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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 September 30, 2024
OR
☐
TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
For the transition period from ____________ to ____________
Commission file number 001-39790
____________________________
MATTERPORT, INC.
(Exact name of registrant as specified in its charter)
____________________________
Delaware
85-1695048
(State or other jurisdiction of incorporation or organization)
(I.R.S. Employer
Identification No.)
352 East Java Drive
Sunnyvale, California 94089
(Address of Principal Executive Offices, including zip code)
(650) 641-2241
(Registrant's telephone number, including area code)
N/A
(Former name, former address and former fiscal year, if changed since last report)
Securities registered pursuant to Section 12(b) of the Act:
Title of each class
Trading
Symbol
Name of each exchange
on which registered
Class A Common Stock, par value of $0.0001 per shareMTTRThe Nasdaq Global Market
Indicate by check mark whether the registrant: (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports); and (2) has been subject to such filing requirements for the past 90 days. Yes x No o
Indicate by check mark whether the registrant has submitted electronically every Interactive Data File required to be submitted pursuant to Rule 405 of Regulation S-T (§232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit such files). Yes x No o

Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, a smaller reporting company, or an emerging growth company. See the definitions of “large accelerated filer,” “accelerated filer,” “smaller reporting company” and “emerging growth company” in Rule 12b-2 of the Exchange Act.
 Large accelerated filer
☒
Accelerated filer
☐
Non-accelerated filer
☐
Smaller reporting company
☐
Emerging growth company
☐
If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act. ☐
Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Act). Yes ☐ No ☒
The registrant had 322,895,329 shares of Class A common stock outstanding as of November 5, 2024.

Table of Contents
Page
Item 2.










3


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 the inability to consummate the proposed transaction with CoStar Group, Inc. (“CoStar Group”) within the anticipated time period, or at all, due to any reason, including the failure to obtain required regulatory approvals or to satisfy the other conditions to the consummation of the proposed transaction with CoStar Group; the risk that the proposed transaction with CoStar Group disrupts Matterport’s current plans and operations or diverts management’s attention from its ongoing business; the effects of the proposed transaction with CoStar Group on Matterport’s business, operating results, and ability to retain and hire key personnel and maintain relationships with customers, suppliers and others with whom Matterport does business; the risk that Matterport’s stock price may decline significantly if the proposed transaction with CoStar Group is not consummated; the nature, cost and outcome of any legal proceedings related to the proposed transaction; 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 remediate our material weakness, or any other material weakness that we may identify in the future that could result in material misstatements in our financial statements; 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; 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, 2023 (the “2023 Form 10-K”) filed with the Securities and Exchange Commission (the “SEC”) on February 27, 2024, 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.
4
Part I- Financial Information
Item 1. Financial statements
MATTERPORT INC.
CONDENSED CONSOLIDATED BALANCE SHEETS
(unaudited)
(In thousands, except per share data)
September 30,
2024		December 31,
2023
ASSETS
Current assets:
Cash and cash equivalents
$63,358 $82,902 
Restricted cash
95,182 — 
Short-term investments206,818 305,264 
Accounts receivable, net of allowance of $1,119 and $1,155, as of September 30, 2024 and December 31, 2023, respectively
14,918 16,925 
Inventories
7,582 9,115 
Prepaid expenses and other current assets
9,145 8,635 
Total current assets
397,003 422,841 
Property and equipment, net
30,356 32,471 
Operating lease right-of-use assets226 625 
Long-term investments39,824 34,834 
Goodwill69,593 69,593 
Intangible assets, net7,792 9,120 
Other assets
8,129 7,671 
Total assets
$552,923 $577,155 
LIABILITIES AND STOCKHOLDERS’ EQUITY
Current liabilities
Accounts payable
$7,812 $7,586 
Deferred revenue
26,885 23,294 
Accrued expenses and other current liabilities
108,308 13,354 
Total current liabilities
143,005 44,234 
Warrants liability1,185 290 
Deferred revenue, non-current
1,969 3,141 
Other long-term liabilities
— 206 
Total liabilities
146,159 47,871 
Commitments and contingencies (Note 7)
Redeemable convertible preferred stock, $0.0001 par value; 30,000 shares authorized as of September 30, 2024 and December 31, 2023, respectively; nil shares issued and outstanding as of September 30, 2024 and December 31, 2023, respectively
— — 
Stockholders’ equity:
Common stock, $0.0001 par value; 640,000 shares authorized as of September 30, 2024 and December 31, 2023, respectively; and 322,880 shares and 310,061 shares issued and outstanding as of September 30, 2024 and December 31, 2023, respectively
32 31 
Additional paid-in capital
1,400,614 1,307,324 
Accumulated other comprehensive income
707 403 
Accumulated deficit
(994,589)(778,474)
Total stockholders’ equity
406,764 529,284 
Total liabilities and stockholders’ equity
$552,923 $577,155 
The accompanying notes are an integral part of these unaudited condensed consolidated financial statements.
5
MATTERPORT, INC.
CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS
(In thousands, except per share data)
(unaudited)
Three Months Ended September 30,Nine Months Ended September 30,
2024202320242023
Revenue:
Subscription
$25,365 $22,878 $73,535 $63,647 
Services
11,085 9,936 31,069 29,324 
Product
7,343 7,828 21,277 25,232 
Total revenue
43,793 40,642 125,881 118,203 
Costs of revenue:
Subscription
8,236 7,379 24,124 21,576 
Services
7,445 6,725 21,748 20,978 
Product
6,412 6,641 19,337 23,377 
Total costs of revenue
22,093 20,745 65,209 65,931 
Gross profit
21,700 19,897 60,672 52,272 
Operating expenses:
Research and development
15,261 15,577 45,521 52,711 
Selling, general, and administrative
50,464 53,719 150,069 164,660 
Litigation expense
— — 95,000 — 
Total operating expenses
65,725 69,296 290,590 217,371 
Loss from operations
(44,025)(49,399)(229,918)(165,099)
Other income (expense):
Interest income
3,211 1,573 8,098 4,525 
Change in fair value of warrants liability169 513 (895)564 
Other income
2,311 2,669 6,762 5,075 
Total other income
5,691 4,755 13,965 10,164 
Loss before provision for income taxes
(38,334)(44,644)(215,953)(154,935)
Provision for income taxes
67 110 162 197 
Net loss
$(38,401)$(44,754)$(216,115)$(155,132)
Net loss per share, basic and diluted
$(0.12)$(0.15)$(0.68)$(0.52)
Weighted-average shares used in per share calculation, basic and diluted
321,151 303,432 317,002 298,226 
The accompanying notes are an integral part of these unaudited condensed consolidated financial statements.
6
MATTERPORT, INC.
CONDENSED CONSOLIDATED STATEMENTS OF COMPREHENSIVE LOSS
(In thousands, unaudited)
Three Months Ended September 30,Nine Months Ended September 30,
2024202320242023
Net loss
$(38,401)$(44,754)$(216,115)$(155,132)
Other comprehensive income (loss), net of taxes:
Unrealized gain on available-for-sale securities, net of tax
1,211 514 304 4,435 
Other comprehensive income$1,211 $514 $304 $4,435 
Comprehensive loss
$(37,190)$(44,240)$(215,811)$(150,697)

