Q3 2023 Matterport Inc Earnings Call
Hello, and welcome to the matter of Port Inc. Fiscal 2023 third quarter results Conference call.
Participants will be on listen only mode.
Should you need assistance. Please signal conference specialist by pressing that Starkey followed by zero.
After todays presentation, there will be an opportunity to ask questions can I ask a question you May Press Star then one on your Touchtone phone to withdraw your question. Please press Star then two please note today's event is being recorded I would now.
The conference over your host say, Mike Knapp. Please go ahead Sir.
Thanks, and welcome to matter porch third quarter 2023 financial results Conference call.
After the market closed today matter point released results for the quarter ended September 30th 2023.
The release is available on the company's website at investors don't matter Port Dot com.
This call is being recorded and webcast live and a link to the webcast can be found in the Investor Relations section of our website.
Before we begin I'd like 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 ports 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 on today's call.
Information regarding the risks and uncertainties can be found in our filings with the SEC.
All forward looking statements are made as of the date of this call and matter, Puerto assumes no obligation to update or revise them, except as required by law.
In addition financial.
References on this call will be on a non-GAAP basis, unless otherwise indicated.
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 to the most directly comparable GAAP measure can be found in today's earnings slides, which are available on the company's website.
I also wanted to highlight that we recently announced the launch of the matter Port shareholder rewards program, where stock parks.
Interested investors should visit the stock perks app for more details on how to claim that airport shareholder perks.
Hosting todays call are RJ, Pittman, Chairman and Chief Executive Officer, and J D Fay Chief Financial Officer.
And with that I'd like to turn it over to RJ to begin.
Thanks, Mike Good afternoon, everyone and thank you for joining US today I'm pleased to report stand out third quarter results with both revenue and a loss per share surpassing the high end of guidance.
Total revenue for the quarter grew to $46 million fueled by strong uptake from both enterprise small and medium size businesses.
Subscription revenue jumped 20% year over year growth.
A record $22 $9 million underscoring the growing trust in our platform to boost productivity and cut operational costs.
Services Q3 revenue was resilient as customers chose our capture services and marketing solution.
Again, a competitive edge in the challenging real estate market.
We continue to expand at a rapid pace and spaces under management, hitting $11 1 million and our subscriber base expanded to 887000.
Reflecting steady growth in matter port digital twin adoption worldwide.
In addition, gross margins reached 56% a two year high and subscription.
Subscription and product revenue lines saw significant year over year improvement.
Revenue growth gross margin expansion and continued operating expense discipline drove our loss per share to four cents, which is above guidance and up 56% year over year improvement.
These results highlight that we are improving our operating efficiency, while continuing to fund our innovation engine to drive topline growth.
It also confirms that we are firmly on our accelerated path to profitability, which.
Which we remain confident in achieving next year.
On top of these financial improvements we saw our net dollar expansion rate improved to 106% from 100% in the prior quarter.
Trends in both small and medium sized businesses and the enterprise cohorts your crude.
Customers are the lifeblood of our business and our client focused approach is driving greater retention and expansion as we help organizations better understand how to get the most out of our platform across the vertical markets we serve.
I am, particularly encouraged by our opportunity to accelerate the evolution of the real estate sector.
The past two decades have bear witness to profound technological disruption better shape, various industries, including finance retail and entertainment to name a few.
The Internet has disrupted just about every market places in the world, making products cheaper, including the transaction fees.
Because of the Bickwit its efficiency of Digitization.
Such as the zero dollar fees offered by brokerages to trade stocks online for example.
Meanwhile, the real estate sector has largely preserved as traditional analog approach to the property marketplace.
Which is shackled with inefficiencies with cost N C that haven't changed in decades.
Our ability to identify and tackle these inefficiencies if matter port and the digital twin a central role in moving the real estate industry for the old fashioned way.
Bringing it all online.
History has shown that in all cases, the antiquated offline industry must either evolve and embraced digitization or risk extinction.
Recently, we have seen new cracks appear in the foundation of the U S real estate industry.
With rulings against fixed buyer commission that many consider to stifle buyers choices.
However.
We don't need to weigh into the proceedings to see how we got here.
