SEC Filing | Matterport Inc

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mttr-20230331

UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

____________________________

FORM 10-Q

____________________________

(Mark One)


☒			QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
			For the quarterly period ended March 31, 2023


☐			TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
			For the transition period from ____________ to ____________

Commission file number 001-39790

____________________________

MATTERPORT, INC.

(Exact name of registrant as specified in its charter)

____________________________


Delaware									85-1695048
(State or other jurisdiction of incorporation or organization)									(I.R.S. Employer Identification No.)

352 East Java Drive
Sunnyvale, California 94089
(Address of Principal Executive Offices, including zip code)

(650) 641-2241

(Registrant's telephone number, including area code)

N/A

(Former name, former address and former fiscal year, if changed since last report)

Securities registered pursuant to Section 12(b) of the Act:

Title of each class

Trading

Symbol

Name of each exchange

on which registered

Class A Common Stock, par value of $0.0001 per share

MTTR

The Nasdaq Global Market

Indicate by check mark whether the registrant: (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports); and (2) has been subject to such filing requirements for the past 90 days. Yes x No o

Indicate by check mark whether the registrant has submitted electronically every Interactive Data File required to be submitted pursuant to Rule 405 of Regulation S-T (§232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit such files). Yes x No o

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Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, a smaller reporting company, or an emerging growth company. See the definitions of “large accelerated filer,” “accelerated filer,” “smaller reporting company” and “emerging growth company” in Rule 12b-2 of the Exchange Act.


Large accelerated filer	☒	Accelerated filer	☐
Non-accelerated filer	☐	Smaller reporting company	☐
		Emerging growth company	☐

If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act. ☐

Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Act). Yes ☐ No ☒

The registrant had 295,867,535 shares of Class A common stock outstanding as of May 2, 2023.

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		Page

	Cautionary Note Regarding Forward-looking Statements	4

PART I.	FINANCIAL INFORMATION

Item 1.	Financial Statements (Unaudited)

	Condensed Consolidated Balance Sheets as of March 31, 202 3 and December 31, 202 2 (Unaudited)	5

	Condensed Consolidated Statements of Operations for the Three Months Ended March 31, 202 3 and 202 2 (Unaudited)	6

	Condensed Consolidated Statements of Comprehensive Income (Loss) for the Three Months Ended March 31, 202 3 and 202 2 (Unaudited)	7

	Condensed Consolidated Statements of Stockholders’ Equity for the Three Months Ended March 31, 202 3 and 202 2 (Unaudited)	8

	Condensed Consolidated Statements of Cash Flows for the Three Months Ended March 31, 202 3 and 202 2 (Unaudited)	9

	Notes to the Consolidated Financial Statements (Unaudited)	10

Item 2.	Management’s Discussion and Analysis of Financial Condition and Results of Operations	28

Item 3.	Quantitative and Qualitative Disclosures About Market Risk	45

Item 4.	Controls and Procedures	45

PART II.	OTHER INFORMATION

Item 1.	Legal Proceedings	47

Item 1A.	Risk Factors	48

Item 2.	Unregistered Sales of Equity Securities and Use of Proceeds	49

Item 3.	Defaults Upon Senior Securities	49

Item 4.	Mine Safety Disclosures	49

Item 5.	Other Information	49

Item 6.	Exhibits	49

Signatures		51

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CAUTIONARY NOTE REGARDING FORWARD-LOOKING STATEMENTS

This Quarterly Report on Form 10-Q (this “Report”) contains forward-looking statements. We intend such forward-looking statements to be covered by the safe harbor provisions for forward-looking statements contained in Section 27A of the Securities Act of 1933, as amended, or the Securities Act, and Section 21E of the Securities Exchange Act of 1934, as amended, or the Exchange Act. All statements other than statements of historical facts contained in this Report, including statements concerning possible or assumed future actions, business strategies, events or results of operations, and any statements that refer to projections, forecasts or other characterizations of future events or circumstances, including any underlying assumptions, are forward-looking statements. These statements involve known and unknown risks, uncertainties and other important factors that may cause our actual results, performance or achievements to be materially different from any future results, performance or achievements expressed or implied by the forward-looking statements.

In some cases, you can identify forward-looking statements by terms such as “may,” “should,” “expect,” “plan,” “anticipate,” “could,” “intend,” “target,” “project,” “contemplate,” “believe,” “estimate,” “predict,” “potential” or “continue” or the negative of these terms or other similar expressions. Forward-looking statements in this Report are predictions, projections and other statements about future events that are based on current expectations and assumptions and, as a result, are subject to risks and uncertainties. Many factors could cause actual future events to differ materially from the forward-looking statements in this document, including our ability to grow market share in our existing markets or any new markets we may enter; our ability to respond to general economic conditions; our ability to manage our growth effectively; our success in retaining or recruiting our officers, key employees or directors, or changes required in the retention or recruitment of our officers, key employees or directors; the impact of the regulatory environment and complexities with compliance related to such environment; our ability to maintain an effective system of internal controls over financial reporting; our ability to achieve and maintain profitability in the future; our ability to access sources of capital; our ability to maintain and enhance our products and brand, and to attract customers; our ability to manage, develop and refine our technology platform; the success of our strategic relationships with third parties; our history of losses and whether we will continue to incur continuing losses for the foreseeable future; our ability to protect and enforce our intellectual property rights; our ability to implement business plans, forecasts, and other expectations and identify and realize additional opportunities; our ability to attract and retain new subscribers; the size of the total addressable market for our products and services; the continued adoption of spatial data; any inability to complete acquisitions and integrate acquired businesses; general economic uncertainty and the effect of general economic conditions in our industry; environmental uncertainties and risks related to adverse weather conditions and natural disasters; factors relating to our business, operations and financial performance, including: the impact of the ongoing COVID-19 public health emergency or other infectious diseases, health epidemics and pandemics; the volatility of the market price and liquidity of our Class A common stock, and other securities; the increasingly competitive environment in which we operate; and other factors detailed under the section entitled “Risk Factors” in our Annual Report on Form 10-K for the year ended December 31, 2022 (the “2022 Form 10-K”) filed with the Securities and Exchange Commission (the “SEC”) on February 28, 2023, and subsequently filed Quarterly Reports on Form 10-Q.