The accompanying notes are an integral part of these unaudited condensed consolidated financial statements.
7
MATTERPORT, INC.
CONDENSED CONSOLIDATED STATEMENTS OF STOCKHOLDERS’ EQUITY
(In thousands, unaudited)
Common Stock
SharesAmount
Additional
Paid-In
Capital
Accumulated
Other
Comprehensive
Income (loss)
Accumulated
Deficit
Total
Stockholders’
Equity
Balance as of December 31, 2023
310,061 $31 $1,307,324 $403 $(778,474)$529,284 
Net loss
— — — — (36,128)(36,128)
Other comprehensive loss
— — — (619)— (619)
Issuance of common stock in connection with employee equity incentive plans, net of tax withholding4,446 — 259 — — 259 
Stock-based compensation
— — 30,211 — — 30,211 
Balance as of March 31, 2024
314,507 $31 $1,337,794 $(216)$(814,602)$523,007 
Net loss
— — — — (141,586)(141,586)
Other comprehensive loss
— — — (288)— (288)
Issuance of common stock in connection with employee equity incentive plans, net of tax withholding4,499 1 1,072 — — 1,073 
Stock-based compensation
— — 30,753 — — 30,753 
Balance as of June 30, 2024
319,006 $32 $1,369,619 $(504)$(956,188)$412,959 
Net loss
— — — — (38,401)(38,401)
Other comprehensive income
— — — 1,211 — 1,211 
Issuance of common stock in connection with employee equity incentive plans, net of tax withholding3,874 — 312 — — 312 
Stock-based compensation
— — 30,683 — — 30,683 
Balance as of September 30, 2024
322,880 $32 $1,400,614 $707 $(994,589)$406,764 
8

Common Stock
SharesAmount
Additional
Paid-In
Capital
Accumulated
Other
Comprehensive
Loss
Accumulated
Deficit
Total
Stockholders’
Equity
Balance as of December 31, 2022
290,541 $29 $1,168,313 $(5,034)$(579,397)$583,911 
Net loss
— — — — (53,842)(53,842)
Other comprehensive income
— — — 2,223 — 2,223 
Issuance of common stock in connection with employee equity incentive plans, net of tax 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, 2023
295,700 $30 $1,206,100 $(2,811)$(633,239)$570,080 
Net loss
— — — — $(56,536)(56,536)
Other comprehensive income
— — — 1,698 — 1,698 
Issuance of common stock in connection with employee equity incentive plans, net of tax withholding
4,871 — 1,509 — — 1,509 
Stock-based compensation
— — 34,751 — — 34,751 
Balance as of June 30, 2023
300,571 $30 $1,242,360 $(1,113)$(689,775)$551,502 
Net loss
— — — — $(44,754)(44,754)
Other comprehensive income
— — — 514 — 514 
Issuance of common stock in connection with employee equity incentive plans, net of tax withholding
4,875 1 1,113 — — 1,114 
Issuance of common stock in connection with acquisitions116 — 1,827 — — 1,827 
Stock-based compensation
— — 29,853 — — 29,853 
Balance as of September 30, 2023
305,562 $31 $1,275,153 $(599)$(734,529)$540,056 
The accompanying notes are an integral part of these unaudited condensed consolidated financial statements.
9
MATTERPORT, INC.
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
FOR THE NINE MONTHS ENDED SEPTEMBER 30, 2024 AND 2023
(In thousands, unaudited)
Nine Months Ended September 30,
20242023
CASH FLOWS FROM OPERATING ACTIVITIES
Net loss
$(216,115)$(155,132)
Adjustments to reconcile net income (loss) to net cash provided by (used in) operating activities:
Depreciation and amortization
17,284 14,130 
Accretion of discounts, net of amortization of investment premiums
(7,049)(5,511)
Stock-based compensation, net of amounts capitalized
84,821 90,674 
Cease use of certain leased facilities— 123 
Change in fair value of warrants liability895 (564)
Deferred income taxes— (185)
Allowance for doubtful accounts
525 150 
Loss from excess inventory and purchase obligation
— 1,592 
Other
(61)(60)
Changes in operating assets and liabilities, net of effects of businesses acquired:
Accounts receivable
1,482 3,489 
Inventories
1,532 (6,833)
Prepaid expenses and other assets
656 2,491 
Accounts payable
226 263 
Deferred revenue
2,419 6,527 
Accrued expenses and other liabilities
94,750 529 
Net cash used in operating activities
(18,635)(48,317)
CASH FLOWS FROM INVESTING ACTIVITIES:
Purchases of property and equipment
(170)(112)
Capitalized software and development costs
(6,846)(7,528)
Purchase of investments(157,522)(368,119)
Maturities of investments257,106 388,201 
Business acquisitions, net of cash acquired — (4,116)
Net cash provided by investing activities
92,568 8,326 
CASH FLOW FROM FINANCING ACTIVITIES:
Proceeds from the sales of shares through employee equity incentive plans
1,644 3,309 
Payments for taxes related to net settlement of equity awards— (329)
Net cash provided by financing activities
1,644 2,980 
Net change in cash, cash equivalents, and restricted cash
75,577 (37,011)
Effect of exchange rate changes on cash
61 25 
Cash, cash equivalents, and restricted cash at beginning of year
82,902 117,128 
Cash, cash equivalents, and restricted cash at end of period
$158,540 $80,142 
Supplemental disclosures of non-cash investing and financing information
Common stock issued in connection with acquisition $— $5,748 
The accompanying notes are an integral part of these unaudited condensed consolidated financial statements.
10
MATTERPORT, INC.
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED)

