Matterport, Inc.

Good afternoon and welcome to the Matterport Fiscal 2023 Fourth Quarter Results Conference Call. All participants will be in listen-only mode. Should you need assistance, please signal a conference specialist by pressing star then zero on your telephone keypad. 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. To withdraw your question, please press star then two. Please note this event is being recorded. I would now like to turn the conference over to Mike Knapp, Vice President of Investor Relations. Please go ahead.

Thanks, and welcome to Matterport's fourth quarter and full year 2023 financial results conference call. After the market closed today, Matterport released results for the quarter ended December 31st, 2023. The release is available on the company's website at investors.matterport.com. This call is being recorded in webcast live, and a link to the webcast can be found on the investor relations section of our 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 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, 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 closed 2023 with strong fourth quarter results. Total revenue for the quarter was $39.5 million, powered by continued adoption of our solutions from enterprise and small and medium-sized business customers around the globe. Conscription revenue accelerated to 23% year-over-year growth, reaching a record $23.7 million for the period. This was above the high end of our guidance range and demonstrates our platform's growing credibility in boosting productivity and reducing operational costs for customers throughout the industries we serve. Our key metrics continue to grow at a rapid pace. The space is under management reaching 11.7 million, and our subscriber base expanded to 938,000, reflecting the rapid adoption of our solutions. Subscription revenue growth Gross margin expansion and continued operating expense discipline drove our loss per share to 4 cents, a 56% year-on-year improvement. These results highlight our ability to consistently deliver robust subscription growth while driving significant operating improvements as we continue on a fast-track path to positive cash flow, a key milestone we expect to achieve this year. Our dedication to maximizing the customer experience is steadily producing increased tension and expansion as organizations gain a deeper understanding of the broader applications of our technology and the impact it delivers. In fact, we saw our net dollar expansion rate improve to 109% from 106% in the prior quarter, the highest level in two years. Reflecting back on 2023, our ability to quickly adapt to changing market conditions paid off. We implemented a comprehensive restructuring to align our business more closely with our core competencies and areas of greatest growth potential. We executed strategies to enhance our company-wide productivity and sales and marketing effectiveness, focusing on investments with the highest ROI for the business. We did this very thoughtfully and expediently, which enabled us to deliver results that bucked several challenging industry trends in 2023. With U.S. home sales down almost 19% and interest rates at decade highs, we managed to grow total revenue by 16%. Moreover, we grew residential real estate subscription revenue by 14%. Double-digit growth amidst double-digit industry declines is a strong testament to our value proposition. even in down markets. What's more, our subscription revenue outside of real estate in verticals like facilities management and construction grew more than 20% in 2023, demonstrating our diversification strategy is working and providing us with powerful momentum heading into 2024. I'm especially encouraged to report that we digitized more than 9 billion square feet of real estate in 2023. to close the year with 38 billion square feet under management, a 36% increase led by Pro3 adoption and usage. This rapid growth is not only a clear indicator of market leadership, it is pivotal to our product strategy. Our spatial data library, the largest in the industry, unlocks powerful AI-driven insights like property intelligence and sets Matterport further apart from the field. No other solution in the market today can match Matterport's unique combination of fully automated 3D construction and automated property operational insights from the rich data library that we have created. In 2024, we are accelerating our AI solution strategy, recognizing the transformative impact AI, particularly large language models, is having across industries at a rate and scale reminiscent of the early days of the Internet's. The realm of the built world is no exception. The era where the novel virtual tour suffices is behind us. The future demands capabilities to comprehend, modify, engage with, and reconceptualize our living spaces, workplaces, facilities with the same ease that characterizes the rest of our digital experiences today. This year, we are leveraging our extensive spatial data library and immersive imagery with the capabilities of these groundbreaking generative technologies. This fusion is set to revolutionize our interaction with the built world, making a significant paradigm shift in how we perceive and engage with our surroundings. To that end, we took a major leap forward last week with the global launch of property intelligence, a suite of AI-powered features and new capabilities for the next generation of intelligent digital twins. Part of the 2024 winter release, Property Intelligence gives customers the ability to instantly understand the details of their property with automated measurements, layouts, editing, and reporting capabilities, all generated from a digital twin. Matterport has consistently led the field in property marketing, setting the standard with dimensionally accurate 3D virtual tours. Our introduction of Property Intelligence propels us further ahead. Introducing a new suite of automated features designed to elevate every property listing while saving our customers valuable time and effort. At the core of property intelligence is our unique spatial data library, encompassing 38 billion square feet of the physical world. Our recent advancements in AI have created significant opportunity to increase both subscription revenue and market share across the diverse industries we serve. Globally, we serve 1 billion virtual tours each year to millions of visitors, enabling them to walk through their dream home, manage a retail store, inspect a construction project, or operate their facilities remotely. Our advancements in automation and property insights streamline processes and enhance decision-making speed and quality for all Digital Twin applications. Later this year, we will further enhance the Digital Twin with generative AI features to unlock the full potential of a property or physical space. Building on the focus of automation, the next release will introduce the ability to re-imagine what space could become. Details will be shared in a future update, but it's clear that property intelligence and our AI strategy can significantly up our business trajectory and fuel our long-term growth. As part of our winter 2024 release, we're pleased to announce the introduction of ShowBase plugins, which simplify navigation for virtual visitors and facilitate connections with experts. The Compass and Minimap plugins assist in navigating large spaces, homes, job sites, hotels, and more, while the Business