Because forward-looking statements are inherently subject to risks and uncertainties, some of which cannot be predicted or quantified and some of which are beyond our control, you should not rely on these forward-looking statements as predictions of future events. The events and circumstances reflected in our forward-looking statements may not be achieved or occur, and actual results could differ materially from those projected in the forward-looking statements. Moreover, we operate in an evolving environment. New risk factors and uncertainties may emerge from time to time, and it is not possible for management to predict all risk factors and uncertainties. As a result of these factors, we cannot assure you that the forward-looking statements in this Report will prove to be accurate. Except as required by applicable law, we do not plan to publicly update or revise any forward-looking statements contained herein, whether as a result of any new information, future events, changed circumstances or otherwise.

You should read this Report completely and with the understanding that our actual future results may be materially different from what we expect. We qualify all of our forward-looking statements by these cautionary statements.

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Part I- Financial Information

Item 1. Financial statements

MATTERPORT INC.

CONDENSED CONSOLIDATED BALANCE SHEETS

(unaudited)

(In thousands, except per share data)


	March 31, 2023		December 31, 2022
ASSETS
Current assets:
Cash and cash equivalents	$	144,315	$	117,128

Short-term investments	311,884		355,815
Accounts receivable, net of allowance of $1,295 and $1,212, as of March 31, 2023 and December 31, 2022, respectively	21,817		20,844
Inventories	11,002		11,061
Prepaid expenses and other current assets	10,724		13,084
Total current assets	499,742		517,932
Property and equipment, net	31,701		30,559
Operating lease right-of-use assets	2,225		2,515
Long-term investments	—		3,959
Goodwill	69,593		69,593
Intangible assets, net	10,447		10,890
Other assets	5,825		4,947
Total assets	$	619,533	$	640,395
LIABILITIES AND STOCKHOLDERS’ EQUITY
Current liabilities
Accounts payable	$	6,044	$	8,331

Deferred revenue	18,284		16,731
Accrued expenses and other current liabilities	21,900		23,916

Total current liabilities	46,228		48,978
Warrants liability	581		803


Deferred revenue, non-current	1,489		1,201

Other long-term liabilities	1,155		5,502
Total liabilities	49,453		56,484
Commitments and contingencies (Note 8)
Redeemable convertible preferred stock, $0.0001 par value; 30,000 shares authorized as of March 31, 2023 and December 31, 2022, respectively; nil shares issued and outstanding as of March 31, 2023 and December 31, 2022, respectively	—		—
Stockholders’ equity:
Common stock, $0.0001 par value; 640,000 shares authorized as of March 31, 2023 and December 31, 2022, respectively; and 295,700 shares and 290,541 shares issued and outstanding as of March 31, 2023 and December 31, 2022, respectively	30		29
Additional paid-in capital	1,206,100		1,168,313
Accumulated other comprehensive loss	(2,811)		(5,034)
Accumulated deficit	(633,239)		(579,397)
Total stockholders’ equity	570,080		583,911
Total liabilities and stockholders’ equity	$	619,533	$	640,395

The accompanying notes are an integral part of these unaudited condensed consolidated financial statements.

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MATTERPORT, INC.

CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS

(In thousands, except per share data)

(unaudited)


	Three Months Ended March 31,
	2023		2022
Revenue:
Subscription	$	19,847	$	17,141
License	27		23
Services	8,704		3,973
Product	9,416		7,373
Total revenue	37,994		28,510
Costs of revenue:
Subscription	6,962		5,262
License	—		—
Services	6,244		2,983
Product	8,376		8,356
Total costs of revenue	21,582		16,601
Gross profit	16,412		11,909
Operating expenses:
Research and development	18,273		26,002
Selling, general, and administrative	54,933		70,849
Total operating expenses	73,206		96,851
Loss from operations	(56,794)		(84,942)
Other income (expense):
Interest income	1,471		1,295


Change in fair value of warrants liability	222		21,433
Change in fair value of contingent earn-out liability	—		136,043
Other income (expense), net	1,183		(1,321)
Total other income	2,876		157,450
Income (loss) before provision for income taxes	(53,918)		72,508
Provision for (benefit from) income taxes	(76)		604
Net income (loss)	$	(53,842)	$	71,904
Net income (loss) per share attributable to common stockholders:

Basic	$	(0.18)	$	0.26
Diluted	$	(0.18)	$	0.23
Weighted-average shares used in computing net income (loss) per share attributable to common stockholders:
Basic	293,074		275,199
Diluted	293,074		312,432

The accompanying notes are an integral part of these unaudited condensed consolidated financial statements.

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MATTERPORT, INC.

CONDENSED CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME (LOSS)

(In thousands, unaudited)


	Three Months Ended March 31,
	2023		2022
Net income (loss)	(53,842)		71,904
Other comprehensive income (loss), net of taxes:

Unrealized gain (loss) on available-for-sale securities, net of tax	2,223		$	(4,635)
Other comprehensive income (loss)	$	2,223	$	(4,635)
Comprehensive income (loss)	$	(51,619)	$	67,269

The accompanying notes are an integral part of these unaudited condensed consolidated financial statements.

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MATTERPORT, INC.

