Why Matterport Is Embracing Real Estate as Part of Its Future

Matterport (MTTR 0.85%) is betting heavily on residential real estate with a new acquisition. In this Motley Fool Live segment from "3-Minute Stock Updates," recorded on July 11, Fool.com contributors Travis Hoium and Ryan Henderson take a closer look at this and other news for Matterport stock. 

Travis Hoium: Revenue was up. That was a positive result. There are some mixed numbers in there. Subscription revenue is rising. They also sell hardware, so that revenue was actually on the decline. But you want to see that revenue number continuing to rise for a company like this. This is a SaaS company. So they're going to put a lot of money upfront in spending and hope to make high-margin returns long term. What has happened since the end of the quarter? The stock has not done very well. Actually, it's bounced along with the the decline, and gross stocks generally bottomed out here. This was a SPAC became public at a $10 price point. So it hasn't performed really well as a public company. There's a couple of things that they did during the quarter, completed what's called the SOC 2 Type 2 standard, which shows that they can meet some security standards for enterprises, which is going to be, I think, a bigger piece of their business. They acquired a company called VHT Studios, which offers real estate services. Now if you're familiar with Matterport's products, their digital twins and the cameras that they have that spin around and create map, a physical space in the 3D environment and then make those dollhouses, one of the really great use cases for that is for real estate.

This really means that they're starting to move into that business, not just providing the technology services to an individual realtor or maybe a real estate firm, but actually getting into the business themselves. I think that's an interesting play. One of the things that I did look up that I think was notable, so with all the changes that we've seen in technology, a lot of the SaaS companies, particularly in private markets, but in public markets as well, have been going through layoffs. I have not seen any layoffs from Matterport, so I don't know exactly how to read that, whether that's, hey, things are going pretty well, and we're on a path. They have a solid cash balance, so they have some runway to grow the business long-term. But if they are seeing a slowdown in their momentum, you would want to see them cut back on some of their spending, and that's one of the ways to do that. That's one of the things I'm really going to be watching closely over the next few weeks is do they start to pull back on some of those expenses from a staffing standpoint because this is something that every tech company is going to be talking about in the next quarterly results. What do you think there, Ryan? By the way, I will point out, not a lot of press releases from them. When they went public, they would do a press release every week, and there's been four since the last quarter ended.

Ryan Henderson: I know the term gets overused, but optionality, it seems like it's an applicable term here for Matterport. The biggest opportunity, and the market would be for them, it sounds like they're betting heavily on the residential real estate. Do you think that's going to be the biggest end market driver?

Travis Hoium: I think near-term, yes. One of the things I have been excited about with them long-term is building their APIs and SDKs, which would basically allow somebody else to build a business on top of their technology, then they become more of a platform company. Again, I don't know that that is happening. There were some really interesting stuff, companies in early stage that they have shown them building. I don't know if that has pulled back. I think this is one of those areas where the financing environment in private markets slowing down may actually hurt Matterport because if you have a really great idea to use these digital twins to make it easier to do home repairs, or you're renting out a commercial space, now I want to mock it up, and I want to see what it looks like within 24 hours. You can do that using technology like Matterport as the foundation. The idea was that there would be companies that would be built on top of that. I don't know that that's happening yet, and the current financing environment might be a headwind for them, so that's another thing to keep in mind. Yes, short-term, real estate, long-term, we'll see if some of these other business model, maybe they'll scoop up some of the companies that they were actually investing into. That'll be interesting to see.