January 25, 2021

Latch and TS Innovation Acquisitions Corp. Conference Call

C O R P O R A T E   P A R T I C I P A N T S

Scott Bacigalupo, Managing Director, Allen & Company
Rob Speyer, President & Chief Executive Officer, Tishman Speyer; and Chief Executive Officer & Chairman (TSIA)
Luke Schoenfelder, Chief Executive Officer & Co-Founder, Latch
Garth Mitchell, Chief Financial Officer, Latch

P R E S E N T A T I O N  

Scott Bacigalupo

Welcome to the Latch and TS Innovation Acquisitions Corp., or TSIA, Investor conference call. I am Scott Bacigalupo, Managing Director at Allen & Company.

On the call with me today are Rob Speyer, President and CEO of Tishman Speyer and the CEO and Chairman of TSIA; Luke Schoenfelder, CEO and Co-Founder of Latch; and Garth Mitchell, CFO of Latch.  

Before we begin, I want to note that this call may contain forward-looking statements, including Latch's expectations of future financial and business performance and conditions, the industry outlook and the timing completion of the transaction. Forward-looking statements are inherently subject to risks, uncertainties and assumptions and they are not guarantees of performance. We encourage you to read the press release issued today, the accompanying presentation that is available on Latch's Investor Relations page, and TSIA's filings with the SEC for a discussion of the risks that could affect the business combination and the business of Latch after completion of the proposed transaction.  

As a reminder, all participants on today's call will be in listen-only mode and the call will not include a Q&A session.

Thank you for joining us to discuss the transaction between the Tishman Speyer sponsored TS Innovation Acquisition Corp. and Latch, maker of full-building enterprise SaaS platform LatchOS that will bring Latch's business into the public markets.  

Before Rob and Luke get into more details of why we think this transaction makes so much sense, let me quickly give you the key metrics of the transaction.

The transaction values Latch at approximately $1.56 billion post money, and once it’s complete, the Company expects to have up to $510 million in cash to fund growth initiatives. This includes the net proceeds from the $300 million of cash held in TSIA's trust account from its initial public offering in November, $190 million of PIPE investment, and a $60 million of existing cash on Latch's balance sheet. The combined company will have a pro forma ownership at $10 per share, with existing shareholders having a 64% controlling interest; TSIA shareholders 19%; TSIA sponsors 4%; and the transaction's PIPE investors 12%. Following the close, we expect Latch to begin trading on NASDAQ under the ticker symbol LTCH.  

With that, I will turn the call over to Rob.

Rob Speyer

Thank you, Scott.  

First, let me introduce Tishman Speyer. We're a global real estate platform owning and operating iconic buildings like Rockefeller Center in New York City, and also developing ground up across the world from The Springs in Shanghai to the Sony Center in Berlin to Mission Rock in San Francisco. Today, we have a portfolio of more than 120 assets, nearly $57 billion in AUM. We do commercial office, residential, mixed use and life science real estate. We're a global platform with nearly 80 million square feet spread across the U.S., Europe, Latin America and Asia. And this is an exciting moment, possibly unique, in our 120-year history, because real estate, an industry not exactly renowned for innovation, is in the early stages of a profound disruption and one that is dramatically changing the possibilities for how we interact with built spaces.

We've long believed in the importance of integrating technology into old and new buildings alike, and we believe that the companies providing innovative, beautiful and smart tools, tools that can make our customers lives a little bit easier, these companies are poised for great success, companies like Latch.

Latch has developed an exceptional product, one that puts the customer experience first. I've known Luke and Latch for years first as a customer and later as an investor in the Company. Luke and I first connected over our shared vision for making the places people live better, and I'm a strong believer in Luke's goal for creating a seamless residential experience, starting with access and extending to the full breadth of a Latch operating system.  

And Latch's track record speaks for itself. They've seen their cumulative bookings grow over 700% in the last two years. They've brought strong and growing engagement to their app and they've got traction with the country’s biggest developers, like us. In fact, Latch is now installed in more than one out of every ten new apartments in the United States.  

