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Unity Software (U) Q4 Earnings Top Estimates, Revenues Up Y/Y
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Unity Software (U - Free Report) reported fourth-quarter 2020 loss of 10 cents per share, comfortably beating the Zacks Consensus Estimate by 33.3%. The company had posted a loss of 79 cents per share in the year-ago quarter.
Revenues of $220.3 million beat the consensus mark by 8.1%. Moreover, the figure jumped 39.4% year over year.
The company’s dollar-based net expansion rate was 138% in the reported quarter, up from the 133% witnessed in the last reported quarter. Moreover, customers who contributed more than $100,000 of revenues increased from 600 as of Dec 31, 2019 to 793, as of Dec 31, 2020.
Markedly, in the fourth quarter, games built with Unity accounted for 71% of the top 1,000 mobile games. Moreover, monthly active end users were, on average, 2.7 billion per month in the reported quarter, surging 63% year over year.
Unity Software Inc. Price, Consensus and EPS Surprise
Revenues from Operate Solutions (60.9% of total revenues) jumped 54.4% year over year to $134.3 million. This solid uptake was on strong execution and increased product enhancements. Moreover, the pandemic-induced stay-at-home trend, which has boosted player engagement on gaming platforms, was a major growth driver for Unity’s Operate Solutions.
Revenues from Create Solutions (30.4% of total revenues) climbed 39.4% year over year to $66.9 million. This upswing was primarily driven by strong performance across gaming and new verticals led by solid customer demand for the company’s real time 3D technology.
However, Strategic Partnerships and Other Revenues (8.7% of total revenues) slid 20.4% year over year, to $19.1 million, due to the pandemic-led longer deal cycles.
Operating Details
Gross Profit on a non-GAAP basis grew 34.1% year over year to $172.6 million from $128.7 million in the year-ago quarter. However, the gross margin contracted 309 bps year over year to 78.3%
Selling and Marketing expenses flared up 25.4% year over year to $57.6 million. General and Administrative expenses rose 10.4% year over year to $45.1 million. Research and Development expenses surged 36.7% year over year to $90 million.
Unity reported a non-GAAP operating loss of $20.1 million compared with the non-GAAP operating loss of $23.9 million seen in the year-ago quarter.
Balance Sheet and Cash Flows
As of Dec 31, 2020, the company has cash & cash equivalents and restricted cash worth $1.3 billion compared with $1.8 billion, of Sep 30, 2020.
Cash flow from operations was $14.8 million, significantly up from the year-ago quarter’s reported figure of $0.9 million. Moreover, free cash flow was $3.6 million compared with a negative free cash flow of $9.7 million reported in the year-ago quarter.
Guidance
Unity projects first-quarter 2021 revenues between $210 million and $220 million and revenue growth in the range of 26-32% year over year. Non-GAAP operating loss is estimated between $30 million and $40 million.
Moreover, the company expects revenues between $950 million and $970 million, and a non-GAAP operating loss between $90 million and $105 million for 2021.
The guidance includes impact of Apple’s (AAPL - Free Report) iOS14’s privacy modifications on IDFA, which is anticipated to commence this spring. The changes are likely to reduce Unity’s revenues by nearly $30 million, 3% of the revenues, in 2021.
Nevertheless, the company believes that the coronavirus-led elevated gaming engagement, along with ongoing digital transformation across enterprises will continue to boost the adoption of Unity’s real time 3D technology, thereby driving top-line growth.
Zacks Rank & Stocks to Consider
Unity Software currently carries a Zacks Rank #3 (Buy).
Advanced Energy and Cohu are scheduled to report quarterly numbers on Feb 10 and 11, respectively.
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Unity Software (U) Q4 Earnings Top Estimates, Revenues Up Y/Y
Unity Software (U - Free Report) reported fourth-quarter 2020 loss of 10 cents per share, comfortably beating the Zacks Consensus Estimate by 33.3%. The company had posted a loss of 79 cents per share in the year-ago quarter.
Revenues of $220.3 million beat the consensus mark by 8.1%. Moreover, the figure jumped 39.4% year over year.