1. ORGANIZATION AND DESCRIPTION OF BUSINESS
Matterport, Inc., together with its subsidiaries (“Matterport” or the “Company”), is leading the digitization and datafication of the built world. Matterport’s pioneering technology has set the standard for digitizing, accessing and managing buildings, spaces and places online. Matterport’s platform, comprised of innovative software, spatial data-driven data science, and 3D capture technology has broken down the barriers that have kept the largest asset class in the world, buildings and physical spaces, offline and underutilized for so long. The Company was incorporated in the state of Delaware in 2011. The Company is headquartered at Sunnyvale, California.
On July 22, 2021 (the “Gores Closing Date”), the Company consummated the merger (collectively with the other transactions described in the Gores Merger Agreement, the “Gores Merger”, “Gores Closing”, or “Gores Transactions”) pursuant to an Agreement and Plan of Merger, dated February 7, 2021 (the “Gores 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. (“Gores First Merger Sub”), a direct, wholly owned subsidiary of the Company, and Maker Merger Sub II, LLC (“Gores Second Merger Sub”), a direct, wholly owned subsidiary of the Company, pursuant to which Gores First Merger Sub merged with and into Legacy Matterport, with Legacy Matterport continuing as the surviving corporation (the “Gores First Merger”), and immediately following the Gores First Merger and as part of the same overall transaction as the Gores First Merger, Legacy Matterport merged with and into Gores Second Merger Sub, with Gores Second Merger Sub continuing as the surviving entity as a wholly owned subsidiary of the Company, under the new name “Matterport Operating, LLC”. Upon the closing of the Gores Merger, we changed our name to Matterport, Inc. Unless the context otherwise requires, the “Company” refers to the combined company and its subsidiaries following the Gores Merger, “Gores” refers to the Company prior to the Gores Merger and “Legacy Matterport” refers to Matterport, Inc. prior to the Gores Merger.
CoStar Group Merger Agreement
On April 21, 2024, the Company entered into an Agreement and Plan of Merger and Reorganization (the “CoStar Group Merger Agreement”) with CoStar Group, Inc., a Delaware corporation (“CoStar Group”), Matrix Merger Sub, Inc., a Delaware corporation and a wholly owned subsidiary of CoStar Group (“CoStar Group Merger Sub I”), and Matrix Merger Sub II LLC, a Delaware limited liability company and a wholly owned subsidiary of CoStar Group (“CoStar Group Merger Sub II” and, together with CoStar Group Merger Sub I, the “CoStar Group Merger Subs”). Pursuant to the CoStar Group Merger Agreement, CoStar Group Merger Sub I will be merged with and into the Company, with the Company surviving as a wholly owned subsidiary of CoStar Group (the “Costar Group First Merger”). Immediately thereafter, subject to the terms of the CoStar Group Merger Agreement and, in certain circumstances, at the discretion of CoStar Group, the Company will merge with and into CoStar Group Merger Sub II, which will survive the merger as a wholly owned subsidiary of CoStar Group (the “CoStar Group Second Merger” and, together with the CoStar Group First Merger, the “CoStar Group Mergers”).

Subject to the terms and conditions set forth in the CoStar Group Merger Agreement, at the effective time of the CoStar Group First Merger (the “First Effective Time”), each share of Class A common stock, par value $0.0001 per share, of the Company (each a “Matterport Share” and collectively, the “Matterport Shares”) issued and outstanding immediately prior to the First Effective Time (other than Matterport Shares held by the Company (including in treasury), CoStar Group or their respective subsidiaries and Matterport Shares that are held by stockholders who have perfected and not withdrawn a demand for appraisal rights pursuant to Delaware law) will be converted into the right to receive (i) $2.75 in cash (the “Per Share Cash Consideration”) plus (ii) a number of shares of CoStar Group common stock, par value $0.01 per share (the “CoStar Group Shares”), equal to the Exchange Ratio (as defined in the CoStar Group Merger Agreement), subject to a right to receive cash in lieu of fractional shares (such cash and shares collectively, the “CoStar Group Merger Consideration”).


11
MATTERPORT, INC.
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED)
The consummation of the CoStar Group Mergers are subject to various conditions, including, among others, (i) the expiration of the applicable waiting period (or extensions thereof) under the Hart-Scott-Rodino Antitrust Improvements Act of 1976, as amended, and the receipt of other approvals under specified antitrust and foreign investment laws, (ii) absence of any law or order prohibiting the CoStar Group Mergers, (iii) the accuracy of the parties’ respective representations and warranties in the CoStar Group Merger Agreement, (iv) compliance and performance by the parties with their respective covenants in the CoStar Group Merger Agreement in all material respects, and (v) the absence of a material adverse effect (as defined in the CoStar Group Merger Agreement) with respect to Matterport or CoStar Group on or after the date of the CoStar Group Merger Agreement.

On July 3, 2024, Matterport and CoStar Group each received a request for additional information and documentary materials (the “Second Request”) from the Federal Trade Commission (the “FTC”) in connection with the FTC’s review of the transaction. The effect of the Second Request is to extend the waiting period imposed by the Hart-Scott-Rodino Antitrust Improvements Act of 1976, as amended (the “HSR Act”), until 30 days after Matterport and CoStar Group have each substantially complied with their respective second requests, unless that period is extended or terminated sooner by the FTC. Each of Matterport and CoStar Group expect to respond promptly to the Second Request and to continue to work cooperatively with the FTC in its review of the transaction. The CoStar Group Mergers, which are expected to be consummated in the fourth quarter of 2024 or the first quarter of 2025, were approved by Matterport stockholders at a special meeting held on July 26, 2024, but remains subject to the receipt of regulatory approvals and other customary closing conditions as described above. If the transaction is consummated, the Common Stock will be delisted from the NASDAQ Global Market and deregistered under the Securities Exchange Act of 1934, as amended.

The CoStar Group Merger Agreement contains termination rights for either or each of CoStar Group and the Company, including if the consummation of the CoStar Group Mergers does not occur on or before January 21, 2025, subject to three extensions of three months if on such date all of the closing conditions except those relating to regulatory approvals have been satisfied or waived. The Merger Agreement requires the CoStar Group to pay an $85 million fee to the Company in the event the Merger Agreement is terminated under specified circumstances, including, among others: if certain antitrust approvals are not obtained or a governmental order related to antitrust or competition matters prohibits the consummation of the transaction.

