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Why I'm Bullish About Unity's Earnings

By Jose Najarro – Aug 11, 2021 at 11:00AM

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Unity reported a strong revenue beat, but is that the only bullish case?

On Aug. 10, Unity Software (U -1.33%) reported second-quarter earnings after the market closed. In today's video I share some strong points on Unity's earnings and what yellow flags investors should be aware of. Here are some highlights from the video: 

  1. Unity reported 48% year-over-year (YOY) revenue growth driven by 31% YOY revenue growth in its "create solutions" segment and 63% YOY revenue growth in its "operate solutions" segment. Investors should recall that the operate solutions segment brings in more than 50% of total revenue, and this segment's strong growth could support a bullish case. 
  2. Unity customers are growing both inside and outside the gaming market. Outside the gaming market, Unity added three new automotive manufacturers and several consumer brands. Unity ended the quarter with 888 customers that generate more than $100,000 of revenue in the trailing 12 months, compared to 716 customers a year ago and 837 customers a quarter ago. 
  3. Unity has again increased its yearly guidance due to its strength this quarter. Management now expects YOY revenue growth of 36% at the midpoint of its guidance, which is an increase from its previous guidance of roughly 30% revenue growth. 

Click the video below for my full thoughts and analysis. 

*Stock prices used were the after-hour prices of Aug. 10, 2021. The video was published on Aug. 10, 2021.

Jose Najarro owns shares of Unity Software Inc. The Motley Fool owns shares of and recommends Unity Software Inc. The Motley Fool has a disclosure policyJose is an affiliate of The Motley Fool and may be compensated for promoting its services. If you choose to subscribe through his link, he will earn some extra money that supports his channel. His opinions remain his own and are unaffected by The Motley Fool.

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