NASDAQ:MTTR Matterport Q3 2023 Earnings Report $5.38 0.00 (0.00%) As of 02/28/2025 Earnings History Matterport EPS ResultsActual EPS-$0.15Consensus EPS -$0.18Beat/MissBeat by +$0.03One Year Ago EPSN/AMatterport Revenue ResultsActual Revenue$40.64 millionExpected Revenue$39.09 millionBeat/MissBeat by +$1.55 millionYoY Revenue GrowthN/AMatterport Announcement DetailsQuarterQ3 2023Date11/6/2023TimeN/AConference Call DateMonday, November 6, 2023Conference Call Time4:30PM ETUpcoming EarningsMatterport's Q1 2025 earnings is scheduled for Monday, May 5, 2025, with a conference call scheduled at 4:30 PM ET. Check back for transcripts, audio, and key financial metrics as they become available.Q1 2025 Earnings ReportConference Call ResourcesConference Call AudioConference Call TranscriptSlide DeckPress Release (8-K)Quarterly Report (10-Q)Earnings HistoryCompany ProfileSlide DeckFull Screen Slide DeckPowered by Matterport Q3 2023 Earnings Call TranscriptProvided by QuartrNovember 6, 2023 ShareLink copied to clipboard.There are 11 speakers on the call. Operator00:00:00Welcome to the Matterport Inc. Fiscal 2023 Third Quarter Results Conference Call. All participants will be in listen only mode. After today's presentation, there will be an opportunity to ask questions. Please note, today's event is being recorded. Operator00:00:26I would now like to turn the conference over to your host today, Mike Knapp. Please go ahead, sir. Speaker 100:00:34Thanks, and welcome to Matterport's Q3 2023 Financial Results Conference Call. After the market close today, Matterport released results for the quarter ended September 30, 2023. The release is available on the company's website at investors. Matterport.com. This call is being recorded and webcast live, A link to the webcast can be found in the Investor Relations section of our website. Speaker 100:01:00Before we begin, I'd like to remind you that today's call contains forward looking statements Within the meaning of federal securities laws, including, but not limited to, statements regarding Matterport's future financial results and management's expectations and plans for the business. These forward looking statements are subject to numerous risks and uncertainties It may cause actual results to differ materially from those discussed on today's call. Additional information regarding the risks and uncertainties can be found in our All forward looking statements are made as of the date of this call and Matterport assumes no obligation to update or revise them In addition, financial references on this call will be on a non GAAP basis unless otherwise indicated. These measures should be considered as a supplement to and not a substitute for GAAP Financial Measures. Reconciliation of each of these non GAAP financial measures to the most directly comparable GAAP measure can be found in today's earnings slides, which are available on the company's website. Speaker 100:02:06I also wanted to highlight that we recently announced the launch of the Matterport Shareholder Rewards Program with StockPerks. Interested investors should visit the StockPerks app for more details on how to claim Matterport shareholder perks. Hosting today's call are R. J. Pittman, Chairman and Chief Executive Officer and J. Speaker 100:02:26D. Faye, Chief Financial Officer. And with that, I'd like to turn Speaker 200:02:30it over to RJ to begin. Thanks, Mike. Good afternoon, everyone, and thank you for joining us today. I'm pleased to report standout 3rd quarter results with both revenue and loss per share surpassing the high end of guidance. Total revenue for the quarter grew to $40,600,000 fueled by strong uptake from both enterprise and small and medium sized businesses. Speaker 200:02:54Subscription revenue jumped to 20% year over year growth, reaching a record $22,900,000 underscoring the growing trust in our platform to boost productivity and cut operational costs. In services, Q3 revenue was resilient as customers chose our capture services and marketing solutions to gain a competitive edge in the challenging real estate market. We continue to expand at a rapid pace, with spaces under management hitting 11,100,000 and our subscriber base expanding to 887,000, reflecting steady growth in Matterport Digital Twin Adoption Worldwide. In addition, Gross margins reached 56%, a 2 year high as subscription and product revenue lines saw significant year over year improvement. Revenue growth, gross margin expansion and continued operating expense discipline drove our loss per share to $0.04 which is above guidance and a 56% year over year improvement. Speaker 200:04:01These results highlight that we are improving our operating efficiency, while continuing to fund our innovation engine to drive top line growth. It also confirms that we are firmly on our accelerated path to profitability, which we remain confident in achieving next year. On top of these financial improvements, we saw our net dollar expansion rate improve to 100 and percent from 100% in the prior quarter as trends in both small and medium sized businesses and the enterprise cohorts improved. Customers are the lifeblood of our business and our client focused approach is driving greater retention and expansion as we help organizations better understand how to get the most out of our platform across the vertical markets we serve. I am particularly encouraged by our opportunity to accelerate the evolution of the real estate sector. Speaker 200:04:54The past 2 decades have bared witness to profound technological disruption that has shaped various industries, including finance, Retail and entertainment to name a few. The Internet has disrupted just about every marketplace in the world, making products cheaper, including the transaction fees, Because of the ubiquitous efficiency of digitization, Speaker 300:05:17such as Speaker 200:05:17the $0 fees offered by brokerages to trade stocks online, for example. Meanwhile, the real estate sector has largely preserved its traditional analog approach to the property marketplace, which is shackled with inefficiencies with costs and fees that haven't changed in decades. Our ability to identify and tackle these inefficiencies Give Matterport and the digital twin a central role in moving the real estate industry forward the old fashioned way by bringing it all online. History has shown that in all cases, the antiquated offline industries must either evolve and embrace digitization or risk extinction. Recently, we have seen new cracks appear in the foundation of the U. Speaker 200:06:04S. Real estate industry with rulings against fixed buyer commissions that many consider to stifle buyers' choices. However, we don't need to weigh into the proceedings to see how we got here. The inefficiencies of the legacy marketplace themselves are what drive the behaviors that keep the cost high and the process of buying and selling real estate More cumbersome than it should be in 2023. Given the tremendous technology advancements available to us today, It's not hard to imagine a present day industry transformation that reshapes how people buy, sell, rent and manage their properties online and from anywhere in the world. Speaker 200:06:46Matterport continues to evolve too. Our platform has evolved from the immersive 3 d virtual tour Into a powerful property intelligence agent that provides unprecedented details and insights about a home that have never been previously available to buyers and sellers alike. These new capabilities are empowering the marketplace with better home valuation data and more decision making information, while making it easy to share in the process with family, friends and agents. Society's expectations today that all industries be fast, efficient, empowering and digital are ultimately what drives industry change, even if that requires re pouring a new foundation to get there. At the heart of that change, it happens to be generational. Speaker 200:07:38Gen Z and millennial buyers Represent the largest generation in human history with more than $10,000,000,000,000 in spending power. This generation was born digital and has very high expectations when it comes to the one click efficiency of commerce, financial services, Transportation and Healthcare. Should it really be any more difficult to purchase a home online than it is to purchase a car or a vacuum cleaner? For more than a decade, Matterport has been a catalyst across the real estate industry, pushing it to its inevitable digital destination. In order for the industry to thrive, much less survive, the change starts today. Speaker 200:08:19There has never been a better time As an industry leader, we are relentlessly committed to our customer success and increasing the value we deliver to them every day. For many years, Matterport has delivered countless new features, Functionality and engaging experiences across the ecosystem. In Q2, we announced our first change to our subscription plan structure and pricing. The new model incorporated robust customer feedback throughout the process. By carefully considering our customers' priorities, We were able to deliver a pricing strategy that balances exceptional value and flexibility at a fair and reasonable price point. Speaker 200:09:11In our view, this customer centric approach should be more common across the industry as it results in your customers Strengthening and aligning their vested interest in your products and services over the long term, just as our customers have. The feedback has been very encouraging and confirms the power of customer centric value based pricing. The same approach was taken last year with our enterprise customers That helped us grow to over 100 enterprise accounts with over $50,000 in annual recurring revenue today, while expanding our 6 and 7 figure contract wins along the way. In fact, I am proud to announce that Matterport won its first 8 figure deal in Q3, a testament to the impact our product is having on some of the largest companies in the world. At the core, innovation is driving up revenue per digital twin more than ever before. Speaker 200:10:08For example, we've recently signed enterprise customers in construction and manufacturing verticals at a price that ranges between 150 and $2,500 per month per digital twin. That's more than 1,000 times our SMB Starter plan pricing of $2 per month per digital twin. This represents the tip of the iceberg Of the significant growth opportunities that lie ahead as we continue to double down on innovation and new tools for our customers. Our strategy is intentionally aligned with our customers' goals. The more valuable tools we can deliver to help them improve productivity and reduce costs, The faster they can achieve their business goals, while simultaneously accelerating adoption for Matterport. Speaker 200:10:59Now let's move on to our partnership update. Matterport delivered value by creating efficient workflows, which is why we continue to focus on strategic partnerships to foster connections within the industry ecosystems, fortify our platform's functionality, Pave the way for new distribution avenues for our solutions and drive our pipeline. As you know, Procore, a long time partner of ours, is a leader in construction management software with millions of users around the globe. In Q3, we were very excited to announce An expansion of our Procore relationship, enabling deeper digital twin integration to streamline the design and construction process. These new features allow Procore customers to use features such as request for information, observations And coordination issues directly within Matterport's photorealistic 3 d