Shares of Unity Technologies (U) plunged over 15% in after-hours trading Monday after the company’s FQ4 earnings and guidance substantially missed Wall Street’s expectations.
The video game software developer announced a loss per share of $0.66, notably worse than the earnings per share (EPS) of $0.22 that analysts expected. Revenue came in at $609 million, surpassing the anticipated projection of $551.57 million.
For the first quarter of 2024, Unity Software projects revenues to be in the range of $415 to $420 million, a far cry from the $536.1 million estimated by analysts.
Looking ahead to the full year of 2024, the company anticipates revenue to fall between $1.76 billion and $1.8 billion, also well below the consensus estimates of $2.32 billion.
During the fourth quarter, Unity and the visual effects company Wētā FX decided to end their service agreement and instead opted for a perpetual license arrangement, allowing Wētā FX to continuously use Unity's Wētā tools internally.
This change contributed an additional $99 million to U’s revenue, factoring in the recognition of deferred revenue from Wētā FX. Excluding this impact, Unity's revenue would have stood at $510 million, marking a 2% decline from the previous year on a pro-forma basis, the company said.
"Going forward, we will guide revenue only for our Strategic Portfolio, as we expect that the non-Strategic portfolio will not be material for the year,” Unity said in a statement.
“We will report any non-strategic revenue separately so that you can track our underlying performance. In 2024, we expect another year of high engagement from gamers and new game launches,” it added.