The inefficiencies of the legacy marketplace themselves are what drive the behaviors that keep the cost high in the process of buying and selling real estate more cumbersome than it should be in 2023.
Given the tremendous technology advancements are available to us, but it's not hard to imagine a present day industry transformation that reshaped how people buy sell rent and manage their properties online and from anywhere in the world.
Matter pork continues to evolve too.
The platform has evolved from the immersive three D virtual tour into a powerful property intelligence agent that provides.
Unprecedented details and insights.
About a home and I've never been previously available to buyers and sellers alike.
These new capabilities are empowering the marketplace, but better home valuation data and more decision, making information, while making it easy to share in the process with family friends and agents.
Societies expectations today.
That all industries be fast efficient empowering and digital.
Ultimately what drives industry change.
Even if that requires reporting a new foundation to get there.
At the heart of that change it happens to be generational.
Gen Z and millennial buyers represent the largest generation in human history with more than 10 trillion dollars in spending power.
This generation was born digital and has very high expectations. When it comes to the one click efficiency of Commerce financial services transportation and health care.
Should it really be any more difficult to purchase a home online than it is to purchase a car or a vacuum cleaner.
For more than a decade matter part has been a catalyst across the real estate industry pushing it too it's inevitable digital destination.
In order for the industry to thrive much less survives the change starts today.
There has never been a better time to be at the intersection of technology and real estate.
And we are more optimistic than ever for the future of the real estate industry and matter ports role in accelerating the digital transformation for the build world.
As an industry leader, we are relentlessly committed to our customer success and increasing the value we deliver to them every day.
For many years matter Port has delivered countless new features functionality and engaging experiences across the ecosystem.
In Q2, we announced our first change toward subscription plan structure and pricing.
Model incorporated robust customer feedback throughout the process.
By carefully considering our customers' priorities, we were able to deliver a pricing strategy that balances exceptional value and flexibility at a fair and reasonable price point.
In our view this customer centric approach should be more common across the industry as it results in your customers strengthening and aligning their vested interest in New York products and services over the long term.
Just as our customers have.
The feedback has been very encouraging and confirms the power of customer centric value based pricing.
The same approach was taken last year with our enterprise customers that helped us grow to over 100 enterprise accounts with over $50000 in annual recurring revenue today.
Spanning our six and seven figure contract wins, along the way.
In fact, I am proud to announce that matter port won its first eight figure deal in Q3.
A testament to the impact our product is having on some of the largest companies in the world.
At the core innovation is driving up revenue per digital twin more than ever before.
For example.
We've recently signed enterprise customers in construction and manufacturing verticals at a price that ranges between 150 and $2500 per month for digital twin.
That's more than 1000 times, our SMB startup planned pricing of $2 per month per digital twin.
This represents the tip of the iceberg of the significant growth opportunities that lie ahead, as we continue to double down on innovation and new tools for our customers.
Our strategy is intentionally aligned with our customers' goals the more valuable tools, we can deliver to help them improve productivity and reduce costs.
The faster they can achieve their business goals, while simultaneously accelerating adoption for matter of pork.
Now, let's move onto our partnership update.
Matter of port deliver value by creating efficient workflows, which is why we continue to focus on strategic partnerships to foster connections within the industry ecosystems.
Fortify our platform functionality.
Paved the way for new distribution avenues for our solutions and drive our pipeline.
As you know pro car a longtime partner of ours is a leader in construction management software with millions of users around the globe.
In Q3, we were very excited to announce an expansion of our pro core relationship.
Billing deeper digital twin integration to streamline the design and construction process.
These new features allow pro core customers to use features such as request for information observations and coordination issues directly within matter ports photo realistic three D digital twins, creating.
Creating a visual system of record for site conditions that anyone on a project contract.
Users can centralized recordkeeping enable better progress tracking improve quality control and experience a more efficient closeout process as they transition seamlessly between their pro core project management workspace and a matter port digital twin of its sites.
We recently announced our membership is in Autodesk construction cloud Premier partner.
Helping bring matter ports for K digital twins to even more construction professionals.
Strategic partnerships like this and other leading enterprise software providers like Autodesk AWS and various continue to provide us with significant momentum and pipeline.
I mentioned last quarter that we had expanded our global reach by partnering with major distributors like comp Houston Lucio nights in Latin America.
