[Software] Unity Software May Be the Stock of the Decade, Judging by This Metric

[FazzNoth]

Key Points

• Growth in Unity's create solutions segment is speeding up.
• Its CEO believes its tools will power creativity in the metaverse.
• Sustained revenue growth will drive long-term shareholder returns

Motley Fool Issues Rare “All In” Buy Alert

Years ago, it was obvious when something was animated in a movie or video game. Now, it can be difficult to distinguish between what is real and what has been created using state-of-the-art animation software. One company providing creators with this amazing capability is Unity Software (NYSE:U).

Not only is Unity involved in cinematics, but it also has a video-game development platform, engineering uses, and augmented reality (AR) and virtual reality (VR) solutions. Because of the company's focus on 3D animation, the stock has made its way onto multiple metaverse-themed investment lists. With so many uses, could Unity Software be a decade-defining stock?

A key metric is accelerating
While Unity is becoming more known for its applications in multiple industries, its gaming segment brings in the bulk of the revenue. Its operate solutions revenue was $195 million during the fourth quarter, making up 62% of total revenue. This segment focuses on monetizing games created with its platform.

Content creators have multiple tools to monetize and understand their user base. Armed with these insights, studios can lengthen a game's life span as well as create fewer failures. This segment is well established, yet still grew at a 44% year-over-year clip during the fourth quarter.

The segment many investors have their eye on is the create solutions division. Within its domain are its industry-specific tool kit -- like the ability to create an AR or VR space from building information models (BIM) -- as well as metaverse aspirations.

Although Unity is still a solid company without this segment, the growth prospects are more exciting than the operate solutions component. In the fourth quarter, the division's revenue increased year over year by 49%, an acceleration from previous quarters.

More Info: https://www.fool.com/investing/2022/02/22/unity-software-may-be-the-stock-of-the-decade-judg/