Q3 2021 Matterport Inc Earnings Call
Okay.
Thank you for standing by and welcome to the Mad afford Inc's fiscal 'twenty 'twenty. One Q3 earnings conference call. At this time all participants are in listen only mode. After the speaker's presentation there'll be a question and answer session to ask a question at that time. Please press Star then one when you touch tone telephone.
As a reminder, today's conference call is being recorded.
I would now like turn the conference over to your host Mr. <unk>, Kim Vice President of Investor Relations. Please go ahead.
Thank you before we begin I'd to remind you that today's call contains forward looking statements within the meaning of federal securities laws, including but not limited to statements regarding matter approach future financial results and management's expectations and plans for the business.
These forward looking statements are subject to numerous risks and uncertainties that may cause actual results to differ materially from those discussed in today's call additional information regarding the risks and uncertainties that could cause actual results to differ from forward looking statements can be found in our filings with the SEC any forward looking statements made on this call speak only as of today and that a prestigious new obligation.
To update or revise them, whether as a result of new developments or otherwise except as required by law.
In addition, todays call may include discussion of non-GAAP financial measures. These measures should be considered as a supplement to and not a substitute for GAAP financial measures reconciliation of each of these non-GAAP financial measures. The most directly comparable GAAP measures can be found in today's earnings deck, which is available on the company's website hosting todays call are RJ Pittman chairman and chief.
<unk> office for a matter of Port and J D Fay Chief Financial Officer.
Now I'd like to turn it over to RJ to begin.
Thanks, Joanne and good afternoon, everyone and thank you for joining us today I'm excited to share our third quarter financial results with you. This is the second earnings call as a public company and we had another strong quarter delivering on our products strategy and results are.
Our subscriber base more than doubled to over 439000 subscribers and we delivered over $15 million in subscription revenue up 36% from one year ago.
Further increasing its percentage of the revenue mix with total revenue for the quarter of $27 $7 million.
This includes an all time monthly shipment record for our <unk> camera for the month of September.
I would like to talk about four key initiatives that we have recently brought to market.
Matter port for Android.
Our entry into the public sector.
Didn't file for the ADC category.
And an update on our partnership with Facebook now meta.
Before handing over the call to J D to discuss our financial results for the quarter in more detail.
Let's start with Android and our capture ubiquity strategy, we've had tremendous success with our breakthrough pro two camera selling over $100 million of hardware in the first 10 years of our history.
We also knew that pro two would be just one of the many ways in which we would capture the built world digitally over.
Over the past three years, we've opened up our capture ecosystem to a number of third party cameras, including the high precision like a BLK lidar camera.
Followed by support for low cost highly portable 360 cameras.
It was at this point that matter port unveiled scalable true <unk> capture from standard digital photography.
This breakthrough was powered by cortex, our artificial intelligence engine that can accurately predict <unk> geometry of any space because it was trained on the accurate <unk> data captured over the years with pro two.
In 2020, we took cortex, even further training the AI to accurately predict three D building geometry from flat photos taken from an iPhone.
The early beta product was well received attracting more subscribers to our platform in three days than in the first eight years of the company.
To say that matter port for iPhone has been an important part of our SaaS subscriber growth strategy would be an understatement.
As we approach a half a million dollars matter port subscribers today.
It's hard to imagine we had just over 13000 subscribers on the platform at the start of 2019.
Making the first matter port space free for our new customers is very important to our business.
This compelling offer removes any friction from getting started and becoming successful with their first digital twin of any space.
Home office or hotel.
All from just the smart phone in their pocket just download and co.
Later in 2020 matter for exited beta with another groundbreaking announcement.
Full support for iphones and ipads with Apple's new Lidar sensor added to the device's camera system.
Now reports partnership with Apple has continued to flourish.
<unk>, our technical input on Lidar software controls ensuring matter ports seamless integration on these new devices, while also creating solutions for Apple's global enterprise customer base.
The result, a matter part plus high precision enterprise ready Lidar capture solution that fits in your pocket.
It is simply game changing.
Now during that same period matter port recognized that our big ambitions for smartphone capture would only be partially fulfilled without Android, which represents nearly 75% of active smartphones in the world today.
And with companies like Samsung Xiaomi, and Google shifting more than 1 billion, new Android phones every year.
Potential is massive.
I'm happy to confirm that we have delivered on that commitment with the full release of matter port for Android in the Google play store on October 28 for 175 countries around the world, enabling both existing and new customers to experience matter port using just the Android phone in their pocket.
Together matter port for Android and matter Port for iPhone provide a three D capture solution for the vast majority of the world's digital citizens and we call it matter port for mobile and as always your first full featured matter pork for mobile digital twin is free.
From here forward, we will be rolling matter port for mobile across all of our key vertical markets and geographies, starting with travel and hospitality.
<unk> residential real estate and the enterprise this highly portable all in one solution makes <unk> capture more convenient than ever for homeowners hospitality house facilities managers alike.
