Revenue Miss and Forecast Lowering

Unity Software Inc. shares took a hit in late trading on Monday after the app-monetization company fell short with its latest results and forecasts.

The company projected $415 million to $420 million in fiscal first-quarter revenue for its "strategic portfolio", while indicating that its non-strategic portfolio will not play a significant role in revenue moving forward. However, the FactSet consensus had expected $534 million in revenue.

Similarly, for the full year, Unity anticipates revenue between $1.7 billion and $1.8 billion for the strategic portfolio, falling below analysts' forecast of $2.3 billion.

Earnings Forecast and Performance

In the extended trading session on Monday, shares plummeted more than 17%.

The company's forecast for adjusted Ebitda in the fiscal first quarter was $45 million to $50 million, with a full-year outlook of $400 million to $425 million. This starkly contrasts with analysts' expectations of $112 million for the quarter and $647 million for the year.

Despite recording a fiscal fourth-quarter net loss of $254 million, or 66 cents per share, an improvement from the preceding year's loss of $288 million or 82 cents per share, Unity still fell short of analysts' expectations, who had predicted a 46-cent loss per share.

Revenue Figures

Unity reported revenue totaling $609 million, surpassing analysts' estimates of $551 million. The company highlighted that revenue would have been $510 million if excluding a specific transaction resulting in Wētā FX's deferred revenue release.

Company Reset Phase

In its shareholder letter, Unity disclosed that it is amid a "two-phase company reset" geared towards achieving sustainable success with both customers and shareholders. With the reconstruction of the portfolio and cost structure mostly completed, the company emphasized that its primary focus is now on reigniting revenue growth.

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