Revenue Performance - Revenue for Q1 2025 was $435 million, a decrease of 6% year-over-year from $460 million in Q1 2024[4] - Create Solutions revenue was $150 million, down 8% year-over-year, while Grow Solutions revenue was $285 million, down 4% year-over-year[4][5] - Revenue for Q1 2025 was $435 million, a decrease of 5.5% compared to $460.38 million in Q1 2024[29] Net Loss and Earnings - Net loss for the quarter was $78 million, significantly improved from a net loss of $291 million in Q1 2024, resulting in a net loss margin of (18)% compared to (63)%[7][8] - Basic and diluted net loss per share was $0.19, compared to $0.75 for the same period in 2024[6][8] - GAAP net loss for Q1 2025 was $77.91 million, significantly improved from a net loss of $291.48 million in Q1 2024[29] EBITDA and Profit Margins - Adjusted EBITDA for Q1 2025 was $84 million, with a margin of 19%, up from $79 million and a margin of 17% in Q1 2024[10] - Adjusted EBITDA for Q1 2025 was $83.94 million, representing an increase of 6.1% from $78.52 million in Q1 2024[29] - GAAP gross profit for Q1 2025 was $321.04 million, compared to $315.99 million in Q1 2024, resulting in a GAAP gross margin of 74%[29] - Adjusted gross profit for Q1 2025 was $359.10 million, slightly down from $376.58 million in Q1 2024, maintaining an adjusted gross margin of 82%[29] Cash Flow and Operating Activities - Net cash provided by operating activities was $13 million, a turnaround from net cash used of $7 million in Q1 2024[9][10] - Free cash flow for the quarter was $7 million, compared to negative $15 million in Q1 2024[10] - Free cash flow for Q1 2025 was $7.31 million, a recovery from a negative free cash flow of $14.56 million in Q1 2024[33] - As of March 31, 2025, cash and cash equivalents totaled $1,552 million, an increase of $24 million from $1,528 million at the end of 2024[12] Guidance and Future Outlook - Q2 2025 revenue guidance is projected to be between $415 million and $425 million, with adjusted EBITDA expected to be between $70 million and $75 million[15] - Unity expects to enhance its platform and accelerate product innovation, with a focus on opportunities in the AR and VR gaming market[34] Expenses - Research and development expenses for Q1 2025 were $220.63 million, down from $282.73 million in Q1 2024, representing 51% of revenue[31] - Sales and marketing expenses for Q1 2025 were $162.01 million, reduced from $230.63 million in Q1 2024, accounting for 37% of revenue[31] Market Positioning - The early success of Unity Vector and strong demand for Unity 6 highlight the company's strategic positioning in the game development market[2]

Core Insights - The article emphasizes the importance of earnings acceleration in driving stock prices higher, indicating that stocks often experience an increase in earnings before their prices rise [1][3]. Earnings Acceleration Definition - Earnings acceleration refers to the incremental growth in a company's earnings per share (EPS), specifically when the quarter-over-quarter earnings growth rate increases over time [2]. Importance of Earnings Acceleration - Unlike earnings growth, which may already be reflected in stock prices, earnings acceleration can identify stocks that have not yet attracted investor attention, leading to potential price rallies [3]. Earnings Growth Trends - An increasing percentage of earnings growth suggests a fundamentally sound company, while a stable or decreasing percentage may indicate consolidation or a slowdown, potentially dragging prices down [4]. Screening Parameters - The article outlines specific screening parameters to identify stocks with earnings acceleration, including: - Last two quarter-over-quarter EPS growth rates exceeding previous periods [5]. - Projected EPS growth rates for the upcoming quarter expected to exceed prior periods [6][7]. Top Stocks Identified - The screening process narrowed down to four stocks, with three highlighted: - **Lam Research Corporation (LRCX)**: Expected earnings growth rate of 32.8% for the current year, Zacks Rank 2 (Buy) [8]. - **Unity Software Inc. (U)**: Anticipated earnings growth rate of 34.5% for the current year, Zacks Rank 1 (Strong Buy) [10]. - **Gulfport Energy Corporation (GPOR)**: Expected earnings growth rate of 85.3% for the current year, Zacks Rank 1 (Strong Buy) [11].

