synopsis

CEO Matt Bromberg said fourth-quarter results meaningfully exceeded expectations on both revenue and profit, underscoring the company’s progress “in building a new Unity.”

Unity Software, Inc. (U) stock rallied in Thursday’s premarket session after the company reported better-than-expected fourth-quarter results. Investors largely ignored the downbeat guidance for the first quarter.

San Francisco, California-based Unity, which offers a suite of tools for creating and marketing games and interactive experiences across devices, reported a fourth-quarter GAAP loss of $0.30 per share, narrower than the year-ago loss of $0.66 per share

According to Yahoo Finance, analysts’ average estimate was for a loss of $0.37 per share.

Revenue fell about 25% year over year (YoY) to $457 million from $609 million, and yet exceeded the consensus of $433.47 million. The company noted that revenue from its strategic portfolio climbed 4% to $442 million.

Adjusted earnings before interest, taxes, depreciation, and amortization (EBITDA) was $106 million, down from $186 million in the year-ago quarter. The company noted that the year-ago number included a $102 million impact from the Wētā FX termination and $21 million in consumer credits.

Unity said it generated free cash flow of $106 million in the fourth quarter, up from $61 million last year.

CEO Matt Bromberg said, “The company’s fourth-quarter results meaningfully exceeded expectations on both revenue and profit, underscoring our progress in building a new Unity.”

Unity expects fiscal year 2025 first-quarter revenue of $405 million to $415 million and adjusted EBITDA of $60 million to $65 million. The revenue guidance fell short of the $440.07-million consensus estimate.

However, Bromberg exuded confidence about the future, citing the successful launch of Unity 6, the appeal of Unity’s new pricing model, and the progress it is making in artificial intelligence (AI)  for our advertising customers.

 Unity stock was among the top five trending tickers on the platform.

A watcher said the stock is a great ‘value play’ and pointed to CEO comments on the call about the company’s new ad model going into effect in the first quarter and boosting revenue growth.

Another user noted the wild swing in premarket and hoped AI could add value to the company’s systems and offerings.

Unity stock erased the nearly 10% drop in the early premarket session and turned higher, rising over 17% to $25.15. However, the stock is down 4.5% year-to-date (YTD).

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