transactions described in the Merger Agreement, the “Transactions”). In connection with the closing of the Transactions, the Company changed its name from TS Innovation Acquisitions Corp. to Latch, Inc. The “Post Combination Company” following the Business Combination is Latch, Inc. The Company is located and headquartered in New York, NY. Other offices operated by the Company are in San Francisco, CA; Denver, CO; and Taipei, Taiwan. In May 2019, the Company incorporated Latch Taiwan, Inc., a wholly owned subsidiary, in the state of Delaware. In October 2020, the Company incorporated Latch Insurance Solutions, LLC, a wholly owned subsidiary, in the state of Delaware. In September 2021, the Company incorporated Latch Systems Ltd., a wholly owned subsidiary, in England and Wales. The Company’s revenues are derived primarily from operations in North America. The Business Combination On January 24, 2021, TSIA entered into the Merger Agreement with Merger Sub and Legacy Latch. Legacy Latch’s board of directors unanimously approved Legacy Latch’s entry into the Merger Agreement. On June 3, 2021, TSIA held a special meeting of its stockholders (the “Special Meeting”), at which the TSIA stockholders considered and adopted, among other matters, a proposal to approve the Business Combination, including (a) adopting the Merger Agreement and (b) approving the other Transactions contemplated by the Merger Agreement. On June 4, 2021, the Company consummated the Business Combination and the other Transactions (the “Closing”). The following occurred upon the Closing: • The mandatory conversion feature upon a business combination was triggered for the convertible promissory notes issued in 2020 (the “Convertible Notes”), causing a conversion of the $50.0 million outstanding principal amount of these Convertible Notes and any unpaid accrued interest into equity securities at a specified price. The noteholders received approximately 6.9 million shares of common stock in the Post Combination Company. Also, the embedded derivative related to the Convertible Notes was extinguished as part of the Closing. • The 71.1 million outstanding shares of redeemable convertible preferred stock were exchanged for 63.8 million shares of common stock in the Post Combination Company. • Repayment in full of the outstanding principal and accrued interest on a term loan entered into in 2020 in the total amount of $5.0 million. The embedded derivative on the warrants issued in connection with the term loan was extinguished as part of the Closing. • Holders of 5,916 shares of TSIA’s Class A common stock sold in its initial public offering (the “Initial Shares”) properly exercised their right to have such shares redeemed for a full pro rata portion of the trust account holding the proceeds from TSIA’s initial public offering (the “TSIA IPO”), calculated as of two business days prior to the consummation of the Business Combination, which was approximately $10.00 per share, or $0.06 million in the aggregate. • The shares of TSIA Class B common stock held by TS Innovation Acquisitions Sponsor, L.L.C. (“Sponsor”) automatically converted to 7.4 million shares of common stock in the Post Combination Company. Of the 7.4 million shares of common stock held by the Sponsor, 0.7 million are subject to vesting under certain conditions (the “Sponsor Earnout Shares”), including that the volume-weighted average price of the Post Combination Company equals or exceeds $14.00 for any 20 trading days within a 30 trading day period on or prior to the five year anniversary of the Closing. • Pursuant to subscription agreements entered into in connection with the Merger Agreement, certain investors agreed to subscribe for an aggregate of 19.3 million newly-issued shares of common stock at a purchase price of $10.00 per share for an aggregate purchase price of $192.6 million (the “PIPE Investment”). The PIPE Investment included 0.3 million newly issued shares of common stock at a purchase price of $10.00 per share for an aggregate purchase price of $2.6 million that was used to fund a cash election. At the Closing, the Company consummated the PIPE Investment. • After giving effect to the Transactions, the redemption of Initial Shares as described above and the consummation of the PIPE Investment, there were 140.5 million shares of common stock issued and outstanding (excluding the Sponsor Earnout Shares). As noted above, an aggregate of $0.06 million was paid from TSIA’s trust account to holders that properly exercised their right to have Initial Shares redeemed, and the remaining balance immediately prior to the Closing of approximately $300.0 million remained in the trust account. The remaining amount in the trust account was used to fund the Business Combination. Latch received approximately $450.0 million in cash proceeds, net of fees and expenses funded in connection with the Closing of the Business Combination, which included approximately $192.6 million from the PIPE Investment mentioned above. As a result of the Business Combination, each share of Legacy Latch redeemable convertible preferred stock and common stock was converted into the right to receive approximately 0.8971 shares of the common stock of the Post Combination Company (the “Exchange Ratio”). Based on the following factors, the Company determined under Accounting Standards Codification (“ASC”) 805, Business Combinations , that the Business Combination was a reverse recapitalization. • Legacy Latch stockholders owned approximately 60.0% of the shares in the Post Combination Company, and thus had sufficient voting rights to exert influence over the Post Combination Company. • Legacy Latch appointed a majority of the Post Combination Company’s board of directors and maintained a majority of the composition of management. • Legacy Latch was the larger entity based on historical revenues and business operations and comprised the ongoing operations of the Post Combination Company. • The Post Combination Company assumed the name “Latch, Inc.” The accounting for the transaction was similar to that resulting from a reverse acquisition, except that goodwill or other intangibles were not recognized, and the transaction was followed by a recapitalization. In accordance with guidance applicable to these circumstances, the equity structure has been recast in all comparative periods up to the Closing Date to reflect the number of shares of the Company’s common stock, par value $0.0001 per share, issued to Legacy Latch’s stockholders in connection with the Business Combination. As such, the shares and corresponding capital amounts and earnings per share related to Legacy Latch redeemable convertible preferred stock and Legacy Latch common stock prior to the Business Combination have been retroactively recast as shares reflecting the Exchange Ratio of 0.8971 established in the Business Combination. Post Combination Company common stock and warrants commenced trading on the Nasdaq Stock Market LLC under the symbols “LTCH” and “LTCHW,” respectively, on June 7, 2021. COVID-19 In March 2020, the outbreak of COVID-19 was declared a pandemic. The COVID-19 pandemic disrupted and may continue to disrupt the Company’s hardware deliveries due to delays in construction timelines at customers’ building sites. COVID-19 has also affected our supply chain consistent with its effect across many industries, including creating shipping and logistics challenges. We expect these impacts, including potential delayed product availability and higher component and shipping costs, to continue for as long as the global supply chain is experiencing these challenges. We continue to invest in supply chain initiatives to address industry-wide capacity challenges. While the nature of the situation is dynamic, the Company has considered the impact when developing its estimates and assumptions. Actual results and outcomes may differ from management’s estimates and assumptions. |
SUMMARY OF SIGNIFICANT ACCOUNTI
SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES | 3 Months Ended |
Mar. 31, 2022 | |
Accounting Policies [Abstract] | |
SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES | SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES Basis of Presentation The condensed consolidated financial statements and related notes of the Company have been prepared in accordance with accounting principles generally accepted in the United States for interim financial reporting and Article 10 of Regulation S-X. Accordingly, certain information and footnote disclosures normally included in financial statements prepared under U.S. generally accepted accounting principles (“GAAP”) have been condensed or omitted pursuant to the rules and regulations of 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 for the year ended December 31, 2021 and the notes thereto, which are included in the Company’s Annual Report on Form 10-K filed with the SEC on March 1, 2022. Shares outstanding and earnings per share available for common stockholders prior to the Business Combination have been retroactively restated to reflect the Exchange Ratio and for consistency with the current period presentation. Principles of Consolidation The condensed consolidated financial statements include the accounts of Latch, Inc. and its wholly owned subsidiaries, Latch Systems, Inc., Latch Taiwan, Inc., Latch Insurance Solutions, LLC and Latch Systems Ltd. All intercompany transactions have been eliminated in consolidation. 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. Estimates are used when accounting for revenue recognition, allowance for doubtful accounts, allowance for hardware returns, estimates of excess and obsolete inventory, stock-based compensation, warrants, impairment of fixed assets, investment in trading securities and capitalized internally developed software. 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. Due to the use of estimates inherent in the financial reporting process and given the unknowable duration and effects of the COVID-19 pandemic, among other factors, actual results could differ from those estimates. The Company’s significant accounting policies for its Condensed Consolidated Financial Statements as of March 31, 2022 are summarized below and should be read in conjunction with the Summary of Significant Accounting Policies detailed in the Company’s Consolidated Financial Statements for the year ended December 31, 2021. Marketable Securities The Company classifies its fixed income marketable securities as available-for-sale based on its intentions with regard to these instruments. Accordingly, marketable securities are reported at fair value, with all unrealized holding gains and losses reflected in stockholders’ equity. On January 1, 2022, the Company adopted Accounting Standards Update (“ASU”) 2016-13, Financial Instruments-Credit Losses (Topic 326): Measurement of Credit Losses of Financial Instruments (“ASU 2016-13”) that requires credit losses to be recorded on an expected loss methodology. The Company monitors the marketable securities for expected credit losses and indicators of impairment. If it is determined that an investment has an expected credit loss, the Company recognizes the investment loss in other income (expense) in the condensed consolidated statements of operations and comprehensive loss. The Company periodically evaluates its investments to determine if impairment charges are required. Accounts Receivable and Allowance for Doubtful Accounts Accounts receivable are stated at net realizable value, net of allowance for doubtful accounts and reserve for wholesale returns (See “—Revenue Recognition—Hardware” below for further information). Following the adoption of ASU 2016-13, the Company recognizes an accounts receivable allowance based on estimates of expected credit losses. The Company estimates the total expected credit loss over the lifetime of the receivables using historical loss data and by applying a loss-rate method using relevant available information from internal and external sources, including historical write-off activity, current conditions and reasonable and supportable forecasts. Historical credit loss experience provides the basis for the estimation of expected credit losses. Adjustments to historical loss information are made for changes in economic conditions. When certain amounts are deemed uncollectible, those balances are reserved in full. The allowance for doubtful accounts is measured on a pooled basis when similar risk characteristics exist. When assessing whether to measure certain financial assets on a pooled basis, the Company considers various risk characteristics, including the financial asset type, size and historical or expected credit loss pattern. These risk characteristics are relevant to accounts receivable and contract assets. The Company considers customer type, product lines and geography in relation to further segmentation and determined that further segmentation of the accounts receivable and contract assets would not yield a materially different credit loss allowance. The Company only segments its receivables based on the aging of the outstanding balance. The Company generally does not require any security or collateral to support its receivables. The following table represents a roll-forward of the Company’s allowance for doubtful accounts: Balance as of January 1, 2022 $ 1,980 Impact of adopting ASU 2016-13 927 Provision for doubtful accounts 298 Recoveries (353) Balance as of March 31, 2022 $ 2,852 Inventories, Net Inventories consist of finished goods and component parts, which are purchased from contract manufacturers and component suppliers. Inventories are stated at the lower of cost or net realizable value with cost being determined using the average cost method. The Company periodically assesses the valuation of inventory and writes down the value for estimated excess and obsolete inventory based upon estimates of future demand and market conditions, when necessary. Leases On January 1, 2022, the Company adopted ASU 2016-02, Leases (Topic 842) (“ASC 842”). The Company determines if an arrangement contains a lease at the inception of the arrangement. As part of the lease determination process, the Company assesses several factors, including, but not limited to, whether there is a right to control and direct the use of the asset and whether the other party has a substantive substitution right. The Company will apply the portfolio approach whenever leases are both similar in nature and have identical or nearly identical contract provisions. However, as the Company’s leases generally do not have identical or nearly identical contract provisions, the Company will account for each of its leases at the contract level. If the Company enters into leases that are similar in nature and have identical or nearly identical contract provisions, the Company will apply the portfolio approach as necessary. The Company has made the policy election to not separate lease and non-lease components for any of its leases within its existing classes of assets. The Company will evaluate this election for any new leases involving a new underlying class of asset. The Company also made the policy election to not recognize a lease liability or a right-of-use asset for any leases with a term of 12 months or less. These lease payments are recognized on a straight-line basis over the lease term. In general, the Company concluded that any of its renewal options and termination options are reasonably certain to not be exercised. This is due to the fact that the needs of the Company continue to evolve as the Company’s business progresses and its facility requirements may change in the future in order to support the Company’s operations. The Company does not generally enter into lease arrangements where the option to renew or terminate a lease is controlled by the lessor. However, the Company will evaluate any such options on a contract-by-contract basis to determine whether specific circumstances would result in the conclusion that any options are reasonably certain to be exercised. Right-of-use (“ROU”) assets represent the right to use an underlying asset for the term of the lease, and lease liabilities represent the obligation to make lease payments throughout the term of the lease. ROU assets and lease liabilities are recognized as of the commencement date of the lease based on the present value of contractual lease payments due over the term of the lease. The Company uses an incremental borrowing rate to determine the present value of the lease payments, as the leases do not state the rate implicit in the lease. The incremental borrowing rate is determined based on various outstanding debt from which an estimated discount rate can be determined. These rates are adjusted, as necessary, to account for differences in the term, amounts and risks of each lease relative to the terms of the debt. ROU assets resulting from operating leases are recorded within other non-current assets, and lease liabilities from operating leases are recorded within current liabilities