Latch (LTCH) resets cost structure
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Latch, Inc. (NASDAQ: LTCH), maker of LatchOS, the full-building enterprise software-as-a-service (SaaS) platform, today announced the completion of a workforce reduction. Additionally, the Company is announcing the reorganization of the sales and marketing departments under the leadership of Lee Odess. Prior to this role, Odess was the GM of New Market Development at Latch. Odess is a proven leader in the industry with nearly 20 years of experience driving sales growth, product innovation, and geographic expansion for leading companies in the smart access and security space.
Latch believes that, along with the recently announced reorganization of its product organization and revised sales compensation structure focused on recurring software revenue, these changes will position the Company for long-term growth while also accelerating its path towards self-sustaining free cash flow and profitability. Latch expects this reduction in force will better align staffing and expense levels with current sales volumes and the current macroeconomic environment, with continued construction delays and supply chain shortages. The reduction impacts approximately 130 people, or approximately 28% of Latch’s full-time employees. Once fully implemented, Latch expects to achieve approximately $40 million annual run rate cost savings across research and development, sales and marketing and general and administrative expenses. The reduction is expected to result in approximately $4 million to $6 million of total cash restructuring and related charges primarily related to severance and benefits costs (excluding the impact of share-based compensation), substantially all of which is expected to be incurred in the second quarter of 2022.
Latch’s guidance provided in its first quarter earnings release does not reflect the recently completed workforce reduction. Latch intends to provide further information about this reorganization and updated guidance in connection with the release of Latch’s second quarter earnings.
As of March 31, 2022, Latch had cash plus marketable securities of $335 million, and continues to believe it is fully capitalized to fund its growth plan to free cash flow breakeven.
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