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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

For the quarterly period ended March 31, 2021

OR

☐

TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

For the transition period from ____________ to ____________

FOR THE TRANSITION PERIOD FROM         TO        

Commission File Number:file number 001-39790

GORES HOLDINGS VI,

____________________________
MATTERPORT, INC.

(Exact name of registrant as specified in its Charter)

charter)
____________________________

Delaware

85-1695048

Delaware

85-1695048
(State or other jurisdiction of

(I.R.S. Employer

incorporation or organization)

(I.R.S. Employer
Identification No.)

6260 Lookout Rd.

352 East Java Drive

Boulder, CO

80301

Sunnyvale, California 94089

(Address of principal executive offices)

(Zip Code)

Principal Executive Offices, including zip code)

(310) 209-3010

(650) 641-2241
(Registrant’sRegistrant'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 Symbols

Symbol

Name of each exchange
on which registered

Class A Common Stock,

par value of $0.0001 per share

GHVI

MTTR

The Nasdaq CapitalGlobal Market

Warrants

GHVIW

Nasdaq Capital Market

Units

GHVIU

Nasdaq Capital 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 Yesx☐ No Noo
☒

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 Yesx☒ No  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 definitiondefinitions of “large accelerated filer”,filer,” “accelerated filer”,filer,” “smaller reporting company,”company” and “emerging growth company” in Rule 12b‑212b-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‑212b-2 of the Exchange Act). YES Yes ☐ No ☒ NO ☐

As of May 27, 2021, there were 34,500,000

The registrant had 295,867,535 shares of the Company’s Class A common stock par value $0.0001 per share, and 8,625,000 sharesoutstanding as of the Company’s Class F common stock, par value $0.0001 per share, issued and outstanding.

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May 2, 2023.

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Item 2.

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GORES HOLDINGS VI,










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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 SHEET

SHEETS

 

 

March 31, 2021

 

 

December 31, 2020

 

 

 

(unaudited)

 

 

(audited)

 

CURRENT ASSETS:

 

 

 

 

 

 

 

 

 

 

Cash and cash equivalents

 

$

 

176,595

 

 

$

 

633,266

 

Prepaid assets

 

 

 

835,981

 

 

 

 

897,754

 

Total current assets

 

 

 

1,012,576

 

 

 

 

1,531,020

 

Deferred tax asset

 

 

 

—

 

 

 

 

26,273

 

Investments and cash held in Trust Account

 

 

 

345,022,332

 

 

 

 

345,008,625

 

Total assets

 

$

 

346,034,908

 

 

$

 

346,565,918

 

 

 

 

 

 

 

 

 

 

 

 

LIABILITIES AND STOCKHOLDERS’ EQUITY (DEFICIT)

 

 

 

 

 

 

 

 

 

 

Current liabilities:

 

 

 

 

 

 

 

 

 

 

Accrued expenses, formation and offering costs

 

$

 

2,659,357

 

 

$

 

475,462

 

Related party note

 

 

 

600,000

 

 

 

 

—

 

State franchise tax accrual

 

 

 

50,000

 

 

 

 

55,241

 

Public warrants derivative liability

 

 

 

27,255,000

 

 

 

 

11,040,000

 

Private warrants derivative liability

 

 

 

17,577,500

 

 

 

 

7,120,000

 

Total current liabilities

 

 

 

48,141,857

 

 

 

 

18,690,703

 

Deferred underwriting compensation

 

 

 

12,075,000

 

 

 

 

12,075,000

 

Total liabilities

 

$

 

60,216,857

 

 

$

 

30,765,703

 

 

 

 

 

 

 

 

 

 

 

 

Commitments and Contingencies

 

 

 

 

 

 

 

 

 

 

Class A Common Stock subject to possible redemption, 34,500,000 shares (at redemption value of $10 per share)

 

 

 

345,000,000

 

 

 

 

345,000,000

 

 

 

 

 

 

 

 

 

 

 

 

Stockholders’ equity (deficit):

 

 

 

 

 

 

 

 

 

 

Preferred stock, $0.0001 par value; 1,000,000 shares authorized, NaN issued or outstanding

 

 

 

—

 

 

 

 

—

 

Common stock

 

 

 

 

 

 

 

 

 

 

Class A Common Stock, $0.0001 par value; 400,000,000 shares authorized

 

 

 

—

 

 

 

 

—

 

Class F Common Stock, $0.0001 par value; 40,000,000 shares authorized, 8,625,000 shares issued and outstanding

 

 

 

863

 

 

 

 

863

 

Additional paid-in-capital

 

 

 

—

 

 

 

 

—

 

Accumulated deficit

 

 

 

(59,182,812

)

 

 

 

(29,200,648

)

 

 

 

 

 

 

 

 

 

 

 

Total stockholders’ equity (deficit)

 

 

 

(59,181,949

)

 

 

 

(29,199,785

)

 

 

 

 

 

 

 

 

 

 

 

Total liabilities and stockholders’ equity (deficit)

 

$

 

346,034,908

 

 

$

 

346,565,918

 

(unaudited)

See

(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 investments311,884 355,815 
Accounts receivable, net of allowance of $1,295 and $1,212, as of March 31, 2023 and December 31, 2022, respectively21,817 20,844 
Inventories11,002 11,061 
Prepaid expenses and other current assets10,724 13,084 
Total current assets499,742 517,932 
Property and equipment, net31,701 30,559 
Operating lease right-of-use assets2,225 2,515 
Long-term investments— 3,959 
Goodwill69,593 69,593 
Intangible assets, net10,447 10,890 
Other assets5,825 4,947 
Total assets$619,533 $640,395 
LIABILITIES AND STOCKHOLDERS’ EQUITY
Current liabilities
Accounts payable$6,044 $8,331 
Deferred revenue18,284 16,731 
Accrued expenses and other current liabilities21,900 23,916 
Total current liabilities46,228 48,978 
Warrants liability581 803 
Deferred revenue, non-current1,489 1,201 
Other long-term liabilities1,155 5,502 
Total liabilities49,453 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, respectively30 29 
Additional paid-in capital1,206,100 1,168,313 
Accumulated other comprehensive loss(2,811)(5,034)
Accumulated deficit(633,239)(579,397)
Total stockholders’ equity570,080 583,911 
Total liabilities and stockholders’ equity$619,533 $640,395 
The accompanying notes to theare an integral part of these unaudited interimcondensed consolidated financial statements.

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5

GORES HOLDINGS VI,

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MATTERPORT, INC.

STATEMENT

CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS

(Unaudited)

Three

Months Ended

March 31, 2021

Professional fees and other expenses

$

(3,238,968

)

State franchise taxes, other than income tax

(50,000

)

Change in fair value of warrant liability

(26,672,500

)

     Net loss from operations

(29,961,468

)

Other income - interest and dividend income

13,707

     Loss before income taxes

(29,947,761

)

Income tax expense

(26,273

)

     Net loss attributable to common shares

$

(29,974,034

)

Net loss per ordinary share:

   Class A Common Stock - basic and diluted

$

(0.70

)

   Class F Common Stock - basic and diluted

$

(0.70

)

(In thousands, except per share data)

See

(unaudited)
Three Months Ended March 31,
20232022
Revenue:
Subscription$19,847 $17,141 
License27 23 
Services8,704 3,973 
Product9,416 7,373 
Total revenue37,994 28,510 
Costs of revenue:
Subscription6,962 5,262 
License— — 
Services6,244 2,983 
Product8,376 8,356 
Total costs of revenue21,582 16,601 
Gross profit16,412 11,909 
Operating expenses:
Research and development18,273 26,002 
Selling, general, and administrative54,933 70,849 
Total operating expenses73,206 96,851 
Loss from operations(56,794)(84,942)
Other income (expense):
Interest income1,471 1,295 
Change in fair value of warrants liability222 21,433 
Change in fair value of contingent earn-out liability— 136,043 
Other income (expense), net1,183 (1,321)
Total other income2,876 157,450 
Income (loss) before provision for income taxes(53,918)72,508 
Provision for (benefit from) income taxes(76)604 
Net income (loss)$(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:
Basic293,074 275,199 
Diluted293,074 312,432 
The accompanying notes to theare an integral part of these unaudited interimcondensed consolidated financial statements.


GORES HOLDINGS VI,



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MATTERPORT, INC.

STATEMENT

CONDENSED CONSOLIDATED STATEMENTS OF CHANGES IN STOCKHOLDERS’ EQUITY (DEFICIT)

For the Three Months Ended March 31, 2021

(Unaudited)

COMPREHENSIVE INCOME (LOSS)

 

 

Class A Common Stock

 

 

Class F Common Stock

 

 

Additional

 

 

Accumulated

 

 

Stockholders'

 

 

 

Shares

 

 

Amount

 

 

 

Shares

 

 

Amount

 

 

Paid-In Capital

 

 

Deficit

 

 

Equity (Deficit)

 

Balance at January 1, 2021

 

 

-

 

 

$

 

-

 

 

 

 

8,625,000

 

 

$

 

863

 

 

$

 

-

 

 

$

 

(29,200,648

)

 

$

 

(29,199,785

)

Subsequent measurement under ASC 480-10-S99 against accumulated deficit

 

 

-

 

 

 

 

-

 

 

 

 

-

 

 

 

 

-

 

 

 

 

-

 

 

 

 

(8,130

)

 

 

 

(8,130

)

Net loss

 

 

-

 

 

 

 

-

 

 

 

 

-

 

 

 

 

-

 

 

 

 

-

 

 

 

 

(29,974,034

)

 

 

 

(29,974,034

)

Balance at March 31, 2021

 

 

-

 

 

$

 

-

 

 

 

 

8,625,000

 

 

$

 

863

 

 

$

 

0

 

 

$

 

(59,182,812

)

 

$

 

(59,181,949

)

(In thousands, unaudited)

See

Three Months Ended March 31,
20232022
Net income (loss)(53,842)71,904 
Other comprehensive income (loss), net of taxes:
Unrealized gain (loss) on available-for-sale securities, net of tax2,223 $(4,635)
Other comprehensive income (loss)$2,223 $(4,635)
Comprehensive income (loss)$(51,619)$67,269 

The accompanying notes to theare an integral part of these unaudited interimcondensed consolidated financial statements

statements.

7

GORES HOLDINGS VI,

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MATTERPORT, INC.

STATEMENT

CONDENSED CONSOLIDATED STATEMENTS OF STOCKHOLDERS’ EQUITY
(In thousands, unaudited)

Common Stock
SharesAmount
Additional
Paid-In
Capital
Accumulated
Other
Comprehensive
loss
Accumulated
Deficit
Total
Stockholders’
Equity
Balance as of December 31, 2022290,541 $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 withholding4,910 1 356 — — 357 
Issuance of common stock in connection with acquisitions249 — 3,921 — — 3,921 
Stock-based compensation— — 33,510 — — 33,510 
Balance as of March 31, 2023295,700 $30 $1,206,100 $(2,811)$(633,239)$570,080 


Common Stock
SharesAmount
Additional
Paid-In
Capital
Accumulated
Other
Comprehensive
loss
Accumulated
Deficit
Total
Stockholders’
Equity
Balance as of December 31, 2021250,173 $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 withholding6,295 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 customer100 — 559 — — 559 
Issuance of common stock upon exercise of public warrants1,994 — 34,055 — — 34,055 
Issuance of common stock in connection with acquisitions1,215 — 19,118 — — 19,118 
Issuance of earn-out shares upon triggering events, net of tax withholding21,494 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, 2022281,271 $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

(Unaudited)

Three

Months Ended

Cash flows from operating activities:

March 31, 2021

Net loss

$

(29,974,034

)

Changes in state franchise tax accrual

(5,241

)

Changes in prepaid assets

61,773

Changes in accrued expenses, formation and offering costs

2,183,895

Change in fair value of warrant liability

26,672,500

Changes in deferred income tax

26,273

Net cash used in operating activities

(1,034,834

)

Cash used in investing activities:

Interest and dividends reinvested in the Trust Account

(13,707

)

Net cash used in investing activities

(13,707

)

Cash flows from financing activities:

Proceeds from notes and advances payable – related party

600,000

Payment of issuance expenses

(8,130

)

Net cash provided by financing activities

591,870

Increase in cash

(456,671

)

Cash at beginning of period

633,266

Cash at end of period

$

176,595

Supplemental disclosure of income and franchise taxes paid:

Cash paid for income and state franchise taxes

$

55,241

FOR THE THREE MONTHS ENDED MARCH 31, 2023 AND 2022

See

(In thousands, unaudited)
Three Months Ended March 31,
20232022
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 amortization4,391 2,463 
Amortization of investment premiums, net of accretion of discounts(681)954 
Stock-based compensation, net of amounts capitalized31,074 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 accounts289 191 
Loss of excess inventory and purchase obligation622 — 
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 assets1,308 (1,571)
Accounts payable(2,287)659 
Deferred revenue1,841 2,610 
Accrued expenses and other liabilities2,193 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 investments108,806 46,200 
Business acquisitions, net of cash acquired(1,676)(30,020)
Net cash provided by (used in) investing activities46,899 (18,242)
CASH FLOW FROM FINANCING ACTIVITIES:
Proceeds from exercise of stock options686 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 activities357 (3,226)
Net change in cash, cash equivalents, and restricted cash26,858 (46,946)
Effect of exchange rate changes on cash329 (45)
Cash, cash equivalents, and restricted cash at beginning of year117,128 139,987 
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 to theare an integral part of these unaudited interimcondensed consolidated financial statements.

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GORES HOLDINGS VI,

Table of Contents
MATTERPORT, INC.

NOTES TO THE UNAUDITED, INTERIMCONDENSED CONSOLIDATED FINANCIAL STATEMENTS

(UNAUDITED)


1. OrganizationORGANIZATION AND DESCRIPTION OF BUSINESS
Matterport, Inc., together with its subsidiaries (“Matterport” or the “Company”), is leading the digitization and Business Operations

Organizationdatafication of the built world. Matterport’s pioneering technology has set the standard for digitizing, accessing and General

Gores Holdings VI, Inc. (the “Company”)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 on June 29, 2020.in 2011. The Company was formed for the purpose of effecting a merger, capital stock exchange, asset acquisition, stock purchase, reorganization or similar Business Combination with one or more businessesis headquartered at Sunnyvale, California.

On July 22, 2021 (the “Business Combination”). The Company has neither engaged in any operations nor generated any revenue to date. The Company’s management has broad discretion with respect to the Business Combination. The Company’s Sponsor is Gores Sponsor VI, LLC, a Delaware limited liability company (the “Sponsor”). The Company has selected December 31st as its fiscal year-end.

The Company completed the Public Offering on December 15, 2020 (the “IPO Closing“Closing Date”). The Company will not generate any operating revenues until after the completion of its Business Combination, at the earliest. Subsequent to the Public Offering,, the Company will generate non-operating incomeconsummated the merger (collectively with the other transactions described in the formMerger Agreement, the “Merger”, “Closing”, or “Transactions”) pursuant to an Agreement and Plan of interest income on cash and cash equivalents from the proceeds derived from the Public Offering and the sale of the Private Placement Warrants (as defined below) held in the Trust Account (as defined below).

Proposed Matterport Business Combination

OnMerger, dated February 7, 2021 the Company entered into a Merger Agreement,(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 Second Merger Sub,merged with and into Legacy Matterport, which provides for, among other things: (a)with Legacy Matterport continuing as the First Merger;surviving corporation (the “First Merger”), and (b) 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 Second Merger. The transactions set forth in the Merger Agreement, including the Mergers, will constitutesurviving entity as a “Business Combination” as contemplated by the Company’s Amended and Restated Certificate of Incorporation.

The Merger Agreement and the transactions contemplated thereby were unanimously approved by the Board of Directorswholly owned subsidiary of the Company, on February 7, 2021 andunder the Matterport Board on February 7, 2021.

The Merger Agreement

Merger Consideration

Pursuant to the terms of the Merger Agreement, at the effective time of the First Merger (the “Effective Time”), each share of Matterport’s common stock, par value $0.001 per share (“Matterport Common Stock”), will be converted into the right to receive a number of newly-issued shares of the Company’s Class A common stock, par value $0.0001 per share (“Company Class A common stock”), equal to the Per Share Company Common Stock Consideration (as defined in the Merger Agreement) and each share of Matterport’s preferred stock, par value $0.001 per share (“Matterport Preferred Stock”), will be converted into the right to receive a number of newly-issued shares of Company Class A common stock equal to the Per Share Company Preferred Stock Consideration (as defined in the Merger Agreement)new name “Matterport Operating, LLC”. Pursuant to the terms of the Merger Agreement, the Company is required to use reasonable best efforts to cause the shares of Company Class A common stock to be issued in connection with the transactions contemplated by the Merger Agreement (the “Business Combination”) to be listed on the Nasdaq Capital Market (the “Nasdaq”) atUpon the closing of the Business Combination.

PursuantMerger, 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 Agreement, the aggregate merger consideration payable at the closing of the Business Combinationand “Legacy Matterport” refers to all of the stockholders and holders of equity awards of Matterport, will be an aggregate number of shares, or equity awards exercisable for shares, of Company Class A common stock (deemed to have a value of $10.00 per share) equal to $2,188,750,000, divided by $10.00.

In addition to the consideration to be paid at the closing of the Business Combination, stockholders of Matterport will be entitled to receive their pro rata share of an additional number of earn-out shares from the

7

Company, issuable in Company Class A common stock and subject to the terms provided in the Merger Agreement, up to an aggregate of 23,460,000 shares collectively issuable to all Matterport equity holders.

Treatment of Matterport’s Equity Awards

Pursuant to the Merger Agreement, at the closing of the Business Combination, each of Matterport’s stock options, to the extent then outstanding and unexercised, will automatically be converted into (a) an option to acquire a certain number of shares of Company Class A common stock (pursuant to a ratio based on the Per Share Company Common Stock Consideration), at an adjusted exercise price per share and (b) the right to receive a pro rata portion of a number of earn-out shares from the Company, issuable in Company Class A common stock and subject to the terms provided in the Merger Agreement (including that such right to receive earn-out shares is conditional on the holder continuing to provide services to the Company), up to an aggregate of 23,460,000 shares collectively issuable to all Matterport equity holders. Each such converted option will be subject to the same terms and conditions as were applicable immediately prior to such conversion.

Pursuant to the Merger Agreement, at the closing of the Business Combination, each of Matterport’s restricted stock units, to the extent then unvested and outstanding, will automatically be converted into (a) an award of restricted stock units covering a certain number of shares of Company Class A common stock (pursuant to a ratio based on the Per Share Company Common Stock Consideration) and (b) the right to receive a pro rata portion of a number of earn-out shares from the Company, issuable in Company Class A common stock and subject to the terms provided in the Merger Agreement (including that such right to receive earn-out shares is conditional on the holder continuing to provide services to the Company), up to an aggregate of 23,460,000 shares collectively issuable to all Matterport equity holders. Each such converted restricted stock unit will be subject to the same terms and conditions as were applicable immediately prior to such conversion.

Private Placement Subscription Agreements

On February 7, 2021, the Company entered into subscription agreements (each, a “Subscription Agreement” and collectively, the “Subscription Agreements”) with certain investors, including certain individuals (each, an “Individual Investor Subscription Agreement”), institutional investors (each, an “Institutional Investor Subscription Agreement”) and Gores Sponsor VI LLC (the “Sponsor”), pursuant to which the investors have agreed to purchase an aggregate of 29,500,000 shares of Class A common stock in a private placement for $10.00 per share (the “Private Placement”). The proceeds from the Private Placement will remain on the Company’s balance sheet following the consummation of the Business Combination.

Each Subscription Agreement will terminate with no further force and effect upon the earliest to occur of: (a) such date and time as the Merger Agreement is terminated in accordance with its terms; (b) upon the mutual written agreement of the parties to such Subscription Agreement; (c) if any of the conditions to closing set forth in such Subscription Agreement are not satisfied or waived on orInc. prior to the closing and, as a result thereof, the transactions contemplated by such Subscription Agreement are not consummated at the closing; and (d) if the closingMerger.

2. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
Summary of the Business Combination shall not have occurred by September 7, 2021. As of the date hereof, the shares of Class A common stock to be issued pursuant to the Subscription Agreements have not been registered under the Securities Act of 1933, as amended (the “Securities Act”). The Company will, within 30 days after the closing, file with the Securities and Exchange Commission (“SEC”) a registration statement (the “Post-Closing Registration Statement”) registering the resale of such shares of Class A Common Stock and will use its commercially reasonable efforts to have such Post-Closing Registration Statement declared effective as soon as practicable after the filing thereof.

The subscription agreements are accounted for as equity given that the shares are only contingently issuable. There is no impact on basic or diluted net income/(loss) per share.

Financing

Upon the IPO Closing Date and the sale of the Private Placement Warrants, an aggregate of $345,000,000 was placed in a Trust Account with Continental Stock Transfer & Trust Company (the “Trust Account”) acting as Trustee.

The Company intends to finance the Proposed Business Combination with the net proceeds from its $345,000,000 Public Offering and its sale of $8,900,000 of Private Placement Warrants.

8

Trust Account

Funds held in the Trust Account can be invested only in U.S. government treasury bills with a maturity of one hundred and eighty-five (185) days or less or in money market funds meeting certain conditions under Rule 2a‑7 under the Investment Company Act of 1940, as amended, that invest only in direct U.S. government obligations. As of March 31, 2021, the Trust Account consisted of cash and money market funds.

Significant Accounting Policies

The Company’s amended and restated certificatesignificant accounting policies are discussed in “Note 2 – Summary of incorporation provides that, other than the withdrawal of interest to fund regulatory compliance requirements and other costs related thereto (a “Regulatory Withdrawal”) for a maximum 24 months and/or additional amounts necessary to pay franchise and income taxes, if any, none of the funds held in trust will be released until the earliest of: (i) the completion of the Business Combination; or (ii) the redemption of any public shares of common stock properly tendered in connection with a stockholder vote to amend the Company’s amended and restated certificate of incorporation to modify the substance or timingSignificant Accounting Policies” of the Company’s obligation to redeem 100% of such public shares of common stock ifAnnual Report on Form 10-K for the Company does not complete the Business Combination within 24 months from the IPO Closing Date; or (iii) the redemption of 100% of the public shares of common stock if the Company is unable to complete a Business Combination within 24 months from the IPO Closing Date, subject to the requirements of law and stock exchange rules.

Business Combination

The Company’s management has broad discretion with respect to the specific application of the net proceeds of the Public Offering, although substantially all of the net proceeds of the Public Offering are intended to be generally applied toward consummating a Business Combination. The Business Combination must be with one or more target businesses that together have an aggregate fair market value of at least 80% of the assets held in the Trust Account (less any deferred underwriting commissions and taxes payable on interest income earned) at the time of the Company signing a definitive agreement in connectionfiscal year ended December 31, 2022, which was filed with the Business Combination. Furthermore, there is no assurance that the Company will be able to successfully effect a Business Combination, including the Proposed Business Combination.

The Company, after signing a definitive agreement for a Business Combination, will either (i) seek stockholder approval of the Business Combination at a meeting called for such purpose in connection with which stockholders may seek to redeem their shares, regardless of whether they vote for or against the Business Combination, for cash equal to their pro rata share of the aggregate amount thenSEC on deposit in the Trust Account as of two business days prior to the consummation of the Business Combination, including interest income but less taxes payable, or (ii) provide stockholders with the opportunity to sell their shares to the Company by means of a tender offer (and thereby avoid the need for a stockholder vote) for an amount in cash equal to their pro rata share of the aggregate amount then on deposit in the Trust Account as of two business days prior to the consummation of the Business Combination, including interest income but less taxes payable. The decision as to whether the Company will seek stockholder approval of the Business Combination or will allow stockholders to sell their shares in a tender offer will be made by the Company, solely in its discretion, and will be based on a variety of factors such as the timing of the transaction and whether the terms of the transaction would otherwise require the Company to seek stockholder approval, unless a vote is required by law or under Nasdaq rules. If the Company seeks stockholder approval, it will complete its Business Combination only if a majority of the outstanding shares of common stock voted are voted in favor of the Business Combination. Currently, the Company will not redeem its public shares of common stock in an amount that would cause its net tangible assets to be less than $5,000,001. In such case, the Company would not proceed with the redemption of its public shares of common stock and the related Business Combination, and instead may search for an alternate Business Combination. For business and other reasons, the Company has elected to provide its stockholders with the opportunity to have their public shares redeemed in connection with a stockholder vote to approve the Proposed Business Combination rather than a tender offer.

As a result of the foregoing redemption provisions, the public shares of common stockFebruary 28, 2023. There have been recorded at redemption amount and classified as temporary equity, in accordance with SEC and its staff’s guidance on redeemable equity instruments, which has been codified in Financial Accounting Standards Board (“FASB”) Accounting Standards Codification (“ASC”) Topic 480, “no significant changes to these policies during the Distinguishing Liabilities from Equity” (“ASC 480”) in subsequent periods.

9

The Company will have 24three months from the IPO Closing Date to complete its Business Combination. If the Company does not complete a Business Combination within this period of time, it shall (i) cease all operations except for the purposes of winding up; (ii) as promptly as reasonably possible, but not more than ten business days thereafter, redeem the public shares of common stock for a per share pro rata portion of the Trust Account, including interest income, but less taxes payable (less up to $100,000 of such net interest income to pay dissolution expenses) and (iii) as promptly as possible following such redemption, dissolve and liquidate the balance of the Company’s net assets to its remaining stockholders, as part of its plan of dissolution and liquidation. The Sponsor and the Company’s officers and directors have entered into a letter agreement with the Company, pursuant to which they waived their rights to participate in any redemption with respect to their Founder Shares (as defined below); however, if the Sponsor or any of the Company’s officers, directors or affiliates acquire public shares of common stock, they will be entitled to a pro rata share of the Trust Account in the event the Company does not complete a Business Combination within the required time period.

In the event of such distribution, it is possible that the per share value of the residual assets remaining available for distribution (including Trust Account assets) will be less than the initial public offering price per Unit in the Public Offering.

Emerging Growth Company

Section 102(b)(1) of the JOBS Act exempts emerging growth companies from being required to comply with new or revised financial accounting standards until private companies (that is, those that have not had a Securities Act registration statement declared effective or do not have a class of securities registered under the Securities Exchange Act of 1934, as amended (the “Exchange Act”)) are required to comply with the new or revised financial accounting standards. The JOBS Act provides that a company can elect to opt out of the extended transition period and comply with the requirements that apply to non-emerging growth companies but any such election to opt out is irrevocable. The Company has elected not to opt out of such extended transition period which means that when a standard is issued or revised and it has different application dates for public or private companies, the Company, as an emerging growth company, can adopt the new or revised standard at the time private companies adopt the new or revised standard.

2.       Significant Accounting Policies

ended March 31, 2023.

Basis of Presentation

The accompanying unaudited condensed consolidated financial statements have been prepared in accordanceconformity with accounting principles generally accepted in the United States of America (“U.S. GAAP”) and pursuant to the accounting and disclosureapplicable rules and regulations of the SEC, regarding interim financial reporting. Certain information and reflectdisclosures 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 of normal recurring adjustments, which are, in the opinion of management, necessary for a fair presentationstatement of theits financial position as of March 31, 20212023, and theits results of operations and cash flows for the periods presented. Operating results for the three months ended March 31, 2021 are not necessarily indicative of results that may be expected2023 and 2022, and cash flows for the full year or any other period. The Company was formed on June 29, 2020. Therefore, these financials statements do not include comparative statements to prior 2020 periods.

Net Income/(Loss) Per Common Share

The Company has two classes of shares, which are referred to as Class A Common Stock (the “Common Stock”) and Class F Common Stock (the “Founders Shares”). Earnings and losses are shared pro rata between the two classes of shares. Private and public warrants to purchase

10

11,350,000 shares of Common Stock at $11.50 per share were issued on December 15, 2020. NaN warrants were exercised during the three months ended March 31, 2021.2023 and 2022. The 11,350,000 potential common shares for outstanding warrants to purchasecondensed consolidated balance sheet as of December 31, 2022, was derived from audited annual financial statements but does not contain all of the Company’s stock were excludedfootnote disclosures from diluted earnings per share in 2021 asthe annual financial statements.



10
Table of Contents
MATTERPORT, INC.
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED)
Principles of Consolidation
The accompanying condensed consolidated financial statements include the accounts of the Company had aand 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 forcontingencies, and the period.determination of stand-alone selling price of various performance obligations. As a result, diluted net income/(loss) per common sharemany 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 same as basic net income/(loss) per common share forCompany’s revenue by geography. Substantially all of the period.

Company’s long-lived assets are located in the United States.

 

 

Three Months Ended March 31, 2021

 

 

 

Class A

 

 

Class F

 

Basic and diluted net income/(loss) per share:

 

 

 

 

 

 

 

 

 

 

Numerator:

 

 

 

 

 

 

 

 

 

 

Allocation of net income/(loss)

 

$

 

(23,985,731

)

 

$

 

(5,996,433

)

 

 

 

 

 

 

 

 

 

 

 

Denominator:

 

 

 

 

 

 

 

 

 

 

Weighted-average shares outstanding

 

 

 

34,500,000

 

 

 

 

8,625,000

 

Basic and diluted net income/(loss) per share

 

$

 

(0.70

)

 

$

 

(0.70

)

Concentration of Credit Risk

and Other Risks and Uncertainties

Financial instruments that potentially 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 aaccounts held by major banks and financial institution as well asinstitutions located in the Trust Account, which at times,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 Federal depositoryamount of insurance coverage of $250,000.provided on such deposits.
The Company’s accounts receivable is derived from customers located both inside and outside the United States. The Company hasmitigates 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 experienced losses on these accounts.

Financial Instruments

The fair valuerequire collateral from its customers.

No customer accounted for more than 10% of the Company’s assets and liabilities, which qualify as financial instruments under FASB ASC Topic 820, “Fair Value Measurements and Disclosures,” (“ASC 820”) approximates the carrying amounts represented in the balance sheet.

Offering Costs

The Company complies with the requirements of ASC 340-10-S99-1 and SEC Staff Accounting Bulletin Topic 5A — “Expenses of Offering.” Offering costs consist principally of professional and registration fees incurred through the balance sheet date that are related to our Public Offering and were charged to equity upon the completion of our Public Offering.

Redeemable Common Stock

As discussed in Note 4, all of the 34,500,000 Class A Common Stock sold as part of the Units in the Public Offering contain a redemption feature which allows for the redemption of such public shares in connection with the Company’s liquidation, if there is a stockholder vote or tender offer in connection with the Business Combination and in connection with certain amendments to the Company’s second amended and restated certificate of incorporation. In accordance with SEC and its staff’s guidance on redeemable equity instruments, which has been codified in ASC 480-10-S99, redemption provisions not solely within the control of the Company require common stock subject to redemption to be classified outside of permanent equity. Therefore, all Class A Common Stock has been classified outside of permanent equity.  

The Company recognizes changes in redemption value immediately as they occur and adjusts the carrying value of redeemable common stock to equal the redemption value at the end of each reporting period. Increases or decreases in the carrying amount of redeemable common stock are affected by charges against additional paid in capital and accumulated deficit.

Use of Estimates

The preparation of financial statements in conformity with U.S. GAAP requires the Company’s management to make estimates and assumptions that affect the reported amounts of assets and liabilities and disclosure of contingent assets and liabilities at the date of the financial statements and the reported amounts of revenues and expenses during the reporting period. One of the more significant accounting estimates included in these financial statements is the determination of the fair value of the warrant liability. Such estimates may be

11

subject to change as more current information becomes available and accordingly the actual results could differ significantly from those estimates.

Income Taxes

The Company follows the asset and liability method of accounting for income taxes under ASC Topic 740, “Income Taxes.” Deferred tax assets and liabilities are recognized for the estimated future tax consequences attributable to differences between the financial statements carrying amounts of existing assets and liabilities and their respective tax bases. Deferred tax assets and liabilities are measured using enacted tax rates expected to apply to taxable income in the years in which those temporary differences are expected to be recovered or settled. The effect on deferred tax assets and liabilities of a change in tax rates is recognized in income in the period that includes the enactment date. Valuation allowances are established, when necessary, to reduce deferred tax assets to the amount expected to be realized.

For those liabilities or benefits to be recognized, a tax position must be more-likely-than-not to be sustained upon examination by taxing authorities. The Company recognizes accrued interest and penalties related to unrecognized tax liabilities as income tax expense. NaN amounts were accrued for the payment of interest and penaltiestotal accounts receivable at March 31, 2021.

The Company may be subject to potential examination by U.S. federal, states or foreign jurisdiction authorities in the areas of income taxes. These potential examinations may include questioning the timing2023 and amount of deductions, the nexus of income amounts in various tax jurisdictions and compliance with U.S. federal, states or foreign tax laws.

The Company is incorporated in the State of Delaware and is required to pay franchise taxes to the State of Delaware on an annual basis.

Cash and Cash Equivalents

The Company considers all highly liquid instruments purchased with an original maturity of three months or less to be cash equivalents. The Company continually monitors its positions with and the credit quality of the financial institutions with which it invests. Periodically, the Company may maintain balances in various operating accounts in excess of federally insured limits.

Investments and Cash Held in Trust Account

At MarchDecember 31, 2021, the Company had $345,022,332 in the Trust Account which may be utilized2022. No customer accounted for Business Combinations. At March 31, 2021, the Trust Account consisted of cash and money market funds.

The Company’s amended and restated certificate of incorporation provides that, othermore than the withdrawal of interest to pay taxes, if any, none of the funds held in trust will be released until the earlier of: (i) the completion of the Business Combination; (ii) the redemption of any public shares of common stock properly tendered in connection with a stockholder vote to amend the Company’s amended and restated certificate of incorporation to modify the substance or timing10% of the Company’s obligation to redeem 100% of such public shares of common stock if the Company does not complete the Business Combination within 24 months from the IPO Closing Date; or (iii) the redemption of 100% of the public shares of common stock if the Company is unable to complete a Business Combination within 24 months from the IPO Closing Date, subject to the requirements of law and stock exchange rules.

Warrant Liability

The Company accounts for warrants for shares of the Company’s common stock that are not indexed to its own stock as liabilities at fair value on the balance sheet. The warrants are subject to remeasurement at each balance sheet date and any change in fair value is recognized in the Company’s the statement of operations. For issued or modified warrants that meet all of the criteria for equity classification, the warrants are required to be recorded as a

12

component of additional paid-in capital at the time of issuance. For issued or modified warrants that do not meet all the criteria for equity classification, the warrants are required to be recorded as a liability at their initial fair value on the date of issuance, and each balance sheet date thereafter. Changes in the estimated fair value of the warrants are recognized as a non-cash gain or loss on the statements of operations.

Recently Issued Accounting Pronouncements Not Yet Adopted

Management does not believe that any recently issued, but not yet effective, accounting pronouncements, if currently adopted, would have a material effect on the Company’s financial statements based on current operations of the Company.  The impact of any recently issued accounting standards will be re-evaluated on a regular basis or if a business combination is completed where the impact could be material.

Going Concern Consideration

If the Company does not complete its Business Combination by December 15, 2022, the Company will (i) cease all operations except for the purpose of winding up, (ii) as promptly as reasonably possible but not more than ten business days thereafter, redeem 100% of the common stock sold as part of the units in the Public Offering, at a per-share price, payable in cash, equal to the aggregate amount then on deposit in the Trust Account, including interest (which interest shall be net of franchise and income taxes payable and less up to $100,000 of such net interest which may be distributed to the Company to pay dissolution expenses), divided by the number of then outstanding public shares, which redemption will completely extinguish public stockholders’ rights as stockholders (including the right to receive further liquidation distributions, if any), subject to applicable law, and (iii) as promptly as reasonably possible following such redemption, subject to the approval of the Company’s remaining stockholders and the Company’s Board of Directors, dissolve and liquidate, subject in each case to the Company’s obligations under Delaware law to provide for claims of creditors and the requirements of other applicable law.

In the event of such distribution, it is possible that the per share value of the residual assets remaining available for distribution (including Trust Account assets) will be less than the initial public offering price per unit in the Public Offering. In addition, if the Company fails to complete its Business Combination by December 15, 2022, there will be no redemption rights or liquidating distributions with respect to the warrants, which will expire worthless.

In addition, at March 31, 2021 and December 31, 2020, the Company had current liabilities of $48,141,857 and $18,690,703, respectively and working capital of ($47,129,281) and ($17,159,683), the balances of which are primarily related to warrants we have recorded as liabilities as described in Notes 2, 3 and 4. Other amounts related to accrued expenses owed to professionals, consultants, advisors and others who are working on seeking a Business Combination as described in Note 1. Such work is continuing after March 31, 2021 and amounts are continuing to accrue.

3.       Public Offering

Public Units

On December 15, 2020, the Company sold 34,500,000 units at a price of $10.00 per unit (the “Units”), including 4,500,000 Units as a result of the underwriters’ full exercise of their over-allotment option, generating gross proceeds of $345,000,000. Each Unit consists of 1 share of the Company’s Class A common stock, $0.0001 par value, and one-fifth of one redeemable Class A common stock purchase warrant (the “Warrants”). Each Whole Warrant entitles the holder to purchase 1 share of Class A common stock for $11.50 per share. Each Warrant will become exercisable on the later of 30 days after the completion of the Business Combination or 12 months from the IPO Closing Date and will expire five years after the completion of the Business Combination or earlier upon redemption or liquidation. However, if the Company does not complete the Business Combination on or prior to the 24-month period allotted to complete the Business Combination, the Warrants will expire at the end of such period. The Warrants were issued in registered form under a warrant agreement between Continental Stock Transfer & Trust Company, as warrant agent, and the Company. The Company did not register the shares of common stock issuable upon exercise of the Warrants under the Securities Act or any state securities law. Under the

13

terms of the warrant agreement, the Company has agreed to use its best efforts to file a registration statement under the Securities Act following the completion of the Business Combination covering the shares of common stock issuable upon exercise of the Warrants. The Company paid an upfront underwriting discount of 2.00% ($6,900,000) of the per Unit offering price to the underwriters at the IPO Closing Date, with an additional fee (the “Deferred Discount”) of 3.50% ($12,075,000) of the per Unit offering price payable upon the Company’s completion of a Business Combination. The Deferred Discount will become payable to the underwriters from the amounts held in the Trust Account solely in the event the Company completes its Business Combination.

The public warrants issued as part of the Units are accounted for as liabilities as there are terms and features do not qualify for equity classification in ASC Topic 815-40 “Derivatives and Hedging – Contracts in Entity’s Own Equity.” The fair value of the public warrants at December 31, 2020 was a liability of $11,040,000. At March 31, 2021, the fair value has increased to $27,255,000. The change in fair value of $16,215,000 is reflected as an expense in the statement of operations.  

All of the 34,500,000 Class A Common Stock sold as part of the Units in the Public Offering contain a redemption feature which allows for the redemption of such public shares in connection with the Company’s liquidation, if there is a stockholder vote or tender offer in connection with the Business Combination and in connection with certain amendments to the Company’s second amended and restated certificate of incorporation. In accordance with SEC and its staff’s guidance on redeemable equity instruments, which has been codified in ASC 480-10-S99, redemption provisions not solely within the control of the Company require common stock subject to redemption to be classified outside of permanent equity. Given that the Class A Common Stock was issued with other freestanding instruments (i.e., public warrants), the initial carrying value of Class A Common Stock classified as temporary equity is the allocated proceeds based on the guidance in ASC 470-20.

Our Class A Common Stock are subject to SEC and its staff’s guidance on redeemable equity instruments, which has been codified in ASC 480-10-S99. If it is probable that the equity instrument will become redeemable, the Company has the option to either accrete changes in the redemption value over the period from the date of issuance (or from the date that it becomes probable that the instrument will become redeemable, if later) to the earliest redemption date of the instrument or to recognize changes in the redemption value immediately as they occur and adjust the carrying amount of the instrument to equal the redemption value at the end of each reporting period. The Company has elected to recognize the changes immediately. The accretion or remeasurement is treated as a deemed dividend (i.e., a reduction to retained earnings, or in absence of retained earnings, additional paid-in capital).

As of March 31, 2021, the Class A Common Stock reflected on the balance sheet are reconciled in the following table. The accretion of carrying value to redemption value was recognized on December 31, 2020, and there has been $8,130 of additional accretiontotal revenue for the three months ended March 31, 2021:

2023 and 2022.