So we believe this moment is a strategic point in Latch's trajectory. And I knew that Tishman Speyer had something unique to offer proptech companies, the power of our vertically integrated real estate platform and the expertise of our more than 1,200 people, and I knew that we could help the right company accelerate growth across all the global markets of Tishman Speyer. And so we set out to find the right company for our SPAC, companies that had achieved a certain scale with a strong and differentiated business model, an exceptional team and the potential to scale much further through our platform.  

Latch checks all these boxes and more.  

We've had the pleasure of working with Luke and his team for years, rolling out Latch across our own residential portfolio, and was thrilled to work with Latch today and in the coming years to bring Latch's products to new global markets, like Europe, and new verticals, like commercial office. So it's with this conviction, the conviction of a long-time real estate and capital markets investor, but also the conviction of an extremely satisfied customer that we believe in Latch's future in the public market.  


Luke Schoenfelder

Thank you so much for that introduction, Rob.

To echo Rob's sentiments, we're very excited about this partnership with Tishman Speyer to bring Latch to the public markets. This is a transformative transaction for Latch, one that will create more opportunities for us to continue to grow and expand through new products, new verticals and new geographies. It has always been a long-term goal for Latch to be a public company, and with Tishman Speyer and TSIA, we're confident that we found the right strategic path to the public markets.

I co-founded Latch in 2014 with Brian Jones, Dhruva Rajendra and Thomas Meyerhoffer. Together, we have built an Executive team with decades of experience at some of the world's best companies, including Apple, BCG and IDEO. We would not be where we are today if it wasn't for this talented and dedicated group of professionals who've been committed to our mission from the very beginning. At our core, we're a product company, and more than half of our employees work in product development roles, even today.

From the start, we had a simple and clear vision - to create products that make spaces better places to live, work and visit. Over the last seven years, we have methodically executed this mission, creating a LatchOS software platform and an entire ecosystem of products and experiences for all the stakeholders at a building. Building owners pay for a LatchOS software platform, install Latch in partner devices, and then everyone at the building gets to use them everyday. Each Latch product is designed to help people get more out of each space, enhancing their enjoyment and efficiency in ever-increasing ways. And LatchOS scales to meet the needs of users in all types of buildings.

In the beginning, we started by solving the access problem at apartment buildings. We created products that work for each door in an apartment building, from building entrances to apartment doors, elevators, parking garages, gyms and just about everything in between. Once installed, users could use their smartphone, NFC card door code or even their Apple watch to unlock each door in their path and share access right from their phone. These products help define the smart access category for multi-family buildings and serve as the foundation for our growth.  

From there, we expanded into delivery and gas management, making sure that our products enabled more efficient and seamless deliveries and guest reception through our Latch intercom, Latch camera and Latch delivery assistant products. We worked with partners like UPS to help make sure we could drive efficiency gains for each delivery while also providing a better experience for residents and buildings too.  

After that, we saw an opportunity to extend the enterprise device management capabilities that we built to manage our own first party devices to manage third party products, and we built relationships with companies like Google Nest, Honeywell, ecobee and more. Now LatchOS manages each of these third party devices for building managers and the Latch app enables residents to control each of their devices from our app.  

From there, we saw the need to bring enterprise connectivity solutions to apartment buildings, and we built LTE into our Latch intercom and Latch hub to enable us to bring connectivity right to the edge. With this foundation of products in place, we've created a resident experience where the average user interacts with our app 4.6 times per day, setting the stage for the introduction of new experiences over time. Our average building customer installed Latch and partner devices across the whole building paid Latch between $7 and $12 per apartment per month for the features that they need, and then they onboard their staff and residents and go from there.  