During the three and nine months ended September 30, 2024, other than CoStar Group Mergers-related expenses incurred, the terms of the CoStar Group Merger Agreement did not materially affect the results reported in our unaudited interim condensed consolidated financial statements. CoStar Group Mergers-related expenses in the three and nine months ended September 30, 2024 were approximately $4.3 million and $12.2 million, respectively, and were primarily included in “Selling, general, and administrative expenses” on our condensed consolidated statement of operations.
2. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
Summary of Significant Accounting Policies
The Company’s significant accounting policies are discussed in “Note 2 – Summary of Significant Accounting Policies” of the Company’s Annual Report on Form 10-K for the fiscal year ended December 31, 2023, which was filed with the SEC on February 27, 2024. There have been no significant changes to these policies during the three and nine months ended September 30, 2024.
Basis of Presentation
The accompanying unaudited condensed consolidated financial statements have been prepared in conformity with accounting principles generally accepted in the United States of America (“U.S. GAAP”) and applicable rules and regulations of the SEC, regarding interim financial reporting. Certain information and disclosures normally included in the financial statements prepared in accordance with U.S. GAAP have been condensed or omitted pursuant to such rules and regulations. These unaudited condensed consolidated financial statements should be read in conjunction with the audited consolidated financial statements and related notes in the Company’s 2023 Form 10-K for the fiscal year ended December 31, 2023, which provides a more complete discussion of the Company’s accounting policies and certain other information.
12
MATTERPORT, INC.
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED)
In the opinion of the Company, the accompanying unaudited condensed consolidated financial statements contain all adjustments, consisting of only normal recurring adjustments, necessary for a fair statement of its financial position as of September 30, 2024, and its results of operations for the three and nine months ended September 30, 2024 and 2023, and cash flows for the nine months ended September 30, 2024 and 2023. The condensed consolidated balance sheet as of December 31, 2023, was derived from audited annual financial statements but does not contain all of the footnote disclosures from the annual financial statements.
Reclassification
Certain prior-period amounts have been reclassified in the accompanying Condensed Consolidated Financial Statements and Notes thereto in order to conform to the current period presentation.
Principles of Consolidation
The accompanying condensed consolidated financial statements include the accounts of the Company and its wholly owned subsidiaries. All significant intercompany balances and transactions have been eliminated in consolidation.
Use of Estimates
The preparation of the accompanying condensed consolidated financial statements in conformity with U.S. GAAP requires management to make certain estimates and assumptions that affect the reported amounts and disclosures in the condensed consolidated financial statements and accompanying notes. Significant estimates include assumptions 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, loss contingencies, and the determination of stand-alone selling price of various performance obligations. As a result, many of the Company’s estimates and assumptions require 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.

Cash, Cash Equivalents, and Restricted Cash

The Company considers all highly liquid investments purchased with an original maturity of 90 days or less to be cash equivalents. Cash and cash equivalents include cash on hand and amounts on deposit with financial institutions.

Restricted cash consists of cash deposited as collateral related to a litigation bond in a third-party insured account. Refer to Note 7. Commitments and Contingencies for additional information.

Loss Contingencies and Litigation Expense
The Company is subject to the possibility of losses from various contingencies including certain legal proceedings. Significant judgment is necessary to estimate the probability and amount of a loss, if any, from such contingencies. An accrual is made when it is probable that a liability has been incurred or an asset has been impaired, and the amount of loss can be reasonably estimated. In accounting for the resolution of contingencies, significant judgment may be necessary to estimate amounts pertaining to periods prior to the resolution that are charged to operations in the period of resolution and amounts related to future periods. If only a range of estimated losses can be determined, the Company records an amount within the range that, in its judgment, reflects the most likely outcome; if none of the estimates within that range is a better estimate than any other amount, the Company records the low end of the range. Any such accrual would be charged to expense in the appropriate period. The Company recognizes litigation expense in the period in which the litigation services were provided.
13
MATTERPORT, INC.
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED)
Segment Information
The Company has a single operating segment and reportable segment. The Company’s chief operating decision-maker (“CODM”) is its Chief Executive Officer, who reviews financial information presented on a consolidated basis for purposes of making operating decisions, assessing financial performance, and allocating resources. Refer to Note 3 for information regarding the Company’s revenue by geography. Substantially all of the Company’s long-lived assets are located in the United States.
Concentration of Credit Risk and Other Risks and Uncertainties
Financial instruments that subject the Company to concentrations of credit risk consist primarily of cash and cash equivalents, investments, and accounts receivable. The Company maintains its cash balances in accounts held by major banks and financial institutions located in the United States. Such bank deposits from time to time may be exposed to credit risk in excess of the Federal Deposit Insurance Corporation insurance limit, and the Company considers such risk to be minimal.
The Company invests only in high-quality credit instruments and maintain our cash and cash equivalents and available-for-sale investments in fixed income securities. Management believes that the financial institutions that hold our investments are financially sound and, accordingly, are subject to minimal credit risk. Deposits held with banks may exceed the amount of insurance provided on such deposits.
The Company’s accounts receivable is derived from customers located both inside and outside the United States. The Company mitigates its credit risks by performing ongoing credit evaluations of the financial condition of its customers and requires advance payment from customers in certain circumstances. The Company generally does not require collateral from its customers.
No customer accounted for more than 10% of the Company’s total accounts receivable at September 30, 2024 and December 31, 2023. No customer accounted for more than 10% of the Company’s total revenue for the three and nine months ended September 30, 2024 and 2023.
Accounting Pronouncements – Recently Issued Accounting Standards Not Yet Adopted
In November 2023, the FASB issued ASU No. 2023-07, Segment Reporting (Topic 280): Improvements to Reportable Segment Disclosures (“ASU 2023-07”). The amendments in this ASU require disclosures, on an annual and interim basis, of significant segment expenses that are regularly provided to the CODM, as well as the aggregate amount of other segment items included in the reported measure of segment profit or loss, the title and position of the CODM and an explanation of how the CODM uses the reported measure(s) of segment profit or loss. This ASU will be applied retrospectively and is effective for public entities for annual periods beginning after December 15, 2023 and for interim reporting periods beginning after December 15, 2024. Early adoption is permitted. The Company is currently assessing the impact the guidance will have on the Company’s annual financial statements and disclosures.

