Business Overview

Matterport, Inc. (NASDAQ: MTTR) is leading the digitization and datafication of the built world, providing a pioneering platform that is revolutionizing how businesses and individuals interact with physical spaces. With a strong focus on innovation and customer success, Matterport has established itself as a market leader in the rapidly evolving spatial data and digital twin technology landscape.

Matterport's innovative platform combines cutting-edge 3D capture technology, powerful AI-driven software, and a comprehensive suite of solutions to digitize and analyze physical buildings and spaces. The company's flagship product, the Matterport Pro3 Camera, enables users to create highly accurate, dimensionally precise digital twins of any physical environment, from residential homes to commercial properties, construction sites, and industrial facilities.

These digital twins serve as the foundation for Matterport's suite of applications, which leverage the company's extensive spatial data library and advanced analytics to deliver valuable insights and streamline workflows across a diverse range of industries. Matterport's solutions are particularly well-suited for applications in real estate, facilities management, construction, travel and hospitality, and insurance, among others.

Financials

In the fiscal year 2023, Matterport reported annual revenue of $157.7 million, a 16% increase from the prior year. This growth was driven by a 38% increase in services revenue and an 18% increase in subscription revenue, which now accounts for 60% of the company's total revenue. The company's annual net income was -$199.1 million, while its annual operating cash flow and free cash flow were -$58.7 million and -$68.6 million, respectively.

For the first quarter of 2024, Matterport reported total revenue of $39.9 million, with subscription revenue reaching $24.0 million, a 21% year-over-year increase. The company's gross margin improved to 49% during the quarter, up from 43% in the same period last year, primarily due to increased efficiency and cost optimization efforts. Matterport's non-GAAP loss per share for the quarter was $0.12, a 33% improvement from the prior-year period.

Outlook

Looking ahead, Matterport provided guidance for the full-year 2024, expecting total revenue to be in the range of $173 million to $183 million, with subscription revenue expected to be between $104 million and $106 million, representing over 20% growth at the midpoint. The company also anticipates a non-GAAP loss per share of $0.07 to $0.11 for the full year, a 59% improvement compared to 2023.

Matterport's confidence in its 2024 outlook is bolstered by the strong adoption of its recently launched Property Intelligence suite, which leverages the company's extensive spatial data library and advanced AI capabilities to deliver automated insights and streamline workflows for customers. The company believes that the continued rollout of these innovative features, combined with its focus on enterprise-level solutions and strategic partnerships, will drive further growth and operational improvements in the coming year.

Geographic and Vertical Market Performance

Matterport's revenue is generated both domestically and internationally, with the United States accounting for approximately 65% of total revenue in the first quarter of 2024. The company has seen strong growth in international markets, particularly in Europe, the Middle East, and Africa, which grew over 30% year-over-year during the same period.

In terms of vertical market performance, Matterport has experienced balanced growth across its key industries, with both residential real estate and non-residential real estate verticals growing over 20% year-over-year in 2023. The company has also seen significant traction in the travel and hospitality, facilities management, and construction sectors, as customers increasingly recognize the value of Matterport's digital twin solutions in streamlining operations, enhancing marketing efforts, and improving decision-making.

Subscription Revenue and Customer Metrics

Matterport's subscription revenue has been a key driver of the company's growth, now accounting for 60% of total revenue in the first quarter of 2024, up from 52% in the same period last year. This shift towards a more recurring, high-margin revenue stream has been a strategic focus for the company, as it aims to build a more durable and profitable business model.

As of March 31, 2024, Matterport had a total subscriber base of 1,005,000, including 74,000 paid subscribers and 931,000 free subscribers. The company's net dollar expansion rate, a key metric that measures the growth in subscription revenue from existing customers, improved to 107% in the first quarter of 2024, up from 103% in the prior-year period. This indicates that Matterport's customers are increasingly adopting and expanding their use of the company's platform, further enhancing the predictability and profitability of its business.

Operational Efficiency and Profitability

Matterport has made significant strides in improving its operational efficiency and profitability, as evidenced by the company's expanding gross margins and reduced operating expenses. In the first quarter of 2024, Matterport's gross margin improved to 49%, up from 43% in the same period last year, driven by a mix shift towards higher-margin subscription revenue and ongoing cost optimization efforts.

The company has also implemented a comprehensive restructuring plan, which has enabled it to streamline operations, enhance productivity, and focus its investments on the areas of greatest growth potential. As a result, Matterport's research and development expenses decreased by 18% year-over-year in the first quarter of 2024, while selling, general, and administrative expenses declined by 17% during the same period.

These operational improvements, combined with Matterport's focus on driving higher-margin subscription revenue growth, have positioned the company to achieve positive cash flow from operations by the end of 2024, a significant milestone in its path towards sustainable profitability.

Risks and Challenges

Matterport operates in a rapidly evolving and competitive market, facing challenges from both established players and emerging startups in the digital twin and spatial data technology space. The company's ability to maintain its market-leading position and continue to innovate its product offerings will be crucial to its long-term success.

Additionally, Matterport is subject to various risks, including macroeconomic and geopolitical uncertainties, supply chain disruptions, and the potential for increased competition. The company's ability to effectively navigate these challenges and continue to deliver value to its customers will be a key determinant of its future performance.

Conclusion

Matterport's innovative digital twin solutions and focus on customer success have positioned the company as a leader in the rapidly evolving spatial data and digital transformation landscape. With a strong financial foundation, a growing subscriber base, and a robust pipeline of new product offerings, Matterport is well-positioned to capitalize on the significant opportunities in its target markets and drive sustainable growth in the years ahead.

As the company continues to execute on its strategic initiatives, investors will be closely watching Matterport's ability to achieve its profitability targets, expand its enterprise customer base, and further enhance the value proposition of its platform through the integration of advanced AI and data analytics capabilities.