Matterport (NASDAQ:MTTR) Beats Q3 Sales Targets But Quarterly Guidance Underwhelms

Real estate focused virtual reality platform Matterport (NASDAQ:MTTR) reported Q3 FY2023 results topping analysts' expectations, with revenue up 7% year on year to $40.6 million. Revenue guidance for the full year also exceeded analysts' estimates but next quarter's guidance of $40 million was less impressive, coming in 0.6% below expectations. Turning to EPS, Matterport made a GAAP loss of $0.15 per share, improving from its loss of $0.20 per share in the same quarter last year.

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Matterport (MTTR) Q3 FY2023 Highlights:

• Revenue: $40.6 million vs analyst estimates of $39.1 million (3.9% beat)
• EPS (non-GAAP): -$0.04 vs analyst estimates of -$0.06
• Revenue Guidance for Q4 2023 is $40 million at the midpoint, below analyst estimates of $40.2 million
• Free Cash Flow was -$17.8 million compared to -$12.5 million in the previous quarter
• Customers: 887,000, up from 827,000 in the previous quarter
• Gross Margin (GAAP): 49%, up from 43.1% in the same quarter last year

“I’m pleased to report standout third quarter results with both revenue and loss per share surpassing the high end of guidance. Total revenue for the quarter grew to $40.6 million, fueled by strong uptake from enterprises and SMBs. Subscription revenue jumped 20% year-over-year, to a record $22.9 million, underscoring the growing trust in our platform to boost productivity and cut operational costs,” 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.

Design SoftwareThe 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 GrowthAs you can see below, Matterport's revenue growth has been strong over the last two years, growing from $27.7 million in Q3 FY2021 to $40.6 million this quarter.

Matterport's quarterly revenue was only up 7% year on year, which might disappoint some shareholders. Additionally, its growth did slow down compared to last quarter as the company's revenue increased by just $1.1 million in Q3 compared to $1.6 million in Q2 2023. While we'd like to see revenue increase by a greater amount each quarter, a one-off fluctuation is usually not concerning.

Next quarter, Matterport is guiding for a 2.8% year-on-year revenue decline to $40 million, a further deceleration from the 51.9% year-on-year decrease it recorded in the same quarter last year. Looking ahead, analysts covering the company were expecting sales to grow 7.9% over the next 12 months before the earnings results announcement.

Customer Growth Matterport reported 887,000 customers at the end of the quarter, an increase of 60,000 from the previous quarter. That's roughly the same customer growth as we observed last quarter and quite a bit above what we've typically seen over the last year, confirming that the company is sustaining a good sales pace.

Key Takeaways from Matterport's Q3 ResultsAlthough Matterport, which has a market capitalization of $662.7 million, has been burning cash over the last 12 months, its more than $407.8 million in cash on hand gives it the flexibility to continue prioritizing growth over profitability.

It was good to see Matterport beat analysts' revenue expectations this quarter. We were also glad its full-year revenue guidance came in higher than Wall Street's estimates. On the other hand, its revenue guidance for next quarter underwhelmed. Overall, this was a mixed quarter for Matterport. The stock is up 4.2% after reporting and currently trades at $2.22 per share.

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