Matterport, Inc. (NASDAQ:MTTR) Q3 2023 Earnings Call Transcript

Matterport, Inc. (NASDAQ:MTTR) Q3 2023 Earnings Call Transcript November 6, 2023

Matterport, Inc. beats earnings expectations. Reported EPS is $-0.04, expectations were $-0.06.

Operator: Hello, and welcome to the Matterport Inc. Fiscal 2023 Third Quarter Results Conference Call. All participants will be in listen-only mode. [Operator Instructions] After today’s presentation, there will be an opportunity to ask questions. [Operator Instructions] Please note, today’s event is being recorded. I would now like to turn the conference over to your host Mr. Mike Knapp, please go ahead, sir.

Mike Knapp: Thanks, and welcome to Matterport’s third quarter 2023 financial results conference call. After the market closed today, Matterport released results for the quarter ended September 30th, 2023. The release is available on the company’s website at investors.matterport.com. This call is being recorded and webcasted live, and a link to the webcast can be found in the Investor Relations section of our website. Before we begin, I would 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 Matterport’s 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.

Additional 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 Matterport 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 as 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 Matterport’s shareholder rewards program with Stockperks.

Interested investors should visit the Stockperks app for more details on how to claim Matterport shareholder perks. Hosting today’s call are RJ Pittman, Chairman and Chief Executive Officer, and JD Fay, Chief Financial Officer. And with that, I’d like to turn it over to RJ to begin.

RJ Pittman: 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 loss per share surpassing the high-end of guidance. Total revenue for the quarter grew to $40.6 million, fueled by strong uptake from both enterprise, and small and medium-size businesses. Subscription revenue jumped to 20% year-over-year growth, reaching a record $22.9 million, underscoring the growing trust in our platform to boost productivity and cut operational costs. In 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, with spaces under management hitting $11.1 million, and our subscriber base expanding to 887,000, reflecting steady growth in Matterport digital twin adoption worldwide.

In addition, gross margins reached 56%, a two-year high as 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 $0.04, which is above guidance and a 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 we remain confident in achieving next year. On top of these financial improvements, we saw our net dollar expansion rate improve to 106% from 100% in the prior quarter, as trends in both small and medium-size businesses and the enterprise cohorts improved.

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 beared witness to profound technological disruption that has shaped various industries, including finance, retail and entertainment to name a few. The Internet has disrupted just about every marketplace in the world, making products cheaper, including the transaction fees, because of the ubiquitous efficiency of digitalization, such as zero dollar fees offered by brokerages to trade stocks online for example.

Meanwhile, the real estate sector has largely preserved its traditional analog approach to the property marketplace, which is shackled with inefficiencies with cost and fees that haven’t changed in decades. Our ability to identify and tackle these inefficiencies, if Matterport and the digital twin a central role in moving the real estate industry forward the old-fashioned way by bringing it all online. History has shown that in all cases the antiquated offline industries must either evolve and embrace digitization or risk extinction. Recently, we have seen new cracks appear in the foundation of the US real estate industry with rulings against fixed buyer commissions that many consider to stifle buyers’ choices. However, we don’t need to wait until the proceedings to see how we got here.

The inefficiencies of the legacy marketplace themselves would drive the behaviors that keep the cost high and the process of buying and selling real estate more cumbersome than it should be in 2023. Given the tremendous technology advancements available to us today, it’s not hard to imagine a present-day industry transformation that reshapes how people buy, sell, rent and manage their properties online, and from anywhere in the world. Matterport continues to evolve too. Our platform has evolved from the immersive 3D virtual tour into a powerful property intelligence agent that provides unprecedented details and insights, and about a home that have never been previously available to buyers and sellers alike. These new capabilities are empowering the marketplace with 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 are ultimately what drives industry change, even if that requires repouring 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 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 healthcare, 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, Matterport has been a catalyst across the real estate industry, pushing it to its inevitable digital destination.

In order for the industry to thrive, much less to survive, 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 Matterport’s role in accelerating the digital transformation of the built 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, Matterport has delivered countless new features, functionality and engaging experiences across the ecosystem. In Q2, we announced our first change store subscription plan structure and pricing. The new 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 newer 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 $50,000 in annual recurring revenue today, while expanding our six and seven-figure contract wins along the way.

In fact, I am proud to announce that Matterport won its first eight-figure deal in Q3, a testament to the impact our product is having with 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 per month and $2,500 per month per digital twin, that’s more than 1,000 times our SMB starter plan 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 Matterport. Now, let’s move on to our partnership update. Matterport delivers 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’s functionality, pave the way for new distribution avenues for our solutions, and drive our pipeline. As you know, Procore, 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 Procore relationship, enabling deeper digital twin integration to streamline the design and construction process.

