Hello everyone!
Today is the big day and I have the summary of Earning Reports of my only pure growth play and stock that I have been most bullish on (as a result I had to suffer from harsh days) - $U. After, 3 years U 0.00%â has finally given us good earning reports.
Letâs dive into the highlights.
đš Intro
Unity ( U 0.00%â ) is the powerhouse behind game development, offering tools to create, market, and grow interactive experiences across mobile, PC, console, and XR - itâs the only software company that touches every aspect of the game development life cycle. If you're in the game industry, chances are you've worked with Unity in some capacity.
đšď¸ My Journey with Unity
I've been holding Unity since its early days, even when it crashed 30% in a single day or be it their data corruption in their AI model. My conviction in $U isn't just from an investorâs standpointâI've closely worked with the Supersonic team (their publishing arm) and spent over a decade in game development. Iâve seen firsthand the potential and challenges of Unityâs platform, and despite its missteps in recent years, the long-term vision keeps me invested.
đ˘ Unity's Q4 2024 Earnings Call
đ The Numbers
Unity has beaten all the expectations (tho expectations donât matter much) - below are the numbers.
đš Revenue: $457M (est. $432.5M) â
đš Create Solutions Revenue: $152M (est. $139.4M) â
đš Grow Solutions Revenue: $305M (est. $292.4M) â
đš Adj. EBITDA: $106M (est. $84.4M) â
đš Free Cash Flow: $106M, up 60% from 2023 đ
While overall revenue dipped YoY (due to previous portfolio resets), Q4 results significantly exceeded guidance. CEO Matthew Bromberg emphasized a shift in culture towards execution and discipline, and the numbers back that up. Initially, the stock was 10% down as the Q1 forecast was considered not attractive but as the CEO emphasized over the call about the next steps investorsâ confidence grew and stock ended up +30% at the end of the day.
đŽ Whatâs Next for Unity?
1ď¸âŁ Revenue Growth â But Manage Expectations
The introduction of Unity 6 and AI-powered ad solutions (Unity Vector) is expected to drive growth - but it will take few quarters for the revenue increase to reflect as for Unity 6âs revenue developer will have to upgrade to Unity 6, and Unity Vector is supposed to show effect as soon as Q2 2025.
The shift from the revenue share model is bringing in new renewals and bookings from developers and has increased developer confidence.
However, Unity is not expected to grow as fast as AppLovin ($APP) in the near term, so patience is needed.
2ď¸âŁ Improving Margins & Free Cash Flow
Margins are expanding, and cost-cutting measures are working.
R&D costs have been reduced without compromising innovationâa solid indicator of smarter capital allocation.
Shareholder dilution from SBC (Stock-Based Compensation) is being addressed, a much-needed move.
Unity is now focused on organic growth rather than heavy M&A, which plagued past management.
3ď¸âŁ The Big Catalyst: Unity Vector (AI Ad Platform)
Unity is migrating its ad network to an AI-driven system called Unity Vector, which is taking a similar step with significantly better data flow/source.
This transition is happening ahead of schedule (Q2 2025) and could unlock a major revenue boost.
This is a direct response to previous ad monetization struggles, which have been a major competitive disadvantage against AppLovin.
One more advantage Unity has over Applovin is it has bigger variety of ad networks/types - mediation - LevelPlay vs MAX, Unity Ads vs AppLoving AdNetwork, but one thing that AppLovin doesnât have is first party offerwall monetization (Offerwall ads are timely ads that offer rewards to players for interacting with them).
Note: Ad business isnât a takes-all market, so both APP 0.00%â and can succeed in past days Applovin and IronSource were equally successful.
đĄ Final Thoughts
This quarter hinted Unityâs turnaround is real. Brombergâs leadership is making a noticeable difference, and if youâve been following $Uâs journey, this is exactly what investors needed to see.
đ Bullish Case: If Unity executes on AI-driven ad monetization and continues margin improvements, the stock could 2-3x in the next few years.
â ď¸ Bearish Case: The restructuring still has work to do, and Unity needs to prove that it can compete sustainably with AppLovin in ad monetization.
đ Bottom Line: If youâre looking for a get-rich-quick stock, Unity isnât it. But if you believe in AI-driven ad tech, real-time 3D growth, and strong leadership execution, holding through the volatility could pay off massively.
As you know I am bullish in U 0.00%â and I see it as a 10-20x opportunity in the next few years, so I will keep holding my 1,900 Unity shares.