Is Matterport a Buy Before the SPAC Merger?

Matterport, a leader in 3D mapping technology, is set to go public via a special purpose acquisition company (SPAC) merger with Gores Holdings VI (GHVI). With a massive addressable market opportunity, this could be worth a look for patient long-term investors. In this Fool Live video clip, recorded on May 10, Fool.com contributors Matt Frankel, CFP, and Brian Withers discuss Matterport and why it could be such an interesting opportunity. 

Matt Frankel: All right, we will get into our last company which is Matterport, which is currently trading as Gores Holding VI. It's another SPAC. Ticker symbol right now is GHVI. It will be trading under its own ticker symbol shortly, but for now you have to buy the SPAC.

Matterport is the leader in spatial data. They produce software and hardware that produces really impressive 3D mappings of buildings. Tons of applications for those. The obvious application from a home seller's standpoint or homebuyer's standpoint is it makes virtual walk-throughs not only easier but better. If I can look up and see what the ceilings look like, if I can look down and see what the floors look like, it makes it much more thorough. A lot of other applications, construction, for example. If a contractor has a precise 3D map of a building, it makes the whole design process so much easier. Equipment design, facilities management, tons of applications.

Matterport sells its product as a software-as-a-service product. Plans start at $9.99 a month if you're just an individual. It goes up from there obviously for businesses and enterprise clients, things like that. As its spatial data library gets bigger. Right now it has the biggest spatial data library in the world. It's got 10 billion square feet of space 3D mapped. Less than 1% of the world's real estate per total has been 3D mapped.

Big opportunity here, their data becomes much more valuable the bigger it gets. We've talked about the network effect several times. They have a potential network effect going on. Their technology is just leaps and bounds above anyone else. They make money off software and hardware. They have that recurring revenue that Brian loves, all their subscription-based revenue. They also have hardware that they sell that is proprietary to them. For example, their Matterport Pro2 3D mapping camera sells for over $3,000. It's the best 3D mapping camera you could buy pretty much, and integrates perfectly with their platform.

Great recurring revenue model. Their customers spend more money every time. They have a 112% net dollar retention rate. They generated $86 million in 2020 revenue. They're trading at 60 times sales. This is a massive market opportunity. They see spatial data as a $240 billion global market. They are at a tiny fraction of that. If they can get one percent market penetration, there would be over $2 billion of recurring revenue. I think that's a reasonable target, 1%t. They're not going to get $240 billion, don't get me wrong. Their economics work really well. Matterport estimates that its averaged subscriber, the lifetime value of that subscriber is over 11 times its acquisition costs. These recurring-revenue businesses, great economics when they're growing well. That's Matterport, I think we're bumping up against our time, but Brian, do you have anything to add with Matterport?

Brian Withers: Matterport is pretty interesting. You think through the use cases there, and if you're building like cruise lines who are building brand-new ships, or resorts, or manufacturing facilities, or distribution centers, anything where you're going to have tons of people running through. Take a 2D design and imagine it in your head where it's going to be. I think this technology that Matterport brings to the table, where you can walk through, in a realistic way, through the building or facility before it's built, I think it provides tremendous opportunities and savings for those companies.