CONDENSED CONSOLIDATED STATEMENTS OF STOCKHOLDERS’ EQUITY

(In thousands, unaudited)


	Common Stock
		Shares	Amount		Additional Paid-In Capital		Accumulated Other Comprehensive loss		Accumulated Deficit		Total Stockholders’ Equity
Balance as of December 31, 2022		290,541	$	29	$	1,168,313	$	(5,034)	$	(579,397)	$	583,911
Net loss		—	—		—		—		(53,842)		(53,842)
Other comprehensive income		—	—		—		2,223		—		2,223
Issuance of common stock in connection with employee equity incentive plans, net of tax withholding		4,910	1		356		—		—		357
Issuance of common stock in connection with acquisitions		249	—		3,921		—		—		3,921
Stock-based compensation		—	—		33,510		—		—		33,510
Balance as of March 31, 2023		295,700	$	30	$	1,206,100	$	(2,811)	$	(633,239)	$	570,080


	Common Stock
		Shares	Amount		Additional Paid-In Capital		Accumulated Other Comprehensive loss		Accumulated Deficit		Total Stockholders’ Equity
Balance as of December 31, 2021		250,173	$	25	$	737,735	$	(1,539)	$	(468,058)	$	268,163
Net income		—	—		—		—		71,904		71,904
Other comprehensive loss		—	—		—		(4,635)		—		(4,635)
Issuance of common stock in connection with employee equity incentive plans, net of tax withholding		6,295	1		(14,498)		—		—		(14,497)
Issuance of common stock upon the reverse recapitalization, net of transaction costs		—	—		76		—		—		76
Issuance of common stock to a customer		100	—		559		—		—		559
Issuance of common stock upon exercise of public warrants		1,994	—		34,055		—		—		34,055
Issuance of common stock in connection with acquisitions		1,215	—		19,118		—		—		19,118
Issuance of earn-out shares upon triggering events, net of tax withholding		21,494	2		(17,738)		—		—		(17,736)
Earn-out liability recognized upon the re-allocation		—	—		(896)		—		—		(896)
Reclassification of remaining contingent earn-out liability upon triggering events		—	—		242,430		—		—		242,430
Stock-based compensation		—	—		61,097		—		—		61,097
Balance as of March 31, 2022		281,271	$	28	$	1,061,938	$	(6,174)	$	(396,154)	$	659,638

The accompanying notes are an integral part of these unaudited condensed consolidated financial statements.

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MATTERPORT, INC.

CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS

FOR THE THREE MONTHS ENDED MARCH 31, 2023 AND 2022

(In thousands, unaudited)


	Three Months Ended March 31,
	2023		2022
CASH FLOWS FROM OPERATING ACTIVITIES
Net income (loss)	$	(53,842)	$	71,904
Adjustments to reconcile net income (loss) to net cash provided by (used in) operating activities:
Depreciation and amortization	4,391		2,463

Amortization of investment premiums, net of accretion of discounts	(681)		954

Stock-based compensation, net of amounts capitalized	31,074		55,277
Change in fair value of warrants liability	(222)		(21,433)
Change in fair value of contingent earn-out liability	—		(136,043)
Deferred income taxes	(184)		(227)


Allowance for doubtful accounts	289		191
Loss of excess inventory and purchase obligation	622		—
Other	(381)		45
Changes in operating assets and liabilities, net of effects of businesses acquired:
Accounts receivable	(1,261)		(3,988)
Inventories	(3,258)		427
Prepaid expenses and other assets	1,308		(1,571)
Accounts payable	(2,287)		659
Deferred revenue	1,841		2,610
Accrued expenses and other liabilities	2,193		3,254
Net cash used in operating activities	(20,398)		(25,478)
CASH FLOWS FROM INVESTING ACTIVITIES:
Purchases of property and equipment	(87)		(448)
Capitalized software and development costs	(2,567)		(3,596)
Purchase of investments	(57,577)		(30,378)
Maturities of investments	108,806		46,200


Business acquisitions, net of cash acquired	(1,676)		(30,020)
Net cash provided by (used in) investing activities	46,899		(18,242)
CASH FLOW FROM FINANCING ACTIVITIES:



Proceeds from exercise of stock options	686		2,191
Payments for taxes related to net settlement of equity awards	(329)		(33,337)
Proceeds from exercise of warrants	—		27,844



Other	—		76


Net cash provided by (used in) financing activities	357		(3,226)
Net change in cash, cash equivalents, and restricted cash	26,858		(46,946)
Effect of exchange rate changes on cash	329		(45)
Cash, cash equivalents, and restricted cash at beginning of year	117,128		139,987
Cash, cash equivalents, and restricted cash at end of period	$	144,315	$	92,996




Supplemental disclosures of non-cash investing and financing information
Earn-out liability recognized upon the re-allocation	$	—	$	896
Reclassification of remaining contingent Earn-out liability upon triggering events	$	—	$	242,430



Property, equipment and capitalized software and development costs included in accounts payable and accrued expenses and other liabilities	—		270
Common stock issued in connection with acquisition	$	3,921	$	19,118
Unpaid cash consideration in connection with acquisition	$	2,434	$	4,348

The accompanying notes are an integral part of these unaudited condensed consolidated financial statements.

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MATTERPORT, INC.

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED)

1. ORGANIZATION AND DESCRIPTION OF BUSINESS

Matterport, Inc., together with its subsidiaries (“Matterport” or the “Company”), is leading the digitization and datafication of the built world. Matterport’s pioneering technology has set the standard for digitizing, accessing and managing buildings, spaces and places online. Matterport’s platform comprising innovative software, spatial data-driven data science, and 3D capture technology has broken down the barriers that have kept the largest asset class in the world, buildings and physical spaces, offline and underutilized for so long. The Company was incorporated in the state of Delaware in 2011. The Company is headquartered at Sunnyvale, California.

