1 tech stock that could make a huge difference in your wallet
Physical property is one of the least disrupted industries in an increasingly digital world. However, a tech company Matterport (NASDAQ: MTTR) transforms physical property into 3D spaces, unlocking various new ways companies can use properties. Matterport could be a game-changer for investors. Here are three important reasons why.
1. Turn buildings into data
Savills World Research estimates the total value of buildings worldwide could reach $ 230 trillion; most are “offline” because these buildings were built years before the Internet. These buildings are isolated from the digital world and can only be seen in photographic images and “plans”, documents that map the dimensions and characteristics of a space.
Matterport brings buildings into the digital world. Using a combination of special cameras and its smartphone app to record physical spaces, Matterport’s patented software then converts them into 3D models that can be viewed, measured, and interacted with.
Matterport was founded in 2011, but only went public last month via a PSPC. To date, the company has captured 4.9 million spaces, totaling 15 billion square feet. Management estimates this to be 100 times more than its closest competitor, giving Matterport a significant first-mover advantage.
2. Matterport has many uses
The massive global supply of buildings translates into an addressable market that management estimates at $ 240 billion. Matterport’s upside potential will be determined by its ability to capture this market.
Digitization of property opens up a variety of uses for Matterport customers. Existing customers are using technology to give consumers digital access to properties. Potential buyers can view the digital versions of the homes at Red tuna, and tenants can preview properties before booking them on Airbnb. Insurance companies can document real estate claims better than photos. Retailers are even starting to use Matterport to build virtual representations of their stores, where online shoppers can browse and buy from 3D storefronts.
Matterport has collected over 3 billion data points to date, and management hopes to start using that data to deliver data-driven insights to its customers. This can include measuring dimensions inside buildings, breaking down trends, or simply answering customer questions. Imagine wanting to replace windows in a commercial building and being able to determine measurements without setting foot in place!
From maintenance to real estate to retail, businesses can use digital spaces in a number of ways. The many buildings around the world and the potential applications of this technology could lead to years of potential growth opportunities for Matterport.
3. Fuel many years of growth to come
Matterport sells camera equipment to capture spaces and offers its technology on a subscription model. Revenue in 2020 was $ 86 million, of which 38% was hardware sales. The company’s subscriptions have higher gross margins than its product sales, and management expects subscription revenues to exceed hardware sales over time, increasing Matterport’s overall profitability. The company is currently unprofitable, however, having lost $ 11.6 million operating in 2020.
Matterport’s business is positioned to grow revenues for the foreseeable future through the multiple ways the business grows. For example, he released a smartphone application in 2020, which made it much easier to get started on the platform.
It offers a “freemium” model, where users can try Matterport for free before becoming paying customers to unlock the full platform. Business customers who have gone from free to paid subscribers include Shopify, Starbucks, Hermes Paris and Andersen Windows & Doors. Management revealed that 13% of Fortune 1000s are currently using the free model.
Its subscriber growth was up six-fold in the first quarter of 2021 compared to 2020, increasing total revenue by 108% to $ 26.9 million year-on-year. Management expects revenue for the year 2021 to increase 43% from 2020 to $ 123 million. The increase in subscribers could indicate strong revenue growth over the next few years, as customers spend 29% more after subscribing to Matterport’s platform.
Is Matterport a buy today?
Matterport is newly listed and still has a market capitalization of just under $ 4 billion, offering investors long-term potential if the business can grow successfully. Matterport trades at a price-to-sell ratio of 30 using estimated revenue for 2021, a P / S ratio similar to other high growth software stocks. Shareholders will want to ensure subscription growth continues and Matterport successfully converts freemium users into paying customers.
With such a large addressable market, its distinct first-mover advantage, and little competition, Matterport is a company that could grow in value, rewarding patient investors over time.
This article represents the opinion of the author, who may disagree with the “official” recommendation position of a premium Motley Fool consulting service. We are heterogeneous! Questioning an investment thesis – even one of our own – helps us all to think critically about investing and make decisions that help us become smarter, happier, and richer.