Latch Layoffs: Proptech Company Conducts Consecutive Weeks of Cuts

Latch Announces Further Workforce Reduction

Latch, a smart lock company operating within the proptech sector, is implementing another round of layoffs. The company previously secured $152 million in private funding before becoming publicly traded via a SPAC merger last year.

Initial Layoffs and Subsequent Cuts

Earlier this month, Latch reduced its workforce by 30 employees, representing 6% of its total staff, as detailed in a communication obtained by TechCrunch.

A press release issued late Friday confirmed that Latch has now cut a total of 130 positions, equating to 28% of its full-time employee base. These reductions reportedly include the roles of Chief Revenue Officer Chris Lee and VP of Sales Adam Sold.

Rationale Behind the Restructuring

In a message to employees, Latch CEO Luke Schoenfelder stated that the initial layoffs were intended to “ensure Latch is on a path to sustainable growth.” He also indicated that the company would be scaling back investment in certain areas of the business.

It remains unclear whether these reductions will involve eliminating entire product lines or simply decreasing resources allocated to existing projects. TechCrunch attempted to contact Latch for clarification regarding this week’s layoffs but had not received a response as of publication.

Recent Leadership Changes and Market Conditions

These consecutive weeks of layoffs are unusual and potentially signal internal instability. The situation follows the departure of Latch’s CFO in April, less than a year after his appointment and after the company’s public debut through a reverse merger.

This occurred amidst a broader downturn in the SPAC market, a trend that has significantly impacted Latch’s performance. The company’s stock price has experienced a dramatic decline.

Stock Performance and Investor Confidence

According to Yahoo Finance, Latch’s initial public offering price was $11 per share. Currently, the stock trades at just over $2 per share, representing a decrease of over 80% in value since its debut in June 2021.

Such a substantial loss of value and diminished investor confidence can compel a company to implement rapid cost-cutting measures to demonstrate its ability to operate more efficiently.

Expected Cost Savings and Restructuring Costs

Upon completion of the workforce reduction, Latch anticipates achieving approximately $40 million in annual cost savings. These savings will be realized across research and development, sales and marketing, and general and administrative expenses, as stated in a press release.

The layoffs and associated restructuring are expected to incur costs of approximately $4 million to $6 million, which the company plans to expense during the second quarter of 2022.

Broader Tech Industry Trends

Over the past month, numerous public and private technology companies have announced significant layoffs across various sectors. Affected employees include those from companies such as Section4, Carvana, DataRobot, Mural, Robinhood, On Deck, Thrasio, MainStreet, and Netflix.

Other major tech firms, including Twitter and Meta, are implementing hiring freezes, while some, like Uber, are announcing strategic shifts.