Behind the Deal on the Matterport-CoStar Merger

On the first official day after the CoStar acquisition of Matterport was finalized at the end of February, Matterport CEO RJ Pittman asked his “Matterpeeps” to show up at one of CoStar’s 72 offices in 13 countries. The in-person show of support from remote-first Matterport, headquartered in Sunnyvale, was an effort to display that it was all in on the new arrangement with the real estate data, analytics and listings firm, he said.

“We’re going to be the tail that wags the dog,” he said. “Can we be a factor in really amplifying the full growth potential of CoStar and not just making a better version of Matterport?”

If improving Matterport was the goal, it didn’t need to do the $1.6 billion deal, Pittman said. The 3D modeling firm had just gone public in July 2021, which “fired the rocket boosters on scaling the company” and “there was nothing in our mindset about selling the business or getting off the trajectory we were on,” he said. The total revenue was nearly $170 million for fiscal year 2024, up 8% from the prior year and full-year subscription revenues increased 14% to $99.5 million, according to a company earnings release, though it still had a net loss of $256 million for the year, a nearly 30% increase over 2023.

CoStar, which owns Apartments.com and Homes.com in addition to its flagship commercial data and marketplace platform, had $2.7 billion in revenue in 2024, an 11 percent year-over-year increase, according to its company earnings release. It has been one of Matterport’s biggest and longest-term clients since the company was beta testing its “digital twins” about a decade ago.

“They were so far beyond skin deep,” Pittman said. “To use the parlance of a house, they’ve gone from the roof deck all the way down to the basement.”

So when Pittman and CoStar Founder and CEO Andy Florance got together to talk about “how we could really push CoStar into the 21st century” using Matterport’s visualization and AI features, the pair ended up having “inspiring conversations” that led to the acquisition negotiations, Pittman said.

“If there was a chance of doing a one plus one equals five or 10, a real force multiplier, I came to the conclusion that this would be it,” he said.

The deal puts Matterport in an “exponentially larger number of buildings” while providing an “expansion mechanism” for CoStar, he added.

CoStar did not reply to requests for comment on the Matterport acquisition. But in statements after the deal was finalized, Florance said the companies had “long shared a vision of digitizing the real estate industry” and that Matterport’s 3D capture and AI-powered property insights would create an “unparalleled solution for buyers, sellers and renters to explore properties with greater depth and insight than ever before.”

Pittman said he would be “naive” to think that the companies are past the honeymoon period just yet, but so far their priorities have been aligned and he believes that will continue.

“All the things on our roadmap are the things that they want,” he said, adding that CoStar wanted to invest in what the company was already doing, not “reswizzle it in some way.”

Outside of concerns about the possibility of in-office work mandates, his employees have not had any major issues with CoStar’s company culture and were on board with the acquistion, he said.

“This was not some secret decision in an ivory tower somewhere. We just don’t do it that way. So everybody had a vote,” he said, adding that CoStar has been “very gracious” about figuring out a way to “gracefully” bridge the gap between Matterport’s remote-first set up and CoStar’s in-office culture.

Pittman said he loves the convenience of remote work, but believes companies need to be hybrid at a minimum to be more productive and inspire creativity and collaboration. Before the merger, WeWork, another Matterport client, had been hosting Matterpeeps in its offices around the world.

In San Francisco, where Pittman lives, it will be moving out of the WeWork in Salesforce Tower and into CoStar’s offices at 101 California when its contract with the coworking firm is up, he said. The London operations, Matterport’s second-biggest hub outside the Bay Area, will also merge into CoStar’s new offices there, Pittman said.

Matterport is also looking to leave its Sunnyvale headquarters and sign a lease on a new, and hopefully turnkey, office in the Palo Alto area later this year, he said. Matterport hasn’t decided on a specific space yet, but it is envisioned as a flagship R&D center for Matterport, plus a customer and executive briefing center that would also “welcome any and all CoStar teams,” he said.

“While we are a standalone business unit inside of CoStar, and there’s good reason for us to keep a lot of the team and technology close together, we’re also a fabric that runs through all of the digital, horizontal platforms that are going to power all of the CoStar portfolio around the world,” he said. “I love that.”

Correction: This story has been edited to reflect the companies that Costar owns.