Unity Software Inc. (NYSE: U ) underwent a major restructuring at the beginning of FY24 and may now be undergoing a transitional period before a potential return to growth. With the release of Unity 6 andMichael Del Monte is a buy-side equity analyst with over 5 years of industry experience. Prior to working in the investment management industry, Michael spent over a decade in professional services working in industries that range from O&G, OFS, Midstream, Industrials, Information Technology, EPC Services, ...

Unity Software Inc. (U) closed at $21.96 in the latest trading session, marking a +1.2% move from the prior day. The stock's performance was ahead of the S&P 500's daily gain of 0.12%. Elsewhere, the Dow gained 0.52%, while the tech-heavy Nasdaq lost 0.23%.Prior to today's trading, shares of the company had lost 13.75% over the past month. This has lagged the Computer and Technology sector's loss of 3.73% and the S&P 500's loss of 3.45% in that time.The upcoming earnings release of Unity Software Inc. will ...

Unity Software Inc. (U) shares ended the last trading session 9.1% higher at $24.51. The jump came on an impressive volume with a higher-than-average number of shares changing hands in the session. This compares to the stock's 14.7% loss over the past four weeks.The upswing in share price came following a social media post from meme stock trader Keith Gill, known online as Roaring Kitty. Gill, who notably spurred on the GameStop rally of 2021, posted a short clip of the musician Rick James who has a song ca ...

Unity Software (U) shares have declined 40% year to date (YTD), underperforming the broader Zacks Computer and Technology sector’s appreciation of 29.8%.It has also underperformed the Zacks Internet - Software industry and its peers, such as Fortinet (FTNT) , monday.com (MNDY) and Audioeye (AEYE) .In the same time frame, shares of AEYE, FTNT, and MNDY have returned 377.7%, 63.7%, and 49.4%, respectively. The industry has appreciated 35.1% YTD. The company’s underperformance can be attributed to declining Gr ...

Turnarounds are not the most popular of recommendations-particularly in the IT space. I doubt if their success ratio reaches 50%. They sound good in theBert Hochfeld graduated with a degree in economics from the University of Pennsylvania and received an MBA from Harvard. Mr. Hochfeld has enjoyed a long career in the tech world, working for IBM, Memorex/Telex, Raytheon Data Systems, and BMC Software. Starting in the 1990s, Mr. Hochfeld worked as a sell-side analyst and won awards from the Wall Street Journa ...

Investment Rating - The report maintains a "Buy" rating for Unity (U.US) with a target price raised to $25, indicating a potential upside of 29% from the current price of $22.21 [4][7][18]. Core Insights - Unity's Q3 2024 revenue reached $447 million, exceeding market expectations of $410 million. The strategic revenue segment was $429 million, showing a 2% year-over-year decline. Adjusted EBITDA was $92 million, also above prior guidance. The company has raised its Q4 guidance, expecting strategic revenue between $422 million and $427 million, corresponding to a 0%-1% year-over-year growth [2][4]. - Subscription revenue continues to show double-digit growth, with Q3 2024 Create Solutions revenue at $132 million, a 5% year-over-year increase. The company has shifted back to a seat-based subscription model, which is expected to enhance revenue predictability and developer adoption [3][4]. - Unity's advertising segment is making positive strides, with Q3 2024 Grow Solutions revenue at $298 million, a 5% year-over-year decline. The company is investing in a new data platform to improve user acquisition and monetization performance [4]. Financial Summary - For FY 2024E, Unity's revenue is projected at $1.787 billion, with adjusted EBITDA margin expected to be 21%. For FY 2025E, revenue is forecasted at $1.805 billion, with an adjusted EBITDA margin of 23% [6][10]. - The company reported a total revenue of $1.391 billion in FY 2022, which increased to $2.187 billion in FY 2023. However, a decline is expected in FY 2024E, followed by a slight recovery in FY 2025E and FY 2026E [10][11].