On July 22, 2021 (the “Closing Date”), the Company consummated the merger (collectively with the other transactions described in the Merger Agreement, the “Merger”, “Closing”, or “Transactions”) pursuant to an Agreement and Plan of Merger, dated February 7, 2021 (the “Merger Agreement”), by and among the Company (formerly known as Gores Holdings VI, Inc.), the pre-Merger Matterport, Inc. (now known as Matterport Operating, LLC) (“Legacy Matterport”), Maker Merger Sub, Inc. (“First Merger Sub”), a direct, wholly owned subsidiary of the Company, and Maker Merger Sub II, LLC (“Second Merger Sub”), a direct, wholly owned subsidiary of the Company, pursuant to which First Merger Sub merged with and into Legacy Matterport, with Legacy Matterport continuing as the surviving corporation (the “First Merger”), and immediately following the First Merger and as part of the same overall transaction as the First Merger, Legacy Matterport merged with and into Second Merger Sub, with Second Merger Sub continuing as the surviving entity as a wholly owned subsidiary of the Company, under the new name “Matterport Operating, LLC”. Upon the closing of the Merger, we changed our name to Matterport, Inc.

Unless the context otherwise requires, the “Company” refers to the combined company and its subsidiaries following the Merger, “Gores” refers to the Company prior to the Merger and “Legacy Matterport” refers to Matterport, Inc. prior to the Merger.

2. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES

Summary of Significant Accounting Policies

The Company’s significant accounting policies are discussed in “Note 2 – Summary of Significant Accounting Policies” of the Company’s Annual Report on Form 10-K for the fiscal year ended December 31, 2022, which was filed with the SEC on February 28, 2023. There have been no significant changes to these policies during the three months ended March 31, 2023.

Basis of Presentation

The accompanying unaudited condensed consolidated financial statements have been prepared in conformity with accounting principles generally accepted in the United States of America (“U.S. GAAP”) and applicable rules and regulations of the SEC, regarding interim financial reporting. Certain information and disclosures normally included in the financial statements prepared in accordance with U.S. GAAP have been condensed or omitted pursuant to such rules and regulations. These unaudited condensed consolidated financial statements should be read in conjunction with the audited consolidated financial statements and related notes in the Company’s 2022 Form 10-K for the fiscal year ended December 31, 2022, which provides a more complete discussion of the Company’s accounting policies and certain other information.

In the opinion of the Company, the accompanying unaudited condensed consolidated financial statements contain all adjustments, consisting of only normal recurring adjustments, necessary for a fair statement of its financial position as of March 31, 2023, and its results of operations for the three months ended March 31, 2023 and 2022, and cash flows for the three months ended March 31, 2023 and 2022. The condensed consolidated balance sheet as of December 31, 2022, was derived from audited annual financial statements but does not contain all of the footnote disclosures from the annual financial statements.

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MATTERPORT, INC.

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED)

Principles of Consolidation

The accompanying condensed consolidated financial statements include the accounts of the Company and its wholly owned subsidiaries. All significant intercompany balances and transactions have been eliminated in consolidation.

Use of Estimates

The preparation of the accompanying condensed consolidated financial statements in conformity with U.S. GAAP requires management to make certain estimates and assumptions that affect the reported amounts and disclosures in the condensed consolidated financial statements and accompanying notes. Significant estimates include assumptions related to the fair value of common stock before the Merger and other assumptions used to measure stock-based compensation, fair value of assets acquired and liabilities assumed in business combinations, fair value of identified intangibles, goodwill impairment, valuation of deferred tax assets, the estimate of net realizable value of inventory, allowance for doubtful accounts, the fair value of warrants liability, and loss contingencies, and the determination of stand-alone selling price of various performance obligations. As a result, many of the Company’s estimates and assumptions required increased judgment and these estimates may change materially in future periods.

Management evaluates its estimates and assumptions on an ongoing basis using historical experience and various other factors, including the current economic environment, which management believes to be reasonable under the circumstances, the results of which form the basis for making judgments about the carrying values of assets and liabilities that are not readily apparent from other sources. The Company adjusts such estimates and assumptions when dictated by facts and circumstances. Changes in those estimates resulting from continuing changes in the economic environment will be reflected in the condensed consolidated financial statements in future periods. Actual results may differ materially from those estimates.

Segment Information

The Company has a single operating segment and reportable segment. The Company’s chief operating decision-maker is its Chief Executive Officer, who reviews financial information presented on a consolidated basis for purposes of making operating decisions, assessing financial performance, and allocating resources. Refer to Note 3 for information regarding the Company’s revenue by geography. Substantially all of the Company’s long-lived assets are located in the United States.

Concentration of Credit Risk and Other Risks and Uncertainties

Financial instruments that subject the Company to concentrations of credit risk consist primarily of cash and cash equivalents, investments, and accounts receivable. The Company maintains its cash balances in accounts held by major banks and financial institutions located in the United States. Such bank deposits from time to time may be exposed to credit risk in excess of the Federal Deposit Insurance Corporation insurance limit, and the Company considers such risk to be minimal.

We invest only in high-quality credit instruments and maintain our cash and cash equivalents and available-for-sale investments in fixed income securities. Management believes that the financial institutions that hold our investments are financially sound and, accordingly, are subject to minimal credit risk. Deposits held with banks may exceed the amount of insurance provided on such deposits.

The Company’s accounts receivable is derived from customers located both inside and outside the United States. The Company mitigates its credit risks by performing ongoing credit evaluations of the financial condition of its customers and requires advance payment from customers in certain circumstances. The Company generally does not require collateral from its customers.

No customer accounted for more than 10% of the Company’s total accounts receivable at March 31, 2023 and December 31, 2022. No customer accounted for more than 10% of the Company’s total revenue for the three months ended March 31, 2023 and 2022.