In December 2023, the FASB issued ASU No. 2023-09, Income Taxes (Topic 740): Improvement to Income Tax Disclosures (“ASU 2023-09”) to enhance the transparency, effectiveness and decision usefulness of income tax disclosures primarily related to the rate reconciliation and income taxes paid information. ASU 2023-09 is effective for annual periods beginning after December 15, 2024 on a prospective basis. Early adoption and retrospective application are permitted. The Company is currently assessing the impact the guidance will have on the Company’s financial statements and disclosures.
In November 2024, the FASB issued ASU No.2024-03, Income Statement - Reporting Comprehensive Income - Expense Disaggregation Disclosures (Subtopic 220-40): Disaggregation of Income Statement Expenses (“ASU 2024-03”) to require public companies to disclose, in the notes to financial statements, specified information about certain costs and expenses at each interim and annual reporting period. This ASU is effective for annual reporting periods beginning after December 15, 2026, and interim reporting periods beginning after December 15, 2027. Early adoption is permitted. The Company is currently evaluating whether this standard will have a material impact on our consolidated financial statements.
14
MATTERPORT, INC.
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED)
3. REVENUE
Disaggregated Revenue—The following table shows the revenue by geography for the three and nine months ended September 30, 2024 and 2023, respectively (in thousands):
Three Months Ended September 30,Nine Months Ended September 30,
2024202320242023
Revenue:
United States
$27,729 $26,667 $81,433 $76,130 
International
16,064 13,975 44,448 42,073 
Total revenue
$43,793 $40,642 $125,881 $118,203 
No country other than the United States accounted for more than 10% of the Company’s revenue for the three and nine months ended September 30, 2024 and 2023, 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 and nine months ended September 30, 2024 and 2023, respectively (in thousands):
Three Months Ended September 30,Nine Months Ended September 30,
2024202320242023
Over time revenue
$36,450 $32,786 $104,604 $92,889 
Point-in-time revenue
7,343 7,856 21,277 25,314 
Total
$43,793 $40,642 $125,881 $118,203 
Contract Asset and Liability Balances—Contract assets consist of unbilled accounts receivable and are recorded when revenue is recognized in advance of scheduled billings. Scheduled billings in advance of revenue recognized results in the timing of revenue recognition differing 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 accounts receivable and contract balances as of September 30, 2024 and December 31, 2023 were as follows (in thousands):
September 30,
2024		December 31,
2023
Accounts receivable, net
$12,546 $15,094 
Unbilled accounts receivable
$2,372 $1,831 
Deferred revenue
$28,854 $26,435 
During the nine months ended September 30, 2024 and 2023, the Company recognized revenue of $21.4 million and $13.3 million that was included in the deferred revenue balance at the beginning of the fiscal year, respectively. Contracted but unsatisfied performance obligations were $73.0 million at the end of September 30, 2024 and consisted of deferred revenue and backlog.


15
MATTERPORT, INC.
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED)
As of September 30, 2024, the contracted but unsatisfied or partially unsatisfied performance obligations expected to be recognized are as follows (in thousands):

Amount
Remaining 2024
$19,781 
202533,064 
202614,739 
20273,753 
20281,616 
Thereafter
— 
Total
$72,953 
16
MATTERPORT, INC.
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED)
4. GOODWILL AND INTANGIBLE ASSETS
Goodwill—As of September 30, 2024 and December 31, 2023, goodwill was $69.6 million. The Company did not recognize any impairment losses on goodwill during the three and nine months ended September 30, 2024 and 2023, respectively.
Purchased Intangible Assets—The following table presents details of the Company’s purchased intangible assets as of September 30, 2024 and December 31, 2023 (in thousands):

September 30, 2024December 31, 2023
Gross Carrying AmountAccumulated Amortization Net Carrying Amount Gross Carrying AmountAccumulated AmortizationNet Carrying Amount
Intangible assets subject to amortization:
Developed technology $5,400 $(2,955)$2,445 $5,400 $(2,146)$3,254 
Customer relationships 6,900 (1,553)5,347 6,900 (1,034)5,866 
Total $12,300 $(4,508)$7,792 $12,300 $(3,180)$9,120 
The Company recognized amortization expense of $0.4 million and $0.4 million for the three months ended September 30, 2024 and 2023, respectively, and $1.3 million and $1.3 million for the nine months ended September 30, 2024 and 2023, respectively. The Company did not recognize any impairment losses on intangible assets or other long-lived assets during the three and nine months ended September 30, 2024 and 2023, respectively.
The following table summarizes estimated future amortization expense for the Company’s intangible assets as of September 30, 2024 (in thousands):

Amount
Remaining 2024
$442 
20251,770 
20261,770 
2027705 
2028690 
2029 and thereafter2,415 
Total future amortization expense$7,792 


17
MATTERPORT, INC.
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED)
5. BALANCE SHEET COMPONENTS
Allowance for Doubtful Accounts—Allowance for doubtful accounts as of September 30, 2024 and 2023 and the rollforward for three and nine months ended September 30, 2024 and 2023 were as follows (in thousands):
Three Months Ended September 30,Nine Months Ended September 30,
2024202320242023
Balance—beginning of period
$(1,243)$(933)$(1,155)$(1,212)
Increase in reserves
(260)(101)(525)(150)
Write-offs
384 137 561 465 
Balance—end of period
$(1,119)$(897)$(1,119)$(897)
Inventories—Inventories as of September 30, 2024 and December 31, 2023, consisted of the following (in thousands):
September 30,
2024		December 31,
2023
Finished goods
$4,865 $6,179 
Work in process
526 826 
Purchased parts and raw materials
2,191 2,110 
Total inventories
$7,582 $9,115 
Property and Equipment, Net—Property and equipment as of September 30, 2024 and December 31, 2023, consisted of the following (in thousands):
September 30,
2024		December 31,
2023
Machinery and equipment
$4,198 $4,087 
Furniture and fixtures
376 355 
Leasehold improvements
751 713 
Capitalized software and development costs
88,794 75,123 
Total property and equipment
94,119 80,278 
Accumulated depreciation and amortization
(63,763)(47,807)
Total property and equipment, net
$30,356 $32,471 
Depreciation and amortization expense of property and equipment were $5.5 million and $4.6 million for the three months ended September 30, 2024 and 2023, respectively, and $16.0 million and $12.8 million for the nine months ended September 30, 2024 and 2023, respectively.
Additions to capitalized software and development costs, inclusive of stock-based compensation in the three months ended September 30, 2024 and 2023 were $4.7 million and $4.7 million, respectively. Additions to capitalized software and development costs, inclusive of stock-based compensation in the nine months ended September 30, 2024 and 2023 were $13.7 million and $15.0 million, respectively. These are recorded as part of property and equipment, net on the condensed consolidated balance sheets.

