Unity CEO says ‘we expect to be profitable’ in Q4 after rough quarter

Unity Software expects slower growth in the second and fourth quarters while rebuilding its data but expects to be profitable at the end of the year, chief executive John Riccitiello told CNBC’s Jim Cramer on Wednesday.

“We brought our guidance down, and what that’s about is [a] self-inflicted wound. We did some things on the advertising side of the business that reduced the accuracy of our models. It’s going to take us a couple of quarters to fix and we’re going to have slower growth for a couple of quarters while we fix that,” Riccitiello said in an interview on “Mad Money.”

Unity missed top line expectations in its latest quarter and lowered its revenue guidance. The company cited flaws with its Audience Pinpointer tool in its Operate business and said it expects the impact to the business to be about $110 million this year.

Shares of the video software developer tumbled 37.05% on Wednesday, reaching a new 52-week low earlier in the day.

“We know our stock was a lot higher nine months ago at the very peak of the market. And my sense is we probably had about 10% too much in spending in our business as a consequence of sort of euphoria that goes with that,” Riccitiello said, adding that the company brought its spending down by $100 million compared to its original plan in response. 

“What that allows us to do is to bring profitability from future years into this year. At the end of this year at Q4, we expect to be profitable,” he added.

Riccitiello also said that Apple’s privacy changes were not a notable headwind in its latest quarter. “That’s largely digested, and so that’s not really the issue. … That was baked into our guidance this year,” he said.

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(With inputs from CNBC)