Shares of Unity Software (NYSE:U) fell in after-hours trading after the video game software development company reported earnings for its first quarter of Fiscal Year 2024. GAAP earnings per share came in at -$0.75, which missed analysts’ consensus estimate of -$0.67 per share. Interestingly, prior to today’s report, the firm had met or exceeded forecasts in all but one of the nine previous quarters, as pictured below:
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Sales decreased by 8% year-over-year, with revenue hitting $460.38 million. This beat analysts’ expectations of $433.5 million. The decline in revenue can be mainly attributed to the company’s decision to exit non-strategic businesses. In fact, this segment saw sales fall by 59% year-over-year to $34 million. Unity expects the declines in this segment to continue.
Looking forward, management now expects revenue and adjusted EBITDA for FY 2024 to be in the ranges of $1,760M to $1,800M and $400M to $425M, respectively. For reference, analysts were expecting $1,809M in revenue and $414.3M in EBITDA.
Unity Appoints New CEO
In addition to its Q1 results, Unity announced that it will appoint Matthew Bromberg as its Chief Executive Officer, President, and member of the Board of Directors. The change will take effect on May 15, 2024, and will see Interim CEO Jim Whitehurst be appointed Executive Chair of the Board while current Chairman Roelof Botha will become Lead Independent Director of the Board.
Is U Stock a Good Buy?
Turning to Wall Street, analysts have a Moderate Buy consensus rating on U stock based on eight Buys, seven Holds, and two Sells assigned in the past three months, as indicated by the graphic below. After a 15% decline in its share price over the past year, the average Unity price target of $32.12 per share implies 32.13% upside potential. However, it’s worth noting that estimates will likely change following today’s earnings report.
