Matterport, Inc.

Good day and welcome to the Matterport Inc. Fiscal 2023 First Quarter Results Conference Call. Today, all participants will be in a listen-only mode. Should you need assistance during today's conference, please signal for 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 telephone keypad. If you would like to withdraw your question, please press star, then two. Please note that today's event is being recorded. I would now like to turn the conference over to Mike Knapp, VP of Investor Relations. Please go ahead, sir.

Thanks, and welcome to Matterport's first quarter 2023 financial results conference call. After the market closed today, Matterport released results for the quarter ended March 31st, 2023. The release is available on the company's website at investors.matterport.com. This call is being recorded and webcast live, and 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 in today's call. Additional information regarding the risks and uncertainties can be found in our filings with the SEC. All forward-looking statements are made as of the date of this call, and Matterport assumes no obligation to update or revise them except as required by law. 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. Hosting today's call are RJ Pittman, Chairman and Chief Executive Officer, and JD Fay, our Chief Financial Officer. And with that, I'd like to turn it over to RJ to begin.

Thanks, Mike. Good afternoon, everyone, and thank you for joining us today. I'm pleased to report that we are off to a great start in 2023, with first quarter revenue of $38 million, $2 million above the high end of our guidance range, and up 33% from the year-ago period. We set new records across key metrics with our spaces under management reaching 9.9 million by the end of the quarter, more than double the number of spaces we managed at the start of 2021. And we just crossed the 10 million spaces milestone last month. Our subscriber base expanded to 771,000, buoyed by strong enterprise adoption and improving subscriber growth rates in small and medium businesses in the quarter. Our platform's ability to increase productivity and reduce costs for our customers continues to drive this strong adoption. It has also enabled us to add new blue chip names to our growing customer list as companies use our digital twins to better manage their building life cycles. From planning and construction, to facilities management and operations, to documentation, appraisal, and marketing. Our customers across the verticals we serve are seeing strong returns on investment with our solution, saving them time and money while simplifying collaboration across their organization. The criticality and value of our solution helped propel subscription revenue to a new record of $19.8 million, also above the high end of our guidance range for the quarter. By the end of Q1, we have recorded over 100 enterprise accounts with greater than $50,000 in annual recurring revenue as we continue to grow and diversify our customer base. The strength in our business and our continued focus on operating efficiency has also resulted in strong outperformance on the bottom line. With net loss per share of 7 cents, that's 3 cents better than the midpoint of our guidance range as we accelerate our path to profitability. These results are bolstered by our continued investment in highly scalable technology solutions for our customers. Since the beginning, Matterport has built its foundation around Cortex, our AI-driven 3D reconstruction engine. In our case, AI-driven means fully automated. We are currently the only company that can generate dimensionally accurate, photorealistic digital twins from an AI engine like Cortex. The first and only fully automated technology of its kind, this breakthrough enables us to create thousands of digital twins every day. And because we employ a sophisticated deep learning neural network, the more digital twins we create, the more efficient they become. Matterport created this category more than a decade ago, and we have a lot more in store. In 2022, the AI industry reached a significant inflection point with the introduction of new generative AI technologies that have captured the world's attention. These disruptive advancements in data science have marked a turning point in the industry, delivering human-like intelligence and functionality that has already begun revolutionizing the way we do business today. The unlock here is the data. Without vast amounts of data to train these new AI models, none of this would be possible. The same has been true for Matterport since the beginning. Our digital twin platform depends on AI, and our AI depends on an enormous amount of spatial data to train and learn how to automatically construct precision 3D digital twins from any digital capture device, including the smartphone in your pocket. To put this in perspective, Matterport has now digitized over 30 billion square feet of physical space in over 177 countries around the world. We have enough data to synthesize a complete picture and deep understanding of the built world. The possibilities from here are limitless, and our experience in the field is catapulting Matterport's solution into exciting new areas for our customers every day. Property Intelligence is our latest offering that unlocks the power of every digital twin we create and is the cornerstone of our future in the built world. This fully automated software platform generates powerful property insights from our extensive spatial data library, enabling clients to easily manage their properties online and discover new operational efficiencies. We help them resolve a wide range of critical operating challenges in their buildings while significantly cutting down the time needed for onsite inspections and analysis. And for our larger customers, it enables them to manage multiple facilities from any single remote location. We're currently piloting property intelligence with select customers and expect to announce general availability in the second half of 2023. We are incredibly excited about the growth potential of our new AI-driven solution for both new and existing customers around the world. This will be a significant unlock for Matterport in the quarters and years to come. Let's turn our attention to a few key industry milestones that are fueling our growth around the globe. And