With LatchOS, we have a unique platform and a highly attractive financial operating profile, including a rapidly growing, recurring enterprise software revenue model, highly sticky customer relationships with building owners and with residents; long term prepaid enterprise software agreements with high switching costs; visibility to sustained average revenue per home unit, or ARPU, expansion with new and existing customers; extensive opportunities to sell deeper into new and existing customer portfolios; and we have a capital efficient customer acquisition and clear upsell opportunities, with an opportunity for disruptive consumer SaaS and internet businesses to be built right on top of our enterprise distribution.

As a result, after only three years in the market, Latch consistently delivers strong sales at high growth as we continue to drive ever broader market adoption of our products. In fact, one in ten new apartments in the U.S. are built with Latch, and seven out of ten of NMHC's top developers are Latch customers.  

Garth is going to provide a deeper dive into our financial metrics later in this presentation, but I would like to highlight that even with the uncertainty of 2020, we drove $167 million in booked revenue, which represents 49% growth over 2019.  

As our results show, Latch has a strong foundation and there's compelling opportunity for further growth that's supported by four important pillars that we're going to talk through. First, the market for an apartment building operating system is massive. Second, LatchOS is defining the full-building operating system category. Third, since our inception in 2014, we have demonstrated strong customer traction and unit economics. And fourth, there's significant white space for rapid growth.  

So I'm going to dive into each of these in more detail right now.

Let me start with the massive market opportunity. There are an estimated 47 million rental homes in the United States alone, which Latch can serve through our LatchOS ecosystem. Although we've seen three years of enormous growth, we've only penetrated approximately 1% of the overall rental unit market, including existing rental units. Just by serving operators and owners in the United States represents an annual $54 billion opportunity just with the LatchOS modules that are currently on our road map. In Europe, there's an estimated 93 million additional apartments, which can add an incremental $90 billion annual market opportunity. That's a total addressable market of $144 billion a year.  

LatchOS is the first multi-family operating system that is able to service this opportunity and is defining the building operating system category.  

When we started, people thought that we might be a coastal product, but the reality is that LatchOS powers buildings, large and small, across more than 35 states. From affordable housing in Baltimore and garden style developments in Atlanta, to luxury towers in the Midwest and historic buildings in Manhattan, LatchOS scales to meet the needs of users in all types of buildings. Building owners pick the modules for each of their apartments and then choose the devices that they want to install as part of their building infrastructure.  

This is the existing universe of Latch products and partners. It has taken us seven years to develop this ecosystem and we're excited by the capabilities that we provide to our customers, residents and service providers everyday.  

To get started, building owners choose the LatchOS capabilities that they need, select the devices they'd like to install to their buildings and we handle the rest. Our LatchOS software platform then combines our own devices, partner devices and services to create a complete system for each building and stakeholder. Our average customer signs a LatchOS software contract greater than six years to provide the capabilities that they need at their building.

The way we sell our products is also unique, as we become essentially the trusted technology adviser for many of our customers. While traditionally this takes an eight or more disparate, largely disconnected vendors to replicate the capabilities of LatchOS, we're able to consolidate all of those capabilities in a single system.  

We always work to better understand and serve our customers and we're constantly evolving our product suite to meet their needs, solving their problems and unifying important capabilities directly in the LatchOS platform. Our product road map is directly informed by this collaboration with our customers, as we evolve to meet their needs and provide a singular experience that makes life better for everyone at a building.  

Real estate owners buy LatchOS because it helps drive net operating income through increased revenue and reduced expenses. LatchOS can help customers increase their revenue by up to $200 to $500 per apartment per year, while at the same time reducing expenses by up to $100 to $300 per apartment per year.  

On this slide, you can see the specific benefits LatchOS provides. Once building owners have set their Latch system up, they add all their residents to Latch. When a resident moves in they get smart access, guest sharing, smart home control and intercom capabilities all in a single app. These capabilities lead our residents to interact with our app on average of 4.6 times per day. This engagement allows us to introduce new features to meet the needs of residents from house cleaning to laundry to renter's insurance, and even subscription services, like internet, directly inside the Latch app. This has the effect of expanding our market opportunity to encompass resident spending.  