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MATTERPORT, INC.

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED)

Recently Adopted Accounting Standards

In October 2021, the FASB issued ASU No. 2021-08, Business Combinations (Topic 805): Accounting for Contract Assets and Contract Liabilities from Contracts with Customers. ASU 2021-08 requires an acquirer in a business combination to recognize and measure contract assets and contract liabilities acquired in a business combination in accordance with ASC 606, Revenue from Contract with Customers, as if it had originated the contracts. The Company adopted this standard effective January 1, 2023, which did not have a material impact on the Company’s condensed consolidated financial statements.

3. REVENUE

Disaggregated Revenue—The following table shows the revenue by geography for the three months ended March 31, 2023 and 2022, respectively (in thousands):


	Three Months Ended March 31,
	2023		2022
Revenue:
United States	$	24,226	$	16,237
International	13,768		12,273
Total revenue	$	37,994	$	28,510

No country other than the United States accounted for more than 10% of the Company’s revenue for the three months ended March 31, 2023 and 2022, respectively. The geographical revenue information is determined by the ship-to address of the products and the billing address of the customers of the services.

The following table shows over time versus point-in-time revenue for the three months ended March 31, 2023 and 2022, respectively (in thousands):


	Three Months Ended March 31,
	2023		2022
Over time revenue	$	28,551	$	21,114
Point-in-time revenue	9,443		7,396
Total	$	37,994	$	28,510

Contract Asset and Liability Balances—Contract assets consist of unbilled accounts receivable and are recorded when revenue is recognized in advance of scheduled billings. The timing of revenue recognition differs from the timing of invoicing to customers and this timing difference results in contract liabilities (deferred revenue) on the Company’s condensed consolidated balance sheets. The contract balances as of March 31, 2023 and December 31, 2022 were as follows (in thousands):


	March 31, 2023		December 31, 2022
Accounts receivable, net	$	19,965	$	19,037
Unbilled accounts receivable	$	1,852	$	1,807
Deferred revenue	$	19,773	$	17,932

During the three months ended March 31, 2023 and 2022, the Company recognized revenue of $5.9 million and $4.4 million that was included in the deferred revenue balance at the beginning of the fiscal year, respectively. Contracted but unsatisfied performance obligations were $49.7 million at the end of March 31, 2023 and consisted of deferred revenue and backlog. The contracted but unsatisfied or partially unsatisfied performance obligations expected to be recognized over the next 12 months at the end of March 31, 2023 were $34.6 million, and the remaining thereafter.

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MATTERPORT, INC.

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED)

4. ACQUISITION

On January 5, 2022 (the “Enview Acquisition Date”), the Company completed the acquisition (the “Enview Acquisition”) of Enview, Inc. (“Enview”), a privately-held company engaged in the development of artificial intelligence algorithms to identify natural and man-made features in geospatial data using various techniques. The total purchase consideration for the Enview Acquisition was $64.3 million, including an insignificant working capital adjustment finalized during the measurement period that reduced the purchase price for Enview. The total purchase consideration consisted of the following (in thousands):


	Amount
Cash(1)	$	36,897
Common stock (1.5 million shares)(2)	23,161
Unpaid Consideration (3)	4,266
Total	$	64,324

(1) The Company paid $1.9 million and $35.0 million in cash consideration during the three months period ended March 31, 2023 and 2022, respectively.

(2) On the Enview Acquisition Date, the Company's closing stock price was $15.73 per share. The Company issued 0.3 million shares and 1.2 million shares during the three months period ended March 31, 2023 and 2022, respectively.

(3) The Company recorded a liability for unpaid cash of $2.4 million and stock consideration of $1.9 million that will be paid due to the passage of time on the second anniversary of the Enview Acquisition Date in accordance with the merger agreement. The liabilities are included in accrued expenses and other current liabilities in the condensed consolidated balance sheet.

The Company has accounted for the Enview Acquisition as a business combination and allocated the purchase consideration to assets acquired and liabilities assumed based on the fair values at the Enview Acquisition Date. The purchase price allocation includes adjustments for additional information that existed as of the Acquisition Date but at that time was unknown and became known during the measurement period of 12 months from the Acquisition Date. As of March 31, 2023, the Company has completed the purchase price allocation of the Enview Acquisition. The following table summarizes the allocation of purchase consideration on the Enview Acquisition Date, inclusive of measurement period adjustments (in thousands):


	Amount
Goodwill	$	53,990
Identified intangible assets	5,400
Net assets acquired	4,934


Total	$	64,324

Goodwill generated from this business combination is primarily attributable to the assembled workforce and expected post-acquisition synergies from integrating Enview technology with Matterport’s products and services. The goodwill is not deductible for income tax purposes.

The following table summarizes the estimated fair values and estimated useful lives of the components of identifiable intangible assets acquired as of the Enview Acquisition Date (in thousands, except years):


	Fair Value		Estimated Useful Life
Developed technology	$	5,400	5 years

Developed technology relates to existing Enview technology of its artificial intelligence algorithms to identify natural and man-made features in geospatial data. The economic useful life was determined based on the technology cycle related to the developed technology of existing services, as well as the cash flows anticipated over the forecasted periods.

The fair value of developed technology was estimated using the multi-period excess earnings method, an income approach (Level 3), which converts projected revenues and costs into cash flows. Significant assumptions used in the discounted cash flow analysis for the developed technology were the revenue growth rates, EBITDA margins, obsolescence technology factor, and discount rate.

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MATTERPORT, INC.

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED)

Pro forma results of operations have not been presented because the effects of the Enview Acquisition were not material to the Company’s condensed consolidated statements of operations.

