Unity Software (U) Q4 Earnings Top Estimates, Revenues Rise Y/Y

Unity Software U reported fourth-quarter 2023 adjusted earnings of 23 cents per share, beating the Zacks Consensus Estimate of 19 cents. The reported figure compared favorably with breakeven earnings in the year-ago quarter.

Revenues of $609.27 million beat the consensus mark by 13.57% and jumped 35.1% year over year.

Unity Software Inc. Price, Consensus and EPS Surprise

Unity Software Inc. Price, Consensus and EPS Surprise

Unity Software Inc. price-consensus-eps-surprise-chart | Unity Software Inc. Quote

Quarter Details

Revenues from Grow Solutions (52.4% of total revenues) jumped 26% year over year to $319 million. The figure lagged the Zacks Consensus Estimate by 9.08%.

Industries (beyond games) represent 23% of the total Create Solutions revenues compared with 19% in the fourth quarter of the prior year.

Create Solutions revenues (47.6% of total revenues) increased 47.21% year over year to $290 million. The figure beat the Zacks Consensus Estimate by 56.23%.

Gross profit on a non-GAAP basis climbed 46.87% year over year to $522.7 million in the reported quarter. However, gross margin expanded 2,291 basis points on a year-over-year basis to 85.8%.

Selling and marketing expenses flared up 9.57% year over year to $123.47 million. General and administrative expenses rose 1.48% year over year to $60.06 million. Research and development expenses declined 6% year over year to $153.5 million.

Unity Software reported a non-GAAP operating profit of $185.64 million compared with the year-ago quarter’s profit of $20.7 million.

Balance Sheet and Cash Flow

As of Dec 31, 2023, cash & cash equivalents and restricted cash were $1.604 billion.

Cash flow from operations was $72.1 million in the reported quarter against net cash used in operating activities of negative $49.06 million in the year-ago quarter.

Guidance

Unity Software projects first-quarter 2024 revenues between $415 million and $420 million. The company estimates revenues to decline in the range of 15-16% year over year.

Adjusted EBITDA is estimated between $45 million and $50 million.

For 2024, U expects revenues between $1.76 billion and $1.8 billion. The company estimates revenues to decline in the range of 17-19% year over year.

Adjusted EBITDA is estimated between $400 million and $425 million.

Zacks Rank & Stocks to Consider

Unity Software currently carries a Zacks Rank #4 (Sell).

Some better-ranked stocks from the broader Computer and Technology sector are Dell Technologies DELL, ACM Research ACMR and Bandwidth BAND, each carrying a Zacks Rank #2 (Buy) at present. You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.

Shares of Dell Technologies have jumped 21.3% year to date. DELL is scheduled to release fourth-quarter fiscal 2024 results on Feb 29.

Shares of ACM Research have gained 10.5% year to date. ACMR is set to report its fourth-quarter 2023 results on Feb 28.

Shares of Bandwidth have lost 17.3% year to date. BAND is set to report its fourth-quarter 2023 results on Feb 28.

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The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of Nasdaq, Inc.

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