As of March 31,

11
MATTERPORT, INC.
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED)
Recently Adopted Accounting Standards
In October 2021,

Gross proceeds

$

345,000,000

Less:

Proceeds allocated to public warrants

$

(10,557,000

)

Class A shares issuance costs

$

(19,266,180

)

Plus:

Accretion of carrying value to redemption value

$

(29,823,180

)

Contingently redeemable Class A Common Stock

$

345,000,000


4.       Related Party Transactions

Founder Shares

On July 24, 2020, the Sponsor purchased 17,250,000 shares of Class F Common StockFASB issued ASU No. 2021-08, Business Combinations (Topic 805): Accounting for $25,000, or approximately $0.001 per share. On OctoberContract 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, 2020, the Sponsor surrendered 8,625,000 Founder Shares to us for 0 consideration, on October 23, 2020, the Company effected2023, which did not have a stock dividend with respect to its Class F Common Stock of 6,468,750 shares thereof and on November 13, 2020 the Sponsor surrendered 6,468,750 Founder Shares to us for 0 consideration, resulting in an aggregate of 8,625,000 outstanding shares of Class F Common Stock. As a result of such surrender, the per-share purchase price increased to approximately $0.003 per share. The number of Founder Shares issued was determined basedmaterial impact on the expectation that such Founder Shares would represent 20% ofCompany’s condensed consolidated financial statements.

3. REVENUE
Disaggregated Revenue—The following table shows the outstanding shares upon completion of the Public Offering. On September 11, 2020, the Sponsor transferred 25,000 Founder Shares to each of the independent directors at their original purchase price. The Founder Shares are identical to the common stock included in the Units sold in the Public Offering except that the Founder Shares will automatically convert into shares of Class A common stock at the time of the Business Combination on a 1-for-one basis, subject to adjustment as described in the Company’s amended and restated certificate of incorporation.

The sale of the Founders Shares is in the scope of ASC 718, “Compensation-Stock Compensation.”  Under ASC 718, stock-based compensation associated with equity-classified awards is measured at fair value upon the grant date. The Founders Shares were granted subject to a performance condition (i.e., the occurrence of a Business Combination). Compensation expense related to the Founders Shares is recognized only when the performance condition is probable of occurrenceunder the applicable accounting literature in this circumstance. As of December 31, 2020, the Company determined that a Business Combination is not considered probable, and, therefore, 0 stock-based compensation expense has been recognized. Stock-based compensation would be recognized at the date a Business Combination is considered probable (i.e., upon consummation of a Business Combination) in an amount equal to the number of Founders Shares that ultimately vest multiplied times the grant date fair value per share (unless subsequently modified) less the amount initially receivedrevenue by geography for the purchase of the Founders Shares.

Private Placement Warrants

The Sponsor purchased from the Company an aggregate of 4,450,000 warrants at a price of $2.00 per warrant (a purchase price of $8,900,000) in a private placement that occurred simultaneously with the Public Offering (the “Private Placement Warrants”). Each Private Placement Warrant entitles the holder to purchase 1 share of Class A common stock at $11.50 per share. A portion of the purchase price of the Private Placement Warrants was added to the proceeds from the Public Offering to be held in the Trust Account pending completion of the Business Combination.

The Private Placement Warrants have terms and provisions that are identical to those of the public warrants sold as part of the units in the Public Offering, except that the Private Placement Warrants may be physical (cash) or net share (cashless) settled and are not redeemable so long as they are held by the Sponsor or its permitted transferees.

If the Company does not complete a Business Combination, then the Private Placement Warrants proceeds will be part of the liquidation distribution to the public stockholders and the Private Placement Warrants will expire worthless.Consistent with the public warrants, the private warrants are accounted for as liabilities under ASC Topic 814-40, due to their terms.

Registration Rights

The holders of Founder Shares, Private Placement Warrants and warrants issued upon conversion of working capital loans, if any, have registration rights (in the case of the Founder Shares, only after conversion of such shares to common shares) pursuant to a registration rights agreement entered into by the Company, the Sponsor and the other security holders named therein on December 15, 2020. These holders will also have certain demand

15

and “piggy back” registration rights. The Company will bear the expenses incurred in connection with the filing of any such registration statements.

Sponsor Loan

On July 24, 2020, Company borrowed $300,000 by the issuance of an unsecured promissory note from the Sponsor for $300,000 to cover expenses related to the Public Offering. This Note was non-interest bearing and payable on the earlier of June 30, 2021 or the completion of the Public Offering. This Note was repaid in full upon the completion of the Public Offering.

On March 19, 2021, the Sponsor made available to the Company a loan of up to $2,000,000 pursuant to a promissory note issued by the Company to the Sponsor. The proceeds from the note will be used for on-going operational expenses and certain other expenses in connection with the Proposed Business Combination. The note is unsecured, non-interest bearing and matures on the earlier of: (i) January 31, 2022 or (ii) the date on which the Company consummates the Proposed Business Combination. As of March 31, 2021, the amount advanced by Sponsor to the Company was $600,000.

Administrative Services Agreement

The Company entered into an administrative services agreement on December 10, 2020, pursuant to which it agreed to pay to an affiliate of the Sponsor $20,000 a month for office space, utilities and secretarial support. Services commenced on the date the securities were first listed on the Nasdaq Capital Market and will terminate upon the earlier of the consummation by the Company of a Business Combination or the liquidation of the Company.

For the three months ended March 31, 20212023 and 2022, respectively (in thousands):

Three Months Ended March 31,
20232022
Revenue:
United States$24,226 $16,237 
International13,768 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,
20232022
Over time revenue$28,551 $21,114 
Point-in-time revenue9,443 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.
12
Table of Contents
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 paidcompleted the affiliate $60,000.

5.       Deferred Underwriting Compensation

The Company is committed to pay a deferred underwriting discount totaling $12,075,000 or 3.50%purchase price allocation of the gross offering proceedsEnview Acquisition. The following table summarizes the allocation of purchase consideration on the Public Offering,Enview Acquisition Date, inclusive of measurement period adjustments (in thousands):


Amount
Goodwill$53,990 
Identified intangible assets5,400 
Net assets acquired4,934 
Total$64,324 

Goodwill generated from this business combination is primarily attributable to the underwriters upon the Company’s consummation of a Business Combination.assembled workforce and expected post-acquisition synergies from integrating Enview technology with Matterport’s products and services. The underwriters are not entitled to any interest accrued on the Deferred Discount, and 0 Deferred Discount is payable to the underwriters if there is no Business Combination.

6.       Income Taxes

Income tax expense during interim periods is based on applying an estimated annual effective income tax rate to year-to-date income, plus any significant unusual or infrequently occurring items which are recorded in the interim period. The Company’s effective tax rates differ from the federal statutory rate primarily due to the fair value on instruments treated as debt for GAAP and equity for tax purposes, whichgoodwill is not deductible for income tax purposes, for 2021.

purposes.


The computationfollowing table summarizes the estimated fair values and estimated useful lives of the annual estimated effective tax rate at each interim period requires certain estimatescomponents of identifiable intangible assets acquired as of the Enview Acquisition Date (in thousands, except years):

Fair ValueEstimated Useful Life
Developed technology$5,400 5 years

Developed technology relates to existing Enview technology of its artificial intelligence algorithms to identify natural and significant judgment including, but not limitedman-made features in geospatial data. The economic useful life was determined based on the technology cycle related to the expected operatingdeveloped 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 year, projectionsdeveloped technology were the revenue growth rates, EBITDA margins, obsolescence technology factor, and discount rate.
13
Table of Contents
MATTERPORT, INC.
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED)
Pro forma results of operations have not been presented because the effects of the proportionEnview Acquisition were not material to the Company’s condensed consolidated statements of income earnedoperations.
Acquisition-related transaction costs are expensed as incurred and taxedare recorded in various jurisdictions, permanentselling, general, and temporary differences, and the likelihood of recovering deferred tax assets generatedadministrative expenses in the current year. The accounting estimates used to compute the provision for income taxes may change as new events occur, more experience is obtained, additional information becomes known or as the tax environment changes.

16

Condensed Consolidated Statements of Operations. The Company has evaluated tax positions taken or expected to be taken in the courseincurred $0.5 million of preparing the financial statements to determine if the tax positions are “more likely than not” of being sustained by the applicable tax authority. Tax positions not deemed to meet the “more likely than not” threshold would be recorded as a tax benefit or expense in the current year. The Company has concluded that there was no impact related to uncertain tax positions on the results of its operationsacquisition-related costs for the periodthree months ended March 31, 2021. 2022. There were no acquisition-related costs incurred for the three months ended March 31, 2023.


14
Table of Contents
MATTERPORT, INC.
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, 2021, the Company has 0 accrued interest or penalties related to uncertain tax positions. 2023 and December 31, 2022 (in thousands).

March 31, 2023December 31, 2022
Gross Carrying AmountAccumulated AmortizationNet Carrying AmountGross Carrying AmountAccumulated AmortizationNet Carrying Amount
Intangible assets subject to amortization:
Developed technology$5,400 $(1,335)$4,065 $5,400 $(1,065)$4,335 
Customer relationships6,900 (518)6,382 6,900 (345)6,555 
Total$12,300 $(1,853)$10,447 $12,300 $(1,410)$10,890 
The Company is currentlyrecognized 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 awarerecognize 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 any issues under review that could result in significant payments, accruals or material deviation from its position. The Company’s conclusions regarding tax positions will be subject to review and may be adjusted at a later date based on factors including, but not limited to, ongoing analysesMarch 31, 2023 (in thousands):

Amount
Remaining 2023$1,327 
20241,770 
20251,770 
20261,770 
2027705 
2028 and thereafter3,105 
Total future amortization expense$10,447 


15
Table of tax laws, regulations, and interpretations thereof.Contents

7.       Investments and Cash Held in Trust

As

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, 2021, investment securities2023 and 2022 and the rollforward for three months ended March 31, 2023 and 2022 were as follows (in thousands):
Three Months Ended March 31,
20232022
Balance—beginning of period$(1,212)$(291)
Increase in reserves(289)(191)
Write-offs206 — 
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 process4,628 3,477 
Purchased parts and raw materials5,643 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 fixtures355 355 
Leasehold improvements734 734 
Capitalized software and development costs60,665 55,662 
Total property and equipment65,789 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 Company’s Trust Account consistthree months ended March 31, 2023 and 2022, was $5.0 million and $9.4 million, respectively. These are recorded as part of $345,022,332property 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 cashthe condensed consolidated statements of operations, respectively.

16
Table of Contents
MATTERPORT, INC.
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED)
Accrued Expenses and moneyOther 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 payable1,412 1,669 
ESPP contribution1,122 341 
Current unpaid acquisition consideration4,266 6,109 
Short-term operating lease liabilities1,287 1,267 
Accrued loss on firm inventory purchase commitments1,296 3,991 
Other current liabilities6,096 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 funds.

8.       Fair Value Measurement

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 Company complies with ASC 820 for itsinputs require significant management judgment or estimation.
The Company’s financial assets and liabilities that are re-measured and reported at fair value at each reporting period, and non-financial assets and liabilities that are re-measured and reported at fair value at least annually. ASC 820 determines fair value to be the price that would be received to sell an asset or would be paid to transfer a liability (i.e., the exit price) in an orderly transaction between market participants at the measurement date.

Warrants

The Company has determined that warrants issued in connection with its initial public offering in December 2020 are subject to treatment as a liability. The Company utilizes a Monte Carlo simulation methodology to value the warrants at each reporting period, with changes in fair value recognized in the statement of operations. The estimated fair value of the warrant liability is determined using Level 1 and Level 2 inputs. The key assumptions in the option pricing model utilized are assumptions related to expected share-price volatility, expected term, risk-free interest rate and dividend yield. The expected volatility as of the IPO Closing Date was derived from observable public warrant pricing on comparable ‘blank-check’ companies that recently went public in 2020 and 2021. At March 31, 2021, there were observable transactions in the Company’s public warrants and correspondingly an implied volatility. The risk-free interest rate is based on the interpolated U.S. Constant Maturity Treasury yield. The expected term of the warrants is assumed to be six months until the close of a Business Combination, and the contractual five year term subsequently. The dividend rate is based on the historical rate, which the Company anticipates to remain at 0.

The Warrants were classified as Level 2 at the respective measurement dates.

The key inputs into the option model for the Private Placement Warrants and Public Warrants were as follows for the relevant periods:

 

As of

 

 

December 31, 2020

 

 

March 31, 2021

 

Volatility

 

21.0

%

 

 

13.0

%

Risk-free interest rate

 

0.43

%

 

 

1.00

%

Warrant exercise price

$

11.50

 

 

$

11.50

 

Expected term

5.5

 

 

5.35

 


Subsequent Measurement

The Warrants are measured at fair value on a recurring basis. The subsequent measurement of the Public and Private Warrants as of March 31, 2021 and December 31, 2020 are classified as Level 2 due to the use of both observable inputs in an active market as well as quoted prices in active markets for similar assets and liabilities.  

As of March 31, 2021, the aggregate values of the Private Placement Warrants and Public Warrants were $17.6 million and $27.3 million, respectively, based on the closing price of GHVIW on that date of $3.95.

As of December 31, 2020, the aggregate values of the Private Placement Warrants and Public Warrants were $7.1 million and $11.0 million, respectively, based on the closing price of GHVIU on that date of $10.60.

The following table presents the changes in the fair value of warrant liabilities:

 

Private placement warrants

 

 

Public warrants

 

 

Total warrant liabilities

 

Fair value at December 31, 2020

$

7,120,000

 

 

$

11,040,000

 

 

$

18,160,000

 

Change in fair value

 

10,457,500

 

 

 

16,215,000

 

 

 

26,672,500

 

Fair value at March 31, 2021

$

17,577,500

 

 

$

27,255,000

 

 

$

44,832,500

 

The following table presents information about the Company’s assets and liabilities that are measured at fair value on a recurring basis were as follows (in thousands):


March 31, 2023
Level 1Level 2Level 3Total
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 

17
Table of Contents
MATTERPORT, INC.
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED)
December 31, 2022
Level 1Level 2Level 3Total
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 CostUnrealized GainsUnrealized LossesFair Value
Investments:
U.S. government and agency securities$155,185 $— $(1,695)$153,490 
Non-U.S. government and agency securities19,311 — (103)19,208 
Corporate debt securities96,863 — (936)95,927 
Commercial paper43,284 — (25)43,259 
Total available-for-sale investments$314,643 $— $(2,759)$311,884 
December 31, 2022
Amortized CostUnrealized GainsUnrealized LossesFair Value
Investments:
U.S. government and agency securities$185,371 $— $(3,657)$181,714 
Non-U.S. government and agency securities24,989 — (44)24,945 
Corporate debt securities119,396 — (1,324)118,072 
Commercial paper35,052 — (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
18
Table of Contents
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, 20212023, by contractual years-to-maturity (in thousands):
March 31, 2023
 Amortized CostFair 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 indicates the fair value hierarchyissued purchase orders containing non-cancelable payment terms to purchase goods and services.
As of the valuation techniques the Company utilized to determine such fair value. In general, fair values determined by Level 1 inputs utilize quoted prices (unadjusted) in active markets for identical assets or liabilities. Fair values determined by Level 2 inputs utilize data points thatMarch 31, 2023, future minimum purchase obligations are observable such as quoted prices, interest rates and yield curves. Fair values determined by Level 3 inputs are unobservable data points for the asset or liability, and includes situations where there is little, if any, market activity for the asset or liability:

follows (in thousands):

 

 

 

 

 

 

 

 

 

 

 

 

Significant

 

 

Significant

 

 

 

 

 

 

 

 

 

 

 

 

 

Other

 

 

Other

 

 

 

 

 

 

 

 

Quoted Prices in

 

 

Observable

 

 

Unobservable

 

 

 

March 31,

 

 

Active Markets

 

 

Inputs

 

 

Inputs

 

Description

 

2021

 

 

(Level 1)

 

 

(Level 2)

 

 

(Level 3)

 

Investments and cash held in Trust Account

 

 

 

345,022,332

 

 

 

 

345,022,332

 

 

 

 

—

 

 

 

 

—

 

Public warrants

 

 

 

27,255,000

 

 

 

 

—

 

 

 

 

27,255,000

 

 

 

 

—

 

Private placement warrants

 

 

 

17,577,500

 

 

 

 

—

 

 

 

 

17,577,500

 

 

 

 

—

 

Total

 

$

 

389,854,832

 

 

$

 

345,022,332

 

 

$

 

44,832,500

 

 

$

 

—

 

Purchase
Obligations
Remainder of 2023$14,528 
20247,667 
2025100 
Thereafter— 
Total$22,295 

9.       Stockholders’ Equity

Common Stock

Litigation—The Company is authorizednamed from time to issue 440,000,000time 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 consisting of 400,000,000Matterport 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 and 40,000,000(the “Class A common stock”), from 400,000,000 shares to 600,000,000 shares. The New Certificate of Class F Common Stock, par value $0.0001 per share. HoldersIncorporation was approved by a majority of the Company’s common stock are entitled to 1 vote for each share of common stock and vote together as a single class. At March 31, 2021, there were 34,500,000 shares of Class A common stock and 8,625,000 shares ofthe Company’s Class F Common Stock issued and outstanding, respectively.