Acquisition-related transaction costs are expensed as incurred and are recorded in selling, general, and administrative expenses in the Condensed Consolidated Statements of Operations. The Company incurred $0.5 million of acquisition-related costs for the three months ended March 31, 2022. There were no acquisition-related costs incurred for the three months ended March 31, 2023.

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NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED)

5. GOODWILL AND INTANGIBLE ASSETS

Goodwill—As of December 31, 2022 and March 31, 2023, goodwill was $69.6 million. The Company did not recognize any impairment losses on goodwill during the three months ended March 31, 2023 and 2022, respectively.

Purchased Intangible Assets—The following table presents details of the Company’s purchased intangible assets as of March 31, 2023 and December 31, 2022 (in thousands).


	March 31, 2023						December 31, 2022
	Gross Carrying Amount		Accumulated Amortization		Net Carrying Amount		Gross Carrying Amount		Accumulated Amortization		Net Carrying Amount
Intangible assets subject to amortization:
Developed technology	$	5,400	$	(1,335)	$	4,065	$	5,400	$	(1,065)	$	4,335
Customer relationships	6,900		(518)		6,382		6,900		(345)		6,555
Total	$	12,300	$	(1,853)	$	10,447	$	12,300	$	(1,410)	$	10,890

The Company recognized amortization expense of $0.4 million and $0.3 million for the three months ended March 31, 2023 and 2022, respectively. The Company did not recognize any impairment losses on intangible assets or other long-lived assets during the three months ended March 31, 2023 and 2022, respectively.

The following table summarizes estimated future amortization expense for the Company’s intangible assets as of March 31, 2023 (in thousands):


	Amount
Remaining 2023	$	1,327
2024	1,770
2025	1,770
2026	1,770
2027	705
2028 and thereafter	3,105
Total future amortization expense	$	10,447

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MATTERPORT, INC.

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED)

6. BALANCE SHEET COMPONENTS

Allowance for Doubtful Accounts—Allowance for doubtful accounts as of March 31, 2023 and 2022 and the rollforward for three months ended March 31, 2023 and 2022 were as follows (in thousands):


	Three Months Ended March 31,
	2023		2022
Balance—beginning of period	$	(1,212)	$	(291)
Increase in reserves	(289)		(191)
Write-offs	206		—
Balance—end of period	$	(1,295)	$	(482)

Inventories—Inventories as of March 31, 2023 and December 31, 2022 consisted of the following (in thousands):


	March 31, 2023		December 31, 2022
Finished goods	$	731	$	2,112
Work in process	4,628		3,477
Purchased parts and raw materials	5,643		5,472
Total inventories	$	11,002	$	11,061

Property and Equipment, Net—Property and equipment as of March 31, 2023 and December 31, 2022 consisted of the following (in thousands):


	March 31, 2023		December 31, 2022
Machinery and equipment	$	4,035	$	3,948
Furniture and fixtures	355		355
Leasehold improvements	734		734
Capitalized software and development costs	60,665		55,662
Total property and equipment	65,789		60,699
Accumulated depreciation and amortization	(34,088)		(30,140)
Total property and equipment, net	$	31,701	$	30,559

Depreciation and amortization expenses of property and equipment were $3.9 million and $2.2 million for the three months ended March 31, 2023 and 2022, respectively.

Additions to capitalized software and development costs, inclusive of stock-based compensation in the three months ended March 31, 2023 and 2022, was $5.0 million and $9.4 million, respectively. These are recorded as part of property and equipment, net on the condensed consolidated balance sheets.

Amortization expense was $3.8 million and $2.1 million for three months ended March 31, 2023 and 2022, respectively, of which $3.5 million and $1.8 million was recorded to costs of revenue related to subscription and $0.3 million and $0.3 million to selling, general and administrative in the condensed consolidated statements of operations, respectively.

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MATTERPORT, INC.

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED)

Accrued Expenses and Other Current Liabilities—Accrued expenses and other current liabilities as of March 31, 2023 and December 31, 2022, consisted of the following (in thousands):


	March 31, 2023		December 31, 2022
Accrued compensation	$	6,421	$	5,609
Tax payable	1,412		1,669
ESPP contribution	1,122		341
Current unpaid acquisition consideration	4,266		6,109
Short-term operating lease liabilities	1,287		1,267

Accrued loss on firm inventory purchase commitments	1,296		3,991
Other current liabilities	6,096		4,930
Total accrued expenses and other current liabilities	$	21,900	$	23,916

7. FAIR VALUE MEASUREMENTS

We categorize assets and liabilities recorded or disclosed at fair value on our condensed consolidated balance sheets based upon the level of judgment associated with inputs used to measure their fair value. The categories are as follows:

Level 1—Inputs are unadjusted quoted prices for identical assets or liabilities in active markets.

Level 2—Inputs to the valuation methodology include quoted prices for similar assets and liabilities in active markets, or inputs that are observable for the asset or liability, either directly or indirectly through market corroboration, for substantially the full term of the financial instrument.

Level 3—Inputs to the valuation methodology are unobservable and significant to the fair value measurement. The inputs require significant management judgment or estimation.

The Company’s financial assets and liabilities that were measured at fair value on a recurring basis were as follows (in thousands):


	March 31, 2023
	Level 1		Level 2		Level 3		Total
Financial Assets:
Cash equivalents:
Money market funds	$	71,343	$	—	$	—	$	71,343
Total cash equivalents	$	71,343	$	—	$	—	$	71,343
Short-term investments:
U.S. government and agency securities	$	153,490	$	—	$	—	$	153,490
Non-U.S. government and agency securities	—		19,208		—		19,208
Corporate debt securities	—		95,927		—		95,927
Commercial paper	—		43,259		—		43,259
Total short-term investments	$	153,490	$	158,394	$	—	$	311,884










Total assets measured at fair value	$	224,833	$	158,394	$	—	$	383,227

Financial Liabilities:
Private warrants liability	$	—	$	—	$	581	$	581
Total liabilities measured at fair value	$	—	$	—	$	581	$	581

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MATTERPORT, INC.