Digital Twins, creating a visual system of record for site conditions That anyone on a project can track. Speaker 200:12:02Users can centralize record keeping, enable better progress tracking, improve quality control and experience a more efficient closeout process as they transition seamlessly between their Procore project management workspace and a Matterport digital twin of a We recently announced our membership as an Autodesk Construction Cloud Premier Partner, Helping bring Matterport's 4 ks digital twins to even more construction professionals. Strategic partnerships like this And other leading enterprise software providers like Autodesk, AWS and Verisk continue to provide us with significant momentum and pipeline. I mentioned last quarter that we had expanded our global reach by partnering with major distributors like CompuSolutions in Latin America And Equinox Technologies in the Middle East, Africa and Asia Pacific. In Q3, we also extended our long term relationship with Idealista, Southern Europe's largest online real estate platform through a multi year agreement. Our global momentum remains strong And I want to take a moment to briefly discuss a couple of notable European customers. Speaker 200:13:18These details are available on our earnings slides and additional case studies can be found on our website. The first is Danone, based in Paris, which operates large food and beverage manufacturing facilities worldwide that include areas that are difficult for visitors and partners to access. Strict safety and quality protocols mean that all visitors who wish to enter the production facilities must undergo safety and quality awareness training and wear protective clothing. Using Matterport Pro 3 cameras, Danone has captured its facilities with dimensionally accurate Photorealistic 3ddigital twins. Authorized users can now access any production site remotely from their laptop or mobile device in True3D. Speaker 200:14:07This drove a 50% reduction in on-site visits, saving hundreds of employee hours annually for Danone and its partners, as well as reducing expenses and downtime associated with travel. The digital twin also provides convenient always on access to insights and collaboration that actually increases the engagement, Attention to detail and quality of work with no added costs, while seamlessly connecting colleagues and work groups that may be located all across the globe. This deepens the understanding of manufacturing plant conditions and requirements as well as enhances Training knowledge for those who will service the facility. The second case study relates to Siemens based in Munich, The high resolution digital twins enable Siemens personnel to meet virtually With new and existing customers to discuss the company's manufacturing capabilities in exquisite detail. With their digital twins, internal stakeholders and customers can perform thorough reviews of production and assembly line setups for as long as necessary without disrupting operations. Speaker 200:15:31Tight spaces that might only accommodate a few people in person Can be viewed in unison online. Zooming in on specialized equipment to highlight advanced features requires only the flick of a finger for the click of a mouse. The noise issues of conducting meetings during a production run are eliminated along with physical safety risk And complexities of welcoming visitors in person. Management is particularly interested in conducting digital twin visits using VR headset, Mitigating the risk of unauthorized photography of sensitive data and reducing travel costs and loss of productivity with travel. Large multinational companies continue to find exceptional value in our solution as do the Fortune 1,000, 25% of which We are proud to call our customers. Speaker 200:16:24Before I turn it over to JD Faith, I'd like to provide an update on Genesis, Our AI initiative that will combine property intelligence with generative AI and our spatial data library to offer unique AI solutions to the built world. Genasys will leverage our 35,000,000,000 square feet of digital space to create one of the most powerful spatial computing platforms in the world For homeowners and property managers alike, Genasys is designed to automate interior design, Space planning, property management and so much more or spaces across the vertical markets we serve. In the Q3, we took another step forward in our vision to provide new property insights automatically generated using Cortex, Our AI engine that has been powering Matterport Digital Twins since our inception. Now in an oversubscribed public beta, The new property insights for real estate provide automated room measurements, layouts, editing and rich reporting capabilities automatically. This type of automation marks a significant breakthrough, delivering insights that were previously unavailable or even feasible with detailed on-site assessments. Speaker 200:17:42Additionally, these new tools Show vast improvement over the accuracy of measurement taken by hand by automatically processing the millions of 3 d data points captured with the Matterport digital twin. Instant access to room dimensions, total square footage by room, by floor and the entire space built upon one of our most popular features, measurement mode. More than 200,000,000 measurements have been taken manually with this With our new intelligent digital twins, our customers get hundreds of useful measurements, Room names, print ready layouts and more generated automatically. The new digital twin is immensely valuable for any type of building or space Across all industries, every operations manager or property marketer needs this information. In the case of residential real estate, These details allow a buyer to quickly assess a property and constantly understand the value and potential of their new home. Speaker 200:18:46Property marketers can accelerate home listings and sales with instant at a glance property overviews and MLS data, saving significant time while modernizing listings with the insights buyers increasingly demand. We have over 1500 customers registered for the beta and customer feedback has been phenomenal and super helpful in making our products the best they can be. Driven by popular demand, the wait list continues to grow We're working around the clock to get these breakthrough features in the hands of more of our customers. Genasys And our commitment to delivering valuable data insights to our customers is made possible through our comprehensive spatial data library. In the quarter, the library grew to more than 35,000,000,000 square feet of digitized physical space. Speaker 200:19:39As our customer base grows And the size of spaces being captured grows too. This is fueled by the power of Pro 3 to capture super large spaces indoor and out. In the short time that Pro 3 has been in market, the average square feet captured by our Pro 3 camera is 4 times greater Than that of the Pro 2, expanding our industry leading spatial data library at a record pace. The rapidly growing breadth and depth of our spatial data library is vital to our long term strategy. This unprecedented level of information enables Cortex, our core AI platform to train, learn and deliver so many new insights and recommendations This has long provided Matterport with an enormous advantage in the industry. Speaker 200:20:30And today, It is unlocking extraordinary innovation for us, fueled by the historic inflection point of game changing advancements in the field of AI that have only just begun. I would now like to turn it over to J. D. Faith to discuss our financial performance for the Q3 And the outlook for Q4 and the full year 2023. Speaker 300:20:53Thank you, RJ. For the 3rd quarter, We delivered total revenue of $40,600,000 which was above the high end of our guidance range. The strength in our revenue was across subscription and services, With subscription revenue achieving a new record in the quarter, subscription revenue rose to $22,900,000 Accelerating to 20% growth from the year ago period and above the high end of our guidance range, this brought our annual recurring revenue to $91,400,000 as we rapidly approach the $100,000,000 ARR milestone. The strength was broad based from growth in new subscribers, expansion of existing subscribers and during the quarter we implemented a price increase For small to medium business subscription plans, we also saw double digit growth in both enterprise and SMB customers As of the end of the Q3, free subscribers grew by 37% and paid subscribers grew by 13% compared to the year ago period. These growth rates were roughly equal to the average growth rates over the past year. Speaker 300:22:11Our net dollar expansion rate improved to 106% in Q3. The improvement across SMB and enterprise cohorts highlight the success we are seeing through our targeted investments The customer support teams focused on retaining and growing our customers' use of Matterport. The price increase for SMB subscription plans also helped to lift results. We expect our Q4 net dollar expansion rate will remain consistent with Q3 levels as well. In the Q3, we were pleased to deliver strong double digit subscription growth in residential real estate and commercial real estate. Speaker 300:22:47We also grew by similar double digit rates in other markets, including construction and travel and hospitality. The growth in residential and commercial real estate is in sharp contrast to industry activity and other companies that have been declining in the current economy. Further, our double digit growth rate highlights the share gains we have achieved and sustained over the past several quarters, while also proving the value of our solutions during both standing and contracting real estate markets. Moreover, we are encouraged by recent data that show an increase in homes listed for sale, which as this trend strengthens can be a tailwind for Matterport. Residential real estate represented approximately 50% of Services revenue for the Q3 was $9,900,000 roughly flat from the year ago period. Speaker 300:23:38Our capture services business, which helps customers join the Matterport platform quickly and at scale, grew at double digit rates from the year ago period as well. Most of our other services offerings continue to grow, but were offset by a large services contract in the year ago period that had completed before the Q3, And this impact was contemplated in our guidance for the quarter. Our product revenue was 7 $800,000 in the 3rd quarter, down 13% from the year ago period. Looking back to the Q3 of 2022, Product sales were particularly high because first, we had just launched the Pro 3 camera, which experienced strong pent up launch demand and second, we were able to complete a recovery in the supply chain relating to the Pro II camera, which at that time had a backlog of open orders to be fulfilled. These two factors were not expected to repeat in the Q3 of 2023, which was also contemplated in our guidance for the quarter. Speaker 300:24:39Moving on to gross margin. Total gross margin for the 3rd quarter expanded to 56% compared to 48% in the year ago period. Our gross margin was the strongest that we have delivered in 2 years as we drove substantial cost improvements Across our subscription and product revenue lines, subscription gross margin was very strong at 77%, up significantly from 72% in Year ago period, as we continue to implement technology advancements that reduce our platform costs and drive scalability in our customer success organization. Rising prices also contributed to the growth in margin. Product gross margin was 23% in the 