Cloud Stocks: Unity Software Focuses On Digital Marketing With RestAR Acquisition

According to a recent Research and Markets report, the global gaming market is estimated to grow at a CAGR of over 9% to reach $287.1 billion by 2026 from $167.9 billion in 2020. San Francisco-based Unity Software (NYSE: U) is a leading game development platform that continues to show stellar performance.

Unity’s Financials

For the fourth quarter of the year, its revenues grew 39% to $220.3 million, significantly ahead of the market’s forecast of $204.23 million. Adjusted loss was $0.10 per share, surpassing market estimates of a loss of $0.14 per share.

Customers that generated more than $100,000 of revenue in the trailing twelve months as of December 31, 2020, grew to 793 compared to 600 a year ago. The dollar-based net expansion rate improved to 138% compared to 133% a year ago.

For the year, Unity’s revenues grew 43% to $772.4 million, and net loss was $1.66 per share.

Unity expects to end the current year with revenues of $950-$970 million. It forecast revenues of $210-$220 million for the current quarter. The market was looking for revenues of $214.7 million for the quarter and $956.1 million for the year.

The current lockdown conditions are expected to continue to drive gaming revenues, but it expects a short-term impact in advertising revenues on account of Apple’s privacy policy change. Currently, app developers and other players leverage Apple’s identifier for advertisers (IDFA), a unique string of letters and numbers on every Apple device, to target mobile ads and track ad performance metrics. Apple’s new privacy update will force these app makers to ask permission from the user before they can access a user’s IDFA. The industry believes that a significant portion of users will deny the request, making targeted advertising less effective.

Unity believes that the changes to IDFA will impact the way mobile game developers attract new customers and maximize monetization from these users. Other players like Facebook and Snap have also expressed their concerns. But as consumers become more aware of privacy concerns, Apple and other device providers will need to continue to address the issue – albeit at the risk of advertising revenues of other companies.

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Disclosure: All investors should make their own assessments based on their own research, informed interpretations and risk appetite. This article expresses my own opinions based on my own ...

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