Matterport, Inc.

Hello, and welcome to the Matterport Inc. Fiscal 2022 Third Quarter Results Conference Call. All participants will be in listen-only mode. Should you need assistance, please signal a conference specialist by pressing the star key followed by zero. After today's presentation, there will be an opportunity to ask questions. To ask a question, you may press star, then one on your touchtone phone. To withdraw your question, please press star, then two. Please note, today's event is being recorded. Now I'd like to turn the conference over to your host today, Lindsay Savarese, Investor Relations. Ms. Savarese, please go ahead.

Thank you. I am pleased to welcome you to Matterport's third quarter 2022 financial results conference call. After the market closed today, Matterport released results for the third quarter 2022 and it's September 30th, 2022. 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 recording can be found on the investor relations section of the Matterport website. Before 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 that may cause actual results to differ materially from those discussed on today's call. Additional information regarding the risks and uncertainties that could cause actual results to differ from forward-looking statements can be found in our filings with the SEC. Any forward-looking statements made on this call speak only as of today and Matterport assumes no obligation to update or revise them, whether of new developments or otherwise, except as required by law. In addition, today's call may include discussion of non-GAAP financial measures. These measures should be considered as a supplement to and not as 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 deck, which is available on the company's website. Hosting today's call are RJ Pittman, Chairman and Chief Executive Officer of Matterport, and J.D. Fay, Chief Financial Officer. And with that, I'd like to turn it over to RJ to begin.

