Game engine maker Unity (NYSE:U) will be reporting earnings tomorrow after market hours. Here's what investors should know.
Unity beat analysts' revenue expectations by 6.2% last quarter, reporting revenues of $460.4 million, down 8% year on year. It was a solid quarter for the company, with a significant improvement in its gross margin and a narrow beat of analysts' billings estimates .
Is Unity a buy or sell going into earnings? Read our full analysis here, it's free.
This quarter, analysts are expecting Unity's revenue to decline 17.2% year on year to $441.7 million, a reversal from the 79.6% increase it recorded in the same quarter last year. Adjusted earnings are expected to come in at $0.14 per share.
The majority of analysts covering the company have reconfirmed their estimates over the last 30 days, suggesting they anticipate the business to stay the course heading into earnings. Unity has missed Wall Street's revenue estimates three times over the last two years.
Looking at Unity's peers in the design software segment, some have already reported their Q2 results, giving us a hint as to what we can expect. Cadence delivered year-on-year revenue growth of 8.6%, beating analysts' expectations by 1.7%, and Procore reported revenues up 24.4%, topping estimates by 3.3%. Cadence traded down 1.6% following the results while Procore was also down 15.5%.
Read our full analysis of Cadence's results here and Procore's results here.
Inflation progressed towards the Fed's 2% goal at the end of 2023, leading to strong stock market performance. The start of 2024 has been a bumpier ride as the market switches between optimism and pessimism around rate cuts thanks to mixed inflation data, and while some of the design software stocks have fared somewhat better, they have not been spared, with share prices down 4.8% on average over the last month. Unity is down 8.4% during the same time and is heading into earnings with an average analyst price target of $24.8 (compared to the current share price of $14.21).
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