And equinox technologies in the Middle East Africa, and Asia Pacific.
In Q3, we also extended our long term relationship with idealistic.
Southern Europe's largest online real estate platform through a multi year agreements.
Our global momentum remains strong and I want to take a moment to briefly discuss a couple of notable European customers.
These details are available in our earnings slides and additional case studies can be found on our website.
The first is denote base.
Based in Paris, which operates large food and beverage manufacturing facilities worldwide.
<unk> areas that are difficult for visitors and partners to access.
Strict safety and quality protocols, meaning that all visitors who wish to enter the production facilities must undergo safety and quality awareness training and wear protective clothing.
Using matter part pro three cameras.
No one has captured its facilities with dimensional the accurate photo realistic three D digital twins.
Authorized users can now access any production site remotely from their laptop or mobile device and true three D.
This drove a 50% reduction in onsite visits saving hundreds of employee hours annually for Danone and its partners as well as reducing expenses and downtime associated with travel.
The digital twin also provides convenient always on access to insights and collaboration that actually increases the engagement attention to detail and quality of work with no added cost while seamlessly connecting colleagues and work groups that may be located all across the globe.
This deep into the understanding of manufacturing plant conditions and requirements as well as enhance there's training knowledge for those who will service the facility.
The second case study relates to Siemens based in Munich.
A fortune global 500 company, and our manufacturing and technology powerhouse.
Women's is captured thousands of square feet of its manufacturing plants overstate.
The high resolution digital twins enabled Siemens personnel to meet virtually with new and existing customers to discuss the company's manufacturing capabilities in exquisite detail.
With their digital twins internal stakeholders and customers can perform their own views of production and assembly line setup for as long as necessary without disrupting operations.
Tight spaces that might only accommodate a few people in person can be viewed in unison online.
Zooming in on specialized equipment to highlight advanced features requires only the flick of a finger or the click of a mouse.
The noise issues are conducting meetings during a production run are eliminated along with physical safety risk and complexities of welcoming visitors in person.
Management is particularly interested in conducting digital twin visits using VR headset.
Mitigating the risk of unauthorized photography sensitive data and reducing travel costs and loss of productivity with travel.
Large multinational companies continue to find exceptional value in our solution as do the fortune, 1025% of which we are proud to call our customers.
Genesis will leverage our 35 billion square feet of digital space to create one of the most powerful spatial computing platforms in the world for homeowners and property managers alike.
Genesis is designed to automate interior design space planning property management, it's so much more for spaces across the vertical markets we serve.
In the third quarter, we took another step forward in our vision to provide new property insights automatically generated using cortex. Our AI engine that has been powering matter port digital twins since our inception.
Now in an oversubscribed public data the new property insights for real estate provide automated room measurements layouts editing and rich reporting capabilities automatically.
This type of automation marks a significant breakthrough.
Delivering insights that were previously unavailable or even feasible with detailed on site assessments.
Additionally, these new tools showed vast improvement over the accuracy of measurement taken by hand.
I automatically processing millions of three D data points captured with the matter Port digital twin.
Instant access to room dimensions.
Total square footage by room.
My floor.
And the entire space built upon one of our most popular features measurement mode.
More than 200 million measurements have been taken manually with this powerful tool.
With our new intelligent digital twins or customers get hundreds of useful measurements room names print ready layouts and more generated automatically.
The new digital twin is immensely valuable for any type of building our space across all industries.
Every operations manager or property marketer needs. This information.
In the case of residential real estate. These details allow a buyer to quickly assess a property and confidently understand the value and potential of their new home.
Property marketers can accelerate home listings and sales with incident at a glance property overviews and MLS data.
Savings significant time, while modernizing listings with the insights buyers increasingly demand.
We have over 1500 customers registered for the beta and customer feedback has been phenomenal and super helpful in making our products the best they can be.
Driven by popular demand the waitlist continues to grow and we're working around the clock to get these breakthrough features in the hands of more of our customers.
Genesis and our commitment to delivering valuable data insights to our customers is made possible through our comprehensive spatial data library.
In the quarter the library grew to more than 35 billion square feet of digitize physical space as.
Our customer base grows and the size of spaces being captured grows too.