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Preferred Stock

The Company is authorized to issue 1,000,000 shares of preferredcommon 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 such designations, votingrespect 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 rightsparties 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 preferencesthe 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 stock1,708 
Common stock options outstanding and unvested RSUs under the Amended and Restated 2011 Stock Incentive Plan73,302 
Shares available for future grant under 2021 Employee Stock Purchase Plan11,867 
Shares available for future grant under 2021 Incentive Award Plan5,956 
Total shares of common stock reserved92,833 
Accumulated Other Comprehensive Loss
The following table summarizes the changes in accumulated other comprehensive losses by component, net of tax (in thousands):
Foreign Currency Translation, Net of TaxUnrealized Losses on Available-for-Sale Debt Securities, Net of TaxTotal
Balance at December 31, 2022$(52)$(4,982)$(5,034)
Net unrealized gain— 2,223 2,223 
Balance at March 31, 2023$(52)$(2,759)$(2,811)
Foreign Currency Translation, Net of TaxUnrealized Losses on Available-for-Sale Debt Securities, Net of TaxTotal
Balance at December 31, 2021$(52)$(1,487)$(1,539)
Net unrealized loss— (4,635)(4,635)
Balance at March 31, 2022$(52)$(6,122)$(6,174)
10. PUBLIC AND PRIVATE WARRANTS
Prior to the Closing, Gores issued 6,900,000 Public Warrants and 4,450,000 Private Warrants. Each whole warrant entitles the holder to purchase one share of the Company’s Class A common stock at a price of $11.50 per share, subject to adjustments. The Warrants became exercisable on December 15, 2021 and will expire on July 22, 2026, which is five years after the Closing.
On January 14, 2022, the Public Warrants ceased trading on the Nasdaq Global Market. As of the Redemption Date of January 14, 2022, a total of 9.1 million shares of Common Stock have been issued upon the exercise of 6.4 million Public Warrants and 2.7 million Private Warrants by the holders thereof at an exercise price of $11.50 per share, resulting in aggregate proceeds to Matterport of $104.4 million, including 7.1 million shares issued upon the exercise of Public Warrants and Private Warrants by the holders with a total proceeds of $76.6 million received during the year ended December 31, 2021 and 2.0 million shares issued upon the exercise of 2.0 million Public Warrants with a total proceeds of
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MATTERPORT, INC.
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED)
$27.8 million received during the three months ended March 31, 2022. The remaining 0.6 million unexercised and outstanding Public Warrants as of 5:00 p.m. January 14, 2022 New York City time were redeemed at a price of $0.01 per Public Warrant and, as a result, no Public Warrants remained outstanding thereafter. Warrants to purchase Common Stock that were issued under the Warrant Agreement in a private placement simultaneously with the Company’s initial public offering and that are still held by the initial holders thereof or their permitted transferees were not subject to this redemption. A total of 1.7 million Private Warrants remained outstanding as of March 31, 2023 and December 31, 2022. No Private Warrants have been exercised during the three months ended March 31, 2023.
The Public Warrants were classified as Level 1 because there was adequate trading volume to provide a reliable indication of value from the Closing Date to the Redemption Date. The Private Warrants were classified as Level 2 because, from the Closing Date until the Redemption Date, the fair value of the Private Warrants was deemed to be substantially the same as the fair value of the Public Warrants because the Private Warrants have similar terms and are subject to substantially the same redemption features as the Public Warrants. Both the Public Warrants and the Private Warrants were valued at $2.00 per unit as of the Redemption Date.
Upon the ceasing of trading of the Public Warrants on the Redemption Date, the fair value measurement of Private Warrants transferred from Level 2 to Level 3 and the Company used a Black Scholes model to determine the fair value of the Private Warrants. The primary significant unobservable input used to evaluate the fair value measurement of the Company’s Private Warrants is the expected volatility of the ordinary shares. Significant increases (decreases) in the expected volatility in isolation would result in a significantly higher (lower) fair value measurement. The Private Warrants were valued at $0.34 per unit as of March 31, 2023.
The following table provides the assumptions used to estimate the fair value of the Private Warrants during the three months ended March 31, 2023:
March 31, 2023
Current stock price$2.73
Strike price$11.50
Expected term (in years)3.31
Expected volatility63.0%
Risk-free interest rate3.8%
Expected dividend yield—%
The Private Warrants are measured for fair value at the end of each quarter. The following table presents the changes in the warrants liabilitiy as of March 31, 2023 (in thousands):
Total Warrants
Liability
Fair value at December 31, 2022$803 
Change in fair value(222)
Fair value at March 31, 2023$581 
11. CONTINGENT EARN-OUT AWARDS
Legacy Matterport stockholders and certain holders of Legacy Matterport Stock Options and RSUs are entitled to receive a number of Earn-out Shares comprising up to 23.5 million shares of Class A common stock in the aggregate. There are six distinct tranches, and each tranche has 3,910,000 Earn-out Shares. Pursuant to the Merger Agreement, Common Share Price means the share price equal to the volume weighted average price of the Matterport Class A common stock for a period of at least 10 days out of 30 consecutive trading days ending on the trading day immediately prior to the date of determination. If the Common Share Price exceeds $13.00, $15.50, $18.00, $20.50, $23.00, and $25.50, the Earn-out Shares are issuable during the period beginning on the 180th day following the Closing and ending on the fifth anniversary of such date (the “Earn-out Period”). The Earn-out Shares are subject to early release if a change of control that
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MATTERPORT, INC.
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED)
will result in the holders of the Company common stock receiving a per share price equal to or in excess of the price target as above (collectively, the “Earn-Out Triggering Events”).
Any Earn-out Shares issuable to any holder of Matterport Stock Options and Matterport RSUs in respect of such Matterport Stock Options and Matterport RSUs shall be issued to such holder only if such holder continues to provide services to the Post-Combination Company through the date of the occurrence of the corresponding triggering event that causes such Earn-out Shares to become issuable. Any Earn-out Shares that are forfeited pursuant to the preceding sentence shall be reallocated to the other Legacy Matterport stockholders and Legacy Matterport stock options and RSUs holders who remain entitled to receive Earn-out Shares in accordance with their respective Earn-out pro rata shares.
At the Closing, the estimated fair value of the total Earn-out Shares was $294.8 million. The contingent obligation to issue Earn-out Shares to Legacy Matterport stockholders was accounted for as a liability because the Earn-out Triggering Events that determine the number of Earn-out Shares required to be issued include events that are not solely indexed to the Common Stock of Matterport, Inc. The Earn-out pro rata Shares issuable to holders of Legacy Matterport’s RSUs and holders of Legacy Matterport’s Stock Options are accounted for as a stock-based compensation expense as they are subject to forfeiture based on the satisfaction of certain employment conditions, see Note 12 “Stock Plan” for more information. The Company recognized $231.6 million of contingent earn-out liability attributable to the Earn-out Shares to Matterport legacy Stockholders upon the Closing on July 22, 2021.
On January 18, 2022, all six Earn-out Triggering Events for issuing up to 23.5 million Earn-out Shares occurred. A total of 18.8 million shares of common stock became issuable to the eligible Matterport legacy Stockholders. Another total of 4.7 million pro rata Earn-out Shares became issuable to holders of Matterport's eligible legacy RSU and options holders were immediately vested. The Company issued an aggregate of 21.5 million Earn-out Shares to the eligible Legacy Matterport stockholders and Legacy Matterport RSU and stock option holders, which reflects the withholding of approximately 2.0 million Earn-out Shares to cover tax obligations during the three months ended March 31, 2022.
The following table sets forth a summary of the changes in the earn-out liabilities during the three months ended March 31, 2022 (in thousands):
Fair Value Measurements Using Significant Unobservable Inputs
(Level 3)
Balance at December 31, 2021$377,576 
Reallocation of Earn-out Shares to earn-out liability upon forfeitures896 
Change in fair value of earn-out liability(136,043)
Issuance of Earn-out Shares upon triggering events(242,429)
Balance at March 31, 2022$— 
12. STOCK PLAN
2021 Incentive Award Plan
In connection with the Closing on July 22, 2021, the Company approved the 2021 Incentive Award Plan (the “2021 Plan”), an incentive compensation plan for the benefit of eligible employees, consultants, and directors of the Company and its subsidiaries. The Company concurrently assumed the Amended and Restated 2011 Stock Incentive Plan (the “2011 Plan”) and all outstanding awards thereunder, effective as of the Closing, and no further awards shall be granted under the 2011 Plan. The 2021 Plan provides that the initial aggregate number of shares of Class A common stock, available for issuance pursuant to awards thereunder shall be the sum of (a) 10% of the outstanding shares of Class A common stock as of the Closing, which is equivalent to 24.2 million shares of Class A common stock (the “Initial Plan Reserve”), (b) any shares of Class A common stock subject to outstanding equity awards under the amended and restated the 2011 Stock Plan which, following the effective date of the 2021 Plan, become available for issuance under the 2021 Plan and (c) an annual increase on the first day of each calendar year beginning on January 1, 2022 and ending on and including January 1, 2031 equal to a number of shares equal to 5% of the aggregate number of shares of Class A common stock outstanding on the
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MATTERPORT, INC.
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED)
final day of the immediately preceding calendar year. The maximum aggregate number of shares of common stock that may be issued under the 2021 Plan upon the exercise of ISOs is 181.5 million shares of Class A common stock.
Shares forfeited due to employee termination or expiration are returned to the share pool. Similarly, shares withheld upon exercise to provide for the exercise price and/or taxes due and shares repurchased by the Company are also returned to the pool. As of March 31, 2023, a total of 6.0 million shares remained available for future grant under the Company’s 2021 Plan.
2021 Employee Stock Purchase Plan
In connection with the Closing on July 22, 2021, the Company approved the 2021 Employee Stock Purchase Plan (“2021 ESPP”). The 2021 ESPP provides that the aggregate number of shares of Class A common stock available for issuance pursuant to awards under the 2021 ESPP shall be the sum of (a) 3% of the number of outstanding shares of Class A common stock as of the Closing, which is equivalent to 7.3 million shares of Class A common stock (the “Initial ESPP Reserve”), and (b) an annual increase on the first day of each calendar year beginning on January 1, 2022 and ending on and including January 1, 2031 equal to the lesser of (i) 1% of the aggregate number of shares of Class A common stock outstanding on the last day of the immediately preceding fiscal year and (ii) such smaller number of shares of common stock as may be determined from time to time by the BoardCompany’s board of Directors. At March 31, 2021, there were 0directors; provided, however, that the number of shares of preferredcommon stock that may be issued and outstanding.

10.       Risk and Contingencies

Management is currently evaluatingor transferred pursuant to the impactrights granted under the 2021 ESPP shall not exceed 15.25% of the COVID-19 pandemic on the industry and has concluded that while it is reasonably possible that the virus could have a negative effect on the Company’s financial position, resultsoutstanding shares of its operations, and/or search for a target company, the specific impact is not readily determinableClass A common stock as of the Closing, which is equivalent to 36.9 million shares.

Our 2021 ESPP permits eligible employees to acquire shares of our common stock at 85% of the lower of the fair market value of our common stock on the first trading day of each offering period or on the purchase date. If the fair market value of our common stock on the purchase date is lower than the first trading day of the offering period, the current offering period will be cancelled after purchase and a new 24-month offering period will begin. Participants may purchase shares of common stock through payroll deductions of up to 15% of their eligible compensation, subject to purchase limits of 3,000 shares per purchase period, 12,000 per offering period, and $25,000 worth of stock for each calendar year.
The 2021 ESPP provides for consecutive offering periods that will typically have a duration of approximately 24 months in length and is comprised of four purchase periods of approximately six months in length. The offering periods are scheduled to start on the first trading day on or after June 1 and December 1 of each year, except for the first offering period commenced on July 23, 2021 and will end on May 31, 2023. As of March 31, 2023, a total of 11.9 million shares of our common stock remained available for sale under our 2021 ESPP. For the three months ended March 31, 2023, there were no shares of common stock purchased under the 2021 ESPP.
Stock Option Activities—The following table summarizes the stock option activities under the Company’s stock plans for three months ended March 31, 2023(in thousands, except for per share data):
 Options Outstanding

Number of
Shares		Weighted-
Average
Exercise Price Per Share
Weighted-
Average
Remaining
Contractual
Term (Years)
Aggregate
Intrinsic Value
Balance—December 31, 202233,417 $0.65 6.1$71,842 
Expired or canceled(9)0.76
Exercised(1,380)0.50 $3,182 
Balance—March 31, 202332,028 $0.66 5.9$66,402 
Options vested and exercisable—March 31, 202329,234 $0.64 5.8$61,176 
As of March 31, 2023, unrecognized stock-based compensation expense related to unvested options was $0.9 million, which is expected to be amortized over a weighted-average vesting period of 1.2 years.
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MATTERPORT, INC.
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED)
RSU and PRSU Activities—The following table summarizes the RSU activity under the Company’s stock plans for the three months ended March 31, 2023(in thousands, except per share data):
RSUs and PRSUs
Number of
Shares		Weighted-
Average 
Grant-Date Fair Value
Price Per Share
Balance—December 31, 202237,176 $10.47 
Granted8,217 2.93 
Vested(3,519)10.81 
Canceled or forfeited(600)5.45 
Balance—March 31, 202341,274 $9.01 

Stock-based compensation expense for awards with only service conditions are recognized on a straight-line basis over the requisite service period of the related award. The performance-based RSU (“PRSU”) awards have both service-based and performance-based vesting conditions. The service-based vesting condition for these financial statements.awards is typically satisfied over four years with a cliff vesting period of one year and continued vesting quarterly thereafter. The financial statements do not includeperformance-based vesting condition is satisfied upon the occurrence of a liquidity event, as defined in the Amended and Restated 2011 Stock Plan. The performance based vesting condition was deemed satisfied upon the Closing.

As of March 31, 2023, unrecognized compensation costs related to unvested RSUs and PRSUs were $333.2 million and $3.1 million, respectively. The remaining unrecognized compensation costs for RSUs and PRSUs are expected to be recognized over a weighted-average period of 2.6 years and 1.3 years, respectively, excluding additional stock-based compensation expense related to any adjustments that might resultfuture grants of share-based awards.
Earn-out Award Activities
As discussed in Note 11 “Contingent Earn-Out Awards”, the pro rata Earn-out Shares issuable to holders of Legacy Matterport’s RSUs and holders of Legacy Matterport’s Stock Options for such holders with respect to such holders’ Legacy RSUs and Options are expected to be accounted as stock-based compensation expense as they are subject both a market condition and a service condition to the eligible employees.
On January 18, 2022, all six Earn-out Triggering Events for issuing up to 23.5 million Earn-out Shares occurred. A total of 4.7 million pro rata Earn-out Shares issuable to holders of Matterport's eligible legacy RSU and options holders were immediately vested. The Company issued 2.7 million Earn-out Shares to Matterport's eligible legacy RSU and options holders after withholding 2.0 million these Earn-out Shares to cover tax withholding obligations. The Company recognized all the remaining $27.6 million unamortized stock-based compensation related to the Earn-out Shares during the three months ended March 31, 2022, as both Triggering event condition satisfied and the service condition was met. No further Earn-out Shares remained contingently issuable thereafter.
Employee Stock Purchase Plan—The fair value of shares issued under our 2021 ESPP are estimated on the grant date using the Black-Scholes option pricing model. The following table summarizes the assumptions used and the resulting grant-date fair values of our 2021 ESPP:
Three Months Ended March 31,
20232022
Expected term0.5 – 2.0 years0.5 – 2.0 years
Expected volatility35.2 – 48.0%27.9 – 43.4%
Risk-free interest rate0.4 – 4.7%0.1 – 0.6%
Expected dividend yield—%—%
Grant-date fair value per share$0.85 – $14.36$7.59 – $14.36
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MATTERPORT, INC.
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED)
The expected volatility is based on the average volatility of a peer group of representative public companies with sufficient trading history over the expected term. The expected term represents the term from the outcome of this uncertainty.

11.       Subsequent Events

Management has performed an evaluation of subsequent events through May 27, 2021first day of the financial statements, noting no itemsoffering period to the purchase dates within each offering period. The dividend yield assumption is based on our expectations about our anticipated dividend policy. The risk-free interest rate is based on the implied yield available on U.S. Treasury zero-coupon issues with maturities that approximate the expected term. As of March 31, 2023, unrecognized compensation cost related to the 2021 ESPP was $1.9 million, which require adjustment or disclosure other than those set forthis expected to be recognized over the remaining weighted-average service period of 1.3 years.

Stock-based Compensation— The Company recognizes stock-based compensation expense for awards with only service conditions on a straight-line basis over the requisite service period of the related award and recognizes stock-based compensation expenses for awards with performance conditions on a straight-line basis over the requisite service period for each separate vesting portion of the awards when it is probable that the performance condition will be achieved. The stock-based compensation expenses of Earn-out Awards are recognized on a straight-line basis over the derived services period during which the market conditions are expected to be met. Forfeitures are accounted for in the preceding notesperiod in which they occur.
The amount of stock-based compensation related to stock-based awards to employees in the Company’s consolidated statements of operations for the three months ended March 31, 2023 and 2022 were as follows (in thousands):
Three Months Ended March 31,
20232022
Costs of revenue$844 $1,809 
Research and development7,565 12,943 
Selling, general, and administrative22,665 40,525 
Stock-based compensation, net of amounts capitalized31,074 55,277 
Capitalized stock-based compensation2,436 5,820 
Total stock-based compensation$33,510 $61,097 
13. INCOME TAXES
The income tax provision for interim periods is determined using an estimate of the Company’s annual effective tax rate as adjusted for discrete items arising in that quarter.
Given the Company has a full valuation allowance recorded against its domestic net deferred tax assets and operating losses in the US, and its foreign subsidiaries are in operating profit, the Company has applied the exception to use a worldwide effective tax rate under ASC 740-270-30-36. The Company used the foreign jurisdiction’s statutory rate as an estimate for the annual effective tax rate (“AETR”). The quarterly tax provision, and estimate of the Company’s annual effective tax rate, is subject to variation due to several factors, including variability in pre-tax income (or loss), the mix of jurisdictions to which such income relates, changes in how we do business, and tax law developments. Tax benefits for the three months ended March 31, 2023 and the tax expense for three months ended March 31, 2022 was primarily attributable to foreign income taxes. The Company records deferred tax assets to the financial statements.

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extent we believe these assets will more likely than not be realized. In making such determination, the Company considered all available positive and negative evidence and continued to conclude that as of March 31, 2023, it is not more likely than not that the Company will realize the benefits of its remaining net deferred tax assets.

14. NET INCOME (LOSS) PER SHARE ATTRIBUTABLE TO COMMON STOCKHOLDERS
Basic net income (loss) per share attributable to common stockholders was computed by dividing net income (loss) by the weighted-average number of common shares outstanding for the three months ended March 31, 2023 and 2022 (in thousands, except for per share data). Diluted net income (loss) per share gives effect to all potential shares of common stock, including common stock issuable upon conversion of our redeemable convertible preferred stock, stock options and
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MATTERPORT, INC.
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED)
RSUs to the extent these are dilutive. We calculated basic and diluted net income (loss) per share attributable to common stockholders as follows (in thousands, except per share amounts):
 Three Months Ended March 31,
 20232022
Basic net income (loss) per share attributable to common stockholders:
Numerator: 
Net income (loss) attributable to common stockholders$(53,842)$71,904 
Denominator:
Weighted average shares used in computing net income (loss) per share attributable to common stockholders, basic293,074 275,199 
Basic net income (loss) per share attributable to common stockholders$(0.18)$0.26 
Diluted net income (loss) per share attributable to common stockholders
Numerator:
Diluted net income (loss) attributable to common stockholders$(53,842)$71,904 
Denominator:
Weighted average shares used in computing net income (loss) per share293,074 275,199 
Weighted average effect of dilutive potential common stock— 37,233 
Weighted-average shares used in computing net income (loss) per share attributable to common stockholders, diluted293,074 312,432 
Diluted net income (loss) per share attributable to common stockholders$(0.18)$0.23 

Basic net loss per share is the same as diluted net loss per share for the period we reported a net loss. The following potentially dilutive outstanding securities were excluded from the computation of diluted net income (loss) per share attributable to common stockholders, basic and diluted, because their effect would have been anti-dilutive or issuance of such shares is contingent upon the satisfaction of certain conditions which were not satisfied by the end of the period (shares in thousands):
 As of March 31,
 20232022
Private warrants1,708 1,708 
Common stock options outstanding32,028 1,027 
Unvested RSUs41,274 26,109 
ESPP shares1,955 1,094 
Total potentially dilutive common stock equivalents76,965 29,938 
15. EMPLOYEE BENEFITS PLANS
The Company contributes to a defined-contribution pension plan for eligible employees in the U.K. Pension plan benefits are based primarily on participants’ compensation and years of service credited as specified under the terms of the plan. The Company made $0.1 million and $0.1 million matching contributions to the U.K. pension plan for the three months ended March 31, 2023 and 2022.
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Item 2. Management’s Discussion and Analysis of Financial Condition and ResultsResult of Operations