then I will pass the discussion to JD Fay, who will elaborate on our financial results and provide an outlook for the remainder of the year. Last month, we announced the general availability of new integrations with Amazon's AWS IoT TwinMaker, enabling enterprise customers to seamlessly connect data into visually immersive and dimensionally accurate Matterport digital twins. This solution makes it easier for developers to create digital twins of real-world systems, such as buildings, factories, industrial equipment, and production lines. Our new offering supports enterprise digital transformation efforts by providing customers with an efficient and cost-effective solution to remotely optimize building operations, increase production output, improve equipment performance, and enhance environmental health and safety at their facilities. We were extremely excited to showcase our new integrations and platform in April at Hannover Messe 2023 in Germany, alongside our partner, AWS. Anno Vermessa is the world's largest trade fair focused on industrial technology. It is a renowned event for showcasing cutting-edge technologies, innovation, and trends in areas like digitization, automation, robotics, industrial software, and more. The event brings together international exhibitors and visitors from diverse industries to exchange ideas, explore business opportunities, and discuss the latest developments in industrial technologies. It was the perfect venue for Matterport to announce our latest AWS integration and demonstrate the benefits of our solution to potential as well as existing customers. During the quarter, we also announced new integrations with Autodesk Construction Cloud, making it easier for project teams using Matterport and Autodesk Build to collaborate within critical project management workflows. This new solution allows project stakeholders to simplify and feed the request for information or RFI process in Autodesk Build. The RFI process is vital dialogue between contractors and architects on every construction project. And by moving from traditional methods of communication to immersive digital twins, the RFI becomes a detailed visual context of the current state of the project. Historically, this process has been tedious and time-consuming, as documentation typically spans multiple formats that constantly evolve as stakeholders weigh in, making it difficult for teams to track the latest information. According to Navigant Construction Forum survey, the average construction project will result in more than 800 RFIs, averaging more than 50 RFIs submitted per week. Inaccurate or incomplete documentation is responsible for almost half of the rework that occurs in the construction industry in the United States. The Matterport plus Autodesk build solution simplifies and streamlines this documentation process by creating a visual system of record for site conditions, allowing users to create and track requests directly within the digital replica of the space. This dramatically speeds up the project while reducing errors along the way. We continue to add additional blue-chip organizations to our growing roster of customers. In fact, we are proud to call 25% of the Fortune 1000 companies our customers. We are fortunate to have such an important set of customers across a diverse set of end markets because it has been critical in maintaining our strong revenue growth, reducing our reliance on any single market, driving innovation across our organization, and strengthening the Matterport brand. It is a testament to our value proposition that industries from retail, insurance, and construction to travel and hospitality, facilities management, and real estate all recognize the many benefits of our solution and their ability to increase productivity and reduce costs for organizations around the globe. Next, I'd like to provide an update on the tremendous success we are seeing with our new Pro3 cameras. This product has revolutionized 3D capture for the built world and opens new horizons with its ability to capture virtually any type of physical space with no limits on size, location, and condition, both indoors and outdoors. The fastest camera of its kind, you can capture large spaces in stunning detail thanks to its 20 megapixel sensor and LiDAR power capture range of up to 100 meters. and our customers agree that our price performance package is unbeatable and in a class all its own. We've received overwhelmingly positive reviews from customers, and we are collecting their feedback and creative ways they've put the Pro 3 to work in the field. The market response has exceeded expectations since its debut last fall, and Pro 3 sales continue to top our original sales plan. Moving on to services. In Q1 of this year, we introduced our second flagship offering to the market, Digital Pro. Digital Pro is the most innovative and affordable all-in-one property marketing solution in the industry. It provides property marketing professionals with HD photos, a 2D floor plan, a stunning Matterport 3D tour, and a preview video great for social media, all delivered within one to two business days for less than $300. I think the most compelling aspect of this offering is that the entire offering is produced from one digital twin in one appointment for one flat rate. In this challenging real estate environment, the value and convenience of DigitalPro is a game changer for agents and their sellers. The initial response has been excellent. A large portion of new customers are choosing DigitalPro, while a significant number of agents are upgrading from using photos only to the complete Digital Pro package, often for the same or lower price. It's no surprise that Digital Pro has doubled the attach rate of digital twins in real estate listings here in the US with VHT Studios, the marketing arm of Matterport that we acquired last year. Agents, brokers, and sellers are excited about getting the power of the Matterport 3D Tour and much more, all for the same great price or less than traditional 2D photography packages for their listing. We are confident that DigitalPro will be the catalyst to accelerate Matterport's share of total property listings in the U.S. and eventually around the world. I would now like to turn it over to JD to discuss our financial performance for the first quarter and the outlook for Q2 and the full year 2023.