Unity posts profitable quarter with lukewarm outlook

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Unity released its financial results for the fourth quarter of 2022 this week. According to the company's results, it had a profitable quarter for the first time as a public company. It also posted $451 million in revenue for the quarter, as well as $1.39 billion for the full year. That said, its future earnings forecast disappointed analysts who had more solid expectations for the year ahead.

According to Unity, fourth-quarter revenue grew 43% YoY for the quarter and 25% YoY from 2021. Across its two divisions, Unity's creative solutions grew 41 % year-on-year. year on year with $198 million, while Grow Solutions was up 12% year on year with $253 million. The company also said its quarterly earnings were above estimates for the previous quarter.

However, not all results have been favorable. Unity admitted in its shareholder letter that the mobile advertising market was weak in 2022. Its shareholder letter states that the in-game advertising market "decreased year-over-year in the third and fourth quarters. , with some game publishers having become more conservative with their advertising". spending as economies slow. »

Luis Felipe Visoso, CFO of Unity, also mentioned the January layoffs. These layoffs, which affected nearly 300 employees, were the second in six months. The company also laid off more than 200 employees last June as part of a quest to "realign some of our resources to better focus and support our long-term growth."

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Visoso said on the call that the January layoffs were part of an overall cost reduction effort, adding that they were "very selective in any future new hires we add to the business, by being more focused on our investments and reducing the number of beds we make at Unity, raising the cost bar, and we've turned every stone once or twice and found new opportunities in a few places.”

Shares of the company also fell after the earnings release as it cut its revenue forecast for the first quarter of 2023. Specifically, it expects revenue of between $470 million and $480 million. According to MarketWatch, some analysts had estimated revenue closer to $521 million, about 10% higher than Unity's projections. Unity stock fell nearly 20% the day it announced its financial results.

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