This is fueled by the power of pro free to capture Super large spaces indoor and outdoor.
In the short time that pro three has been in market. The average square feet captured by our pro three camera, it's four times greater than that of the pro two.
Expanding our industry, leading spatial data library at a record pace.
The rapidly growing breadth and depth of our spatial data library is vital to our long term strategy.
This unprecedented level of information enables cortex.
Core AI platform to train learn and deliver so many new insights and recommendations for properties every time.
This has long provided matter port with an enormous advantage in the industry.
Today, It is unlocking extraordinary innovation for us fueled by the historic inflection point of game changing advancements in the field of AI that has only just begun.
I would now like to turn it over to J D faith to discuss our financial performance for the third quarter and the outlook for Q4 and the full year 2023.
Thank you RJ for the third quarter, we delivered total revenue of $46 million, which was above the high end of our guidance range.
Strengthen our revenue was across subscription and services.
With subscription revenue, achieving a new record in the quarter.
Subscription revenue rose to $22 $9 million accelerating to 20% growth from the year ago period and above the high end of our guidance range.
Brought our annual recurring revenue to 91 $4 million as we rapidly approach the $100 million.
Our milestone.
The strength was broad based from growth in new subscribers expansion of existing subscribers and during the quarter, we implemented a price increase for small to medium business subscription plans. We also saw double digit growth in both enterprise and SMB customers and double digit growth across all three of our geographic opera.
Rating regions.
Our paid subscriber base grew to 71000 as at the end of the third quarter.
Free subscribers grew by 37% and paid subscribers grew by 13% compared to the year ago period.
These growth rates were roughly equal to the average growth rates over the past year.
Our net dollar expansion rate improved to 106% in Q3.
The improvement across SMB and enterprise cohorts highlight the success, we are seeing through our targeted investments and customer support teams focused on retaining and growing our customers use a matter port.
The price increase for F. N B subscription plans also helped to lift our results.
We expect our Q4 net dollar expansion rate will remain consistent with Q3 levels as well.
In the third quarter, we were pleased to deliver strong double digit subscription growth in residential real estate and commercial real estate.
We also grew like similar double digit rates in the other markets, including construction and travel and hospitality.
The growth in residential and commercial real estate is in sharp contrast to industry activity and other companies that had been declining in the current economy.
Further our double digit growth rate highlights the share gains, we've achieved and sustained over the past several quarters while.
We'll also proving the value of our solutions during both expanding and contracting real estate markets.
Moreover, we are encouraged by recent data that show an increase in homes listed for sale, which as this trend strengthens can be a tailwind for matador.
Residential real estate represented approximately 50% of subscription revenue in Q3.
Services revenue for the third quarter was $9 9 million roughly flat from the year ago period.
Our capture services business, which helps customers joined the matter port platform quickly and at scale.
Grew at double digit rates from the year ago period as well.
Most of our other services offerings continue to grow but were offset by a large services contract in the year ago period that have completed before the third quarter and this impact was contemplated in our guidance for the quarter.
Our product revenue was $7 $8 million in the third quarter down 13% from the year ago period.
Looking back to the third quarter of 2022 product sales were particularly high because first we had just launched the pro three camera, which experienced strong pent up lost demand.
We were able to complete a recovery in the supply chain relating to the pro two camera, which at that time had a backlog of open orders to be fulfilled.
These two factors were not expected to repeat in the third quarter of 2023.
Which was also contemplated in our guidance for the quarter.
Moving onto gross margin total gross margin for the third quarter expanded to 56%.
To 48% in a year ago period.
Our gross margin was the strongest that we have delivered in two years as we drove substantial cost improvements across our subscription and product revenue lines.
Subscription gross margin was very strong at 77% up significantly from 72% in the year ago period, as we continue to implement technology advancements that reduce our platform costs and drive scalability in our customer success organization.
Rising prices also contributed to the growth and margin.
Product gross margin was 23% in the third quarter.
Also up materially from 13% a year ago period.
Turning to operating expenses, we are beginning to realize the benefits. We highlighted early this quarter regarding the restructuring of our business to streamline operations grow faster and more efficiently.
These changes have already improved our focus execution speed and our fast tracking our operational cash flow profitability, which we continue to expect to achieve next year.