Financial Data and Key Metrics Changes - In Q3 2024, revenue from the strategic portfolio was $429 million, down 2% year-over-year but up 1% sequentially from Q2, exceeding guidance of $415 million to $420 million [16] - Adjusted EBITDA for the total company was $92 million, compared to guidance of $75 million to $80 million, with free cash flow of $115 million, up 11% from $104 million in the prior year [18] - Cash and cash equivalents at the end of the quarter were $1.4 billion [18] Business Line Data and Key Metrics Changes - Revenue from Create Solutions was $132 million, up 5% year-over-year and up 2% quarter-over-quarter, driven by a 12% increase in subscription revenue [17] - Growth Solutions revenue was $298 million, down 5% year-over-year but up 1% quarter-over-quarter, indicating a sequential growth trend [17] Market Data and Key Metrics Changes - The company reported strong growth in its subscription business, particularly outside the gaming sector, with notable new customer accounts including KLM and Deutsche Bahn [8] - The company is experiencing positive momentum in the industry, with a focus on enhancing its machine learning stack and data infrastructure to improve advertising ROI [9][10] Company Strategy and Development Direction - The company is prioritizing execution and discipline to drive product innovation and strengthen customer relationships, having canceled the run time fee and reverted to a subscription-based model [5][6] - Unity 6 represents a fundamental change in the development cycle, with a new upgrade philosophy aimed at enhancing stability and customer feedback [7] - The company is focused on expanding relationships with existing customers and exploring new consumption-based products [31] Management's Comments on Operating Environment and Future Outlook - Management expressed optimism about the long-term value of Unity, highlighting the growth potential in 3D content creation and interactive entertainment [21][22] - The company is committed to improving its product offerings and customer relationships, emphasizing the importance of stability and support in its platform [40] - Management acknowledged the need for disciplined execution and customer engagement to maximize Unity's strategic importance in the ecosystem [70] Other Important Information - The company has made significant strides in building a new leadership team, with the recent hiring of a new CTO and an incoming CFO [11][12] - The company is raising its full-year guidance for the strategic portfolio to $1.73 billion to $1.78 billion, up from previous guidance [18] Q&A Session Summary Question: Long-term growth parameters for Unity - Management is bullish on Unity's long-term growth potential, believing it can grow faster than the mobile gaming industry due to its unique position as a tools provider [21][22] Question: Roadmap for product launch and campaign performance - The roadmap involves iterative testing and validation of new machine learning models, with a focus on ensuring new models outperform old ones [26][27] Question: Impact of repealing the run time fee on customer relationships - The repeal was crucial for restoring customer relationships, with management emphasizing the importance of partnership and customer satisfaction [29][30] Question: Progress in team restructuring and talent acquisition - Management is pleased with the progress in building a capable team, with a mix of internal promotions and key external hires [35][36] Question: Customer adoption of Unity 6 and key metrics - The repeal of the run time fee has positively impacted customer willingness to adopt Unity 6, with significant adoption rates reported [39][41] Question: Strategy for non-gaming opportunities - Management is excited about the growth in non-gaming sectors, emphasizing the importance of focusing on core strengths and building partnerships [48][52] Question: Pricing strategy and impact on enterprise accounts - Recent price increases are expected to roll out in 2025, with management confident in achieving double-digit growth through improved product performance [66][67]

