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Unity's stock sheds 15% after disappointing earnings

marketwatch.com

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Re: Unity's stock sheds 15% after disappointing earnings

#41

Post by brutus1213 »

ffgjgf1 wrote: post #30
danielmarkbruce wrote: post #20

Earlier quoted context omitted.

It's slightly better than operating cashflow neutral. It's growing at a very healthy rate. It's definitely sustainable. The debate is around is it worth $5 billion or $50 billion. It's not as easy as one might think to figure which.

> slightly better than operating cashflow neutral Only because they are issuing massive amounts of stock (IIRC ~15% per year) to pay their employees and not doing any buybacks. How sustainable is that? > It's growing at a very healthy rate The problem is that it’s not. YoY growth they reported yesterday was -2% and they are also guiding for negative growth next year.

Can you explain the "issuing stock to pay people"? 15% per year sounds quite a bit to me .. is this the norm in Silicon Valley? I presume this in the 10K?

Re: Unity's stock sheds 15% after disappointing earnings

#42

Post by danielmarkbruce »

brutus1213 wrote: post #41
ffgjgf1 wrote: post #30

Earlier quoted context omitted.

> slightly better than operating cashflow neutral Only because they are issuing massive amounts of stock (IIRC ~15% per year) to pay their employees and not doing any buybacks. How sustainable is that? > It's growing at a very healthy rate The problem is that it’s not. YoY growth they reported yesterday was -2% and they are also guiding for negative growth next year.

Can you explain the "issuing stock to pay people"? 15% per year sounds quite a bit to me .. is this the norm in Silicon Valley? I presume this in the 10K?

A good portion of compensation is in stock. There is nothing wrong with it per se. It shows up on the income statement as an expense - all good. But then when people quote "operating cashflow" the company has added back that expense because it wasn't in cash. So the quoted operating cashflow (which in theory should be "real") becomes more fake from an economic viewpoint.

It's not bad, you just have to be aware of it. It's in the k - right there in the income statement (the opex lines will all have some % which is equity) and cashflow statement (the operating cashflow calc explicitly has a line for it).

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