Latch, Inc.

Good day, and thank you for standing by, and welcome to the last third quarter earnings conference call. At this time, all participants are in a listen-only mode. After the speaker's presentation, there will be a question-and-answer session. To ask a question during the session, you'll need to press star 1 on your telephone. As a reminder, this conference is being recorded. If you require any further assistance, please press star 0. I would now like to hand the conference over to Sean Hannon with Investor Relations. Please go ahead.

Thank you, Operator. Good afternoon and thank you for joining us today to review Latch's third quarter 2021 financial results. With me on the call today are Luke Schoenfelder, Chief Executive Officer, Co-Founder and Chairman of the Board of Directors, and Garth Mitchell, Chief Financial Officer. After prepared remarks, we will open up the call for question and answer session. During this call, we may make statements related to our business that are forward-looking statements under federal securities laws. These statements are not guarantees of future performance, but rather subject to a variety of risks and uncertainties. Our actual results could differ materially from these expectations reflected in any forward-looking statements. Forward-looking statements made today speak only to our expectations as of today, and we undertake no obligation to publicly update or revise them. For discussion of material risks and other important factors that could affect our actual results, please refer to the risk factors section in our SEC filings available on the FCC's EDGAR system and our website, as well as other risks and other important factors discussed in today's results. Additionally, non-GAAP financial measures will be discussed on this conference call. Please refer to the tables in our earnings release and the investor relations portion of our website for reconciliation of these measures, the most directly comparable GAAP financial measure. With that, I'd like to turn the call over to Chief Executive Officer Luke Schoenfelder. Luke?

