Matterport Q3 2024: Profitability a Stretch as CoStar Acqusition Draws Near

Matterport, the leading spatial data company, today announced financial results for the quarter ended September 30, 2024.

Highlights include:

• Quarterly revenues increased 8% year-on-year, up to $43.8 million
• Subscription revenues increase to $25.3 million for the quarter and $73.5 million YTD
• YTD revenues of $125.8 million
• Net losses in Q3 reach $38.4 million
• Net losses for the year already surpass FY 2023

RJ Pittman, Chairman and CEO at Matterport, said:

"I’m pleased to share our third-quarter 2024 results, highlighting our continued success driving efficient growth.

"Total square feet managed reached 47.3 billion, up 34% year-over-year, with annual recurring revenue hitting a record $101.5 million, an 11% increase year-over-year.

"Our Fall 2024 Release introduced groundbreaking AI-powered tools designed to elevate digital twin applications and real estate listings. With one-click defurnishing and automated property descriptions from a Matterport digital twin, customers save time, streamline workflows, and enhance their listings. Features like 3D model merge, field tags, and bill-back processing bring unmatched speed, efficiency, and precision to managing spaces at scale for agents, contractors, and enterprise teams alike.

"We believe our innovation pipeline is the strongest it’s ever been, and with customers raving about our Fall 2024 Release, we’re setting the stage for more bold, product-led growth in 2025."

Matterport continues to increase its revenues steadily quarter on quarter, with admirable growth for its subscription packages now accounting for well in excess of half of the proptech's overall revenues. The good news for Matterport is that every quarter seems to deliver record revenues, if marginal.

Nevertheless, Matterport's net losses continue to be a problem. Firstly, there appears to be no obvious pattern proportionate to revenues, while Q2's exceptional loss of $141 million stick out like a sore thumb after Matterport incurred costs of $95 million in litigation costs.

In Q1 2024, Pittman suggested profitability was a realistic target for the digital twin specialist. This is not the case as the year draws towards its close.

In fact, losses appear to be widening as revenues go up. Even Q2's massive outlay on the courtroom, an exceptional one-time cost, somewhat masks what would ordinarily have been widening net losses $46 million—a $10 million quarter-on-quarter increase from Q1.

While full year losses for 2023 hit $199 million, Matterport's net loss for the first nine months of the year are $216 million (in part due to the one-off litigation cost). Nevertheless, full year losses would otherwise likely narrow for the Matterport's full year results due in February 2025.

Matterport and CoStar

Matterport is currently under offer by CoStar Group, with a $1.6 billion dollar acquisition expected to close by the end of the first quarter of 2025 after receiving approval from Matterport shareholders in July.

The difficult reality for CoStar CEO Andy Florance will be how to effectively absorb a market leader that can't turn a profit into CoStar's business and trim it down to a size that pleases the industry and shareholders alike.

With a career's worth of the "ruthless" moniker under his belt, Florance will almost certainly need to restructure Matterport to make it a financially sound investment in the long-run, especially given CoStar's lofty ambitions of evolving Matterport into a "something-for-everyone" technology widely available to the global real estate industry.

Is CoStar overpaying for Matterport? Watch the PPW Podcast episode below to find out what Online Marketplaces chairman Simon Baker thinks.