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Unity Software (U - Free Report) reported second-quarter 2023 adjusted earnings of 7 cents per share, beating the Zacks Consensus Estimate of 6 cents. The company had reported a loss of 18 cents per share in the year-ago quarter.
Revenues of $533 million beat the consensus mark by 3.63% and jumped 80% year over year.
The company’s dollar-based net expansion rate was 106% in the reported quarter, down from 121% witnessed in the year-ago quarter. Moreover, the number of customers who contributed more than $100,000 of revenues increased from 1,085 as of Jun 30, 2022, to 1,330 as of Jun 30, 2023. The figure missed the Zacks Consensus Estimate by 1.94%.
Unity Software Inc. Price, Consensus and EPS Surprise
Revenues from Grow Solutions (63.7% of total revenues) surged 157% year over year to $340 million. The figure beat the Zacks Consensus Estimate by 6.66%.
Industries (beyond games) represent 30% of the total Create Solutions revenues, same as in the fourth quarter of 2022.
Create Solutions revenues (36.2% of total revenues) increased 17% year over year to $193 million. The figure missed the Zacks Consensus Estimate by 1.35%.
Gross profit on a non-GAAP basis grew 96.12% year over year to $434.26 million in the reported quarter. However, gross margin expanded 600 basis points on a year-over-year basis to 81%.
Selling and marketing expenses flared up 79.9% year over year to $120.9 million. General and administrative expenses rose 9.95% year over year to $56.1 million. Research and development expenses surged 11.1% year over year to $158.5 million.
Unity Software reported non-GAAP operating profit of $98.7 million compared with the year-ago quarter’s loss of $37.6 million.
Balance Sheet and Cash Flows
As of Jun 30, 2023, cash & cash equivalents and restricted cash were $1.654 billion.
Cash flow from operations was $47.6 million in the reported quarter against net cash used in operating activities of negative $45.89 million in the year-ago quarter.
Guidance
Unity Software projects third-quarter 2023 revenues between $540 million and $550 million. The company estimates revenue growth in the range of 67-70% year over year.
Adjusted EBITDA is estimated between $90 million and $100 million.
For 2023, U expects revenues between $2.12 billion and $2.2 billion. The company estimates revenue growth in the range of 52-58% year over year.
Adjusted EBITDA is estimated between $320 million and $340 million.
Zacks Rank & Stocks to Consider
Unity Software currently carries a Zacks Rank #3 (Hold).
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Unity Software (U) Q2 Earnings Beat Estimates, Revenues Rise Y/Y (Revised)
Unity Software (U - Free Report) reported second-quarter 2023 adjusted earnings of 7 cents per share, beating the Zacks Consensus Estimate of 6 cents. The company had reported a loss of 18 cents per share in the year-ago quarter.
Revenues of $533 million beat the consensus mark by 3.63% and jumped 80% year over year.
The company’s dollar-based net expansion rate was 106% in the reported quarter, down from 121% witnessed in the year-ago quarter. Moreover, the number of customers who contributed more than $100,000 of revenues increased from 1,085 as of Jun 30, 2022, to 1,330 as of Jun 30, 2023. The figure missed the Zacks Consensus Estimate by 1.94%.
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 (63.7% of total revenues) surged 157% year over year to $340 million. The figure beat the Zacks Consensus Estimate by 6.66%.
Industries (beyond games) represent 30% of the total Create Solutions revenues, same as in the fourth quarter of 2022.
Create Solutions revenues (36.2% of total revenues) increased 17% year over year to $193 million. The figure missed the Zacks Consensus Estimate by 1.35%.
Gross profit on a non-GAAP basis grew 96.12% year over year to $434.26 million in the reported quarter. However, gross margin expanded 600 basis points on a year-over-year basis to 81%.
Selling and marketing expenses flared up 79.9% year over year to $120.9 million. General and administrative expenses rose 9.95% year over year to $56.1 million. Research and development expenses surged 11.1% year over year to $158.5 million.
Unity Software reported non-GAAP operating profit of $98.7 million compared with the year-ago quarter’s loss of $37.6 million.
Balance Sheet and Cash Flows
As of Jun 30, 2023, cash & cash equivalents and restricted cash were $1.654 billion.
Cash flow from operations was $47.6 million in the reported quarter against net cash used in operating activities of negative $45.89 million in the year-ago quarter.
Guidance
Unity Software projects third-quarter 2023 revenues between $540 million and $550 million. The company estimates revenue growth in the range of 67-70% year over year.
Adjusted EBITDA is estimated between $90 million and $100 million.
For 2023, U expects revenues between $2.12 billion and $2.2 billion. The company estimates revenue growth in the range of 52-58% year over year.
Adjusted EBITDA is estimated between $320 million and $340 million.
Zacks Rank & Stocks to Consider
Unity Software currently carries a Zacks Rank #3 (Hold).
Some better-ranked stocks in the broader Zacks Computer & Technology sector are Salesforce (CRM - Free Report) , AvidXchange (AVDX - Free Report) and Akamai Technologies (AKAM - Free Report) , 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.
Salesforce shares have rallied 70.7% in the year-to-date period. The long-term earnings growth rate for CRM is currently projected at 19.25%.
AvidXchange shares have climbed 21.1% in the year-to-date period. The long-term earnings growth rate for AVDX is currently projected at 22.90%.
Akamai shares have gained 9.5% in the year-to-date period. The long-term earnings growth rate for AKAM is currently projected at 10%.
(We are reissuing this article to correct a mistake. The original article, issued on August 3, 2023, should no longer be relied upon.)