Unity Earnings: What To Look For From U

Jabin Bastian /
2023/05/09 4:29 am EDT

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 $451 million, up 42.8% year on year, beating analyst revenue expectations by 2.95%. It was a mixed quarter for the company, with a significant improvement in gross margin but a full year guidance missing analysts' expectations. The company added 265 enterprise customers paying more than $100,000 annually to a total of 1,340.

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 49.9% year on year to $479.8 million, improving on the 36.4% year-over-year increase in revenue the company had recorded in the same quarter last year. Adjusted loss is expected to come in at -$0.02 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 vertical software segment, some of them have already reported Q1 earnings results, giving us a hint what we can expect. PTC delivered top-line growth of 7.31% year on year, beating analyst estimates by 0.55% and Cadence reported revenues up 13.3% year on year, exceeding estimates by 1.51%. PTC traded up 1.46% on the results, Cadence was down 1.9%. Read our full analysis of PTC's results here and Cadence's results here.

Tech stocks have been facing declining investor sentiment in 2022 and while some of the software stocks have fared somewhat better, they have not been spared, with share price declining 4.81% over the last month. Unity is down 8.09% during the same time, and is heading into the earnings with analyst price target of $36, compared to share price of $28.09.

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.

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