What happened
Shares of Unity Software (U 3.97%) rose 60.2% in November, according to data from S&P Global Market Intelligence. The video game development engine stock benefited from a strong quarterly report and momentum for the broader market.
Unity published third quarter results on Nov. 12, posting sales and earnings that topped the average analyst estimates. The company posted a non-GAAP (adjusted) loss per share of $0.09 on sales of $200.8 million, while the average analyst estimate had targeted a loss of $0.15 per share on sales of $186.9 million.
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So what
Unity's revenue climbed roughly 53% year over year in the third quarter, and the company posted a loss from operations of $141.7 million -- 70.6% of sales. In the prior-year quarter, the company posted an operating loss of $41.7 million -- or 31.9% of revenue for the period. However, the proportional surge for the company's operating loss as a percentage of revenue stemmed from a one-time charge related to the company's recent initial public offering (IPO). Overall, it was a strong quarter for the game engine company.
The stock also appears to have gotten a boost from favorable analyst coverage. DA Davidson analyst Franco Granda published a note on the stock on Nov. 16, maintaining a "buy" rating on the stock and raising his one-year price target from $100 to $115 per share.
Now what
Unity Software has continued to climb in December. The company's share price has risen 2.5% in the month so far.
Unity is guiding for sales to be between $200 million and $204 million in the fourth quarter and an adjusted operating loss between $35 million and $40 million. Management expects revenue for the full year to come in between $752 million and $756 million and an adjusted operating loss between $66 million and $71 million.
Unity has a market capitalization of roughly $41 billion and is valued at roughly 53 times this year's expected sales.