These new features allow Procore customers choose features such as request for information, observations, and coordination issues directly within Matterport’s photo-realistic 3D digital twins, creating a visual system of record for site conditions that anyone on a project can track. Users can centralize record keeping, enable better progress tracking, improve quality control, and experience a more efficient closeout process as they transition seamlessly between their Procore project management workspace and in Matterport digital twin of a site. We recently announced our membership as an Autodesk Construction Cloud Premium Partner, helping bring Matterport’s 4K digital twins to even more construction professionals. Strategic partnerships like this and other leading enterprise software providers like Autodesk, AWS and Verisk 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 CompuSoluciones in Latin America, and Equinox Technologies in the Middle East, Africa and Asia-Pacific. In Q3, we also extended our long-term relationship with Idealista, Southern Europe’s largest online real estate platform, through a multi-year agreement. 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 Danone, based in Paris, which operates large food and beverage manufacturing facilities worldwide, and include areas that are difficult for visitors and partners to access.

Strict safety and quality protocols mean that all visitors who wish to enter the production facilities must undergo safety and quality awareness training and wear protective clothing. Using Matterport Pro3 cameras, Danone has captured its facilities with dimensionally accurate, photo-realistic 3D digital twins. Authorized users can now access any production site remotely from their laptop or mobile device in true 3D. This drove a 50% reduction in on-site 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 costs, while seamlessly connecting colleagues and work groups that may be located all across the globe.

This deepens the understanding of manufacturing plant conditions and requirements, as well as enhances training knowledge for those who will service facility. Second case study relates to Siemens based in Munich, a Fortune Global 500 company, and a manufacturing and technology powerhouse. Siemens has captured thousands of square feet of its manufacturing plants overseas. The high-resolution digital twins enables Siemens’ personnel to meet virtually with new and existing customers to discuss the company’s manufacturing capabilities with exquisite detail. With our digital twins, internal stakeholders and customers can perform thorough reviews of production and assembly line setups 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 of conducting meetings during a production run are eliminated along with physical safety and complexities of welcoming visitors in-person. Management is particularly interested in conducting digital twin visits using VR headsets, mitigating the risk of unauthorized photography of 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 1000, 25% of which we are proud to call our customers. Before I turn it over to JD Fay, I’d like to provide an update on Genesis, our AI initiatives that will combine property intelligence with generative AI and our spatial data library to offer unique AI solutions to the built world.

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, and 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 Matterport digital twins since our inception. Now in an oversubscribed public beta, the new property insights for real estate provide automated room measurements, layouts, editing and risk 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 show vast improvement over the accuracy of measurement taken by hand by automatically processing the millions of 3D data points captured with the Matterport digital twin. Instant access to room dimensions, total square footage by room, by 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, our 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 or 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 constantly understand the value and potential of their new home. Property marketers can accelerate home listings in sales with instant at-a-glance property overviews and MLS data, saving significant time, while modernizing listings with the insights buyers increasingly demand. We have over 1,500 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 digitized physical space, as our customer base grows and the size of spaces being captured grows too. This is fueled by the power of Pro3 to capture super-large spaces indoor and out. In the short time, the Pro3 has been in market, the average square feet captured by our Pro3 camera is four times greater than that of the Pro2, 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, our core AI platform to train, learn and deliver so many new insights and recommendations for properties of every kind. This has long provided Matterport with an enormous advantage in the industry, and today, it is unlocking extraordinary innovation for us, fueled by the historic inflection point of game-changing advancements in the field of AI that have only just begun.

I would now like to turn it over to JD Fay to discuss our financial performance for the third quarter and the outlook for Q4 and the full-year 2023.

JD Fay: Thank you, RJ. For the third quarter, we delivered total revenue of $40.6 million, which was above the high end of our guidance range. The strength in 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. This brought our annual recurring revenue to $91.4 million as we rapidly approach the $100 million ARR 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 operating regions.

Our paid subscriber base grew to 71,000 as of 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’re seeing through our targeted investment in customer support teams, focused on retaining and growing our customers’ use of Matterport. The price increase for SMB subscription plans also helped to lift 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 by similar double-digit rates in 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 have been declining in the current economy. Further, our double-digit growth rate highlights the share gains we have achieved and sustained over the past several quarters, while 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 Matterport. 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 join the Matterport 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 had 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 Pro3 camera which experienced strong pent-up loss demand, and second, we were able to complete a recovery in the supply chain relating to the Pro2 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 on to gross margin, total gross margin for the third quarter expanded to 56% compared to 48% in the year-ago period. Our gross margin was the strongest that we had 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 in margin. Product gross margin was 23% in the third quarter, also up materially from 13% in the year-ago period.