3rd quarter, also up materially from 13% in the year ago period. Speaker 300:25:26The improvement was largely due to having earlier work through higher costs That were associated with the supply chain challenges we experienced last year along with contribution from Pro 3 camera sales. Turning to operating expenses, we are beginning to realize the benefits we highlighted early this quarter regarding the restructuring of our business to streamline operations, grow faster and more efficiently. These changes have already improved our focus, execution speed and are fast tracking our operational cash flow profitability, which we continue to expect to achieve next year. Research and development expense in Q3 was $8,800,000 a reduction of 29% from the year ago period. This change resulted from rigorous evaluation of spending and allocation toward offerings that we expect will yield the highest returns and reflect our commitment to operate more efficiently while advancing our technology platform. Speaker 300:26:23SG and A expenses for Q3 were $30,200,000 A reduction of 10% from the year ago period. This reduction in spending was primarily related to lower sales and marketing expenses as we continue to drive spending efficiency combined with high ROI go to market programs across customer facing operations. The result is a 3rd quarter non GAAP net loss of $12,000,000 and non GAAP loss per share of $0.04 above the high end of our guidance range. This is also a 56% improvement in bottom line performance from the year ago quarter. I am very pleased with the significant progress on the bottom line as we are actively driving the company to achieve profitability, which is in sight. Speaker 300:27:10Our weighted average share count was 303,000,000 shares. Moving on to the balance sheet, we ended the quarter with $430,000,000 in cash Down just 4% from the prior quarter and we remain debt free. Our cash used in operations improved to $15,500,000 in the 3rd quarter, which is a 62% improvement from the year ago period. Turning to guidance, we remain on track to deliver another record year for the company as we grow the top line, improve gross margins and make significant progress to profitability. Accordingly, for the Q4, we expect Total revenue to be in the range of $39,000,000 to $41,000,000 and subscription revenue to be in the range of $23,000,000 to $23,300,000 This represents 20% year on year growth at the midpoint of the subscription revenue range, maintaining the higher level of growth we delivered last quarter. Speaker 300:28:08We expect the balance of revenue to be split roughly evenly between the services and product revenue lines. We anticipate 4th quarter non GAAP loss per share to be in the range of $0.03 to $0.05 This means we are raising our full year 2023 total revenue guidance, which is now $157,000,000 to $159,000,000 And we are raising our full year 2023 subscription revenue guidance, which is now expected to be in the range of 86.5 to $86,800,000 For the full year of 2023, we expect a $0.21 to $0.23 non GAAP loss per share And this represents an improvement of $0.14 at the midpoint compared to the guidance we articulated at the beginning of the year and a 46% improvement from 2022. Higher subscription growth rates, expanded gross margins And reduced operating expenses are delivering improved operating margins, and we expect this trend to continue. These factors have already yielded accelerating year over year improvements in the bottom line and cash flow. And as we continue on this path, We are firmly and rapidly approaching our near term objective of positive cash flow from operations. Speaker 300:29:25Now, I would like to turn the call back over to RJ. Speaker 200:29:29Thanks, JD. The Q3 was a key period of execution for the company as we operationalize a more efficient plan for growth with a leaner customer centric organization. We continue to outperform the market by focusing on the needs of our customers across residential and commercial real and the enterprise. More and more customers are recognizing the profound cost benefits of property digitization with Matterport During a period when cost savings, productivity and operating efficiency targets are at an all time high. We are working hard to integrate Matterport into the daily workflows of our customers to simplify how they get things done. Speaker 200:30:13Our property intelligence data insights can tell buyers and sellers more about a property than ever before, leading to better decisions and outcomes for everyone. The power of digitization unlocks the power of data, The linchpin for growth across the real estate industry. Customers are thriving with Matterport, adopting our latest offerings that provide Significant value, a reality echoed in our increasing net dollar expansion rates. The value is evident In the steady growth across both our SMB and Enterprise segments. We are on track to reach cash flow breakeven in 2024, A full year ahead of schedule, a milestone underscored by our strong performance in the Q3, delivering accelerated growth amidst rising interest rates, inflation and the challenges in the real estate market. Speaker 200:31:09We remain committed to our strategic plan, delivering results that are independent of fluctuating real estate market trends. Our digital twin technology offers unmatched value to agents, Brokers and sellers aligning with the digital first expectation of the modern homebuyer. Our expansion across various sectors, including manufacturing, design, construction, travel and hospitality solidifies our market leadership. Our advantage is further amplified by our AI driven innovation pipeline featuring technologies like Cortex and Genasys. As the real estate industry continues to face rising pressure to deliver a significantly more powerful, cost effective and convenient experience For all participants across the $327,000,000,000,000 asset class we call the BILT world, The time to embrace that future is now and it starts by making every property, every physical space Thank you for joining us today. Speaker 200:32:17Operator, we are now ready for questions. Operator00:32:21Yes, thank you. At this time, we will begin the question and answer session. And the first question comes from Bhavan Shah with Deutsche Bank. Speaker 400:32:46Hi, everyone. It's Nick on for Bob in this evening. Thanks for taking my questions. J. Speaker 100:32:50D. Or I. J, can Speaker 400:32:51you just talk through what you see underpinning the continued 20% growth momentum heading into the 4th quarter? Yes. Speaker 500:33:00Thanks, Nick. So in the 20% growth Forecast at the midpoint, we're continuing to see strong demand in both of our main cohorts, the small and medium business customer As well as the enterprise customer. Of course, in both are benefiting from more value that we're Providing into the subscription plans and we of course are generating more revenue per account and per Digital Twin as well Reflecting the price changes and increases we made for both of those cohorts at different times over the last several quarters. So all of those internals are continuing as we sit here today, and that applies to the acquisition of new paid subscribers as well as to Speaker 400:33:51Great. Thank you. And then just as a follow-up, can you give us Sort of an idea what the lingering tailwind is, is from the pricing and packaging changes earlier this year from customers that are have yet to renew? Speaker 500:34:04Yes. For those customers that have yet to renew, and these are customers who are on 1 year or longer subscription plans, In the small and medium business cohorts, that's a relatively small number of customers, although growing, In particular, because we're offering some promotional packages to incentivize those customers to sign up for 1 year plans and that is working. So that's a fairly small percentage in the single digit rates that our small and medium business customers with 1 year or longer plans today. In the enterprise cohort, most of those customers have 1 year or longer subscription plans or agreements with us. And so it will take the next 1 to 3 years, I would say, to work through that existing subscriber base and work with those customers on the value based pricing that we introduced late last year. Speaker 500:35:00So most of that work is ahead of us, but it's also, of course, a great opportunity for us to continue to expand Our subscription revenue and our value proposition with those enterprise customers. Speaker 400:35:11Great. Thank you for taking my questions. Operator00:35:15Thank you. And the next question comes from Yun Kim with Loop Capital Markets. Speaker 600:35:20All right, great. Congrats on another solid quarter RJ and JD. Can you just talk about it seems like you're enjoying a solid traction in your enterprise market. Is there any way to get a little more insight into your momentum beyond the price increase that you were able to introduce? For instance, it seems like Now you have 100 plus enterprise accounts that generate 50 ks ARR which is very, very solid. Speaker 600:35:48Any trend around average deal size or ARR per customer and such? And any change in the land and expand motion for the enterprise customers? Speaker 700:35:58Sure. Thanks, Eun. I'll start with that and J. D. Can fill in. Speaker 700:36:03And picking up right where you left off, Yes, absolutely. And one of the things we've been really working on this year is driving operational efficiency and driving sales efficiency. The pipeline strength is better than ever at Matterport and particularly Seeing very impressive forward momentum in the enterprise pipeline. Second to that is, We have been architecting the enterprise solution in a very iterative fashion over Past several quarters, just continuing to hone that product market fit and making sure that the ease of integration Into Enterprises is smooth and quick, so that we can get them up and online and producing on our platform as soon as possible. And The faster that happens, the faster you see the results in the business. Speaker 700:37:01And so that overall efficiency, from the Pipeline and prosecuting the deal opportunities to getting our customers successful on the platform has been a key operational focus for us And it's paying dividends. And so that's allowing our customers to accelerate the adoption of Matterport and that's going to continue Because we're seeing continued strong demand for the product and the alignment of our data offerings, the property intelligence that we Spoke quite a bit about and it's out in public beta today is broadly of interest to Not just residential, but also to our commercial real estate property managers, which we find in the enterprise. Speaker 500:37:48Yes. And I'll just add to that. As you noted, our larger enterprise customers with more than $50,000 of Annual recurring revenue has experienced very healthy growth in the last quarter. In fact, we had the largest number of logo acquisitions Last quarter, that we've had in over a year. And combined with a growing average revenue per account, As illustrated by some of the revenue per digital twin statistics we provided during the call, we can see That as well is driving up the enterprise cohorts growth in our subscription revenue overall. Speaker 500:38:27And finally, I would just again reiterate, we had our first 8 figure deal in history of the company. And so these deal sizes, I think are growing very rapidly and some ways, have almost a limit. Speaker 600:38:44Okay, great. And then, just a question on the price increase in the quarter. What has been the reaction? Did you see any uptick in churn, especially