Unity Earnings: What To Look For From U

Game engine maker Unity (NYSE:U) will be reporting earnings tomorrow morning. Here’s what investors should know.

Unity beat analysts’ revenue expectations by 4.2% last quarter, reporting revenues of $446.5 million, down 18% year on year. It was a mixed quarter for the company, with a solid beat of analysts’ billings estimates but revenue guidance for next quarter missing analysts’ expectations significantly.

Is Unity a buy or sell going into earnings? Read our full analysis here, it’s free.

This quarter, analysts are expecting Unity’s revenue to decline 29.1% year on year to $431.8 million, a reversal from the 35.1% increase it recorded in the same quarter last year. Adjusted earnings are expected to come in at $0.16 per share.

Analysts covering the company have generally reconfirmed their estimates over the last 30 days, suggesting they anticipate the business to stay the course heading into earnings. Unity has only missed Wall Street’s revenue estimates once over the last two years, exceeding top-line expectations by 4.1% on average.

Looking at Unity’s peers in the design software segment, some have already reported their Q4 results, giving us a hint as to what we can expect. Cadence delivered year-on-year revenue growth of 26.9%, meeting analysts’ expectations, and Procore reported revenues up 16.2%, topping estimates by 1.4%. Procore traded up 16.5% following the results.

Read our full analysis of Cadence’s results here and Procore’s results here.

There has been positive sentiment among investors in the design software segment, with share prices up 5.4% on average over the last month. Unity is down 2.3% during the same time and is heading into earnings with an average analyst price target of $23.10 (compared to the current share price of $21.75).

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