Matterport(MTTR) - 2024 Q1 - Quarterly Report

Business Growth and Market Opportunity - As of March 31, 2024, Matterport has approximately 12.3 million spaces under management, up from 9.9 million in the same period of 2023, representing a growth of about 24.2% year-over-year[124] - Matterport estimates its total addressable market to be more than $240 billion, with potential expansion beyond $1 trillion as the spatial data platform grows[102] - The global property market, valued at approximately $327 trillion, remains largely undigitized, with less than 0.1% currently penetrated, presenting a significant market opportunity exceeding $240 billion[131] - As of March 31, 2024, approximately 43% of subscription revenues were generated from subscribers outside the United States, highlighting the company's international expansion efforts[141] Revenue Breakdown - Subscription revenue accounted for approximately 60% of total revenue for the three months ended March 31, 2024, compared to 52% for the same period in 2023[114] - Product revenue accounted for approximately 17% of total revenue for the three months ended March 31, 2024, down from 25% in the same period of 2023[121] - Services revenue, which includes Matterport Capture Services, accounted for approximately 23% of total revenue for the three months ended March 31, 2024, consistent with the same period in 2023[116] Subscriber Growth - As of March 31, 2024, the total number of subscribers reached 1,005,000, an increase from 771,000 in the same period of 2023, representing a growth of 30%[127] - The number of free subscribers increased to 931,000 in Q1 2024 from 704,000 in Q1 2023, while paid subscribers rose to 74,000 from 67,000, indicating a growth of 32% and 10% respectively[127] - The net dollar expansion rate improved to 107% for the three months ended March 31, 2024, compared to 103% for the same period in 2023, reflecting strong retention and revenue growth from existing subscribers[129] Financial Performance - Total revenue rose by $1.9 million, or 5%, to $39.9 million during the three months ended March 31, 2024, from $38.0 million in the same period of 2023, driven primarily by subscription and services revenue[164] - Subscription revenue increased by $4.1 million, or 21%, to $24.0 million for the three months ended March 31, 2024, compared to $19.9 million in the same period of 2023[163] - Gross profit increased by $3.2 million, or 19%, to $19.6 million for the three months ended March 31, 2024, with a gross margin of 49%, up from 43% in the same period of 2023[171] - Net loss improved by $17.7 million, or 33%, to $36.1 million for the three months ended March 31, 2024, from a net loss of $53.8 million in the same period of 2023[163] Cost Management - Total cost of revenue decreased by $1.3 million, or 6%, to $20.3 million for the three months ended March 31, 2024, from $21.6 million in the same period of 2023, primarily due to a decrease in product revenue costs[168] - Operating expenses decreased by $12.8 million, or 18%, to $60.4 million for the three months ended March 31, 2024, compared to $73.2 million in the same period of 2023[163] - Research and development expenses decreased by $3.4 million, or 18%, to $14.9 million for the three months ended March 31, 2024, from $18.3 million in the same period of 2023[172] - Selling, general and administrative expenses decreased by $9.5 million, or 17%, to $45.5 million for the three months ended March 31, 2024, from $54.9 million for the same period in 2023[173] Strategic Initiatives - The merger with CoStar Group, announced on April 21, 2024, involves Matterport becoming a wholly owned subsidiary of CoStar, with each Matterport share converting into $2.75 in cash plus CoStar shares[106] - The company is focused on scaling execution across various growth vectors, including international expansion and increased R&D investment[104] - The launch of Digital Pro in February 2023 provided a comprehensive marketing solution for real estate agents, combining Matterport's 3D technology with integrated marketing services[142] - A partnership with a leading global provider of construction management software was announced in September 2023, enhancing Matterport's platform for design and construction management[135] - The company aims to expand its partner integrations and third-party developer platform to drive subscriber growth and enhance the value of its offerings[145] - The introduction of the Matterport CAD file add-on in November 2023 allows for the creation of CAD files directly from digital twins, streamlining design workflows[144] Economic and Market Conditions - Macroeconomic conditions, including inflation and geopolitical tensions, are impacting demand for Matterport's products and services[109] - Inflation has not had a material effect on the company's business or financial condition, but significant inflationary pressures could harm operating results if costs cannot be offset by price increases[201] Cash Flow and Investments - Free cash flow was a negative $6.1 million for the three months ended March 31, 2024, compared to a negative $23.1 million for the same period in 2023[183] - As of March 31, 2024, the company had cash, cash equivalents, and investments totaling approximately $418.8 million[184] - Net cash used in operating activities was $3.8 million for the three months ended March 31, 2024, compared to $20.4 million for the same period in 2023[189] - Net cash provided by investing activities was $0.3 million for the three months ended March 31, 2024, compared to a net cash used of $46.9 million for the same period in 2023[191] Foreign Currency and Risk Management - The company is primarily exposed to foreign currency exchange risk, with revenue mainly generated in U.S. dollars and expenses in local currencies of operations such as the U.K., Japan, and Singapore[200] - A hypothetical 10% change in foreign currency exchange rates would not have a material impact on the company's consolidated financial statements as of March 31, 2024[200] - The company has not engaged in any hedging strategies to mitigate foreign currency risk, but will reassess its approach as international operations grow[200]