Here's a quick take of matter port for mobiles powerful value proposition in each of these global markets.
For travel and hospitality property owners want to maintain promote and feel confident managing multiple properties online with these.
For insurance building owners can quickly document a home assets warranties upgrades personal property and even keep active records of how the property its contents and condition have changed over the years.
They can also easily capture a matter port model on a loss to quickly document things such as subrogation insurance fraud sub bids approval questions and resolution disputes.
For residential real estate property owners and agents can easily and freely start capturing properties with no special camera required, allowing them to quickly at <unk> tours to improve their online engagement and visit or conversions.
For enterprise.
Large companies and facilities managers gain the ability to enlist teams of people to head out and accurately capture many buildings and spaces at the same time, each using the smartphone in their pocket.
This is just a sampling of the enormous opportunity that matter port for mobile bring to our capture ubiquity strategy in the years to come.
Next I would like to explain our entry into the public sector.
Standing matter port into this important and meaningful part of the build world.
The market opportunity for digitizing the public sector is substantial.
Spanning federal state and local government agencies.
The segments include education law enforcement military infrastructure and health care.
Building assets infrastructure and other physical spaces within the U S. Federal government alone exceeds $260 billion in value. According to a study done by the Obama administration in 2017.
Representing hundreds of thousands of buildings and spaces.
Infrastructure budgets that are measured in the trillions of dollars in the U S alone.
The appeal of this enormous market opportunity stems from our established offerings across the property lifecycle, including construction facilities management insurance and remote access training and inspection of facilities from anywhere in the world.
Matter of ports decade of experience is a distinct advantage to the sector that will provide government agencies and departments of jumpstart that would otherwise take years to develop and deploy with more expensive and complex solutions.
We are going to market with two strong partners first we recently announced a strategic partnership with inkjet sell or IQ Chi.
For more than 20 years, the intelligence and National Security community have relied on the ITT to anticipate its technology questions needs and achieve solutions.
We are thrilled that IQ T is advocating for and representing matter for it to secure federal agencies in a way that will help. These government organizations stay ahead of the technology curve and ensure the national security of the U S and its allies.
Second our long standing partnership with Amazon's AWS Division expands with the launch of AWS Gov cloud.
This will be the platform, where we deploy and manage our first fed ramp compliance offering as we work together with AWS as a new member of the AWS public sector partner program.
Upon formally entering the public sector in Q3, the demand was immediate.
We have signed a number of customers with compelling use cases, including a large public school district in the United States to capture an initial footprint of 60 schools for first responder coordination situational awareness and space planning and facilities management longer term.
In the event of an incident or crisis. The police departments fire departments will now have detailed knowledge of the building layout ingress egress and where the critical infrastructure is located from a remote location and long before entering the building.
Now moving on to the category of architecture engineering, and construction or AUC.
I'd like to introduce our next big product for this industry the matter port them file.
Building information modeling or Bim is a process for creating and managing information on a construction or design project across the project lifecycle.
<unk> brings together all of the information about every component of a building into one place.
Creating a digital bim enables those who interact with the building to optimize their actions, resulting in a greater hole light value for the asset user.
Using software such as Autodesk Revit professionals can create models for conceptual design visualization analysis and construction.
Building information models are not limited to just the dimensions and geometry aspects of the building.
Project stakeholders can include information about behavior performance materials types cost and more within the Bim model them.
Bim objects contained whatever information designers input in the system.
Until now it does require a considerable amount of measurements and CAD translation labor to put all the data into the system to realize the full benefits of them.
The process can take several weeks or longer depending on the size and complexity of the project.
Today, we are speeding this process up dramatically with the launch of the matter port been file add on service available to every matter port digital twin on the platform today.
Our customers can quickly transform a matter port digital twin into a ready to use Autodesk bim file at the click of a button.
Receiving the final output in days versus weeks or months and most importantly delivered at a fraction of the cost.
Architects designers and building engineers can now accurately reflect the current state of any building and its contents in pad faster easier and more cost effectively than ever before.
As with all of our new vertical market applications, we don't beta test in small corners of the industry. We have been working with Autodesk on the technology and the early deployments are with some of the biggest and most recognized firms in the industry, including the legendary firm era and Angus.
Together, we are delivering the fastest and most convenient pack from matter port reality capture to them and just days from the click of a button.
This is at the center of the global construction industry today. It is equivalent to the PDF documents standard for any design build project in the modern age.
Matter ports Didnt file add on offers breakthrough scans have been performance for any building project large or small enabling matter for it to accelerate the creation of the built world.
In both physical and digital forms simultaneously.
Our spatial data platform continues to unlock enormous opportunities for the company.
At the end of Q2, we announced a collaboration with Facebook AI research now meta through which we made the largest ever dataset of three D indoor spaces available for academic research across the fields of robotics and autonomy to train AI systems to function in both the physical <unk>.
And virtual worlds.
The program is off to a fast start exceeding all expectations with hundreds of high quality institutions and research groups qualifying for the program and beginning their work.
