Unity Software (U) Q1 Earnings Miss, Revenues Increase Y/Y
Unity Software U reported first-quarter 2023 loss of 67 cents per share, wider than the Zacks Consensus Estimate of a loss of 5 cents. The company had posted a loss of 60 cents per share in the year-ago quarter.
Revenues of $500.36 million beat the consensus mark by 4.8% and jumped 56.3% year over year.
The company’s dollar-based net expansion rate was 107% in the reported quarter, down from 135% witnessed in the year-ago quarter. Moreover, the number of customers who contributed more than $100,000 of revenues increased from 1,083 as of Mar 31, 2022, to 1,322 as of Mar 31, 2023.
Unity Software Inc. Price, Consensus and EPS Surprise
Unity Software Inc. price-consensus-eps-surprise-chart | Unity Software Inc. Quote
Quarter Details
Revenues from Grow Solutions (62.6% of total revenues) surged 101% year over year to $313 million.
Create Solutions revenues (34% of total revenues) increased 17% year over year to $170 million.
Strategic Partnerships and Other revenues (3.4% of total revenues) decreased 9% year over year to $17 million.
Gross profit on a non-GAAP basis grew 61.5% year over year to $394 million in the reported quarter. However, gross margin expanded 300 basis points on a year-over-year basis to 79%.
Selling and marketing expenses flared up 82.9% year over year to $130.2 million. General and administrative expenses rose 11.7% year over year to $58.4 million. Research and development expenses surged 20.7% year over year to $172.9 million.
Unity Software reported non-GAAP operating profit of $32.5 million compared with the year-ago quarter’s loss of $22.8 million.
Balance Sheet and Cash Flows
As of Mar 31, 2023, cash & cash equivalents and restricted cash were $1.61 billion.
Cash flow from operations was negative $5.1 million in the reported quarter against net cash used in operating activities of $101.3 million in the year-ago quarter.
Guidance
Unity Software projects second-quarter 2023 revenues between $510 million and $520 million. The company estimates revenue growth in the range of 72-75% year over year.
Non-GAAP operating profit is estimated between $50 million and $60 million.
For 2023, U expects revenues between $2.08 billion and $2.2 billion. The company estimates revenue growth in the range of 50-58% year over year.
Non-GAAP operating profit is expected between $250 million and $300 million.
Zacks Rank & Stocks to Consider
Unity Software currently carries a Zacks Rank #3 (Hold).
Investors interested in the broader Zacks Computer & Technology sector can consider some better-ranked stocks like Agilent Technologies A, DigitalOcean DOCN and AMETEK AME, each carrying a Zacks Rank #2 (Buy) at present. You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.
Shares of Agilent Technologies have risen 10.3% in the past year. A’s long-term earnings growth rate is projected at 12%.
Shares of DigitalOcean have fallen 3.2% in the past year. DOCN’s long-term earnings growth rate is projected at 41.06%.
Shares of AMETEK have rallied 20.2% in the past year. AME’s long-term earnings growth rate is projected at 8.95%.
Want the latest recommendations from Zacks Investment Research? Today, you can download 7 Best Stocks for the Next 30 Days. Click to get this free report
Agilent Technologies, Inc. (A) : Free Stock Analysis Report
AMETEK, Inc. (AME) : Free Stock Analysis Report
Unity Software Inc. (U) : Free Stock Analysis Report
DigitalOcean Holdings, Inc. (DOCN) : Free Stock Analysis Report