YTD Unity is down 85%, and vastly lagging behind SP500. I personally have lost a significant chunk in the process. Today was Unity’s Q3 ER, so let’s dive into it. Here are the following things that will be discussed in the post:
🧾 $U Q3 Earnings Report
🤓 My thoughts
🧾 $U Q3 Earnings Report
Let’s move on to the factual part. I am going to be presenting ER from the following sources 10-Q, and webcast. Here are a few key pointers from the ER.
🔴 means negative and 🟢 means positive (IMO)
It beats EPS estimates of -$0.16 by $0.15 🟢
Revenue was $322.9 million (+13% YoY) in line with the guidance of $315m-$335m. 🟢
Revenue breakdown - Create $128.6m (+54% YoY) 🟢, Operate $171.7 (-7% YoY) 🔴, Partnership $22.6 (+26% YoY) 🔴
Customers generating $100k+ revenue 1,075 (+10.48% YoY) 🔴
Dollar-based net expansion rate 111% vs 121% (Q2, 21) 🔴
Big news coming are:
U x IS merger completed
New pricing for Unity Pro and Enterprise
Cashflow positive in Q4
Guidance:
Q4 revenue $425M — $445M (+35% to +41% YoY), 2022 revenue $1.365b-$1.385b (+23% to +25% YoY) and increase from previous guidance of $1.3b-$1.35b (17% to 22% YoY) 🟢
🤓 My thoughts
I wasn’t too surprised with the Q3 earning report, although I was expecting lowered guidance. I am happy with the growth of Create (as it’s the core of the business) - it’s also driven by new pricing for Unity Pro and Unity Enterprise which has increased by 13% and 25% respectively. Number of $100k+ revenue generating customers and decrease in dollar-based net expansion decreasing it can be contributed to weaker ads industry in a whole. There are a lot of things outside the control of Unity in this like macro-economic condition. Once advertisers start spending more again, these two KPIs are tend to go up. How long will it take, I am yet to know.
I am excited about the increased guidance of 2022 to $1.365b to $1.386b which takes the company close to it’s long term CAGR of 30%.
As I told you in my previous articles too about my excitement for U x IS, I am happy that it’s finally closed. One interesting promise from Unity’s management is about being cashflow positive in next quarter - that’s a great news. I would say that’s challenging given current ads market with lower eCPM.
While this quarter was okaish, I am thrilled about next quarter. I am still to read the call transcript and will update you on if I get any additional info. This earning report has given some positive hope for the future.