CoStar Group to Acquire Tech Firm Matterport for $1.6 Billion

CoStar Group has announced it will acquire the industry-leading real estate tech firm Matterport for $1.6 billion subject to shareholder approval.

No timeframe has been specified but the deal is expected to conclude in 2024 with Matterport's Board of Directors voting unanimously in favour of the acquisition.

Under the terms of the agreement, which CoStar broke via its website, CoStar will pay Matterport $5.50 per share with Matterport shareholders receiving $2.75 in cash and an equivalent share of $2.75 in CoStar stock.

Matterport is the company behind some of the most cutting-edge technology in global real estate, pioneering the development of the first 3D capture solution to deliver dimensionally accurate, photorealistic virtual tours or “digital twins” for any type of property.

In layman's terms, you can use Matterport from your smartphone to accurately digitize your property.

To quote the announcement made by CoStar:

Matterport's 3D technology is utilized in nearly every sector of real estate, spanning residential, commercial, hospitality, retail, and industrial spaces, among others.

Over the years, Matterport has curated what is considered to be one of the largest and most precise collections of spatial property data worldwide, with over 12 million spaces captured in 177 countries, and representing more than 38 billion square feet of digital property under management.

Meanwhile, CoStar Group is a leading provider of online real estate marketplaces in the United States and the UK, and the owner-operator of Homes.com and OnTheMarket, among others.

Andy Florance, founder and CEO of CoStar Group, said:

"CoStar Group and Matterport have nearly identical mission statements of digitizing the world’s real estate. I look forward to welcoming Matterport to the CoStar Group family and believe that we will be stronger together, in pursuit of our common mission.

"The world has changed and today a Matterport is the new open house or property tour. People now select their next home, apartment, office, store, hotel or warehouse on their mobile devices, often without ever visiting the property. There is no better way to remotely experience space than via Matterport.

"CoStar Group intends to support and invest in research and development opportunities to further develop Matterport’s spatial technology, including the application of AI and machine learning to extract information from the 3D spatial data library as well as using generative artificial intelligence to imagine and reimagine physical spaces."

RJ Pittman, CEO and Chair at Matterport, said:

"We are thrilled to join forces with CoStar Group, a long-standing customer and partner with a shared vision for transforming global real estate through technology and digitization.

"This transaction is another significant milestone that acknowledges the groundbreaking work Matterport has accomplished in 3D digital twin technology and AI-driven property intelligence. With CoStar Group's expansive reach and scale in property research and analytics and our joint commitment to innovation, we believe that this powerful combination will transform how properties are marketed, sold, and managed worldwide.

"Importantly, it offers Matterport's stockholders the opportunity to participate in the value creation and future growth prospects of our combined efforts."

 

While CoStar will be undoubtedly pleased with this acquisition—they wouldn't pay over a billion dollars if they weren't convinced by Matterport's access to technology otherwise—it is worth noting that Matterport will be equally happy to have been acquired given its strong performance without a trace of profitability.

Matterport has recorded 12 consecutive quarters of net losses dating back to 2021, with February's Q4 financial results revealing that losses from Q3 had more than tripled to $43.9 million, with net losses for the year a shade under $200 million. Shares in the tech firm soared by a record 187% when the announcement was made.

At the other end of the spectrum, Costar is one of the most consistently profitable businesses in global real estate.

CoStar's ability to absorb Matterport's cost base on top of the acquisition fee is a fair reflection of the Group's cash surplus—Andy Florance said so himself on stage in Madrid in 2023.

This is the Group's second major acquisition in six months, following December's $100 million deal to buy UK challenger OnTheMarket.

Homes.com and OnTheMarket's offerings just went to a whole new level. The integration of Matterport tech will be accelerated to give both portals a clear competitive edge over rivals Zillow and Realtor.com in the United States, and Rightmove and Zoopla in the United Kingdom.

Make no mistake, this story is going to get a lot of column inches, and I wouldn't be at all surprised to see a podcast on this very topic in the near future!