Unity’s Shares Plummet as Firm Refuses to Provide Guidance for Q4

Unity Software (NYSE: U), the company behind the namesake game development software, reported third-quarter revenue that missed expectations and did not provide guidance for Q4 2023. The move suggested a lack of vision, urging investors to jump ship and sending Unity’s shares down 14.9% in the Friday premarket. 

Unity Misses Q3 Revenue Estimates

Shares of Unity Software nosedived almost 15% in the market pre-open on Friday after the video game software developer posted worse-than-expected Q3 revenue and decided not to offer an outlook for the fourth quarter.

The company reported a loss per share of 32 cents for the third quarter on revenue of $544.2 million. That was lower than Wall Street’s expectations of $553.7 million, according to LSEG data.

Year-over-year, revenue grew 69%, fueled largely by Unity’s acquisition of mobile advertising company ironSource. Net loss in the quarter narrowed to $124.1 million from $250 million in the year-ago period. 

However, the clear investors’ reaction was likely due to Unity opting not to offer guidance for Q4 2023. “A lot of people are grumpy about that,” said James M. Whitehurst, the newly appointed CEO of Unity who succeeded John Riccitiello. 

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Unity Stock Down 30% Since Pricing Fiasco; Layoffs an Increasing Possibility 

The premarket drop marks the latest of many ups and downs Unity experienced in the stock market this year.

The stock experienced a turbulent ride after the game engine software maker announced a series of price changes in mid-September. In the initial announcement, Unity unveiled a new fee that would charge game developers each time one of their games was downloaded.

Expectedly, the move drew significant outrage from the developers. The company tried to recall some pricing changes a few weeks later, but that did little to reduce the dissent. This sentiment was reflected in Unity’s stock market performance, with its shares dropping more than 30% since September 12. 

A month later, Unity’s former CEO, John Riccitiello, announced his decision to retire after running the firm for nine years. This was the first quarterly report Unity published under its new boss, Whitehurst. To offset the effects of the pricing debacle, the new management is working on a strategy that may involve discontinuations, office space reductions, and layoffs. In May, Unity said it would trim its workforce by 600 employees, or 8% of its total manpower. 

Do you think the new management will successfully stage a turnaround for Unity? Let us know in the comments below.