along the smaller businesses? If you can compare the difference in how customers reacted between the enterprise versus the small business customers? Speaker 500:39:05Yes, I can. So with respect to the larger population of small and medium businesses, We did not see an uptick in churn. In fact, we have seen churn remain steady over this period. And as noted a moment ago, we offered, I think, very attractive 1 year subscription plan during the transition, which many customers took advantage of. And I think that bodes well for us as well as we continue to build a stable base of recurring subscription revenue. Speaker 500:39:40And importantly, I think we're providing a tremendous amount of added value as we make these pricing changes. Speaker 700:39:48Yes. And I'll build on that. It's been a philosophy of ours for many years that Despite the rising cost of living and the rising rates of inflation, etcetera, We don't believe in arbitrary price increases for the sake of it. And that's been a hallmark here at Matterport. And importantly, pricing changes are only associated with Continued value add on the platform. Speaker 700:40:24And we're going to continue on that trend going forward in a way that is very customer centric. So In other Speaker 200:40:32words, a lot of Speaker 700:40:33these new features and functions that we have brought out this year and last year, were not just Purely coming from Matterport, but from the partnership with our customers who've been involved in the process, in the process of Expanding the value proposition of Matterport and growing that value based pricing model, doing that together has created a lot of positive Goodwill in our customer ecosystem, and it shows in the results that you've seen here in the quarter, we expect that to continue. Speaker 600:41:02Okay. And then one final question for JD. So we saw a pretty good sequential uptick on NRR. I'm assuming a lot of it is driven by the price increase. Where should we expect the NRR to stabilize here going forward given the Pricing increase providing the tailwind? Speaker 500:41:24Generally, yes, Yun. About half of the improvement And the expansion rate was due to growth in with our existing subscribers and on a call it non price Adjusted basis, which is great to see. Customers are accessing the platform more and expanding their library of digital twins and so forth. And then the other half of the impact was from the price increase as you noted. And I would expect that Those trends to be largely consistent in the Q4. Speaker 600:42:00Okay, great. Thank you so much. Operator00:42:04Thank you. And the next question comes from Joshua Tilton with Wolfe Research. Speaker 800:42:11Hi. This is Luke on for Josh. Just a quick one for me. Just the comments in the prepared remarks about the Price per month you're able to charge for some of the larger enterprise customers, very encouraging. I just wanted to ask, what features are those Speaker 700:42:33Sure. 1st and foremost, in the enterprise, they're mostly associated with larger, more complex facilities. And so part of that pricing Based on the size and complexity of spaces alone, and we continue to evolve that over the course of the last couple of years. So That's driver number 1. Number 2 is a suite of enterprise essentials that includes anything from workflow integrations Into other project management, software systems and solutions to our existing enterprise applications, Single sign on, enterprise security and multi user access control, all of the types of things that are required to integrate safely and in a scalable way, the enterprise solution That is typically adopted by more than one user, right? Speaker 700:43:44So when we move into enterprise, you have work groups That could range from 10, 25 up to 100 of users on the platform, all working and collaborating around one of these very large digital twins. And so these work group capabilities and enterprise sort of infrastructure and support capabilities are Nonnegotiable in the enterprise arena. And so we have been building those and expanding that portfolio of that offering over the last couple of years, and Operator00:44:25Thank you. And the next question comes from Elizabeth Porter with Morgan Stanley. Speaker 900:44:34Hey, this is Chris Pintero on for Elizabeth Porter. Thanks for taking our questions. I want to ask how your pipeline has been impacted by some of the industry partnerships, maybe more specifically Autodesk 1. Obviously expanded it most recently by becoming that premium partner. So clearly something is working well there. Speaker 900:44:51So just wanted to get a bit more color on what the impact has been so far? Speaker 700:44:57Absolutely. These are critical partners for us and we've mentioned a few of them on the Speaker 300:45:02call, Procore Speaker 700:45:05And Autodesk, 2 stalwarts in the construction and architecture and design industry. And in both cases, Pipeline has been very healthy. We're going to be moving into more co marketing and even co selling arrangements for some of these partners. And that obviously is germane to continuing to expand a healthy pipeline. We're seeing great results from these expanded partnerships in the quarter. Speaker 700:45:37Nothing specific to report yet, but moving all in the right direction. One of the other parts that's really important is once you become a partner, That represents a great opportunity and a gateway into a much larger ecosystem. The second part of it is Creating the awareness that these integrations exist. And what we have found is that through some of our own marketing efforts in the quarter, Making these customers of our partners aware of the Matterport integration coming straight from Matterport to be very effective Because the integration now is straightforward and they can be up and running with Matterport plus any Autodesk piece of software or ProCore's Program management software in a day. And so the further we push that success And that awareness out in the market, we think we're going to continue to accelerate our pipeline growth. Speaker 900:46:37Got it. That's very helpful. And then on Genesis, You talked about the beta being oversubscribed, but just curious what some of the early customer conversations there have been so far that have gotten them so excited about it? Speaker 200:46:50Yes. I mean, Speaker 700:46:53this program was built around kind of a simple philosophy, Which was, let's go in and take a look at what are people doing once they digitize a building, once they transform it into a Matterport digital, we've got all kinds of Tools for measuring, managing, exploring, analyzing, tagging and labeling a space of any kind. And how can we help those customers do that job more efficiently? And what we learned is there is a great commonality Analysis, the permits such that people are taking that we could solve automatically by just Our AI capabilities right down the fairway and eliminate some of the work that they're, if not a lot of the work that they're doing by hand. And so that requires time with our customers going back And it was the lead up to how we would approach design, develop and deploy the next wave of features for our customers. So you could imagine After people have taken 200,000,000 measurements the manual way after the digital twin is created, you go in and Take measurements by hand with our point and click software that you'll now be able to get all of that, not just a single measurement, But every room, every floor, the entire building becomes a 3 d blueprint for you at the bottom of a button. Speaker 700:48:26This is saving hours of time and effort to do these kinds of things manually, We're also getting smarter about it, automatically identifying the type of room that it is. So in residential, bedrooms, kitchens, in the room or in the property at large. And doing this all also fully automatically at the click of a button Creates not only great convenience and huge efficiency gains for our customers, but it also creates a new layer of data. By having all of that insight, all of that metadata about a property down to the fixtures, we can then run another set of algorithms on it to generate insights and give you these customized property reports that would top some of the best Appraisals that you've seen out there in the industry. So we're going to be compounding this value proposition with our customers and continuing To expand the value on our journey of value driven growth for the company. Speaker 900:49:39Excellent. Thank you for taking the questions. Operator00:49:42Thank you. And the next question comes from Praise Lynette Piper Sandler. Speaker 1000:49:48Perfect. Thank you for taking the question. This is JR on for Brent. Just a quick one follow-up on Property Intelligence Beta. Any more color you can give in terms of framing the scope of the beta release, more in terms of the how broad spread it is? Speaker 1000:50:05Thank you. Speaker 700:50:08Sure. We're managing it carefully because it's a lot of data. A single customer might represent 100 or even 1000 of digital twins and the kind of feedback that we're getting from them, which is Essentially running all of this AI, all of this intelligent software across their existing digital twins, this is the great thing about it as well. You don't have to go back out and redigitize the space to get the benefits of all of this new data science. In fact, we've gone back and Run our new property intelligence capabilities over scans we've done 8 years ago, and it's really fantastic because it brings a whole new set of insights But because it's a very data intensive exercise and we're getting such volume feedback, We really want to make sure that we prosecute it in the most straightforward way possible. Speaker 700:51:03And we're seeing Great energy and great feedback from our customers to really just help them fine tune and make it as easy as possible for them to use. Nothing no showstoppers have come through so far. So we've been steadily opening up that beta. Our intention is to continue the beta through this quarter Into early 2024, but go into full public release of the product in early 2024. So we're on track and moving very quickly, and you can expect that this beta will steadily expand well beyond The 1,000 or 2 customers that we have working with us today. Speaker 1000:51:47Perfect. Sounds great. Thanks again for taking the question. Operator00:51:52Thank you. And at this time, the question and answer session has concluded. I would like to turn the floor to Mike Knapp for any closing comments. Speaker 100:52:00Great. Thanks very much for joining us today. As always, we appreciate your interest in Matterport, and we look forward to speaking with you on our next earnings call. Thanks and goodbye. Operator00:52:09Thank you. The conference has now concluded. Thank you for attending today's presentation. You may now disconnect your lines.Read morePowered by Conference Call Audio Live Call not available Earnings Conference CallMatterport Q3 202300:00 / 00:00Speed:1x1.25x1.5x2x Earnings DocumentsSlide DeckPress Release(8-K)Quarterly report(10-Q) Matterport Earnings HeadlinesMatterport reports Q4 EPS (2c) , consensus (1c)February 27, 2025 | markets.businessinsider.comMatterport edges higher amid report CoStar has cleared FTC reviewFebruary 27, 2025 | msn.comFrom Social Security to Social Prosperity?In less than a decade, Social Security could be out of money. But a surprising plan from Trump’s inner circle may not just save the system — it could unlock a major opportunity for savvy investors. Financial insider Jim Rickards calls it “Social Prosperity,” and says those who act now could see the biggest gains.April 26, 2025 | Paradigm Press (Ad)Matterport Announces Fourth Quarter 2024 Financial Results, with Over 50 Billion in Square Feet Under Management, up 33%, and Total Subscription Revenue up 14%, Year-over-YearFebruary 26, 2025 | globenewswire.comIntroducing Matterport Marketing Cloud: The Ultimate Hub for Real Estate Agents to Get Listings to Market FasterFebruary 25, 2025 | globenewswire.comMatterport 2025 Winter Release: Productivity Multiplied Delivers The Next Leap in Property Marketing and ManagementFebruary 25, 2025 | globenewswire.comSee More Matterport Headlines Get Earnings Announcements in your inboxWant to stay updated on the latest earnings announcements and upcoming reports for companies like Matterport? Sign up for Earnings360's daily newsletter to receive timely earnings updates on Matterport and other key companies, straight to your email. Email Address About MatterportMatterport (NASDAQ:MTTR), a spatial data company, focuses on digitization and datafication in the United States and internationally. The company offers Matterport Capture Services, a fully managed solution for enterprise subscribers; Matterport Pro3, a 3D camera that scans properties; Matterport Pro2, a 3D camera that captures spaces; LEICA BLK360, a device to create digital twins; Smartphone Capture, a smartphone capture solution for both iOS and Android; and 360 Cameras. It also provides Matterport Axis, a motor-mount accessory for smartphone. The company serves its products in residential and commercial real estate, facilities management and retail, AEC, insurance and repair, and travel and hospitality markets. 