Matterport (MTTR +0.00%) stock gained 1.9% on Wednesday following the spatial-data company's release of its first-quarter 2022 results on Tuesday after the market close.
The stock's performance was stronger than it might look at initial glance because the market had a terrible day on Wednesday, with tech stocks especially hard hit. The tech-heavy Nasdaq Composite index dropped 3.2%.
Matterport's stock had gained 5.6% in after-hours trading on Tuesday, suggesting that its performance on Wednesday would probably have been in this general ballpark or better had the market not had such a poor showing.
Matterport stock's pop on Wednesday is attributable to first-quarter revenue and earnings coming in higher than the Wall Street consensus estimates. The report had a notable hiccup: Second-quarter guidance for both the top and bottom lines fell short of analysts' expectations. However, investors probably overlooked this weaker-than-expected quarterly outlook because management reaffirmed the full-year 2022 outlook that it issued last quarter.
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Matterport's key numbers
| Metric | Q1 2022 Result (Loss) | Q1 2021 Result | Change |
|---|---|---|---|
| Revenue | $28.5 million | $26.9 million | 6% |
| GAAP operating income | ($84.9 million) | ($2.4 million) | Loss widened 3,438% |
| GAAP net income | $71.9 million | ($2.9 million) | N/A |
| Adjusted net income | ($27.9 million) | ($2.2 million) | Loss widened 1,168% |
| GAAP earnings per share (EPS) | $0.23 | ($0.07) | N/A |
| Adjusted EPS | ($0.10) | ($0.01) | Loss widened 900% |
Data source: Matterport. GAAP = generally accepted accounting principles.
On a GAAP basis, net income was positive while operating income was negative because net income benefited from a $21.4 million change in fair value of warrants liabilities and $136 million change in fair value of contingent earn-out liability. The adjusted numbers for net income and EPS strip out these and other one-time items, and are the numbers on which investors should focus.
Wall Street was looking for an adjusted loss of $0.14 per share on revenue of $27.5 million, so Matterport beat both expectations. The company also bettered its own guidance, which was for an adjusted loss per share between $0.15 and $0.13, and revenue between $25.5 million and $27.5 million.
In the first quarter, Matterport used $25.5 million running its operations compared with generating $1.1 million from running its operations in the year-ago period. It ended the quarter with $401.8 million in cash, cash equivalents, and short-term investments.
For context, in the fourth quarter of 2021, total revenue grew 15% year over year to $27.1 million, driven by a 32% jump in subscription revenue.
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Key Data Points
Revenue breakdown
The first quarter's year-over-year revenue growth was driven by a 24% jump in subscription revenue to $17.1 million and a 48% surge in services revenue to $4 million.
Product revenue fell 10% to $7.4 million and license revenue declined to $23,000 from $2.3 million in the year-ago period. The steep drop in license revenue isn't a concern, as the company's strategy involves transitioning its licensing business to subscription accounts, which generate recurring revenue.
Matterport's first-quarter net dollar expansion rate was 107%, meaning existing subscribers increased their spending with the company by an average of 7% year over year. This metric is down from last quarter's 110%, which is also about the company's historic rate. On the earnings call, chief financial officer JD Fay explained the reason for the dip:
We saw exceptionally strong expansion with our enterprise customers in the first quarter. [T]his strength was largely offset by unusually low expansion in our small and medium business customers in the first half of the quarter. The small and medium business customer cohort, which started the year off tentatively influenced by volatility in the macroeconomic environment, recovered to historical trends by the end of the quarter.
What management had to say
Here's part of CEO RJ Pittman's statement in the earnings release:
We are pleased to report another strong quarter, increasing our subscriber count by 70% to 562,000 subscribers for the period. We expanded Spaces Under Management by 49% to 7.3 million spaces... Real property is the largest asset class in the world, now valued at an estimated $327 trillion... Matterport is leading the industry with over 7 million digital twins, and we're creating thousands more each day, while 99% of the world's buildings have yet to be digitized. ... [W]e remain focused on efficiently scaling Matterport's business to meet the rising global demand for software-driven property management.
Guidance
Management issued second-quarter guidance and reaffirmed its full-year 2022 outlook.
| Metric | Q2 2022 Guidance | Q2 2022 Projected Change (YOY) | Full-Year 2022 Guidance | Full-Year 2022 Projected Change (YOY) |
|---|---|---|---|---|
| Revenue (decline) | $28.5 million to $30.5 million | (3%) to 3%* | $125 million to $135 million | 12% to 21%* |
| Subscription revenue | $18 million to $18.3 million | 18% to 20% | $80 million to $82 million | 31% to 34% |
| Adjusted earnings per share (loss) | ($0.15) to ($0.13) |
Loss projected to narrow 76% to 79%* | ($0.52) to ($0.47) | Loss projected to widen 126% to 104%* |
Data source: Matterport. YOY = year over year. *Calculated by author using data from company's Q2 2021 and full-year 2021 reports.
Going into the earnings release, Wall Street was modeling for a second-quarter adjusted loss of $0.12 per share on revenue of $31 million. So the company's guidance fell a little short of both expectations.
In short, Matterport turned in a solid first quarter, with the all-important metric of subscription revenue growing 24% year over year.
