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Wedbush analysts reiterated their outperform rating, which is their way of saying they expect the stock to do better than the broader market. They set a price target of $63, which is higher than the current average analyst target of $54. This move follows the company's recent report showing its first-ever quarterly profit. While a single analyst's target doesn't change the business, it shows that professional researchers are gaining confidence in the company's shift from a loss-making software tool to a profitable advertising and industrial platform.
Source: Wedbush
After Unity Software reported its November results, we updated our fair value and raised our quality score to 3.7. We increased our ratings for its sales growth and the profit it makes on its investments, while lowering our rating for how well the company is protected from competitors. We have added the company's financial partnerships and its artificial intelligence collaboration with large cloud providers to the growth drivers we track. We also reset our projections for when the company would turn a profit and how fast its advertising business can grow.
Unity reported its first-ever quarterly profit since its 2020 IPO, earning $0.44 per share on $622 million in revenue. This far exceeded the $0.57 billion analysts expected. The standout performer was the advertising and monetization arm, which grew 90 percent from a year ago. This segment helps game developers find new players and earn money from their apps, and its rapid growth suggests the company's new machine learning models are working.
The core game engine business, where developers build the actual games, also grew a steady 11 percent. Management expects this momentum to continue, forecasting even higher revenue of about $687 million for the final quarter of the year. After a difficult period of restructuring and leadership changes, these results show the company is successfully turning its massive market share into a profitable business.
See the full quarter, and how our tracked metrics did
Source: 8-K filing
Unity is partnering with PvX, a firm that specializes in financing user acquisition, which is the money studios spend on ads to get people to download their games. Through this deal, developers using Unity's engine can get access to cash to grow their player base without having to sell ownership stakes in their companies.
This is a smart move for Unity because its business relies on a healthy ecosystem of successful games. By helping its developers solve the high cost of marketing, Unity makes it more likely that those games will scale up and stay on its platform. This also creates more opportunities for Unity's own advertising business to earn money as these developers spend their new capital on ads.
Source: Business Wire
Unity is scheduled to report its latest quarterly results on Thursday, November 5. Analysts expect the company to bring in about 570 million dollars in revenue and a small profit of roughly 3 cents per share. This update is important because it will show how well Unity is recovering after its recent business reset. We will be looking for signs that its advertising segment is growing again and whether more industrial companies are using its 3D software for non-gaming projects.
Management has struggled to set a reliable bar in the past, but recent blowout results suggest their new advertising technology is finally outrunning their own forecasts.
| Expectation | |
|---|---|
| EPS | $0.31 |
| Revenue | $690M |
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