Earnings To Watch: Unity (U) Reports Q3 Results Tomorrow

Radek Strnad /
2023/11/08 2:02 am EST

Game engine maker Unity (NYSE:U) will be reporting results tomorrow after market hours. Here's what you need to know.

Last quarter Unity reported revenues of $533.5 million, up 79.6% year on year, beating analyst revenue expectations by 3.1%. It was a decent quarter for the company, with revenue and adjusted EBITDA exceeding expectations. While next quarter's revenue guidance was below Wall Street Consensus and full year revenue guidance was slightly above, adjusted EBITDA guidance for both periods was well ahead.

Is Unity buy or sell heading into the earnings? Read our full analysis here, it's free.

This quarter analysts are expecting Unity's revenue to grow 70.2% year on year to $549.4 million, improving on the 12.8% year-over-year increase in revenue the company had recorded in the same quarter last year. Adjusted earnings are expected to come in at $0.18 per share.

Unity Total Revenue

Majority of analysts covering the company have reconfirmed their estimates over the last thirty days, suggesting they are expecting the business to stay the course heading into the earnings. The company missed Wall St's revenue estimates three times over the last two years.

Looking at Unity's peers in the design software segment, some of them have already reported Q3 earnings results, giving us a hint of what we can expect. Procore Technologies delivered top-line growth of 33% year on year, beating analyst estimates by 6.1%, and Cadence reported revenues up 13.4% year on year, exceeding estimates by 1.8%. Procore Technologies traded down 6.1% on the results, Cadence was down 0.9%.

Read our full analysis of Procore Technologies's results here and Cadence's results here.

Triggered by the Federal Reserve's hawkish stance on interest rates, shares of technology companies have been facing sell-off in 2022 and while some of the design software stocks have fared somewhat better, they have not been spared, with share price declining 3% over the last month. Unity is down 10.7% during the same time, and is heading into the earnings with analyst price target of $42.3, compared to share price of $26.8.

One way to find opportunities in the market is to watch for generational shifts in the economy. Almost every company is slowly finding itself becoming a technology company and facing cybersecurity risks and as a result, the demand for cloud-native cybersecurity is skyrocketing. This company is leading a massive technological shift in the industry and with revenue growth of 70% year on year and best-in-class SaaS metrics it should definitely be on your radar.

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The author has no position in any of the stocks mentioned.