<unk> Cornell University and Carnegie Mellon to name just two.
Matter of Port and met a recognized years ago that our digital twins of the built world and powerful spatial data hold a unique potential to transform the ways in which we work live and play this was foundational to the partnership and looking ahead potentially very relevant to the development of.
Meta versus.
Matter port for mobile.
File the spatial data partnership with meta and our public sector initiative are four significant examples of how matter part is delivering on our platform first strategy to accelerate the digitization of the built world across industries Q.
Q3 was another proof point with clear signals of industry by key customer wins and breakthrough product launches.
We have more exciting launches coming and I look forward to sharing them with all of our investors in the coming quarters.
I will now turn it over to J D, who will discuss our financial performance for the third quarter and the continued strength of our business model.
Thank you RJ I am delighted to report that our Q3 was another solid quarter for matter port delivering record third quarter revenue of <unk>.
$97 $7 million up 10%.
From Q3 last year.
Which is on top of one of the company's all time best quarters last year.
In addition, we are reporting continued growth in our annual recurring revenue metric to a record $62 $7 million a quarter end.
We continue to make significant progress on our mission to transform the world's buildings and spaces into data through Digitization and data application.
Our offerings continue to resonate with customers in our target segments.
Evidenced by our growth in total subscribers year over year.
We had another stellar quarter of customer acquisition, increasing our subscribers 116%.
Q4 hundred 39000 in Q3.
We had strong growth in both free and paid categories. Our free subscribers grew 136% to 385000.
While our paid subscribers increased 35% to 54000.
I will now discuss our Q3 financial results in more detail.
This discussion includes some non-GAAP financial measures and.
And we have included tables that provide reconciliations between non-GAAP and GAAP financial measures in the quarterly presentation available on our website.
Revenue.
Was led by continued growth in subscription revenue.
License revenue was as expected and product sales came in below expectations, given the environment, which we will discuss a bit later.
The majority of our revenue is comprised of recurring subscription revenue.
Subscription revenue was up 36% from a year ago to $15 7 million.
Subscription revenue as a percent of total revenue continues to grow and was 57% of total revenue in the third quarter compared to 46% in the year ago period.
Subscriptions are core to our growth strategy and we use the other revenue lines.
Services and license.
To continue to build subscription revenue over time.
The growth of subscription revenue also naturally results in more of our revenue becoming recurring with.
With high gross margin.
Our subscribers are also increasing their spend with us at a healthy rate.
Our net dollar expansion rate was 114% in Q3.
While this growth rate does not match the record high we saw in Q2.
I have said in prior calls that our historical growth rate for this metric is around 110% and I am pleased that Q3 was comfortably.
Above our historical trend.
I mentioned in the past that our net dollar expansion rate can be driven by our enterprise customers, where we still have relatively low penetration and we had another successful quarter moving enterprise customers upward to higher plans.
As they grew their use of matter of port.
License revenue was zero point $1 million compared to $3 million last year.
I noted on our last earnings call license revenue can be very lumpy from quarter to quarter, depending on the timing of completed transactions and any associated implementation work that we must perform to recognize revenue.
Services revenue for the third quarter was $3 3 million up 41% year on year.
We provide a variety of services, including in App purchases and capture services.
In App purchases provide our customers additional digital assets for their spaces.
Such a schematic floor plans or scanned beam files that RJ discussed earlier.
Capture services, as an offering by which enterprise customers hire us to subcontract the capture of their spaces and high volume, enabling them to get onto our platform more quickly and at scale.
We offer capture services around the world by leveraging our large network of service partners.
We also briskly expanded our footprint and availability of a new service capture services on demand.
Now covering 80 cities in the U S and another four internationally in the UK.
Our product revenue was $8 $6 million up 4% year on year.
We saw strong demand in the quarter and were building momentum shipping at a record pace.
Towards the end of the quarter. However, we started to experience impacts from the global supply chain constraints.
We sold out of high demand stock at the end of the quarter as a result.
Without this factor we believe that we could have shipped up to an additional 15% of products in the third quarter.
Moving onto gross margin our total non-GAAP gross margin for the third quarter was 55%.
We increased gross margin for both subscription and services.
While we had minimal margin contribution from license revenue in the third quarter.
Our subscription gross margin was 77% up 240 basis points from a year ago.
I am pleased with the continued growth in subscription margin.
It was above our expectations.
As we have noted before we expect subscription gross margin to vary by 100 to 200 basis points.
From quarter to quarter as we invest in additional research and development activities.
Product gross margin was 23% as compared to 37% a year ago as we continue to use our <unk> camera as an on ramp for subscriptions.
As such we routinely experiment with competitive plans and promotions to drive adoption.
In the third quarter, we started bundling accessories for the first time.
And launched promotions to share these offerings with our target audience.
Accordingly, our product margin was lower than in earlier quarters, this year, but consistent with our growth plans.
