When property technology company Latch (LTCH 2.22%) reported its second-quarter earnings, the stock reacted rather negatively. However, in this Fool Live video clip, recorded on August 16, Fool.com contributor Matt Frankel, CFP, and Industry Focus host Jason Moser take a closer look at the numbers and give a rundown of the key takeaways investors should know.

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Jason Moser: Latch earnings also came out recently here, and a little bit of a reaction to the stock. That really seemed to me to be more related to the guidance revision, but I'll let you talk more about that. What stood out to you in this quarter for Latch?

Matt Frankel: It's the guidance revision and the general SPAC pessimism going on right now. Pretty much any company that went public through a SPAC is tanking right now.

Moser: Yeah.

Frankel: Not necessarily because anything wrong with their business. When you look at the numbers, this is another one where it's tough to find anything other than maybe that guidance revision. Even not upset about bookings, as we've said, the number that you want to pay attention to, was about $96 million, just over 100% year over year annual recurring revenue, which is a big, big part of any subscription driven business. Up 122% year over year, the revenue figure itself is only $9 million, which for any company that's trading in the billions sounds very, very low on the surface.

Moser: Yeah.

Frankel: They're not profitable, which no one expected them to be for years. If you're doubling your bookings year over year, no one really cares what you're earning at that point. At some point, people will. Bookings are the number to pay attention to. Because that's, like I said, when they're installing their product in a multi-family building. That takes years to develop, so they book it when it's still in its early stages. A couple of highlights going on, then there is one thing I really wanted to point out about Latch's revenue. First, I want to get your take on this. They got their SPAC money early in June. Remember, their SPAC deal was completed. Toward the end of the quarter, they just reported. One of the first things they did, they hired a Chief Marketing Officer for the first time. Tell me what you think of this resume. Former Senior Vice President of Endeavor (EDR 0.19%), and former Global Head of Content and Lifestyle Strategy at Apple (AAPL 2.86%).

Moser: I've heard of Apple. Up-and-comer. I understand in the tech space. I mean, in all seriousness. That sounds like a pretty rich work history.

Frankel: Right. The half billion dollars or so they got as part of the SPAC deal isn't reflected in this quarter's numbers, which is one big thing to keep in mind. I mentioned the revenues only $9 million. Check this out. 80% of that was from hardware, the locks and stuff like they sell for the smart homes. They made $7.2 million in revenue from hardware. The cost of that revenue was over $8 million. They lost money on hardware.

Moser: They're loss leaders.

Frankel: They are loss leaders. Negative 11% profit margin that works out too. On the software side, they did $1.8 million from software, so not a ton yet. That only cost them $173,000. That's a 90% gross margin. Right now, it's a tiny part of the business. But the idea is that the more hardware they sell, the more software subscriptions they'll sell on a recurring basis. That's why I mentioned that annual recurring revenue and that's the real number to watch, is the mix of revenue that's coming from software. Because once software gets to the point where it's more than hardware, that's when you're going to see a real path to profitability from this business.