Unity beats expectations with Q4 revenue of $315.9M, up 43%

Game engine maker Unity reported earnings and revenues that beat Wall Street’s expectations for the fourth quarter ended December 31.

The company’s stock rose 16% in after-hours trading to $106.30 a share, up 14%. The company’s closing market valuation was $27 billion.

The San Francisco-based company also forecast better-than-expected earnings for the year ahead.

In Q4, Unity lost an adjusted 5 cents a share on sales of $315.9 million. Analysts had expected Unity to lose 7 cents a share on sales of $295.5 million. In the year-earlier period, it lost 10 cents a share on sales of $220.3 million.

For the current quarter, Unity forecast sales of $317.5 million, up 35% from the same period last year and matching Wall Street’s target. That’s based on the midpoint of its outlook.

“We closed out the quarter with great momentum,” said John Riccitiello, CEO of Unity, in a call with analysts.

For full year 2022, Unity expects revenue of $1.5 billion, up 35% from a year ago. Analysts expected $1.43 billion.

Unity makes game engine tools for developing and monetizing games and apps for mobile devices, PCs, and consoles. It has also expanded into sports broadcasts, movie and TV show production, and commercials.

Unity said it sees an expanded total available market of $45 billion, up from $29 billion in 2020, as demand for immersive, real-time 3D experiences grows. Unity has hit 40%-plus growth in six of the last eight quarters.

“Big market, rapidly growing, good tailwinds,” Riccitiello said.

He said non-gaming business is growing even faster than games, and he said Unity extended its market share lead over rivals (like Epic Games) in virtual reality and mobile games.

Unity Create Solutions Q4 revenue increased 49% from 2020; full-year revenue increased 41% from a year ago. And Unity Operate Solutions Q4 revenue increased 45% from 2020; full-year revenue increased 51% from a year ago. Unity is now on two dozen platforms, Riccitiello said.

Unity said 1,052 customers each generated more than $100,000 of revenue in the trailing 12 months as of December 31, 2021, compared to 793 as of December 31, 2020.

Facebook said that Apple’s focus on privacy over targeted ads would cost the company $10 billion in revenues this year. But Riccitiello said the company still executed despite the challenging environment Identifier for Advertisers (IDFA) changes at Apple

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