Unity Software’s stock skids 15% on revenue miss, uncertain outlook

Unity Software Inc.’s stock fell about 15% in extended trading Thursday after the company reported a revenue miss and withheld from offering guidance.

“Our results in the third quarter were mixed,” Unity
U,
-3.15%

said in a letter to shareholders. “While revenue came in within guidance, we believe we can do better.”

The beleaguered game-engine software company has been whipsawed by a series of missteps and departures. In September, it announced new fees based on the number of people who install games built with Unity’s editor software — only to backtrack and revamp its plan following a chorus of complaints that dented the stock. Last month, John Riccitiello announced he was retiring as chief executive, effective immediately.

“While we did not expect the introduction of the fees to be easy, the execution created friction with our customers and near-term headwinds,” Unity said in the letter. “We expect the impact of this business-model change to have minimal benefit in 2024 and ramp from there as customers adopt our new releases.”

Unity executives are mulling several new strategies that include layoffs, a reduction in office space and product discontinuations, but it did not offer timing or guidance, according to the shareholder letter.

Unity reported a fiscal third-quarter net loss of $125.3 million, or 32 cents a share, compared with a net loss of $250 million, or 84 cents a share, in the year-ago quarter.

Revenue was $544.2 million, up from $322.9 million a year ago.

Analysts surveyed by FactSet had expected revenue of $554 million.

Shares of Unity have dipped 12% this year. The broader S&P 500 index
SPX,
-0.81%

is up 13% in 2023.

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