Matterport Earnings: what to watch on February 16?

Matterport (NASDAQ: MTTR) is expected to report its fourth quarter and full year 2021 results after market close on Wednesday, February 16. A conference call with analysts is scheduled for 5 p.m. ET the same day.

The spatial data company went public in July 2021 through a special purpose acquisition company (SPAC). Its technology allows users to create 3D digital replicas – or “digital twins” – of physical spaces. Many investors are optimistic about the company’s potential to profit from the booming metaverse.

Since its IPO, Matterport stock is down 41% through February 10. S&P500 the index returned nearly 4%, and the Nasdaq Compound the index lost just over 3% over this period.

The stock has been volatile. After going public, it shot up 128% until November 29, 2021, when it hit its all-time closing high. Since then, it has fallen 72%, as of February 10.

Arguably, investors have driven stocks too high, too fast. So some fall back to Earth was not surprising. The magnitude of the decline increased due, in large part, to market momentum. Over the past few months, highly valued tech growth stocks have taken a big hit. Some investors have dumped these interest-sensitive stocks because the Federal Reserve is about to start raising rates soon.

Long-term oriented investors should not pay much attention to market dynamics.

Here’s what to watch for in Matterport’s Q4 report.

Image source: Getty Images.

Matterport’s key quarterly figures

Matterport was not a publicly traded company a year ago, so figures for that period cannot be presented in this table, as is customary. The figures for the last quarter are therefore used.

Metric

Q3 2021 result

Wall Street consensus estimate for the fourth quarter of 2021 Wall Street Projections Sequential Change

Income

$27.7 million

$25.1 million

(9.4%)

Adjusted earnings per share (EPS)

($0.06) ($0.09) N/A. Adjusted loss per share is expected to increase by 50%.

Data sources: Matterport and Yahoo! Finance.

Wall Street expects Matterport’s fourth-quarter revenue to decline somewhat from the third quarter. Such a drop would not necessarily be worrying. It’s common for many companies – even non-retailers – to have some seasonality in their results, with the fourth quarter often being stronger than the third.

In some context, in the third quarter, the company’s revenue rose 10% to $27.7 million. That result missed the analyst consensus estimate of $29.1 million. However, the only reason for the failure was that pandemic-related supply constraints – which plague most businesses – prevented Matterport from fully meeting demand.

Adjusted for one-time items, loss per share for the third quarter was $0.06, compared to earnings per share of $0.01 in the same period a year ago. This result was slightly better than the $0.07 per share loss that Wall Street expected.

Focus on growing subscription revenue

Investors should be more concerned with the growth of subscription revenue than total revenue. Matterport has transitioned its business model to a subscription-driven model. This transition is positive for investors because subscription-based businesses generate recurring revenue and have high profit margin potential.

In the third quarter, subscription revenue increased 36% year-over-year to $15.7 million, representing 57% of Matterport’s total revenue. Total subscribers jumped 116% year-over-year to 439,000, and paid subscribers jumped 35% to 53,000.

Investors will also want to keep an eye on Matterport’s net dollar expansion rate, which is a measure of customer satisfaction. Last quarter, this metric was 114%, meaning existing subscribers increased their spending with the company by an average of 14% over the prior year period.

Advice

It remains to be seen whether management will provide guidance for the first quarter of 2022, the full year 2022, or both. Since the company is new to the public markets, it doesn’t have much of a track record when it comes to guidance. Since its IPO, management has provided a yearly outlook for revenue and adjusted EPS.

That said, investors should know what Wall Street expects for the first quarter and full year 2022. The stock is likely to move in a significantly different outlook than analysts are predicting.

For the first quarter of 2022, Wall Street forecasts an adjusted loss of $0.07 per share on revenue of $31.9 million. And for 2022, analysts expect an adjusted loss of $0.23 per share on revenue of $160.4 million.

This article represents the opinion of the author, who may disagree with the “official” recommendation position of a high-end consulting service Motley Fool. We are heterogeneous! Challenging an investing thesis — even one of our own — helps us all think critically about investing and make decisions that help us become smarter, happier, and wealthier.

Floyd N. Morlan