Unity Software (U) Preparing to Release Q2 Earnings: What Can We Expect?

Unity Software is set to release its second-quarter earnings report, and analysts are eagerly awaiting the results. The software company, known for its popular video game development engine, has been experiencing strong growth due to increased demand for gaming and virtual reality products. Unity’s robust platform serves as a go-to for game developers and offers various revenue streams, including advertising and subscription services. Experts expect the company to deliver solid numbers, driven by a surge in digital content consumption during the pandemic. Additionally, Unity’s recent partnerships and acquisitions are predicted to contribute to its Q2 success..

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Unity Software U is set to report second-quarter 2023 results on Aug 2.

The company expects second-quarter revenues between $510 million and $520 million, up 72-75% year over year. The Zacks Consensus Estimate is pegged at $514.18 million, indicating an increase of 73.1% from the year-ago quarter’s reported figure.

The consensus mark is pegged at a loss of 6 cents per share, reflecting no change in the past 30 days.

Unity’s earnings beat the Zacks Consensus Estimate twice in the trailing four quarters (matched once and missed once). It delivered an earnings surprise of 32.5%, on average.

Unity Software Inc. Price and EPS Surprise

Unity Software Inc. price-eps-surprise | Unity Software Inc. Quote

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Factors Likely to Influence Second-Quarter Results

Unity’s second-quarter performance is expected to have benefited from increasing demand for its software solutions from content creators like game developers, architects, automotive designers and filmmakers.

The strong adoption of U’s subscription-based Create Solutions and Operate Solutions is likely to have driven top-line growth in the to-be-reported quarter.

Steady demand for interactive, real-time 2D and real-time 3D (RT3D) content for mobile phones, tablets, PCs and virtual reality devices is likely to have aided the company’s top line.

Acquisitions of Parsec and SyncSketch, which enable cloud-based, secure collaboration between separated creators and artists, are expected to have contributed to U’s top-line growth in the to-be-reported quarter.

Launch of Artificial Intelligence (AI) Platforms & Marketplace to Drive Q2 Revenues

Unity has been expanding its platform by introducing new product capabilities. This is likely to have been a major growth driver in customer growth.

In the first quarter, the number of customers who contributed more than $100,000 of revenues increased from 1,083 as of Mar 31, 2022, to 1,322 as of Mar 31, 2023. For the second quarter, the Zacks Consensus Estimate for the number of customers expected to generate more than $100,000 of revenues is pegged at 1,356.

In the second quarter, this Zacks Rank #3 (Hold) company launched Unity Sentis and Unity Muse, two new AI platforms designed to make creators more productive and their RT3D experiences more engaging. Together, both Unity Muse and Unity Sentis leverage AI to enhance the interactivity of gameplay and RT3D powered experiences, while accelerating creative workflows. You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.

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Unity competes with big gaming giants, which have already started investing in AI, including Tencent TCEHY, NetEase NTES and The NFT Gaming Company NFTG.

Chinese video game studios are rushing to invest in AI-generated content. NetEase, the second largest video game service provider has announced ChatGPT-like service in Justice Online, its flagship mobile game. Tencent is already using AI to improve gaming contents like character movements in its games.

The NFT Gaming Company has acquired AI assets of Voxpow and will integrate the same in its gaming portfolio. Voxpow is known for its AI-powered speech-recognition technology with natural language processing that identifies more than 100 languages and variants.

Unity also launched a dedicated AI marketplace in the Unity Asset Store that features curated solutions to accelerate AI-driven game development and gameplay enhancements. With the company’s marketplace, developers will be able to use technology like artwork generator to instantly create content.

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Unity Software is expected to announce its second-quarter 2023 earnings on August 2. The company anticipates revenues between $510 million and $520 million, representing a year-over-year growth of 72-75%. The Zacks Consensus Estimate forecasts revenues of $514.18 million, a 73.1% increase from the previous year. Unity’s performance in Q2 is likely to be driven by strong demand for its software solutions, particularly from content creators in various industries. The company’s recent acquisitions and the launch of AI platforms and marketplace are also expected to contribute to its revenue growth.

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