Additionally towards the end of the quarter, we began expediting materials, where possible to meet customer demand.
Which also increased our product cost of goods sold.
Reviewing non-GAAP operating expenses in Q3 research and development expenses were $7 8 million up from $3 7 million in the prior year period.
The growth in spending as planned and is primarily attributable to investments in head count to increase our product development capabilities and throughput.
SG&A expenses were $21 million as compared to $9 5 million a year ago.
We continue to invest in sales and marketing initiatives to drive further growth.
We have also added capabilities in our G&A organization as we transitioned to being a public company in the quarter.
Operating loss was $13 6 million in the third quarter and as expected.
Impaired to an operating profit of $1 9 million in a year ago period.
During the early days of the pandemic in 2020.
We right sized our cost structure too.
To drive towards profitability prioritizing that objective over revenue growth at the time.
Now that we have strengthened our balance sheet considerably as a public company.
And as Covid initial impact on the World economy has stabilized we had planned to invest to drive rapid growth in light of the market opportunity in front of us.
Non-GAAP net loss was $14 million and diluted non-GAAP loss per share was six cents for the quarter as expected.
Using a weighted average share count of roughly 226 million shares.
Moving onto our balance sheet, we ended the quarter with over $614 million in cash and investments.
Having a strong balance sheet will give us tremendous flexibility to accelerate our growth both organically and inorganically over time.
Turning to our outlook.
We believe the long term opportunity in end market demand for matter port remain intact.
And our pace of product innovation further elevate our competitive moat.
Notwithstanding our momentum we know that the technology industry is facing supply chain bottlenecks and a tight labor market.
We're taking a cautious view of those factors and updating our annual guidance accordingly.
We expect full year 2021 total revenue.
To be in the range of $107 million to $110 million.
While this range is lower than our previous expectations of $120 million to $126 million for total revenue in 2021.
We are continuing on our growth trajectory.
That's 2021 is expected to be up from 2020 revenue of $86 million.
And up from 2019 revenue of $46 million.
Yeah.
I will next describing revenue line in more detail to provide additional context.
While we have been successful hiring key talent during the quarter. It has been difficult to hire all the personnel, we need as quickly as desired to meet our goals.
We ended the quarter with 401 employees, bringing on 75, new colleagues during the quarter.
We are adding talent across the board in technology sales marketing et cetera to help achieve our plans.
Expanding our workforce is crucial to achieving new levels of capacity and productivity.
We are somewhat behind our head count plans, but we believe we can recruit.
We continue to leverage our raised profile as a public company.
Okay.
Moving to license revenue, we expect the Q4 license revenue to be consistent with Q3, which is under $100000.
As we discussed previously.
Our license revenue can be lumpy.
As of our Q2 earnings call, we expected a license transaction that was signed in the past to move to license revenue during Q4.
We have been able to move this project forward very positively and we expect that it will be recognized in the fourth quarter. However, it will move directly into the subscription phase.
We are pleased with this development because it meets our long term objectives with license transactions, which is to offer solutions on a subscription basis, rather than on a one time license fee basis.
Thus the transaction, we expect to recognize this revenue in the fourth quarter would be recognized not as a one time larger license revenue item, but recognized as recurring subscription revenue over the next several quarters.
Last week's announcement of matter port for modal, which includes a matter of port capture for Android.
We are optimistic that we will generate significant subscriber growth.
Which can lead to further subscription revenue growth.
Given the launch was just last week. It is premature for us to forecast revenue growth in the fourth quarter from this new offering and market expansion.
Finally, as we sit here today, we expect the current environment affecting technology companies to continue for some time into 2022.
We will have a further update on 2022 and our next quarter conference call.
And given that we do not see any change in the end market demand for our products and services as the economy returns to a more normalized state we would expect to grow our annual total revenue around the 50% range.
Moving to earnings per share we are narrowing the range to a 21 to 25 cent non-GAAP loss per share for the full year.
From our previous range of 17 to 25 cents.
While our investment level is restrained compared to our original plans. We have also included in our EPS guidance expectations for a one time litigation expense.
That we expect to incur in the fourth quarter, and which we had not included in last quarter's guidance.
Our expectations assume assure count of approximately 202 million shares based on an estimate of weighted average shares.
Sure Count could change based on future weren't in stock option exercise activity.
Please refer to our investor presentation on our website for more information about the share count.
[noise] and some we remain very excited about our market opportunity demand is there and we believe we can navigate successfully through the economic turbulence.
I am confident in our team's ability to execute in fact this team has successfully navigated other challenges in the past.
Therefore, we expect to make steady progress towards our longterm objective.
Which is to digitize and data Fi the entire Bill World.
Now I would like to turn the call back over to RJ.
Thank you J D. In summary, I couldn't be more proud of our team and the innovation, we are delivering to our customers every day.
We are further cementing our already strong leadership position and we see significant potential for growth ahead.
I am very bullish on our strategy in outlook it as a matter of timing sequencing and navigating the waters ahead towards massive adoption.
