![]() U has also been winning customers outside of gaming - after all, 3D modeling applies to more sectors than just gaming. I've already mentioned that they power more than 70% of the top mobile games - as disclosed on the call they also made up 80% of the most popular games in July and 72% of the top selling games for the Oculus Quest. While U stock may look like discarded trash, the product remains relevant as ever. I agree with management that this should be a 30+% growing business over the long term but I wouldn't be surprised if guidance gets cut again due to the near-term macro struggles. Looking ahead, U expects revenue growth to accelerate in the third quarter before accelerating again to 26% in the fourth quarter. The poor Operate results led to the 12-month trailing net dollar expansion rate declining to 121%, down from 142% last year. ![]() Management noted that it has fixed the data issues and has also invested heavily in its audience pinpointer product. The company had been faced with not only a tough macro environment but also self-inflicted execution issues, as bad data ingestion of the prior quarter continued to impact results. The Operate segment, however, saw growth not only decelerate but turn negative. ![]() U has a dominant position in gaming where, as shared in the conference call, the company powers 70% of the top mobile games. U did see accelerating growth in its Create segment. The latest quarter saw U generate only 8.6% overall revenue growth - a steep decline from the 36% number posted in the first quarter and the 48% rate of the prior year's second quarter. Since then, AppLovin ( APP), a competitor of IS, made an unsolicited offer to buy U, but that offer has since been rescinded. I last covered U in July where I discussed the company's prospects after the proposed acquisition of IS. In fact, its stock is one of the more beaten down names in the tech sector. Once a tech darling, U stock has not been immune to tech beat down. I continue to rate U a strong buy as the stock price is not reflecting the strong secular drivers that caused the prior bubble in the first place. There was initially some drama with regards to its proposed acquisition of ironSource ( IS ), but that deal now looks all but certain to close. While much of it was due to the egregious valuations at which the stock traded at prior to the crash, some of the fall was arguably warranted as the company's execution issues led to poor growth rates in its Operate segment. Like many tech stocks, Unity ( NYSE: U) has seen its stock price get obliterated amidst the tech crash.
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