Shares of Matterport (MTTR 0.85%) have been in the doghouse for almost the entire year, losing 82% of their value and dropping to less than $4 as of this writing. But the spatial data company gave investors a big reason to cheer when it released its third-quarter 2022 results on Nov. 10.
Matterport stock jumped nearly 25% on the day following the earnings release, as its numbers were ahead of expectations. Additionally, the company's guidance points toward a nice acceleration in its growth. Let's see what's working for Matterport, whose solutions allow customers to capture real-world spaces in 3D and create digital twins -- a fast-growing market that's set to explode in the long run.
Matterport's offerings are seeing healthy demand
Matterport's Q3 revenue increased 37% year over year to a record $38 million, driven by healthy growth in the company's subscription and services businesses. Subscription revenue was up 21% year over year to $19 million, while services revenue jumped 204% over the prior-year period to $10 million.
Matterport's subscriber base jumped an impressive 50% year over year last quarter to 657,000. The number of paid subscribers increased nearly 17% from the year-ago quarter to 63,000. Matterport's impressive growth last quarter isn't surprising, as demand for the company's spatial data solutions is huge.
Matterport estimates that it is sitting on a massive $240 billion addressable market. That's not surprising, as the company sells products, such as 3D cameras and other accessories, apart from providing subscription-based capture services that enable its customers to create digital twins -- digital models that represent objects accurately. What's more, Matterport's solutions can be deployed across a wide range of industries, including real estate, retail, travel and hospitality, architecture, and facility management, among others.
The 3D camera market, for instance, could unlock a tremendous growth opportunity for Matterport, as their demand is expected to increase at an annual pace of nearly 32% through the end of the decade, according to Allied Market Research. The digital twin market, on the other hand, could clock over 34% annual growth over the next five years.
So Matterport is scratching the surface of a massive market, and the growth in the company's subscriber base indicates that it is doing well to take advantage of the opportunity on offer. The company has captured 8.7 million spaces using its solutions at the end of the third quarter, a jump of 40% over the prior-year period. Matterport claims that its portfolio of spaces under management is a whopping 100 times greater than the rest of the market, which should put the company in a solid position to dig into the lucrative market it is targeting.
The company's growth potential makes the stock a bargain
The catalysts discussed above indicate why Matterport's growth is expected to accelerate in the current quarter. The company has guided for $40 million in revenue in the fourth quarter, which would translate into 48% year-over-year growth. For the full year, the company anticipates $135 million in revenue at the midpoint of its guidance range, which would be a 21% improvement over 2021.
Even better, Matterport's growth is expected to accelerate in 2023, with analysts forecasting a 30% jump in its top line. As such, it wouldn't be surprising to see this tech stock step on the gas in the new year and sustain its momentum in the long run thanks to emerging concepts such as the metaverse. That's why savvy investors can consider using Matterport's steep decline in 2022 to buy the stock, as it is trading at 8.4 times sales, which represents a big discount to last year's price-to-sales ratio of 46.