Research and development expense in Q3 was $8 8 million a reduction of 29% from the year ago period.
This change resulted from rigorous evaluation of spending it.
Allocation toward offerings that we expect will yield the highest returns and reflect our commitment to operate more efficiently while advancing our technology platform.
SG&A expenses for Q3 was $30 2 million a reduction of 10% from the year ago period.
This reduction in spending was primarily related to lower sales and marketing expenses as we continue to drive spending efficiency combined with high ROI go to market programs across customer facing operations.
The result is a third quarter non-GAAP net loss of $12 million and non-GAAP loss per share of four cents above the high end of our guidance range.
This is also a 56% improvement in bottom line performance from the year ago quarter.
I am very pleased with the significant progress on the bottom line as we are actively driving the company to achieve profitability wishes insight.
Our weighted average share count was 303 million shares.
Moving onto the balance sheet, we ended the quarter with $430 million in cash and investments down just 4% from the prior quarter and we remain debt free.
Our cash used in operations improved to $15 $5 million in the third quarter, which is a 62% improvement from the year ago period.
Turning to guidance, we remain on track to deliver another record year for the company as we grow the top line improved gross margins and make significant progress to profitability.
Accordingly for the fourth quarter, we expect total revenue to be in the range of $39 million to $41 million.
And subscription revenue to be in the range of $23 million to $23.3 million.
This represents 20% year on year growth at the midpoint of the subscription revenue range, maintaining the higher level of growth we delivered last quarter.
We expect the balance of revenue to be split roughly evenly between the services and product revenue lines.
We anticipate fourth quarter non-GAAP loss per share to be in the range of three to five cents.
It means we are raising our full year 2023, total revenue guidance, which is now 157% to $159 million.
And we are raising our full year 2020, threep subscription revenue guidance.
Which is now expected to be in the range of $86 five to $86 $8 million.
For the full year of 2023, we expect a 'twenty one to 'twenty three non-GAAP loss per share.
This represents an improvement of 14 cents at the midpoint compared to the guidance, we articulated at the beginning of the year.
A 46% improvement from 2022.
Higher subscription growth rates expanded gross margins and reduced operating expenses are delivering improved operating margins. We expect this trend to continue.
These factors have already yielded accelerating year over year improvements in our bottom line and cash flow.
As we continue on this path we are firmly in rapidly approaching our near term objective of positive cash flow from operations.
Now I would like to turn the call back over to RJ.
Thanks J D.
We continue to outperform the market by focusing on the needs of our customers across residential and commercial real estate and the enterprise.
More and more customers are recognizing the profound cost benefits of property digitization with matter part.
During a period when cost savings productivity and operating efficiency targets are at an all time high.
We are working hard to integrate matter port into the daily workflows of our customers to simplify how they get things done.
Our property intelligence data insights until buyers and sellers more about a property than ever before.
Leading to better decisions and outcomes for everyone.
The power of Digitization unlocks the power of data.
The linchpin for growth across the real estate industry.
Customers are thriving with matter port adopting our latest offerings that provide significant value.
Reality echoed in our increasing net dollar expansion rates the.
The value is evidenced in the steady growth across both our SMB and enterprise segments.
We are on track to reach cash flow breakeven in 2020 for a full year ahead of schedule.
Millstone underscored by our strong performance in the third quarter.
<unk> accelerated growth amidst rising interest rates inflation and the challenges in the real estate market.
We remain committed to our strategic plan delivering results that are independent of fluctuating real estate market trends.
Our digital twin technology offers unmatched value to agents brokers and sellers.
<unk> with a digital first expectation of the modern homebuyer.
Our expansion across various sectors, including manufacturing design construction travel and hospitality.
Solidifies our market leadership.
Our advantage is further amplified by our AI, driven innovation pipeline heat shrink technologies like cortex and Genesis.
As the real estate industry continues to face rising pressure to deliver a significantly more powerful cost effective and convenient experience for all participants across the 327 trillion dollar asset class, we called the built world.
Time to embrace that future is now.
And it starts by making every property every physical space more valuable and accessible by bringing them all online together.
Thank you for joining us today, operator, we are now ready for questions.
