Is Matterport (NASDAQ: MTTR) Stock a Buy? – Value the Markets

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We delivered outstanding third quarter results, with record total revenue, demonstrating that our strategy is working,

–       RJ Pittman, Chairman and Chief Executive Officer of Matterport 

Matterport (NASDAQ: MTTR) enjoyed a 15% share price hike yesterday and is up a further 10% in pre-market trading.

What Does Matterport Do?

Matterport, Inc is leading the digital transformation of the built world. Its ground-breaking spatial data platform turns buildings into data to make nearly every space more valuable and accessible. Millions of buildings in more than 177 countries have been transformed into immersive Matterport digital twins to improve every part of the building lifecycle, from planning, construction, and operations to documentation, appraisal, and marketing.

Since its founding in 2011, Matterport’s pioneering technology has set the standard for digitizing, accessing and managing buildings, spaces and places online. The company believes the digitization and datafication of the built world will continue to unlock significant operational efficiencies and property values and that Matterport is the platform to lead this enormous global transformation.

Matterport’s digital twin technology takes a lead role in helping consumers envision a future where the metaverse is an integrated part of our daily lives.

Matterport is based in the United States with subsidiaries in the UK, Singapore, Japan and the Netherlands.

Q3 Highlights

  • Total Revenue: $38m (up 27% Y/Y and above guidance)

  • Subscription Revenue: $19m (up 21% Y/Y and above guidance)

  • Services Revenue: $10m (+204% Y/Y)

  • Q3 GAAP Loss Per Share: ($0.20)

  • Q3 Non-GAAP Loss Per Share: ($0.09)

  • Cash And Investments: $495m

  • Total subscribers increased to 657,000 (up 50% Y/Y)

  • Spaces Under Management (SUM) grew to 8.7 million (up 40% Y/Y) 

In Q3, Matterport launched its new Enterprise Essentials subscription suite and new, high-speed, LiDAR-enabled, Pro3 camera.

The company completed its acquisition of VHT Studios, amalgamating an industry-leading real estate marketing platform with Matterport’s immersive digital twin technologies. This transaction combines VHT Studios’ visual media services with the immersive Matterport 3D Digital Twin platform to elevate the buying experience for home buyers while simplifying the process of creating comprehensive marketing packages for brokers and agents.

Matterport also reported that customer demand remained robust as enterprises leveraged the deflationary power of Matterport digital twins to improve operating efficiency and productivity, resulting in solid revenue growth. 

JD Fay, Chief Financial Officer of Matterport, said:

We saw strength across all of our revenue lines in the quarter, and combined with our focus on operating efficiency, we delivered financial results that exceeded our expectations on both the top and bottom lines,

Subscription revenue grew to a record $19 million, and services revenue grew 204% year-over-year, to a record $10 million. In addition, we were able to ship through our product order backlog during the third quarter.

Finally, our focus on operational efficiency began yielding savings a quarter earlier than planned, and with our strong revenue growth, enabled non-GAAP net loss to improve by 24% sequentially, resulting in a narrower loss relative to our guidance range.

Forward Guidance

Guiding for Q4 2022, Matterport expects to achieve the following:

  • Total Revenue: $39m to $41m

  • Subscription Revenue: $19m to $19.2m

  • Non-GAAP Loss Per Share: ($0.09) – ($0.11)

Guiding for the full year, Matterport expects:

  • Total Revenue: $134m to $136m

  • Subscription Revenue: $73.5m to $73.7m

  • Non-GAAP Loss Per Share: ($0.41) – ($0.43)

How Does Matterport Make Money?

Matterport makes money by selling subscriptions, data licensing, product sales and services.

The company is primarily focused on driving substantial annual growth in subscription revenue and maintaining a modest increase in license, product and services revenue.

The company sells subscriptions for its AI-powered spatial data platform. The subscription allows its customers to create digital twins of physical spaces giving them valuable data analytics and insights. Plans run from free to customized, depending on the size and needs of the business.

Analyst Ratings

Eight FactSet analysts have an Overweight rating on MTTR stock, with a target share price of $7.92.

Matterport Corp Growth Potential and Risks

The company is expanding its market presence, building collaborative relationships and improving its technology. Its subscription business is high margin, and along with achieving revenue growth, the fact Matterport has diversified its income streams is a positive.

Matterport’s enterprise business is executing well, and the company is enhancing its platform to meet a diverse customer base. 

The company began selling its Pro3 camera in Q3, which starts at $6k. This is a much higher price point than the Pro2, but this hasn’t deterred customers as its high performance makes it highly covetable, and the company is pleasantly surprised at the demand it is seeing for the Pro3.

Is MTTR Stock a Good Investment? 

Rate hikes and inflationary pressures are weighing on business profit margins. This, combined with economic and geopolitical uncertainty, is causing share price volatility. This is particularly prevalent in speculative market areas, such as spatial computing and penny stocks.

Matterport’s revenue growth demonstrates surprising resilience during these challenging times.

However, its share price is less forgiving. MTTR stock is down 84.5% YTD and 75% since the company went public in February 2021.

For investors considering buying shares in MTTR stock, it’s important to remember it is still a loss-making business. But it has been profitable in the past and strives to reach that goal again.

If you enjoyed our Matterport Corp coverage, you might be interested in our Spatial Computing stocks article.

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