Unity (U) Q4 2023 earnings report

Unity Software shares plummeted 17% in extended trading on Monday after the gaming software company issued weaker-than-expected guidance for the current quarter.

Here’s how the company did:

• Earnings: Loss of 66 cents per share. The results may not be comparable to the 46-cent loss predicted by analysts, according to LSEG, formerly known as Refinitiv.
• Revenue: $609 million vs. $596 million as expected by analysts, according to LSEG.

Unity said it expects first-quarter adjusted earnings of $45 million to $50 million, below the $113 million that analysts were expecting.

The company said that going forward it would only provide revenue guidance for its “strategic portfolio,” which includes its engine, cloud and monetization business units. Unity said in January that it would cut 1,800 jobs as part of a corporate restructuring plan that included ending efforts deemed to be “non-strategic,” like professional services and the Luna marketing business.

The company said that first-quarter guidance for its strategic portfolio would come in between $415 million to $420 million. Analysts were expecting total first-quarter revenue of $534 million.

“We are right sizing our cost structure to grow from a healthy financial position,” Unity said in a shareholder letter. “This includes the previously announced reduction of approximately 25% of our workforce, in addition to cloud hosting cost savings, office footprint consolidation, and software license optimization.”

Unity said fourth-quarter revenue jumped 35% from $451 million a year earlier, while its net loss narrowed to $254 million from close to $288 million a year ago.

In October, John Riccitiello retired as Unity’s CEO and was replaced by former Red Hat chief James Whitehurst as interim CEO. Riccitiello’s departure came shortly after Unity announced a pricing change that upset several video game developers.

“We are committed to increasing shareholder value through revenue growth, margin expansion, and free cash flow generation and we believe that the steps we have taken in the past few months position us for success in 2024 and beyond,” Unity said in its shareholder letter.

WATCH: Unity Software cutting 25% of workforce