Matterport Q2 2024 Financial Results: Revenue Growth Offset by Increasingly Heavy Losses

Matterport, the real estate spatial data platform under offer from CoStar Group, released its Q2 and half-year 2024 results this week, with losses for the quarter greater than the previous five quarters combined.

Highlights include:

• Total revenue was $42.2 million, up 6.7% YoY (was $39.5 million)
• Subscription revenue of $24.2 million up 15% YoY (was $20.9 million)
• Quarterly net losses triple YoY to $141.5 million (was $56.5 million)
• Annualized Recurring Revenue hits record $96.6 million, up 16% year-over-year
• Total subscribers grew to 1.06 million, up 28% year-over-year

RJ Pittman, chairman and CEO at Matterport, commented:

"I’m pleased to announce our second-quarter 2024 results, which underscore our ongoing success in driving efficient growth. Subscription revenue increased by 16% year-over-year, reaching a record $24.2 million, and now accounts for over 57% of our total revenue.

"This growth highlights our strategic focus on expanding the recurring subscription revenue within our business.

"Q2 was marked by bold product innovation. Our latest AI initiative, Project Genesis, along with our spatial data-driven efforts like Property Intelligence from our Q1 Winter Release, have been well received by customers and partners. We are actively developing the future of the digital twin and look forward to unveiling more breakthroughs in our Fall Release later this year."

JD Fay, CFO at Matterport, said:

"Our second quarter results represent continued revenue growth and improvements in Non-GAAP net loss per share year-over-year. Steady subscription revenue growth, gross margin expansion, and continued operating expense discipline drove our non-GAAP loss per share to $0.02, which is a 71% year-on-year improvement.

"These results underscore our steadfast commitment to profitability and highlight the significant progress we are making in transforming the industry."

Despite good comms and an optimistic outlook, the reality for Matterport is that it continues to be a market leader that can't make a profit.

If anything, the firm is struggling more than ever.

Q2 losses of $141.5 million widened by 150% from the same period in 2023, while quarter-on-quarter losses widened by 292%; Matterport had lost $36.1 million in the three months to March 2024.

Put into context, Matterport has doubled its subscription revenue in the past four years and is now generating roughly $8 million in monthly subscription revenues.

However, total losses of circa $440 million across the past 14 quarters equate to an average monthly loss of $31.5 million.

In other words, since Q1 2021, Matterport has spent $4 for every $1 earned.

Therefore, the emergence of CoStar Group's $1.6 billion takeover bid earlier this year has come at a critical time for Matterport, with shareholders approving the deal in late July.

Regarding the upcoming acquisition, Matterport said:

CoStar Group will acquire all outstanding shares of Matterport in a cash and stock transaction valued at $5.50 per share, representing an equity value of approximately $2.1 billion and an enterprise value of approximately $1.6 billion based on the closing price for CoStar Group common stock on April 19, 2024.

Under the terms and subject to the conditions of the agreement, Matterport stockholders will receive $2.75 in cash and $2.75 in shares of CoStar Group common stock for each share of Matterport common stock.

In light of the pending transaction, the Company had previously suspended its financial guidance for the full fiscal year 2024 and will not be providing financial guidance for the upcoming fiscal quarter.

At a special meeting of stockholders held on July 26, 2024, Matterport stockholders approved the transaction with CoStar Group, Inc.

Andy Florance has his work cut out for him.

Given his continued pursuit of Zillow and Realtor.com in the United States, Rightmove and Zillow in the United Kingdom (via OnTheMarket), an international expansion strategy in Europe that has yet to bear fruit or fireworks—and now the additional headache of bailing out Matterport—CoStar Group's CEO is dealing with possibly the most complex and expensive strategy in global real estate.

Meanwhile, Matterport must prepare itself for a difficult year. Cutting losses and attaching some rockets to flat revenues means change must happen for the digital twin specialist.