The improvement was largely due to having earlier worked through higher costs that were associated with the supply chain challenges we experienced last year, along with contribution from Pro3 camera sales. 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 are 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 and 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 were $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 $0.04, above the high end of our guidance range. This is also a 56% improvement in bottom line performance from the year-ago quarter. I’m very pleased with the significant progress on the bottom line, as we are actively driving the company to achieve profitability, which is in sight. 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, improve 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 a range of $23 million to $23.3 million. This represents 20% year-on-year growth at the midpoint of the subscription revenue range, maintaining a 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 a range of $0.03 to $0.05. This means, we are raising our full-year 2023 total revenue guidance, which is now $157 million to $159 million, and we are raising our full-year 2023 subscription revenue guidance, which is now expected to be in the range of $86.5 million to $86.8 million. For the full year of 2023, we expect a $0.21 to $0.23 non-GAAP loss per share, and this represents an improvement of $0.14 at the midpoint compared to the guidance we articulated at the beginning of the year, and 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 the bottom line and cash flow. And as we continue on this path, we are firmly and rapidly approaching our near-term objective of positive cash flow from operations. Now, I would like to turn the call back over to RJ. RJ Pittman Thanks, JD. The third quarter was a key period of execution for the company, as we operationalize a more efficient plan for growth with a leaner customer-centric organization. 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 Matterport, during a period when cost savings, productivity, and operating efficiency targets are at an all-time high.

We are working hard to integrate Matterport into the daily workflows of our customers to simplify how they get things done. Our Property Intelligence data insights can tell 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 lynchpin for growth across the real estate industry. Customers are thriving with Matterport, adopting our latest offerings that provide significant value. The reality echoed in our increasing net dollar expansion rates. The value is evidence in the steady growth across both our SMB and enterprise segments. We are on track to reach cash flow breakeven in 2024, a full-year ahead of schedule, a milestone underscored by our strong performance in the third quarter, delivering 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, aligning 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, featuring 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 asset class, we call the built world, the 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.

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Q&A Session

Operator: Yes, thank you. At this time, we will begin the question-and-answer session. [Operator Instructions] At this time, we will pause momentarily to assemble the roster. And the first question comes from Bhavin Shah with Deutsche Bank.

Unidentified Analyst: Hi, everyone. It’s [Nick] (ph) on for Bob this evening. Thanks for taking my questions. JD or RJ, can you just talk through what you see underpinning the continued 20% growth momentum heading into the fourth quarter?

JD Fay: 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, and both are benefiting from more value that we’re providing into the subscription plans, and we of course are generating more revenue for account and for digital twin, as well reflecting the price changes and increases we make 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 to expansions of our existing subscriber base.

Unidentified Analyst: 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 pricing and packaging changes [Technical Difficulty] from customers that are — have yet to renew?

RJ Pittman: Yes. For those customers that have yet to renew, and these are customers who are on 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 are 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 medium business customers with one year or longer plans today. In the enterprise cohort, most of those customers have one year or longer subscription plans or agreements with us, and so we will take the next one years 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.

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.

Unidentified Analyst: Great, thank you for taking my questions.

Operator: Thank you. And the next question comes from Yun Kim with Loop Capital Markets.

Yun Kim: All right, great. Congrats on another solid quarter RJ and JD. 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? For instance, it seems like now you have 100 plus enterprise accounts that generate $50,000 ARR which is very, very solid. Any trend around average deal size or ARR per customer and such, and any change in the land and expand motion for the enterprise customers?

RJ Pittman: Sure, thanks, Yun. I’ll start with that, and JD can fill in. And picking up right where you left off, yes, absolutely. One of the things we’ve been really working on this year is driving operational efficiency and driving sales efficiency. The pipeline strength is better than at Matterport, and particularly seeing very impressive forward momentum in the enterprise pipeline. Second to that is, we have been architecting the enterprise solution in a very iterative fashion over the past several quarters just continuing to hone that product market fit and making sure that the ease of integration into enterprise is smooth and quick so that we can get them 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 the pipeline and prosecuting the deal opportunities to getting our customers successful on the platform has been a key operational focus for us, and it’s paying dividends. And so that’s allowing our customers to accelerate the adoption of Matterport, and that’s going to continue, because we are seeing continued strong demand for the products, and the alignment of our data offerings, the property intelligence that we spoke quite a bit about and that’s out in public data today is broadly of interest to not just residential but also to our commercial real estate property managers, which we find in the enterprise.

JD Fay: Yes. And I’ll just add to that, as you noted, our larger enterprise customers with more than $50,000 of annual recurring revenue has experienced very healthy growth in the last quarter. In fact, we had the largest number of logo acquisitions last quarter that we’ve had in over a year, and combined with 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 as well as driving up the enterprise cohorts growth in our subscription revenue overall. And finally I would just again reiterate, we 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 that have almost a limit.

Yun Kim: Okay, great. And then just a 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 there between the enterprise versus the small business customers?

RJ Pittman: 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, which many customers took advantage of, and I think that bodes well for us as well as we continue 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.

JD Fay: Yeah. I’ll build on that. It’s been a philosophy of ours for many years that despite the rising cost of living and the rising rates of inflation et cetera, we don’t believe in arbitrary price increases for the sake of it, and that’s been a hallmark here at Matterport. And importantly, pricing changes are only associated with continued value-add on the platform, and we’re going to continue on that trend going forward in a way that is very customer-centric. So in other words, a lot of these new features and functions that we have brought out this year and last year, were not just purely coming from Matterport, but from the partnership with our customers have been involved in the process, in the process of expanding the value proposition of Matterport and growing that value-based pricing model.