Card and QuickLink plugins offer essential contact information and additional details about the property. These features allow real estate agents to personalize virtual tours and enable property or facilities managers to enrich spaces with contextual content, such as operations manuals, restaurant menus, reservation pages, and more, ensuring a comprehensive and interactive virtual experience. In an era where real estate agents navigate challenges, such as housing affordability, inventory shortages, and the rapid pace of technological advancements, the pressure to adapt is immense. Amidst growing scrutiny over commission structures, Agents are under increased pressure to meet the high expectations of their clients and secure new listings. Our digital twins serve as comprehensive marketing tools, offering agents a competitive edge to attract more qualified buyers, expedite transactions, and increase rental bookings. With enhancements in property intelligence, including automatic generation of property reports that detail room dimensions and ceiling heights, along with new branding opportunities for agents, Matterport stands as an essential tool for buying, selling, and renting properties more effectively. The travel and hospitality sector remains a significant source of revenue for us, offering substantial growth opportunities. According to IDC, by 2025, an estimated 50% of travel and hospitality organizations are expected to implement digital twins to enhance efficiency and bookings. Global hospitality market valued at $4.7 trillion by Statista traditionally depended on direct interactions for sales, property assessments and improvement initiatives. However, industry is experiencing a fundamental shift towards digital engagement with immersive technologies playing a pivotal role in marketing efforts. Matterport is at the front of this transformation. providing the necessary solutions for customers to capitalize on these digital advancements. Our hospitality clients are increasingly acknowledging the benefits we offer. In the fourth quarter, we entered into a new multi-year collaboration with PCAS, utilizing Matterport's digital twin platform and capture services. PCAS is set to enhance the use of our platform, integrating it thoroughly into its property onboarding and guest services, for the numerous properties under its management. Our comprehensive digital twin solutions will allow Vacasa to capture, document, and market its listings more efficiently and effectively. Each digital twin will provide a deep virtual tour and high resolution photos, ensuring a uniform showcase experience across Vacasa's portfolio with just a single capture session. We've also entered into a partnership with Visiting Media, a leading provider of immersive sales enablement and channel distribution solutions for the hospitality industry. Visiting Media, which supports millions of users worldwide and works with top hospitality brands such as Hilton, Hyatt, and IHG Hotels and Resorts, has chosen to expand its utilization of Matterport's property marketing solutions. making our 3D technology the preferred option for the thousands of hotels it serves. With digital twins for over 17,000 spaces, business media enables hospitality revenue teams to significantly streamline workflows across their properties, aiding property management teams and improving channel distribution efforts. Our presence in the construction industry is rapidly expanding as we further enhance our suite of solutions and partnerships. Recently, we launched the Matterport CAD file add-on, enabling the conversion of Matterport digital twin point clouds into editable CAD drawings in various formats. Given the widespread use of CAD software across the industry, Matterport simplifies as-built documentation processes and accelerates project timelines. The Pro3 has gained significant popularity within the architecture, engineering, and construction industry, due to its exceptional value for performance in capturing superior imagery and high-fidelity digital twin reconstructions. Our commitment to innovation for our flagship device remains strong. In the fourth quarter, we initiated a beta program for high-density scanning, a software-enabled capture upgrade to increase the precision of our 3D models and simplify professional as-built modeling with Matterport. In 2023, we successfully expanded our portfolio of Fortune 1000 clients, welcoming notable new logos such as John Deere, Siemens, and Danone. We also showcased a collaboration with Bayer, a global leader in pharmaceuticals and biotechnology. Bayer's Crop Sciences Division has leveraged Matterport for the design and management of construction projects in Germany and South Africa. transitioning from traditional design processes to digital collaboration. This shift enabled the team to cut project planning expenses by 75% and enhance efficiency across the value chain, from design to construction. We recently formed a strategic partnership with Bellman, a premier global provider of network infrastructure and digitization solutions aimed at offering 3D digital twin-powered connectivity solutions for facilities management in sectors such as industrial automation, smart buildings, and broadband. McKinsey reports that 70% of C-suite technology leaders in large corporations are currently evaluating and investing in digital twins. The synergy between Belden's network solutions and our digital twin platform will empower businesses worldwide to enhance their connected worker initiatives. allowing for more efficient management of physical spaces in terms of asset performance, production monitoring, and sustainable manufacturing. Through this collaboration, Matterport will integrate into Belden's edge-to-cloud solution, bringing our advanced visualization, spatial data, and developer tools to Belden's comprehensive services for secure data handling and management. As members of the Amazon Web Services Partner Network, Matterport and Belden will also collaborate closely with this leading cloud service provider to develop innovative solutions that assist customers in their operational transformation journeys. Before handing over to JD Fay, I'd like to spotlight our latest environmental, social, and governance report. Embedded within our core business strategy, our ESG framework reflects our commitment to aiding customers in achieving their sustainability objectives, influencing our everyday decisions. The report underscores the efficiency of Matterport technology as a sustainable alternative to travel, facilitating virtual interaction and operations in environments like construction sites, manufacturing plants, or during home tours. According to 2022 data, Matterport's technology has helped prevent over 756,000 tons of carbon emissions since initiating this tracking in 2021. Enhancing support for our clients, we've collaborated with a third-party carbon accounting firm to create an emissions calculator for enterprise customers. This tool offers a tailored analysis of the environmental and economic benefits derived from using the Matterport Digital Twin platform, seeming to be accessible to all our enterprise clients. Our platform plays a pivotal role in enabling customers to conduct their operations more sustainably, efficiently, and remotely from anywhere in the world. I would now like to turn it over to JD Fay to discuss our financial performance for the fourth quarter and our outlook for Q1 and full year 2024.