Yes, thank you at.
At this time, we will begin the question and answer session.
A question you May Press Star then one on your house town phone.
We are using a speakerphone please pick up your handset before pressing the keys.
Your question. Please press Star then two.
At this time, we will pause momentarily to assemble the roster.
And the first question comes from Robin Shah with Deutsche Bank.
Hi, everyone. It's Nick on for Bob This evening, Thanks for taking my questions.
J D or I take keep just talk through what you see underpinning the continued 20% growth momentum heading into the fourth quarter.
Yes, thanks, Nick.
So in the 20% growth forecast at the midpoint, we're continuing to see strong demand in both of our main cohorts, the small and medium business customer as well as the enterprise customer.
Of course in both are benefiting from a more value that we're providing into the subscription plans and we of course are generating more revenue per accounts and for digital twins as well, reflecting the price changes and increases we made.
For both of those cohorts at different times over the last several quarters. So all of those internals are continuing as we sit here today and that applies to the acquisition of new paid subscribers as well as two expansions of our existing subscriber base.
Great. Thank you and then just as a follow up can you give us sort of an idea of what the lingering tailwind is from a pricing and packaging changes.
Sure.
Customers that are have yet to renew.
Oh, yes for those customers that have yet to renew and these are customers who are on a one year or longer subscription plans.
In the small and medium business cohort, that's a relatively small number of customers, although growing in particular, because we're offering some promotional packages.
To incentivize those customers to sign up for one year plans and that is working.
So that's a fairly small percentage in a single digit rates that are small and small and medium business customers with a one year or longer plants today.
In the enterprise cohort cohort most of those customers have one year or longer.
A description plans or agreements with us and so it will take the next one to three years I would say to work through that existing subscriber base and work with those customers.
On the value based pricing that we introduced late last year and so most of that work is ahead of us, but it's also of course, a great opportunity for us to continue to expand our subscription revenue and our value proposition with those enterprise customers.
Great. Thank you for taking my questions.
Yeah.
Thank you and the next question comes from Yun, Kim with loop capital markets.
Alright, great congrats on another solid quarter, our gain Judy can.
Can you just talk about it seems like you're enjoying a solid traction in your enterprise market is there any way to get a little more insight into your momentum beyond the price increase that you were able to introduce them for instance.
Now Youre not now you have 100, plus enterprise accounts that generate good PK R. R.
It's just very very solid.
Any trend around average deal size or a pro customer and thoughts and any change in the land and expand motion for your enterprise customers.
Sure. Thanks, Ian I'll, I'll start with that and J D can fill in.
And picking up right, where you left off yes, absolutely I mean, one of the things we've been really working on this year is driving operational efficiency.
Driving sales efficiency.
The pipeline strength.
Is.
Better than that.
As a matter of course, and particularly the very impressive.
Forward momentum in the enterprise pipeline.
Second to that is.
We have been.
Architected the enterprise solution.
Very iterative fashion over the past several quarters is continuing to hone that product market fit in.
And making sure that the ease of integration.
Enterprises is smooth and quick so that we can get them up line up and online.
And producing on our platform as soon as possible and the faster that happens the faster you see the results in the business and so that overall efficiency.
From a pipeline and prosecuting that deal opportunities.
Getting our customers successful on our platform has been a key operational focus for us and its paying dividends and so that's allowing our customers to accelerate the adoption of matter for <unk> and that's going to continue because.
Because we're seeing a continued strong demand for the product and the alignment of our data offerings. The property intelligence that we spoke quite a bit about them that's out in public data today.
Is broadly.
Interest to not just residential but also to our commercial real estate property managers, which we find in the enterprise.
Yes, and I'll just add to that as you noted are.
Larger enterprise customers with more than $50000 of annual recurring revenue has experienced very healthy growth in the last quarter. In fact, we had the largest number of logo acquisitions.
That we've had in over a year.
Hum.
Bind with Roche.
Growing average revenue per account.
As illustrated by some of the revenue per digital twin statistics, we provided during the call we can see.
That is well, it's driving up the enterprise cohorts growth in our subscription revenue overall, and finally I would just again reiterate.
Had our first eight figure deal in history of the company and so these deal sizes I think are.
Growing very rapidly and in some ways.
