Matterport's (NASDAQ:MTTR) Posts Q2 Sales In Line With Estimates But Stock Drops

Real estate focused virtual reality platform Matterport (NASDAQ:MTTR) reported results in line with analysts' expectations in Q2 FY2023, with revenue up 38.9% year on year to $39.6 million. However, next quarter's revenue guidance of $39 million was less impressive, coming in 6.59% below analysts' estimates. Matterport made a GAAP loss of $56.5 million, improving from its loss of $64.6 million in the same quarter last year.

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“The second quarter execution was pivotal for the company this year. We delivered record subscription and services revenue while doubling-down on our efficiency initiatives to deliver step function productivity gains in the second half of 2023. Total revenue for the quarter grew to nearly $40 million, fueled by strong enterprise adoption and steady improvements with our small and medium-sized businesses,” said RJ Pittman, Chairman and Chief Executive Officer of Matterport.

Founded in 2011 before any mass market VR headset was released, Matterport (NASDAQ:MTTR) provides the hardware and software necessary to turn real world spaces into 3D visualization.

The demand for rich, interactive 2D, 3D, VR and AR experiences is growing, and while the ubiquitous metaverse might still be more of a buzzword than a real thing, what is real is the demand for the tools to create these experiences, whether they are games, 3D tours or interactive movies.

Sales Growth

As you can see below, Matterport's revenue growth has been strong over the last two years, growing from $29.5 million in Q2 FY2021 to $39.6 million this quarter.

This was a standout quarter for Matterport with quarterly revenue up 38.9% year on year, above the company's historical trend. On top of that, its revenue increased $1.57 million quarter on quarter, a strong improvement from the $3.15 million decrease in Q1 2023. This is a sign of acceleration of growth and very nice to see indeed.

Next quarter's guidance suggests that Matterport is expecting revenue to grow 2.65% year on year to $39 million, slowing down from the 37.4% year-on-year increase it recorded in the same quarter last year. Ahead of the earnings results announcement, the analysts covering the company were expecting sales to grow 11.1% over the next 12 months.

While most things went back to how they were before the pandemic, a few consumer habits fundamentally changed. One founder-led company is benefiting massively from this shift and is set to beat the market for years to come. The business has grown astonishingly fast, with 40%+ free cash flow margins, and its fundamentals are undoubtedly best-in-class. Still, its total addressable market is so big that the company has room to grow many times in size. You can find it on our platform for free.

Customer Growth

Matterport reported 827,000 customers at the end of the quarter, an increase of 56,000 from the previous quarter. That's a fair bit slower customer growth than last quarter but in line with what we've observed in past quarters, suggesting that the company still has decent sales momentum.

Key Takeaways from Matterport's Q2 Results

Although Matterport, which has a market capitalization of $964.5 million, has been burning cash over the last 12 months, its more than $445.6 million in cash on hand gives it the flexibility to continue prioritizing growth over profitability.

We struggled to find many strong positives in these results. As for negatives, its full-year revenue guidance was lowered and missed analysts' expectations. Next quarter's revenue guidance also missed Wall Street's expectations, although adjusted EPS guidance was slightly above. Overall, this was a mediocre quarter for Matterport. The stock is flat after reporting and currently trades at $3.14 per share.

Matterport may have had a tough quarter, but does that actually create an opportunity to invest right now? When making that decision, it's important to consider its valuation, business qualities, as well as what has happened in the latest quarter. We cover that in our actionable full research report which you can read here, it's free.

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The author has no position in any of the stocks mentioned in this report.