Why Matterport Stock Was Surging Today
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Shares of Matterport (MTTR 22.41%) were moving higher Tuesday after the spatial data technology company posted better-than-expected results in its third-quarter report and raised its guidance for the full year.
As of 2:45 p.m. ET, the stock was up by 22.6%.
Image source: Getty Images.
Matterport has good news
Matterport, which may be best known for its “digital twins” — virtual digital copies of physical spaces that are highly useful in real estate and other industries — said that its subscription revenue was up 20% to $22.9 million. That drove total revenue up 7% to $40.6 million, which beat the consensus estimate of $39.1 million.
Total subscribers rose 35% year over year to 887,000, and spaces under management rose 28% to 11.1 million, both signs its product is rapidly gaining adoption.
The company also gained traction further down the income statement as gross margin improved by 800 basis points to 49% thanks to growth in subscriptions and improvements in product costs. On the bottom line, the company reported an adjusted loss of $0.04 per share, better than its loss of $0.09 per share in the year-ago quarter and better than the analysts’ consensus for a loss of $0.06 per share.
“As our business continues to grow we are succeeding in generating economies of scale that drive steady improvements in our bottom line, as reflected in our strong earnings beat this quarter,” said CEO RJ Pittman.
What’s next for the spatial tech company
Matterport is still unprofitable and burning cash, and its fourth-quarter guidance was mixed. It expects subscription revenue growth of 19% to 21% to between $23 million and $23.3 million, and anticipates overall revenue of $39 million to $41 million, which would be down 3% year over year at the midpoint. It also called for an adjusted loss of $0.03 per share to $0.05 per share.
It’s hard to get excited about a company that’s losing money and forecasting declining revenue, but Matterport’s gains Tuesday seem to reflect that the stock had already fallen more than 90% from its peak, meaning it’s cheap relative to earlier expectations. Additionally, there was a broader surge in software stocks Tuesday after a strong report by Datadog.
While Matterport’s technology seems to hold promise, the company will need to generate faster growth than this in order to drive a real rebound for the stock.
Jeremy Bowman has no position in any of the stocks mentioned. The Motley Fool has positions in and recommends Datadog and Matterport. The Motley Fool has a disclosure policy.
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