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Matterport Earnings: What to Watch

By Beth McKenna – Oct 19, 2021 at 9:45AM

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Investors' main focus should be on subscription revenue growth when the newly public spatial-data company releases its third-quarter results.

Matterport (MTTR 3.84%) is slated to report its third-quarter 2021 results after the market close on Wednesday, Nov. 3. An analyst conference call is scheduled for 4:30 p.m. EDT on the same day.

Matterport is probably a new name to many investors. The Silicon Valley-based company went public in July via a reverse merger with a special purpose acquisition company, or SPAC. Its platform enables users to turn a physical space into an immersive 3D replica, or "digital twin." These digital twins are being used in many ways, including by realtors to sell homes and by hospitality companies to rent out their vacation accommodations.

Since going public on July 23, Matterport stock is up 27% through Oct. 18. The S&P 500 index has returned 3.1% over this period.

Here's what to watch in Matterport's Q3 report.

Vertical cross-sectional view of a multiple-story house.

Image source: Matterport. A view of a home using Matterport's "dollhouse view."

Matterport's key numbers 

Matterport wasn't a publicly traded company in the year-ago period, so that period's numbers can't be presented in the below table, as is customary. Last quarter's numbers are used.

Metric

Q2 2021 Result 

Wall Street's Q3 2021 Consensus Estimate  Wall Street's Projected Sequential Change

Revenue

$29.5 million 

$29.1 million

Essentially flat

EPS

($0.62) ($0.07) N/A. Loss expected to narrow by 89%.

Data sources: Matterport and Yahoo! Finance. EPS = earnings per share.

For context, in the second quarter, the company's revenue increased 21% year over year (and 10% sequentially) to $29.5 million. Growth was driven by a 53% year-over-year surge in subscription revenue to $15.3 million. The number of subscribers skyrocketed 158% to 404,000.

Customers are finding good value in Matterport's platform, as evidenced by its net dollar expansion rate reaching a record 132% last quarter. This metric means existing customers expanded their spending with the company by an average of 32% year over year. 

In Q2, Matterport posted a net loss of $6.2 million, or $0.62 per share, compared to a net loss of $3.7 million, or $0.47 per share, in the year-ago quarter. The fact that Matterport isn't profitable shouldn't concern investors at this point. Newly public tech companies usually put the most emphasis on scaling their operations to drive sales growth. 

Subscription revenue growth is key

Investors will want to focus on Matterport's revenue growth in its subscription business, which accounted for about 52% of its total revenue last quarter. The subscription business is particularly attractive for two reasons. First, the revenue it generates is recurring. Second, it's more profitable than the company's products and services businesses. 

Last quarter, Matterport's overall gross margin was 60.4%, while its subscription business had a gross margin of 77.9%. The company also generated some licensing revenue -- and this type of revenue is extremely attractive because it goes straight to the bottom line, meaning its gross margin is 100%. But licensing revenue is "lumpy" and accounts for just a small portion of the company's total revenue at this point. 

Guidance

Management's outlook will be very important since the market looks ahead. For full-year 2021, management previously guided for:

  • Revenue in the range of $120 million to $126 million. This compares to 2020 revenue of $86 million (representing growth of 40% to 47% year over year) and 2019 revenue of $46 million. 
  • Adjusted loss per share between $0.17 and $0.25.

Beth McKenna has no position in any of the stocks mentioned. The Motley Fool owns shares of and recommends Matterport, Inc. The Motley Fool has a disclosure policy.

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