Unity Software Stock Is Falling Tuesday: What's Going On?

Unity Software Inc U shares are trading lower Tuesday on the heels of the company’s fourth-quarter financial results.

What Happened: Unity’s fourth-quarter revenue increased 35% year-over-year to $609 million, which beat the consensus estimate of $562.71 million. The company reported a quarterly loss of 66 cents per share, which missed analyst estimates for a loss of 42 cents per share, according to Benzinga Pro.

Create Solutions revenue came in at $290 million, up 47% on a year-over-year basis. Grow Solutions revenue totaled $319 million, up 26% year-over-year. Cash provided by operations was $72 million in the quarter and free cash flow totaled $61 million.

"We are focused on delivering value for our customers. We believe that we are making the right interventions to win with customers for many years to come through a more focused portfolio, a leaner cost structure, and innovation that customers value," the company said in a letter to shareholders.

Unity said it sees first-quarter strategic portfolio revenue in the range of $415 million to $420 million. The company anticipates full-year 2024 revenue of $1.76 billion to $1.8 billion for its strategic portfolio business.

On the conference call following the print, the company said it expects to see strong financial performance in the back half of the year after it completes a strategic portfolio reset.

Following the company’s quarterly results, Piper Sandler analyst Brent Bracelin upgraded Unity from Underweight to Neutral and lowered the price target from $35 to $30.

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U Price Action: Unity shares were down 13.3% at $28.65 at the time of publication, according to Benzinga Pro.

Photo: Joshua Woroniecki from Pixabay.