and non-current liabilities, on the condensed consolidated balance sheets. We did not have any finance leases or subleases as of March 31, 2022 and December 31, 2021. Rent expense related to our leases is allocated between cost of revenue, research and development, sales and marketing, and general and administrative depending on headcount and the nature of the underlying lease. Intangible Assets The Company’s finite-lived intangible assets consisted of the following as of March 31, 2022 and December 31, 2021: March 31, 2022 December 31, 2021 Assembled workforce $ 700 $ 700 Domain names 318 318 Patents 37 37 Other intangibles 4 4 Intangible assets 1,059 1,059 Less: accumulated amortization (292) (213) Total intangible assets, net $ 767 $ 846 Revenue Recognition In determining the appropriate amount of revenue to be recognized as it fulfills its obligations under its agreements, the Company performs the following steps: (i) identify contracts with customers; (ii) identify performance obligations; (iii) determine the transaction price; (iv) allocate the transaction price to the performance obligations; and (v) recognize revenue when (or as) the Company satisfies each performance obligation. A performance obligation is a promise in a contract to transfer a distinct good or service to a customer and is the unit of account in ASU No. 2014-09 and its related amendments (collectively known as ASC 606, Revenue from Contracts with Customers ). Revenues are recognized when control of the promised goods or services are transferred to a customer in an amount that reflects the consideration that the Company expects to receive in exchange for those services. The Company currently generates its revenues from three primary sources: (1) hardware devices, (2) software products and (3) services related to the hardware devices. Hardware The Company generates hardware revenue primarily from the sale of its portfolio of devices for its smart access and smart apartment solutions. The Company sells hardware to building developers directly or through its channel partners who act as the intermediary and installer. The Company recognizes hardware revenue when the hardware is shipped directly to building developers or to its channel partners, which is when control is transferred to the building developer. The Company provides warranties that its hardware will be substantially free from defects in materials and workmanship for a period of one year for electronic components and five years for mechanical components. The Company replaces, repairs or refunds warrantable devices at its sole discretion. The Company determined these warranties are not separate performance obligations as they cannot be purchased separately and do not provide a service in addition to an assurance the hardware will function as expected. 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, 2022 and 2021, the reserve for hardware warranties was approximately 2% and 1% of cost of hardware revenue, respectively. The Company also provides certain customers a wholesale arrangement with 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, 2022 and 2021, the reserve for wholesale returns against revenue was zero and $0.01 million, respectively. The reserve against accounts receivable as of March 31, 2022 and December 31, 2021 was $0.6 million and $0.6 million, respectively. Software The Company generates software revenue primarily through the sale of its software-as-a-service (“SaaS”) to building developers over its cloud-based platform on a subscription-based arrangement. Subscription fees vary depending on the optional features selected by customers as well as the term length. SaaS arrangements generally have term lengths of month-to-month, two-year, five-year and ten-year and include a fixed fee paid upfront except for the month-to-month arrangements. As a result of significant discounts provided to our customers on the longer-term software contracts paid upfront, the Company has determined that there is a significant financing component related to the time value of money and has therefore broken out the interest component and recorded it as a component of interest income (expense), net on the 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 where the outstanding principal balance decreases over time. The amount of interest expense related to this component was $1.1 million and $0.7 million for the three months ended March 31, 2022 and 2021, respectively. The services provided by the Company for the subscription-based arrangements are considered stand-ready performance obligations where customers benefit from the services evenly throughout the service period. Revenue is primarily recognized on a ratable basis over the subscription period of the contractual arrangement beginning when or as control of the promised services is available or transferred to the customer. Services The Company generates revenues for services related to installation and activation of hardware devices sold to building developers. These services are recognized over time on a percentage of completion basis. The Company recognized services revenue of $1.6 million and zero for the three months ended March 31, 2022 and 2021, respectively. Performance Obligations The Company enters into contracts that contain multiple distinct performance obligations: hardware, software and services. The hardware performance obligation includes the delivery of hardware, the software performance obligation allows the customer access to the software during the contracted-use term when the promised service is transferred to the customer and the services performance obligation includes the delivery of activation and installation of the hardware. The Company has determined that the hardware, software and services are individual distinct performance obligations because they can be sold by the Company on a standalone basis, and because other vendors sell similar technologies and services on a standalone basis. For each performance obligation identified, the Company estimates the standalone selling price, which represents the price at which the Company would sell the good or service separately. If the standalone selling price is not observable through past transactions, the Company estimates the standalone selling price, taking into account available information such as market conditions, historical pricing data and internal pricing guidelines related to the performance obligations. The Company then allocates the transaction price among those obligations based on the estimation of standalone selling price. For software revenue, the Company estimates the transaction price, including variable consideration, at the commencement of the contract and recognizes revenue over the contract term. The aggregate amount of the transaction price allocated to performance obligations that were unsatisfied was $35.7 million as of March 31, 2022. The Company expects to recognize the short-term amount of $7.2 million over the next 12 months, of which $11.1 million will be recognized as revenue and $3.9 million will be recognized as interest expense related to the significant financing component, and the long-term portion of $28.5 million over the contracted-use term of each agreement, of which $38.1 million will be recognized as revenue and $9.6 million will be recognized as interest expense related to the significant financing component. Revenue Disaggregation The Company had total revenue of $13.7 million and $6.6 million for the three months ended March 31, 2022 and 2021, respectively. The Company’s revenues are derived primarily from operations in North America. Deferred Contract Costs The Company capitalizes commission expenses paid that are incremental to obtaining customer software contracts. Costs related to the initial signing of software contracts are amortized over the average customer life, which has been estimated to be ten years. The Company determined the period of benefit by taking into consideration the length of terms in its customer contracts, including renewals and extensions. Amounts expected to be recognized within one year of the balance sheet date are recorded as deferred contract costs, current and are included in prepaid expenses and other current assets on the condensed consolidated balance sheets; the remaining portion is recorded as deferred contract costs, non-current and is included in other non-current assets on the condensed consolidated balance sheets. Amortization expense is included in sales and marketing expense in the condensed consolidated statements of operations and comprehensive loss. The following table represents a roll-forward of the Company’s deferred contract costs: Balance as of January 1, 2022 $ 1,275 Additions to deferred contract costs 392 Amortization of deferred contract costs (40) Balance as of March 31, 2022 $ 1,627 Contract Assets and Contract Liabilities (Unbilled Receivables and Deferred Revenue) March 31, 2022 December 31, 2021 Contract assets (unbilled receivables) $ 619 $ 633 Contract liabilities (deferred revenue) $ 35,695 $ 30,206 The Company enters into contracts with its customers, which may give rise to contract assets (unbilled receivables) and contract liabilities (deferred revenue) due to revenue recognition differing from the timing of billings to customers. The Company recognizes unbilled receivables when the performance obligation precedes the invoice date. The Company considers contract assets similar to accounts receivable but with an extended credit term. Until the contract asset is billed, the Company is exposed to a similar credit risk as current accounts receivable. The expected loss percentage is the same as the loss rate used for each accounts receivable aging bucket. As of March 31, 2022, contract assets are reported net of a loss reserve of $0.04 million. The Company records unbilled receivables within accounts receivable, net on the condensed consolidated balance sheets. The Company records contract liabilities to deferred revenue when the Company bills customers in advance of the performance obligations being satisfied on the Company’s contracts, which is generally the case for the Company’s software revenue. The Company generally invoices its customers monthly, or up to two years, five years or ten years in advance of services being provided. The Company recognized $2.4 million of prior year deferred software revenue during the three months ended March 31, 2022. Increase in contract liabilities for the three months ended March 31, 2022 primarily resulted from growth of contracts with new and existing customers. Deferred revenue that will be recognized during the succeeding 12-month period is recorded within current liabilities on the accompanying Condensed Consolidated Balance Sheets. 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, warranty costs, assembly costs and warehousing costs, as well as other non-inventoriable costs including personnel-related expenses associated with supply chain logistics and channel partner fees. Cost of software revenue consists primarily of outsourced hosting costs and personnel-related expenses associated with monitoring and managing outsourced hosting service providers. Cost of services revenue consists primarily of third-party installation labor costs, parts and materials and personnel-related expenses associated with deployment of our hardware. Cost of revenue excludes depreciation and amortization shown in operating expenses. Income Taxes Income taxes are accounted for under the asset and liability method. Deferred tax assets and liabilities are recognized for the future tax consequences attributable to differences between the condensed consolidated financial statement carrying amounts of existing assets and liabilities and their respective tax bases and operating loss and tax credit carryforwards. Deferred tax assets and liabilities are measured using enacted tax rates expected to apply to taxable income in the years in which those temporary differences are expected to be recovered or settled. The effect on deferred tax assets and liabilities of a change in tax rates is recognized in income in the period that includes the enactment date. A valuation allowance is recorded for deferred tax assets if it is more likely than not that some portion or all of the deferred tax assets will not be realized. As of March 31, 2022 and December 31, 2021, the Company recorded a full valuation allowance against its deferred tax assets. The Company recognizes the effect of income tax positions only if those positions are more likely than not to be sustained. Recognized income tax positions are measured at the largest amount that has a greater than 50% likelihood of being realized. Changes in recognition or measurement are reflected in the period in which the change in judgment occurs. Stock-Based Compensation The Company measures and records the expense related to stock-based payment awards based on the fair value of those awards as determined on the date of grant. The Company recognizes stock-based compensation expense over the requisite service period of the individual grant, generally equal to the vesting period, and uses the straight-line method to recognize stock-based compensation. The fair value of restricted stock units (“RSUs”) is determined using the closing trading price of the Company’s common stock on the grant date. The Company uses the Black-Scholes-Merton (“Black-Scholes”) option-pricing model to determine the fair value of stock options. The Black-Scholes option-pricing model requires the use of highly subjective and complex assumptions to determine the fair value of stock options, including the option’s expected term and the price volatility of the underlying stock. The Company calculates the fair value of options granted by using the Black-Scholes option-pricing model with the following assumptions: • Expected Volatility —The Company estimates volatility for option grants by evaluating the average historical volatility of a peer group of companies for the period immediately preceding the option grant for a term that is approximately equal to the option’s expected term. • Expected Term —The expected term of the Company’s options represents the period that the stock-based awards are expected to be outstanding. The Company has elected to use the midpoint between the stock options’ vesting term and contractual expiration period to compute the expected term, as the Company does not have sufficient historical information to develop reasonable expectations about future exercise patterns and post-vesting employment termination behavior. • Risk-Free Interest Rate —The risk-free interest rate is based on the implied yield currently available on U.S. Treasury zero-coupon issues with a term that is equal to the options’ expected term at the grant date. • Dividend Yield —The Company has not declared or paid dividends to date and does not anticipate declaring dividends. As such, the dividend yield has been estimated to be zero. Fair Value Measurement Fair value accounting is applied for all financial assets and liabilities and nonfinancial assets and liabilities that are recognized or disclosed at fair value in the condensed consolidated financial statements on a recurring basis (at least annually). Fair value is defined as the exchange price that would be received for an asset or an exit price that would be paid to transfer a liability in the principal or most advantageous market for the asset or liability in an orderly transaction between market participants on the measurement date. The authoritative guidance establishes a fair value hierarchy that prioritizes the inputs to valuation techniques used to measure fair value. The hierarchy gives the highest priority to unadjusted quoted prices in active markets for identical assets or liabilities (Level 1 measurements) and the lowest priority to measurements involving significant unobservable inputs (Level 3 measurements). The three levels of the fair value hierarchy are as follows: Level 1 —Inputs are quoted prices (unadjusted) in active markets for identical assets or liabilities that the Company has the ability to access at the measurement date. Level 2 —Inputs are observable, either directly or indirectly, unadjusted quoted prices in active markets for similar assets or liabilities, unadjusted quoted prices for identical or similar assets or liabilities in markets that are not active or other inputs that are observable or can be corroborated by observable market data for substantially the full term of the related assets or liabilities. Level 3 —Inputs are generally unobservable and typically reflect management’s best estimate of assumptions that market participants would use in pricing the asset or liability. The level in the fair value hierarchy within which a fair value measurement in its entirety falls is based on the lowest-level input that is significant to the fair value measurement in its entirety. 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 3, Investments ). Significant customers are those that represent more than 10% of the Company’s total revenue or gross accounts receivable balance at each balance sheet date. As of March 31, 2022, the Company had one customer that accounted for $5.0 million, or 17%, of gross accounts receivable. As of December 31, 2021, the Company had one customer that accounted for $3.0 million, or 12%, of gross accounts receivable. For the three months ended March 31, 2022 and 2021, the Company had one customer that accounted for $4.4 million and $0.9 million, or 32% and 14%, of total revenue, respectively. Segment Information The Company has one operating and reportable segment as it only reports financial information on an aggregate and consolidated basis to its Chief Executive Officer, who is the Company’s chief operating decision maker. Recent Accounting Pronouncements In February 2016, the Financial Accounting Standards Board (the “FASB”) issued ASC 842, which requires lessees to recognize most leases on the balance sheet as a right of use asset and related lease liability. On January 1, 2022, the Company adopted ASC 842 using a modified retrospective approach recording a cumulative-effect adjustment to retained earnings. The Company elected to adopt the practical expedients that permit it to combine lease and non-lease components for all lease contracts and also elected not to recognize ROU assets and lease liabilities for leases with terms of 12 months or less. The Company recognized (i) $0.4 million of operating lease ROU assets recorded in other non-current assets other current liabilities other non-current liabilities |
