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Unity announced its fourth quarter 2022 financial results this week. According to the company’s results, it had its first profitable quarter as a public company. It also posted $451 million in revenue for the quarter, as well as $1.39 billion for the full fiscal year. That said, the earnings outlook disappointed analysts, who had more robust expectations for the year ahead.
According to Unity, fourth-quarter revenue grew 43% year-over-year for the quarter and 25% year-over-year over 2021. Of the two divisions, Unity’s Create Solutions grew 41% year-over-year at $198 million, while Grow Solutions grew 12% year-over-year by $253 million. The company also reported that its quarterly profit was higher than the previous quarter’s estimates.
Unity’s weaknesses and share price decline
However, the results were not all favorable. Unity admitted in its shareholder letter that the mobile ad market was weak in 2022. The shareholder letter states that the in-game ad market was “down year-over-year in the third and fourth quarters as some in-game publishers became more conservative with their ad spending as the economy softened.”
Luis Felipe Visoso, CFO of Unity, also mentioned January layoffs. These layoffs, which affected nearly 300 employees, were the second round in six months. The company also laid off more than 200 employees last June as part of a quest to “realign some of our resources to better drive focus and support our long-term growth.”
Visoso said in the call that the January layoffs were part of an overall cost-cutting effort, adding that they were “highly selective about future new hires that we add to the company, more focused in our investments and reduced bed count.” that we’re making at Unity raise the bar in terms of cost, and we’ve turned every brick once or twice and found new opportunities in a few places.
Shares of the company also fell after the earnings announcement as it lowered its revenue expectations for the first quarter of 2023. Specifically, it expects revenue between $470 and $480 million. According to MarketWatch, some analysts had estimated revenue at $521 million, about 10% higher than Unity’s forecasts. Unity shares fell nearly 20% on the day it announced its financial results.
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