Unity plays its Apple card well
For Unity Software, the ability to manage changes in Apple’s mobile ecosystem is proving rewarding.
Unity’s second quarter results on Tuesday night revived investors, as revenue jumped 48% year-over-year to $ 273.6 million. This is an acceleration from the previous two quarters and about 13% ahead of Wall Street projections. The company’s third-quarter revenue forecast was also ahead of estimate, pushing the stock up nearly 11% by noon, matching its best one-day gain since November.
Unity has long been known for its tools used by video game developers, such as its eponymous game engine. But its biggest business consists of services used by game publishers and other companies to host their content and earn money from it, usually through advertisements and in-game transactions. lucrative business given the shift in the gaming industry to focus on live services that generate recurring revenue as opposed to initial sales. Unity’s Operate Solutions segment generated nearly $ 584 million in revenue for the 12-month period ended June, up 56% from the same period last year.
But since many of the games Unity serves are played on Apple’s iOS mobile platform, investors are worried about the impact of recent changes made by the iPhone giant. These changes limit the ability of businesses to use Apple’s advertising user identification tag, known as IDFA, unless users agree to it. Apple announced the changes in June 2020, three months before Unity’s initial public offering. Unity therefore added a warning to its IPO filing, but noted that the effect of the proposed changes was not yet clear.
Recent results have provided some needed clarity. Apple finally adopted the changes in April, but Unity’s Operate segment business that would have felt the impact actually grew, with revenue there jumping 63% year-over-year, compared to an increase of 40% in the March quarter. Unity has amassed its own huge pool of valuable user data – the company says it now captures and analyzes 50 billion in-app events every day – which puts it in a prime position to help customers guide their spending. advertising. “Therefore, Unity is in the process of becoming a net beneficiary of IDFA at the moment and appears to be gaining market share,” wrote Stephen Ju of Credit Suisse.