We are successfully managing the macro effects currently impacting the tech industry at large and we are continuing to stay nimble adapting quickly to minimize turbulence in the short term.
Our vision strategy and longterm plans remain as ambitious as ever.
And we believe we are well on track to lead the industry over the next decade.
As we've said before our growth opportunity ahead will be measured in years and decades to be captured through our proprietary technology platform.
Thoughtful execution and bold leadership.
Operator, we are now ready for questions.
Thank you again, if you'd like to ask a question. Please press Star then one when you get that sounds telephone against ask a question. Please that starred in one.
Our first question constant Dan add the lepers Eli is okay.
Yeah. Thanks.
Can you talk about just scaling up more enterprise wide meals. I mean, obviously you have more success on a on a large large areas, but especially when we're talking about real estate and some of the other verticals could you just talk about from a pipeline perspective, and just directionally, how you see that trend in where it is today.
Sure are happy too.
Thanks, Dan as.
As I've said before.
The fastest growing and most exciting segment of the business that matter Port is the enterprise and that absolutely continues to be the case through two three and we'll continue well through Q forward into into 22.
And there was a couple of reasons for that one is these enterprises represents very large footprints multiple buildings hundreds even thousands of buildings.
And millions and millions of square footage of physical space to digitize right.
And it it it provides a very efficient mechanism for us through a winning a large enterprise account to have long term revs.
Revenues subscription revenue upside from there.
And you mentioned, specifically, how we look at that from a residential real estate point of view, what we've been doing over the course of the last couple of years.
Is migrating from matter ports.
Solution being deployed through.
M B small office real estate brokerages in offices into enterprise deals themselves right you've seen.
The various announcements our global partnership with J O L N Cushman and Wakefield on the commercial side, we have similar enterprise engagements now with Compass and Keller Williams and many others, where we are now working with much larger portfolios of residential.
Real estate up once.
And we are building matter ports offering into the service offerings of the brokerages. So that it becomes a much more seamless components of every listing in residential real estate.
Continue.
Expand our partnership with Redfin, and Costar in apartments, Dot com and others.
Where there is enormous traffic from real estate shoppers out there.
That is putting matter pork front and center.
In front of all of that traffic.
And and and just a bit of a fall when when you think about partnerships like Facebook or murder.
Is that something we should expect more and more of in terms of those types of partnerships, especially knows we're starting to see <unk>.
More and more of a focus from tech companies, especially moving to <unk>.
Well you know what matter of ports been doing for the past 10 years is reality capture right that is creating a dimensionally accurate.
Photo realistic digital twin of any physical space and creating a virtual instantiation of that in fact, we got the largest spatial library spatial data library of digital twins in the world.
And if.
If you think about.
Technology partnerships like that with Facebook. This is a very important engagement for us.
For the advancement of AI and data science for autonomous agent, both physical robots and virtual agents in virtual assistance critical foundational work that today can't happen safely or scientifically enough in the.
Physical world they need these virtual environments.
To advance.
Those capabilities and it's critical and you no matter porch.
Is very keen to see these advancements that these groups make.
Using our high fidelity precision digital twins.
And the implications of that become great value add we start to get insights and intelligence about how to in our operate in both the physical world, but also inside these digital twins and let's remember that.
Every matter for digital twin on our platform.
Is VR ready and they happen to look great. They are quite immersive inside and oculus headset or really any b R. Headset for that matter and we've known this for years right our platform.
Is providing a proliferation of VR ready content.
From matter of towards millions of <unk> digital twins, including museums historic landmarks stunning properties and destinations all over the world.
It's easy to see how it platform like ours could be very interesting very relevant in the future of all of these virtual platforms that are getting created including the matters.
Thank God.
Thank you. Our next question comes from John will also credit Suisse in line is okay.
Hi, good afternoon.
Good afternoon.
Yes, great So I guess.
The first question, it's kind of around.
The expectations of the Android launch, obviously, you're gonna be covering a big installed base.
For modeling purposes should we think the slope look similar to the iPhone <unk> deployment, just on a potentially higher number of devices or how would you kind of help us think about that slope.
Sure Let me, let me take you through a couple of things.
They are not exactly the same for it it's not quite an apples to apples comparison and the slope will be different.
First and foremost yesterday opportunity with Android is enormous it's 75% of the global smartphone installed base right.
So first of all it's a it's a massive footprint and it's especially.
Well penetrated internationally and for our expansion markets that we're focused on.
The benefits that Android gets is more than two years of R&D on smartphone capture that we worked on with Apple an iPhone that we're able to bring to the first version of matter of court for Android. So it is a much stronger.
Anger and more mature product for a one dato than we've ever put out before.
And as a result of that we're also bringing it in first two are more mature markets, so rather than abroad umbrella launch.
To everybody and anyone.
We are focusing on bringing it out in a more methodical method across each of our key vertical markets, starting with travel and hospitality and then moving to <unk> residential real estate and insurance and the enterprise and and so you're gonna see a sequence of events and sub launches.
