Unity (U) Q4 2023 Earnings Report

Unity software shares tumbled 17% in extended trading Monday after the gaming software company issued weaker-than-expected guidance for the current quarter.

Here’s how the company fared:

• Earnings per share: A loss of 66 cents. The results may not be comparable to the 46 cents loss forecast by analysts, according to LSEG, formerly Refinitiv
• Income: $609 million versus the $596 million expected by analysts, according to LSEG

Unity said it expected first-quarter adjusted profit of $45 million to $50 million, below the $113 million analysts expected.

The company said going forward it would only provide revenue guidance for its “strategic portfolio,” which includes its engine, cloud and monetization business units. Unity said in January it would cut 1,800 jobs as part of a corporate restructuring plan that includes winding down efforts deemed “non-strategic,” such as professional services and marketing business Luna.

The company said first-quarter guidance for its strategic portfolio would be between $415 million and $420 million. Analysts had expected total revenue for the first quarter of $534 million.

“We are right-sizing our cost structure to grow from a sound financial position,” Unity said in a letter to shareholders. “This includes the previously announced reduction of approximately 25% of our workforce, in addition to cost savings on cloud hosting, office footprint consolidation and software license optimization.”

Unity reported fourth-quarter revenue jumped 35% from $451 million a year earlier, while net loss narrowed to $254 million from nearly $288 million a year ago.

In October, John Riccitiello retired as Unity’s CEO and was replaced by former Red Hat boss James Whitehurst as interim CEO. Riccittiello’s departure came shortly after Unity announced a price change that upset several video game developers.

“We are committed to increasing shareholder value through revenue growth, margin expansion and free cash flow generation, and we believe the steps we have taken over the past several months position us for success in 2024 and beyond,” Unity said in his letter to shareholders.

I’M WATCHING: Unity Software cuts 25% of workforce