Unity's Turnaround Is Slowly Taking Shape
Video game engine company Unity (NYSE: U) reported fourth-quarter results that should make investors squirm. Total revenue plunged 25% year over year, while revenue in the Create Solutions segment tumbled 47%. Even excluding the impact of the termination of a deal with Wētā FX, Create Solutions revenue would have still been down 20%. Grow Solutions, which covers Unity's advertising business, suffered a smaller 5% revenue decline.Much of Unity's sales decline was driven by the company's portfolio reset, which saw Unity exit businesses and simplify its operations. A big decline was expected, and the company actually beat analyst expectations. However, Unity's guidance for the first quarter was unequivocally disappointing. The company guided for a steep sequential revenue decline that fell far short of analyst estimates.While Unity's guidance was awful, the stock surged on Thursday. There's no telling whether this rally will hold, but there were some signs within Unity's results that point to the start of a turnaround.Continue reading
Video game engine company Unity (NYSE: U) reported fourth-quarter results that should make investors squirm. Total revenue plunged 25% year over year, while revenue in the Create Solutions segment tumbled 47%. Even excluding the impact of the termination of a deal with Wētā FX, Create Solutions revenue would have still been down 20%. Grow Solutions, which covers Unity's advertising business, suffered a smaller 5% revenue decline.
Much of Unity's sales decline was driven by the company's portfolio reset, which saw Unity exit businesses and simplify its operations. A big decline was expected, and the company actually beat analyst expectations. However, Unity's guidance for the first quarter was unequivocally disappointing. The company guided for a steep sequential revenue decline that fell far short of analyst estimates.
While Unity's guidance was awful, the stock surged on Thursday. There's no telling whether this rally will hold, but there were some signs within Unity's results that point to the start of a turnaround.