In keeping with our focus on helping people create better spaces to live, work and visit, you can expect to see a suite of services and experiences sold directly to the residents of Latch buildings as we believe we can make their entire rental experience easier and more efficient. And we can do all this via the incredible engagement we get for free via our own app. That's the power of the integrated full-building experience LatchOS delivers.  

Because of the value we're able to deliver, Latch is a diverse customer group ranging from the largest real estate companies in the world, like Tishman Speyer and Brookfield, to small regional developers. We have had deep relationships with many of the country's largest residential real estate owners, including seven of the ten largest NMHC developers, as you can see on this slide.

Because we have these direct relationships with our customers, we partner with them from the start of each project, acting as their first technology partner, understanding their nuanced specific needs and learning how our products already meet or can evolve to meet their needs. With an insulation timeline that can range from 6 to 18 months, depending on the construction schedule, we can actually improve our products and add new features between the time of the initial sale and the time of install.  

We often say that the worst Latch product you'll ever use is the one that you buy on day one. Just like a smartphone or a Tesla car, we believe our products will only improve as time goes on, as our software updates keep adapting to our customers' needs throughout their multiyear software contracts.  

So what is the outcome of our end-to-end sales cycle and product development cycle? It results in multiyear software contracts, direct feedback loops to our buildings and the residents, local and regional market insights, and a full picture of ever-changing needs that the real estate industry's looking for. It gives our customers a connected operating system that is constantly evolving, getting better in periods, best measured in weeks or months, rather than years and decades. This empowers Latch to build superior products for our customers and deliver a superior experience again and again.  

And how do we define superior? Well, a really big part of that is financial metrics. I'll hand it over to Garth Mitchell, Latch's CFO, to talk about the growth engine powering Latch.

Garth Mitchell
Thanks, Luke.

Now I'll discuss Latch's compelling financial metrics.

Since our launch in the summer of 2017, we haven't lost a customer, leading to 100% gross dollar retention. Our direct sales model enables high repeat customer bookings, larger deal sizes and upselling activity. Between Q4 2019 and Q4 2020, we were able to grow booked annual recurring revenue from the same customers by 54%. As we look ahead, we believe our enterprise SaaS business has a distinct competitive advantage. Our iconic best-in-class hardware bolts our solution directly onto apartment doors.  

As Rob mentioned earlier, if you examine our revenue growth, net booked revenue expansion, booked and software gross margins, all compare highly favorably to some of the best-in-class publicly traded vertical software companies. We are a SaaS business serving one of the world's largest industries, with no direct competitors. This is what makes our business model and growth trajectory so unique.

Certain modules of our software solution are hardware enabled, so we price our hardware to win (phon) the software agreements. And think about hardware as a component of our customer acquisition costs, factoring in any hardware losses when we compare to our software LTV, which is lifetime value, defined as software revenue across the initial contract term, minus software cost of good sold. Even after factoring in occasional hardware losses, our business delivers an attractive SaaS company LTV to customer acquisition cost ratio of 4x, which we believe will only expand as customers purchase new LatchOS modules over time, and as we realize greater economies of scale and manufacturing. The hardware also only helps increase the stickiness of our product. Adding only one renewal to the LTV improves LTV to customer acquisition cost ratio to 7x.  

Latch also has compelling upfront unit economics. Ninety seven percent of our customers prepay their full six-plus year contract on day one, which creates highly attractive upfront profitability and cash efficiencies.  

Our customers are also quick to adopt new products as we release them, validating our product expansion strategy. In Q4 2020, 44% of our booked home units were sold with intercom or smart home integration software after we just started selling the products in May. Those products increased average revenue per home unit by approximately 30% each.  

Speaking of average revenue per home unit, we have visibility to approximately 150% growth of maximum average revenue per home unit, just with the products currently on our road map. This just includes products slated to launch this year. This strong adoption is a testament to all the hard work of our employees and their commitment to making the building experience better for all our customers.

I'll now turn it back over to Luke to talk about our growth strategy.  

Luke Schoenfelder
Thanks so much, Garth.

