Unity (U) Reports Q1: Everything You Need To Know Ahead Of Earnings

Radek Strnad /
2022/05/09 7:45 am EDT
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Game engine maker Unity (NYSE:U) will be reporting earnings tomorrow after market hours. Here's what to look for.

Last quarter Unity reported revenues of $315.8 million, up 43.3% year on year, beating analyst revenue expectations by 6.81%. It was a mixed quarter for the company, with an exceptional revenue growth but an underwhelming revenue guidance for the next quarter. The company added 79 enterprise customers paying more than $100,000 annually to a total of 1,052.

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 36.8% year on year to $321.1 million, in line with the 40.5% year-over-year increase in revenue the company had recorded in the same quarter last year. Adjusted loss is expected to come in at -$0.08 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 has a history of exceeding Wall St's expectations, beating revenue estimates every single time over the past two years on average by 8.42%.

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. Q2 Holdings delivered top-line growth of 15% year on year, beating analyst estimates by 1.21% and 2U reported revenues up 8.97% year on year, exceeding estimates by 0.14%. Both companies (2U and Q2 Holdings) traded flat on the results. Read our full analysis of Q2 Holdings's results here and 2U's results here.

The technology sell-off has been putting pressure on stocks since November and software stocks have not been spared, with share price down on average 18.1% over the last month. Unity is down 36.4% during the same time, and is heading into the earnings with analyst price target of $141.3, compared to share price of $57.5.

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.