Amortization expense related to capitalized internal-use software development costs was $5.3 million and $4.4 million for three months ended September 30, 2024 and 2023, respectively, of which $4.9 million and $4.0 million was recorded to cost of revenue related to subscription and $0.4 million and $0.4 million to selling, general and administrative in the condensed consolidated statements of operations, respectively. Amortization expense was $15.4 million and $12.2 million for the nine months ended September 30, 2024 and 2023, respectively, of which $14.1 million and $11.2 million was recorded to cost of revenue related to subscription and $1.3 million and $1.0 million to selling, general and administrative in the condensed consolidated statements of operations, respectively.
18
MATTERPORT, INC.
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED)

Accrued Expenses and Other Current Liabilities—Accrued expenses and other current liabilities as of September 30, 2024 and December 31, 2023, consisted of the following (in thousands):
September 30,
2024		December 31,
2023
Accrued compensation
$4,748 $4,362 
Tax payable
733 1,107 
ESPP contribution663 243 
Short-term operating lease liabilities514 1,277 
Accrued loss on firm inventory purchase commitments36 36 
Litigation expense
95,000 — 
Other current liabilities
6,614 6,329 
Total accrued expenses and other current liabilities
$108,308 $13,354 

19
MATTERPORT, INC.
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED)
6. FAIR VALUE MEASUREMENTS
We categorize assets and liabilities recorded or disclosed at fair value on our condensed consolidated balance sheets based upon the level of judgment associated with inputs used to measure their fair value. The categories are as follows:
Level 1—Inputs are unadjusted quoted prices for identical assets or liabilities in active markets.
Level 2—Inputs to the valuation methodology include quoted prices for similar assets and liabilities in active markets, or inputs that are observable for the asset or liability, either directly or indirectly through market corroboration, for substantially the full term of the financial instrument.
Level 3—Inputs to the valuation methodology are unobservable and significant to the fair value measurement. The inputs require significant management judgment or estimation.
The Company’s financial assets and liabilities that were measured at fair value on a recurring basis were as follows (in thousands):

September 30, 2024
Level 1Level 2Level 3Total
Financial Assets:
Cash equivalents:
Money market funds$43,725 $— $— $43,725 
Total cash equivalents$43,725 $— $— $43,725 
Short-term investments:
U.S. government and agency securities$118,150 $— $— $118,150 
Non-U.S. government and agency securities— 9,771 — 9,771 
Corporate debt securities— 78,897 — 78,897 
Total short-term investments$118,150 $88,668 $— $206,818 
Long-term investments:
U.S. government and agency securities$14,069 $— $— $14,069 
Corporate debt securities— 25,755 — 25,755 
Total long-term investments$14,069 $25,755 $— $39,824 
Total assets measured at fair value$175,944 $114,423 $— $290,367 
Financial Liabilities:
Private warrants liability$— $— $1,185 $1,185 
Total liabilities measured at fair value$— $— $1,185 $1,185 
20
MATTERPORT, INC.
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED)
December 31, 2023
Level 1Level 2Level 3Total
Financial Assets:
Cash equivalents:
Money market funds$61,090 $— $— $61,090 
Total cash equivalents$61,090 $— $— $61,090 
Short-term investments:
U.S. government and agency securities$245,447 $— $— $245,447 
Non-U.S. government and agency securities— 19,950 — 19,950 
Corporate debt securities— 23,030 — 23,030 
Commercial paper— 16,837 — 16,837 
Total short-term investments$245,447 $59,817 $— $305,264 
Long-term investments:
U.S. government and agency securities$21,323 $— $— $21,323 
Corporate debt securities— 13,511 — 13,511 
Total long-term investments$21,323 $13,511 $— $34,834 
Total assets measured at fair value$327,860 $73,328 $— $401,188 
Financial Liabilities:
Private warrants liability$— $— $290 $290 
Total liabilities measured at fair value$— $— $290 $290 

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 September 30, 2024 and December 31, 2023 (in thousands):
September 30, 2024
Amortized CostUnrealized GainsUnrealized LossesFair Value
Investments:
U.S. government and agency securities$131,907 $313 $(1)$132,219 
Non-U.S. government and agency securities9,738 33 — 9,771 
Corporate debt securities104,238 414 — 104,652 
Total available-for-sale investments$245,883 $760 $(1)$246,642 
December 31, 2023
Amortized CostUnrealized GainsUnrealized LossesFair Value
Investments:
U.S. government and agency securities$266,339 $444 $(13)$266,770 
Non-U.S. government and agency securities19,958 — (8)19,950 
Corporate debt securities36,507 69 (35)36,541 
Commercial paper16,839 6 (8)16,837 
Total available-for-sale investments$339,643 $519 $(64)$340,098 

21
MATTERPORT, INC.
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED)
As of September 30, 2024 and December 31, 2023, total unrealized losses related to available-for-sale debt securities were immaterial.
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 and nine months ended September 30, 2024 and 2023.
The following table summarizes the amortized cost and fair value of our available-for-sale debt securities as of September 30, 2024, by contractual years-to-maturity (in thousands):
September 30, 2024
 Amortized CostFair Value
Due within one year
$206,287 $206,818 
Due between one and three years
39,596 39,824 
Total
$245,883 $246,642 
7. COMMITMENTS AND CONTINGENCIES