INVESTMENTS
INVESTMENTS | 3 Months Ended |
Mar. 31, 2022 | |
Investments, Debt and Equity Securities [Abstract] | |
INVESTMENTS | INVESTMENTS Available-for-Sale Securities (Marketable Securities) The Company’s investments in marketable securities are classified and accounted for as available-for-sale and consist of high quality asset backed securities, commercial paper, corporate bonds and U.S. government agency debt securities. The Company’s marketable securities with remaining effective maturities of 12 months or less from the balance sheet date are classified as current; otherwise, they are classified as non-current on the condensed consolidated balance sheets. Unrealized gains and losses on marketable securities classified as available-for-sale are recognized in other comprehensive income (loss). The Company’s marketable securities by security type are summarized as follows: As of March 31, 2022 Amortized Cost Gross Unrealized Loss Estimated Fair Value Asset backed securities $ 11,066 $ (193) $ 10,873 Commercial paper and corporate bonds 214,398 (1,788) 212,610 U.S. government agency debt securities 20,881 (313) 20,568 Total available-for-sale securities $ 246,345 $ (2,294) $ 244,051 As of December 31, 2021 Amortized Cost Gross Unrealized Loss Estimated Fair Value Asset backed securities $ 11,101 $ (56) $ 11,045 Commercial paper and corporate bonds 234,497 (551) 233,946 U.S. government agency debt securities 16,929 (69) 16,860 Total available-for-sale securities $ 262,527 $ (676) $ 261,851 As of March 31, 2022 and December 31, 2021, the Company recorded $2.3 million and $0.7 million, respectively, of gross unrealized losses in accumulated other comprehensive loss on the Condensed Consolidated Balance Sheets, primarily due to a decrease in the fair value of the corporate bonds. Trading Securities (Convertible Promissory Notes) In July 2021, the Company purchased a convertible promissory note (the “Note”) from a counterparty for $4.0 million. In November 2021 and March 2022, the Company executed additional promissory notes in the aggregate amount of $0.5 million under the same terms as the initial Note (collectively referred to as the “Notes”). The outstanding principal of the Notes, together with unpaid and accrued interest, is due and payable on September 30, 2022, which can be extended at the option of the Company for a period of one year, unless the debt is converted to equity securities in the counterparty or the Company declares the Notes due and payable upon the occurrence of an event of default. The Notes also contain certain embedded features, including: acceleration in the event of default; automatic conversion into the equity of the counterparty upon a subsequent equity financing by the counterparty; optional conversion into equity upon the sale of preferred stock by the counterparty; optional acceleration or conversion into equity upon certain corporate transactions by the counterparty; and the Company’s option to extend the maturity date. Interest accrues at 6% per annum and is due upon the earlier of the maturity date or an event of default. The Notes meet the definition of a debt security under the provisions of ASC 320, Investments - Debt Securities . The Company classified the Notes as trading securities and categorized them within Level 3 of the fair value hierarchy. Changes in fair value are reported in earnings. The Company recorded a gain on the Notes of $1.0 million during the three months ended March 31, 2022, recorded in change in fair value of trading securities on the Condensed Consolidated Statements of Operations and Comprehensive Loss. The Notes are recorded in prepaid expenses and other current assets on the Condensed Consolidated Balance Sheets. Contractual maturities of the Company’s available-for-sale and trading securities are summarized as follows: As of March 31, 2022 Amortized Cost Estimated Fair Value Due in less than one year 178,405 178,543 Due in one to five years 72,490 71,058 Total investments $ 250,895 $ 249,601 The Company monitors the available-for-sale securities for expected credit losses and indicators of impairment. If it is determined that an investment has an expected credit loss, the Company recognizes the investment loss in other income (expense) in the condensed consolidated statements of operations and comprehensive loss. The Company periodically evaluates its investments to determine if impairment charges are required. Factors considered in determining whether there is an expected credit loss 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 security prior to recovery. As of March 31, 2022, the Company had not identified any impairment indicators in the investments. |
FAIR VALUE MEASUREMENTS
FAIR VALUE MEASUREMENTS | 3 Months Ended |
Mar. 31, 2022 | |
Fair Value Disclosures [Abstract] | |
FAIR VALUE MEASUREMENTS | FAIR VALUE MEASUREMENTS The Company’s financial assets and liabilities that are measured at fair value on a recurring basis are summarized as follows: As of March 31, 2022 Fair Value Measurements Using Level 1 Level 2 Level 3 Total Assets Cash $ 22,157 $ — $ — $ 22,157 Money market funds 68,802 — — 68,802 Total cash and cash equivalents 90,959 — — 90,959 Available-for-sale securities — 244,051 — 244,051 Trading securities (convertible promissory notes) — — 5,550 5,550 Total assets $ 90,959 $ 244,051 $ 5,550 $ 340,560 Liabilities Warrant liability — 3,520 — 3,520 Total liabilities $ — $ 3,520 $ — $ 3,520 As of December 31, 2021 Fair Value Measurements Using Level 1 Level 2 Level 3 Total Assets Cash $ 8,983 $ — $ — $ 8,983 Money market funds 115,799 — — 115,799 Total cash and cash equivalents 124,782 — — 124,782 Available-for-sale securities — 261,851 — 261,851 Trading securities (convertible promissory notes) — — 4,300 4,300 Total assets $ 124,782 $ 261,851 $ 4,300 $ 390,933 Liabilities Warrant liability — 9,787 — 9,787 Total liabilities $ — $ 9,787 $ — $ 9,787 The Company’s investments in money market funds backed by U.S. government securities have been classified as Level 1 as they are valued utilizing quoted prices (unadjusted) in active markets for identical assets. Investments in asset backed securities, commercial paper, corporate bonds and U.S. government agency debt securities have been classified as Level 2 as they are valued using quoted prices in less active markets or other directly or indirectly observable inputs. Fair values of corporate bonds and U.S. government agency 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. The Company’s investments in the Notes are classified as Level 3 in the fair value hierarchy because they rely significantly on inputs that are unobservable in the market. The conversion price is dependent on varying events and equity value and therefore has been estimated using a Monte Carlo model to simulate the various future events. Significant assumptions include: (i) the timing and amount of a subsequent equity financing, if any; (ii) the equity value of the counterparty as of March 31, 2022; (iii) once converted into equity, the timing of any liquidity event; (iv) the counterparty to undergo a dissolution if the new equity financing does not occur before the maturity of the Notes; and (v) an assumed recovery rate in a dissolution event. The Notes are measured at fair value using a Monte Carlo simulation model at each measurement date. With respect to the Notes, the Company elected to apply the fair value option and account for the hybrid instrument containing the Notes and the embedded derivatives at fair value as a single instrument, with any subsequent changes in fair value being reported in earnings. For the three months ended March 31, 2022, the Company reported a change in fair value of the Notes of $1.0 million. The following table provides quantitative information regarding Level 3 fair value inputs at their measurement dates: March 31, 2022 Volatility 80.0 % Risk free rate U.S Constant Maturity Treasury Yields Term 0.50 years During the three months ended March 31, 2022, there were no transfers of financial assets between Level 1 and Level 2. The Company’s warrant liability includes private placement warrants that were originally issued in connection with the TSIA IPO, but which were transferred to the Company as part of the Closing of the Business Combination (the “Private Placement Warrants”). The Private Placement Warrants are recorded on the Condensed Consolidated Balance Sheets at fair value. This valuation is subject to re-measurement at each balance sheet date. With each re-measurement, the valuation will be adjusted to fair value, with the change in fair value recognized in the Condensed Consolidated Statements of Operations and Comprehensive Loss. The Private Placement Warrants are held by a single holder. ASC 820, Fair Value Measurements , indicates that the fair value should be determined “from the perspective of a market participant that holds the identical item” and “use the quoted price in an active market held by another party, if that price is available.” As the only market for the transfer of the Private Placement Warrants is the public market, the Company has determined that the fair value of the Private Placement Warrants at a specific date is determined by the closing price of the Company’s public warrants, traded under the symbol “LTCHW,” and within Level 2 of the fair value hierarchy. The closing price of the public warrants was $0.66 and $1.84 as of March 31, 2022 and December 31, 2021, respectively. The fair value of the Private Placement Warrants was $3.5 million and $9.8 million as of March 31, 2022 and December 31, 2021, respectively. The following table represents the activity of the Level 3 instruments: Trading Securities Balance at December 31, 2021 $ 4,300 Purchases 250 Change in fair value (1) 1,000 Balance at March 31, 2022 $ 5,550 (1) Recorded in other income (expense) within the Condensed Consolidated Statements of Operations and Comprehensive Loss. During the three months ended March 31, 2022, the Company purchased an additional Note (as described in Note 3, Investments ), which is categorized as Level 3 in the fair value hierarchy. There were no sales of Level 3 instruments during the three months ended March 31, 2022. There were no transfers of instruments into or out of Level 3 during the three months ended March 31, 2022. |
PROPERTY AND EQUIPMENT, NET
PROPERTY AND EQUIPMENT, NET | 3 Months Ended |
Mar. 31, 2022 | |
Property, Plant and Equipment [Abstract] | |
PROPERTY AND EQUIPMENT, NET | PROPERTY AND EQUIPMENT, NET Property and equipment, net consisted of the following as of March 31, 2022 and December 31, 2021: March 31, 2022 December 31, 2021 Office furniture $ 86 $ 86 Computers and equipment 4,799 3,810 Property and equipment 4,885 3,896 Less: Accumulated depreciation (2,130) (1,857) Total property and equipment, net $ 2,755 $ 2,039 |
INTERNALLY DEVELOPED SOFTWARE,
INTERNALLY DEVELOPED SOFTWARE, NET | 3 Months Ended |
Mar. 31, 2022 | |
Research and Development [Abstract] | |
INTERNALLY DEVELOPED SOFTWARE, NET | INTERNALLY DEVELOPED SOFTWARE, NET Internally developed software, net consisted of the following as of March 31, 2022 and December 31, 2021: March 31, 2022 December 31, 2021 Internally developed software $ 13,071 $ 11,761 Construction in progress 5,812 4,339 Less: Accumulated amortization (1) (4,472) (3,625) Total internally developed software, net $ 14,411 $ 12,475 (1) Includes $0.3 million related to the decision not to proceed with further development of certain software products during the three months ended March 31, 2022. Capitalized costs associated with construction in progress are not amortized into amortization expense until the related assets are put into service. |
INVENTORIES, NET
INVENTORIES, NET | 3 Months Ended |
Mar. 31, 2022 | |
Inventory Disclosure [Abstract] | |
INVENTORIES, NET | INVENTORIES, NET Inventories, net consisted of the following as of March 31, 2022 and December 31, 2021: March 31, 2022 December 31, 2021 Raw materials $ 3,192 $ 2,513 Finished goods 16,084 9,492 Excess and obsolete reserve (280) (390) Total inventories, net $ 18,996 $ 11,615 |
LEASES
LEASES | 3 Months Ended |
Mar. 31, 2022 | |
Leases [Abstract] | |
LEASES | LEASES The Company has entered into various operating lease agreements, which are generally for offices and facilities. The Company leases office spaces in New York City, Denver, San Francisco, Chicago and Taiwan with lease termination dates through November 2024. The lease terms range from one Additional information related to operating leases included on the Condensed Consolidated Balance Sheet as of and for the three months ended March 31, 2022 is presented in the table below (in thousands, except weighted average term and discount rate): ROU asset $ 430 Lease liabilities $ 431 Operating lease cost $ 125 Short-term lease cost $ 177 Cash paid for amounts included in the measurement of operating lease liabilities $ 124 Weighted average remaining lease term - operating leases 1.8 years Weighted average discount rate - operating leases 14.5 % Maturities of lease liabilities as of March 31, 2022 are as follows: Remainder of 2022 $ 248 2023 138 2024 102 2025 — 2026 — Thereafter — Total lease payments 488 Less: imputed interest 57 Total lease liabilities $ 431 |
ACCRUED EXPENSES
ACCRUED EXPENSES | 3 Months Ended |
Mar. 31, 2022 | |
Payables and Accruals [Abstract] | |
ACCRUED EXPENSES | ACCRUED EXPENSES Accrued expenses consisted of the following as of March 31, 2022 and December 31, 2021: March 31, 2022 December 31, 2021 Accrued compensation $ 4,836 $ 6,407 Accrued warranties 318 556 Accrued purchases 4,800 1,692 Accrued excess inventory 1,114 550 Accrued operating expense 6,574 7,894 Accrued litigation costs 6,750 6,750 Other accrued expenses 295 335 Total accrued expenses $ 24,687 $ 24,184 |
DEBT
DEBT | 3 Months Ended |
Mar. 31, 2022 | |
Debt Disclosure [Abstract] | |
DEBT | DEBT Revolving Credit Facility In January 2021, Legacy Latch signed an agreement for a revolving credit facility (the “revolving facility”) with a freight forwarding and customs brokerage company. The original revolving facility had a credit limit of $1.0 million. On July 1, 2021, the Company executed a new revolving credit facility with a credit limit of $6.0 million replacing the matured facility. The revolving facility is available to finance supply chain commercial invoices, including freight and customs duty charges. The Company authorizes payment of invoices by the lender on the due date and repays the financed amount plus interest 90 days following the initial payment date. An installment plan agreement is executed for each financing request, which includes the interest rate. The interest rate for the installment plan agreements executed during the three months ended March 31, 2022 and 2021 ranged from 0.87% to 1.25% per month. The new facility has no financial covenants and limited non-financial covenants, including requiring the lender’s consent prior to a disposition of substantially all assets, a merger or acquisition or an ownership change in excess of 50% of the voting capital stock of the borrower. As of March 31, 2022 and December 31, 2021, there was $2.3 million and $3.4 million outstanding on the revolving facility, respectively, which is reported in other current liabilities on the Condensed Consolidated Balance Sheets. |
COMMITMENTS AND CONTINGENCIES
COMMITMENTS AND CONTINGENCIES | 3 Months Ended |
Mar. 31, 2022 | |
Commitments and Contingencies Disclosure [Abstract] | |