Latch has significant white space for rapid growth, and we'll be strategic about how we approach each new opportunity. As we look at the near term for Latch, there are four key growth drivers in North America. We're focused on growing the number of units on our LatchOS platform by driving bookings with new customers and expanding within our existing customer portfolios. We're also determined to expand average revenue per home unit by adding and expanding our LatchOS modules for enterprise customers and also capturing more digital services spending from residents.  

As I mentioned earlier, one of the key benefits of this transaction is it will enable us to expand to new markets faster than we'd be able to do on our own. As we look further out with TSIA, we can accelerate our European expansion. We thought long and hard about our European strategy for years. Our plan is to start with a focused approach, leveraging Tishman Speyer's decades of expertise and assets and target the 23.5 million apartments in Germany, 9.9 million apartments in France, and 4.2 million apartments in the U.K. in the first stage.

We will also have the capital to expand to new verticals. Starting with commercial office. We're going to work with existing and adjacent partners to bring our operating platform into commercial buildings. We're confident that we'll be able to serve all the doors in a building, from garages to office entrances to elevators, and that we can solve many of the problems people deal with in large office buildings today.  

It's anticipated that the largest return to office will occur this year, which means that there's an increased focus on new infrastructure. Latch products are designed for the flexibility and ease of use that'll be needed in this new realty. We can't wait to see how our products improve the daily lives of users and building managers as people return to office and Latch offers new products and new experiences for the commercial office vertical.  

I've never been more excited for what lies ahead, and we're just getting started. Latch is a product company and we're committed to continuing to deliver for each stakeholder in our ecosystem. We have a strong foundation of products and services, deep customer relationships and a team that is dedicated to pushing the Latch experience forward in every way that we can.  

As we continue to add to the depth and breadth of LatchOS, continue to innovate with new products, and continue expanding to new markets, Latch's next chapter is going to be something really special. We hope you'll follow our journey.  

Thank you for joining us today. And onwards.  


This transcript relates to a proposed transaction between Latch and TSIA. This transcript does not constitute an offer to sell or exchange, or the solicitation of an offer to buy or exchange, any securities, nor shall there be any sale of securities in any jurisdiction in which such offer, sale or exchange would be unlawful prior to registration or qualification under the securities laws of any such jurisdiction. TSIA intends to file a registration statement on Form S-4 that will include a proxy statement of TSIA and a prospectus of TSIA. The proxy statement/prospectus will be sent to all TSIA and Latch stockholders. TSIA also will file other documents regarding the proposed transaction with the SEC. Before making any voting decision, investors and security holders of TSIA and Latch are urged to read the registration statement, the proxy statement/prospectus and all other relevant documents filed or that will be filed with the SEC in connection with the proposed transaction as they become available because they will contain important information about the proposed transaction.

Investors and security holders will be able to obtain free copies of the proxy statement/prospectus and all other relevant documents filed or that will be filed with the SEC by TSIA through the website maintained by the SEC at www.sec.gov [sec.gov]. Inaddition, the documents filed by TSIA may be obtained free of charge from TSIA's website at www.TSIAcop.com [tsiacorp.com] or by written request to TSIA at TS Innovation Acquisitions Corp., 45 Rockefeller Plaza, 7th Floor, New York, NY 10111.


TSIA and Latch and their respective directors and officers may be deemed to be participants in the solicitation of proxies from TSIA’s stockholders in connection with the proposed transaction. Information about TSIA’s directors and executive officers and their ownership of TSIA’s securities is set forth in TSIA's filings with the SEC, including TSIA’s Registration Statement on Form S-1, which was filed with the SEC on November 5, 2020. To the extent that holdings of TSIA’s securities have changed since the amounts printed in TSIA’s Registration Statement on Form S-1, such changes have been or will be reflected on Statements of Change in Ownership on Form 4 filed with the SEC. Additional information regarding the interests of those persons and other persons who may be deemed participants in the proposed transaction may be obtained by reading the proxy statement/prospectus regarding the proposed transaction when it becomes available. You may obtain free copies of these documents as described in the preceding paragraph.


