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Unity Software (NYSE:U) sank more than 17% during post-market trading Monday after it released fourth-quarter results and guidance for the upcoming period.
Revenue for the game creation platform for the fourth quarter hit $609M, which shattered the consensus estimate of $560.54M.
However, a sizable portion of the quarterly revenue came from a single transaction. During the quarter, Unity and Wētā FX mutually agreed to terminate Unity’s service agreement and entered into a perpetual license agreement for Wētā FX’s internal use of Unity’s Wētā tools.
The transaction resulted in $99M of incremental revenue. Excluding this transaction, revenue would have been $510M.
Earning per share for quarter were at -$0.66, which was a far cry from the consensus estimate of -$0.23.
Looking ahead, Unity expects first-quarter revenue to be between $415M and $420M, well below the consensus of $536M. Full-year sales are forecast to be between $1.76B and $1.8B, which is below the consensus of $2.32B.
On Friday, Unity was downgraded to Underperform from Neutral by Macquarie. The firm was concerned over the scope of Unity’s reorganization efforts as well as layoffs.
“We are right sizing our cost structure to grow from a healthy financial position,” Unity said in a shareholder letter. “This includes the previously announced reduction of approximately 25% of our workforce, in addition to cloud hosting cost savings, office footprint consolidation, and software license optimization. We expect most of this work to be completed by the end of the first quarter.”