And almost no limit.
Okay, Great and then.
Question on the price increase in the quarter.
What has been the reaction did you see any uptick in churn, especially among the smaller businesses.
If you can compare the difference in how customers react to it between the enterprise business.
The small business customers.
Yes, I can so with respect to the larger population of small and medium businesses.
We did not see an uptick in churn in fact.
We have seen churn remained steady over this period.
And as noted a moment ago, we offered I think very attractive one year subscription plan during the transition.
Many customers took advantage of and I think that bodes well for us as well as the continued to build a stable base of recurring subscription revenue.
And importantly, I think we're providing a tremendous amount of added value as we make these pricing changes and I'll build on that.
You know, it's been a philosophy of ours for many years that.
Despite the rising.
Cost of living and the rising rates are in place it et cetera.
We don't believe an arbitrary price increases.
For the sake of it and that's been a hallmark accurate matter port and importantly.
The pricing changes are only associated with continued value add on the platform and we're going to continue on that trend going forward.
Not just purely coming from matter for it but from the partnership with our customers and then involved in the process in the process of <unk>.
Spanning the value proposition of matter port and growing that value based pricing model doing that together has created a lot of positive goodwill in our customer ecosystem.
And it shows in the results that you've seen here quarter, we expect that to continue.
Okay, and then I have one final question for J D.
We saw a pretty good sequential uptick on N and M on Ana our I'm, assuming a lot of it is driven by the price increase.
Should we expect the MLR to stabilize here.
Going forward, given the pricing increase providing the tailwind.
Generally yes.
About half of the improvement in the expansion rate was due to growth in.
With our existing subscribers.
And on a call it non price adjusted basis.
It is great to see customers are accessing the platform more on expanding their library of digital twins, and so forth and then the other.
Other half of the impact was from the price increase as you noted and I would expect that those.
Those trends to be largely consistent in the fourth quarter.
Okay, great. Thank you so much.
Thank you and the next question comes from Joshua Tilton with Wolfe Research.
Hi, This is Luke on for Josh just a quick one for me just you know to comments in the prepared remarks about the price per month are you able to charge for some of the larger enterprise customers very encouraging and I. Just wanted to let you know what features are those consumers leveraging that youre able to charge.
Who knows right.
Sure.
First and foremost the enterprise, they're mostly associated with larger more complex facilities and so.
So part of that pricing is driven by the sheer square footage we're talking about properties.
Being scanned.
In the range of 50000 to 500000 square feet.
And larger.
And.
We have long had a pricing that is determinant based on the size and complexity of spaces alone.
And we've continued to evolve that over the course of the last couple of years. So that's that's driver number one number two is a suite of enterprise essentials that includes anything from workflow integrations into other project management software systems and solutions, our existing enterprise applications.
<unk> single sign on.
Enterprise security and multi user access control all of the types of things.
That are required to integrate safely and in a scalable way the enterprise solution.
That is typically.
Adopted by more than one user right. So when we move into enterprise to have work groups that could range from 10 to 25 up to hundreds of users on the platform all working and collaborating around one of these very large digital twins.
And so these workgroup capabilities in enterprise sort of infrastructure and support capabilities are.
Non negotiable.
The enterprise Arena, and so we have been building those and expanding that portfolio and that offering over the last couple of years and that's what drives.
The higher price points for these kinds of spaces.
Yeah.
Okay.
Thank you.
Yeah.
And then last question comes from those with poor with Morgan Stanley.
Hey, this is Chris Terrill on for Elizabeth, Florida, Thanks for taking our questions.
I wanted to ask how your pipeline has been impacted by some of the industry partnerships, maybe even more specifically the autodesk one you obviously expanded it most recently by becoming that premium partner. So clearly something is working well there. So I just wanted to get a bit more color on what the impact has been so far.
Absolutely.
These are critical partners for us and we mentioned a few of them on the call Pro core.
Autodesk two stalwarts in the construction and architecture and design industry.
And in both cases pipeline has been very healthy.
We're going to be moving into more co marketing and even co selling arrangements for some of these partners.
And that obviously is germane to continuing to expand our healthy pipeline.
We're seeing.