That follow it this across two four and well.
Well across all across 22 in fact in a rolling Thunder fashion.
And we believe that the combination of this.
With increased marketing and go to market for all of our matter of pork for mobile that includes iPhone as well the powerful capabilities of iPhone plus lidar.
Are going to be not only are best.
Mobile offering yet by far and away, but we think it also has the greatest growth potential for the future.
Great and then maybe as a as a second question. When we look at your R&D increase can you talk about where some of that spending is focused on and I'd love to get an answer in the context of.
Of you benefit from a lot of the camera and device R&D that Apple and the Android device manufacturers are obviously doing to improve their own hardware. So just curious within the context of that how you think about your R&D priorities and what are some of the project.
Your funding.
Sure.
First off that piece or capture ubiquity strategy that moved us from being exclusively bill.
Built around our own pro two camera, which still.
For many of our markets enterprise mid market SMB. It is an absolute workhorse.
And very critical to the strategy, but if.
If we want to dramatically increase our rate of digitizing the built world things like smartphone capture in third party devices are very important and.
Benefiting from the R&D investments much.
Much bigger technology platforms, like Google and Samsung an Apple.
Is hugely beneficial to us that enables us to shift more of our focus onto the platform no matter of port spatial data platform really represents the future of the company. We are building and deploying enterprise grade add ons and capabilities for all of our vertical markets that are <unk>.
Mattingly accelerating our penetration and its success in construction like we've talked about bin file.
And the insurance category with true plan, and you know high fidelity insurance Documentations and claim processing, what kind of changing the game.
After the capture with all of the value added technologies and capabilities that we're bringing to the matter port spatial data platform.
With much much more to come there you've heard me talk a lot about the two phases of matter Port phase one being the digitization of the built world and then phase two what do we do with all of the data once we have it right and what we are providing for our customers. When we call. The data application of the built world or on locking all kinds of.
Digital building insights and analytics that can push the capabilities of their property and asset management much much further and achieve much greater ROI in value increase using just the digital twin right and so.
This is a very intentional part of the strategy that we embarked on a few years ago that allowed us to put you know the center of our R&D on the data side of the house.
Thank you pass it along.
Thank you.
Our next question comes from <unk> Bright one type of family in line is okay.
Good afternoon, and thanks for taking my question here handful of questions, maybe I'll start with J D and finish with with our J a G. D. You talked about some supply constraints impacting you know late in September. Thank you frame that is 15% little over a million dollars a product.
Revenue should we think about that as the the monthly run rate drag on product and should think more like a 3 million dollar potential drag on product and in Q4 is that the right thinking and then also could you address timing when would you think you could start to get more of a supply ballet.
<unk> could that also impact next year or do you think you could get this supply chain constraints kind of fixed sooner than that thanks.
Yeah.
Yeah. Thanks bread, so from the perspective of the constraints themselves.
I did and I think I would just say this is a bit earlier I think it will continue into into next year, it's a little bit unclear how long it will take for those to be for those to subside for us in particular, we're obviously working pretty working pretty actively on it now working with our suppliers.
Working with the logistics channels to mitigate.
And so we'll update the group when when new events occur in our next conference call as as we mentioned from the magnitude, yes, I think that 15, one 5%.
Sort of a magnitude persist into into Q4.
And while these.
Macro events or in front of us.
Sort of pacing our ability to deploy to the demand that there I think that scale of an impact as appropriate looking forward.
Fair enough and then did you see any sort of shift in the quarter as it relates to kind of the residential versus commercial mix either on new subscribers or or pipeline can you remind us the mixed today and was there any sort of meaningful change in that mix that you saw in the.
<unk>.
Yeah.
So we like to talk about.
And customer markets in terms of our five now six key vertical markets. One of course is a big one a real estate and inside of that we have residential real estate and commercial real estate kind of the promotion use cases, you could say and then the other vertical markets.
From facilities to insurance travel hospitality and so forth.
So in terms of the mix, we often talk about real estate and all other.
Real estate in the quarter was was about two thirds of the revenue that has been consistent over the last several quarters.
And then of course, they all other is the balance.
And in terms of going forward, we actually have an increasing number of of of Ah very meaningfully size enterprise bookings.
Not just real estate, but also in the other vertical market. So I think it will be a bit dynamic in it but I think you'll see as well the other vertical markets start to grow as a percentage of the total as those larger booking start to deploy over the next several quarters.
Kind of help what color there and then I guess two quick ones for for our J, if if I if I should.
2021 has been a transitional year, obviously you completed the the merger recently here Uhm, you, obviously know doing with some supply constraints, how should we frame kind of the second half of this year is is this really a transitional year, where you're really focused on trying to drive acceleration next year.
<unk> help us just can maybe frame kind of how we should think about Q3 Q4, how should we think about the opportunities you have looking out to 2022.
That's right.
The first yes it was.
