Unity Software Plummets As Much As 37% After “Highest” Quarterly Revenue

Unity Software (NYSE: U) claimed it “delivered record quarterly revenue” in Q1 2022, billed as the “highest in the company’s history”. But the timing of its financial release post-closing bell suggests there’s more to the story.

The tech firm posted US$320.1 million in Q1 2022, up from Q1 2021’s US$234.7 million, and met the company’s upper end of the guidance. But this achievement has been marred by missed estimates, wider losses, and reduced guidance. This is further reflected by the firm’s shares dropping as much as 37% in after-market yesterday.

For starters, the record quarterly revenue actually missed the estimates of US$321.1 million. Further, with operating expenses higher than the revenue, the firm also recorded an operating loss of US$171.2 million, down from last year’s loss of US$110.9 million.

The jump in opex, according to the firm, is mainly due to the increase in stock-based compensation expenses at US$103.2 million for the quarter.

This further led the firm to record a net loss of US$177.6 million, also down from last year’s US$107.6 million. This translates to US$0.60 loss per share, which also barely missed the estimated US$0.59 loss per share.

Calibrating for this, among other financial items, the firm’s non-GAAP net loss came in at US$25.4 million from a net loss of US$27.3 million last year.

Nevertheless, the company ended with a cash balance of US$1.15 billion, putting the balance of the current assets at US$2.22 billion. Meanwhile, current liabilities ended at US$630.3 million.

Despite the record quarterly revenue, the online content platform is looking at a lower revenue for Q2 2022–guiding the figure to land between US$290 – US$295 million. Non-GAAP loss is also expected to widen next quarter, notching between US$62 – US$64 million loss.

The firm is also lowering its 2022 revenue guidance to US$1.35 – US$1.425 billion. The revised outlook is said to be “due to challenges with monetization products” that are expected to make an impact in the remainder of the year.

Unity last traded at US$31.62 on the NYSE.

Information for this briefing was found via Edgar, Seeking Alpha, and the companies mentioned. The author has no securities or affiliations related to this organization. Not a recommendation to buy or sell. Always do additional research and consult a professional before purchasing a security. The author holds no licenses.

Leave a Reply