Unity Takes a Big Risk to Boost Growth and Profit
Shares of game-engine developer Unity (NYSE: U) have been crushed over the past two years. Since hitting its pandemic-era peak in late 2021, the stock has tumbled a whopping 80%.
A crashing growth rate has been part of the problem. Revenue grew by 25% in 2022, down from 44% growth in 2021, and the situation has gotten worse this year. Revenue edged up 2% in the first quarter and 11% in the second quarter. These growth rates are on a pro forma basis to account for the acquisition of ironSource.
Unity relies on subscription fees for a big chunk of its revenue. The company's Create Solutions segment, which covers subscriptions, support, and professional services, accounted for a bit more than half of total revenue in 2022. For anyone not a student or hobbyist, Unity charges hefty per-seat fees for using its platform. The company boosted some of these fees last year, which helped keep revenue growing.
Source Fool.com
