Unity Software Inc. (U) shares plummeted 5.02% during intraday trading on Wednesday, following the release of its first-quarter 2025 financial results and second-quarter guidance. Despite beating earnings expectations, the company's forward-looking revenue projections fell short of analyst estimates, sparking concerns among investors.
For the first quarter, Unity reported adjusted earnings per share of $0.24, surpassing the FactSet analyst consensus of $0.12. Revenue for the quarter came in at $435 million, exceeding the expected $415.7 million. However, this figure represented a 5.5% decrease compared to the same period last year when the company reported revenue of $460.4 million.
The primary driver behind the stock's sharp decline appears to be Unity's disappointing second-quarter revenue guidance. The company forecasts Q2 revenue between $415 million and $425 million, falling below the FactSet analyst expectations of $426.1 million. This outlook has raised concerns about Unity's growth trajectory in the competitive software and gaming engine market, prompting some investors to reassess their positions in the stock.