COMMITMENTS AND CONTINGENCIES | COMMITMENTS AND CONTINGENCIES Purchase Commitment In January 2021, the Company entered into an arrangement with a supplier that requires future minimum purchases of inventory for an aggregate amount of $3.3 million in scheduled installments starting in August 2021 through December 2022. Minimum purchases are $2.8 million in 2022. As of March 31, 2022, the Company purchased $0.8 million of inventory and accrued $0.5 million related to the unpurchased minimum commitment. As of December 31, 2021, the Company purchased $0.2 million of inventory and accrued $0.2 million related to the unpurchased minimum commitment. Registration Rights Agreement In connection with the execution of the Merger Agreement, the Company and certain stockholders of Legacy Latch and TSIA entered into an amended and restated registration rights agreement (the “Registration Rights Agreement”). Pursuant to the Registration Rights Agreement, in June 2021, the Company filed a registration statement on Form S-1 with respect to the registrable securities under the 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 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 Registration Rights Agreement does not provide for any penalties connected with delays in registering the Company’s common stock. Legal Contingencies The Company is currently involved 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, to avoid the cost of litigation, the Company is negotiating a potential business resolution to the dispute with the service provider, which includes an agreement to engage the service provider for future services in exchange for market rate compensation for those services. 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, 2022 and December 31, 2021, the Company accrued approximately $6.8 million in connection with the dispute. The Company believes it is reasonably possible that this potential exposure may change based on the resolution of the ongoing discussions. No legal proceedings have been initiated with respect to this demand for payment or the prior agreement with the service provider. 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, 2022 (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. |
EQUITY
EQUITY | 3 Months Ended |
Mar. 31, 2022 | |
Equity [Abstract] | |
EQUITY | EQUITYThe 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. Common Stock Reserved for Future Issuance The reserved shares for future issuance as of March 31, 2022 include the following: March 31, 2022 December 31, 2021 Stock options issued and outstanding 14,452,845 15,009,656 Restricted stock units issued and outstanding 13,971,741 6,498,869 Public warrants outstanding 9,999,967 9,999,967 Private placement warrants outstanding 5,333,334 5,333,334 2021 Incentive Award Plan available shares (1) 16,279,853 16,731,819 Total 60,037,740 53,573,645 (1) Effective January 1, 2022, the number of shares reserved for future issuance under the 2021 Incentive Award Plan increased by 7,116,519 shares. Warrants As part of the Closing of the Business Combination, 10.0 million public warrants sold during the TSIA IPO converted into 10.0 million public warrants to purchase up to 10.0 million shares of common stock of the Post Combination Company, which are exercisable at $11.50 per share. The Company accounts for warrants as required under ASC 815, Derivatives and Hedging , 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. Fair Valuation Methodology - Private Placement Warrants The private placement warrants, which Legacy Latch assumed as part of the Closing of the Business Combination, are recorded as warrant liabilities. See Note 4, Fair Value Measurements . |
EARNINGS PER SHARE
EARNINGS PER SHARE | 3 Months Ended |
Mar. 31, 2022 | |
Earnings Per Share [Abstract] | |
EARNINGS PER SHARE | EARNINGS PER SHARE The following table sets forth the computation of basic and diluted net income per share for common stock and preferred stock: Three Months Ended March 31, 2022 2021 Numerator: Numerator for basic and diluted net loss per share - net loss $ (44,231) $ (38,101) Denominator: Denominator for basic net loss per share - weighted average common shares 141,970,190 10,438,778 Effect of dilutive securities — — Denominator for diluted net loss - adjusted weighted average common shares 141,970,190 10,438,778 Basic and diluted net loss per share $ (0.31) $ (3.65) Potential common shares of 39.4 million underlying outstanding common stock options, RSUs and common stock warrants were excluded from diluted net loss per share for the three months ended March 31, 2022, as the Company had net losses, and their inclusion would be anti-dilutive. Potential common shares of 81.0 million (as adjusted for the Exchange Ratio) underlying outstanding preferred stock, common stock options and common stock warrants were excluded from diluted net loss per share for the three months ended March 31, 2021, as Legacy Latch had net losses, and their inclusion would be anti-dilutive. |
STOCK-BASED COMPENSATION
STOCK-BASED COMPENSATION | 3 Months Ended |
Mar. 31, 2022 | |
Share-based Payment Arrangement [Abstract] | |
STOCK-BASED COMPENSATION | STOCK-BASED COMPENSATION For the three months ended March 31, 2022 and 2021, the components of stock-based compensation expense were as follows: Three months ended March 31, 2022 2021 Stock options $ 1,408 $ 14,514 Restricted stock units 11,329 — Capitalized costs (1) (1,019) (21) Total stock-based compensation $ 11,718 $ 14,493 (1) Included in internally developed software, net on the Condensed Consolidated Balance Sheets. All stock-based compensation expense is included in cost of revenue, research and development, sales and marketing, and general and administrative on the condensed consolidated statements of operations and comprehensive loss. 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”) pursuant to which 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 our common stock to our employees and (ii) to grant NSOs to outside directors and consultants. 22,797,955 shares had been authorized for issuance under the 2016 Plan when the 2021 Plan (defined below) became effective. 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 terms and vest over a four-year period starting from the date specified in each award agreement. From and after the effectiveness of the 2021 Plan, no additional awards will be granted under the Prior Plans. Upon the effectiveness of the Business Combination, all outstanding stock options under the Prior Plans, whether vested or unvested, converted into options to purchase a number of shares of common stock of the Post Combination Company based on the Exchange Ratio. Awards previously granted under the Prior Plans will continue to be subject to the provisions thereof. On June 3, 2021, the Latch, Inc. 2021 Incentive Award Plan (the “2021 Plan”) was approved by the TSIA stockholders at the Special Meeting and became effective upon the Closing of the 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 common stock outstanding on the last day of the immediately preceding calendar year and (B) such smaller amount of shares as determined by the Company’s board of directors. Effective January 1, 2022, the number of shares reserved for future issuance under the 2021 Plan increased by 7,116,519 shares. As of March 31, 2022, 15.7 million RSUs had been granted under the 2021 Plan. Stock Options A summary of the status of the employee and non-employee stock options as of March 31, 2022 and changes during 2022 is presented below (the number of options represents ordinary shares exercisable in respect thereof): Options Weighted Average Aggregate Balance at December 31, 2021 15,009,656 $ 0.75 Options forfeited (191,831) $ 1.03 Options expired — $ — Options exercised (364,980) $ 0.72 Options granted — $ — Balance at March 31, 2022 14,452,845 $ 0.75 $ 50,922 Exercisable at March 31, 2022 11,121,183 $ 0.64 $ 40,421 The Company records stock-based compensation expense on a straight-line basis over the vesting period. As of March 31, 2022, total compensation expense not yet recognized related to unvested stock options was $1.7 million, which is expected to be recognized over a weighted average period of 1.6 years. Additionally, the Company records forfeitures as they occur. The Company estimates the fair value of stock options on the date of grant using the Black-Scholes option-pricing model. The Black-Scholes option-pricing model requires estimates of highly subjective assumptions, which affect the fair value of each stock option. Restricted Stock Units On February 22, 2022, the Company granted an aggregate of approximately 7.9 million RSUs under the 2021 Plan to certain employees and consultants at a grant date fair value of $5.09 per unit. The RSUs vest over three years. On March 14, 2022, the Company granted an aggregate of approximately 0.6 million RSUs to certain employees at a grant date fair value of $3.40 per unit. The RSUs vest over three years. Equity-based RSUs are settled in shares upon vesting and liability-based RSUs are settled in cash upon vesting. The RSUs vest over a period of one Equity-based A summary of the equity-based RSUs as of March 31, 2022 is presented below: Number of RSUs Weighted Average Grant Date Fair Value (per unit) Balance at December 31, 2021 6,477,513 $ 12.14 Granted 8,548,788 $ 4.97 Vested (489,784) $ 13.14 Forfeited (584,141) $ 8.25 Balance at March 31, 2022 13,952,376 $ 7.88 Stock-based compensation expense is recognized on a straight-line basis through the vesting date of the RSUs. The unrecognized stock-based compensation expense related to the unvested RSUs was $96.4 million as of March 31, 2022 and will be expensed over a weighted average period of 2.6 years. Liability-based A summary of the liability-based RSUs as of March 31, 2022 is presented below: Number of RSUs Balance at December 31, 2021 21,356 Granted — Vested (1,991) Forfeited — Balance at March 31, 2022 19,365 Liability-based RSU expense is recognized on a straight-line basis through the vesting date of the RSUs. For the three months ended March 31, 2022, the Company recognized $0.01 million bonus expense within cost of revenue in the Consolidated Statements of Operations and Comprehensive Loss. The unrecognized expense related to the unvested liability-based RSUs was $0.1 million as of March 31, 2022 and will be expensed over a weighted average period of 2.2 years. The Company settled 1,991 liability-based RSUs for $0.01 million in cash for the three months ended March 31, 2022. Secondary Purchase On January 19, 2021, one of Legacy Latch’s existing equity holders acquired an additional 2.8 million shares (as adjusted based on the Exchange Ratio) of Legacy Latch’s common stock from certain employees and nonemployee service providers at a price per share of $9.92 (as adjusted based on the Exchange Ratio). This price was determined based on the pre-money equity valuation ascribed to the Post Combination Company by TSIA and the estimated conversion ratio at the time of the sales. The foregoing sales were consummated directly among the equity holders to satisfy the acquiring equity holder’s demand for additional shares of Legacy Latch’s common stock without increasing the size of the PIPE Investment and causing incremental dilution to investors in the Post Combination Company. Legacy Latch determined that the price per share paid by the equity holder was in excess of fair value. The Company recorded $13.8 million in stock-based compensation expense related to the transaction allocated to research and development, sales and marketing, and general and administrative in the Condensed Consolidated Statements of Operations and Comprehensive Loss. Cash Election Prior to the Business Combination, Legacy Latch’s holders of vested stock options were given an election to cancel up to 25% of the vested stock options in exchange for $10.00 per share less the exercise price applicable to each share. An aggregate amount of 0.3 million options were cancelled. Payment for the cash election in the amount of $2.6 million was funded as part of the PIPE Investment and 0.3 million of newly issued shares of common stock were granted (see Note 1, Description of Business ). Modifications In March 2022, the Company entered into a separation agreement with an employee that triggered a modification of the employee’s outstanding stock options and RSUs. The modification resulted in an incremental stock-based compensation expense of $2.1 million during the three months ended March 31, 2022, recorded in general and administrative expense in the Condensed Consolidated Statements of Operations and Comprehensive Loss. |
INCOME TAXES
INCOME TAXES | 3 Months Ended |
Mar. 31, 2022 | |
Income Tax Disclosure [Abstract] | |
INCOME TAXES | INCOME TAXES The income tax provision for the three months ended March 31, 2022 and 2021 was $0.02 million and zero, respectively. For the three months ended March 31, 2022 and 2021, the Company’s effective tax rate was different from the U.S. federal statutory rate. This difference is primarily attributable to the effect of 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, 2022, 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 than likely than not that these assets will not be fully realized. |
RELATED-PARTY TRANSACTIONS
RELATED-PARTY TRANSACTIONS | 3 Months Ended |
Mar. 31, 2022 | |
Related Party Transactions [Abstract] | |
RELATED-PARTY TRANSACTIONS | RELATED-PARTY TRANSACTIONS Throughout the Company’s history, the Company has obtained equity funding from strategic partners with whom the Company transacts through the ordinary course of business. As such, 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, 2022 and December 31, 2021, the Company had $0.1 million and $0.5 million, respectively, of receivables due from these customers, which are included within accounts receivable on the Condensed Consolidated Balance Sheets. For the three months ended March 31, 2022 and 2021, the Company had $0.1 million and $0.2 million, respectively, of hardware revenue from these customers, and $0.03 million and $0.2 million, respectively, of software revenue from these customers, which was included within the Condensed Consolidated Statements of Operations and Comprehensive Loss. In January 2021, one of the Company’s existing equity holders acquired shares of Legacy Latch’s common stock from certain employees and non-employee service providers. See Note 14, Stock-Based Compensation . |
SUMMARY OF SIGNIFICANT ACCOUN_2
SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (Policies) | 3 Months Ended |
Mar. 31, 2022 | |
Accounting Policies [Abstract] | |
Basis of Presentation | The condensed consolidated financial statements and related notes of the Company have been prepared in accordance with accounting principles generally accepted in the United States for interim financial reporting and Article 10 of Regulation S-X. Accordingly, certain information and footnote disclosures normally included in financial statements prepared under U.S. generally accepted accounting principles (“GAAP”) have been condensed or omitted pursuant to the rules and regulations of 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 for the year ended December 31, 2021 and the notes thereto, which are included in the Company’s Annual Report on Form 10-K filed with the SEC on March 1, 2022. Shares outstanding and earnings per share available for common stockholders prior to the Business Combination have been retroactively restated to reflect the Exchange Ratio and for consistency with the current period presentation. |
Principles of Consolidation | The condensed consolidated financial statements include the accounts of Latch, Inc. and its wholly owned subsidiaries, Latch Systems, Inc., Latch Taiwan, Inc., Latch Insurance Solutions, LLC and Latch Systems Ltd. All intercompany transactions have been eliminated in consolidation. |
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. Estimates are used when accounting for revenue recognition, allowance for doubtful accounts, allowance for hardware returns, estimates of excess and obsolete inventory, stock-based compensation, warrants, impairment of fixed assets, investment in trading securities and capitalized internally developed software. 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. Due to the use of estimates inherent in the financial reporting process and given the unknowable duration and effects of the COVID-19 pandemic, among other factors, actual results could differ from those estimates. The Company’s significant accounting policies for its Condensed Consolidated Financial Statements as of March 31, 2022 are summarized below and should be read in conjunction with the Summary of Significant Accounting Policies detailed in the Company’s Consolidated Financial Statements for the year ended December 31, 2021. |