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED)


	December 31, 2022
	Level 1		Level 2		Level 3		Total
Financial Assets:
Cash equivalents:
Money market funds	$	51,557	$	—	$	—	$	51,557
Total cash equivalents	$	51,557	$	—	$	—	$	51,557
Short-term investments:
U.S. government and agency securities	$	181,714	$	—	$	—	$	181,714
Non-U.S. government and agency securities	—		24,946		—		24,946
Corporate debt securities	—		114,113		—		114,113
Commercial paper	—		35,042		—		35,042
Total short-term investments	$	181,714	$	174,101	$	—	$	355,815
Long-term investments:


Corporate debt securities	$	—	$	3,959	$	—	$	3,959

Total long-term investments	$	—	$	3,959	$	—	$	3,959




Total assets measured at fair value	$	233,271	$	178,060	$	—	$	411,331

Financial Liabilities:

Private warrants liability	$	—	$	—	$	803	$	803

Total liabilities measured at fair value	$	—	$	—	$	803	$	803

Available-for-sale Debt Securities

The following tables summarize the amortized cost, unrealized gains and losses, and fair value of our available-for-sale debt securities as of March 31, 2023 and December 31, 2022 (in thousands):


	March 31, 2023
	Amortized Cost		Unrealized Gains		Unrealized Losses		Fair Value



Investments:
U.S. government and agency securities	$	155,185	$	—	$	(1,695)	$	153,490
Non-U.S. government and agency securities	19,311		—		(103)		19,208
Corporate debt securities	96,863		—		(936)		95,927
Commercial paper	43,284		—		(25)		43,259

Total available-for-sale investments	$	314,643	$	—	$	(2,759)	$	311,884


	December 31, 2022
	Amortized Cost		Unrealized Gains		Unrealized Losses		Fair Value



Investments:
U.S. government and agency securities	$	185,371	$	—	$	(3,657)	$	181,714
Non-U.S. government and agency securities	24,989		—		(44)		24,945
Corporate debt securities	119,396		—		(1,324)		118,072
Commercial paper	35,052		—		(9)		35,043

Total available-for-sale investments	$	364,808	$	—	$	(5,034)	$	359,774

As of March 31, 2023, the gross unrealized losses that have been in a continuous unrealized loss position for less than 12 months were $0.4 million, which were related to $112.5 million of available-for-sale debt securities, and the gross unrealized losses that have been in a continuous unrealized loss position for more than 12 months were $2.4 million, which were related to $199.4 million of available-for-sale debt securities. As of December 31, 2022, the gross unrealized losses

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MATTERPORT, INC.

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED)

that have been in a continuous unrealized loss position for less than 12 months were $0.2 million, which were related to $49.4 million of available-for-sale debt securities, and the gross unrealized losses that have been in a continuous unrealized loss position for more than 12 months were $4.8 million, which were related to $291.0 million of available-for-sale debt securities.

Unrealized losses related to these securities are due to interest rate fluctuations as opposed to credit quality. In addition, we do not intend to sell and it is not likely that we would be required to sell these securities before recovery of their amortized cost basis, which may be at maturity. We did not recognize any credit losses related to our available-for-sale debt securities during the three months ended March 31, 2023 and 2022.

The following table summarizes the amortized cost and fair value of our available-for-sale debt securities as of March 31, 2023, by contractual years-to-maturity (in thousands):


	March 31, 2023
	Amortized Cost		Fair Value
Due within one year	$	314,643	$	311,884

Total	$	314,643	$	311,884

8. COMMITMENTS AND CONTINGENCIES

Purchase Obligation—The Company has purchase obligations, which include agreements and issued purchase orders containing non-cancelable payment terms to purchase goods and services.

As of March 31, 2023, future minimum purchase obligations are as follows (in thousands):


	Purchase Obligations
Remainder of 2023	$	14,528
2024	7,667
2025	100


Thereafter	—
Total	$	22,295

Litigation—The Company is named from time to time as a party to lawsuits and other types of legal proceedings and claims in the normal course of business. The Company accrues for contingencies when it believes that a loss is probable and that it can reasonably estimate the amount of any such loss.

On July 23, 2021, plaintiff William J. Brown, a former employee and a shareholder of Matterport, Inc. (now known as Matterport Operating, LLC) (“Legacy Matterport”), sued Legacy Matterport, Gores Holdings VI, Inc. (now known as Matterport, Inc.), Maker Merger Sub Inc., Maker Merger Sub II, LLC, and Legacy Matterport directors R.J. Pittman, David Gausebeck, Matt Bell, Peter Hebert, Jason Krikorian, Carlos Kokron and Michael Gustafson (collectively, the “Defendants”) in the Court of Chancery of the State of Delaware. The plaintiff’s initial complaint claimed that Defendants imposed invalid transfer restrictions on his shares of Matterport stock in connection with the merger transactions between Matterport, Inc. and Legacy Matterport (the “Transfer Restrictions”), and that Legacy Matterport’s board of directors violated their fiduciary duties in connection with a purportedly misleading letter of transmittal. The initial complaint sought damages and costs, as well as a declaration from the court that he may freely transfer his shares of Class A common stock of Matterport received in connection with the merger transactions. An expedited trial regarding the facial validity of the Transfer Restrictions took place in December 2021. On January 11, 2022, the court issued a ruling that the Transfer Restrictions did not apply to the plaintiff. The opinion did not address the validity of the Transfer Restrictions more broadly. Matterport filed a notice of appeal of the court’s ruling on February 8, 2022, and a hearing was held in front of the Delaware Supreme Court on July 13, 2022, after which the appellate court affirmed the lower court’s ruling. Separate proceedings regarding the plaintiff’s remaining claims are pending. The plaintiff filed a Third Amended Complaint on September 16, 2022, which asserts the causes of action described above but omits as defendants Maker Merger Sub Inc., Maker Merger Sub II, LLC, and Legacy Matterport directors David Gausebeck, Matt Bell, and Carlos Kokron, and adds an

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MATTERPORT, INC.