The following discussion and analysis provides information that Matterport’s management believes is relevant to an assessment and understanding of Matterport’s condensed consolidated results of operations and financial condition. The discussion should be read together with our unaudited interim condensed consolidated financial statements, the respective notes thereto, and other financial information included elsewhere within this Report. The discussion and analysis should also be read together with the audited consolidated financial statements for the year ended December 31, 2022 and the related notes in the 2022 Form 10-K. This discussion contains forward-looking statements based upon Matterport’s current expectations, estimates and projections that involve risks and uncertainties. Actual results could differ materially from those anticipated in these forward-looking statements as a result of various factors, including those discussed under “Risk Factors”, “Forward-Looking Statements” and other disclosures included in this Form 10-Q. Unless the context otherwise requires, all references in this section to “we,” “our,” “us,” “the Company” or “Matterport” refer to the business of Matterport, Inc., a Delaware corporation, and its subsidiaries both prior to the consummation of and following the Merger (as defined below).
Overview
Matterport is leading the digitization and datafication of the built world. We believe the digital transformation of the built world will fundamentally change the way people interact with buildings and the physical spaces around them. Our Company’s website is www.matterport.com.
Since its founding in 2011, Matterport’s pioneering technology has set the standard for digitizing, accessing and managing buildings, spaces and places online. Our platform’s innovative software, spatial data-driven data science, and 3D capture technology have broken down the barriers that have kept the largest asset class in the world, buildings and physical spaces, offline and underutilized for many years. We believe the digitization and datafication of the built world will continue to unlock significant operational efficiencies and property values, and that Matterport is the platform to lead this enormous global transformation.
The world is rapidly moving from offline to online. Digital transformation has made a powerful and lasting impact across every business and industry today. Nevertheless, the global building stock remains largely offline today, and we estimate that less than 0.1% is penetrated by digital transformation. We were among the first to recognize the increasing need for digitization of the built world and the power of spatial data, the unique details underlying buildings and spaces, in facilitating the understanding of buildings and spaces. With approximately 9.9 million spaces under management as of March 31, 2023, we are continuing to penetrate the estimated $327 trillion global building stock and expand our footprint across various end markets, including residential and commercial real estate, facilities management, retail, architecture, engineering and construction (“AEC”), insurance and repair, and travel and hospitality. We estimate our total addressable market to be more than four billion buildings and 20 billion spaces globally, yielding a more than $240 billion market opportunity.
We believe the total addressable market for the digitization and datafication of the built world could expand beyond $1 trillion as our spatial data platform continues to grow, powered by the following:
•Bringing offline buildings online: Traditionally, our customers needed to conduct site visits in-person to understand and assess their buildings and spaces. With the AI-powered capabilities of Cortex, our proprietary AI software engine, the world’s building stock can move from offline to online and be accessible to our customers real-time and on demand from anywhere.
•Driven by spatial data: Cortex uses the breadth of the billions of data points we have accumulated over the years to improve the 3D accuracy of our digital twins. Our sophisticated algorithms also deliver significant commercial value to our subscribers by generating data-based insights that allow them to confidently make assessments and decisions about their properties. With approximately 9.9 million spaces under management as of March 31, 2023, our spatial data library is the clearinghouse for information about the built world.
•Powered by AI and ML: Artificial intelligence (“AI”) and machine learning (“ML”) technologies effectively utilize spatial data to create a robust virtual experience that is dynamic, realistic, interactive, informative and permits multiple viewing angles. AI and ML also make costly cameras unnecessary for everyday scans—subscribers can now scan their spaces by simply tapping a button on their smartphones. As a result, Matterport is a device agnostic platform, helping us more rapidly scale and drive towards our mission of digitizing and indexing the built world.
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We believe that Matterport has tremendous growth potential ahead. After securing market-leading positions in a variety of geographies and vertical markets, we have demonstrated our repeatable value proposition and the ability of our sales growth model to scale. The magnitude of our total addressable market is so large that even with leading market share, we believe our penetration rates today are a small fraction of the opportunity for Matterport. With a mature and tested go-to-market playbook and team in place, we are focused on scaling execution across a carefully selected set of growth vectors, including: scaling the enterprise across industry verticals, expanding internationally, investing in R&D, and expanding partner integrations and third-party developer platforms.
Impacts of Macroeconomic and Geopolitical Conditions and Other Factors on our Business
We were impacted by adverse macroeconomic and geopolitical conditions. These conditions include but are not limited to inflation, foreign currency fluctuations, slowing of economic activity around the globe, unstable global credit markets and financial conditions, in part due to rising interest rates, and lower consumer spending. In addition, the war in Ukraine has further increased existing global supply chain, logistics, and inflationary challenges. Such global or regional economic and political conditions adversely affect demand for our products. These conditions also have an impact on our suppliers, causing increases in cost of materials and higher shipping and transportation rates, and as a result impacting the pricing of our products. We purchase certain products and key hardware components from a limited number of sources, including in some cases only a single supplier for some products and components, and depend on the supply chain, including freight, to receive components, transport finished goods and deliver our products across the world. The industry-wide global supply chain challenges, including with respect to manufacturing, transportation and logistics could impact our operational and financial performance adversely, including impact on our subscribers and their spending habits, impact on our marketing efforts, and effect on our suppliers. Delays, interruptions and disruptions in our supply chain have and could continue to impact our ability to maintain supplies of products and the costs associated with obtaining products. While we have made improvements to our supply chain since the second half of the fiscal year 2022, we continue to work to mitigate the disruption we have experienced during the three months ended March 31, 2023. If macroeconomic and geopolitical conditions do not improve or if they worsen, then our results of operations may be negatively impacted.
For additional information, refer to Part II Item 1A "Risk Factors.”
Our Business Model
We generate revenue by selling subscriptions to our AI-powered spatial data platform to customers, licensing our data to third parties, selling capture devices (including our newly launched Pro3 and Pro 2 cameras) and by providing services to customers from our technicians and through in-application purchases. We are focused on driving substantial annual growth in subscription revenue and maintaining modest growth in license, product and services revenue.
We serve customers of all sizes, at every stage of maturity, from individuals to large enterprises, and we see opportunities for growth across all of our customer segments. We are particularly focused on increasing sales efficiency and driving customer growth and recurring revenue growth from large enterprises.
Subscription Revenue
Our AI-powered spatial data platform creates high-fidelity and high-accuracy digital twins of physical spaces and generates valuable data analytics and insights for customers. We derive subscription revenue from the sale of subscription plans to subscribers of all sizes ranging from individuals to large enterprises.
Our subscription plans are priced from free to custom plans tailored to the needs of larger-scale businesses. Our standard subscription plans for individuals and small businesses range from a free online Matterport account with a single user and a single active space that can be captured with an iPhone or an Android smartphone to multiple-user accounts that provide for the capture of unlimited active spaces. The pricing of our subscription plans increases as the number of users and active spaces increase. The wide variety and flexibility of our subscription plans enable us to retain existing subscribers and grow our subscriber base across diverse end markets, with particular focus on large enterprise subscribers. Subscription revenue accounted for approximately 52% and 60% of our total revenue for the three months ended March 31, 2023 and 2022, respectively.
The majority of our subscription services are billed either monthly or annually in advance and are typically non-refundable and non-cancellable. Consequently, for month-to-month subscriptions, we recognize the revenue monthly, and
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for annual or longer subscriptions, we record deferred revenue on our condensed consolidated balance sheet and recognize the deferred revenue ratably over the subscription term.
License Revenue
We also offer data license solutions that allow certain customers to use our digital twin data for their own needs. License revenue accounted for less than 1% of our total revenue for the three months ended March 31, 2023 and 2022. Data licenses to date have been granted as perpetual licenses and are therefore recognized at a point in time upon transfer of control when the customer accepts delivery of the licensed data or other property. We expect our license revenue to fluctuate from quarter to quarter based on the number of new licenses purchased by our customers as we obtain new customers for our license solutions and the delivery of our licensed content is accepted by our customers during each quarter.
Services Revenue
Most of our customers are able to utilize the Pro3 Camera, Pro 2 Camera or other compatible capture devices to scan digital twins without external assistance, as the camera is relatively easy to configure and requires minimal training. However, our customers sometimes may also request professional assistance with the data capture process. We generate professional services revenue from Matterport Capture Services, a fully managed solution for enterprise subscribers worldwide that require on-demand scheduling of experienced and reliable Matterport professionals to scan their properties. In addition, we derive services revenue from in-app purchases, made by subscribers using our smartphone applications or by logging in to their subscriber account. In July 2022, we completed the acquisition of VHT, Inc., known as VHT Studios (“VHT”), a U.S.-based real estate marketing company that offers brokerages and enterprise digital solutions to promote and sell properties, which expands Matterport Capture Services by bringing together Matterport digital twins with professional photography, drone capture, and marketing services. Services revenue accounted for approximately 23% and 14% of our total revenue for the three months ended March 31, 2023 and 2022, respectively.
Product Revenue
We offer a comprehensive set of solutions designed to provide our customers with access to state-of-the-art capture technology that produces the high-quality data necessary to process images into dimensionally accurate digital twins. We derive product revenue from sales of our innovative 3D capture product, the Pro2 Camera, which has played an integral part in shaping the 3D building and property visualization ecosystem. Since April 2022, we also have begun to offer capture devices and accessories manufactured by third parties and Matterport Axis, a cost-effective motor-mount for smartphones. The Pro2 Camera has driven adoption of our solutions and has generated the unique high-quality and scaled data set that has enabled Cortex to become the pioneering software engine for digital twin creation, and we expect that future sales of our Pro2 Camera and third-party capture devices will continue to drive increased adoption of our solutions. In August 2022, we launched and began shipment of our Pro3 Camera along with major updates to our industry-leading digital twin cloud platform. The Matterport Pro3 Camera is an advanced 3D capture device, which includes faster boot time, swappable batteries, and a lighter design. The Pro3 camera can perform both indoors and outdoors and is designed for speed, fidelity, versatility, and accuracy. Along with our Pro2 Camera, we expect that future sales of our Pro3 Camera will continue to drive increased adoption of our solutions. Product revenue accounted for approximately 25% and 26% of our total revenue for the three months ended March 31, 2023 and 2022, respectively.
Key Metrics
We monitor the following key metrics to help us evaluate our business, identify trends affecting our business, formulate business plans, and make strategic decisions. The calculation of the key metrics discussed below may differ from other similarly titled metrics used by other companies, analysts, investors and other industry participants.
Spaces Under Management
We track the number of spaces that have been scanned and filed on the Matterport platform, which we refer to as spaces under management, because we believe that the number of spaces under management is an indicator of market penetration and the growth of our business. A space can be a single room or building, or any one contiguous scan of a discrete area, and is composed of a collection of imagery and spatial data that is captured and reconstructed in a dimensionally accurate digital twin of the scanned space. For tracking purposes, we treat each scanned and filed space as a unique file or model. We have a history of growing the number of our spaces under management and, as of March 31,
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2023, we had approximately 9.9 million spaces under management. The scale of our spaces under management allows us to directly monetize each space managed for our paid subscribers as well as increase our ability to offer new and enhanced services to subscribers, which in turn provides us with an opportunity to convert subscribers from free subscription plans to paid plans. We believe our spaces under management will continue to grow as our business expands with our current customers and as we add new free and paid subscribers.
The following chart shows our spaces under management for each of the periods presented (in millions):
Three Months Ended March 31,
20232022
Spaces under management9.97.3
Total Subscribers
We believe that our ability to increase the number of subscribers on our platform is an indicator of market penetration, the growth of our business and future revenue trends. For purposes of our business, a “subscriber” is an individual or entity that has signed up for a Matterport account during the applicable measurement period. We include both free and paid subscribers in our total subscriber count. We refer to a subscriber that has signed up for a free account and typically scans only one free space allocated to the account as a “free subscriber.” We refer to a subscriber that has signed up for one of our paid subscription levels and typically scans at least one space as a “paid subscriber.” Our paid subscribers typically enter into monthly subscriptions with us. We generally consider a single organization to be a single subscriber if the organization has entered into a discrete enterprise agreement with us, even if the organization includes multiple divisions, segments or subsidiaries that utilize our platform. If multiple individuals, divisions, segments or subsidiaries within an organization have each entered into a discrete subscription with us, we consider each individual account to be a separate subscriber.
We believe the number of paid subscribers on our platform is an important indicator of future revenue trends, and we believe the number of free subscribers on our platform is important because free subscribers may over time become paid subscribers on our platform and are therefore another indicator of our future revenue trend. We continue to demonstrate strong growth in the number of free and paid subscribers on our platform as indicated by our results for the three months ended March 31, 2023.
The following chart shows the number of our free subscribers, paid subscribers and total subscribers for each of the periods presented (in thousands):
Three Months Ended March 31,

20232022
Free subscribers704 504 
Paid subscribers67 58 
Total subscribers771 562 

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Net Dollar Expansion Rate
We believe our ability to retain and grow the subscription revenue generated by our existing subscribers is an important measure of the health of our business and our future growth prospects. We track our performance in this area by measuring our net dollar expansion rate from the same set of customers across comparable periods. We calculate this metric on a quarterly basis by comparing the aggregate amount of subscription revenue attributable to a subscriber cohort for the most recent quarter divided by the amount of subscription revenue attributable to the same subscriber cohort for the same quarter in the previous fiscal year. Our calculation for the applicable quarter includes any subscriber in the cohort that upgrades or downgrades the subscriber’s respective subscription level or churns. Our net dollar expansion rate can fluctuate from quarter to quarter due to a number of factors, including, but not limited to, the number of subscribers that upgrade or downgrade their respective subscription levels or a higher or lower churn rate during any given quarter.

Three Months Ended March 31,
20232022
Net dollar expansion rate103 %107 %

Factors Affecting Our Performance
We believe that our growth and financial performance are dependent upon many factors, including the key factors described below, which are in turn subject to significant risks and challenges.
Penetrating a Largely Undigitized Global Property Market
Despite the rapid pace of digital transformation in today’s world, the massive global building stock, estimated by Savills to be $327 trillion in total property value, remains largely undigitized today, and we estimate that less than 0.1% is penetrated by digital transformation. As a first mover in digital twin creation and spatial data library construction, we see significant opportunities to continue leading the digitization and datafication of the built world. We estimate that there are more than 4 billion buildings and 20 billion spaces in the world globally, yielding a more than $240 billion market opportunity. We believe that as Matterport’s unique spatial data library and property data services continue to grow, this opportunity could increase to more than $1 trillion based on the size of the building stock and the untapped value creation available to buildings worldwide. Property digitization and datafication are expected to accelerate on a global basis in both frequency and magnitude as the visually immersive and dimensionally accurate digital twins help increase productivity and reduce costs for our customers with the solutions that we have developed for diverse markets over the past decade.
Through providing a comprehensive set of solutions from cutting-edge capture technology and high-accuracy digital twins to valuable property insights, our AI-powered platform delivers value across the property lifecycle to subscribers from various end markets, including residential and commercial real estate, facilities management and retail, AEC, insurance and repair, and travel and hospitality. As of March 31, 2023, we had over 771,000 subscribers on our platform and approximately 9.9 million spaces under management, and we aim to continue scaling our platform and strengthen our foothold in various end markets and geographies to deepen our market penetration. With the VHT Acquisition completed in July 2022, we were able to service more property listings and position ourselves to increase adoption of digital twin technology and expand further into the residential real estate industry while adding marketing services for other vertical markets such as commercial real estate, travel and hospitality, and the retail sector. We believe that the breadth and depth of the Matterport platform along with the strong network effect from our growing spatial data library will lead to increased adoption of our solutions across diverse end markets, enabling us to drive further digital transformation of the built world.
Adoption of our Solutions by Enterprise Subscribers
We are pioneering the transformation of the built world from offline to online. We provide a complete, data-driven set of solutions for the digitization and datafication of the built world across a diverse set of use cases and industries. We take a largely offline global property market to the online world using a data-based approach, creating a digital experience for subscribers to interact with buildings and spaces and derive actionable insights. Our Cortex AI-driven engine and software platform uses the breadth of the billions of data points we have accumulated over the years to improve the 3D accuracy of our digital twin models. Our machine learning algorithms also deliver significant commercial value to our subscribers by generating data-based insights that allow them to confidently make assessments and decisions about their
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properties. We provide enterprise subscribers with a comprehensive solution that includes all of the capture, design, build, promote, insure, inspect and manage functionality of our platform.

We believe that our scale of data, superior capture technology, continued focus on innovation and considerable brand recognition will drive a continued adoption of our all-in-one platform by enterprise subscribers.

We are particularly focused on acquiring and retaining large enterprise subscribers due to the significant opportunities to expand our integrated solutions to different parts of an organization and utilize digital twins for more use cases within an organization. In January 2023, we announced that John Deere selected Matterport’s Digital Twin Platform and 3D capture technology to build a virtual Operations Center for remote management of over 60 facilities across North America, South America, Europe and Asia. Matterport’s platform creates simulated digital replicas of John Deere manufacturing facilities, where teams can remotely track progress, plan for site changes, and collaborate remotely. As of March 31, 2023, 25% of Fortune 1000 companies use Matterport to manage their enterprise facilities, real estate portfolios, factories, offices, and retail locations. We will continue improving our proprietary spatial data library and AI-powered platform to strengthen our long-term relationships and commitments with large enterprise customers while increasing investments in direct sales and account-based marketing to enhance enterprise adoption of our solutions.

Retention and Expansion of Existing Subscribers
Our ability to increase revenue depends in part on retaining our existing subscribers and expanding their use of our platform. We offer an integrated, comprehensive set of solutions including spatial data capturing, digital twin creation, publication, vertical-market specific content, and property analytics. We have a variety of subscription plans to meet the needs of every subscriber, including free subscription plans and several standard paid subscription plans, and we are able to provide customized subscription plans tailored to the specific needs of large enterprises. As we seek to develop long-term subscriber relationships, our value proposition to subscribers is designed to serve the entirety of the property lifecycle, from design and build to maintenance and operations, promotion, insure, repair, restore, secure and finance. As a result, we believe we are uniquely positioned to grow our revenue with our existing subscribers as our platform helps them discover opportunities to drive short and long-term returns on their property investments.
Given the all-in-one nature of our platform and its ease of use, we are also able to drive adoption of our solutions across various parts of an organization. For example, we established our long-term relationship with large commercial real estate clients in the areas including being engaged to create digital twins for available office spaces for promotion and leasing, working with the subscriber’s construction team to redesign office spaces through integrating our digital twins with the construction team’s design software, and conducting due diligence of potential real property acquisitions.
As a result of our long-term focus and expansion strategy, we have been able to consistently retain our subscribers and drive increased usage of our platform. Our net dollar expansion rate of 103% and 107% for the three months ended March 31, 2023 and 2022, respectively, demonstrates the stickiness and growth potential of our platform. We continued to see expansion with our enterprise customers in the three months ended March 31, 2023. On a combined basis, growth in enterprise customers was offset by lower expansion in our small and medium business customers, which grew more slowly in the quarter ended March 31, 2023 as the macro environment is further influencing this cohort to be more cautious in spending.
Scaling Across Various Industry Verticals
Matterport’s fundamental go-to-market model is built upon a subscription first approach. We have invested aggressively to unlock a scalable and cost-effective subscription flywheel for customer adoption. With our large spatial data library and pioneering AI-powered capabilities, we pride ourselves on our ability to deliver value across the property lifecycle to subscribers from various end markets, including residential and commercial real estate, facilities management and retail, AEC, insurance and repair, and travel and hospitality. We focus on industry-specific sales and marketing initiatives to increase sales efficiency and drive subscriber and recurring revenue growth. We will continue to improve our spatial data library and AI-powered platform to address the workflows of the industries we serve, while expanding our solutions and reaching new real estate segments.
International Expansion
We are focused on continuing to expand our AI-powered spatial data platform to all corners of the world. Given that the global building stock remains largely undigitized today and with the vast majority of the world’s buildings located
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outside of the United States, we expect significant opportunities in pursuing the digitization and datafication of the building stock worldwide. We use a “land and expand” model to capitalize on the potential for geographic expansion. We continue to seek to further penetrate our existing geographies in order to add their spatial data to our platform. In February 2022, we started partnering with Midland Holdings, one of the largest residential real estate (RRE) brokerages in the Greater China region, and became the first brokerage firm in the region to use Matterport digital twins to create virtual 3D experiences for its entire portfolio of properties. In March 2022, we expanded our presence in the Brazilian market via two strategic partners, Guandalini Posicionamento and PARS, to offer Matterport's spatial data platform to their enterprise customers in the AEC markets. Subscribers outside the United States accounted for approximately 43% of our subscription revenues for three months ended March 31, 2023. Given the flexibility and ease of use of our platform and capture device agnostic data capture strategy, we believe that we are well-positioned to further penetrate existing and additional geographies.
To scale our international penetration, we plan to continue to increase our investment in sales and marketing efforts across the globe, including building up sales and marketing teams in North America, Europe, the Middle East and Africa, and the Asia Pacific region. With multiple sales attachment points and a global marketing effort, we believe that we can further penetrate enterprises and businesses worldwide through channel partnerships and direct sales. Such international expansion efforts will also involve additional investments in our market research teams to tailor platform solutions, subscription plans and pricing for each market. These international expansion activities may impact our near-term profitability as we lay the foundation for international growth. Nevertheless, we believe that customers around the world will derive value from the universal utility and flexibility of our spatial data platform which transforms how customers interact with their physical spaces in the modern age.
Investing in Research and Innovation for Growth
We will continue to invest in research and development to improve Cortex, expand our solutions portfolio, and support seamless integration of our platform with third-party software applications. We plan to concentrate on in-house innovation and expect to consider acquisitions on an opportunistic basis. Since the launch of Matterport for iPhone in May 2020, we have been continuously developing a robust pipeline of new product releases, including releasing the Android Capture app, collaboration with Facebook AI (now knows as Meta) to release the world’s largest dataset of 3D spaces, partnership with Apex, announced a new integration with Xactimate, and launching Notes and Matterport for Mobile. In January 2022, we completed the acquisition of Enview, Inc., a pioneer in scalable artificial intelligence (AI) for 3D spatial data, which will accelerate our development of artificial intelligence algorithms to identify natural and man-made features in geospatial data using various techniques, including deep learning, neural networks and physics-based modeling. In February 2022, we introduced Axis, a new hands-free motor mount for precision 3D capture for smartphones to enable a hands-free solution that produces reliable, high-fidelity results with just a click of a button. In April 2022, we made Matterport Axis available for purchase, enabling hands-free precision 3D capture for smartphones. In August 2022, we introduced major updates to our industry-leading digital twin cloud platform. Matterport has reimagined the cloud software platform that creates, publishes, and manages digital twins of buildings and spaces of any size or shape, indoors or outdoors. All of these new capabilities integrate seamlessly so customers can securely create immersive environments for their employees, customers and partners to collaborate and explore. We created a new workgroup collaboration framework called Views to enable groups and large organizations to create separate, permissions-based workflows to manage different tasks with different teams such as: virtual inspections, remote training, space planning, personalized virtual tours, and so much more. We have also created new tools called Guided Tours and Tags to elevate the visitor experience that a business user can use to create directed virtual tours of any commercial or residential space tailored to the interest of their visitors, and guided virtual training courses for remote workers. In February 2023, we launched Digital Pro, an all-in-one marketing solution for real estate agents. Digital Pro combines the innovation of Matterport’s 3D digital twin technology with integrated marketing and content production services to create the industry’s most affordable, comprehensive marketing package to help real estate professionals with more listings and sell homes faster. These investments may impact our operating profitability in the near term, but we expect our operating margins to improve over the long term as we solidify our scale and reach. While we plan to concentrate on in-house innovation, we may also pursue acquisitions of products, teams and technologies on an opportunistic basis to further expand the functionality of and use cases for our platform. As with organic research and development, we adopt a long-term perspective in the evaluation of acquisition opportunities in order to ensure sustainable value creation for our customers.
Expanding Partner Integrations and Third-Party Developer Platform