Transformational year for Mad reported in many respects with of course going public right in the middle of the year. So we didn't have the benefit of a full year.
<unk> transaction.
Use of proceeds to really fully fleet up and scale up this this business and a full four quarter period, where we're coming.
Got out of the.
The transaction in the middle of Q3, and and we are accelerating and we've been accelerating year on year.
In all of the right ways, but there's no question that 21, we have been laying the foundation and building the capacity in the organization for the next stage of growth at matter port without a doubt.
And despite some of the challenges that we're seeing out there in the market is very dynamic is very competitive for talent.
We are ferring extraordinarily well I would say amongst our peers a couple of interesting data points for you.
As we mentioned we've added over 75 people to the organization.
Which is a relatively large number when we were sub to some 300 people prior to that quarter gives you a.
A sense of the percentage of growth in the organization and of the candidates that are coming in.
Seeing over 90% acceptance rate, which is really top of the industry and it shows the strength and interest in appeal.
Matter port as a future career of choice for a very large.
Employee base that we're going after so I'm feeling very encouraged by his despite having to navigate these challenges I'd say sports ferring better than quite a lot of companies out there and in addition to building and bringing to market a number of our new commercial offerings, which you could see quite a few of them.
That came to market in Q3, and even right here at the start of Q4, there's gonna be a few more coming.
There's a lot of building that's happening in this quarter, that's setting us up for greater acceleration in 22 without question.
Great to my last question is on 22, a lot of new things here as we think about <unk> Gov cloud offering Android, you're expanding capture services and 80 cities, obviously international push [noise].
What are you. Most excited about is you think about all these things here what what are you. Most excited about as you think about the opportunity you have for for 2022.
Sure.
There's a lot to be excited about here. It matter part I think our strategy is firing on all cylinders are G. O expansion represents an enormous untapped opportunity, especially in Asia Pacific, We're really scaling up our nascent group and and footprints out of Singapore headquarters Europe or.
Also represents tremendous growth opportunity of the enterprise is I've spoke about soup.
Super thrilled with its our fastest growing segment that we're continuing to double down on.
But the thing that really excites me most is data vacation.
And we are really rounding a corner now uhm on locking tremendous value tremendous revenue add ons through the platform right and being able to tap into this spatial data.
And create a services platform after the capture as I described and we're putting an enormous amount of focus attention and resources on really bringing data vacation forward in 22, it's really where we're building a big chunk of the future of the company on the the just on <unk>.
Limited potential of data vacation and the value proposition not just from matter port, but from our third party ecosystem of Fantastic Enterprise developer partners and just enterprise companies and all of these verticals that are coming on to our platform every week.
Extend the value proposition in the offering of matter Corp. Much further with our own technologies and solutions running on top of the matter of port spatial data.
Into our top verticals, that's where I'm most excited.
How for color very clear and thank you for taking my questions.
Thank you.
Thank you.
Our next question comes from Ian Cam absolute capital market. Your line is okay.
Thank you I D and D D. Congrats on a solid cooner, especially on the using <unk> first I apologies for the background noise I'm travelling today R. J Uhm following up on the earlier question I know, it's early but what is your expectation regarding the monetization or conversion rate on the angelique capturing horses.
The iPhone uterus, no meaning to conversion rate to be paid subscribers and also if you can just give us any any studying too much to go I think we'll make up I'll be unduly.
IPhone iPhone ask downloads.
Sure.
Well it is super early days were just a couple of days into the large so I hesitate make any bold predictions were extrapolation from the actual data.
So I'm going to refrain from doing that but what I can tell you is we have.
Very strong expectations conversion on deployment.
Ms on adoption because of how large the Android market share and global footprint is and I see it being.
At least as strong and at least as important and I think potentially reaching even further than.
Matter of Port for iPhone, just given the sheer volume and distribution.
Active smartphones out there in the world on the Android platform.
The difference that I will I will caution and point out is it's not as easy to roll out to the entire installed base of Android because it's a very fragmented ecosystem. We have hundreds if not thousands of different handset manufacturers and we have a matrix of it almost as many different versions of off.
<unk> systems and layers on top of the operating systems that these vendors will put on in a proprietary fashion. So as you know with all Android developers that just adds a lot of twists and challenges to building a product that works great. On every device, having said that we've got one of the best engineering teams in mobile in the industry.
And we're making tremendous progress across the lion's share of the most important devices relevant to our capture needs. So with those pieces combined I'm very bullish on the outlook of what Android can deliver for us and it also provides.
A lower cost of ownership for our customers right for a number one they can just start using the phone in their pocket if they want a crossover to matter port historically, an Android customer would have to go out and buy an iOS device right, a phone or a or a tablets.
And and that was not an automatic purchase consideration and we'd virtually eliminated that now for really the entire.
Globe of digital citizens, so I have.
Because of that if my expectations are as high as they've ever been.
For the role the smartphone capture was going to play and like I said.
It's going to play an important role for us in some very new markets, including the enterprise.
