Unit Software (U) Q4 Earnings Estimates, Revenue Increases Y / Y

Unit software You reported a ten-cent loss per share in the fourth quarter of 2020, beating the Zacks Consensus Estimate comfortably by 33.3%. The company posted a loss of 79 cents per share in the previous quarter.

Revenue of $ 220.3 million lowered the consensus point by 8.1%. In addition, the figure increased by 39.4% year-on-year.

The company’s net expansion rate on dollars was 138% in the reported quarter, compared to 133% seen in the last quarter. In addition, customers who contributed more than $ 100,000 in revenue increased from 600 on December 31, 2019 to 793, on December 31, 2020.

In the fourth quarter, games built with Unity accounted for 71% of the first 1,000 mobile games. In addition, the monthly active end-users averaged 2.7 billion per month in the reported quarter, which increased by 63% year-on-year.

Unity Software Inc. Price, consensus and EPS surprise

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

Segment Details

Revenue from Operate Solutions (60.9% of total revenue) increased 54.4% year-over-year to $ 134.3 million. This solid survey was with strong execution and increased product improvements. The pandemic-induced stay-at-home trend, which has increased player engagement on gaming platforms, has also been a major growth driver for Unity’s Operate Solutions.

Revenue from Create Solutions (30.4% of total revenue) increased 39.4% year-over-year to $ 66.9 million. This upswing was mainly driven by strong in – game performance and new verticals, driven by solid customer demand for the company’s real – time 3D technology.

However, strategic partnerships and other revenue (8.7% of total revenue) decreased 20.4% year-over-year to $ 19.1 million due to the longer pandemic cycles.

Business Details

Gross profit on a non-GAAP basis grew by 34.1% year-on-year to $ 172.6 million from $ 128.7 million in the previous quarter. However, the gross margin shrank 309 bps year-on-year to 78.3%

Sales and marketing expenses increased 25.4% year-on-year to $ 57.6 million. General and administrative expenses increased 10.4% year-on-year to $ 45.1 million. Research and development costs increased 36.7% year-on-year to $ 90 million.

Unity reported a $ 20.1 million non-GAAP operating loss compared to the $ 23.9 million non-GAAP operating loss seen in the previous quarter.

Balance sheet and cash flow

As of December 31, 2020, the Company has cash and cash equivalents and limited cash worth $ 1.3 billion compared to $ 1.8 billion as of September 30, 2020.

Cash flow from operations was $ 14.8 million, significantly higher than the reported figure of $ 0.9 million in the previous quarter. In addition, free cash flow was $ 3.6 million, compared to a negative free cash flow of $ 9.7 million reported in the previous quarter.

Guidance

Unity projects revenue from the first quarter of 2021 between $ 210 million and $ 220 million and revenue growth in the region of 26-32% year-on-year. Non-GAAP operating loss is estimated at between $ 30 million and $ 40 million.

In addition, the company expects revenue between $ 950 million and $ 970 million, and a non-GAAP operating loss between $ 90 million and $ 105 million for 2021.

The guidance includes the impact of appealThe privacy adjustments of AAPL iOS14 on IDFA, which is expected to launch this spring. The changes are likely to reduce Unity’s revenue by nearly $ 30 million, 3% of revenue, by 2021.

Nevertheless, the company believes that the increased gaming engagement led by the coronavirus, coupled with continuous digital transformation in enterprises, will promote the adoption of Unity’s real-time 3D technology, thus stimulating top growth.

Zacks’ rank and shares to consider

Unity Software currently has a Zacks Rank # 3 (Buy).

Some better ranked stocks in the broader technology sector are Advanced energy industries AEIS and Cohu COHU. Both stocks currently have a Zacks rank of # 2 (buy). You can see the full list of today’s Zacks # 1 (strong buy) rank stocks here.

Advanced Energy and Cohu will report quarterly on February 10 and 11.

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