Unity Software Stock Slides Pre-market After Mixed Earnings: But Retail Confident After Revised Guidance, New CFO Hire

Shares of Unity Software Inc ($U) declined over 8% in Friday’s pre-market session after the firm’s third-quarter earnings came in weaker than expected.

Revenue fell 18% year-over-year (YoY) to $446.52 million, topping an analyst estimate of $427.34 million. The company reported an earnings loss of $0.31 versus an expected profit of $0.14. Net loss came in flat at $124.74 million.

Unity offers a suite of tools to create, market and grow games and interactive experiences across all major platforms from mobile, PC, and console, to extended reality (XR).

During the quarter, Unity’s Create Solutions revenue rose 5% YoY to $132 million, driven by a 12% growth in subscriptions revenue, as customers upgraded and renewed at increased prices. However, Grow Solutions revenue fell 5% YoY to $298 million.

The company’s non-strategic portfolio revenue declined 84% to $17 million during the quarter due to portfolio reset. “We expect revenue from our non-strategic portfolio in the fourth quarter to continue to decline compared to the third quarter,” Unity said in a statement.

For the fourth quarter, the firm expects revenue for its strategic portfolio at $422 million to $427 million while adjusted earnings before interest, tax, depreciation, and amortization (EBITDA) is expected at $79 million to $84 million.

Unity raised its full year revenue guidance for its strategic portfolio at $1.70 billion to $1.71 billion compared to an earlier guidance of $1.68 billion to $1.69 billion and adjusted EBITDA of $363 million to $368 million compared to $340 million to $350 million previously.

Meanwhile, Unity has been making some high level hirings in recent weeks. On Thursday, the company announced that Jarrod Yahes will join as the Chief Financial Officer (CFO) on Jan. 1, 2025. His appointment came on the heels of last week’s hiring of Steve Collins as Unity’s new Chief Technology Officer.

Despite the mixed earnings, retail investors on Stocktwits mostly expressed optimism on the stock while noting the recent correction may offer good buying opportunities.

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