Marketable Securities | The Company classifies its fixed income marketable securities as available-for-sale based on its intentions with regard to these instruments. Accordingly, marketable securities are reported at fair value, with all unrealized holding gains and losses reflected in stockholders’ equity. On January 1, 2022, the Company adopted Accounting Standards Update (“ASU”) 2016-13, Financial Instruments-Credit Losses (Topic 326): Measurement of Credit Losses of Financial Instruments (“ASU 2016-13”) that requires credit losses to be recorded on an expected loss methodology. The Company monitors the marketable securities for expected credit losses and indicators of impairment. If it is determined that an investment has an expected credit loss, the Company recognizes the investment loss in other income (expense) in the condensed consolidated statements of operations and comprehensive loss. The Company periodically evaluates its investments to determine if impairment charges are required. |
Accounts Receivable and Allowance for Doubtful Accounts | Accounts receivable are stated at net realizable value, net of allowance for doubtful accounts and reserve for wholesale returns (See “—Revenue Recognition—Hardware” below for further information). Following the adoption of ASU 2016-13, the Company recognizes an accounts receivable allowance based on estimates of expected credit losses. The Company estimates the total expected credit loss over the lifetime of the receivables using historical loss data and by applying a loss-rate method using relevant available information from internal and external sources, including historical write-off activity, current conditions and reasonable and supportable forecasts. Historical credit loss experience provides the basis for the estimation of expected credit losses. Adjustments to historical loss information are made for changes in economic conditions. When certain amounts are deemed uncollectible, those balances are reserved in full. The allowance for doubtful accounts is measured on a pooled basis when similar risk characteristics exist. When assessing whether to measure certain financial assets on a pooled basis, the Company considers various risk characteristics, including the financial asset type, size and historical or expected credit loss pattern. These risk characteristics are relevant to accounts receivable and contract assets. The Company considers customer type, product lines and geography in relation to further segmentation and determined that further segmentation of the accounts receivable and contract assets would not yield a materially different credit loss allowance. The Company only segments its receivables based on the aging of the outstanding balance. The Company generally does not require any security or collateral to support its receivables. |
Inventories, Net | Inventories consist of finished goods and component parts, which are purchased from contract manufacturers and component suppliers. Inventories are stated at the lower of cost or net realizable value with cost being determined using the average cost method. The Company periodically assesses the valuation of inventory and writes down the value for estimated excess and obsolete inventory based upon estimates of future demand and market conditions, when necessary. |
Leases | On January 1, 2022, the Company adopted ASU 2016-02, Leases (Topic 842) (“ASC 842”). The Company determines if an arrangement contains a lease at the inception of the arrangement. As part of the lease determination process, the Company assesses several factors, including, but not limited to, whether there is a right to control and direct the use of the asset and whether the other party has a substantive substitution right. The Company will apply the portfolio approach whenever leases are both similar in nature and have identical or nearly identical contract provisions. However, as the Company’s leases generally do not have identical or nearly identical contract provisions, the Company will account for each of its leases at the contract level. If the Company enters into leases that are similar in nature and have identical or nearly identical contract provisions, the Company will apply the portfolio approach as necessary. The Company has made the policy election to not separate lease and non-lease components for any of its leases within its existing classes of assets. The Company will evaluate this election for any new leases involving a new underlying class of asset. The Company also made the policy election to not recognize a lease liability or a right-of-use asset for any leases with a term of 12 months or less. These lease payments are recognized on a straight-line basis over the lease term. In general, the Company concluded that any of its renewal options and termination options are reasonably certain to not be exercised. This is due to the fact that the needs of the Company continue to evolve as the Company’s business progresses and its facility requirements may change in the future in order to support the Company’s operations. The Company does not generally enter into lease arrangements where the option to renew or terminate a lease is controlled by the lessor. However, the Company will evaluate any such options on a contract-by-contract basis to determine whether specific circumstances would result in the conclusion that any options are reasonably certain to be exercised. Right-of-use (“ROU”) assets represent the right to use an underlying asset for the term of the lease, and lease liabilities represent the obligation to make lease payments throughout the term of the lease. ROU assets and lease liabilities are recognized as of the commencement date of the lease based on the present value of contractual lease payments due over the term of the lease. The Company uses an incremental borrowing rate to determine the present value of the lease payments, as the leases do not state the rate implicit in the lease. The incremental borrowing rate is determined based on various outstanding debt from which an estimated discount rate can be determined. These rates are adjusted, as necessary, to account for differences in the term, amounts and risks of each lease relative to the terms of the debt. ROU assets resulting from operating leases are recorded within other non-current assets, and lease liabilities from operating leases are recorded within current liabilities and non-current liabilities, on the condensed consolidated balance sheets. We did not have any finance leases or subleases as of March 31, 2022 and December 31, 2021. Rent expense related to our leases is allocated between cost of revenue, research and development, sales and marketing, and general and administrative depending on headcount and the nature of the underlying lease. |
Revenue Recognition | In determining the appropriate amount of revenue to be recognized as it fulfills its obligations under its agreements, the Company performs the following steps: (i) identify contracts with customers; (ii) identify performance obligations; (iii) determine the transaction price; (iv) allocate the transaction price to the performance obligations; and (v) recognize revenue when (or as) the Company satisfies each performance obligation. A performance obligation is a promise in a contract to transfer a distinct good or service to a customer and is the unit of account in ASU No. 2014-09 and its related amendments (collectively known as ASC 606, Revenue from Contracts with Customers ). Revenues are recognized when control of the promised goods or services are transferred to a customer in an amount that reflects the consideration that the Company expects to receive in exchange for those services. The Company currently generates its revenues from three primary sources: (1) hardware devices, (2) software products and (3) services related to the hardware devices. Hardware The Company generates hardware revenue primarily from the sale of its portfolio of devices for its smart access and smart apartment solutions. The Company sells hardware to building developers directly or through its channel partners who act as the intermediary and installer. The Company recognizes hardware revenue when the hardware is shipped directly to building developers or to its channel partners, which is when control is transferred to the building developer. The Company provides warranties that its hardware will be substantially free from defects in materials and workmanship for a period of one year for electronic components and five years for mechanical components. The Company replaces, repairs or refunds warrantable devices at its sole discretion. The Company determined these warranties are not separate performance obligations as they cannot be purchased separately and do not provide a service in addition to an assurance the hardware will function as expected. 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, 2022 and 2021, the reserve for hardware warranties was approximately 2% and 1% of cost of hardware revenue, respectively. The Company also provides certain customers a wholesale arrangement with 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, 2022 and 2021, the reserve for wholesale returns against revenue was zero and $0.01 million, respectively. The reserve against accounts receivable as of March 31, 2022 and December 31, 2021 was $0.6 million and $0.6 million, respectively. Software The Company generates software revenue primarily through the sale of its software-as-a-service (“SaaS”) to building developers over its cloud-based platform on a subscription-based arrangement. Subscription fees vary depending on the optional features selected by customers as well as the term length. SaaS arrangements generally have term lengths of month-to-month, two-year, five-year and ten-year and include a fixed fee paid upfront except for the month-to-month arrangements. As a result of significant discounts provided to our customers on the longer-term software contracts paid upfront, the Company has determined that there is a significant financing component related to the time value of money and has therefore broken out the interest component and recorded it as a component of interest income (expense), net on the 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 where the outstanding principal balance decreases over time. The amount of interest expense related to this component was $1.1 million and $0.7 million for the three months ended March 31, 2022 and 2021, respectively. The services provided by the Company for the subscription-based arrangements are considered stand-ready performance obligations where customers benefit from the services evenly throughout the service period. Revenue is primarily recognized on a ratable basis over the subscription period of the contractual arrangement beginning when or as control of the promised services is available or transferred to the customer. Services The Company generates revenues for services related to installation and activation of hardware devices sold to building developers. These services are recognized over time on a percentage of completion basis. The Company recognized services revenue of $1.6 million and zero for the three months ended March 31, 2022 and 2021, respectively. Performance Obligations The Company enters into contracts that contain multiple distinct performance obligations: hardware, software and services. The hardware performance obligation includes the delivery of hardware, the software performance obligation allows the customer access to the software during the contracted-use term when the promised service is transferred to the customer and the services performance obligation includes the delivery of activation and installation of the hardware. The Company has determined that the hardware, software and services are individual distinct performance obligations because they can be sold by the Company on a standalone basis, and because other vendors sell similar technologies and services on a standalone basis. For each performance obligation identified, the Company estimates the standalone selling price, which represents the price at which the Company would sell the good or service separately. If the standalone selling price is not observable through past transactions, the Company estimates the standalone selling price, taking into account available information such as market conditions, historical pricing data and internal pricing guidelines related to the performance obligations. The Company then allocates the transaction price among those obligations based on the estimation of standalone selling price. For software revenue, the Company estimates the transaction price, including variable consideration, at the commencement of the contract and recognizes revenue over the contract term. The aggregate amount of the transaction price allocated to performance obligations that were unsatisfied was $35.7 million as of March 31, 2022. The Company expects to recognize the short-term amount of $7.2 million over the next 12 months, of which $11.1 million will be recognized as revenue and $3.9 million will be recognized as interest expense related to the significant financing component, and the long-term portion of $28.5 million over the contracted-use term of each agreement, of which $38.1 million will be recognized as revenue and $9.6 million will be recognized as interest expense related to the significant financing component. Revenue Disaggregation The Company had total revenue of $13.7 million and $6.6 million for the three months ended March 31, 2022 and 2021, respectively. The Company’s revenues are derived primarily from operations in North America. Deferred Contract Costs The Company capitalizes commission expenses paid that are incremental to obtaining customer software contracts. Costs related to the initial signing of software contracts are amortized over the average customer life, which has been estimated to be ten years. The Company determined the period of benefit by taking into consideration the length of terms in its customer contracts, including renewals and extensions. Amounts expected to be recognized within one year of the balance sheet date are recorded as deferred contract costs, current and are included in prepaid expenses and other current assets on the condensed consolidated balance sheets; the remaining portion is recorded as deferred contract costs, non-current and is included in other non-current assets on the condensed consolidated balance sheets. Amortization expense is included in sales and marketing expense in the condensed consolidated statements of operations and comprehensive loss. The Company enters into contracts with its customers, which may give rise to contract assets (unbilled receivables) and contract liabilities (deferred revenue) due to revenue recognition differing from the timing of billings to customers. The Company recognizes unbilled receivables when the performance obligation precedes the invoice date. The Company considers contract assets similar to accounts receivable but with an extended credit term. Until the contract asset is billed, the Company is exposed to a similar credit risk as current accounts receivable. The expected loss percentage is the same as the loss rate used for each accounts receivable aging bucket. As of March 31, 2022, contract assets are reported net of a loss reserve of $0.04 million. The Company records unbilled receivables within accounts receivable, net on the condensed consolidated balance sheets. The Company records contract liabilities to deferred revenue when the Company bills customers in advance of the performance obligations being satisfied on the Company’s contracts, which is generally the case for the Company’s software revenue. The Company generally invoices its customers monthly, or up to two years, five years or ten years in advance of services being provided. The Company recognized $2.4 million of prior year deferred software revenue during the three months ended March 31, 2022. Increase in contract liabilities for the three months ended March 31, 2022 primarily resulted from growth of contracts with new and existing customers. Deferred revenue that will be recognized during the succeeding 12-month period is recorded within current liabilities on the accompanying Condensed Consolidated Balance Sheets. 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, warranty costs, assembly costs and warehousing costs, as well as other non-inventoriable costs including personnel-related expenses associated with supply chain logistics and channel partner fees. Cost of software revenue consists primarily of outsourced hosting costs and personnel-related expenses associated with monitoring and managing outsourced hosting service providers. Cost of services revenue consists primarily of third-party installation labor costs, parts and materials and personnel-related expenses associated with deployment of our hardware. Cost of revenue excludes depreciation and amortization shown in operating expenses. |