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There are 11 speakers on the call. Operator00:00:00Welcome to the Matterport Inc. Fiscal 2023 Third Quarter Results Conference Call. All participants will be in listen only mode. After today's presentation, there will be an opportunity to ask questions. Please note, today's event is being recorded. Operator00:00:26I would now like to turn the conference over to your host today, Mike Knapp. Please go ahead, sir. Speaker 100:00:34Thanks, and welcome to Matterport's Q3 2023 Financial Results Conference Call. After the market close today, Matterport released results for the quarter ended September 30, 2023. The release is available on the company's website at investors. Matterport.com. This call is being recorded and webcast live, A link to the webcast can be found in the Investor Relations section of our website. Speaker 100:01:00Before we begin, I'd like to remind you that today's call contains forward looking statements Within the meaning of federal securities laws, including, but not limited to, statements regarding Matterport's future financial results and management's expectations and plans for the business. These forward looking statements are subject to numerous risks and uncertainties It may cause actual results to differ materially from those discussed on today's call. Additional information regarding the risks and uncertainties can be found in our All forward looking statements are made as of the date of this call and Matterport assumes no obligation to update or revise them In addition, financial references on this call will be on a non GAAP basis unless otherwise indicated. These measures should be considered as a supplement to and not a substitute for GAAP Financial Measures. Reconciliation of each of these non GAAP financial measures to the most directly comparable GAAP measure can be found in today's earnings slides, which are available on the company's website. Speaker 100:02:06I also wanted to highlight that we recently announced the launch of the Matterport Shareholder Rewards Program with StockPerks. Interested investors should visit the StockPerks app for more details on how to claim Matterport shareholder perks. Hosting today's call are R. J. Pittman, Chairman and Chief Executive Officer and J. Speaker 100:02:26D. Faye, Chief Financial Officer. And with that, I'd like to turn Speaker 200:02:30it over to RJ to begin. Thanks, Mike. Good afternoon, everyone, and thank you for joining us today. I'm pleased to report standout 3rd quarter results with both revenue and loss per share surpassing the high end of guidance. Total revenue for the quarter grew to $40,600,000 fueled by strong uptake from both enterprise and small and medium sized businesses. Speaker 200:02:54Subscription revenue jumped to 20% year over year growth, reaching a record $22,900,000 underscoring the growing trust in our platform to boost productivity and cut operational costs. In services, Q3 revenue was resilient as customers chose our capture services and marketing solutions to gain a competitive edge in the challenging real estate market. We continue to expand at a rapid pace, with spaces under management hitting 11,100,000 and our subscriber base expanding to 887,000, reflecting steady growth in Matterport Digital Twin Adoption Worldwide. In addition, Gross margins reached 56%, a 2 year high as subscription and product revenue lines saw significant year over year improvement. Revenue growth, gross margin expansion and continued operating expense discipline drove our loss per share to $0.04 which is above guidance and a 56% year over year improvement. Speaker 200:04:01These results highlight that we are improving our operating efficiency, while continuing to fund our innovation engine to drive top line growth. It also confirms that we are firmly on our accelerated path to profitability, which we remain confident in achieving next year. On top of these financial improvements, we saw our net dollar expansion rate improve to 100 and percent from 100% in the prior quarter as trends in both small and medium sized businesses and the enterprise cohorts improved. Customers are the lifeblood of our business and our client focused approach is driving greater retention and expansion as we help organizations better understand how to get the most out of our platform across the vertical markets we serve. I am particularly encouraged by our opportunity to accelerate the evolution of the real estate sector. Speaker 200:04:54The past 2 decades have bared witness to profound technological disruption that has shaped various industries, including finance, Retail and entertainment to name a few. The Internet has disrupted just about every marketplace in the world, making products cheaper, including the transaction fees, Because of the ubiquitous efficiency of digitization, Speaker 300:05:17such as Speaker 200:05:17the $0 fees offered by brokerages to trade stocks online, for example. Meanwhile, the real estate sector has largely preserved its traditional analog approach to the property marketplace, which is shackled with inefficiencies with costs and fees that haven't changed in decades. Our ability to identify and tackle these inefficiencies Give Matterport and the digital twin a central role in moving the real estate industry forward the old fashioned way by bringing it all online. History has shown that in all cases, the antiquated offline industries must either evolve and embrace digitization or risk extinction. Recently, we have seen new cracks appear in the foundation of the U. Speaker 200:06:04S. Real estate industry with rulings against fixed buyer commissions that many consider to stifle buyers' choices. However, we don't need to weigh into the proceedings to see how we got here. The inefficiencies of the legacy marketplace themselves are what drive the behaviors that keep the cost high and the process of buying and selling real estate More cumbersome than it should be in 2023. Given the tremendous technology advancements available to us today, It's not hard to imagine a present day industry transformation that reshapes how people buy, sell, rent and manage their properties online and from anywhere in the world. Speaker 200:06:46Matterport continues to evolve too. Our platform has evolved from the immersive 3 d virtual tour Into a powerful property intelligence agent that provides unprecedented details and insights about a home that have never been previously available to buyers and sellers alike. These new capabilities are empowering the marketplace with better home valuation data and more decision making information, while making it easy to share in the process with family, friends and agents. Society's expectations today that all industries be fast, efficient, empowering and digital are ultimately what drives industry change, even if that requires re pouring a new foundation to get there. At the heart of that change, it happens to be generational. Speaker 200:07:38Gen Z and millennial buyers Represent the largest generation in human history with more than $10,000,000,000,000 in spending power. This generation was born digital and has very high expectations when it comes to the one click efficiency of commerce, financial services, Transportation and Healthcare. Should it really be any more difficult to purchase a home online than it is to purchase a car or a vacuum cleaner? For more than a decade, Matterport has been a catalyst across the real estate industry, pushing it to its inevitable digital destination. In order for the industry to thrive, much less survive, the change starts today. Speaker 200:08:19There has never been a better time As an industry leader, we are relentlessly committed to our customer success and increasing the value we deliver to them every day. For many years, Matterport has delivered countless new features, Functionality and engaging experiences across the ecosystem. In Q2, we announced our first change to our subscription plan structure and pricing. The new model incorporated robust customer feedback throughout the process. By carefully considering our customers' priorities, We were able to deliver a pricing strategy that balances exceptional value and flexibility at a fair and reasonable price point. Speaker 200:09:11In our view, this customer centric approach should be more common across the industry as it results in your customers Strengthening and aligning their vested interest in your products and services over the long term, just as our customers have. The feedback has been very encouraging and confirms the power of customer centric value based pricing. The same approach was taken last year with our enterprise customers That helped us grow to over 100 enterprise accounts with over $50,000 in annual recurring revenue today, while expanding our 6 and 7 figure contract wins along the way. In fact, I am proud to announce that Matterport won its first 8 figure deal in Q3, a testament to the impact our product is having on some of the largest companies in the world. At the core, innovation is driving up revenue per digital twin more than ever before. Speaker 200:10:08For example, we've recently signed enterprise customers in construction and manufacturing verticals at a price that ranges between 150 and $2,500 per month per digital twin. That's more than 1,000 times our SMB Starter plan pricing of $2 per month per digital twin. This represents the tip of the iceberg Of the significant growth opportunities that lie ahead as we continue to double down on innovation and new tools for our customers. Our strategy is intentionally aligned with our customers' goals. The more valuable tools we can deliver to help them improve productivity and reduce costs, The faster they can achieve their business goals, while simultaneously accelerating adoption for Matterport. Speaker 200:10:59Now let's move on to our partnership update. Matterport delivered value by creating efficient workflows, which is why we continue