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Unity Soars 15.1% on Stronger-Than-Expected Q4 Results

Shares of Unity Software Inc. (U) jumped 15.1% in Thursday’s extended trading session and a further 14.6% at the time of writing after the video game software development company reported better-than-expected fourth-quarter results.

The company reported a net loss of $0.05 per share against the consensus estimate of a loss of $0.07 per share. The figure compares favorably with a loss of $0.10 per share in the same quarter last year. Total revenues generated during the quarter rose 43% year-over-year to $315.9 million, beating the consensus estimate of $294.8 million.

Create solutions and operate solutions revenue increased 49% and 45%, respectively, from the same quarter last year. Also, strategic partnerships and other revenue stood at $21.3 million, up 12%.

Unity disclosed 1,052 customers during the quarter, compared to 793 as of December 31, 2020. Also, the dollar-based net expansion rate was 140% up from 138% in last year’s quarter.

The President and CEO of Unity, John Riccitiello, said, “Unity’s strong fourth-quarter and full-year results were driven by exceptional execution and innovation by the Unity teams. We believe that the transition from linear 2D to interactive real-time 3D, presents a massive growth opportunity for the next decades. These are strong tailwinds that help us drive growth for years to come.”

Outlook

Unity projects total revenues between $1,485 million and $1,505 million for 2022, up 34% to 36% from 2021. Meanwhile, its non-GAAP loss from operations is expected to be between $39 million and $41 million.

For the first quarter, the company expects to post revenues in the range of $315 to $320 million. Also, it anticipates a loss from operations in the range of $22 million to $23 million.

Price Target

Based on 9 Buys and 1 Hold, the stock has a Strong Buy consensus rating. The average Unity Software price target of $180.30 implies 94.8% upside potential from current levels. Shares have declined 37.8% from the past year.

News Sentiment

News Sentiment for Unity is Very Positive based on 22 articles over the past seven days. All the articles have Bullish sentiment, compared to a sector average of 64%, and none have Bearish Sentiment, compared to a sector average of 36%.

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