Income Taxes | Income taxes are accounted for under the asset and liability method. Deferred tax assets and liabilities are recognized for the future tax consequences attributable to differences between the condensed consolidated financial statement carrying amounts of existing assets and liabilities and their respective tax bases and operating loss and tax credit carryforwards. Deferred tax assets and liabilities are measured using enacted tax rates expected to apply to taxable income in the years in which those temporary differences are expected to be recovered or settled. The effect on deferred tax assets and liabilities of a change in tax rates is recognized in income in the period that includes the enactment date. A valuation allowance is recorded for deferred tax assets if it is more likely than not that some portion or all of the deferred tax assets will not be realized. As of March 31, 2022 and December 31, 2021, the Company recorded a full valuation allowance against its deferred tax assets. The Company recognizes the effect of income tax positions only if those positions are more likely than not to be sustained. Recognized income tax positions are measured at the largest amount that has a greater than 50% likelihood of being realized. Changes in recognition or measurement are reflected in the period in which the change in judgment occurs. |
Stock-Based Compensation | The Company measures and records the expense related to stock-based payment awards based on the fair value of those awards as determined on the date of grant. The Company recognizes stock-based compensation expense over the requisite service period of the individual grant, generally equal to the vesting period, and uses the straight-line method to recognize stock-based compensation. The fair value of restricted stock units (“RSUs”) is determined using the closing trading price of the Company’s common stock on the grant date. The Company uses the Black-Scholes-Merton (“Black-Scholes”) option-pricing model to determine the fair value of stock options. The Black-Scholes option-pricing model requires the use of highly subjective and complex assumptions to determine the fair value of stock options, including the option’s expected term and the price volatility of the underlying stock. The Company calculates the fair value of options granted by using the Black-Scholes option-pricing model with the following assumptions: • Expected Volatility —The Company estimates volatility for option grants by evaluating the average historical volatility of a peer group of companies for the period immediately preceding the option grant for a term that is approximately equal to the option’s expected term. • Expected Term —The expected term of the Company’s options represents the period that the stock-based awards are expected to be outstanding. The Company has elected to use the midpoint between the stock options’ vesting term and contractual expiration period to compute the expected term, as the Company does not have sufficient historical information to develop reasonable expectations about future exercise patterns and post-vesting employment termination behavior. • Risk-Free Interest Rate —The risk-free interest rate is based on the implied yield currently available on U.S. Treasury zero-coupon issues with a term that is equal to the options’ expected term at the grant date. • Dividend Yield —The Company has not declared or paid dividends to date and does not anticipate declaring dividends. As such, the dividend yield has been estimated to be zero. |
Fair Value Measurements | Fair value accounting is applied for all financial assets and liabilities and nonfinancial assets and liabilities that are recognized or disclosed at fair value in the condensed consolidated financial statements on a recurring basis (at least annually). Fair value is defined as the exchange price that would be received for an asset or an exit price that would be paid to transfer a liability in the principal or most advantageous market for the asset or liability in an orderly transaction between market participants on the measurement date. The authoritative guidance establishes a fair value hierarchy that prioritizes the inputs to valuation techniques used to measure fair value. The hierarchy gives the highest priority to unadjusted quoted prices in active markets for identical assets or liabilities (Level 1 measurements) and the lowest priority to measurements involving significant unobservable inputs (Level 3 measurements). The three levels of the fair value hierarchy are as follows: Level 1 —Inputs are quoted prices (unadjusted) in active markets for identical assets or liabilities that the Company has the ability to access at the measurement date. Level 2 —Inputs are observable, either directly or indirectly, unadjusted quoted prices in active markets for similar assets or liabilities, unadjusted quoted prices for identical or similar assets or liabilities in markets that are not active or other inputs that are observable or can be corroborated by observable market data for substantially the full term of the related assets or liabilities. Level 3 —Inputs are generally unobservable and typically reflect management’s best estimate of assumptions that market participants would use in pricing the asset or liability. The level in the fair value hierarchy within which a fair value measurement in its entirety falls is based on the lowest-level input that is significant to the fair value measurement in its entirety. |
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 3, Investments ). |
Segment Information | The Company has one operating and reportable segment as it only reports financial information on an aggregate and consolidated basis to its Chief Executive Officer, who is the Company’s chief operating decision maker. |
Recent Accounting Pronouncements | In February 2016, the Financial Accounting Standards Board (the “FASB”) issued ASC 842, which requires lessees to recognize most leases on the balance sheet as a right of use asset and related lease liability. On January 1, 2022, the Company adopted ASC 842 using a modified retrospective approach recording a cumulative-effect adjustment to retained earnings. The Company elected to adopt the practical expedients that permit it to combine lease and non-lease components for all lease contracts and also elected not to recognize ROU assets and lease liabilities for leases with terms of 12 months or less. The Company recognized (i) $0.4 million of operating lease ROU assets recorded in other non-current assets other current liabilities other non-current liabilities |
SUMMARY OF SIGNIFICANT ACCOUN_3
SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (Tables) | 3 Months Ended |
Mar. 31, 2022 | |
Accounting Policies [Abstract] | |
Accounts Receivable, Allowance for Credit Loss | The following table represents a roll-forward of the Company’s allowance for doubtful accounts: Balance as of January 1, 2022 $ 1,980 Impact of adopting ASU 2016-13 927 Provision for doubtful accounts 298 Recoveries (353) Balance as of March 31, 2022 $ 2,852 |
Schedule of Finite-Lived Intangible Assets | The Company’s finite-lived intangible assets consisted of the following as of March 31, 2022 and December 31, 2021: March 31, 2022 December 31, 2021 Assembled workforce $ 700 $ 700 Domain names 318 318 Patents 37 37 Other intangibles 4 4 Intangible assets 1,059 1,059 Less: accumulated amortization (292) (213) Total intangible assets, net $ 767 $ 846 |
Schedule of Indefinite-Lived Intangible Assets | The Company’s finite-lived intangible assets consisted of the following as of March 31, 2022 and December 31, 2021: March 31, 2022 December 31, 2021 Assembled workforce $ 700 $ 700 Domain names 318 318 Patents 37 37 Other intangibles 4 4 Intangible assets 1,059 1,059 Less: accumulated amortization (292) (213) Total intangible assets, net $ 767 $ 846 |
Schedule of Deferred Contract Cost | The following table represents a roll-forward of the Company’s deferred contract costs: Balance as of January 1, 2022 $ 1,275 Additions to deferred contract costs 392 Amortization of deferred contract costs (40) Balance as of March 31, 2022 $ 1,627 |
Schedule of Contract Assets and Contract Liabilities | Contract Assets and Contract Liabilities (Unbilled Receivables and Deferred Revenue) March 31, 2022 December 31, 2021 Contract assets (unbilled receivables) $ 619 $ 633 Contract liabilities (deferred revenue) $ 35,695 $ 30,206 |
INVESTMENTS (Tables)
INVESTMENTS (Tables) | 3 Months Ended |
Mar. 31, 2022 | |
Investments, Debt and Equity Securities [Abstract] | |
Debt Securities, Available-for-sale | The Company’s marketable securities by security type are summarized as follows: As of March 31, 2022 Amortized Cost Gross Unrealized Loss Estimated Fair Value Asset backed securities $ 11,066 $ (193) $ 10,873 Commercial paper and corporate bonds 214,398 (1,788) 212,610 U.S. government agency debt securities 20,881 (313) 20,568 Total available-for-sale securities $ 246,345 $ (2,294) $ 244,051 As of December 31, 2021 Amortized Cost Gross Unrealized Loss Estimated Fair Value Asset backed securities $ 11,101 $ (56) $ 11,045 Commercial paper and corporate bonds 234,497 (551) 233,946 U.S. government agency debt securities 16,929 (69) 16,860 Total available-for-sale securities $ 262,527 $ (676) $ 261,851 Contractual maturities of the Company’s available-for-sale and trading securities are summarized as follows: As of March 31, 2022 Amortized Cost Estimated Fair Value Due in less than one year 178,405 178,543 Due in one to five years 72,490 71,058 Total investments $ 250,895 $ 249,601 |
FAIR VALUE MEASUREMENTS (Tables
FAIR VALUE MEASUREMENTS (Tables) | 3 Months Ended |
Mar. 31, 2022 | |
Fair Value Disclosures [Abstract] | |
Schedule of Fair Value, Assets and Liabilities Measured on Recurring Basis | The Company’s financial assets and liabilities that are measured at fair value on a recurring basis are summarized as follows: As of March 31, 2022 Fair Value Measurements Using Level 1 Level 2 Level 3 Total Assets Cash $ 22,157 $ — $ — $ 22,157 Money market funds 68,802 — — 68,802 Total cash and cash equivalents 90,959 — — 90,959 Available-for-sale securities — 244,051 — 244,051 Trading securities (convertible promissory notes) — — 5,550 5,550 Total assets $ 90,959 $ 244,051 $ 5,550 $ 340,560 Liabilities Warrant liability — 3,520 — 3,520 Total liabilities $ — $ 3,520 $ — $ 3,520 As of December 31, 2021 Fair Value Measurements Using Level 1 Level 2 Level 3 Total Assets Cash $ 8,983 $ — $ — $ 8,983 Money market funds 115,799 — — 115,799 Total cash and cash equivalents 124,782 — — 124,782 Available-for-sale securities — 261,851 — 261,851 Trading securities (convertible promissory notes) — — 4,300 4,300 Total assets $ 124,782 $ 261,851 $ 4,300 $ 390,933 Liabilities Warrant liability — 9,787 — 9,787 Total liabilities $ — $ 9,787 $ — $ 9,787 |
Fair Value Measurement Inputs and Valuation Techniques | The following table provides quantitative information regarding Level 3 fair value inputs at their measurement dates: March 31, 2022 Volatility 80.0 % Risk free rate U.S Constant Maturity Treasury Yields Term 0.50 years |
Fair Value, Liabilities Measured on Recurring Basis, Unobservable Input Reconciliation | The following table represents the activity of the Level 3 instruments: Trading Securities Balance at December 31, 2021 $ 4,300 Purchases 250 Change in fair value (1) 1,000 Balance at March 31, 2022 $ 5,550 (1) Recorded in other income (expense) within the Condensed Consolidated Statements of Operations and Comprehensive Loss. |
PROPERTY AND EQUIPMENT, NET (Ta
PROPERTY AND EQUIPMENT, NET (Tables) | 3 Months Ended |
Mar. 31, 2022 | |
Property, Plant and Equipment [Abstract] | |
Schedule of Property and Equipment | Property and equipment, net consisted of the following as of March 31, 2022 and December 31, 2021: March 31, 2022 December 31, 2021 Office furniture $ 86 $ 86 Computers and equipment 4,799 3,810 Property and equipment 4,885 3,896 Less: Accumulated depreciation (2,130) (1,857) Total property and equipment, net $ 2,755 $ 2,039 |
INTERNALLY DEVELOPED SOFTWARE_2
INTERNALLY DEVELOPED SOFTWARE, NET (Tables) | 3 Months Ended |
Mar. 31, 2022 | |
Research and Development [Abstract] | |
Schedule Of Internally Developed Software, Net | Internally developed software, net consisted of the following as of March 31, 2022 and December 31, 2021: March 31, 2022 December 31, 2021 Internally developed software $ 13,071 $ 11,761 Construction in progress 5,812 4,339 Less: Accumulated amortization (1) (4,472) (3,625) Total internally developed software, net $ 14,411 $ 12,475 (1) Includes $0.3 million related to the decision not to proceed with further development of certain software products during the three months ended March 31, 2022. |
INVENTORIES, NET (Tables)
INVENTORIES, NET (Tables) | 3 Months Ended |
Mar. 31, 2022 | |
Inventory Disclosure [Abstract] | |
Schedule of Inventories, Net | Inventories, net consisted of the following as of March 31, 2022 and December 31, 2021: March 31, 2022 December 31, 2021 Raw materials $ 3,192 $ 2,513 Finished goods 16,084 9,492 Excess and obsolete reserve (280) (390) Total inventories, net $ 18,996 $ 11,615 |
LEASES (Tables)
LEASES (Tables) | 3 Months Ended |
Mar. 31, 2022 | |
Leases [Abstract] | |
Schedule of Additional Information Related To Operating Leases Included On The Condensed Consolidated Balance Sheet | Additional information related to operating leases included on the Condensed Consolidated Balance Sheet as of and for the three months ended March 31, 2022 is presented in the table below (in thousands, except weighted average term and discount rate): ROU asset $ 430 Lease liabilities $ 431 Operating lease cost $ 125 Short-term lease cost $ 177 Cash paid for amounts included in the measurement of operating lease liabilities $ 124 Weighted average remaining lease term - operating leases 1.8 years Weighted average discount rate - operating leases 14.5 % |
Schedule of Maturities of Lease Liabilities | Maturities of lease liabilities as of March 31, 2022 are as follows: Remainder of 2022 $ 248 2023 138 2024 102 2025 — 2026 — Thereafter — Total lease payments 488 Less: imputed interest 57 Total lease liabilities $ 431 |
ACCRUED EXPENSES (Tables)
ACCRUED EXPENSES (Tables) | 3 Months Ended |
Mar. 31, 2022 | |
Payables and Accruals [Abstract] | |
Schedule of Accrued Expenses | Accrued expenses consisted of the following as of March 31, 2022 and December 31, 2021: March 31, 2022 December 31, 2021 Accrued compensation $ 4,836 $ 6,407 Accrued warranties 318 556 Accrued purchases 4,800 1,692 Accrued excess inventory 1,114 550 Accrued operating expense 6,574 7,894 Accrued litigation costs 6,750 6,750 Other accrued expenses 295 335 Total accrued expenses $ 24,687 $ 24,184 |
EQUITY (Tables)
EQUITY (Tables) | 3 Months Ended |
Mar. 31, 2022 | |
Equity [Abstract] | |
Schedule of Stock by Class | The reserved shares for future issuance as of March 31, 2022 include the following: March 31, 2022 December 31, 2021 Stock options issued and outstanding 14,452,845 15,009,656 Restricted stock units issued and outstanding 13,971,741 6,498,869 Public warrants outstanding 9,999,967 9,999,967 Private placement warrants outstanding 5,333,334 5,333,334 2021 Incentive Award Plan available shares (1) 16,279,853 16,731,819 Total 60,037,740 53,573,645 (1) Effective January 1, 2022, the number of shares reserved for future issuance under the 2021 Incentive Award Plan increased by 7,116,519 shares. Warrants |
EARNINGS PER SHARE (Tables)
EARNINGS PER SHARE (Tables) | 3 Months Ended |
Mar. 31, 2022 | |
Earnings Per Share [Abstract] | |
Schedule of Earnings Per Share, Basic and Diluted | The following table sets forth the computation of basic and diluted net income per share for common stock and preferred stock: Three Months Ended March 31, 2022 2021 Numerator: Numerator for basic and diluted net loss per share - net loss $ (44,231) $ (38,101) Denominator: Denominator for basic net loss per share - weighted average common shares 141,970,190 10,438,778 Effect of dilutive securities — — Denominator for diluted net loss - adjusted weighted average common shares 141,970,190 10,438,778 Basic and diluted net loss per share $ (0.31) $ (3.65) |
STOCK-BASED COMPENSATION (Table
STOCK-BASED COMPENSATION (Tables) | 3 Months Ended |
Mar. 31, 2022 | |
Share-based Payment Arrangement [Abstract] | |
Schedule of components of stock-based compensation expense | For the three months ended March 31, 2022 and 2021, the components of stock-based compensation expense were as follows: Three months ended March 31, 2022 2021 Stock options $ 1,408 $ 14,514 Restricted stock units 11,329 — Capitalized costs (1) (1,019) (21) Total stock-based compensation $ 11,718 $ 14,493 |
Schedule of the Employee and Nonemployee Stock Options | A summary of the status of the employee and non-employee stock options as of March 31, 2022 and changes during 2022 is presented below (the number of options represents ordinary shares exercisable in respect thereof): Options Weighted Average Aggregate Balance at December 31, 2021 15,009,656 $ 0.75 Options forfeited (191,831) $ 1.03 Options expired — $ — Options exercised (364,980) $ 0.72 Options granted — $ — Balance at March 31, 2022 14,452,845 $ 0.75 $ 50,922 Exercisable at March 31, 2022 11,121,183 $ 0.64 $ 40,421 |
