April 21, 2024
Unity’s stock sheds nearly a fifth of its value as earnings, forecast underwhelm

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Unity Software Inc. shares were tumbling in late trading Monday after the app-monetization company whiffed with its latest results and forecasts.

The company forecast $415 million to $420 million in fiscal first-quarter revenue for what it calls its “strategic portfolio,” deeming that its non-strategic portfolio will not be a meaningful contributor to revenue going forward. The FactSet consensus was for $534 million in revenue.

Unity
U,
+5.69%

also sees full-year revenue of $1.7 billion to $1.8 billion for the strategic portfolio. Analysts tracked by FactSet were looking for $2.3 billion.

Shares declined more than 17% in Monday’s extended session.

The company’s fiscal first-quarter forecast for adjusted earnings before interest, taxes, depreciation and amortization (Ebitda) was $45 million to $50 million, while the full-year view calls for $400 million to $425 million. Analysts had been modeling $112 million for the quarter and $647 million for the year.

The company logged a fiscal fourth-quarter net loss of $254 million, or 66 cents a share, compared with a loss of $288 million, or 82 cents a share, in the year-before quarter. Analysts had been calling for a 46-cent loss per share.

Revenue came in at $609 million, whereas analysts tracked by FactSet were modeling $551 million. Unity noted that revenue would have been $510 million excluding a transaction that resulted in the release of Wētā FX’s deferred revenue.

Unity said in its shareholder letter that it’s in the middle of “a two-phase company reset that we expect will enable Unity to sustainably win with customers and shareholders.”

“With the portfolio and cost structure reset mostly behind us, all of our focus turns to reigniting revenue growth,” the company said.

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