[noise]. Thanks for that and then also R. J you made some impressive partner announcements over the past couple of quarters can you just talk about how those relationships have been banting and rain can be sorry to see some material contribution from deep high profile partnership announcement.
Yes.
Bob.
The partnerships are going very well and I think as an indication of the maturity of our enterprise platform that third party ecosystem I'm talking about it's one thing to.
Agree agree to terms and agree in principle to lock arms and go to market, but to have an actual technology solution that can deliver value immediately is what I'm. Most excited about most impressed with and and I can say for a product that we haven't even formally.
Begun marketing and advertising, which is matter of poured them file we've talked about a little bit earlier in the earnings call.
Already at revenue and has already.
One some very notable customer wins.
As a result, but it's it's a product that's not even been in the market for 30 days yet.
And so this is true of all of them are eight apex announcements in the retail category, bringing matter porch.
To the use case of remote facilities management.
For retailers that have thousands of physical locations that want to manage inspections facilities and contents and buildings from anywhere in the world using just a cell phone.
That has.
Been hugely successful with some of the biggest names in retail.
And the list continues to strike or announcements with various and the insurance category.
For the past couple of years insurance has been one of our fastest growing new vehicles and the reason for that is being able to provide new technologies and capabilities for claims processing claims assessment and management and partnering up with.
Arguably the biggest player in the industry with various and their claims software platform has been an enormous advantage for us. It's gotten all of these partnerships not just sort of signs and activated but really producing.
You know nothing to.
Report in terms of.
Any specific expectations with the partners, but certainly from a go to market point of view they've exceeded our expectations in the early going so I'm looking.
Looking forward to continuing to scale them very successfully in 2022.
Okay, great. Thank you so much.
Thank you our next question Coffees <unk> Bamber your line is open.
Hi, Thanks for taking my question I just wanted to ask a question on the Angeles Orange.
Right now you have a pretty impressive conversion rate.
8% conversion from Caesars to painting carrots, and you say that you know for you is there anything usually convert within 45 days.
If we bring in a lot of anxiety users kitten make.
How would you see.
See the conversion rate and time to conversion change.
Yes, so again.
We haven't set any.
Specific parameters or defined expectations spit.
Specifically for Android at this point, it's certainly just a few days then it would be a little premature for us to call that.
Again, what I, what I can tell you about it is.
There are some things we need to understand with the dynamics of the specific personas and profiles of the Android customers that are coming to matter port.
But we believe that we're going to have.
Long term equal if not greater success with the Android platform.
And all of our new Android customers as.
As we have with iPhone.
And as I get more road under the tires and a bit more traction with it I will definitely be keeping everybody posted but we're very excited about it and very optimistic about the road ahead with Android.
Alright, that's very helpful. Thank you just one more question on the expansion opportunity for real estate customers. So <unk> Alrighty has you know top residential and commercial brokerages as customers, but you know what they say expansion opportunity look like.
Is it you know signing on more models or are they are requesting to use more add ons.
Uhm or no.
Sending use cases in other locations globally, and how should be like think about the magnitude of these extensions for large.
Commercial and residential real estate brokerages.
Yes.
First and foremost it is expanding the digital footprint.
[noise] supremely focused on digitizing the built world because it is such a massive tam pour billions buildings 20 billion monetizable spaces out there once digitised by matter for it.
That is what we're going after us when we look at residential and commercial where signing all of the biggest residential brokerages in the world and the largest commercial real estate.
Brokerages in the world as well as all of the large technology real estate technology portals.
To the matter port platform in partnership ecosystem, as well and what we're keenly focused on there is making sure that the digitization throughput gets as close to 100% as possible right. We want every building every space to have its digital twin we've made it free if anybody wants to.
Pull out their smartphone in their pocket and do it themselves or commission that through capture services or their their brokerage. That's now going to have matter of court built in so we have been laying the foundation for that globally and there is still work to do internationally without a doubt, especially Asia Pacific and parts of Europe, where we're continue.
Doing to put our hooks in.
Continuing to establish matter port as the digital twin standard there, it's going very well, but its earlier days. So the geo expansion a key part of that.
And that's the sequencing as we see it right really pushing for Digitization really pushing for Geo expansion and then the data vacation in the add ons are right behind it because many of our customers that have been with US now for even six months, but certainly those that have been with us for a year or two years or five.
Chairs all her asking for value added insights analytics add ons for everything from virtual staging.
Two a.
Call It a personal appraisal of the property and for documenting purposes for Longterm insurance Records and.
And we love that these are the kinds of things that are both bringing our developers platform that have a lot to offer.
And to sell as add ons subscriptions.
To our customers.
With a great unit economics for the customer and great business for the amount of 40 ecosystem and that's why I'm. So excited about data vacation and the future of the company.
Okay.
Thank you.
You're welcome.
Okay.
Ladies and gentlemen.
<unk>. Thank you off with a painting any audit can that have a great day.
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