Unity stock falls after gaming software company forecasts slowing revenue growth

Unity Software shares fell as much as 14% in extended trading on Thursday after the video game engine developer provided a forecast that failed to meet analysts’ most optimistic estimates

Here’s how the company did in the fourth quarter:

• Earnings: Loss of 10 per share, adjusted, vs. loss of 14 cents per share as expected by analysts, according to Refinitiv.
• Revenue: $220.3 million, vs. $204.23 as expected by analysts, according to Refinitiv.

Revenue increased 39% from a year earlier, compared with 53% growth in the prior quarter, according to a statement.

While fourth-quarter results topped estimates, the company’s forecast was disappointing for investors that bought into the stock rally. Since its IPO in September at $52 a share, Unity has almost tripled in value to $149.81 at Thursday’s close.

Unity said it expects $210 million to $220 million in first-quarter revenue, which would imply about 29% annualized growth. At the middle of the range, the forecast is about inline with the $214.7 million consensus among analysts polled by Refinitiv.

For all of 2021, Unity said it sees $950 million to $970 million in revenue. The middle of that range, $960 million, would represent 24% growth and is just ahead of the $956.1 million average analyst estimate.

The company said in the statement that, “Our goal is to build a company that delivers revenue growth of approximately 30% over the long run.”

In the latest quarter, Unity said it was acquiring RestAR, a company whose artificial-intelligence software helps brands make 3D product renderings with mobile devices. The company also announced a deal with Snap that sought to make Unity advertising inventory in apps and games available to companies that advertise with Snap.

Excluding the after-hours move, Unity shares are down 3% so far this year, while the S&P 500 index is up about 3% over the same period.

Executives will discuss the results with analysts on a conference call starting at 5 p.m. Eastern time.

This is breaking news. Please check back for updates.

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