We recently learned that real estate 3-D mapping technology company Matterport is planning to go public through a special-purpose acquisition company (SPAC) merger with Gores Holdings VI (NASDAQ:GHVI). And you might be shocked at just how much the company’s business soared during the COVID-19 pandemic in 2020.
In this Fool Live video clip, recorded on March 8, Fool.com contributor Matt Frankel, CFP, and Jason Moser discuss why Matterport did so well last year, and what could be in store for the future.
Jason Moser: Let’s talk a little bit about the second SPAC, because I think this is another interest one for listeners here interested in the space. Gores Holdings VI. Ticker here is GHVI. This is the SPAC that’s going to be responsible for taking Matterport public. Talk a little bit about what Matterport is and what your thoughts on Gores Holdings VI are.
Matt Frankel: Yes, as the name implies, the sixth SPAC from an investment firm known as the Gores Group. They’ve successfully taken five companies public already, so this would be No. 6. They announced they were taking Matterport, which is another property technology or PropTech company.
What Matterport does is they provide a platform to bake really impressive 3D maps of the inside of buildings, virtual tour technology think of, things like that. They are the company behind the software for that. They have over 250,000 customers in 150 countries around the world. So this is not necessarily an early-stage company. They’ve been around for 10 years now. They have over 10 billion square feet in their library of space that they’ve mapped already. They’re not new at this. They use a software-as-a-service model, also, meaning that they sell subscriptions, their recurring revenue model. They’ve been around for 10 years; 2020 just kind of catapulted them into the next level.
Think of what happened when 2020 started. We all know that there was the COVID pandemic, and everyone was staying inside, and before March 2020, Jason wouldn’t be talking to me from his house. He’d be in the studio talking to me. Everyone stayed inside their house, and the real estate market just kind of went nuts. Not only are mortgages cheaper than they’ve ever been before, but inventory is scarce, and things like that sort of created this tremendous need for people to be able to see prospective homes to buy without actually going there. That’s perfect for a company that can 3D map the inside of a property for virtual tour purposes.
The revenue increased over 500% last year. Don’t expect that every year, that was the COVID effect. Remember, there’s a subscription model, so if they quintupled their subscriber base in 2020, that’s a sustainable boost in revenue. Revenue in 2020 was up 87% year over year. Pretty impressive. The 500% was their subscription based revenue. So currently less than 1% of real estate around the world has a 3D map made of the inside of it, less than 1%. So still a pretty big growth market.
They’re going public through the SPAC deal. It’s valuing them a little bit more, about double Latch’s value. They are valued at about $2.9 billion. That includes $640 million of cash they’re getting in the deal. They’re getting a $295 million pipe, which is the private investor round, and they’re also getting $345 million from the SPAC, the Gores Holding VI that you were talking about.
Couple of impressive statistics that I read. The lifetime value of their subscribers is now over almost 12 times what their cost of acquisition is. That’s pretty good economics. So each subscriber they get is bringing in 12 times the amount of revenue throughout the lifetime than it’s costing them to acquire. That’s some pretty good economics that can really snowball over time, and like I said, the 500% growth in subscribers, just really impressive. Impressive growth, really sustainable. It’s really making the use case for this, because having a 3D map version of the building, it opens up your home tours to people who aren’t near you even after the pandemic.
Moser: There’s no doubt about it, and I think that it’s interesting that you mentioned this one, because to me this immediately this gets on my radar for the augmented reality beyond service that I run here at the Fool. I mean, this sounds to be right up my alley in that regard, so I’m going to be keeping this one. I’m going to be keeping this one very close, and digging more into it in the coming weeks and months ahead.
I’m trying to think here now, with Gores Holdings VI, I mean this to me indicates that this is their sixth go at it. Are there five other Gores Holding SPACs that have launched to this point?
Frankel: Well, there were five others before this that have taken companies public already. I think there’s of Gores Holding seven, and an eight out on the market right now.
Moser: Got you.
Frankel: So six have identified their targets, five have already gone public, and I think there’s two pre-deal Gores Holding stacks that are still in the market. There is 3D mapping, the other thing I wanted to mention, and I’m glad I didn’t forget this. It’s not just 3D home-tour technology. This has implications for design, for construction, for property management. Really, every area of real estate could use a 3D imaging technology inside of the building.
Moser: Yeah, I think you’re right.
Frankel: We’re having a small addition put on the back of our house next year, and we’re working with an architect and they’re using a 3D mapping technology, that’s one application of their product. It’s a huge addressable market opportunity. It’s a pretty rich valuation for the company; they’d add about $86 million of revenue last year. So a pretty rich valuation, but big addressable market, lots of growth momentum. Like I said, the COVID pandemic might have just catapulted them to the next level.
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