Let’s discuss Unity’s Q2 after so so Q1 where they met analyst expectations but stock plunged 30%+ due to forecast, let’s also see the reaction of the internet.
(If you like this post, feel free to change the heart’s color from white to red ❤️)
Overview
👀 Internet’s reaction to U x APP
🧾 U 0.00%↑ Q2 ER
🤓 My thoughts
👀 Internet’s reaction to U x APP
The range of opinions is very interesting to see. Some are absolutely hating it, some are liking it. Let’s see what people have to say regarding U x APP on the internet.
Couch Investor (Twitter, Youtube, Commonstock) isn’t a big fan of the offer which he makes clear through his tweet. In his video, he calls the offer a joke - which I agree with too - esp the premium that APP has offered.
Andreas (Twitter, Substack) on the other hand thinks APP 0.00%↑ is a better quality company than IS 0.00%↑ and U 0.00%↑ should consider U X APP. While I have always wanted U x APP, the only issue for me has been valuation and the premium.
Modern Growth Investing (Commonstock, Twitter) thinks despite the lower premiums, U x APP can be beneficial and grow to a scale where it can compete with the likes of Google.
🧾 $U Q2 Earnings Report
Let’s move on to the factual part. I am going to be presenting ER from the following sources 10-Q, 8-K, and webcast. Here are a few key pointers from the ER.
U beats both EPS (actual $-0.18, expected $-0.21) and revenue expectation
Revenue at $297.0m (+9% YoY) was just above their own guidance of $290 million to $295 million.
Revenue breakdown - Create $120.9m (+66% YoY), Operate 153.5 (-13% YoY), Partnership 17.7 (-2% YoY)
Customers generating $100k+ revenue 1,085 (+22.18% YoY)
Dollar-based net expansion rate 121% vs 142% (Q2, 21)
Big news coming are:
Fixed the inaccuracy of the pinpointer tool and put in place monitoring mechanisms to react faster if something goes wrong
Key partnerships secured with Mercedes-Benz and Capgemini
Guidance:
Q3 revenue $315m-$335m (+10% to 17% YoY), 2022 revenue $1.3b-$1.35b (17% to 22% YoY)
🤓 My thoughts
Unity beating the expectations was expected. Revenue from the operate solutions was a bit disappointing but given their claim that they have fixed their data issue with pinpointer we should see what Q3 holds. While YoY customers generating $100k+ revenue is great, QoQ it’s an almost flat line - I am happy if they can most of them. Despite the dollar-based net expansion rate decreasing, I don’t see quite a problem with it.
The news about pinpointer is certainly exciting, but I would be cautious and wait to see Q3 results to believe it. Guidance was lowered from $1.35b, while it’s not terrible, it’s not certainly good.
Overall as an investor in Unity, I am not thrilled with this quarter. However, it was not as bad to make any selling decisions either. So, I will be holding it.
I have invested around $11k while the stock was down at $34-$32, I might sell those trades if I need them for personal investing.