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Unity Software (U) to Post Q3 Earnings: What's in the Cards?

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Unity Software (U - Free Report) is set to report third-quarter 2021 results on Nov 9.

The company expects third-quarter revenues between $260 million and $265 million. The Zacks Consensus Estimate for revenues is pegged at $266.1 million, indicating an increase of 32.6% from the year-ago quarter’s reported figure.

The consensus mark for loss has remained unchanged at 6 cents per share in the past 30 days. Unity had reported a loss of 9 cents in the year-ago quarter.

Unity’s earnings beat the Zacks Consensus Estimate in all the trailing four quarters, delivering an earnings surprise of 43.3%, on average.
 

Unity Software Inc. Price and EPS Surprise

Unity Software Inc. Price and EPS Surprise

Unity Software Inc. price-eps-surprise | Unity Software Inc. Quote

 

Let’s see how things have shaped up for the upcoming announcement.

Factors Likely to Influence Q3 Results

Unity’s third-quarter top line is expected to have benefited from robust demand for its software solutions from content creators like game developers, architects, automotive designers and filmmakers. Growing momentum in the Operate Solutions business is likely to have served as a key catalyst.

The second quarter of 2021 witnessed new customer additions in automotive, consumer product, and aerospace & defense end-markets. This trend is expected to have continued in the to-be-reported quarter.

In addition, spike in consumer spend in the online gaming industry is expected to have driven the adoption of Unity’s real-time 3D technology among gaming companies in the to-be-reported quarter.

Unity has been expanding its platform by introducing product capabilities, which are likely to have been a major growth driver.

Steady demand for interactive, real-time 2D and 3D content for mobile phones, tablets, PCs and virtual reality devices is likely to have aided the company’s top line.

888 customers generated more than $100,000 of revenues in the trailing 12 months as of Jun 30, 2021, up from 716 customers in the year-ago period.

The company’s dollar-based net expansion rate, which measures expansion in existing customers’ revenues over a trailing 12-month period as of Jun 30, 2021, was 142%, unchanged year over year.

The momentum is likely to have continued in the to-be-reported quarter, primarily on strong adoption of the company’s subscription-based Create Solutions and Operate Solutions.

What Our Model Says

According to the Zacks model, the combination of a positive Earnings ESP and Zacks Rank #1 (Strong Buy), 2 (Buy) or 3 (Hold) increases the odds of an earnings beat. But that’s not the case here.

Unity has an Earnings ESP of 0.00% and a Zacks Rank #3 (Hold). You can uncover the best stocks to buy or sell before they’re reported with our Earnings ESP Filter.

Stocks to Consider

Here are a few companies you may want to consider, as our model shows that these have the right combination of elements to post an earnings beat in their upcoming releases:

Applied Materials (AMAT - Free Report) has an Earnings ESP of +0.52% and a Zacks Rank #2. You can see the complete list of today’s Zacks #1 Rank stocks here.

Synaptics (SYNA - Free Report) has an Earnings ESP of +0.38% and a Zacks Rank #2.

Blink Charging (BLNK - Free Report) has an Earnings ESP of +8.33% and a Zacks Rank #3.

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