This transcript contains certain forward-looking statements within the meaning of the federal securities laws with respect to the proposed transaction between Latch and TSIA, including statements regarding the benefits of the transaction, the anticipated timing of the transaction, the services offered by Latch and the markets in which it operates, and Latch’s projected future results. These forward-looking statements generally are identified by the words “believe,” “project,” “expect,” “anticipate,” “estimate,” “intend,” “strategy,” “future,” “opportunity,” “plan,” “may,” “should,” “will,” “would,” “will be,” “will continue,” “will likely result,” and similar expressions. Forward-looking statements are predictions, projections and other statements about future events that are based on current expectations and assumptions and, as a result, are subject to risks and uncertainties. Many factors could cause actual future events to differ materially from the forward-looking statements in this transcript, including but not limited to: (i) the risk that the transaction, including the contemporaneous private placement of equity securities (the “PIPE investment”), may not be completed in a timely manner or at all, which may adversely affect the price of TSIA’s securities, (ii) the risk that the transaction may not be completed by TSIA’s business combination deadline and the potential failure to obtain an extension of the business combination deadline if sought by TSIA, (iii) the failure to satisfy the conditions to the consummation of the transaction, including the adoption of the agreement and plan of merger by the stockholders of TSIA and Latch, the satisfaction of the minimum trust account amount following redemptions by TSIA’s public stockholders and the receipt of certain governmental and regulatory approvals, (iv) the lack of a third party valuation in determining whether or not to pursue the proposed transaction, (v) the occurrence of any event, change or other circumstance that could give rise to the termination of the agreement and plan of merger or the termination of any PIPE investor’s subscription agreement, (vi) the effect of the announcement or pendency of the transaction on Latch’s business relationships, performance, and business generally, (vii) risks that the proposed transaction disrupts current plans of Latch or diverts management’s attention from Latch’s ongoing business operations and potential difficulties in Latch employee retention as a result of the proposed transaction, (viii) the outcome of any legal proceedings that may be instituted against Latch, TSIA or their respective directors or officers related to the agreement and plan of merger or the proposed transaction, (ix) the amount of the costs, fees, expenses and other charges related to the proposed transaction and PIPE investment, (x) the ability to maintain the listing of TSIA’s securities on NASDAQ, (xi) the price of TSIA’s securities may be volatile due to a variety of factors, including changes in the competitive and highly regulated industries in which Latch plans to operate, variations in performance across competitors, changes in laws and regulations affecting Latch’s business and changes in the combined capital structure, (xii) the ability to implement business plans, forecasts, and other expectations after the completion of the proposed transaction, and identify and realize additional opportunities, including the conversion of pre-orders into binding orders, (xiii) the amount of redemption requests made by TSIA’s public stockholders, (xiv) the ability of TSIA to issue equity or equity-linked securities in connection with the transaction or in the future, (xv) possible variances between the unaudited historical financial information Latch presents and its audited financial statements, when they become available and (xvi) the impact of the global COVID-19 pandemic on any of the foregoing. The foregoing list of factors is not exhaustive. You should carefully consider the foregoing factors and the other risks and uncertainties described in the “Risk Factors” section of TSIA’s Registration Statement on Form S-1, the registration statement on Form S-4 and proxy statement/prospectus described below and other documents filed by TSIA from time to time with the SEC. These filings identify and address other important risks and uncertainties that could cause actual events and results to differ materially from those contained in the forward-looking statements. Forward-looking statements speak only as of the date they are made. Readers are cautioned not to put undue reliance on forward-looking statements, and Latch and TSIA assume no obligation and do not intend to update or revise these forward-looking statements, whether as a result of new information, future events, or otherwise. Neither Latch nor TSIA gives any assurance that either Latch or TSIA will achieve its expectations. The inclusion of any statement in this communication does not constitute an admission by Latch or TSIA or any other person that the events or circumstances described in such statement are material.