Purchase Obligation—The Company has purchase obligations, which includes agreements and issued purchase orders containing non-cancelable payment terms to purchase goods and services.
As of September 30, 2024, future minimum purchase obligations are as follows (in thousands):
Purchase
Obligations
Remainder of 2024
$5,860 
20251,416 
202653 
Thereafter
— 
Total
$7,329 
Litigation—The Company is named from time to time as a party to lawsuits and other types of legal proceedings and claims in the normal course of business. The Company accrues for contingencies when it believes that a loss is probable and that it can reasonably estimate the amount of any such loss.
On July 23, 2021, plaintiff William J. Brown, a former employee and a stockholder 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 “Brown Defendants”) in the Court of Chancery of the State of Delaware (the “Delaware Court of Chancery”). On September 3, 2021, the plaintiff filed an amended complaint advancing three counts. The plaintiff’s complaint claimed that the Brown Defendants imposed invalid transfer restrictions on his shares of Matterport stock in connection with the Gores 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 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 Gores 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 or whether Brown suffered any damages as a result of the Transfer Restrictions. 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, including the amount of any damages suffered by Brown were the subject of the second phase of the
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MATTERPORT, INC.
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED)
case. The Company’s position was that Brown did not suffer any damages as he would have sold his shares as soon as possible after the Gores Merger transaction closed had the Company not prevented him from trading based on its application of the Transfer Restrictions. The plaintiff filed a Third Amended Complaint on September 16, 2022, which asserted the causes of action described above but omitted as defendants Maker Merger Sub Inc., Maker Merger Sub II, LLC, and Legacy Matterport directors David Gausebeck, Matt Bell, and Carlos Kokron, and added an additional cause of action alleging that Matterport, Inc. violated the Delaware Uniform Commercial Code by failing to timely register the plaintiff’s requested transfer of Matterport, Inc. shares. The remaining defendants’ answer to the Third Amended Complaint was filed on November 9, 2022. Trial was held in November 2023 and a post-trial hearing was held on February 22, 2024. On May 28, 2024, the court ruled that Matterport had a reasonable basis to deny the plaintiff’s November 2021 demand that the transfer restrictions be removed from his shares and that the plaintiff lacked standing as to whether the transfer restrictions complied with Delaware law. However, the court awarded the plaintiff $79.1 million plus pre- and post-judgment interest as damages for losses caused by Matterport’s initial refusal to issue freely transferable shares (the “Brown Judgment”). The Company recorded an aggregate litigation expense of $95.0 million in its consolidated statement of operations for the nine months ended September 30, 2024. On July 29, 2024, the Company filed a notice of appeal of the court’s ruling to the Delaware Supreme Court. Brown filed a notice of cross appeal on August 12, 2024. On August 14, 2024, the litigation bond was posted and the Company transferred $95.0 million in cash as collateral into a designated insured account. On September 13, 2024, the Company filed its opening brief with the Delaware Supreme Court. On October 14, 2024, Brown filed its answering brief on appeal and opening brief on cross-appeal. The cash collateral of $95.0 million was classified as restricted cash on the Company’s condensed consolidated financial statements as of September 30, 2024.
Since the Brown judgment, other former Legacy Matterport stockholders have filed similar complaints (the “Post-Brown Complaints”) in the Delaware Court of Chancery alleging that such stockholders were prevented from trading their Matterport shares through invalid transfer restrictions, and seeking damages for the harm to the plaintiffs. These complaints were filed as follows: on July 19, 2024 by Damien Leostic and William Schmitt; on August 16, 2024 by Greg Coombe; on September 19, 2024 by Build Legacy LLC, Build the Future Trust under agreement dated November 16, 2023, Penchant Capital LLC, Penchant Trust, and iRobot Corporation. On September 16, 2024, Kimberly Burdi-Dumas, a former Matterport employee, filed a putative class action complaint on behalf of all persons or entities who were stockholders of Legacy Matterport as of July 21, 2021, and who, pursuant to the Gores Transaction, were thereafter issued and held Matterport shares that were improperly restricted from being sold until January 18, 2022. The Company has not yet answered the Post-Brown Complaints. Given the early stage of the cases, the Company is unable to estimate the reasonably possible loss or range of loss that may result from the matters.
On February 1, 2024, two stockholders, Laurie Hanna and Vasana Smith (collectively “Plaintiffs”) filed a complaint derivatively on behalf of Matterport, Inc. against R.J. Pittman, Michael Gustafson, Peter Hebert, James Krikorian, James Daniel Fay, David Gausebeck, Japjit Tulsi, Judi Otteson, Jay Remley, and numerous stockholders of Matterport, Inc. (collectively “Hanna and Smith Defendants”) in the Delaware Court of Chancery. The complaint alleges that the issuance of 23,460,000 earn-out shares worth $225 million was a breach of fiduciary duty and an act of corporate waste, which unjustly enriched recipients of the earn-out shares at the expense of Matterport and its common stockholders. Specifically, the Plaintiffs allege that issuance of the earn-out shares violated the February 7, 2021 Agreement and Gores Merger Agreement pursuant to which Legacy Matterport and Gores Holding VI, a publicly listed special purpose acquisition company, and two Gores subsidiaries merged, providing Legacy Matterport stockholders with shares of the surviving public company which took the name Matterport. The complaint seeks disgorgement of all unjust enrichment by the Hanna and Smith Defendants, an award of compensatory damages to Matterport, an award of costs and disbursements to the Plaintiffs, as well as a declaration that Plaintiffs may maintain the action on behalf of Matterport and that Plaintiffs are adequate representatives of Matterport, and a finding that demand on the Matterport board is excused as futile. On June 24, 2024, the Plaintiffs filed an amended complaint, which alleges, inter alia, that the members of the Matterport board breached their fiduciary duties by issuing a proxy statement which failed to disclose certain information concerning Matterport’s prior issuance of certain earn-out shares previously issued and the subsequent impact on the amount of the CoStar Group Merger Consideration that would have been received by the plaintiffs and other stockholders if those earn-out shares had not been issued. The amended complaint sought an injunction to enjoin the stockholder vote relating to the Company’s proposed transaction with CoStar Group, and seeks, among other things, damages, and an award of plaintiffs’ costs of the action, including reasonable attorneys’ and experts’ fees. The Plaintiffs in the Hanna Action filed a motion for
23
MATTERPORT, INC.
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED)
a preliminary injunction seeking to enjoin the stockholder vote and a motion for expedited proceedings regarding the motion for a preliminary injunction. On July 11, 2024, the court denied Plaintiffs’ motion to expedite.
On June 3, 2024, a purported Matterport stockholder filed a complaint in the U.S. District Court for the Northern District of California, captioned Andrew Rose v. Matterport, Inc., et al., naming Matterport and each member of the Matterport board as defendants (the “Rose Complaint”). The complaint alleged that CoStar Group’s Form S-4 Registration Statement filed with the SEC on May 21, 2024 was materially misleading and omitted certain purportedly material information relating to the sales process, financial projections of Matterport and CoStar Group, the valuation analyses performed by Qatalyst Partners, and negotiations over the terms of post-transaction employment of certain Matterport employees. The complaint asserted violations of Section 14(a) of the Exchange Act and Rule 14a-9 promulgated thereunder against all defendants, and violations of Section 20(a) of the Exchange Act against the Company’s board. The complaint sought, among other things, an injunction enjoining consummation of the CoStar Group Mergers, an order directing the individual defendants to issue a new Registration Statement, and an award of plaintiff’s costs of the action, including plaintiff’s reasonable attorneys’ and experts’ fees. On August 6, 2024, the Rose Complaint was voluntarily dismissed.