to focus on strategic partnerships to foster connections within the industry ecosystems, fortify our platform's functionality, Pave the way for new distribution avenues for our solutions and drive our pipeline. As you know, Procore, a long time partner of ours, is a leader in construction management software with millions of users around the globe. In Q3, we were very excited to announce An expansion of our Procore relationship, enabling deeper digital twin integration to streamline the design and construction process. These new features allow Procore customers to use features such as request for information, observations And coordination issues directly within Matterport's photorealistic 3 d Digital Twins, creating a visual system of record for site conditions That anyone on a project can track. Speaker 200:12:02Users can centralize record keeping, enable better progress tracking, improve quality control and experience a more efficient closeout process as they transition seamlessly between their Procore project management workspace and a Matterport digital twin of a We recently announced our membership as an Autodesk Construction Cloud Premier Partner, Helping bring Matterport's 4 ks digital twins to even more construction professionals. Strategic partnerships like this And other leading enterprise software providers like Autodesk, AWS and Verisk continue to provide us with significant momentum and pipeline. I mentioned last quarter that we had expanded our global reach by partnering with major distributors like CompuSolutions in Latin America And Equinox Technologies in the Middle East, Africa and Asia Pacific. In Q3, we also extended our long term relationship with Idealista, Southern Europe's largest online real estate platform through a multi year agreement. Our global momentum remains strong And I want to take a moment to briefly discuss a couple of notable European customers. Speaker 200:13:18These details are available on our earnings slides and additional case studies can be found on our website. The first is Danone, based in Paris, which operates large food and beverage manufacturing facilities worldwide that include areas that are difficult for visitors and partners to access. Strict safety and quality protocols mean that all visitors who wish to enter the production facilities must undergo safety and quality awareness training and wear protective clothing. Using Matterport Pro 3 cameras, Danone has captured its facilities with dimensionally accurate Photorealistic 3ddigital twins. Authorized users can now access any production site remotely from their laptop or mobile device in True3D. Speaker 200:14:07This drove a 50% reduction in on-site visits, saving hundreds of employee hours annually for Danone and its partners, as well as reducing expenses and downtime associated with travel. The digital twin also provides convenient always on access to insights and collaboration that actually increases the engagement, Attention to detail and quality of work with no added costs, while seamlessly connecting colleagues and work groups that may be located all across the globe. This deepens the understanding of manufacturing plant conditions and requirements as well as enhances Training knowledge for those who will service the facility. The second case study relates to Siemens based in Munich, The high resolution digital twins enable Siemens personnel to meet virtually With new and existing customers to discuss the company's manufacturing capabilities in exquisite detail. With their digital twins, internal stakeholders and customers can perform thorough reviews of production and assembly line setups for as long as necessary without disrupting operations. Speaker 200:15:31Tight spaces that might only accommodate a few people in person Can be viewed in unison online. Zooming in on specialized equipment to highlight advanced features requires only the flick of a finger for the click of a mouse. The noise issues of conducting meetings during a production run are eliminated along with physical safety risk And complexities of welcoming visitors in person. Management is particularly interested in conducting digital twin visits using VR headset, Mitigating the risk of unauthorized photography of sensitive data and reducing travel costs and loss of productivity with travel. Large multinational companies continue to find exceptional value in our solution as do the Fortune 1,000, 25% of which We are proud to call our customers. Speaker 200:16:24Before I turn it over to JD Faith, I'd like to provide an update on Genesis, Our AI initiative that will combine property intelligence with generative AI and our spatial data library to offer unique AI solutions to the built world. Genasys will leverage our 35,000,000,000 square feet of digital space to create one of the most powerful spatial computing platforms in the world For homeowners and property managers alike, Genasys is designed to automate interior design, Space planning, property management and so much more or spaces across the vertical markets we serve. In the Q3, we took another step forward in our vision to provide new property insights automatically generated using Cortex, Our AI engine that has been powering Matterport Digital Twins since our inception. Now in an oversubscribed public beta, The new property insights for real estate provide automated room measurements, layouts, editing and rich reporting capabilities automatically. This type of automation marks a significant breakthrough, delivering insights that were previously unavailable or even feasible with detailed on-site assessments. Speaker 200:17:42Additionally, these new tools Show vast improvement over the accuracy of measurement taken by hand by automatically processing the millions of 3 d data points captured with the Matterport digital twin. Instant access to room dimensions, total square footage by room, by floor and the entire space built upon one of our most popular features, measurement mode. More than 200,000,000 measurements have been taken manually with this With our new intelligent digital twins, our customers get hundreds of useful measurements, Room names, print ready layouts and more generated automatically. The new digital twin is immensely valuable for any type of building or space Across all industries, every operations manager or property marketer needs this information. In the case of residential real estate, These details allow a buyer to quickly assess a property and constantly understand the value and potential of their new home. Speaker 200:18:46Property marketers can accelerate home listings and sales with instant at a glance property overviews and MLS data, saving significant time while modernizing listings with the insights buyers increasingly demand. We have over 1500 customers registered for the beta and customer feedback has been phenomenal and super helpful in making our products the best they can be. Driven by popular demand, the wait list continues to grow We're working around the clock to get these breakthrough features in the hands of more of our customers. Genasys And our commitment to delivering valuable data insights to our customers is made possible through our comprehensive spatial data library. In the quarter, the library grew to more than 35,000,000,000 square feet of digitized physical space. Speaker 200:19:39As our customer base grows And the size of spaces being captured grows too. This is fueled by the power of Pro 3 to capture super large spaces indoor and out. In the short time that Pro 3 has been in market, the average square feet captured by our Pro 3 camera is 4 times greater Than that of the Pro 2, expanding our industry leading spatial data library at a record pace. The rapidly growing breadth and depth of our spatial data library is vital to our long term strategy. This unprecedented level of information enables Cortex, our core AI platform to train, learn and deliver so many new insights and recommendations This has long provided Matterport with an enormous advantage in the industry. Speaker 200:20:30And today, It is unlocking extraordinary innovation for us, fueled by the historic inflection point of game changing advancements in the field of AI that have only just begun. I would now like to turn it over to J. D. Faith to discuss our financial performance for the Q3 And the outlook for Q4 and the full year 2023. Speaker 300:20:53Thank you, RJ. For the 3rd quarter, We delivered total revenue of $40,600,000 which was above the high end of our guidance range. The strength in our revenue was across subscription and services, With subscription revenue achieving a new record in the quarter, subscription revenue rose to $22,900,000 Accelerating to 20% growth from the year ago period and above the high end of our guidance range, this brought our annual recurring revenue to $91,400,000 as we rapidly approach the $100,000,000 ARR milestone. The strength was broad based from growth in new subscribers, expansion of existing subscribers and during the quarter we implemented a price increase For small to medium business subscription plans, we also saw double digit growth in both enterprise and SMB customers As of the end of the Q3, free subscribers grew by 37% and paid subscribers grew by 13% compared to the year ago period. These growth rates were roughly equal to the average growth rates over the past year. Speaker 300:22:11Our net dollar expansion rate improved to 106% in Q3. The improvement across SMB and enterprise cohorts highlight the success we are seeing through our targeted investments The customer support teams focused on retaining and growing our customers' use of Matterport. The price increase for SMB subscription plans also helped to lift results. We expect our Q4 net dollar expansion rate will remain consistent with Q3 levels as well. In the Q3, we were pleased to deliver strong double digit subscription growth in residential real estate and commercial real estate. Speaker 300:22:47We also grew by similar double digit rates in other markets, including construction and travel and hospitality. The growth in residential and commercial real estate is in sharp contrast to industry activity and other companies that have been declining in the current economy. Further, our double digit growth rate highlights the share gains we have achieved and sustained over the past several quarters, while also proving the value of our solutions during both standing and contracting real estate markets. Moreover, we are encouraged by recent data that show an increase in homes listed for sale, which as this trend strengthens can be a tailwind for Matterport. Residential real estate represented approximately 50% of Services revenue for the Q3 was $9,900,000 roughly flat from the year ago period. Speaker 300:23:38Our capture services business, which helps customers join the Matterport platform quickly and at scale, grew at double digit rates from the year ago period as well. Most of our other services offerings continue to grow, but were offset by a large services contract in the year ago period that had completed before the Q3, And this impact was contemplated in our guidance for the quarter. Our product revenue was 7 $800,000 in the 3rd quarter, down 13% from the year ago period. Looking back to the Q3 of 2022, Product sales were particularly high because first, we had just launched the Pro 3 camera, which experienced strong pent up launch demand and second, we were able to complete a recovery in the supply chain relating to the Pro II camera, which at that time had a backlog of open orders to be fulfilled. These two factors were not expected to repeat in