Thanks, Lindsay. Good afternoon, everyone, and thank you for joining us today. I am pleased to share that we have posted another record quarter delivering on our product strategy and key results. Total revenue for the third quarter of 2022 was a record $38 million, up 37% from the third quarter of 2021. Our subscription revenue for the third quarter was a record 19 million, up 21% from the year-ago quarter. Both of these figures are above the top end of our guidance ranges. We have delivered a record quarter amidst rising inflation and uncertainty across the geopolitical landscape. further demonstrating the timely cost-saving and productivity gains our customers are experiencing with our digital twin solution today. We are achieving success by sticking to our key operating principles laid out at the start of the year. I'd like to expand on them a bit further. First is innovation. We continue to make strategic investments in our products and services that deliver on our long-term vision for Matterport. In Q3, we introduced our most significant products of the decade, essential to the enterprise and essential to capturing every type of building inside and out. Customer response has been incredible, and we'll share more on this shortly. Second, we're committed to ensuring our customers get maximum value from digitizing their properties and growing their portfolio of digital twins in the cloud. The Matterport Cloud software solution enables businesses to realize more efficient facilities management by putting their buildings online and making them accessible to employees and teams anywhere, anytime at a lower capital cost. Enterprises today are increasingly turning to Matterport's digital twins to repurpose and optimize the use of their facilities while instantly boosting productivity in the remote work environment. Third, as demand for our products and services continues to grow, we remain focused on maximizing the efficiency of our growth. We do this through constant optimization of our priorities, program spend, and marketing efficiency to strengthen our long-term outlook. Combined with our strong balance sheet, this discipline provides a durable foundation from which to execute our business plan. In fact, we're ahead of plan this year with driving improvements to operating efficiency that when combined with revenue growth, drove non-GAAP net loss per share to 9 cents, which exceeded our guidance range for the quarter. We reported strong operating metrics with our subscriber base, growing to 657,000 subscribers in the third quarter, which was up 50% from the year-ago quarter. Our spaces under management also increased to over 8.7 million spaces, up more than 40% from the year-ago quarter. As we close in on our 10 million space milestone, it is important to point out that the spaces we are digitizing are getting larger. Fueled by the strong underlying demand from our enterprise customers with large buildings to capture and the tireless efforts of our employees who have delivered on big commitments to our customers. We're experiencing strong demand despite uncertain global economic conditions, primarily because our digital twins are deflationary. saving organizations time and money by reducing operational costs. Furthermore, businesses recognize the importance of investing in solutions that provide employees with flexibility while boosting productivity. Hybrid and remote work is not a trend. It has become integral to the future of work, and for many people, it is the expectation. It is why large multinational enterprises use our digital twin platform to remotely train employees, operate their facilities, and market their properties. This is also why we generated record bookings from new and existing customers in the third quarter, from Matterport subscription services, capture services, and product. Next, I'd like to discuss our operating progress for the third quarter in more detail, and then I'll hand it over to J.D. Fay to discuss our financial results and outlook. Innovation is the cornerstone for the company. It steers the investments into our products and services that are critical to the success of our customers and partners. And in the third quarter, we launched the all-new Matterport Pro3 camera. The Pro3 is a game changer for 3D capture in every way. All-new sensor technology, including state-of-the-art LiDAR and RGB sensors, with powerful onboard software that delivers breakthrough performance in a gorgeous, highly portable form factor. Pro3 has already digitized stadiums, arenas, and is ready to capture every aspect of the physical world indoors and outdoors at unprecedented speed, scale, and precision. With over 100 meter range, the Pro3 camera and our next generation digital twin cloud platform combined to deliver unmatched performance at a price point that's all its own. I've never been more excited and more confident in our capture strategy as we head towards 2023 with Pro3 in the lineup, no building, no physical spaces out of reach for Matterport. This is key to our plan and ensures that we have a solution for every type of customer as digital twins are becoming increasingly more important to businesses around the world. Business leaders are acutely focused on reducing operational expenses while accelerating the productivity of their workforce. Our digital twins provide a number of value-added services and property insights that empower customers to better manage and understand their properties, ultimately driving down costs while increasing operating efficiencies. Customers can make data-driven decisions while remotely managing their facilities, conducting virtual inspections, and collaborating in real time with on-site staff to avoid downtime or to roll out operational procedures. Demand for digital twins continues to rise as third-party research firms like Forrester Research are reporting more than half of global software technology decision-makers are already adopting digital twins. Capgemini has noted digital twins can reduce time to market and improve operational efficiency and sustainability efforts. In addition, McKinsey noted in a recent published paper that it expects digital twins will soon become key tools for optimizing processes and making in every industry. I'd like to discuss one of our new customers in the architecture and engineering space. This quarter, we announced our relationship with Burns McDonald. Burns McDonald is one of the largest engineering companies in the United States and is a family of companies with 10,000 engineers, construction professionals, architects, and staff focusing on the design and construction of critical infrastructure. Burns and McDonald customers use the Matterport Digital Twin platform, including software services and hardware, to optimize construction expansion and maintenance projects. The collaboration equips businesses in the energy, utility, and manufacturing industries with a continuous digital and visual documentation solution that improves operations, enhances collaboration, and increases safety in each project stage. With Matterport, Burns & McDonald provides digital twin management and solutions that have helped its customer base, including Central Lincoln People's Utility District, an electric utility company based in Oregon that serves roughly 55,000 customers. Since leveraging the Matterport platform starting in 2018, the utility has decreased costly employee travel, increased collaboration across teams, while eliminating the need for over 250 expensive repeat site visits to 45 different facilities, allowing them to complete their project on budget and on time. Next up is the new digital twin platform in the cloud. Also in the third quarter, we launched a reimagined digital twin cloud software platform for the enterprise. Our market-leading digital twin platform creates, publishes, and manages digital twins of buildings and spaces of any size or shape, indoors or outdoors. We added a set of new, seamlessly integrated capabilities so customers can securely create immersive environments for their employees, customers, and partners to collaborate and explore. We created a new workgroup collaboration framework called VIEWS. to enable groups and large organizations to create separate permissions-based workflows to manage different tasks with different teams. For example, virtual inspections, remote training, space planning, personalized virtual tours, and so much more. We also created new tools called guided tours and tags to elevate the visitor experience. Now, marketing and sales teams can create directed virtual tours of any commercial or residential space tailored to the interests of their visitors. And operations teams can create guided online training courses for remote workers, all from the same single digital twin. Along with these features, we launched a fully enabled mobile solution that brings together capture, customization, view, edit, publish, and restore capabilities to digital twins all within the new Matterport app for both iOS and Android devices. Previously, these capabilities were provided in separate mobile apps and available only on the web. Now our cloud software platform offers a combination of security, compliance, and access control features that Fortune 500 customers require. We offer longer service and support hours, expanded language support, stock to compliance certification, and provide professional services with robust SLAs. To expand our reach into enterprises, in the third quarter, we launched a new relationship with TD Cynics. TD Cynics has a network of resellers serving industries, including the technology sector, government agencies, retail manufacturing, construction, and more. TD Cinex is a leading distributor and IT solutions integrator with a workforce of over 22,000 people, supporting over 150,000 customers. With this partnership, Matterport joins more than 1,500 best-in-class technology vendors in TD Cinex's portfolio. We have already engaged with a number of these resellers, and toward the end of the third quarter, we began to work together on go-to-market training. These resellers and their sales teams were all from Matterport's industry-leading technology to their customers, delivering the value of digital twins to the enterprise and public sector. Our enterprise customers are becoming more confident in the power of our digital twins and are scaling with Matterport, bringing new spaces online every day. We saw rapid revenue growth from our largest customers and a strong net dollar expansion rate. and the enterprise go-to-market organization we have been building over the last year started to yield tangible results in the third quarter. Now, 23% of the Fortune 1000 companies use Matterport as the customer value proposition is clear to them and demand continues to build. I am encouraged by the results of our team's hard work and commitment to scaling our digital twin platform for our customers. and look forward to helping them accomplish their own digital transformation with tangible results. Finally, I would like to provide an update on our strategic acquisition of BHT Studios, which closed in early July. The integration of our operations is now largely complete. BHT extends our industry leadership with a more comprehensive approach to marketing properties online. Together with VHT, we have moved our offering closer to the customer to service more property listings with a more robust digital marketing solution than we've ever offered before. VHT's market leadership in digital property marketing spans more than 20 years and represents tremendous strategic value for Matterport's digital twin platform for the residential real estate market and offers great potential to impact our commercial real estate and travel and hospitality markets as well. where digital marketing is vital to growth. Together, VHT and Matterport are creating the most comprehensive digital twin marketing technology platform targeted at large-scale residential real estate brokerages and enterprises with our digital twin at the center. VHT has established and maintained dozens of longstanding enterprise customers, including seven of the top 10 brokers in the United States, like AdProperty,