Additionally, on July 9, and July 11, 2024, purported Matterport stockholders filed complaints in the New York Supreme Court, captioned Hamilton v. Matterport, Inc., et al., Case No. 653458/2024 (the “Hamilton Action”) and Scott v. Matterport, Inc., et al., Case No. 653515/2024 (the “Scott Action”), respectively. These complaints name Matterport and each member of the Matterport board as defendants and allege, inter alia, that the notice of special meeting of stockholders and definitive proxy statement on Schedule 14A, dated June 10, 2024 misrepresents or omits certain purportedly material information relating to financial projections for Matterport, the valuation analyses performed by Qatalyst Partners, and potential conflicts of interest faced by Matterport insiders. The complaints assert claims for common law negligent misrepresentation and common law negligence. The complaints seek, among other things, an injunction enjoining consummation of the CoStar Group Mergers, damages, and an award of plaintiff’s costs of the action, including plaintiff’s reasonable attorneys’ and experts’ fees. In addition to the Hamilton and Scott Actions, Matterport has received additional demand letters alleging similar deficiencies or omissions regarding the disclosures made in the Registration Statement, and requesting relevant books and records. On July 25, 2024, one such purported Matterport stockholder filed suit in the Delaware Court of Chancery, captioned Layton v. Matterport, Inc., Case No. 2024-0792 (the “Layton Action”). On July 29, 2024, the Delaware Court of Chancery stayed the action at the request of plaintiff’s counsel during the pendency of the CoStar Group Mergers. Matterport notes that: (i) the Hanna Action, the Hamilton Action, the Scott Action, or the Layton Action may be amended; (ii) additional, similar complaints may be filed; or (iii) additional demand letters may be delivered. These events could prevent or delay completion of the Mergers and result in additional costs to Matterport. Matterport believes that the Hanna Action, the Hamilton Action, the Scott Action, the Layton Action and the demand letters are without merit and intends to vigorously defend against them.
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 filed an opposition to the motion. On August 28, 2023, the Court denied Surefield’s motion to dismiss the Washington case but stayed the action pending the resolution of the Texas case. On October 7, 2024, the Texas court appointed a technical advisor to assist the court with post-trial motions.
On July 24, 2024, Vinatha Kutagula, the Company’s former Chief Customer Officer, filed a complaint against the Company in the Superior Court of the State of California, County of Santa Clara alleging unlawful retaliation and wrongful termination. On September 13, 2024, the Company filed a motion to compel arbitration. On August 30, 2024, the Company
24
MATTERPORT, INC.
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED)
received notice that Ms. Kutagula had filed a complaint with the U.S. Department of Labor with similar allegations. The Company responded to the Department of Labor on October 17, 2024.
The Company monitors developments in these legal matters that could affect the estimate if the Company had previously accrued. As of September 30, 2024 and December 31, 2023, there were no amounts accrued that the Company believes would be material to its financial position, except as noted above, as the range of reasonably possible losses in excess of accrued liabilities currently cannot be reasonably estimated.
Indemnification—In the ordinary course of business, the Company enters into certain agreements that provide for indemnification by the Company of varying scope and terms to customers, vendors, directors, officers, employees and other parties with respect to certain matters. Indemnification includes losses from breach of such agreements, services provided by the Company, or third-party intellectual property infringement claims. These indemnities may survive termination of the underlying agreement and the maximum potential amount of future indemnification payments, in some circumstances, are not subject to a cap.
8. STOCKHOLDERS’ EQUITY
The Company had reserved shares of common stock for future issuance as of September 30, 2024 as follows (in thousands):
 September 30,
2024
Private warrants to purchase common stock 1,708 
Common stock options outstanding and unvested RSUs under the Amended and Restated 2011 Stock Incentive Plan
53,977 
Shares available for future grant under 2021 Employee Stock Purchase Plan
13,718 
Shares available for future grant under 2021 Incentive Award Plan
14,843 
Total shares of common stock reserved
84,246 
Accumulated Other Comprehensive Income (loss)
The following table summarizes the changes in accumulated other comprehensive income (loss) by component, net of tax (in thousands):
Foreign Currency Translation, Net of TaxUnrealized Gains on Available-for-Sale Debt Securities, Net of TaxTotal
Balance at December 31, 2023
$(52)$455 $403 
Net unrealized gain— 304 304 
Balance at September 30, 2024
$(52)$759 $707 
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
— 4,435 4,435 
Balance at September 30, 2023
$(52)$(547)$(599)
25
MATTERPORT, INC.
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED)
9. PRIVATE WARRANTS
Prior to the Gores Closing, Gores issued 6,900,000 Public Warrants and 4,450,000 Private Warrants pursuant to the warrant agreement between Gores and Continental Stock Transfer & Trust Company (the “Warrant Agreement”). Each whole warrant entitles the holder to purchase one share of the Company’s Class A common stock at a price (the “Warrants 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. The Public Warrants were either exercised or redeemed as of January 14, 2022 and no Public Warrants remained outstanding thereafter. A total of 1.7 million Private Warrants remained outstanding as of September 30, 2024 and December 31, 2023. No Private Warrants have been exercised during the three and nine months ended September 30, 2024.

The CoStar Group Merger Agreement provides that, following the date of the CoStar Group Merger Agreement, Matterport shall use commercially reasonable efforts to cause the holders of each outstanding and unexercised Private Warrants exercisable for shares of Matterport Common Stock to execute a conditional exchange agreement (the “Conditional Exchange Agreement”). Pursuant to the Conditional Exchange Agreement, holders of each Private Warrants agree to exchange their Private Warrants for merger consideration upon the closing of CoStar