The same day it received an offer to acquire the company for approximately $20 billion, Unity Software Inc. a loss that was less than feared and pulled it back on its expectations for the year, and the stock slipped during the extended session.
which produces video game engine software that competes with Epic Games Inc.’s Unreal Engine. and helps developers monetize their games, reported a second-quarter loss of $205.8 million, or 69 cents per share, compared to $148.3 million, or 53 cents per share, in the year-ago period. . Adjusted loss, excluding share-based compensation and other items, was 18 cents per share, compared to a loss of one cent per share in the same period last year.
Revenue rose to $297 million, from $273.6 million in the same quarter a year ago.
Analysts polled by FactSet had forecast a loss of 21 cents a share on revenue of $299.7 million, based on Unity’s forecast of $290 million to $295 million in revenue.
That comes in response to an offer from app revenue company Applovin Inc. APP,
to buy Unity for $20 billion in cash and stock. Shares of Applovin ended the day 10.3% lower at $36.01, making it a $13.6 billion company, according to FactSet.
At the top of the analyst conference call, Unity Chief Executive John Riccitiello acknowledged that the company had received an offer and would not comment further.
That offer comes in the wake of a flak that recently caught Unity engaging in its own M&A schemes, the most recent being Unity’s $4.4 billion offer to buy IronSource. Unity shares rose recently on reports that it was looking to spin off its company in China. Shares fell 3% after hours Tuesday, following a 1.2% gain in the regular session to close at $50.35, giving the company a market cap of about $15 billion, according to data from FactSet.
Riccitiello also said he was “encouraged by the progress we’re making” to get his ad targeting software “back on a stable footing.” The CEO referred to Unity’s earlier earnings report, which was marred by a revelation that its ad targeting tools were flawed, the same tools credited with finding a workaround for Apple Inc.’s AAPL.
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“This one is behind us,” Ingrid Lestiyo, the head of Operate Solutions, said during the call.
“We’ve also put in place controls that allow us to monitor our performance more closely, so we can react more quickly if something goes wrong,” Riccitiello told analysts. “And as a result of our work, we’re seeing leading indicators such as audience localization or consistency and accuracy improving, demonstrating that our interventions are effective, and we continue to innovate.”
Unity expects third-quarter revenue of $315 million to $335 million and annual revenue between $1.3 billion and $1.35 billion, compared to its earlier forecast of $1.35 billion to $1.43 billion.
“In Create, we have momentum with clients inside and outside Games,” said Luis Visoso, Unity’s chief financial officer, in a statement. “Our business outside of Games is growing even faster and now represents 40% of our total Create Solutions revenue, up from 25% in 2021.”
Analysts estimate a loss of 7 cents per share on revenue of $343.7 million for the third quarter, and a loss of 37 cents per share on revenue of $1.36 billion for the year.