the Q3 of 2023, which was also contemplated in our guidance for the quarter. Speaker 300:24:39Moving on to gross margin. Total gross margin for the 3rd quarter expanded to 56% compared to 48% in the year ago period. Our gross margin was the strongest that we have delivered in 2 years as we drove substantial cost improvements Across our subscription and product revenue lines, subscription gross margin was very strong at 77%, up significantly from 72% in Year ago period, as we continue to implement technology advancements that reduce our platform costs and drive scalability in our customer success organization. Rising prices also contributed to the growth in margin. Product gross margin was 23% in the 3rd quarter, also up materially from 13% in the year ago period. Speaker 300:25:26The improvement was largely due to having earlier work through higher costs That were associated with the supply chain challenges we experienced last year along with contribution from Pro 3 camera sales. Turning to operating expenses, we are beginning to realize the benefits we highlighted early this quarter regarding the restructuring of our business to streamline operations, grow faster and more efficiently. These changes have already improved our focus, execution speed and are fast tracking our operational cash flow profitability, which we continue to expect to achieve next year. Research and development expense in Q3 was $8,800,000 a reduction of 29% from the year ago period. This change resulted from rigorous evaluation of spending and allocation toward offerings that we expect will yield the highest returns and reflect our commitment to operate more efficiently while advancing our technology platform. Speaker 300:26:23SG and A expenses for Q3 were $30,200,000 A reduction of 10% from the year ago period. This reduction in spending was primarily related to lower sales and marketing expenses as we continue to drive spending efficiency combined with high ROI go to market programs across customer facing operations. The result is a 3rd quarter non GAAP net loss of $12,000,000 and non GAAP loss per share of $0.04 above the high end of our guidance range. This is also a 56% improvement in bottom line performance from the year ago quarter. I am very pleased with the significant progress on the bottom line as we are actively driving the company to achieve profitability, which is in sight. Speaker 300:27:10Our weighted average share count was 303,000,000 shares. Moving on to the balance sheet, we ended the quarter with $430,000,000 in cash Down just 4% from the prior quarter and we remain debt free. Our cash used in operations improved to $15,500,000 in the 3rd quarter, which is a 62% improvement from the year ago period. Turning to guidance, we remain on track to deliver another record year for the company as we grow the top line, improve gross margins and make significant progress to profitability. Accordingly, for the Q4, we expect Total revenue to be in the range of $39,000,000 to $41,000,000 and subscription revenue to be in the range of $23,000,000 to $23,300,000 This represents 20% year on year growth at the midpoint of the subscription revenue range, maintaining the higher level of growth we delivered last quarter. Speaker 300:28:08We expect the balance of revenue to be split roughly evenly between the services and product revenue lines. We anticipate 4th quarter non GAAP loss per share to be in the range of $0.03 to $0.05 This means we are raising our full year 2023 total revenue guidance, which is now $157,000,000 to $159,000,000 And we are raising our full year 2023 subscription revenue guidance, which is now expected to be in the range of 86.5 to $86,800,000 For the full year of 2023, we expect a $0.21 to $0.23 non GAAP loss per share And this represents an improvement of $0.14 at the midpoint compared to the guidance we articulated at the beginning of the year and a 46% improvement from 2022. Higher subscription growth rates, expanded gross margins And reduced operating expenses are delivering improved operating margins, and we expect this trend to continue. These factors have already yielded accelerating year over year improvements in the bottom line and cash flow. And as we continue on this path, We are firmly and rapidly approaching our near term objective of positive cash flow from operations. Speaker 300:29:25Now, I would like to turn the call back over to RJ. Speaker 200:29:29Thanks, JD. The Q3 was a key period of execution for the company as we operationalize a more efficient plan for growth with a leaner customer centric organization. We continue to outperform the market by focusing on the needs of our customers across residential and commercial real and the enterprise. More and more customers are recognizing the profound cost benefits of property digitization with Matterport During a period when cost savings, productivity and operating efficiency targets are at an all time high. We are working hard to integrate Matterport into the daily workflows of our customers to simplify how they get things done. Speaker 200:30:13Our property intelligence data insights can tell buyers and sellers more about a property than ever before, leading to better decisions and outcomes for everyone. The power of digitization unlocks the power of data, The linchpin for growth across the real estate industry. Customers are thriving with Matterport, adopting our latest offerings that provide Significant value, a reality echoed in our increasing net dollar expansion rates. The value is evident In the steady growth across both our SMB and Enterprise segments. We are on track to reach cash flow breakeven in 2024, A full year ahead of schedule, a milestone underscored by our strong performance in the Q3, delivering accelerated growth amidst rising interest rates, inflation and the challenges in the real estate market. Speaker 200:31:09We remain committed to our strategic plan, delivering results that are independent of fluctuating real estate market trends. Our digital twin technology offers unmatched value to agents, Brokers and sellers aligning with the digital first expectation of the modern homebuyer. Our expansion across various sectors, including manufacturing, design, construction, travel and hospitality solidifies our market leadership. Our advantage is further amplified by our AI driven innovation pipeline featuring technologies like Cortex and Genasys. As the real estate industry continues to face rising pressure to deliver a significantly more powerful, cost effective and convenient experience For all participants across the $327,000,000,000,000 asset class we call the BILT world, The time to embrace that future is now and it starts by making every property, every physical space Thank you for joining us today. Speaker 200:32:17Operator, we are now ready for questions. Operator00:32:21Yes, thank you. At this time, we will begin the question and answer session. And the first question comes from Bhavan Shah with Deutsche Bank. Speaker 400:32:46Hi, everyone. It's Nick on for Bob in this evening. Thanks for taking my questions. J. Speaker 100:32:50D. Or I. J, can Speaker 400:32:51you just talk through what you see underpinning the continued 20% growth momentum heading into the 4th quarter? Yes. Speaker 500:33:00Thanks, Nick. So in the 20% growth Forecast at the midpoint, we're continuing to see strong demand in both of our main cohorts, the small and medium business customer As well as the enterprise customer. Of course, in both are benefiting from more value that we're Providing into the subscription plans and we of course are generating more revenue per account and per Digital Twin as well Reflecting the price changes and increases we made for both of those cohorts at different times over the last several quarters. So all of those internals are continuing as we sit here today, and that applies to the acquisition of new paid subscribers as well as to Speaker 400:33:51Great. Thank you. And then just as a follow-up, can you give us Sort of an idea what the lingering tailwind is, is from the pricing and packaging changes earlier this year from customers that are have yet to renew? Speaker 500:34:04Yes. For those customers that have yet to renew, and these are customers who are on 1 year or longer subscription plans, In the small and medium business cohorts, that's a relatively small number of customers, although growing, In particular, because we're offering some promotional packages to incentivize those customers to sign up for 1 year plans and that is working. So that's a fairly small percentage in the single digit rates that our small and medium business customers with 1 year or longer plans today. In the enterprise cohort, most of those customers have 1 year or longer subscription plans or agreements with us. And so it will take the next 1 to 3 years, I would say, to work through that existing subscriber base and work with those customers on the value based pricing that we introduced late last year. Speaker 500:35:00So most of that work is ahead of us, but it's also, of course, a great opportunity for us to continue to expand Our subscription revenue and our value proposition with those enterprise customers. Speaker 400:35:11Great. Thank you for taking my questions. Operator00:35:15Thank you. And the next question comes from Yun Kim with Loop Capital Markets. Speaker 600:35:20All right, great. Congrats on another solid quarter RJ and JD. Can you just talk about it seems like you're enjoying a solid traction in your enterprise market. Is there any way to get a little more insight into your momentum beyond the price increase that you were able to introduce? For instance, it seems like Now you have 100 plus enterprise accounts that generate 50 ks ARR which is very, very solid. Speaker 600:35:48Any trend around average deal size or ARR per customer and such? And any change in the land and expand motion for the enterprise customers? Speaker 700:35:58Sure. Thanks, Eun. I'll start with that and J. D. Can fill in. Speaker 700:36:03And picking up right where you left off, Yes, absolutely. And one of the things we've been really working on this year is driving operational efficiency and driving sales efficiency. The pipeline strength is better than ever at Matterport and particularly Seeing very impressive forward momentum in the enterprise pipeline. Second to that is, We have been architecting the enterprise solution in a very iterative fashion over Past several quarters, just continuing to hone that product market fit and making sure that the ease of integration Into Enterprises is smooth and quick, so that we can get them up and online and producing on our platform as soon as possible. And The faster that happens, the faster you see the results in the business. Speaker 700:37:01And so that overall efficiency, from the Pipeline and prosecuting the deal opportunities to getting our customers successful on the platform has been a key operational focus for us And it's paying dividends. And so that's allowing our customers to accelerate the adoption of Matterport and that's going to continue Because we're seeing continued strong demand for the product and the alignment of our data offerings, the property intelligence that we Spoke quite a bit about and it's out in public beta today is broadly of interest to Not just residential, but also to our commercial real estate property managers, which we find in the enterprise. Speaker 500:37:48Yes. And I'll just add to that. As you noted, our larger enterprise customers with more than $50,000 of Annual recurring revenue has experienced very healthy growth in the last quarter. In fact, we had the