Matterport (NASDAQ: MTTR) went public via SPAC earlier this year, and the company has made some pretty impressive claims about its addressable market opportunity. The business, which creates 3-D digital "twins" of real-world buildings, sells subscriptions to its services and estimates that if it can get 1% of global real estate in its data library, it could translate to $2.4 billion in annual recurring revenue.
Less than 1% of all real estate worldwide has been digitized to date, and quite frankly, many 3-D renderings aren't up to the level of Matterport's capabilities, and the company's technological superiority is why companies like Airbnb (NASDAQ: ABNB) and Redfin (NASDAQ: RDFN) rely on Matterport to help customers experience properties remotely.
While it's certainly nice to have top-quality 3-D renderings of businesses, many investors have trouble visualizing how it could translate into actual value for Matterport's customers. Well, vacation rental management company Vacasa recently gave us some concrete data.
How much value does Matterport add to Vacasa's platform?
Vacasa, which is the largest vacation rental management platform in North America, has been using Matterport's 3-D technology in its business since 2015, and nearly 90% of Vacasa listings today have Matterport digital twins. So the company has a fair amount of data from which to draw conclusions.
Well, Vacasa recently said that listings that include Matterport digital twins have booking conversion rates 12% higher than listings that don't. What's more, prospective guests spend three times as long looking at Matterport-enhanced listings, which shows a clear benefit when it comes to user engagement.
Matterport doesn't just help with booking efficiency. Properties with digital twins are better equipped for Vacasa's customer service team to handle customer service and maintenance issues -- such as where an electrical panel in a particular vacation rental is located without physically going to the property.
The incremental cost to Vacasa to add Matterport 3-D maps is minimal. Property owners simply scan the interior of their home with a smartphone, and Matterport's software does the rest.
What does it mean for investors?
The key takeaway is that Matterport not only adds functionality to its customers' businesses but also increases revenue. With over 30,000 vacation homes under management in Vacasa's platform, a 12% increase in booking conversions translates into a lot of money.
Matterport already has over 400,000 subscribers all over the world, and 13% of the Fortune 1,000 use the platform (although this includes those who use the free version of the software). Matterport's net revenue retention rate was 132% in the second quarter, which means that its existing subscribers are spending 32% more money with Matterport than they were a year ago -- an excellent indicator that customers are seeing real value in the platform.
As I mentioned, Matterport sees an opportunity to achieve $2.4 billion in annual recurring revenue if it can penetrate just 1% of its addressable market opportunity. For context, the company's run rate is $118 million in annual revenue as of the second quarter, so there's a ton of potential -- especially if Matterport could ultimately get 2%, 5%, or even more of its potential opportunity. And this new data from Vacasa shows that Matterport's product can be a true value-add for the businesses that use it.