Shares of Unity Software (U) fell in after-hours trading after the video game software development company reported earnings for its second quarter of Fiscal Year 2024. Adjusted earnings per share came in at -$0.32, which missed analysts’ consensus estimate of $0.13 per share. Interestingly, prior to today’s report, the firm had met or exceeded forecasts in all but one of the eight previous quarters, as pictured below:
Sales decreased by 16% year-over-year, with revenue hitting $449.3 million. This beat analysts’ expectations of $441.7 million. The decline in revenue can be mainly attributed to the company’s decision to exit non-strategic businesses.
In addition, Unity is shaking up its executive team. CFO Luis Visoso is leaving, and Mark Barrysmith is stepping in as interim CFO. Plus, MoPub co-founder Jim Payne is coming on board as the Chief Product Officer for Advertising starting August 12.
Looking forward, management now expects revenue and adjusted EBITDA for FY 2024 to be in the ranges of $1.68B and $1.69B and $340M and $350M, respectively. For reference, analysts were expecting $1,837M in revenue and $410.7M in EBITDA.
Insider Activity
When looking at insider activity leading up to today’s earnings report, we can see that there has been a lot of selling. In fact, insiders have sold $5.3 million worth of shares in the past three months. As a result, confidence from within appears to be low, as the Insider Confidence Signal for Unity stock is very negative and is below the sector average, as shown in the picture below:
Is U Stock a Good Buy?
Turning to Wall Street, analysts have a Moderate Buy consensus rating on U stock based on five Buys, four Holds, and two Sells assigned in the past three months. After a 62% decline in its share price over the past year, the average Unity price target of $26.92 per share implies 89.04% upside potential. However, it’s worth noting that estimates will likely change following today’s earnings report.
