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Business Strength Brought Friday Gains for These 2 Stocks

Investors have waited for an all-clear on the inflation front, and as premature as it might seem to put too much weight on a single month’s readings of the Consumer Price Index, markets nevertheless continued to build momentum on Friday after Thursday’s surge. The Nasdaq Composite (^IXIC 1.88%) climbed almost 2%, while the Dow Jones Industrial Average (^DJI 0.10%) and S&P 500 (^GSPC 0.92%) had more modest gains.


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Business fundamentals still matter, and that’s why investors are watching closely for signs of strength in the quarterly earnings releases that come out every day. On Friday, solid reports from Matterport (MTTR 24.42%) and Figs (FIGS 5.17%) bolstered confidence that the economy might yet escape a recession. Below, you can learn more about what Matterport and Figs said and why their shareholders reacted positively to their news.

A big win for Matterport

Shares of Matterport surged 24% higher on Friday. Investors reacted positively to the latest quarterly financial results from the digital transformation specialist.

Matterport saw revenue jump to a record $38 million, rising 37% year over year and surpassing the company’s prior guidance. Subscription-based revenue gained 21% from year-ago levels, while services revenue tripled. The company’s business metric on spaces under management grew 40% to 8.7 million. Adjusted losses of $0.09 per share were ahead of what Matterport had expected for the quarter.

Matterport is pursuing a combination of subscription-based recurring revenue and product sales, and so far, it appears to be going according to plan. The launch of the Enterprise Essentials subscription suite has shown early success, and Matterport’s new Pro3 camera product started shipping during the quarter. Investors are excited to see the company come up with new use cases, including the use of its immersive digital technology in the real estate marketing arena through the acquisition of VHT Studios.

Best of all, Matterport boosted its future guidance, expecting sales of $134 million to $136 million for the full 2022 fiscal year and adjusted losses of $0.41 to $0.43 per share. Even after today’s gains, the stock remains 75% below where it started the year, but shareholders seem hopeful that better times lie ahead.

Figs keeps healthy

Shares of Figs moved higher by more than 5% Friday. The maker of scrubs and other custom clothing for the medical community reported third-quarter results that reassured shareholders of the company’s future promise.

Figs said that revenue jumped 25% year  over year to $128.6 million, citing rising order counts both from existing customers and from those new to the healthcare apparel and lifestyle brand. Rising freight and overhead costs weighed on margin performance and boosted overall expenses significantly, but Figs still managed to post a modest profit of $4 million, working out to earnings of $0.02 per share.

Figs saw solid fundamental performance from its business. Active customer counts rose by nearly 24% from 12 months ago to 2.2 million. Revenue per customer inched higher by 4% to $227, but average order values climbed nearly 10% to $112. Figs said that it sold higher-priced items than in the year-earlier period, and that customers tended to buy more items per order than they did previously.

Shareholders were also pleased to see Figs project full-year 2022 revenue of $495 million, up 18% from 2021 levels. That’s a slowdown from what the business saw earlier in its history, but with consumers pulling back from discretionary spending, it’s good to see Figs’ products retain customer loyalty.

Dan Caplinger has no position in any of the stocks mentioned. The Motley Fool has positions in and recommends Matterport, Inc. The Motley Fool has a disclosure policy.

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