Group 1 - Unity Software Inc. has reached a key level of support and recently broke out above the 50-day moving average, indicating a short-term bullish trend [1] - The stock has moved 26.7% higher over the last four weeks and is currently rated as a Zacks Rank 1 (Strong Buy) [2] - Positive earnings estimate revisions have occurred, with one higher estimate compared to none lower for the current fiscal year, and the consensus estimate has also increased [2][3] Group 2 - The combination of positive technical factors and earnings estimate revisions suggests that investors may want to monitor Unity Software Inc. for potential gains in the near future [3]

Market Overview - The S&P 500 index is down approximately 9.5% from its high, while the Nasdaq Composite index has fallen 13.5% [1] - The stock market has experienced significant volatility, which may present investment opportunities in companies with strong long-term potential [2] Unity Software - Unity Software provides tools for developers to create video games and digital content, along with digital advertising tools [3] - Despite being a leader in the game-engine services space, Unity's stock has underperformed, down about 89% from its all-time high shortly after its IPO in 2020 [4][5] - In Q4, Unity's sales declined 25% year over year to approximately $457 million, with a net loss of $127 million [6] - However, revenue from Unity's core strategic portfolio increased 4% year over year to $442 million, indicating potential for recovery [7] - The company is undergoing restructuring and strategic shifts, including changes to its digital advertising network and the rollout of a new AI platform [7] - Unity's shares are considered a worthwhile buy ahead of its first-quarter earnings release on May 7 [8] Kenvue - Kenvue, a spinoff from Johnson & Johnson, has not performed as expected, down more than 15% from its all-time high [9] - The company reported 1.9% organic sales growth in its self-care segment and 4.1% growth in essential health, but a decline of 1.9% in the skin health and beauty segment [11] - Kenvue increased its marketing budget to 10.6% of sales in 2024, but recovery is slower than anticipated [12] - There are signs of improvement in the skin health and beauty segment, with organic sales rising 2.6% in Q4 2024 [13] - Kenvue trades at just below 21 times estimated free cash flow for 2025, close to fair value for a mature consumer staple [14] - The stock offers a 3.6% dividend yield, making it attractive for value investors despite low growth prospects [14]

Michael Wiggins De Oliveira is an inflection investor. This means buying into cheap companies at the moment when their narrative is changing and the business is on a path toward becoming significantly more profitable over the next year.With a focus on tech and “the Great Energy Transition (including uranium)”, Michael runs a concentrated portfolio with approximately 15 to 20 stocks and an average holding period of 18 months. Through his 10+ years analyzing countless companies, Michael has accumulated outsta ...

Industry Overview - The Internet Software and Services sector is experiencing growth due to increased IT spending on hybrid operating environments and the high penetration of mobile devices, prompting businesses to invest in web-based infrastructure, applications, and security software [1][3] - The Internet Software industry is ranked in the top 37% of Zacks Industry Rank, indicating an expectation to outperform the market in the next three to six months [2] Growth Drivers - The industry is benefiting from the global digital transformation and the rapid adoption of Software as a Service (SaaS), which provides flexible and cost-effective application delivery [3] - There is a growing demand for web-based cybersecurity software due to the need to secure cloud platforms against cyber-attacks, leading to increased demand for performance management monitoring tools [5] Company Highlights Affirm Holdings Inc. (AFRM) - Affirm is projected to achieve revenues between $3.13 billion and $3.19 billion in fiscal 2025, driven by growing active merchant numbers and partnerships with companies like Apple Pay [11] - The expected revenue and earnings growth rates for Affirm are 36.9% and 96.4%, respectively, for the current year, with a short-term price target indicating a potential upside of 112.4% from the last closing price of $40.49 [12][13] Five9 Inc. (FIVN) - Five9 offers intelligent cloud software for contact centers, benefiting from the adoption of AI tools, with a focus on personalized AI agents [14][16] - The expected revenue and earnings growth rates for Five9 are 9.8% and 5.7%, respectively, with a short-term price target suggesting a maximum upside of 190.4% from the last closing price of $23.07 [17] Unity Software Inc. (U) - Unity provides a platform for creating interactive, real-time 3D content across various devices, catering to developers and content creators [18][19] - The expected revenue and earnings growth rates for Unity are -2% and 31%, respectively, with a short-term price target indicating a potential upside of 82% from the last closing price of $19.23 [20][21] Olo Inc. (OLO) - Olo operates an open SaaS platform for restaurants, facilitating digital ordering and payment solutions, enhancing guest experiences [22][23] - The expected revenue and earnings growth rates for Olo are 17.5% and 40.9%, respectively, with a short-term price target suggesting a maximum upside of 62.1% from the last closing price of $6.17 [25] StoneCo Ltd. (STNE) - StoneCo provides financial technology solutions for electronic commerce in Brazil, distributing through proprietary Stone Hubs [26] - The expected revenue and earnings growth rates for StoneCo are 4.1% and -6.7%, respectively, with a short-term price target indicating a potential upside of 90.8% from the last closing price of $11.53 [27][28]