We aim to foster a strong network of partners and developers around our Matterport platform. Through integration with our open, scalable and secure enterprise platform, organizations across numerous industries have been able to automate workflows, enhance subscriber experiences and create custom extensions for high-value vertical applications. For
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example, in June 2022, we partnered with CGS Partner to deliver virtual training solutions for front-line workers across the Fortune 500. The companies will combine the CGS TeamworkARTM platform with Matterport’s industry-leading digital twins to help customers train workers faster, increase productivity, and reduce costs by training workforces remotely using an exact digital replica of the work environment in immersive 3D. In July 2022, we partnered with Burns & McDonnell. With this relationship, Burns & McDonnell customers can use the Matterport Digital Twin Platform, including software services and hardware, to optimize construction expansion and maintenance projects. The collaboration equips businesses in the energy, utilities, and manufacturing industries with a continuous digital, visual documentation solution that improves operations, enhances collaboration, and increases safety in each project stage. In March 2023, we announced a new integration with Autodesk Construction Cloud — a portfolio of software and services that combines advanced technology, a builders network and predictive insights for construction teams — making it easier for project teams using Matterport and Autodesk Build ® to collaborate within critical project management workflows. This new integration allows project stakeholders to enhance the “Request for Information” (RFI) process in Autodesk Build, moving from traditional methods of communication to immersive digital twin technology, powered by Matterport. In April 2023, we announced the general availability of new integrations with IoT TwinMaker, enabling enterprise customers to seamlessly connect Internet of Things (IoT) data into visually immersive and dimensionally accurate Matterport digital twins. AWS IoT TwinMaker is a solution from Amazon Web Services (AWS) that makes it easier for developers to create digital twins of real-world systems such as buildings, factories, industrial equipment, and production lines. This new offering from Matterport supports enterprise digital transformation efforts by providing customers with an efficient and cost-effective solution to remotely optimize building operations, increase production output, improve equipment performance, and increase environmental health and safety at their facilities.
We believe that our future growth and scale depend partially upon our ability to develop a strong ecosystem of partners and developers which can augment the value of our platform. Going forward, we plan to establish additional strategic partnerships with leading software providers through the Matterport Platform Partner Program, in which our industry partners and developers can build, develop, and integrate with our spatial data library. We will also invest in the Matterport Developer Program to enlarge our marketplace of value-added third-party applications built on top of the Matterport platform. We expect that monetization opportunities from partner integrations and the third-party developer marketplace will allow us to drive subscriber growth and develop a more loyal subscriber base, and the revenue derived from the marketplace will grow over time.
Components of Results of Operations
Revenue
Our revenue consists of subscription revenue, license revenue, services revenue and product revenue.
Subscription revenue—We provide our software as a service on our Matterport platform. Subscribers use our platform under different subscription levels based on the number of active spaces. We typically bill our subscribers monthly or annually in advance based on their subscription level and recognize revenue from subscriptions for our services over the term of the subscription.
License revenue—We provide spatial data to customers in exchange for payment of a license fee. Under these license arrangements, customers take right to possession of the spatial data and pay a fee for an agreed scope of use.
Services revenue—Services revenue consist of capture services and add-on services. Capture services consist of professional services in which aMatterport-qualified third-party technician will provide on-site digital capture services for the customer. With the consummation of the VHT Acquisition in July 2022, our capture solutions expanded to include photos, videos, drone imaging and digital marketing services. Under these arrangements, we will pay the third-party technician and bill the customer directly. Add-on services consist of additional software features that the customer can purchase. These services are typically provided by third parties under our direction and oversight, and we pay the third party and bill the subscriber directly for the provisions of such services.
Product revenue—Product revenue consists of revenue from the sale of capture devices, including our Pro2 and Pro3 Cameras, Matterport Axis, and out-of-warranty repair fees. Customers place orders for our products, and we fulfill the order and ship the devices directly to the customer or, in some cases, we arrange for the shipment of devices from third parties directly to the customer. We recognize product revenue associated with a sale in full at the time of shipment of the product. In some cases, customers prepay for the ordered device and, in other cases we bill the customer upon shipment of the device. Customers purchasing capture devices from us also typically subscribe to the Matterport platform for use with
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their captured spaces. However, we do not require Pro2 or Pro3 Camera owners to have a subscription when purchasing a Pro2 or Pro3 Camera. We will also repair Pro2 and Pro3 Cameras for a fee if the nature of the repair is outside the scope of the applicable warranty.
Cost of Revenue
Cost of revenue consists of cost of subscription revenue, cost of license revenue, cost of services revenue, and cost of product revenue.
Cost of subscription revenue—Cost of subscription revenue consists primarily of costs associated with hosting and delivery services for our platform to support our subscribers and other users of our subscribers’ spatial data, along with our customer support operations. Cost of subscription revenue also includes amortization of internal-use software and stock-based compensation.
Cost of license revenue—Cost of license revenue consists primarily of costs associated with data curation and delivery costs associated with providing spatial data to customers.
Cost of services revenue—Cost of services revenue consists primarily of costs associated with capture services and costs for add-on features. Costs for capture services are primarily attributable to services rendered by third-party technicians that digitally capture spaces on behalf of the applicable customer, as well as administration and support costs associated with managing the program. Costs for add-on features are primarily attributable to services rendered by third-party contractors that develop the floor plans or other add-ons applications purchased by our subscribers as well as support costs associated with delivering the applications.
Cost of product revenue—Cost of product revenue consists primarily of costs associated with the manufacture of our Pro2 and Pro3 Camera, warranty and repair expenses relating to Pro2 and Pro3 Cameras and personnel-related expenses associated with manufacturing employees including salaries, benefits, bonuses, overhead and stock-based compensation. Cost of product revenue also includes depreciation of property and equipment, costs of acquiring third-party capture devices, and costs associated with shipping devices to customers.
Operating Expenses
Our operating expenses consist primarily of research and development expenses, selling, general and administrative expenses. Personnel costs are the most significant component of operating expenses and consist of salaries, benefits, bonuses, stock-based compensation, and sales commissions. Operating expenses also include overhead costs.
Research and development expenses—Research and development expenses consist primarily of personnel-related expenses associated with our research and development employees, including salaries, benefits, bonuses, and stock-based compensation. Research and development expenses also include third-party contractor or professional services fees, and software and subscription services dedicated for use by our research and development organization. We expect that our research and development expenses will increase in absolute dollars as our business grows, particularly as we incur additional costs related to continued investments in our platform and products. In addition, research and development expenses that qualify as internal-use software development costs are capitalized, the amount of which may fluctuate significantly from period to period.
Selling, general and administrative expenses—Selling, general, and administrative expenses consist primarily of personnel-related expenses associated with our sales and marketing, finance, legal, information technology, human resources, facilities, and administrative employees, including salaries, benefits, bonuses, sales commissions, and stock-based compensation. We capitalize and amortize commissions associated with attracting new paid subscribers and services revenue equal to a period of three years, which is the estimated period for which we expect to benefit from the sales commissions. Selling, general and administrative expenses also include external legal, accounting, and other professional services fees, software and subscription services, and other corporate expenses.
Interest Income
Interest income consists of interest income earned on our cash and cash equivalents and investments.
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Change in Fair Value of Warrants Liability
The public and private warrants are subject to fair value remeasurement at each balance sheet date if outstanding, or upon the time immediately before the exercise or redemption. All Public Warrants have been exercised or redeemed. As of March 31, 2023, there were 1.7 million Private Warrants outstanding. Matterport expects to incur incremental income (expense) in the condensed consolidated statements of operations for the fair value change for the outstanding private warrants liability going forward at the end of each reporting period or through the exercise of such warrants.
Change in Fair Value of Contingent Earn-out Liability
The contingent obligation to issue Earn-out Shares to Matterport Legacy Stockholders was accounted for as a liability because the Earn-out triggering events determined the number of Earn-out Shares required. The estimated fair value of the total Earn-out Shares was determined based on a Monte Carlo simulation valuation model and is subject to remeasurement to fair value at each balance sheet date. Contingent earn-out liability was accounted for as a liability as of the date of the Merger and remeasured to fair value until the Earn-out Triggering Events were met. On January 18, 2022, all Earn-out Triggering Events occurred. Upon the occurrence of the triggering events, the Company's common stock price represented the fair value of the Earn-out Awards and the Company reclassified the outstanding Earn-out liability to additional paid-in capital as the Earn-out Shares became issuable as a fixed number of Common Shares. There will be no incremental income (expense) in the consolidated statements of operations for the fair value adjustments for the outstanding earn-out liability as all the Earn-out Shares were issued during the three months ended March 31, 2022.
Other Expense, net
Other expense, net consists primarily of amortization of investment premium.

Provision for Income Taxes
Provision for income taxes consists primarily of income taxes in certain foreign and state jurisdictions in which we conduct business. We record income taxes using the asset and liability method. Under this method, deferred income tax assets and liabilities are recorded based on the estimated future tax effects of differences between the financial statement and income tax basis of existing assets and liabilities. These differences are measured using the enacted statutory tax rates that are expected to apply to taxable income for the years in which differences are expected to reverse. We recognize the effect on deferred income taxes of a change in tax rates in income in the period that includes the enactment date.
We record a valuation allowance to reduce our deferred tax assets and liabilities to the net amount that we believe is more likely than not to be realized. We consider all available evidence, both positive and negative, including historical levels of income, expectations and risks associated with estimates of future taxable income and ongoing tax planning strategies in assessing the need for a valuation allowance.
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RESULTS OF OPERATIONS
The following table sets forth our results of operations for the periods presented based on our condensed consolidated statements of operations data (in thousands, except percentages). The period-to-period comparison of results is not necessarily indicative of results for future periods.
Three Months Ended March 31,Change
20232022Amount%
Revenue:
Subscription$19,847 $17,141 $2,706 16 %
License27 23 4 17 %
Services8,704 3,973 4,731 119 %
Product9,416 7,373 2,043 28 %
Total revenue37,994 28,510 9,484 33 %
Costs of revenue:
Subscription6,962 5,262 1,700 32 %
License— — — — %
Services6,244 2,983 3,261 109 %
Product8,376 8,356 20 — %
Total costs of revenue21,582 16,601 4,981 30 %
Gross profit16,412 11,909 4,503 38 %
Gross margin43%42%
Operating expenses:
Research and development18,273 26,002 (7,729)(30)%
Selling, general, and administrative54,933 70,849 (15,916)(22)%
Total operating expenses73,206 96,851 (23,645)(24)%
Loss from operations(56,794)(84,942)28,148 (33)%
Other income (expense):
Interest income1,471 1,295 176 14%
Change in fair value of warrants liability222 21,433 (21,211)(99)%
Change in fair value of contingent earn-out liability— 136,043 (136,043)(100)%
Other income (expense), net1,183 (1,321)2,504 (190)%
Total other income2,876 157,450 (154,574)(98)%
Income (loss) before provision for income taxes(53,918)72,508 (126,426)(174)%
Provision for (benefit from) income taxes(76)604 (680)(113)%
Net income (loss)$(53,842)$71,904 $(125,746)(175)%
Revenues
Total revenue increased by $9.5 million, or 33%, to $38.0 million during the three months ended March 31, 2023, from $28.5 million during the three months ended March 31, 2022. The increase in revenue is attributable to growth primarily driven by services, subscriptions, and product revenue.
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Three Months Ended March 31,
20232022Change
AmountAmountAmount%
(dollars in thousands)
Subscription$19,847 $17,141 $2,706 16 %
License27 23 4 17 %
Services8,704 3,973 4,731 119 %
Product9,416 7,373 2,043 28 %
Total revenue$37,994 $28,510 $9,484 33 %
Subscription revenue increased for the three months ended March 31, 2023 compared to the same period in 2022, primarily due to higher volume of subscription plans from new subscribers and expansion of the subscription by existing subscribers. Of the $2.7 million increase, approximately $2.6 million was attributable to the higher volume of subscription plans from additional new subscribers during the three months ended March 31, 2023 and approximately $0.1 million was attributable to additional sales to existing customers during that period.
License revenue can fluctuate from period to period, depending on the timing of completed transactions and any associated implementation work that we must perform to recognize revenue. License revenue did not fluctuate significantly for the three months ended March 31, 2023 compared to the same period in 2022.
Services revenue increased for the three months ended March 31, 2023 compared to the same period in 2022. The increase was primarily attributable to increased sales of capture services, including $3.2 million revenue from the acquisition of VHT, and add-on services, primarily driven by our investment in growing our capture services business and the increase in the number of our subscribers.
Product revenue increased for the three months ended March 31, 2023 compared to the same period in 2022. The increase was primarily due to an increase in demand for our Pro3 Camera, which launched in August 2022.
Cost of Revenue
Our cost of revenue consists of cost of subscription revenue, cost of license revenue, cost of services revenue and cost of product revenue.

Three Months Ended March 31,
20232022Change
AmountAmountAmount%
(dollars in thousands)
Cost of subscription revenue$6,962 $5,262 $1,700 32 %
Cost of license revenue— — — — %
Cost of services revenue6,244 2,983 3,261 109 %
Cost of products revenue8,376 8,356 20 — %
Total cost of revenue$21,582 $16,601 $4,981 30 %
Total cost of revenue increased by $5.0 million, or 30%, to $21.6 million for the three months ended March 31, 2023, from $16.6 million for the three months ended March 31, 2022. The increase was primarily attributable to an increase in capture services sold and subscription services provided.
Cost of subscription revenue increased by $1.7 million or 32%, to $7.0 million for the three months ended March 31, 2023 from $5.3 million for the three months ended March 31, 2022, primarily due to increased costs related to hosting and delivery services for our platform to support the growth of subscription services provided.
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Cost of services revenue increased by $3.3 million or 109%, to $6.2 million for the three months ended March 31, 2023 from $3.0 million for the three months ended March 31, 2022, primarily due to an increase in volume and cost related to capture services sold, including the cost of VHT services.
Cost of products revenue did not fluctuate significantly in the three months ended March 31, 2023 compared to the same period in 2022.
Gross Profit and Gross Margin
Three Months Ended March 31,
20232022
(dollars in thousands)
Gross profit$16,412 $11,909 
Gross margin43%42%

Gross profit increased by $4.5 million, or 38%, to $16.4 million for the three months ended March 31, 2023, from $11.9 million for the three months ended March 31, 2022. The increase was primarily due to the increase in product and service revenue and improved margins, along with the increase of subscription revenue, which has higher gross margins in the mix.

Gross margin increased to 43% during the three months ended March 31, 2023 from 42% during the three months ended March 31, 2022. The increase in gross margin was primarily driven by an increase in service and product gross margins, benefiting from the increase of volume and our efforts to mitigate the challenges caused by supply chain shortages.
Three Months Ended March 31,
20232022Change
AmountAmountAmount%
(dollars in thousands)
Research and development expenses$18,273 $26,002 $(7,729)(30)%

Research and development expenses decreased by $7.7 million, or 30%, to $18.3 million for the three months ended March 31, 2023 from $26.0 million for the three months ended March 31, 2022. The decrease was primarily attributable to a $5.4 million decrease in stock-based compensation, a $1.3 million decrease in salary compensation expenses, and a $1.0 million decrease in professional services.
Selling, General and Administrative Expenses
Three Months Ended March 31,
20232022Change
AmountAmountAmount%
(dollars in thousands)
Selling, general and administrative expenses$54,933 $70,849 $(15,916)(22)%
Selling, general and administrative expenses decreased by $15.9 million, or 22%, to $54.9 million for the three months ended March 31, 2023, from $70.8 million for the three months ended March 31, 2022. The decrease was primarily attributable to a $17.9 million decrease in stock-based compensation, partially offset by a $2.3 million increase in personnel-related costs, including a $1.4 million increase in salary compensation expenses as a result of increased headcount.
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Interest Income
Three Months Ended March 31,
20232022
(dollars in thousands)
Interest income$1,471 $1,295 
Interest income increased to $1.5 million for the three months ended March 31, 2023, from $1.3 million for the three months ended March 31, 2022. The increase was primarily attributable to interest earned on our cash equivalents and investments during the three months ended March 31, 2023.
Change in Fair Value of Warrants Liability
Three Months Ended March 31,
20232022
(dollars in thousands)
Change in fair value of warrants liability$222 $21,433 
We recognized a change in fair value of warrants liability of $0.2 million during the three months ended March 31, 2023 due to the decrease in the fair value of our outstanding Private Warrants. As of March 31, 2023, there were 1.7 million Private Warrants outstanding.

Change in Fair Value of Contingent Earn-out Liability
Three Months Ended March 31,
20232022
(dollars in thousands)
Change in fair value of contingent earn-out liability$— $136,043 
As of January 18, 2022, all Earn-out triggering events were achieved, and the Company issued a total of 21.5 million shares of common stock for Earn-out Shares, net of tax withholding to eligible recipients on February 1, 2022.
Other (Expense) Income, Net
Three Months Ended March 31,
20232022
(dollars in thousands)
Other expense, net$1,183 $(1,321)
Other expense increased by $2.5 million, or 190%, to $1.2 million for the three months ended March 31, 2023 from $1.3 million for the three months ended March 31, 2022. The increase was primarily due to accretion of discounts, net of amortization related to investments premiums.
Provision for (Benefit from) Income Taxes
Three Months Ended March 31,
20232022
(dollars in thousands)
Provision for (benefit from) income taxes$(76)$604 
For the three months ended March 31, 2023 and 2022, our provision for income taxes reflects an effective tax rate of 0.14% and 0.83%, respectively. Our effective tax rate for the three months ended March 31, 2023 and 2022, differs from
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the U.S. federal statutory tax rate of 21% primarily due to losses that cannot be benefited from due to the valuation allowance on the U.S entity, foreign earnings being taxed at different tax rates and stock-based compensation activities.

Non-GAAP Financial Measures
In addition to our results of operations below, we report certain financial measures that are not required by, or presented in accordance with, U.S. generally accepted accounting principles (“GAAP”). These measures have limitations as analytical tools when assessing our operating performance and should not be considered in isolation or as a substitute for GAAP measures, including gross profit and net income. We may calculate or present our non-GAAP financial measures differently than other companies who report measures with similar titles and, as a result, the non-GAAP financial measures we report may not be comparable with those of companies in our industry or in other industries.