Schedule of Restricted Stock Unit, Activity | A summary of the equity-based RSUs as of March 31, 2022 is presented below: Number of RSUs Weighted Average Grant Date Fair Value (per unit) Balance at December 31, 2021 6,477,513 $ 12.14 Granted 8,548,788 $ 4.97 Vested (489,784) $ 13.14 Forfeited (584,141) $ 8.25 Balance at March 31, 2022 13,952,376 $ 7.88 A summary of the liability-based RSUs as of March 31, 2022 is presented below: Number of RSUs Balance at December 31, 2021 21,356 Granted — Vested (1,991) Forfeited — Balance at March 31, 2022 19,365 |
DESCRIPTION OF BUSINESS - Narra
DESCRIPTION OF BUSINESS - Narrative (Details) | Jun. 04, 2021USD ($)day$ / sharesshares | Mar. 31, 2022$ / sharesshares | Dec. 31, 2021$ / sharesshares |
Business Acquisition [Line Items] | |||
Stock issued during period, conversion of convertible securities (in shares) | 6,900,000 | ||
Temporary equity, shares, conversion of convertible securities (in shares) | 71,100,000 | ||
Sale of stock, number of shares issued in transaction (in shares) | 19,300,000 | ||
Shares subject to vesting restrictions (in shares) | 738,000 | 738,000 | |
Number of shares issued in transaction, used to fund cash election (in shares) | 300,000 | ||
Sale of stock, price Per share. used to fund cash election (in dollars per share) | $ / shares | $ 10 | ||
Consideration received on transaction, used to fund cash election | $ | $ 2,600,000 | ||
Common stock, issued (in shares) | 140,500,000 | 142,237,954 | 141,592,388 |
Common stock outstanding (in shares) | 140,500,000 | 142,237,954 | 141,592,388 |
Net proceeds from business combination | $ | $ 450,000,000 | ||
Proceeds from issuance of private placement | $ | $ 192,600,000 | ||
Recapitalization exchange ratio | 0.8971 | ||
Common stock, par value (in dollars per share) | $ / shares | $ 0.0001 | $ 0.0001 | $ 0.0001 |
TSIA | |||
Business Acquisition [Line Items] | |||
Assets held-in-trust | $ | $ 300,000,000 | ||
Legacy Latch Stockholders | Latch, Inc | |||
Business Acquisition [Line Items] | |||
Noncontrolling interest, ownership percentage by parent | 60.00% | ||
Common Stock | |||
Business Acquisition [Line Items] | |||
Stock issued during period, conversion of convertible securities (in shares) | 63,800,000 | ||
Common Stock | PIPE Investment | |||
Business Acquisition [Line Items] | |||
Sale of stock, price per share (in dollars per share) | $ / shares | $ 10 | ||
Sale of stock, consideration received on transaction | $ | $ 192,600,000 | ||
Common Class A | IPO | TSIA | |||
Business Acquisition [Line Items] | |||
Sale of stock, number of shares issued in transaction (in shares) | 5,916 | ||
Sale of stock, number of business days prior to business combination in which calculation occurred | day | 2 | ||
Sale of stock, price per share (in dollars per share) | $ / shares | $ 10 | ||
Sale of stock, consideration received on transaction | $ | $ 60,000 | ||
Common Class B | TSIA | |||
Business Acquisition [Line Items] | |||
Stock issued during period, conversion of convertible securities (in shares) | 7,400,000 | ||
Shares subject to vesting restrictions (in shares) | 700,000 | ||
Vesting conditions, volume-weighted average price per share (in dollars per share) | $ / shares | $ 14 | ||
Vesting conditions, number of trading days within trading day period | 20 days | ||
Vesting conditions, trading day period | 30 days | ||
Vesting conditions, anniversary period | 5 years | ||
Convertible Debt | |||
Business Acquisition [Line Items] | |||
Debt conversion, converted instrument, amount | $ | $ 50,000,000 | ||
Secured Debt | Term Loan | |||
Business Acquisition [Line Items] | |||
Repayments of long-term debt | $ | $ 5,000,000 |
SUMMARY OF SIGNIFICANT ACCOUN_4
SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES - Rollforward of Accounts Receivable (Details) $ in Thousands | 3 Months Ended |
Mar. 31, 2022USD ($) | |
Accounts Receivable, Allowance for Credit Loss [Roll Forward] | |
Beginning balance | $ 1,980 |
Provision for doubtful accounts | 298 |
Recoveries | (353) |
Ending balance | 2,852 |
Cumulative Effect, Period of Adoption, Adjustment | |
Accounts Receivable, Allowance for Credit Loss [Roll Forward] | |
Beginning balance | $ 927 |
SUMMARY OF SIGNIFICANT ACCOUN_5
SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES - Schedule of Intangible Assets (Details) - USD ($) $ in Thousands | Mar. 31, 2022 | Dec. 31, 2021 |
Finite-Lived Intangible Assets [Line Items] | ||
Intangible assets | $ 1,059 | $ 1,059 |
Less: accumulated amortization | (292) | (213) |
Total intangible assets, net | 767 | 846 |
Domain names | ||
Finite-Lived Intangible Assets [Line Items] | ||
Intangible assets | 318 | 318 |
Assembled workforce | ||
Finite-Lived Intangible Assets [Line Items] | ||
Intangible assets | 700 | 700 |
Patents | ||
Finite-Lived Intangible Assets [Line Items] | ||
Intangible assets | 37 | 37 |
Other intangibles | ||
Finite-Lived Intangible Assets [Line Items] | ||
Intangible assets | $ 4 | $ 4 |
SUMMARY OF SIGNIFICANT ACCOUN_6
SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES - Narrative (Details) $ in Thousands | 3 Months Ended | 12 Months Ended | |||
Mar. 31, 2022USD ($)segment | Mar. 31, 2021USD ($) | Dec. 31, 2021USD ($) | Jan. 01, 2022USD ($) | Dec. 31, 2020USD ($) | |
Loss Contingencies [Line Items] | |||||
Allowance for doubtful accounts | $ 2,852 | $ 1,980 | |||
Revenue | 13,655 | $ 6,629 | |||
Loss reserve | $ 40 | ||||
Number of operating segments | segment | 1 | ||||
Number of reportable segments | segment | 1 | ||||
Operating lease ROU assets | $ 430 | $ 400 | |||
Operating Lease, Right-of-Use Asset, Statement of Financial Position [Extensible Enumeration] | Other non-current assets | Other non-current assets | |||
Operating lease, current liability | 200 | ||||
Operating Lease, Liability, Current, Statement of Financial Position [Extensible Enumeration] | Other current liabilities | Other current liabilities | |||
Operating lease, non-current liability | 200 | ||||
Operating Lease, Liability, Noncurrent, Statement of Financial Position [Extensible Enumeration] | Other non current liabilities | Other non current liabilities | |||
Total stockholders’ equity (deficit) | $ (342,343) | 175,056 | (377,556) | $ 154,277 | |
Accumulated Deficit | |||||
Loss Contingencies [Line Items] | |||||
Total stockholders’ equity (deficit) | 373,702 | 200,288 | 328,506 | $ 162,187 | |
Cumulative Effect, Period of Adoption, Adjustment | |||||
Loss Contingencies [Line Items] | |||||
Allowance for doubtful accounts | 927 | ||||
Total stockholders’ equity (deficit) | 965 | ||||
Cumulative Effect, Period of Adoption, Adjustment | Accumulated Deficit | |||||
Loss Contingencies [Line Items] | |||||
Total stockholders’ equity (deficit) | 965 | ||||
Accounts Receivable | Customer Concentration Risk | One Customer | |||||
Loss Contingencies [Line Items] | |||||
Accounts receivable, gross | $ 5,000 | $ 3,000 | |||
Concentration risk, percentage | 17.00% | 12.00% | |||
Revenue Benchmark | Customer Concentration Risk | One Customer | |||||
Loss Contingencies [Line Items] | |||||
Revenue | $ 4,400 | $ 900 | |||
Concentration risk, percentage | 32.00% | 14.00% | |||
Minimum | |||||
Loss Contingencies [Line Items] | |||||
Deferred revenue, invoice in advance period | 2 years | ||||
Median | |||||
Loss Contingencies [Line Items] | |||||
Deferred revenue, invoice in advance period | 5 years | ||||
Maximum | |||||
Loss Contingencies [Line Items] | |||||
Deferred revenue, invoice in advance period | 10 years | ||||
Hardware | |||||
Loss Contingencies [Line Items] | |||||
Reserve for returns of defective products, percentage | 2.00% | 1.00% | |||
Reserve for returns of defective products | $ 0 | $ 10 | |||
Allowance for doubtful accounts | 600 | $ 600 | |||
Revenue | $ 9,055 | 5,014 | |||
Hardware Device, Electrical Components | |||||
Loss Contingencies [Line Items] | |||||
Standard product warranty, return period | 1 year | ||||
Hardware Device, Mechanical Components | |||||
Loss Contingencies [Line Items] | |||||
Standard product warranty, return period | 5 years | ||||
Software | |||||
Loss Contingencies [Line Items] | |||||
Interest expense | $ 1,100 | 700 | |||
Revenue | $ 3,039 | 1,615 | |||
Software | Minimum | |||||
Loss Contingencies [Line Items] | |||||
Revenue recognition, customer contract period | 2 years | ||||
Software | Median | |||||
Loss Contingencies [Line Items] | |||||
Revenue recognition, customer contract period | 5 years | ||||
Software | Maximum | |||||
Loss Contingencies [Line Items] | |||||
Revenue recognition, customer contract period | 10 years | ||||
Professional Service Revenue | |||||
Loss Contingencies [Line Items] | |||||
Revenue | $ 1,600 | $ 0 |
SUMMARY OF SIGNIFICANT ACCOUN_7
SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES - Performance Obligations (Details) $ in Millions | 3 Months Ended |
Mar. 31, 2022USD ($) | |
Revenue, Remaining Performance Obligation, Expected Timing of Satisfaction [Line Items] | |
Revenue, remaining performance obligation, amount | $ 35.7 |
Deferred revenue, revenue recognized | 2.4 |
Revenue, Remaining Performance Obligation, Expected Timing of Satisfaction, Start Date [Axis]: 2022-04-01 | |
Revenue, Remaining Performance Obligation, Expected Timing of Satisfaction [Line Items] | |
Revenue, remaining performance obligation, amount | $ 7.2 |
Revenue, remaining performance obligation, expected timing of satisfaction, period | 12 months |
Deferred revenue, revenue recognized | $ 11.1 |
Interest expense related to the significant financing component | 3.9 |
Revenue, Remaining Performance Obligation, Expected Timing of Satisfaction, Start Date [Axis]: 2023-04-01 | |
Revenue, Remaining Performance Obligation, Expected Timing of Satisfaction [Line Items] | |
Revenue, remaining performance obligation, amount | $ 28.5 |
Revenue, remaining performance obligation, expected timing of satisfaction, period | |
Deferred revenue, revenue recognized | $ 38.1 |
Interest expense related to the significant financing component | $ 9.6 |
SUMMARY OF SIGNIFICANT ACCOUN_8
SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES - Deferred Contract Costs (Details) $ in Thousands | 3 Months Ended |
Mar. 31, 2022USD ($) | |
Movement In Capitalized Contract Costs, Net [Roll Forward] | |
Beginning balance | $ 1,275 |
Additions to deferred contract costs | 392 |
Amortization of deferred contract costs | (40) |
Ending balance | $ 1,627 |
SUMMARY OF SIGNIFICANT ACCOUN_9
SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES - Contract Assets and Contract Liabilities (Details) - USD ($) $ in Thousands | Mar. 31, 2022 | Dec. 31, 2021 |
Accounting Policies [Abstract] | ||
Contract assets (unbilled receivables) | $ 619 | $ 633 |
Contract liabilities (deferred revenue) | $ 35,695 | $ 30,206 |
INVESTMENTS - Marketable Securi
INVESTMENTS - Marketable Securities by Security Type Summarized (Details) - USD ($) $ in Thousands | Mar. 31, 2022 | Dec. 31, 2021 |
Debt Securities, Available-for-sale [Line Items] | ||
Amortized Cost | $ 246,345 | $ 262,527 |
Gross Unrealized Loss | (2,294) | (676) |
Estimated Fair Value | 244,051 | 261,851 |
Asset backed securities | ||
Debt Securities, Available-for-sale [Line Items] | ||
Amortized Cost | 11,066 | 11,101 |
Gross Unrealized Loss | (193) | (56) |
Estimated Fair Value | 10,873 | 11,045 |
Commercial paper and corporate bonds | ||
Debt Securities, Available-for-sale [Line Items] | ||
Amortized Cost | 214,398 | 234,497 |
Gross Unrealized Loss | (1,788) | (551) |
Estimated Fair Value | 212,610 | 233,946 |
U.S. government agency debt securities | ||
Debt Securities, Available-for-sale [Line Items] | ||
Amortized Cost | 20,881 | 16,929 |
Gross Unrealized Loss | (313) | (69) |
Estimated Fair Value | $ 20,568 | $ 16,860 |
INVESTMENTS - Narrative (Detail
INVESTMENTS - Narrative (Details) - USD ($) $ in Thousands | 1 Months Ended | 3 Months Ended | ||||
Mar. 31, 2022 | Nov. 30, 2021 | Jul. 31, 2021 | Mar. 31, 2022 | Mar. 31, 2021 | Dec. 31, 2021 | |
Debt Securities, Available-for-sale [Line Items] | ||||||
Gross unrealized loss | $ (2,294) | $ (2,294) | $ (676) | |||
Payments to acquire convertible promissory note | 250 | $ 0 | ||||
Gain on trading securities | $ 1,000 | |||||
Trading securities (convertible promissory notes) | ||||||
Debt Securities, Available-for-sale [Line Items] | ||||||
Payments to acquire convertible promissory note | $ 500 | $ 500 | $ 4,000 | |||
Debt security, extension period | 1 year | |||||
Interest rate | 6.00% |
INVESTMENTS - Contractual Matur
INVESTMENTS - Contractual Maturities of Marketable Securities (Details) $ in Thousands | Mar. 31, 2022USD ($) |
Amortized Cost | |
Marketable securities, due in less than one year | $ 178,405 |
Marketable securities, due in one to five years | 72,490 |
Total investments | 250,895 |
Debt Securities, Available-for-sale, Maturity, Allocated and Single Maturity Date, Fair Value [Abstract] | |
Marketable securities, due in less than one year | 178,543 |
Marketable securities, due in one to five years | 71,058 |
Total investments | $ 249,601 |
FAIR VALUE MEASUREMENTS - Finan
FAIR VALUE MEASUREMENTS - Financial Assets and Liabilities that are Measured at Fair Value on a Recurring Basis (Details) - USD ($) $ in Thousands | Mar. 31, 2022 | Dec. 31, 2021 |
Assets | ||
Debt securities, available-for-sale, fair value | $ 244,051 | $ 261,851 |
Liabilities | ||
Warrant liability | 3,520 | 9,787 |
Asset backed securities | ||
Assets | ||
Debt securities, available-for-sale, fair value | 10,873 | 11,045 |
Fair Value, Recurring | ||
Assets | ||
Total cash and cash equivalents | 90,959 | 124,782 |
Total assets | 340,560 | 390,933 |
Liabilities | ||
Warrant liability | 3,520 | 9,787 |
Total liabilities | 3,520 | 9,787 |
Fair Value, Recurring | Asset backed securities | ||
Assets | ||
Debt securities, available-for-sale, fair value | 244,051 | 261,851 |
Fair Value, Recurring | Trading securities (convertible promissory notes) | ||
Assets | ||
Debt securities, available-for-sale, fair value | 5,550 | 4,300 |
Fair Value, Recurring | Cash | ||
Assets | ||
Total cash and cash equivalents | 22,157 | 8,983 |
Fair Value, Recurring | Money market funds | ||
Assets | ||
Total cash and cash equivalents | 68,802 | 115,799 |
Level 1 | Fair Value, Recurring | ||
Assets | ||
Total cash and cash equivalents | 90,959 | 124,782 |
Total assets | 90,959 | 124,782 |
Liabilities | ||
Warrant liability | 0 | 0 |
Total liabilities | 0 | 0 |
Level 1 | Fair Value, Recurring | Asset backed securities | ||
Assets | ||
Debt securities, available-for-sale, fair value | 0 | 0 |
Level 1 | Fair Value, Recurring | Trading securities (convertible promissory notes) | ||
Assets | ||
Debt securities, available-for-sale, fair value | 0 | 0 |
Level 1 | Fair Value, Recurring | Cash | ||
Assets | ||
Total cash and cash equivalents | 22,157 | 8,983 |
Level 1 | Fair Value, Recurring | Money market funds | ||
Assets | ||
Total cash and cash equivalents | 68,802 | 115,799 |
Level 2 | Fair Value, Recurring | ||
Assets | ||
Total cash and cash equivalents | 0 | 0 |
Total assets | 244,051 | 261,851 |
Liabilities | ||
Warrant liability | 3,520 | 9,787 |
Total liabilities | 3,520 | 9,787 |
Level 2 | Fair Value, Recurring | Asset backed securities | ||
Assets | ||
Debt securities, available-for-sale, fair value | 244,051 | 261,851 |
Level 2 | Fair Value, Recurring | Trading securities (convertible promissory notes) | ||
Assets | ||
Debt securities, available-for-sale, fair value | 0 | 0 |
Level 2 | Fair Value, Recurring | Cash | ||
Assets | ||
Total cash and cash equivalents | 0 | 0 |
Level 2 | Fair Value, Recurring | Money market funds | ||
Assets | ||
Total cash and cash equivalents | 0 | 0 |
Level 3 | Fair Value, Recurring | ||
Assets | ||
Total cash and cash equivalents | 0 | 0 |
Total assets | 5,550 | 4,300 |
Liabilities | ||
Warrant liability | 0 | 0 |
Total liabilities | 0 | 0 |
Level 3 | Fair Value, Recurring | Asset backed securities | ||
Assets | ||
Debt securities, available-for-sale, fair value | 0 | 0 |
Level 3 | Fair Value, Recurring | Trading securities (convertible promissory notes) | ||
Assets | ||
Debt securities, available-for-sale, fair value | 5,550 | 4,300 |
Level 3 | Fair Value, Recurring | Cash | ||
Assets | ||
Total cash and cash equivalents | 0 | 0 |
Level 3 | Fair Value, Recurring | Money market funds | ||
Assets | ||
Total cash and cash equivalents | $ 0 | $ 0 |
FAIR VALUE MEASUREMENTS - Quant
FAIR VALUE MEASUREMENTS - Quantitative Information Regarding the Significant Unobservable Inputs for Derivative Liabilities (Details) - Level 3 - Trading securities (convertible promissory notes) | Mar. 31, 2022 |
Volatility | |
Fair Value Measurement Inputs and Valuation Techniques [Line Items] | |
Debt securities, trading, measurement input | 0.800 |
Term | |
Fair Value Measurement Inputs and Valuation Techniques [Line Items] | |
Debt securities, trading, measurement input | 0.5 |
FAIR VALUE MEASUREMENTS - Narra
FAIR VALUE MEASUREMENTS - Narrative (Details) - USD ($) | 3 Months Ended | |
Mar. 31, 2022 | Dec. 31, 2021 | |
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items] | ||
Warrant liability | $ 3,520,000 | $ 9,787,000 |
Sales issues | 0 | |