largest number of logo acquisitions Last quarter, that we've had in over a year. And combined with a growing average revenue per account, As illustrated by some of the revenue per digital twin statistics we provided during the call, we can see That as well is driving up the enterprise cohorts growth in our subscription revenue overall. Speaker 500:38:27And finally, I would just again reiterate, we had our first 8 figure deal in history of the company. And so these deal sizes, I think are growing very rapidly and some ways, have almost a limit. Speaker 600:38:44Okay, great. And then, just a question on the price increase in the quarter. What has been the reaction? Did you see any uptick in churn, especially along the smaller businesses? If you can compare the difference in how customers reacted between the enterprise versus the small business customers? Speaker 500:39:05Yes, I can. So with respect to the larger population of small and medium businesses, We did not see an uptick in churn. In fact, we have seen churn remain steady over this period. And as noted a moment ago, we offered, I think, very attractive 1 year subscription plan during the transition, which many customers took advantage of. And I think that bodes well for us as well as we continue to build a stable base of recurring subscription revenue. Speaker 500:39:40And importantly, I think we're providing a tremendous amount of added value as we make these pricing changes. Speaker 700:39:48Yes. And I'll build on that. It's been a philosophy of ours for many years that Despite the rising cost of living and the rising rates of inflation, etcetera, We don't believe in arbitrary price increases for the sake of it. And that's been a hallmark here at Matterport. And importantly, pricing changes are only associated with Continued value add on the platform. Speaker 700:40:24And we're going to continue on that trend going forward in a way that is very customer centric. So In other Speaker 200:40:32words, a lot of Speaker 700:40:33these new features and functions that we have brought out this year and last year, were not just Purely coming from Matterport, but from the partnership with our customers who've been involved in the process, in the process of Expanding the value proposition of Matterport and growing that value based pricing model, doing that together has created a lot of positive Goodwill in our customer ecosystem, and it shows in the results that you've seen here in the quarter, we expect that to continue. Speaker 600:41:02Okay. And then one final question for JD. So we saw a pretty good sequential uptick on NRR. I'm assuming a lot of it is driven by the price increase. Where should we expect the NRR to stabilize here going forward given the Pricing increase providing the tailwind? Speaker 500:41:24Generally, yes, Yun. About half of the improvement And the expansion rate was due to growth in with our existing subscribers and on a call it non price Adjusted basis, which is great to see. Customers are accessing the platform more and expanding their library of digital twins and so forth. And then the other half of the impact was from the price increase as you noted. And I would expect that Those trends to be largely consistent in the Q4. Speaker 600:42:00Okay, great. Thank you so much. Operator00:42:04Thank you. And the next question comes from Joshua Tilton with Wolfe Research. Speaker 800:42:11Hi. This is Luke on for Josh. Just a quick one for me. Just the comments in the prepared remarks about the Price per month you're able to charge for some of the larger enterprise customers, very encouraging. I just wanted to ask, what features are those Speaker 700:42:33Sure. 1st and foremost, in the enterprise, they're mostly associated with larger, more complex facilities. And so part of that pricing Based on the size and complexity of spaces alone, and we continue to evolve that over the course of the last couple of years. So That's driver number 1. Number 2 is a suite of enterprise essentials that includes anything from workflow integrations Into other project management, software systems and solutions to our existing enterprise applications, Single sign on, enterprise security and multi user access control, all of the types of things that are required to integrate safely and in a scalable way, the enterprise solution That is typically adopted by more than one user, right? Speaker 700:43:44So when we move into enterprise, you have work groups That could range from 10, 25 up to 100 of users on the platform, all working and collaborating around one of these very large digital twins. And so these work group capabilities and enterprise sort of infrastructure and support capabilities are Nonnegotiable in the enterprise arena. And so we have been building those and expanding that portfolio of that offering over the last couple of years, and Operator00:44:25Thank you. And the next question comes from Elizabeth Porter with Morgan Stanley. Speaker 900:44:34Hey, this is Chris Pintero on for Elizabeth Porter. Thanks for taking our questions. I want to ask how your pipeline has been impacted by some of the industry partnerships, maybe more specifically Autodesk 1. Obviously expanded it most recently by becoming that premium partner. So clearly something is working well there. Speaker 900:44:51So just wanted to get a bit more color on what the impact has been so far? Speaker 700:44:57Absolutely. These are critical partners for us and we've mentioned a few of them on the Speaker 300:45:02call, Procore Speaker 700:45:05And Autodesk, 2 stalwarts in the construction and architecture and design industry. And in both cases, Pipeline has been very healthy. We're going to be moving into more co marketing and even co selling arrangements for some of these partners. And that obviously is germane to continuing to expand a healthy pipeline. We're seeing great results from these expanded partnerships in the quarter. Speaker 700:45:37Nothing specific to report yet, but moving all in the right direction. One of the other parts that's really important is once you become a partner, That represents a great opportunity and a gateway into a much larger ecosystem. The second part of it is Creating the awareness that these integrations exist. And what we have found is that through some of our own marketing efforts in the quarter, Making these customers of our partners aware of the Matterport integration coming straight from Matterport to be very effective Because the integration now is straightforward and they can be up and running with Matterport plus any Autodesk piece of software or ProCore's Program management software in a day. And so the further we push that success And that awareness out in the market, we think we're going to continue to accelerate our pipeline growth. Speaker 900:46:37Got it. That's very helpful. And then on Genesis, You talked about the beta being oversubscribed, but just curious what some of the early customer conversations there have been so far that have gotten them so excited about it? Speaker 200:46:50Yes. I mean, Speaker 700:46:53this program was built around kind of a simple philosophy, Which was, let's go in and take a look at what are people doing once they digitize a building, once they transform it into a Matterport digital, we've got all kinds of Tools for measuring, managing, exploring, analyzing, tagging and labeling a space of any kind. And how can we help those customers do that job more efficiently? And what we learned is there is a great commonality Analysis, the permits such that people are taking that we could solve automatically by just Our AI capabilities right down the fairway and eliminate some of the work that they're, if not a lot of the work that they're doing by hand. And so that requires time with our customers going back And it was the lead up to how we would approach design, develop and deploy the next wave of features for our customers. So you could imagine After people have taken 200,000,000 measurements the manual way after the digital twin is created, you go in and Take measurements by hand with our point and click software that you'll now be able to get all of that, not just a single measurement, But every room, every floor, the entire building becomes a 3 d blueprint for you at the bottom of a button. Speaker 700:48:26This is saving hours of time and effort to do these kinds of things manually, We're also getting smarter about it, automatically identifying the type of room that it is. So in residential, bedrooms, kitchens, in the room or in the property at large. And doing this all also fully automatically at the click of a button Creates not only great convenience and huge efficiency gains for our customers, but it also creates a new layer of data. By having all of that insight, all of that metadata about a property down to the fixtures, we can then run another set of algorithms on it to generate insights and give you these customized property reports that would top some of the best Appraisals that you've seen out there in the industry. So we're going to be compounding this value proposition with our customers and continuing To expand the value on our journey of value driven growth for the company. Speaker 900:49:39Excellent. Thank you for taking the questions. Operator00:49:42Thank you. And the next question comes from Praise Lynette Piper Sandler. Speaker 1000:49:48Perfect. Thank you for taking the question. This is JR on for Brent. Just a quick one follow-up on Property Intelligence Beta. Any more color you can give in terms of framing the scope of the beta release, more in terms of the how broad spread it is? Speaker 1000:50:05Thank you. Speaker 700:50:08Sure. We're managing it carefully because it's a lot of data. A single customer might represent 100 or even 1000 of digital twins and the kind of feedback that we're getting from them, which is Essentially running all of this AI, all of this intelligent software across their existing digital twins, this is the great thing about it as well. You don't have to go back out and redigitize the space to get the benefits of all of this new data science. In fact, we've gone back and Run our new property intelligence capabilities over scans we've done 8 years ago, and it's really fantastic because it brings a whole new set of insights But because it's a very data intensive exercise and we're getting such volume feedback, We really want to make sure that we prosecute it in the most straightforward way possible. Speaker 700:51:03And we're seeing Great energy and great feedback from our customers to really just help them fine tune and make it as easy as possible for them to use. Nothing no showstoppers have come through so far. So we've been steadily opening up that beta. Our intention is to continue the beta through this quarter Into early 2024, but go into full public release of the product in early 2024. So we're on track and moving very quickly, and you can expect that this beta will steadily expand well beyond The 1,000 or 2 customers that we have working with us today. Speaker 1000:51:47Perfect. Sounds great. Thanks again for taking the question. Operator00:51:52Thank you. And at this time, the question and answer session has concluded. I would like to turn the floor to Mike Knapp for any closing comments. Speaker 100:52:00Great. Thanks very much for joining us today. As always, we appreciate your interest in Matterport, and we look forward to speaking with you on our next earnings call. Thanks and goodbye. Operator00:52:09Thank you. The conference has now concluded. Thank you for attending today's presentation. You may now disconnect your lines.Read morePowered by