Non-GAAP Income (Loss) from Operations
We calculate non-GAAP loss from operations as GAAP loss from operations excluding stock-based compensation related charges (including share-based payroll tax expense), payroll tax related to contingent earn-out share issuance, acquisition-related costs, and amortization of acquired intangible assets, which we do not consider to be indicative of our overall operating performance. We believe this measure provides our management and investors with consistency and comparability with our past financial performance and is an important indicator of the performance and profitability of our business.
The following table presents our non-GAAP loss from operations for each of the periods presented (in thousands):

Three months ended March 31,
20232022
GAAP loss from operations$(56,794)$(84,942)
Add back: stock-based compensation expense, net33,111 56,088
Add back: acquisition-related costs— 172 
Add back: amortization expense of acquired intangible assets443 260 
Add back: payroll tax related to contingent earn-out share issuance— 1,164 
Non-GAAP loss from operations$(23,240)$(27,258)

Free Cash Flow
We calculate free cash flow as net cash used in operating activities less purchases of property and equipment and capitalized software and development costs. We believe this metric provides our management and investors with an important indicator of the ability of our business to generate additional cash from our business operations or our need to access additional sources of cash, in order to fund our operations and investments.
The following table presents our free cash flow for each of the periods presented (in thousands):

Three months ended March 31,
20232022
Net cash used in operating activities$(20,398)$(25,478)
Less: purchases of property and equipment87 448 
Less: capitalized software and development costs2,567 3,596 
Free cash flow$(23,052)$(29,522)
LIQUIDITY AND CAPITAL RESOURCES
Sources of Liquidity
Our capital requirements will depend on many factors, including the growth and expansion of our paid subscribers, development of our technology and software platform (including research and development efforts), expansion of our sales and marketing activities and sales, general and administrative expenses. As of March 31, 2023, we had cash, cash equivalents and investments of approximately $456.2 million. Our cash equivalents primarily consist of cash on hand and
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amounts on deposit with financial institutions. To date, our principal sources of liquidity have been proceeds received from the issuance of equity, proceeds from the Merger and proceeds from warrant and option exercises for cash.

March 31, 2023December 31, 2022
(dollars in thousands)
Cash, cash equivalents, and investments:
Cash and cash equivalents$144,315 $117,128 
Investments311,884 359,774 
Total cash, cash equivalents, and investments$456,199 $476,902 
On January 14, 2022, the Public Warrants ceased trading on the Nasdaq Global Market. As of the Redemption Date of January 14, 2022, 9.1 million shares of Common Stock have been issued upon the exercise of Public Warrants and Private Warrants by the holders thereof at an exercise price of $11.50 per share during the Exercise Period from December 15, 2021 to January 14, 2022, resulting in aggregate proceeds to Matterport of $104.4 million, including 7.1 million shares issued upon the exercise of Public Warrants and Private Warrants by the holders with total proceeds of $27.8 million received during the year ended December 31, 2022.
We have incurred negative cash flows from operating activities and significant losses from operations in the past. We expect to continue to incur operating losses at least for the next 12 months due to the investments that we intend to make in our business. As a result, we may require additional capital resources to grow our business. Our future capital requirements will depend on many factors, including increase in our customer base, the timing and extent of spend to support the expansion of sales, marketing and development activities. Management believes that its current financial resources are sufficient to continue operating activities for at least one year past the issuance date of the financial statements.
Other commitments
We lease office space under operating leases for our U.S. headquarters and other locations in the United States that expire at various dates through 2025. In addition, we have purchase obligations, which include contracts and issued purchase orders containing non-cancellable payment terms to purchase third-party goods and services. As of March 31, 2023, our 12-month lease obligations (through March 31, 2023) totaled approximately $1.3 million, or approximately $2.5 million through the year ending December 31, 2025. Our non-cancellable purchase obligations as of March 31, 2023 totaled approximately $22.3 million and are due through the year ending December 31, 2024.
Cash Flows

The following table set forth a summary of our cash flows for the three months ended March 31, 2023 and 2022 (in thousands):
Three Months Ended March 31,
20232022
Cash provided by (used in):
Operating activities$(20,398)$(25,478)
Investing activities$46,899 $(18,242)
Financing activities$357 $(3,226)
Net Cash Used in Operating Activities
Net cash used in operating activities was $20.4 million for the three months ended March 31, 2023. This amount primarily consisted of a net loss of $53.8 million, offset by non-cash charges of $34.9 million, and a change in net operating assets and liabilities of $1.5 million. The non-cash charges primarily consisted of $31.1 million of stock-based compensation expense and $4.4 million of depreciation and amortization expense, partially offset by $0.7 million accretion of discounts, net of amortization premiums and $0.2 million of change in fair value of warrants liability. Changes in net
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operating assets and liabilities primarily consisted of an increase in accounts receivable, inventory, and a decrease in accounts payable, which was partially offset by an increase in accruals and other liabilities and deferred revenue.
Net cash used in operating activities was $25.5 million for the three months ended March 31, 2022. This amount primarily consisted of a net income of $71.9 million, offset by non-cash gains of $98.8 million, and a change in net operating assets and liabilities of $1.4 million. The non-cash gains primarily consisted of $21.4 million of change in fair value of warrants liability and $136.0 million of change in fair value of contingent earn-out liability, partially offset by $2.5 million of depreciation and amortization expense, $55.3 million of stock-based compensation expense, $1.0 million of amortization of investment premiums, net of accretion of discounts, and a $0.2 million increase of allowance for doubtful accounts. Changes in net operating assets and liabilities primarily consisted of an increase in accounts payable, deferred revenue, accruals and other liabilities, which was partially offset by an increase in accounts receivable and prepaid expenses and other assets.
Net Cash Provided by (Used in) Investing Activities
Net cash provided by investing activities was $46.9 million for the three months ended March 31, 2023. This amount primarily consisted of maturities of marketable securities investments of $108.8 million., partially offset by investments in available-for-sale securities of $57.6 million, capitalized software and development costs of $2.6 million, consideration paid (net of cash acquired) for business acquisitions of $1.7 million, and purchases of property and equipment of $0.1 million.
Net cash used in investing activities was $18.2 million for the three months ended March 31, 2022. This amount primarily consisted of investments in available-for-sale securities of $30.4 million, purchase price (net of cash acquired) for business acquisitions of $30.0 million, capitalized software and development costs of $3.6 million, and purchases of property and equipment of $0.4 million, partially offset by maturities of marketable securities investments of $46.2 million.
Net Cash Provided by (Used in) Financing Activities
Net cash provided by financing activities was $0.4 million for the three months ended March 31, 2023. This amount primarily consisted of $0.7 million of proceeds from the exercise of stock options, partially offset by a $0.3 million payment for taxes related to the net settlement of equity awards.
Net cash used in financing activities was $3.2 million for the three months ended March 31, 2022. This amount primarily consisted of $33.3 million payment for taxes related to the net settlement of equity awards, partially offset by $27.8 million of proceeds from the exercise of warrants and $2.2 million of proceeds from the exercise of stock options.
CRITICAL ACCOUNTING POLICIES AND ESTIMATES
Our discussion and analysis of our financial condition and results of operations should be read in conjunction withare based upon our unauditedcondensed consolidated financial statements, which have been prepared in accordance with GAAP. We evaluated the development and selection of our critical accounting policies and estimates and believe that the notes related thereto whichfollowing involve a higher degree of judgment or complexity and are included in “Item 1. Financial Statements”most significant to reporting our results of this Quarterly Report on Form 10‑Q.

Cautionary Note Regarding Forward-Looking Statements

All statements other than statements of historical fact included in this Quarterly Report on Form 10‑Q including, without limitation, statementsoperations and financial position and are therefore discussed as critical.


We believe that the critical accounting estimates discussed under thisItem 7, “Management’s Discussion and Analysis of Financial Condition and Results of Operations” regardingin our 2022 Form 10-K for the Company’s financial position, business strategyfiscal year ended December 31, 2022 reflect our more significant judgments and the plans and objectives of management for future operations, are forward-looking statements. Whenestimates used in this Quarterly Report on Form 10‑Q, words such as “anticipate,” “believe,” “estimate,” “expect,” “intend” and similar expressions, as they relate to us or the Company’s management, identify forward-looking statements. Such forward-looking statements are based on the beliefs of management, as well as assumptions made by, and information currently available to, the Company’s management. Actual results could differ materially from those contemplated by the forward-looking statements as a result of certain factors detailed in our filings with the SEC. All subsequent written or oral forward-looking statements attributable to us or persons acting on the Company’s behalf are qualified in their entirety by this paragraph.

Overview

We are a blank check company incorporated on June 29, 2020 as a Delaware corporation and formed for the purpose of effecting a Business Combination with one or more target businesses. We completed our Public Offering on December 15, 2020.  

We intend to effectuate our Business Combination using cash from the proceedspreparation of our Public Offering and the salecondensed consolidated financial statements. There have been no material changes to our critical accounting estimates as filed in such report. Refer to Note 2. “Summary of Significant Accounting Policies” in Part I, Item 1 of this Report for more information on our adoption of new accounting guidance.

Recent Accounting Pronouncements
For a discussion of the Private Placement Warrants,recent accounting pronouncements, refer to “Accounting Pronouncements” in Note 2. “Summary of Significant Accounting Policies” in Part I, Item 1 of this Report.
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Item 3. Quantitative and Qualitative Disclosures About Market Risk
Matterport is subject to market risk, primarily relating to potential losses arising from adverse changes in foreign currency exchange rates.
Foreign Currency Exchange Risk
Our results of operations and cash flows are subject to fluctuations due to changes in foreign currency exchange rates. Currently, our capital stock, debt, or a combination of cash, stock and debt.

Recent Developments

Proposed Matterport Business Combination

On February 7, 2021,revenue is primarily generated in U.S. dollars. Our expenses are generally denominated in the Company entered into a Merger Agreement, by and among the Company, First Merger Sub, Second Merger Sub, and Matterport, which provides for, among other things: (a) the First Merger; and (b) immediately following the First Merger and as partcurrencies of the same overall transaction as the First Merger, the Second Merger. The transactions set forthjurisdictions in which we conduct our operations, which are primarily in the Merger Agreement, includingUnited States, the Mergers, will constitute a “Business Combination” as contemplated byUnited Kingdom (U.K.), and Singapore. However, there has been, and may continue to be, significant volatility in global stock markets and foreign currency exchange rates that result in the Company’s Amended and Restated Certificate of Incorporation.

The Merger Agreement and the transactions contemplated thereby were unanimously approved by the Board of Directorsstrengthening of the Company on February 7, 2021 and the Matterport Board on February 7, 2021.

U.S. dollar against foreign currencies in which we conduct business. The Merger Agreement

Merger Consideration

Pursuant to the termsstrengthening of the Merger Agreement, at the effective time of the First Merger (the “Effective Time”), each share of Matterport’s common stock, par value $0.001 per share (“Matterport Common Stock”), will be converted into the right to receive a number of newly-issued shares of the Company’s Class A common stock, par value $0.0001 per share (“Company Class A common stock”), equal to the Per Share Company Common Stock Consideration (as definedU.S. dollar may potentially decrease our revenue given our prices are fixed in the Merger Agreement) and each share of Matterport’s preferred stock, par value $0.001 per share (“Matterport Preferred Stock”), will be converted into the right to receive a number of newly-issued shares of Company Class A common stock equal to the Per Share Company Preferred Stock Consideration (as defined in the Merger Agreement). Pursuant to the terms of the Merger Agreement, the Company is required to use reasonable best efforts to cause the shares of Company Class A common stock to be issued in connection with the transactions contemplated by the Merger Agreement (the Business Combination) to be listed on Nasdaq at the closing of the Business Combination.

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Pursuant to the Merger Agreement, the aggregate merger consideration payable at the closing of the Business Combination to all of the stockholders and holders of equity awards of Matterport will be an aggregate number of shares, or equity awards exercisableforeign currencies for shares, of Company Class A common stock (deemed to have a value of $10.00 per share) equal to $2,188,750,000, divided by $10.00.

In addition to the consideration to be paid at the closing of the Business Combination, stockholders of Matterport will be entitled to receive their pro rata share of an additional number of earn-out shares from the Company, issuable in Company Class A common stock and subject to the terms provided in the Merger Agreement, up to an aggregate of 23,460,000 shares collectively issuable to all Matterport equity holders.

Treatment of Matterport’s Equity Awards

Pursuant to the Merger Agreement, at the closing of the Business Combination, each of Matterport’s stock options, to the extent then outstanding and unexercised, will automatically be converted into (a) an option to acquire a certain number of shares of Company Class A common stock (pursuant to a ratio based on the Per Share Company Common Stock Consideration), at an adjusted exercise price per share and (b) the right to receive a pro rata portion of a number of earn-out shares from the Company, issuable in Company Class A common stock and subject to the terms provided in the Merger Agreement (including that such right to receive earn-out shares is conditional on the holder continuing to provide services to the Company), up to an aggregate of 23,460,000 shares collectively issuable to all Matterport equity holders. Each such converted option will be subject to the same terms and conditions as were applicable immediately prior to such conversion.

Pursuant to the Merger Agreement, at the closing of the Business Combination, each of Matterport’s restricted stock units, to the extent then unvested and outstanding, will automatically be converted into (a) an award of restricted stock units covering a certain number of shares of Company Class A common stock (pursuant to a ratio based on the Per Share Company Common Stock Consideration) and (b) the right to receive a pro rata portion of a number of earn-out shares from the Company, issuable in Company Class A common stock and subject to the terms provided in the Merger Agreement (including that such right to receive earn-out shares is conditional on the holder continuing to provide services to the Company), up to an aggregate of 23,460,000 shares collectively issuable to all Matterport equity holders. Each such converted restricted stock unit will be subject to the same terms and conditions as were applicable immediately prior to such conversion.

Private Placement Subscription Agreements

On February 7, 2021, the Company entered into subscription agreements (each, a “Subscription Agreement” and collectively, the “Subscription Agreements”) with certain investors, including certain individuals (each, an “Individual Investor Subscription Agreement”), institutional investors (each, an “Institutional Investor Subscription Agreement”) and Gores Sponsor VI LLC (the “Sponsor”), pursuant to which the investors have agreed to purchase an aggregate of 29,500,000 shares of Class A common stock in a private placement for $10.00 per share (the “Private Placement”). The proceeds from the Private Placement will remain on the Company’s balance sheet following the consummation of the Business Combination.

Each Subscription Agreement will terminate with no further force and effect upon the earliest to occur of: (a) such date and time as the Merger Agreement is terminated in accordance with its terms; (b) upon the mutual written agreement of the parties to such Subscription Agreement; (c) if any of the conditions to closing set forth in such Subscription Agreement are not satisfied or waived on or prior to the closing and, as a result thereof, the transactions contemplated by such Subscription Agreement are not consummated at the closing; and (d) if the closing of the Business Combination shall not have occurred by September 7, 2021. As of the date hereof, the shares of Class A common stock to be issued pursuant to the Subscription Agreements have not been registered under the Securities Act. The Company will, within 30 days after the closing, file with the SEC a registration statement (the “Post-Closing Registration Statement”) registering the resale of such shares of Class A Common Stock and will use its commercially reasonable efforts to have such Post-Closing Registration Statement declared effective as soon as practicable after the filing thereof.

Recent Stockholder Action

21

The Company and the members of its Board of Directors have been named as defendants in a putative stockholder action filed in the Supreme Court of the State of New York, County of New York, captioned Jamin Quimby v. Gores Holdings VI, Inc., et al., Index No. 652761/2021, in connection with the proposed business combination of the Company with Matterport, Inc. (the “Proposed Transaction”).  The complaint generally alleges breach of fiduciary duty and aiding and abetting claims relating to, among other things, alleged misstatements and omissions in the Form S-4 registration statement filed by the Company with the SEC on April 6, 2021 in connection with the Proposed Transaction (the “Registration Statement”).  The complaint seeks, among other things, injunctive relief and an award of attorneys’ fees.  The Company believes the claims asserted in the Quimby matter are without merit, and intends to vigorously defend against them.  

Results of Operations

For the three months ended March 31, 2021, we had a net loss of ($29,974,034), of which ($26,672,500) are non-cash losses related to the change in fair value of the warrant liability. Our business activities during the quarter mainly consisted of identifying and evaluating prospective acquisition candidates for a Business Combination. We believe that we have sufficient funds available to complete our efforts to effect a Business Combination with an operating business by December 15, 2022. However, if our estimates of the costs of identifying a target business, undertaking in-depth due diligence and negotiating a Business Combination are less than the actual amount necessary to do so, we may have insufficient funds available to operate our business prior to our Business Combination.

As indicated in the accompanying unaudited financial statements, at March 31, 2021, we had $176,595 in cash and deferred offering costs of $12,075,000. Further, we expect to continue to incur significant costs in the pursuitsome of our acquisition plans. We cannot assure you that our plans to complete our Business Combination will be successful.

Liquidity and Capital Resources

On July 24, 2020, the Sponsor purchased 17,250,000 shares of Class F Common Stock for $25,000, or approximately $0.001 per share. On October 1, 2020, the Sponsor surrendered 8,625,000 Founder Shares to us for no consideration, on October 23, 2020, the Company effected a stock dividend with respect to its Class F Common Stock of 6,468,750 shares thereof and on November 13, 2020 the Sponsor surrendered 6,468,750 Founder Shares to us for no consideration, resulting in an aggregate of 8,625,000 outstanding shares of Class F Common Stock. As a result of such surrenders and stock dividend, the per-share purchase price increased to approximately $0.003 per share. The number of Founder Shares issued was determined based on the expectation that such Founder Shares would represent 20% of the outstanding shares upon completion of the Public Offering. On September 11, 2020, the Sponsor transferred 25,000 Founder Shares to each of the independent directors at their original purchase price.

On December 15, 2020, the Company consummated its Public Offering of 34,500,000 Units at a price of $10.00 per Unit, including 4,500,000 Units as a result of the underwriters’ full exercise of their over-allotment option, generating gross proceeds of $345,000,000. On the IPO Closing Date, we completed the private sale of an aggregate of 4,450,000 Private Placement Warrants, each exercisable to purchase one share of Common Stock at $11.50 per share, to our Sponsor, at a price of $2.00 per Private Placement Warrant, generating gross proceeds, before expenses, of $8,900,000. After deducting the underwriting discounts and commissions (excluding the Deferred Discount, which amount will be payable upon consummation of the Business Combination, if consummated) and the estimated offering expenses, the total net proceeds from our Public Offering and the sale of the Private Placement Warrants were $346,055,000, of which $345,000,000 (or $10.00 per share sold in the Public Offering) was placed in the Trust Account. The amount of proceeds not deposited in the Trust Account was $1,055,000 at the closing of our Public Offering. Interest earned on the funds held in the Trust Account may be released to us to fund our Regulatory Withdrawals, for a maximum of 24 months and/or additional amounts necessary to pay our franchise and income taxes.

On July 24, 2020, Company borrowed $300,000 by the issuance of an unsecured promissory note from the Sponsor for $300,000 to cover expenses related to the Public Offering. This Note was non-interest bearing and payable on the earlier of June 30, 2021 or the completion of the Public Offering. This Note was repaid in full upon the completion of the Public Offering.

22

On March 19, 2021, the Sponsor made available to the Company a loan of up to $2,000,000 pursuant to a promissory note issued by the Company to the Sponsor. The proceeds from the note will be used for on-going operational expenses and certain other expenses in connection with the Proposed Business Combination. The note is unsecured, non-interest bearing and matures on the earlier of: (i) January 31, 2022 or (ii) the date on which the Company consummates the Proposed Business Combination. As of March 31, 2021, the amount advanced by Sponsor to the Company was $600,000.

At March 31, 2021 and December 31, 2020, we had cash heldend-customers outside of the Trust Account of approximately $176,595United States, and $633,266, respectively, which is available to fund our working capital requirements.Additionally, interest earned on the funds held in the Trust Account may be released to us to fund our Regulatory Withdrawals, for a maximum of 24 months and/or additional amounts necessary to pay our franchise and income taxes.

At March 31, 2021 and December 31, 2020, the Company had current liabilities of $48,141,857 and $18,690,703, respectively, and working capital of ($47,129,281) and ($17,159,683), respectively, the balances of which are primarily related to warrants we have recorded as liabilities. Other amounts related to accrued expenses owed to professionals, consultants, advisors and others who are working on seeking a Business Combination.

