Unity Software (U) Beats Expectations for Q1

Unity Software Inc (NYSE:U), founded in 2004, operates a leading videogame development platform. The company offers a suite of advanced software tools, helping developers create video games. It also helps smaller studios in the distribution process. Unity generates most of its revenue by receiving its share from the sale of the games developed using its platform. The company went public last year in September by pricing its shares at $52 apiece.

The video game software developer recently announced better-than-expected financial results for the first quarter. Unity reported a loss of 39 cents per share for the three months ended March 31, as compared to a loss of 21 cents per share in the year-ago quarter. On an adjusted basis, the company reported a loss of 10 cents per share, narrower than a loss of 12 cents per share estimated by analysts.

Revenue for the quarter climbed 41 percent on a year-over-year basis to $234.8 million, beating the consensus forecast of $216.6 million. Stifel increased its rating for Unity stock from “Hold” to “Buy” following its Q1 results. The research firm also issued a price target of $125 per share for the stock.

Speaking on the results, CEO John Riccitiello said, “Our first quarter results are reflective of the powerful transition from linear 2D to real-time 3D, which is one of the most important changes in how people interact with technology. We believe that real-time 3D will continue to grow at an accelerated pace and achieve massive scale.”

Looking forward, Unity expects revenue in the range of $240 million to $240 million for the second quarter, translating to year-over-year growth of 30-33 percent. Unity shares slightly moved down in the mid-day trading Wednesday despite beating analysts’ expectations for Q1.

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