Unity Soars 15.1% on Stronger-Than-Expected Q4 Results

Shares of Unity Software Inc. (U) jumped 15.1% in Thursday’s extended trading session and a further 14.6% at the time of writing after the video game software development company reported better-than-expected fourth-quarter results.

Don't Miss Our Christmas Offers:

Discover the latest stocks recommended by top Wall Street analysts, all in one place with Analyst Top Stocks
Make smarter investments with weekly expert stock picks from the Smart Investor Newsletter

The company reported a net loss of $0.05 per share against the consensus estimate of a loss of $0.07 per share. The figure compares favorably with a loss of $0.10 per share in the same quarter last year. Total revenues generated during the quarter rose 43% year-over-year to $315.9 million, beating the consensus estimate of $294.8 million.

Create solutions and operate solutions revenue increased 49% and 45%, respectively, from the same quarter last year. Also, strategic partnerships and other revenue stood at $21.3 million, up 12%.

Unity disclosed 1,052 customers during the quarter, compared to 793 as of December 31, 2020. Also, the dollar-based net expansion rate was 140% up from 138% in last year’s quarter.

The President and CEO of Unity, John Riccitiello, said, “Unity’s strong fourth-quarter and full-year results were driven by exceptional execution and innovation by the Unity teams. We believe that the transition from linear 2D to interactive real-time 3D, presents a massive growth opportunity for the next decades. These are strong tailwinds that help us drive growth for years to come.”

Outlook

Unity projects total revenues between $1,485 million and $1,505 million for 2022, up 34% to 36% from 2021. Meanwhile, its non-GAAP loss from operations is expected to be between $39 million and $41 million.

For the first quarter, the company expects to post revenues in the range of $315 to $320 million. Also, it anticipates a loss from operations in the range of $22 million to $23 million.

Price Target

Based on 9 Buys and 1 Hold, the stock has a Strong Buy consensus rating. The average Unity Software price target of $180.30 implies 94.8% upside potential from current levels. Shares have declined 37.8% from the past year.

News Sentiment

News Sentiment for Unity is Very Positive based on 22 articles over the past seven days. All the articles have Bullish sentiment, compared to a sector average of 64%, and none have Bearish Sentiment, compared to a sector average of 36%.

Download the TipRanks mobile app now

To find good ideas for stocks trading at attractive valuations, visit TipRanks’ Best Stocks to Buy, a newly launched tool that unites all of TipRanks’ equity insights.

Read full Disclaimer & Disclosure