Matterport Stock: Huge Opportunities Ahead (NASDAQ:MTTR)

Investment thesis

Matterport (NASDAQ: MTTR) is a leading spatial data company focused on digitizing and indexing the world built with its hardware and software. The company went public last year through a merger of SPAC with Gores Participations VI. Shares soared more than 200% from its $ 10 SPAC price to more than $ 30, with investors betting on its main position for the metavers. However, as the hype faded for the metavers, the stock began to plummet. It is now trading at ~ $ 4, more than 80% higher than its all-time high.

Metaverse was never the main market for Matterport in my opinion, it is rather an unprecedented advantage. The main goal of the company has always been the real estate and construction sector. I believe that Matterport has great potential, as its spatial data is able to provide information to companies and individuals to better design, build, promote and manage their spaces. The TAM (Total Addressable Market) for the digitization of the physical world is estimated at $ 240 billion and Matterport’s current market cap is only about $ 1.5 billion, which leaves a lot of room for growth. However, the valuation still extends a bit even after the fall, so I consider the company as a hold on the current price.

RJ Pittman, CEO, on future opportunities:

“Real estate is the world’s largest asset class, now valued at about $ 327 trillion, reflecting a $ 100 trillion increase in value in recent years as more than 15,000 new buildings are completed Matterport leads the industry with more than 7 million digital twins and we are creating thousands more every day, while 99% of the world’s buildings have not yet been digitized.This huge market opportunity is expanding and we continue to focus on efficiently scaling Matterport ‘s business to meet the growing global demand for software – based property management. “

Introduction

Matterport was founded in California in 2011. It is the leading spatial data company that allows users to access physical buildings in digital buildings and the process is easier than ever. Anyone can turn a physical space into an accurate and immersive digital twin that can be used to design, build, operate, promote and understand.

Matterport requires a device to capture the image of dedicated spaces. Then, with the image, you can choose a subscription plan that includes free, startup, professional, and business.

Free

• 1 active user and active space is allowed
• Able to view images in the cloud
• Able to download photos and videos
• Able to take action

Starter

• 1 active user with 5 active spaces
• Characteristic of the previous plan
• It can be shared and embedded anywhere
• Post Google Street View for free for a limited time
• Basic analysis of space traffic

Professional

• 5 active users and 25 active spaces
• Characteristic of the previous plan
• Small team collaboration
• Automatic face blur
• Schematic plans and technical file (on request with additional cost)

Business

• 20 users with 100 active spaces
• Characteristic of the previous plan
• Great team collaboration
• Account management
• Export traffic report

The current devices that Matterport supports are mobile phones, 360 cameras, Matterport Pro 2 and Leica BLK360 with each hardware with different capabilities. IPhone, iPad, and 360 cameras are usually designed to give people access to fast, portable, and input 3D scanning. Both devices have similar capabilities, except that 360 cameras allow you to scan more spaces and spaces and have higher quality and portability images.

For example, 360 cameras can be used to capture small houses, condominiums, and apartments for rent or sale. Matterport Pro 2 has the highest quality 3D scans with unlimited 4K photography and long battery life for multiple scans, while the Leica BLK360 has similar capabilities with the highest accuracy available. Both cameras are suitable for larger scanning spaces, such as hotels and commercial buildings.

Why Matterport?

Matterport Capture allows you to capture space with the devices mentioned above. Once the Matterport Cloud has created the digital twin, users can edit their spaces in the Matterport Workshop. It has different capabilities, such as tagging rooms, measuring spaces, selecting 4K quality photos, customizing an RV experience, and inviting collaborators to view, upload, and edit the space. Then, using Matterport Showcase, users and their audience can see and explore the space in its final format. It allows users to browse the space in different formats and experience the space in VR format if they have a compatible device like Oculus. That’s why Matterport can play an important role in Metavers, as it builds the bridge between the real world and the virtual world.

Matterport allows industries such as real estate, hospitality and construction to operate more efficiently. Digital twins (spaced out that Matterport captured) are very useful in architecture, engineering, and construction because they can store essential information such as building plans, exact measurements, and the status of specific projects. This allows companies to collaborate, design and plan easily. In the real estate and hospitality sector, the digital twin enhances the experience of potential customers’ journeys through the spaces of the property without having to invite them to come to the real place, which allows them to make purchases or rentals with much more. ease.

Finance and Valuation

Matterport recently announced its first quarter results for fiscal year 22. The company recorded total revenue of $ 28.5 million, up 6% from the first quarter of 2021. Subscription revenue was be $ 17.1 million compared to $ 13.8 million, up 24% year-over-year. It now accounts for about 60% of total revenue. The ARR (annualized recurring income) is now $ 86.8 million. The company is seeing strong commitment during the quarter, with total subscribers rising 70% year-on-year to 562,000. While SUM (managed spaces) increased by 49% to 7.3 million. Revenue targeting for the full year of 2022 will be between $ 125 million and $ 135 million, while subscription revenue will be between $ 80 million and $ 82 million, which represents strong growth continued from 31% to 34%.

However, the company’s results remain weak. Losses from the transaction increased from a negative (2.4) million dollars to a negative (84.9) million dollars. This is largely attributed to the increase in R&D spending, which rose more than 300% from $ 6 million to $ 26 million. Operating cash flow went from $ 1 million positive to $ 1 million negative ($ 25.5). Non-GAAP EPA decreased from negative (0.01) to negative (0.1). The company closed the quarter with a solid balance sheet. Cash in hand amounted to $ 600 million without debt. This gives them a cushion to burn cash and invest in the business.

RJ Pittman, CEO, on first quarter results:

“We are pleased to report another strong quarter, increasing our subscriber count by 70% to 562,000 subscribers during the period. We have expanded the spaces under management by 49% to 7.3 million spaces. 7.3 million digital Matterport twins for homes, offices, factories, hotels and more One of our key strategic levers is subscription revenue, which rose 24% year-over-year, accounting for more than 60% of total revenue Today, we reaffirm our previous revenue and EPS target for 2022. With $ 600 million in cash on our balance sheet, we have the financial strength to navigate the environment. macro and comfortably achieve our long-term business plan “.

It is difficult to value Matterport using most traditional metrics, as it is still in growth mode at all costs. The company currently trades with an EV / anticipated sales ratio of 8.9, which is by no means cheap. In the chart below, you can see that their rating is pretty much in line with other 3D software companies like Unity (U) and Autodesk (ADSK). Matterport is much less mature compared to these companies and also has a much weaker profitability. However, it has a massive untapped TAM that gives the company plenty of room to grow in the future. I think the current valuation is fair given the opportunity Matterport has.

Conclusion

In conclusion, in my opinion, Matterport has great potential. Despite its recent growth, the company is only touching the tip of the iceberg when it comes to its TAM (Total Addressable Market). Your spatial data will be very useful for the real estate and construction sector, with the metavers being an advantage. Many of Matterport’s subscribers and revenue come from individual users, and the company is now shifting its focus to target businesses, opening up many more growth opportunities. Some notable moves include his collaboration with Meta to enable research in AI.

Matterport is growing rapidly with a 70% year-over-year increase in total subscribers and a 49% SUM (managed space). Its SUM is now 7.3 million with 22 billion square feet captured, 100 times larger than the rest of the market, creating a strong data advantage. Although the company is not yet profitable, I think it is more important to capture market share and expand the business instead of being conservative with spending on R&D and S&M. You also have enough cash to keep your current cash burning. The current valuation is in line with similar software companies and I think the company is a buy as it is a unique high growth company with a great TAM.