Thanks, Sean. And I'd like to start by thanking all of you for joining us today for our third quarter earnings call. We are very excited to share our results for the quarter. Despite unprecedented supply chain constraints and construction delays due to labor and material shortages, we continued delivering for our customers, growing our revenue 120% year-over-year to $11.2 million, above the top end of the revenue guidance we gave for the quarter. We had another record bookings quarter for Latch as well, and we saw a substantial acceleration in bookings growth, up 181% to $96 million. And we also saw growth in booked ARR, up 126% to $59.8 million. Garth, our CFO, will talk in a few moments to Q3 results in detail. As this is our third earnings call as a public company, we'd also like to take a moment to remind everyone about who we are, what we do, our value proposition, market opportunity, and business model. I am one of the co-founders of Latch, and beginning in 2014, we embarked on our journey to make buildings better spaces to live, work, and visit, creating a product company focused on the biggest challenges we saw in the space. From the beginning, we recognized a powerful opportunity to transform the world's oldest subscription product, renting a space, and the world's largest asset class, real estate. Our flagship product, LatchOS, provides real estate operators, residents, and service providers the capabilities they need to solve the problems they face every day in their spaces. And we provide tailored solutions through our LatchOS modules, smart access, delivery and guest management, smart home, connectivity, and personalization and services. I'd like to turn now to the current quarter and the new and exciting product and marketing updates from Q3 that we believe demonstrate our commitment to serving our customers with an ever-evolving set of product features and experiences while enhancing our product portfolio and driving long-term growth. In Q3, we announced the new Latch M, which is our latest mortise lock built for retrofits and new construction. The product is designed to be easy to install without any added infrastructure and brings all the benefits of the new Latch lens to the mortise format. This further broadens Latch's ability to provide more buildings of all shapes and sizes with the experience of LatchOS, our full building operating system of software, products, and services. Also in Q3, we hired Lee Odess as General Manager of New Market Development to help strengthen our focus on new markets. Lee 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 device and security space, including Lutron, Brevo, and Allegiant. Immediately prior to joining Latch, he was the founder and CEO of Group 337, a consulting and content firm specializing in the security, access control, and IoT space. Lee's team of industry experts has also joined Latch, and their combined expertise will be invaluable as we continue to innovate and provide scalable technology products to our customers' operating problems. Reflecting on our third quarter results, we are excited to share two key themes. The first theme is that our revenue growth continues to be on an impressive trajectory with 120% growth year over year to $11.2 million in the third quarter. We are particularly proud of delivering these revenue results despite the widespread supply chain and unprecedented construction industry challenges. The most powerful driver of our business remains the secular shift towards more technology in the real estate industry, which has been woefully underserved by technology companies. The lack of focused product innovation for real estate has led to exceptionally low technology penetration rates in what is the world's largest asset class. This is the long-term driver of our business, and we remain steadfast in our focus on delivering the products and experiences our customers and their residents deserve. Let me take a moment to illustrate our momentum with a couple of customer stories that reflect how we go to market and how customers find value working with Latch versus other providers. We are excited to continue our relationship with Middleburg Communities. a leading Southeastern multifamily owner and developer. We booked our first apartment community with Middleburg in Q2, where we delivered hardware within a month of booking. Since the first project, Middleburg has been so impressed with our comprehensive solution, in particular our ability to enable unattended touring and leasing through Tour 24, a LatchLynx partner who referred us to Middleburg. Middleburg has now signed a large additional agreement to further solidify Latch as their preferred smart access partner. This deal demonstrates how our open platform and API access can create differentiated experiences for our customers, our partners, as well as our partners' customers. This shared value creation is a core focus for Latch as we grow our partner ecosystem using our flexible API strategy. We're also very excited to expand our relationship with the related group. After deploying Latch in one of its buildings and its Florida portfolio, they signed up the rest of their upcoming multifamily portfolio with Latch. The related group was previously working with a variety of point solution hardware and middleware providers, but after seeing the benefits of the comprehensive LatchOS platform, they've decided to lean on Latch's full stack of hardware, software, and services as the basis for their smart building design. Another new customer that joined us this quarter was Meta Real Estate Partners, a Southeast real estate developer. The company was highly impressed with our offering and was originally planning to install a competitor before being introduced to the Latch suite of products. Meta decided to make the swap to Latch because they were particularly impressed with our unique ability to serve as the single solution for every stakeholder at the building. The second theme is the state of the global electronic supply chain. We are really pleased by the flexibility, focus, and commitment of our supply chain team in prioritizing our customers' demand, and we are proud of our team's ability to have driven 120% year-over-year revenue growth in light of very challenging supply chain dynamics and the difficulties we're seeing much larger companies facing in this space. We're also very grateful to our engineering teams for being able to quickly and effectively execute engineering changes that allow us to rapidly incorporate alternative components in our products without compromising functionality. These dynamics and our continued prioritization of meeting customer demand led to a sequential step back in the third quarter in hardware margins due to spot buying and elevated shipping costs, which Garth will discuss shortly. The constrained supply for several electronics components and latch and partner products has also persisted, and our sourcing challenges have increased. However, we remain cautiously optimistic about our ability to continue to remain agile to meet demand, and we are excited to leverage our unique supply chain and engineering core competencies to gain market share while keeping an eye towards unit economics and the bottom line. In closing, we are very pleased with our Q3 performance. We are a product-oriented company with a unique perspective and vision for this space, and we've been pleasantly surprised by the number and quality of M&A opportunities that have emerged since formalizing our corporate development efforts earlier this year. Point solutions and features being sold into our end markets today could immediately be more valuable leveraging our deep industry relationships and scaling go-to-market organization. The expansiveness of our vision makes long-term customer and resident lifetime value on the Latch platform worth much more than if those same users were on limited point solutions. We look forward to discussing these growth opportunities more as they develop, and we continue to look at inorganic opportunities as a very real and very tangible driver of long-term growth and value creation for LAT shareholders. As always, we will continue to focus on our long-term strategy while executing day in and day out to deliver the long-term value that our customers and shareholders expect. Finally, I'd like to thank our global team for their unwavering focus and commitment on delivering the best products and experiences to our customers and residents. To our shareholders, the work this team is doing is incredible, and I've never been more excited for what's to come. With that, let me turn the call over to Garth Mitchell, Latches CFO. Garth?