Unity posts profitable quarter with lukewarm future outlook

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Unity revealed its financial results for the fourth quarter of 2022 this week. According to the company’s results, it had a profitable quarter for the first time as a publicly traded company. It also posted revenue of $451 million for the quarter, as well as $1.39 billion for the full fiscal year. That said, its future earnings projections disappointed analysts who had more robust expectations for next year.

According to Unity, its fourth-quarter revenue grew 43% year-over-year for the quarter and 25% year-over-year from 2021. Of its two divisions, Unity’s Create Solutions grew 41% year-over-year to $198 million, while Grow Solutions grew 12% year-over-year to $253 million. The company also said its quarterly earnings were above estimates for the previous quarter.

Unity weaknesses and stock price drop

However, the results were not all favourable. Unity admitted in its shareholder letter that the mobile ad market was weak in 2022. Its shareholder letter says the in-game ad market “declined year-over-year in the third and fourth quarters as some game publishers became more conservative with their advertising spending as economies declined”.

Luis Felipe Visoso, Unity’s CFO, also mentioned the January layoffs. Those layoffs, which affected nearly 300 employees, were the second shift in six months. The company also laid off more than 200 employees last June as part of a quest to “realign some of our resources to better focus and support our long-term growth.”


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Visoso said on the conference call that the January layoffs were part of an overall cost-cutting effort, adding that they were “being very selective in any future new hires that we add to the company, being more focused on our investments and reducing the number of beds that we we do at Unity, raising the bar on cost, and we turn every stone a time or two and discover new opportunities in some places.”

The company’s stock also fell after the earnings release, due to the cut of its revenue expectations for the first quarter of 2023. Specifically, it expects revenues of between $470 and $480 million. According to MarketWatch, some analysts estimated revenue closer to $521 million, about 10% above Unity’s projections. Unity’s stock dropped nearly 20% the day it announced its financial results.

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