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED)

additional cause of action alleging that Matterport, Inc. violated the Delaware Uniform Commercial Code by failing to timely register Brown’s requested transfer of Matterport, Inc. shares. The remaining defendants’ answer to the Third Amended Complaint was filed on November 9, 2022, and the parties are currently engaged in discovery.

On July 20, 2021, the Company, then operating under the name Gores Holdings VI, Inc., held a special meeting of stockholders (the “2021 Special Meeting”) in lieu of the 2021 annual meeting of the Company’s stockholders to approve certain matters relating to its proposed business combination with Matterport, Inc., Maker Merger Sub, Inc. and Maker Merger Sub II, LLC. One of these matters was a proposal to adopt the Second Amended and Restated Certificate of Incorporation of the Company (the “New Certificate of Incorporation”), which, among other things, increased the total number of authorized shares of the Company’s Class A common stock, par value $0.0001 per share (the “Class A common stock”), from 400,000,000 shares to 600,000,000 shares. The New Certificate of Incorporation was approved by a majority of the shares of Class A common stock and the Company’s Class F common stock, par value $0.0001 per share (the “Class F common stock”), voting together as a single class, that were outstanding as of the record date for the 2021 Special Meeting. After the 2021 Special Meeting, the business combination was consummated and the New Certificate of Incorporation became effective. A December 2022 decision of the Delaware Court of Chancery (the “Court of Chancery”) has created uncertainty as to whether Section 242(b)(2) of the Delaware General Corporation Law (“DGCL”) would have required the New Certificate of Incorporation to be approved by a separate vote of the majority of the Company’s then-outstanding shares of Class A common stock, in addition to a majority of the shares of Class A common stock and Class F common stock voting together. The Company continues to believe that a separate vote of Class A common stock was not required to approve the New Certificate of Incorporation. However, in light of the recent Court of Chancery decision, on February 16, 2023 the Company filed a petition (the “Petition”) in the Court of Chancery pursuant to Section 205 of the DGCL seeking validation of the New Certificate of Incorporation, and the shares issued in reliance on the effectiveness of the New Certificate of Incorporation to resolve any uncertainty with respect to those matters. Section 205 of the DGCL permits the Court of Chancery, in its discretion, to ratify and validate potentially defective corporate acts and stock after considering a variety of factors. On March 14, 2023, the Court of Chancery granted the Petition validating the New Certificate of Incorporation and all shares of capital stock issued in reliance on the effectiveness of the New Certificate of Incorporation.

On May 11, 2020, Redfin Corporation (“Redfin”) was served with a complaint by Appliance Computing, Inc. III, d/b/a Surefield (“Surefield”), filed in the United States District Court for the Western District of Texas, Waco Division. In the complaint, Surefield asserted that Redfin’s use of Matterport’s 3D-Walkthrough technology infringes four of Surefield’s patents. Redfin has asserted defenses in the litigation that the patents in question are invalid and have not been infringed upon. We have agreed to indemnify Redfin for this matter pursuant to our existing agreements with Redfin. The parties have vigorously defended against this litigation. The matter went to jury trial in May 2022 and resulted in a jury verdict finding that Redfin had not infringed upon any of the asserted patent claims and that all asserted patent claims were invalid. Final judgment was entered on August 15, 2022. On September 12, 2022, Surefield filed post trial motions seeking to reverse the jury verdict. Redfin has filed oppositions to the motions. In addition, on May 16, 2022, the Company filed a declaratory judgment action against Appliance Computing III, Inc., d/b/a Surefield, seeking a declaratory judgment that the Company had not infringed upon the four patents asserted against Redfin and one additional, related patent. The matter is pending in the Western District of Washington and captioned Matterport, Inc. v. Appliance Computing III, Inc. d/b/a Surefield, Case No. 2:22-cv-00669 (W.D. Wash.). Surefield has filed a motion to dismiss or in the alternative transfer the case to the United States District Court for the Western District of Texas. The Company has filed an opposition to the motion and is awaiting a ruling from the Court.

On January 29, 2021, Legacy Matterport received a voluntary request for information from the Division of Enforcement of the SEC relating to certain sales and repurchases of its securities in the secondary market. We believe we have complied fully with the request. We have not received any updates from the SEC as to the scope, duration or ultimate resolution of the investigation.

The Company monitors developments in these legal matters that could affect the estimate if the Company had previously accrued. As of March 31, 2023 and December 31, 2022, there were no amounts accrued that the Company believes would be material to its financial position.

Indemnification—In the ordinary course of business, the Company enters into certain agreements that provide for indemnification by the Company of varying scope and terms to customers, vendors, directors, officers, employees and other parties with respect to certain matters. Indemnification includes losses from breach of such agreements, services

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MATTERPORT, INC.

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED)

provided by the Company, or third-party intellectual property infringement claims. These indemnities may survive termination of the underlying agreement and the maximum potential amount of future indemnification payments, in some circumstances, are not subject to a cap. As of March 31, 2023, there were no known events or circumstances that have resulted in a material indemnification liability.

9. STOCKHOLDERS’ EQUITY

The Company had reserved shares of common stock for future issuance as of March 31, 2023 as follows (in thousands):


			March 31, 2023

Private warrants to purchase common stock			1,708