Our great results from these expanded partnerships in the quarter nothing specific to report yet, but moving all in the <unk>.
Right direction, one of the other parts that that's really important is once you become a partner that that represents.
Opportunity in our gateway into a much larger ecosystem.
The second part of it is creating the awareness.
Integrations exist and what we have found is that through some of our own marketing efforts in the quarter, making these customers of our partners are aware of the amount of cord integration coming straight for matter court ought to be very effective because the integration now is straightforward and they can be up and running with matter port plus.
Any autodesk piece of software or pro force.
Our program management software in a day.
And so the further we push.
SaaS and then awareness out of the market. We think we're going to continue to accelerate our pipeline growth.
Got it that's very helpful. And then on Genesis you talked about the beta being oversubscribed, but just curious what some of the early customer conversations there had been so far that I've gotten themselves. So excited about it.
Yeah, I mean, yeah.
This program was built around.
Kind of a simple philosophy, which was let's go in and take a look at what our people do and once they digitize the building once they transform it into a matter for sure we've got all kinds of tools.
For measuring managing exploring analyzing.
Tagging and labeling.
Space of any kind.
And how can we help those customers do that job more efficiently.
And what we've learned is there is a great commonality.
Analysis.
That people are taking.
That we could saw automatically biogen.
AI capabilities are right down the fairway.
And eliminate some of the work that they are if not a lot of the work that they're doing about head.
And so that required.
At the time with our customers going back.
Sure.
And the lead up.
We would approach designed to develop and deploy the next wave of features for our customers. So you could imagine.
After people have taken 200 million measurements the manual way after the digital twin is created you go in and take measurements by hand, with our point and click software that youll now be able to get all of that not just the single measurement, but every room every floor the entire building becomes.
A three D blueprint for you.
But this is saving.
<unk> of time and effort to do these kinds of things.
But we're also getting smarter about it automatically identifying the type of room that it is so in residential bedrooms kitchens bathrooms living rooms dining rooms, all automatically and even being able to identify the furnishings and the objects in the fixtures in the room or in the proper.
Pretty at large.
And doing this all also fully automatically a click a button.
Creates not only great convenience and huge efficiency gains for our customers.
But it also creates a new layer of data by having all of that insight all of that metadata about a property down to the fixtures. We can then run it another set of algorithms to generate insights in giving you. These customized property reports that would tap you know some of the best appraisals that you've.
Seen out there in the industry. So we're gonna be compounding this value proposition with our customers and continuing to expand the value on our journey.
<unk> driven growth for the company.
Excellent. Thank you for taking the questions.
Thank you and then next question comes from price alone at Piper Sandler.
Perfect. Thank you for taking the question. This is J R on for Brent.
Just a quick one follow up on property intelligence data anymore.
Any more color you can give in terms of.
Framing the scope with a beta release more in terms of the how broad spread.
It is thank you.
Sure.
We're managing it carefully because it has a lot of data.
A single customer might represent hundreds or even thousands of digital twins and.
What kind of feedback that we're getting from them, which is essentially running all of this AI all of this intelligence software across their existing digital twins. This is the great thing about it is well you don't have to go back out and re digitize the space to get the benefits of all of this new data science in fact, we've gone back.
And.
Run our new property intelligence capabilities over scans, we've done eight years ago, and it's really fantastic as it brings a whole new set of insights to life.
But because it's a very data intensive exercise and we're getting search volume feedback, we really wanted to make sure that we prosecute it.
In the most straightforward way possible and we are seeing.
Great energy and great feedback from our customers. So really just help them fine tune and make it as easy as possible for them to use.
Nothing no showstoppers have come through so far so we've been steadily opening up that data. Our intention is to continue the beta through this quarter into early <unk>.
2024, but go into full public release of the product in early 'twenty.
This data will steadily expand well beyond the 1000 or two customers that we have working with us today.
Perfect sounds good thanks again for taking the question.
Thank you.
At this time the question I ask question has concluded I will turn the Florida, Mike Knapp for any closing comments.
Great. Thanks, very much for joining us today as always we appreciate your interest in matter of Port and we look forward to speaking with you on our next earnings call. Thanks and Goodbye. Thank you.
This has now concluded. Thank you for attending today's presentation. You may now disconnect your lines.