[Offer of Employment](index=1&type=section&id=Offer%20of%20Employment) This section details the employment offer for Jarrod Yahes as CFO, outlining his compensation, equity awards, and the terms and conditions of his employment [Position and Compensation](index=1&type=section&id=Position%20and%20Compensation) This section outlines Jarrod Yahes' employment offer as Senior Vice President, Chief Financial Officer, detailing his annual base salary, discretionary bonus target, and a two-part sign-on bonus - Jarrod Yahes is appointed as Senior Vice President, Chief Financial Officer, reporting to CEO Matthew Bromberg, with a start date of January 1, 2025[1](index=1&type=chunk) Compensation Package Summary | Component | Amount (USD) | Details | | :--- | :--- | :--- | | **Annual Base Salary** | $525,000.00 | Paid semi-monthly ($43,750.00 per month) | | **Corporate Bonus Target** | 75% of base salary | Discretionary, based on previous fiscal year's earned salary | | **Sign-On Bonus** | $400,000.00 | Paid in two equal installments of $200,000: one after the start date and one after the first-year anniversary | [Equity Awards and Severance](index=1&type=section&id=Equity%20Awards%20and%20Severance) This section details the initial RSU grant, target for future annual equity awards, and eligibility for the Executive Severance Plan with accelerated vesting provisions Initial RSU Grant | Item | Value/Terms | | :--- | :--- | | **Grant Value** | USD $12,000,000.00 | | **Vesting Schedule** | 12.5% after the first six full months, then 6.25% quarterly thereafter, contingent on continued employment | - A recommendation will be made for an additional equity award in 2025 with a target value of at least **$4,000,000**, composed of **75% RSUs** and **25% Performance Stock Units**[1](index=1&type=chunk)[2](index=2&type=chunk) - The employee is eligible for the Executive Severance Plan, which may provide for accelerated equity vesting under specific circumstances[2](index=2&type=chunk) [Employment Conditions and Policies](index=2&type=section&id=Employment%20Conditions%20and%20Policies) This section establishes at-will employment, mandates adherence to company policies including the Executive Clawback Policy, and prohibits the use of former employers' proprietary information - Employment is on an "at-will" basis, allowing termination by either party at any time, for any reason, with or without cause or notice[2](index=2&type=chunk) - The employee must sign the Company's "Employee Nondisclosure and Assignment Agreement" and is bound by the Unity Software Inc. Executive Clawback Policy[2](index=2&type=chunk) - The employee represents that commencing employment will not violate any agreements with past employers and is directed not to bring any confidential material from them[2](index=2&type=chunk) [Legal and Administrative Clauses](index=2&type=section&id=Legal%20and%20Administrative%20Clauses) This section covers mandatory binding arbitration for employment claims, governing law, and the offer's contingency on a successful background check, with an acceptance deadline of November 5, 2024 - All employment-related claims must be submitted to mandatory binding arbitration through JAMS, waiving the right to a jury trial, and resolved on an individual basis, not as a class action[2](index=2&type=chunk) - The agreement is governed by the laws of the state where the employee primarily works, with exclusive jurisdiction for non-arbitrable matters granted to state courts in San Francisco County, California[3](index=3&type=chunk) - The offer is contingent upon successful completion of background and reference checks and was set to expire on November 5, 2024[3](index=3&type=chunk) [Attachment 1: Employee Nondisclosure and Assignment Agreement](index=5&type=section&id=Attachment%201%3A%20Employee%20Nondisclosure%20and%20Assignment%20Agreement) This attachment details the employee's obligations concerning proprietary information, intellectual property assignment, and post-employment non-solicitation [Proprietary Information and Confidentiality](index=5&type=section&id=Proprietary%20Information%20and%20Confidentiality) This section broadly defines "Proprietary Information" as company property, obligates the employee to maintain confidentiality, and acknowledges protections under the U.S. Defend Trade Secrets Act - Defines "Proprietary Information" to include a wide range of confidential data, such as trade secrets, business plans, customer lists, and any information the company is obligated to treat as confidential[6](index=6&type=chunk)[7](index=7&type=chunk) - The employee is prohibited from disclosing any Proprietary Information outside the Company and may only disclose it internally on a need-to-know basis[8](index=8&type=chunk) - Acknowledges the employee's right under the U.S. Defend Trade Secrets Act (18 U.S.C. § 1833(b)) to disclose trade secrets to government officials or attorneys for reporting suspected law violations[9](index=9&type=chunk)[10](index=10&type=chunk) [Innovations and Intellectual Property](index=6&type=section&id=Innovations%20and%20Intellectual%20Property) This section defines "Innovations," mandates the assignment of "Company Innovations" to the company, requires disclosure of prior innovations, and grants the company a license for their use if incorporated - The employee must assign all rights to "Company Innovations"—inventions and works created during employment or based on proprietary information—to the Company[14](index=14&type=chunk) - If any prior personal innovations ("Prior Innovations") are incorporated into company work, the employee grants the Company a perpetual, royalty-free, worldwide license to use them[12](index=12&type=chunk)[13](index=13&type=chunk) - The employee agrees to cooperate fully, during and after employment, to help the Company obtain and enforce its rights to Company Innovations, including acting as an agent for the employee if necessary[18](index=18&type=chunk) [Post-Employment and General Provisions](index=7&type=section&id=Post-Employment%20and%20General%20Provisions) This section outlines post-employment obligations, including a one-year non-solicitation clause, the return of company materials, and general legal provisions such as governing law and severability - Upon termination, the employee must return all company materials, including documents, devices, and keys, and provide written certification of compliance[16](index=16&type=chunk) - A non-solicitation clause prevents the employee from soliciting any Company Group employees to terminate their employment for **one year** after their own employment ends[21](index=21&type=chunk) - The agreement's provisions survive employment termination, are binding on the employee's heirs, and are governed by the laws of the state where the employee primarily works[20](index=20&type=chunk)[23](index=23&type=chunk) [Exhibit A: Prior Innovations](index=9&type=section&id=Exhibit%20A%3A%20Prior%20Innovations) This exhibit serves as a formal declaration by the employee regarding any pre-existing innovations related to the company's business [Declaration of Prior Innovations](index=9&type=section&id=Declaration%20of%20Prior%20Innovations) This exhibit formally declares any pre-existing innovations related to the company's business, with Jarrod Yahes indicating no such prior innovations - The employee is required to list all prior innovations related to the Company's business or anticipated research[25](index=25&type=chunk)[26](index=26&type=chunk) - Jarrod Yahes declared "None" for Prior Innovations, indicating no pre-existing inventions or intellectual property relevant to his employment with the Company[26](index=26&type=chunk)

Unity Software (U) is slated to report third-quarter 2024 results on Nov. 7.The company expects third-quarter revenues between $415 million and $420 million, indicating a decline of 4-6% year over year. The Zacks Consensus Estimate is pegged at $428.01 million, indicating a decrease of 21.35% from the year-ago quarter’s reported figure.The consensus mark for earnings is pegged at a loss of 39 cents per share, which has remained unchanged in the past 30 days.Image Source: Zacks Investment ResearchFind the la ...

Unity Software Inc. (U) has recently been on Zacks.com's list of the most searched stocks. Therefore, you might want to consider some of the key factors that could influence the stock's performance in the near future.Over the past month, shares of this company have returned -3%, compared to the Zacks S&P 500 composite's -1% change. During this period, the Zacks Internet - Software industry, which Unity Software falls in, has gained 0.8%. The key question now is: What could be the stock's future direction?Al ...