The company’s dollar-based net expansion rate was 138% in the reported quarter, up from the 133% witnessed in the last reported quarter. Moreover, customers who contributed more than $100,000 of revenues increased from 600 as of Dec 31, 2019 to 793, as of Dec 31, 2020.
Markedly, in the fourth quarter, games built with Unity accounted for 71% of the top 1,000 mobile games. Moreover, monthly active end users were, on average, 2.7 billion per month in the reported quarter, surging 63% year over year.
Unity Software Inc. Price, Consensus and EPS Surprise
Unity Software Inc. price-consensus-eps-surprise-chart | Unity Software Inc. Quote
Segment Details
Revenues from Operate Solutions (60.9% of total revenues) jumped 54.4% year over year to $134.3 million. This solid uptake was on strong execution and increased product enhancements. Moreover, the pandemic-induced stay-at-home trend, which has boosted player engagement on gaming platforms, was a major growth driver for Unity’s Operate Solutions.
Revenues from Create Solutions (30.4% of total revenues) climbed 39.4% year over year to $66.9 million. This upswing was primarily driven by strong performance across gaming and new verticals led by solid customer demand for the company’s real time 3D technology.
However, Strategic Partnerships and Other Revenues (8.7% of total revenues) slid 20.4% year over year, to $19.1 million, due to the pandemic-led longer deal cycles.
Operating Details
Gross Profit on a non-GAAP basis grew 34.1% year over year to $172.6 million from $128.7 million in the year-ago quarter. However, the gross margin contracted 309 bps year over year to 78.3%
Selling and Marketing expenses flared up 25.4% year over year to $57.6 million. General and Administrative expenses rose 10.4% year over year to $45.1 million. Research and Development expenses surged 36.7% year over year to $90 million.
Unity reported a non-GAAP operating loss of $20.1 million compared with the non-GAAP operating loss of $23.9 million seen in the year-ago quarter.
Balance Sheet and Cash Flows
As of Dec 31, 2020, the company has cash & cash equivalents and restricted cash worth $1.3 billion compared with $1.8 billion, of Sep 30, 2020.
Cash flow from operations was $14.8 million, significantly up from the year-ago quarter’s reported figure of $0.9 million. Moreover, free cash flow was $3.6 million compared with a negative free cash flow of $9.7 million reported in the year-ago quarter.
Guidance
Unity projects first-quarter 2021 revenues between $210 million and $220 million and revenue growth in the range of 26-32% year over year. Non-GAAP operating loss is estimated between $30 million and $40 million.
Moreover, the company expects revenues between $950 million and $970 million, and a non-GAAP operating loss between $90 million and $105 million for 2021.
The guidance includes impact of Apple’s (AAPL - Free Report) iOS14’s privacy modifications on IDFA, which is anticipated to commence this spring. The changes are likely to reduce Unity’s revenues by nearly $30 million, 3% of the revenues, in 2021.
Nevertheless, the company believes that the coronavirus-led elevated gaming engagement, along with ongoing digital transformation across enterprises will continue to boost the adoption of Unity’s real time 3D technology, thereby driving top-line growth.
Zacks Rank & Stocks to Consider
Unity Software currently carries a Zacks Rank #3 (Buy).
Some better-ranked stocks in the broader technology sector are Advanced Energy Industries (AEIS - Free Report) and Cohu (COHU - Free Report) . Both stocks carry a Zacks Rank #2 (Buy), currently. You can see the complete list of today’s Zacks #1 (Strong Buy) Rank stocks here.
Advanced Energy and Cohu are scheduled to report quarterly numbers on Feb 10 and 11, respectively.
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The biotech sector is projected to surge beyond $775 billion by 2024 as scientists develop treatments for thousands of diseases. They’re also finding ways to edit the human genome to literally erase our vulnerability to these diseases.
Zacks has just released Century of Biology: 7 Biotech Stocks to Buy Right Now to help investors profit from 7 stocks poised for outperformance. Our recent biotech recommendations have produced gains of +50%, +83% and +164% in as little as 2 months. The stocks in this report could perform even better.
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