Unity Software (U) Stock News and Forecast: Shares add nearly 10% as Q2 guidance raised by $12 million
Premium|Take advantage of 50% OFF on your first month.
Start your subscription and get access to all our original articles.
You have reached your limit of 5 free articles for this month.
Get all exclusive analysis, access our analysis and get Gold and signals alerts
Elevate your trading Journey.
UPGRADE- Unity Software beat Q1 consensus for both earnings and revenue.
- Q2 revenue guidance was pushed up to $515 million.
- This was the second quarter in a row that Unity reported positive adjusted EPS.
- Adjusted EBITDA expected to double in Q2.
Unity Software (U) is beginning to grow into the good graces of Mr. Market after shedding more than 85% since its pandemic heights. The first quarter earnings call late Wednesday showcased a video game platform that has not quit growing. In fact, Unity’s management said revenue growth next quarter would likely top 72% YoY.
This helped Unity Software stock climb 9.4% to $31.44 in Thursday’s premarket, while NASDAQ 100 futures are up just 0.2%.
Unity Software stock news: Growth not giving up
Unity reported $0.06 in adjusted EPS and $-0.67 in GAAP EPS for the first quarter. The former figure beat Wall Street consensus by 9 cents, and the latter beat by 3 cents. This is the second quarter in a row that adjusted earnings were positive after suffering through years worth of negative quarters.
Revenue of $500.4 million rose 56% YoY and overpowered the average analyst estimate by $20.5 million.
“It was a strong first quarter,” said Chief Financial Officer Luis Visoso on the earnings call. “We beat the high end of the revenue guide by $20 million. We beat the high end of the EBITDA guide by $20 million as well. And if you compare this to the first quarter of 2022, that’s a $55 million EBITDA improvement.”
Adjusted EBITDA of $32 million in the first quarter easily beat the consensus call of $9.5 million and last year’s $-23 million figure.
CEO John Riccitiello said Unity’s developer platform would continue to grow faster than its industry as developers embrace the end-to-end possibilities. For the second quarter, he raised revenue guidance to a midpoint of $515 million, above consensus near $503 million. This would mean YoY revenue growth between 72% and 75%.
The second quarter would also add to Unity’s drift toward profitability as guidance for adjusted EBITDA was pushed up from $50 million to $60 million. This would be helped by last week’s announcement of another 600 job cuts. Between June 2022 and January of this year, Unity had already cut 500 jobs, so it is plain to see that the strategy of focusing on profits is now front and center for Unity’s management.
Unity stock forecast
Seeing as how Unity stock is trading above $31 part of the time in Thursday’s premarket, bulls might try to push it to the $32.50 resistance level from March 31 through April 4. A break there would allow strong buying to push the price action in Unity stock up to the $35 to $36 window. This region worked as both resistance and support back in the period between November of last year through this February. It was also the important site of the gap down on February 23, and we all know how much markets love to fill chart gaps. True resistance in both December and again in February came from the $41 to $43 supply zone.
Up until now, Unity stock has been in a slight downtrend, so the question is how long bulls will hold before taking profits. A necessary sign will be when the 9-day moving average overtakes its 21-day counterpart.
Unity Software daily chart
- Unity Software beat Q1 consensus for both earnings and revenue.
- Q2 revenue guidance was pushed up to $515 million.
- This was the second quarter in a row that Unity reported positive adjusted EPS.
- Adjusted EBITDA expected to double in Q2.
Unity Software (U) is beginning to grow into the good graces of Mr. Market after shedding more than 85% since its pandemic heights. The first quarter earnings call late Wednesday showcased a video game platform that has not quit growing. In fact, Unity’s management said revenue growth next quarter would likely top 72% YoY.
This helped Unity Software stock climb 9.4% to $31.44 in Thursday’s premarket, while NASDAQ 100 futures are up just 0.2%.
Unity Software stock news: Growth not giving up
Unity reported $0.06 in adjusted EPS and $-0.67 in GAAP EPS for the first quarter. The former figure beat Wall Street consensus by 9 cents, and the latter beat by 3 cents. This is the second quarter in a row that adjusted earnings were positive after suffering through years worth of negative quarters.
Revenue of $500.4 million rose 56% YoY and overpowered the average analyst estimate by $20.5 million.
“It was a strong first quarter,” said Chief Financial Officer Luis Visoso on the earnings call. “We beat the high end of the revenue guide by $20 million. We beat the high end of the EBITDA guide by $20 million as well. And if you compare this to the first quarter of 2022, that’s a $55 million EBITDA improvement.”
Adjusted EBITDA of $32 million in the first quarter easily beat the consensus call of $9.5 million and last year’s $-23 million figure.
CEO John Riccitiello said Unity’s developer platform would continue to grow faster than its industry as developers embrace the end-to-end possibilities. For the second quarter, he raised revenue guidance to a midpoint of $515 million, above consensus near $503 million. This would mean YoY revenue growth between 72% and 75%.
The second quarter would also add to Unity’s drift toward profitability as guidance for adjusted EBITDA was pushed up from $50 million to $60 million. This would be helped by last week’s announcement of another 600 job cuts. Between June 2022 and January of this year, Unity had already cut 500 jobs, so it is plain to see that the strategy of focusing on profits is now front and center for Unity’s management.
Unity stock forecast
Seeing as how Unity stock is trading above $31 part of the time in Thursday’s premarket, bulls might try to push it to the $32.50 resistance level from March 31 through April 4. A break there would allow strong buying to push the price action in Unity stock up to the $35 to $36 window. This region worked as both resistance and support back in the period between November of last year through this February. It was also the important site of the gap down on February 23, and we all know how much markets love to fill chart gaps. True resistance in both December and again in February came from the $41 to $43 supply zone.
Up until now, Unity stock has been in a slight downtrend, so the question is how long bulls will hold before taking profits. A necessary sign will be when the 9-day moving average overtakes its 21-day counterpart.
Unity Software daily chart
Information on these pages contains forward-looking statements that involve risks and uncertainties. Markets and instruments profiled on this page are for informational purposes only and should not in any way come across as a recommendation to buy or sell in these assets. You should do your own thorough research before making any investment decisions. FXStreet does not in any way guarantee that this information is free from mistakes, errors, or material misstatements. It also does not guarantee that this information is of a timely nature. Investing in Open Markets involves a great deal of risk, including the loss of all or a portion of your investment, as well as emotional distress. All risks, losses and costs associated with investing, including total loss of principal, are your responsibility. The views and opinions expressed in this article are those of the authors and do not necessarily reflect the official policy or position of FXStreet nor its advertisers.