We intend to use substantially all of the funds held in the Trust Account, including interest (which interest shall be net of Regulatory Withdrawals and taxes payable) to consummate our Business Combination. Moreover, we may need to obtain additional financing either to complete a Business Combination or because we become obligated to redeem a significant number of shares of our Common Stock upon completion of a Business Combination. Subject to compliance with applicable securities laws, we would only complete such financing simultaneously with the completion of our Business Combination. If we are unable to complete our Business Combination because we do not have sufficient funds available to us, we will be forced to cease operations and liquidate the Trust Account. In addition, following our Business Combination, if cash on hand is insufficient, we may need to obtain additional financing in order to meet our obligations. To the extent that our capital stock or debt is used,customers pay for our products and services in whole orcurrencies other than the U.S. dollar. If the U.S. dollar continues to strengthen, this could adversely affect our operations and cash flows in part,the future. In addition, the increase of non-U.S. dollar denominated contracts and the growth of our international entities in the future may result in greater foreign currency denominated sales, which would increase our foreign currency risk. The effect of a hypothetical 10% change in foreign currency exchange rates applicable to our business would not have a material impact on our consolidated financial statements as consideration to consummate our Business Combination, the remaining proceeds held in our Trust Account, if any, will be used as working capital to finance the operations of the target business or businesses, make other acquisitions and pursue our growth strategy.

Contractual Obligations

As of March 31, 2021 and December 31, 2020,2023. To date, we did not have any long-term debt obligations, capital lease obligations, operating lease obligations, purchase obligations or long-term liabilities. In connection with the Public Offering, we entered into an administrative services agreement to pay monthly recurring expenses of $20,000 to The Gores Group for office space, utilities and secretarial support. The administrative services agreement terminates upon the earlier of the completion of a Business Combination or the liquidation of the Company.

The underwriters are entitled to underwriting discounts and commissions of 5.5% ($18,975,000), of which 2.0% ($6,900,000) was paid at the IPO Closing Date, and 3.5% ($12,075,000) was deferred. The Deferred Discount will become payable to the underwriters from the amounts held in the Trust Account solely in the event that the Company completes a Business Combination, subject to the terms of the underwriting agreement. The underwriters are not entitled to any interest accrued on the Deferred Discount.

Recently Issued Accounting Pronouncements Not Yet Adopted

Management does not believe that any recently issued, but not yet effective, accounting pronouncements, if currently adopted, would have a material effect on the Company’s financial statements based on current operations of the Company.  The impact of any recently issued accounting standards will be re-evaluated on a regular basis or if a business combination is completed where the impact could be material.

Item 3. Quantitative and Qualitative Disclosures About Market Risk

Market risk is a broad term for the risk of economic loss due to adverse changes in the fair value of a financial instrument. These changes may be the result of various factors, including interest rates, foreign exchange

23

rates, commodity prices and/or equity prices. Our business activities for the three months ended March 31, 2021 consisted solely of organizational activities and activities relating to our Public Offering and the identification of a target company for our Business Combination. As of March 31, 2021, $345,022,332 (including accrued interest and dividends and subject to reduction by the Deferred Discount due at the consummation of the Business Combination) was held in the Trust Account for the purposes of consummating our Business Combination. As of March 31, 2021, investment securities in the Company’s Trust Account consists of $345,022,332 in money market funds. As of March 31, 2021, the effective annualized rate of return generated by our investments was approximately 0.0015%.

We have not engaged in any hedging activities duringstrategies. As our international operations grow, we will continue to reassess our approach to manage the three months ended March 31, 2021. risk relating to fluctuations in currency rates.

Inflation Risk
We do not expectbelieve that inflation has had a material effect on our business, financial condition, or results of operations. If our costs become subject to engage in any hedging activities with respectsignificant inflationary pressures, we may not be able to the market riskfully offset such higher costs through price increases. Our inability or failure to which we are exposed.

do so could harm our business, financial condition and operating results.

Item 4. Controls and Procedures

Evaluation of Disclosure Controls and Procedures
We maintain “disclosure controls and procedures, are controls” as defined in Rule 13a–15(e) and other proceduresRule 15d–15(e) under the Exchange Act that are designed to ensureprovide reasonable assurance that information required to be disclosed by us in ourthe reports filedthat we file or submittedsubmit under the Exchange Act is recorded, processed, summarized and reported, within the time periods specified in the SEC’s rules and forms. Disclosure controls and procedures include, without limitation, controls and procedures designed to ensureprovide reasonable assurance that information required to be disclosed by us in companythe reports filedthat we file or submittedsubmit under the Exchange Act is accumulated and communicated to our management, including our Chief Executive Officer and Chief Financial Officer, as appropriate to allow timely decisions regarding required disclosure.

As required by Rules 13a-15 and 15d-15 under the Exchange Act, our Chief Executive Officer and Chief Financial Officer carried out an evaluation of the effectiveness of the design and operation of our disclosure controls and procedures as of March 31, 2021. Based upon their evaluation at that earlier time, our Chief Executive Officer and Chief Financial Officer had concluded that our disclosure controls and procedures (as defined in Rules 13a-15(e) and 15d-15(e) under the Exchange Act) were effective. Subsequently, our

Our management, re-evaluated, with the participation of our Chief Executive Officer and Chief Financial Officer, has evaluated the effectiveness of our disclosure controls and procedures as of March 31, 2021.2023. Based upon thaton the evaluation of our disclosure controls and in lightprocedures as of the SEC Staff Statement on April 12, 2021,March 31, 2023, our Chief Executive Officer and Chief Financial Officer concluded that, due to the industry-wide issues and related insufficient risk assessmentas of the underlying accounting for certain instruments resulting in the Company’s restatement of its financial statements,such date, our disclosure controls and procedures were not effective as of March 31, 2021. While we have processes to identify and appropriately apply applicable accounting requirements, we plan to enhance our system of evaluating and implementingat the accounting standards that apply to our financial statements, including through enhanced analyses by our personnel and third-party professionals with whom we consult regarding complex accounting applications. The elements of our remediation plan can only be accomplished over time, and we can offer noreasonable assurance that these initiatives will ultimately have the intended effects.

level.

Changes in Internal Control over Financial Reporting

This Quarterly Report on Form 10-Q does not include a report of management’s assessment regarding internal control over financial reporting or an attestation report of our registered public accounting firm due to a transition period established by rules of the SEC for newly public companies; however,

There was no change in light of management’s conclusion, following a review of the warrants in connection with the SEC Staff Statement, to reclassify the Company’s warrants, our internal control over financial reporting did not resultidentified in sufficient risk assessment ofconnection with the underlying accounting for certain financial instruments which we determined to be a material weakness.

Duringevaluation required by Rules 13a-15(d) and 15d-15(d) under the most recently completed fiscal quarter, there has been no changeExchange Act that occurred during the period covered by this Quarterly Report on Form 10-Q that has materially affected, or is reasonably likely to materially affect, our internal control over financial reporting.

24


Inherent Limitations on Effectiveness of Controls
A control system, no matter how well conceived and operated, can provide only reasonable, not absolute, assurance that the objectives of the control system are met. Further, the design of a control system must reflect the fact that there are resource constraints, and the benefits of controls must be considered relative to their costs. Inherent limitations in all control systems include the realities that judgments in decision making can be faulty, and that breakdowns can occur because of a simple error or mistake. Additionally, controls can be circumvented by the individual acts of some persons, by
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PART II—OTHER INFORMATION

Table of Content
collusion of two or more people or by management override of the controls. The design of any system of controls also is based in part upon certain assumptions about the likelihood of future events, and there can be no assurance that any design will succeed in achieving its stated goals under all potential future conditions; over time, controls may become inadequate because of changes in conditions, or the degree of compliance with policies or procedures may deteriorate. Because of the inherent limitations in a cost–effective control system, misstatements due to error or fraud may occur and not be detected.
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Part II - Other Information
None.
Item 1. Legal Proceedings

None.

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 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
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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.

Item 1A. Risk Factors

Factors that could cause our actual

Our operating and financial results are subject to differ materially fromvarious risks and uncertainties including those in this report are any ofdescribed under the risks describedsection titled “Risk Factors” in our prospectus filed with the SEC on December 14, 2020and our Annual Report on Form 10-K/A10-K for the year ended December 31, 2022 filed with the SECSecurities and Exchange Commission (the “SEC”) on May 18, 2021. AnyFebruary 28, 2023 and the updated risk factors described below, together with all of thesethe other information in this report, including the Condensed Consolidated Financial Statements and the related notes included elsewhere in this report. The risks and uncertainties described in our 2022 Form 10-K and below are not the only ones that may impact our operating and financial results. Additional risks and uncertainties that we are unaware of, or that we currently believe are not material, may also become important factors that adversely affect our business. If any of the following risks or others not specified below actually occurs, our business, financial condition, results of operations, and future prospects could be materially and adversely affected, which could result in a decrease in the market price of our common stock.
The following risk factor amends and supplements the “Risks Related to Our Business” subsection contained under Part I, Item 1A. Risk Factors in our 2022 Form 10-K.

Our business may be negatively affected by domestic and global economic and credit conditions.

We have international operations with sales outside the U.S., and we have plans to expand internationally. In addition, our global supply chain is large and complex and the majority of our supplier facilities are located outside the U.S. As a result, our operations and performance depend significantly on global and regional economic conditions.

Adverse macroeconomic conditions, including inflation, slower growth or recession, new or increased tariffs and other barriers to trade, changes to fiscal and monetary policy, tighter credit, higher interest rates, high unemployment, unstable global credit markets and financial conditions and currency fluctuations can adversely impact consumer confidence and spending and materially adversely affect demand for our products and services. In addition, consumer confidence and spending can be materially adversely affected in response to financial market volatility, negative financial news, conditions in the real estate and mortgage markets, declines in income or asset values, energy shortages and cost increases, labor and healthcare costs and other economic factors.

In addition to an adverse impact on demand for our products and services, uncertainty about, or a decline in, global or regional economic conditions can have a significant or material adverse effectimpact on our suppliers and subscribers. These and other economic factors can negatively adversely affect our business, results of operations, or financial condition. Additional risk factors not presently knowncondition and stock price.

Additionally, turmoil in the global banking system has the potential to us or that we currently deem immaterial may also impairimpact our business, or results of operations.

Asoperations, financial condition and stock price. For example, on March 10, 2023, Silicon Valley Bank (SVB), one of our banking partners, was closed by the California Department of Financial Protection and Innovation, which appointed the FDIC as receiver. On March 27, 2023, First Citizens Bank & Trust Company assumed all of SVB’s customer deposits and certain other liabilities and acquired substantially all of SVB's loans and certain other assets from the FDIC. We held a minimal amount of cash directly at SVB and, since that date, the FDIC has stated that all depositors of this Quarterly Report on Form 10-Q,SVB will be made whole, and First Citizens Bank & Trust Company has assumed our deposits from SVB. However, there have beenis no material changes toguarantee that the risk factors disclosedfederal government would guarantee all depositors as they did with SVB depositors in the event of further bank closures, and continued instability in the global banking system may adversely impact our prospectus filed withbusiness and financial condition as well as the SEC on December 14, 2020 orfinancial condition of our Annual Report on Form 10-K/A filed on May 18, 2021; however, we may disclose changes to such factors or disclose additional factors from time to time in our future filings with the SEC.

customers and suppliers.
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Item 2. Unregistered Sales of Equity Securities and Use of Proceeds

Unregistered Sales

On July 24, 2020, the Sponsor purchased 17,250,000 shares of Class F Common Stock for $25,000, or approximately $0.001 per share. On October 1, 2020, the Sponsor surrendered 8,625,000 Founder Shares to us for no consideration, on October 23, 2020, the Company effected a stock dividend with respect to its Class F Common Stock of 6,468,750 shares thereof and on November 13, 2020 the Sponsor surrendered 6,468,750 Founder Shares to us for no consideration, resulting in an aggregate of 8,625,000 outstanding shares of Class F Common Stock. As a result of such surrender, the per-share purchase price increased to approximately $0.003 per share. The number of Founder Shares issued was determined based on the expectation that such Founder Shares would represent 20% of the outstanding shares upon completion of the Public Offering. On September 11, 2020, the Sponsor transferred 25,000 Founder Shares to each of the independent directors at their original purchase price.Our Public Offering was consummated on December 15, 2020.

Prior to the IPO Closing Date, we completed the private sale of an aggregate of 4,450,000 Private Placement Warrants to our Sponsor at a price of $2.00 per Private Placement Warrant, generating total proceeds, before expenses, of $8,900,000. The Private Placement Warrants have terms and provisions that are identical to those of the public warrants sold as part of the units in the IPO, except that the Private Placement Warrants may be physical (cash) or net share (cashless) settled and are not redeemable so long as they are held by the Sponsor or its permitted transferees. If the Private Placement Warrants are held by holders other than our Sponsor or its permitted transferees, the Private Placement Warrants will be redeemable by us and exercisable by the holders on the same basis as the Warrants.

The sales of the above securities by the Company were exempt from registration in reliance on Section 4(a)(2) of the Securities Act as transactions by an issuer not involving a public offering.

Use of Proceeds

On December 10, 2020, our registration statement on Form S‑1 (File No. 333-249312) was declared effective by the SEC for the Public Offering pursuant to which we sold an aggregate of 34,500,000 Units at an offering price to the public of $10.00 per Unit, including 4,500,000 Units as a result of the underwriters’ full exercise of its over-allotment option, generating gross proceeds of $345,000,000.

After deducting the underwriting discounts and commissions (excluding the Deferred Discount, which amount will be payable upon the consummation of our Business Combination, if consummated) and the estimated

25

offering expenses, the total net proceeds from our Public Offering and the sale of the Private Placement Warrants were $346,055,000, of which $345,000,000 (or $10.00 per share sold in the Public Offering) was placed in the Trust Account in the United States maintained by the trustee.

Through March 31, 2021, we incurred approximately $7,799,078 for costs and expenses related to the Public Offering. At the closing of the Public Offering, we paid a total of $6,900,000 in underwriting discounts and commissions. In addition, the underwriters agreed to defer $12,075,000 in underwriting commissions, which amount will be payable upon consummation of our Business Combination, if consummated. There has been no material change in the planned use of proceeds from our Public Offering as described in our final prospectus dated December 14, 2020 which was filed with the SEC.

Our Sponsor, executive officers and directors have agreed, and our second amended and restated certificate of incorporation provides, that we will have only 24 months from the IPO Closing Date to complete our Business Combination. If we are unable to complete our Business Combination within such 24‑month period, we will: (i) cease all operations except for the purpose of winding up, (ii) as promptly as reasonably possible but not more than ten business days thereafter, redeem the public shares, at a per-share price, payable in cash, equal to the aggregate amount then on deposit in our Trust Account, including interest (which interest shall be net of taxes payable, and less up to $100,000 of interest to pay dissolution expenses) divided by the number of then outstanding public shares, which redemption will completely extinguish public stockholders’ rights as stockholders (including the right to receive further liquidation distributions, if any), subject to applicable law, and (iii) as promptly as reasonably possible following such redemption, subject to the approval of our remaining stockholders and our Board, dissolve and liquidate, subject in each case to our obligations under Delaware law to provide for claims of creditors and the requirements of other applicable law.

As of March 31, 2021, after giving effect to our Public Offering and our operations subsequent thereto, approximately $345,022,332 was held in the Trust Account, and we had approximately $176,595 of unrestricted cash available to us for our activities in connection with identifying and conducting due diligence of a suitable Business Combination, and for general corporate matters.

None.

Item 3. Defaults Upon Senior Securities

None

None.

Item 4. Mine Safety Disclosures

Not Applicable.

Item 5. Other Information

None.

26

Item 6. Exhibits

and Financial Statement Schedules.

The following exhibits arefinancial statements filed as part of this registration statement are listed in the index to the financial statements immediately preceding such financial statements, which index to the financial statements is incorporated herein by reference.
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Table of Content
Exhibit
Number		DescriptionFormFile No.ExhibitFiling DateFiled Herewith
2.1†8-K001-397902.17/28/2021
3.18-K001-397903.17/28/2021
3.28-K001-397903.27/28/2021
4.18-K001-397904.112/16/2020
4.28-K001-397904.37/28/2021
31.1*
31.2*
32.1*
32.2*
101.INSInline XBRL Instance Document - the instance document does not appear in the Interactive Data file because its XBRL tags are embedded within the Inline XBRL document.*
101.SCHInline XBRL Taxonomy Extension Schema Document.*
101.CALInline XBRL Taxonomy Extension Calculation Linkbase Document.*
101.DEFInline XBRL Taxonomy Extension Definition Linkbase Document.*
101.LABInline XBRL Taxonomy Extension Label Linkbase Document.*
101.PREInline XBRL Taxonomy Extension Presentation Linkbase Document.*
Exhibit 104Cover Page Interactive Data File (formatted as inline XBRL and contained in Exhibit 101)
_____________
*    Filed herewith
† Indicates a management contract or incorporated by reference into,compensatory plan, contract or arrangement.
† The schedules to this Quarterly Report on Form 10‑Q.

Exhibit have been omitted in accordance with Regulation S-K Item 601(b)(2). The Company agrees to furnish supplementally a copy of any omitted schedule to the Securities and Exchange Commission upon its request.

Exhibit

Number

Description

  2.1

Agreement and Plan of Merger, dated as of February 7, 2021, by and among Gores Holdings VI, Inc., Maker Merger Sub, Inc., Maker Merger Sub II, LLC and Matterport, Inc. (incorporated by reference to Exhibit 2.1 of the Company’s Current Report on Form 8-K filed with the SEC on February 8, 2021).

  3.1

Amended and Restated Certificate of Incorporation (incorporated by reference to Exhibit 3.1 of the Company’s Current Report on Form 8-K filed with the SEC on December 16, 2020).

  3.2

Bylaws (incorporated by reference to Exhibit 3.3 filed with the Form S-1 filed by the Registrant on December 7, 2020).

  4.1

Specimen Unit Certificate (incorporated by reference to Exhibit 4.1 filed with the Form S-1 filed by the Registrant on December 7, 2020).

  4.2

Specimen Class A Common Stock Certificate (incorporated by reference to Exhibit 4.2 filed with the Form S-1 filed by the Registrant on December 7, 2020).

  4.3

Specimen Warrant Certificate (incorporated by reference to Exhibit 4.3 filed with the Form S-1 filed by the Registrant on December 7, 2020).

  4.4

Warrant Agreement, dated December 15, 2020, between the Company and Continental Stock Transfer & Trust Company, as warrant agent (incorporated by reference to Exhibit 4.1 of the Company’s Current Report on Form 8-K filed with the SEC on December 16, 2020).

31.1*

Certification of Principal Executive Officer Pursuant to Rules 13a‑14(a) and 15d‑14(a) under the Securities Exchange Act of 1934, as Adopted Pursuant to Section 302 of the Sarbanes-Oxley Act of 2002.

31.2*

Certification of Principal Financial Officer Pursuant to Rules 13a‑14(a) and 15d‑14(a) under the Securities Exchange Act of 1934, as Adopted Pursuant to Section 302 of the Sarbanes-Oxley Act of 2002.

32.1*

Certification of Principal Executive Officer Pursuant to 18 U.S.C. Section 1350, as Adopted Pursuant to Section 906 of the Sarbanes-Oxley Act of 2002.

32.2*

Certification of Principal Financial Officer Pursuant to 18 U.S.C. Section 1350, as Adopted Pursuant to Section 906 of the Sarbanes-Oxley Act of 2002.

Exhibit 101

The following financial statements from the Quarterly Report on Form 10-Q of Gores Holdings VI, Inc. for the quarter ended March 31, 2021, formatted in inline eXtensible Business Reporting Language (iXBRL): (i) Balance Sheets, (ii) Statement of Income,  (iii) Statement of Changes in Stockholders’ Equity, (iv) Statement of Cash Flows and (v) Notes to Financial Statements.

Exhibit 104

Cover Page Interactive Data File (formatted as inline XBRL and contained in Exhibit 101)


*

Filed herewith.

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SIGNATURES

Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned thereunto duly authorized.


GORES HOLDINGS VI, INC.

MATTERPORT, INC.

Date: May 27, 2021

9, 2023

By:

By:

/s/ Mark Stone

R.J. Pittman

Mark Stone

R.J. Pittman

Chief Executive Officer

(Duly Authorized Officer and Principal Executive Officer)

28

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