Unity Software Inc. (NYSE: U) experienced a sharp 11.93% pre-market plunge on Thursday, despite reporting better-than-expected Q4 earnings and revenue. The decline was driven by the company's disappointing Q1 2025 revenue guidance, which fell short of analysts' estimates.

For Q4 2024, Unity reported adjusted earnings per share of -$0.30, beating estimates by $0.07. Revenue came in at $457.1 million, a 25% year-over-year decline but surpassing expectations by $23.63 million. The company's strategic portfolio revenue grew 4% year-over-year to $442 million. However, Create Solutions revenue declined from $290 million to $152 million, while Grow Solutions revenue dipped from $319 million to $305 million.

Despite the solid Q4 performance, Unity's Q1 2025 revenue guidance of $405-$415 million missed the consensus estimate of $440.07 million, sparking investor concerns. The company's adjusted EBITDA guidance for Q1 2025 was $60-$65 million. Unity's premarket plunge reflects the market's disappointment with the company's near-term revenue outlook, overshadowing its better-than-expected Q4 results.