Core Insights - The individual has retired after over 43 years in investment research, now operating independently to provide actionable investment insights [1] - The focus is on rules and factor-based equity investing strategies, emphasizing the use of numbers to inspire human intelligence-driven investment stories rather than solely relying on statistical studies [1] - The individual combines factor analysis with classic fundamental analysis to uncover the true story of companies and their stocks, highlighting the importance of future potential over past performance [1] Experience and Background - The individual has extensive experience covering a wide range of stocks, including large cap, small cap, micro cap, value, growth, and income [1] - Previous roles include managing a high-yield fixed-income fund and conducting research on quantitative asset allocation strategies, contributing to the development of Robo Advising [1] - The individual has authored two books on stock selection and analysis and has a passion for investor education, having conducted numerous seminars [1]

Core Viewpoint - Unity Software Inc. (U) is experiencing significant selling pressure, with a 20.1% decline over the past four weeks, but is now positioned for a potential trend reversal as it enters oversold territory, supported by analyst expectations of better earnings than previously predicted [1]. Group 1: Technical Indicators - The Relative Strength Index (RSI) is utilized to identify oversold stocks, with a reading below 30 indicating oversold conditions [2]. - Unity's current RSI reading is 28.83, suggesting that the heavy selling pressure may be exhausting, indicating a potential trend reversal [5]. Group 2: Fundamental Indicators - There is a strong consensus among sell-side analysts that Unity will report improved earnings, leading to a 2.4% increase in the consensus EPS estimate over the last 30 days [7]. - Unity holds a Zacks Rank 2 (Buy), placing it in the top 20% of over 4,000 ranked stocks based on earnings estimate revisions and EPS surprises, indicating a strong potential for a turnaround [8].

Unity Software (U) shares have plunged 36.3% in the trailing 12 months, underperforming the Zacks Internet – Software industry, Zacks Computer and Technology sector and the S&P 500 index’s decline of 5%, 7.6% and 2.2%, respectively.The company’s underperformance can be attributed to several external factors like macroeconomic headwinds and intense competition that are affecting investor confidence. Despite the market's negative reaction, U’s strategic initiatives reveal promising future growth potential. Le ...

Core Viewpoint - Unity Software Inc. has been upgraded to a Zacks Rank 1 (Strong Buy), indicating a positive outlook on its earnings estimates, which is a significant factor influencing stock prices [1][3]. Earnings Estimates and Stock Performance - The Zacks rating system is based on changes in earnings estimates, which are closely correlated with stock price movements [4][6]. - Unity Software is expected to earn -$1.19 per share for the fiscal year ending December 2025, reflecting a year-over-year change of 29.2% [8]. - Over the past three months, the Zacks Consensus Estimate for Unity Software has increased by 6% [8]. Zacks Rating System - The Zacks Rank stock-rating system classifies stocks into five groups based on earnings estimates, with Zacks Rank 1 stocks historically generating an average annual return of +25% since 1988 [7]. - Only the top 5% of Zacks-covered stocks receive a 'Strong Buy' rating, indicating superior earnings estimate revisions [9][10].