Transfers into or out of Level 3 | 0 | |
Trading securities (convertible promissory notes) | ||
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items] | ||
Assets, Fair Value Adjustment | $ 1,000,000 | |
Public Warrants | ||
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items] | ||
Share price (in dollars per share) | $ 0.66 | $ 1.84 |
Private Placement Warrants | ||
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items] | ||
Warrant liability | $ 3,500,000 | $ 9,800,000 |
FAIR VALUE MEASUREMENTS - Activ
FAIR VALUE MEASUREMENTS - Activity of the Level 3 Instruments (Details) - Convertible Debt $ in Thousands | 3 Months Ended |
Mar. 31, 2022USD ($) | |
Fair Value, Net Derivative Asset (Liability) Measured on Recurring Basis, Unobservable Input Reconciliation [Roll Forward] | |
Beginning balance | $ 4,300 |
Purchases | 250 |
Change in fair value | 1,000 |
Ending balance | $ 5,550 |
PROPERTY AND EQUIPMENT, NET (De
PROPERTY AND EQUIPMENT, NET (Details) - USD ($) $ in Thousands | Mar. 31, 2022 | Dec. 31, 2021 |
Property, Plant and Equipment [Line Items] | ||
Property and equipment | $ 4,885 | $ 3,896 |
Less: Accumulated depreciation | (2,130) | (1,857) |
Total property and equipment, net | 2,755 | 2,039 |
Office furniture | ||
Property, Plant and Equipment [Line Items] | ||
Property and equipment | 86 | 86 |
Computers and equipment | ||
Property, Plant and Equipment [Line Items] | ||
Property and equipment | $ 4,799 | $ 3,810 |
INTERNALLY DEVELOPED SOFTWARE_3
INTERNALLY DEVELOPED SOFTWARE, NET (Details) - USD ($) $ in Thousands | 3 Months Ended | |
Mar. 31, 2022 | Dec. 31, 2021 | |
Research and Development [Abstract] | ||
Internally developed software | $ 13,071 | $ 11,761 |
Construction in progress | 5,812 | 4,339 |
Less: Accumulated amortization | (4,472) | (3,625) |
Total internally developed software, net | 14,411 | $ 12,475 |
Related to the decision not to proceed with further development of certain software products | $ 300 |
INVENTORIES, NET (Details)
INVENTORIES, NET (Details) - USD ($) $ in Thousands | Mar. 31, 2022 | Dec. 31, 2021 |
Inventory Disclosure [Abstract] | ||
Raw materials | $ 3,192 | $ 2,513 |
Finished goods | 16,084 | 9,492 |
Excess and obsolete reserve | (280) | (390) |
Total inventories, net | $ 18,996 | $ 11,615 |
LEASES - Narrative (Details)
LEASES - Narrative (Details) | Mar. 31, 2022 |
Minimum | |
Lessee, Lease, Description [Line Items] | |
Operating lease, term of contract | 1 year |
Maximum | |
Lessee, Lease, Description [Line Items] | |
Operating lease, term of contract | 3 years |
LEASES - Additional Information
LEASES - Additional Information Related to Operating Leases Included on the Condensed Consolidated Balance Sheet (Details) - USD ($) $ in Thousands | 3 Months Ended | |
Mar. 31, 2022 | Jan. 01, 2022 | |
Leases [Abstract] | ||
Operating lease ROU assets | $ 430 | $ 400 |
Operating lease liabilities | 431 | |
Operating lease cost | 125 | |
Short-term lease cost | 177 | |
Cash paid for amounts included in the measurement of operating lease liabilities | $ 124 | |
Weighted average remaining lease term - operating leases | 1 year 9 months 18 days | |
Weighted average discount rate - operating leases | 14.50% |
LEASES - Maturity of Lease Liab
LEASES - Maturity of Lease Liabilities (Details) $ in Thousands | Mar. 31, 2022USD ($) |
Leases [Abstract] | |
Remainder of 2022 | $ 248 |
2023 | 138 |
2024 | 102 |
2025 | 0 |
2026 | 0 |
Thereafter | 0 |
Total lease payments | 488 |
Less: imputed interest | 57 |
Total lease liabilities | $ 431 |
ACCRUED EXPENSES (Details)
ACCRUED EXPENSES (Details) - USD ($) $ in Thousands | Mar. 31, 2022 | Dec. 31, 2021 |
Payables and Accruals [Abstract] | ||
Accrued compensation | $ 4,836 | $ 6,407 |
Accrued warranties | 318 | 556 |
Accrued purchases | 4,800 | 1,692 |
Accrued excess inventory | 1,114 | 550 |
Accrued operating expense | 6,574 | 7,894 |
Accrued litigation costs | 6,750 | 6,750 |
Other accrued expenses | 295 | 335 |
Total accrued expenses | $ 24,687 | $ 24,184 |
DEBT - Narrative (Details)
DEBT - Narrative (Details) - Revolving Credit Facility - Line of Credit - USD ($) $ in Millions | 1 Months Ended | 3 Months Ended | ||
Jan. 31, 2021 | Mar. 31, 2022 | Dec. 31, 2021 | Jul. 01, 2021 | |
Debt Instrument [Line Items] | ||||
Line of credit facility, capacity available for trade purchases | $ 1 | $ 6 | ||
Debt instrument, payment period after initial payment date | 90 days | |||
Line of credit, current | $ 2.3 | $ 3.4 | ||
Minimum | ||||
Debt Instrument [Line Items] | ||||
Line of credit facility, interest rate | 0.87% | |||
Maximum | ||||
Debt Instrument [Line Items] | ||||
Line of credit facility, interest rate | 1.25% |
COMMITMENTS AND CONTINGENCIES (
COMMITMENTS AND CONTINGENCIES (Details) $ in Millions | 1 Months Ended | 3 Months Ended | 12 Months Ended | |
Jun. 30, 2021USD ($)tranche | Mar. 31, 2022USD ($) | Dec. 31, 2021USD ($) | Jan. 31, 2021USD ($) | |
Operating Leased Assets [Line Items] | ||||
Purchase commitments | $ 3.3 | |||
Future minimum purchases in 2022 | $ 2.8 | |||
Payments for inventory | 0.8 | $ 0.2 | ||
Inventory accrued related to the unpurchased minimum commitment | 0.5 | 0.2 | ||
Amount accrued in connection with the dispute | $ 6.8 | $ 6.8 | ||
Registration Rights Agreement | ||||
Operating Leased Assets [Line Items] | ||||
Number of times stockholders may each request to sell all or any portion of their registrable securities in an underwritten offering (up to) | tranche | 2 | |||
Stockholders may each request to sell all or any portion of their registrable securities in an underwritten offering, period | 12 months | |||
Sale of stock, expected consideration received on transaction | $ 75 |
EQUITY - Narrative (Details)
EQUITY - Narrative (Details) - $ / shares | Jun. 04, 2021 | Mar. 31, 2022 | Dec. 31, 2021 |
Equity, Class of Treasury Stock [Line Items] | |||
Shares, authorized (in shares) | 1,100,000,000 | ||
Common stock, authorized (in shares) | 1,000,000,000 | 1,000,000,000 | 1,000,000,000 |
Common stock, par value (in dollars per share) | $ 0.0001 | $ 0.0001 | $ 0.0001 |
Preferred stock, shares authorized (in shares) | 100,000,000 | ||
Preferred stock, par or stated value per share (in dollars per share) | $ 0.0001 | ||
Public Warrants, TSIA IPO | |||
Equity, Class of Treasury Stock [Line Items] | |||
Class of warrant or right, conversion of securities (in shares) | 10,000,000 | ||
Public Warrants, Post Combination Company | |||
Equity, Class of Treasury Stock [Line Items] | |||
Number of securities called by warrants or rights (in shares) | 10,000,000 | ||
Class of warrant or right, outstanding (in shares) | 10,000,000 | ||
Class of warrant or right, exercise price of warrants or rights (in dollars per share) | $ 11.50 |
EQUITY - Common Stock Shares Re
EQUITY - Common Stock Shares Reserved For Future Issuance (Details) - shares | Mar. 31, 2022 | Jan. 01, 2022 | Dec. 31, 2021 |
Class of Stock [Line Items] | |||
Reserved shares of common stock for future issuance (in shares) | 60,037,740 | 53,573,645 | |
Stock options issued and outstanding | |||
Class of Stock [Line Items] | |||
Reserved shares of common stock for future issuance (in shares) | 14,452,845 | 15,009,656 | |
Restricted stock units issued and outstanding | |||
Class of Stock [Line Items] | |||
Reserved shares of common stock for future issuance (in shares) | 13,971,741 | 6,498,869 | |
Public warrants outstanding | |||
Class of Stock [Line Items] | |||
Reserved shares of common stock for future issuance (in shares) | 9,999,967 | 9,999,967 | |
Private placement warrants outstanding | |||
Class of Stock [Line Items] | |||
Reserved shares of common stock for future issuance (in shares) | 5,333,334 | 5,333,334 | |
2021 Incentive Award Plan | |||
Class of Stock [Line Items] | |||
Reserved shares of common stock for future issuance (in shares) | 16,279,853 | 16,731,819 | |
Increase in reserved shares of common stock for future issuance (in shares) | 7,116,519 |
EARNINGS PER SHARE - Computatio
EARNINGS PER SHARE - Computation of Basic and Diluted Net Income Per Share for Common Stock and Preferred Stock (Details) - USD ($) $ / shares in Units, $ in Thousands | 3 Months Ended | |
Mar. 31, 2022 | Mar. 31, 2021 | |
Numerator: | ||
Numerator for basic net loss per share - net loss | $ (44,231) | $ (38,101) |
Numerator for diluted net loss per share - net loss | $ (44,231) | $ (38,101) |
Denominator: | ||
Basic net loss - adjusted weighted-average common shares (in shares) | 141,970,190 | 10,438,778 |
Effect of dilutive securities | 0 | 0 |
Diluted net loss - adjusted weighted-average common shares (in shares) | 141,970,190 | 10,438,778 |
Earnings Per Share, Basic and Diluted | ||
Basic net loss per share (in dollars per share) | $ (0.31) | $ (3.65) |
Diluted net loss per share (in dollars per share) | $ (0.31) | $ (3.65) |
EARNINGS PER SHARE - Narrative
EARNINGS PER SHARE - Narrative (Details) - shares shares in Millions | 3 Months Ended | |
Mar. 31, 2022 | Mar. 31, 2021 | |
Earnings Per Share [Abstract] | ||
Antidilutive securities excluded from computation of earnings per share, amount | 39.4 | 81 |
STOCK-BASED COMPENSATION - Stoc
STOCK-BASED COMPENSATION - Stock-Based Compensation Activity (Details) - USD ($) $ in Thousands | 3 Months Ended | |
Mar. 31, 2022 | Mar. 31, 2021 | |
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | ||
Capitalized costs | $ (1,019) | $ (21) |
Total stock-based compensation | 11,718 | 14,493 |
Stock options | ||
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | ||
Stock-based compensation expense | 1,408 | 14,514 |
Restricted stock units | ||
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | ||
Stock-based compensation expense | $ 11,329 | $ 0 |
STOCK-BASED COMPENSATION - Narr
STOCK-BASED COMPENSATION - Narrative (Details) - USD ($) $ / shares in Units, $ in Thousands | Mar. 14, 2022 | Feb. 22, 2022 | Jun. 04, 2021 | Jan. 19, 2021 | Mar. 31, 2022 | Mar. 31, 2022 | Mar. 31, 2021 | Jan. 01, 2022 | Jun. 03, 2021 | Jan. 31, 2021 |
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | ||||||||||
Compensation cost not yet recognized related to unvested stock options | $ 1,700 | $ 1,700 | ||||||||
Sale of stock, number of shares issued in transaction (in shares) | 19,300,000 | |||||||||
Options, canceled, percent (up to) | 25.00% | |||||||||
Options, canceled in period (in dollars per share) | $ 10 | |||||||||
Options, canceled in period (in shares) | 300,000 | |||||||||
Consideration received on transaction, used to fund cash election | $ 2,600 | |||||||||
Number of shares issued in transaction, used to fund cash election (in shares) | 300,000 | |||||||||
2021 Incentive Award Plan | ||||||||||
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | ||||||||||
Increase in reserved shares of common stock for future issuance (in shares) | 7,116,519 | |||||||||
General and administrative | ||||||||||
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | ||||||||||
Incremental stock-based compensation expense | 2,100 | |||||||||
Secondary Purchase | ||||||||||
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | ||||||||||
Stock-based compensation expense | $ 13,800 | |||||||||
Sale of stock, number of shares issued in transaction (in shares) | 2,800,000 | |||||||||
Sale of stock, price per share (in dollars per share) | $ 9.92 | |||||||||
Stock options | ||||||||||
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | ||||||||||
Compensation cost not yet recognized related to unvested stock options, period for recognition | 1 year 7 months 6 days | |||||||||
Stock-based compensation expense | $ 1,408 | $ 14,514 | ||||||||
Restricted stock units | ||||||||||
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | ||||||||||
Vesting period | 3 years | 3 years | ||||||||
Grants in period (in shares) | 600,000 | 7,900,000 | 8,548,788 | |||||||
Compensation cost not yet recognized related to unvested stock options, period for recognition | 2 years 7 months 6 days | |||||||||
Grants in period, weighted average grant date fair value (in dollars per share) | $ 3.40 | $ 5.09 | $ 4.97 | |||||||
Compensation cost not yet recognized | 96,400 | $ 96,400 | ||||||||
Stock-based compensation expense | $ 11,329 | $ 0 | ||||||||
Vested in period (in shares) | 489,784 | |||||||||
Restricted stock units | Liability | ||||||||||
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | ||||||||||
Grants in period (in shares) | 0 | |||||||||
Compensation cost not yet recognized related to unvested stock options, period for recognition | 2 years 2 months 12 days | |||||||||
Compensation cost not yet recognized | $ 100 | $ 100 | ||||||||
Vested in period (in shares) | 1,991 | |||||||||
Settlement of liability-based awards for cash | $ 10 | |||||||||
Restricted stock units | Liability | Cost of revenue | ||||||||||
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | ||||||||||
Stock-based compensation expense | $ 10 | |||||||||
2016 Stock Plan | ||||||||||
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | ||||||||||
Number of shares authorized (in shares) | 22,797,955 | |||||||||
Expiration period | 10 years | |||||||||
Vesting period | 4 years | |||||||||
2021 Plan | ||||||||||
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | ||||||||||
Expiration period | 10 years | |||||||||
Number of shares available for grant (in shares) | 22,500,611 | |||||||||
Period for annual increase for common stock available for issuance | 10 years | |||||||||
Percentage of aggregate common stock shares outstanding | 5.00% | |||||||||
Grants in period (in shares) | 15,700,000 | |||||||||
2021 Plan | Restricted stock units | Minimum | ||||||||||
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | ||||||||||
Vesting period | 1 year | |||||||||
2021 Plan | Restricted stock units | Maximum | ||||||||||
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | ||||||||||
Vesting period | 4 years |
STOCK-BASED COMPENSATION - St_2
STOCK-BASED COMPENSATION - Stock Options Activity (Details) $ / shares in Units, $ in Thousands | 3 Months Ended |
Mar. 31, 2022USD ($)$ / sharesshares | |
Options Outstanding | |
Options, outstanding, beginning balance (in shares) | shares | 15,009,656 |
Options forfeited (in shares) | shares | (191,831) |
Options expired (in shares) | shares | 0 |
Options exercised (in shares) | shares | (364,980) |
Options granted (in shares) | shares | 0 |
Options, outstanding, ending balance (in shares) | shares | 14,452,845 |
Weighted Average Exercise Price | |
Options, outstanding, weighted average exercise price, beginning balance (in dollars per share) | $ / shares | $ 0.75 |
Options, forfeited (in dollars per share) | $ / shares | 1.03 |
Options expired (in dollars per share) | $ / shares | 0 |
Options, exercised (in dollars per share) | $ / shares | 0.72 |
Options granted (in dollars per share) | $ / shares | 0 |
Options, outstanding, weighted average exercise price, ending balance (in dollars per share) | $ / shares | $ 0.75 |
Aggregate Intrinsic Value | |
Options outstanding, aggregate intrinsic value | $ | $ 50,922 |
Options, exercisable (in shares) | shares | 11,121,183 |
Options, exercisable (in dollars per share) | $ / shares | $ 0.64 |
Options, exercisable, aggregate intrinsic value | $ | $ 40,421 |
STOCK-BASED COMPENSATION - Rest
STOCK-BASED COMPENSATION - Restricted Stock Units Activity (Details) - Restricted stock units - $ / shares | Mar. 14, 2022 | Feb. 22, 2022 | Mar. 31, 2022 |
Number of RSUs | |||
Beginning balance (in shares) | 6,477,513 | ||
Grants in period (in shares) | 600,000 | 7,900,000 | 8,548,788 |
Vested in period (in shares) | (489,784) | ||
Forfeited (in shares) | (584,141) | ||
Ending balance (in shares) | 13,952,376 | ||
Weighted Average Grant Date Fair Value (per unit) | |||
Beginning balance, weighted average grant date fair value (in dollars per share) | $ 12.14 | ||
Grants in period, weighted average grant date fair value (in dollars per share) | $ 3.40 | $ 5.09 | 4.97 |
Vested in period, weighted average grant date fair value (in dollars per share) | 13.14 | ||
Forfeited in period, weighted average grant date fair value (in dollars per share) | 8.25 | ||
Ending balance, weighted average grant date fair value (in dollars per share) | $ 7.88 | ||
Liability | |||
Number of RSUs | |||
Beginning balance (in shares) | 21,356 | ||
Grants in period (in shares) | 0 | ||
Vested in period (in shares) | (1,991) | ||
Forfeited (in shares) | 0 | ||
Ending balance (in shares) | 19,365 |
INCOME TAXES (Details)
INCOME TAXES (Details) - USD ($) $ in Thousands | 3 Months Ended | |
Mar. 31, 2022 | Mar. 31, 2021 | |
Income Tax Disclosure [Abstract] | ||
Income tax provision | $ 17 | $ 0 |
Unrecognized tax benefits | $ 0 |
RELATED-PARTY TRANSACTIONS (Det
RELATED-PARTY TRANSACTIONS (Details) - USD ($) $ in Thousands | 3 Months Ended | ||
Mar. 31, 2022 | Mar. 31, 2021 | Dec. 31, 2021 | |
Related Party Transaction [Line Items] | |||
Accounts receivable, related parties | $ 100 | $ 500 | |
Hardware | |||
Related Party Transaction [Line Items] | |||
Revenue from related parties | 100 | $ 200 | |
Software | |||
Related Party Transaction [Line Items] | |||
Revenue from related parties | $ 30 | $ 200 |