$Unity Software(U.US) Q4 2024 Quick Interpretation: Overall, the performance in Q4 is fine, with almost all core financial indicators exceeding expectations. However, the concern lies in the Q1 guidance. The company's guidance for Q1 2025 shows not only revenue below expectations but also a weakening profit outlook, which is somewhat disappointing.

For Unity in 2025, it is all about hitting the turning point. Due to the difficulty in reflecting internal technological progress in performance, the short-term performance guidance and this conference call are actually more critical. Earlier this year, Dolphin Research mentioned in the comparative study of Applovin and Unity that there might be a fundamental turning point for Unity this year—steady penetration of Unity 6 + price increases, and AI accelerating the optimization of advertising algorithm models. Although there was a short-term surge in Unity after the new advertising head joined in September and the Q3 earnings release in November, funds looking for a reversal need to see 1-2 quarters of performance before truly betting on it. Therefore, investors with low risk tolerance should not rush to get in in the short term unless they find a good entry point, such as around Dolphin Research's pessimistic expectation position (7.3 billion).

Based on recent institutional surveys of advertisers, there hasn't been much improvement in Unity ads' ROAS. The partial recovery of the mobile gaming market and Applovin's new expansion of non-gaming advertisers' demand without increasing ad inventory may have potentially pushed up CPM bidding, leading some small to medium-sized game developers to pay attention to platforms other than Applovin, such as IronSource ads, which have slightly better ad conversion effects than Unity ads. Currently, this is just a small-scale test, but it at least provides some opportunities for Unity and IronSource to turn things around, which is a change that needs to be monitored.

The weak Q1 guidance actually aligns with the aforementioned survey results (clients' attitudes and views towards Unity ads have not changed yet), so now we are pinning hopes on Unity's new advertising algorithm model. The company plans to launch it mid-year, but what is the current progress? Is it going smoothly? Have any clients conducted internal tests, etc.? These questions are expected to become the focus of analysts during the conference call, and investors are advised to pay close attention to this call.