Markets Face Largest Weekly Decline Since 2022, Unity (U) Guidance Rally

0:00All right, we actually want to welcome in Jenny Horn, co-host of Nexon and markets correspondent to talk us through a little bit of the setup for today and dive into a couple of our morning movers. Jenny, it's good to see you this morning. So we begin the day where markets are under pressure once again, whether we're talking about equities or the bond market, oil prices shooting higher right now. Interestingly enough, you have actually gold ticking higher, which gold had been more mirroring risk assets recently. But I want to get into kind of the price action for equities today. It just feels like it's going to be another downbeat day full of headline risk, your thoughts. I know, frankly, I do feel like we became really accustomed to I mean, something like the pre-market weakness being, I mean, really bought up by the bulls and in the obviously tech trade that was driving overall enthusiasm for the markets for so long. That sort of has died down a bit where oftentimes it does feel like we're poised for a lower open year where not really seeing any sort of revival in these overall markets, at least on a session by session basis.

1:00So I mean, according to a lower open this morning, no doubt, well, you mentioned, of course, crude oil prices still rising. As we have gone through the sort of back and forth all week long, digesting what the timeframe looks like for the war in Iran, of course. And so this does come after now. So officially we've seen the Nasdaq composite slip into correction territory, of course, marking a 10% decline from the record set back in October. The Dow is also now near correction territory down almost 9% from its all time high. S&P is fair to make more modestly down to about 7%. And so President John Trump did extend a deadline to attack Iran's energy infrastructure, saying he would extend a pause to attack those energy facilities that I ran to April 6th, which is a little over a week after the original deadline that had been set to end Friday. And so this is, I mean, heard a true social post Trump did say that to her the Iranian government request, please let the statement surface representation that he is pausing this period of energy plant destruction.

2:02And at talks are ongoing and despite some of the statements from various media outlets, he did say they are going very well. So this is the latest signal that the Trump administration is seeking an end to the U.S. Iran war, which is right now, of course, heard on, I mean, like overall oil prices also been a major weak spot for the entire cryptocurrency asset class. But I will say that looking at some of the interesting price activity today, volatility a bit more elevated than yesterday is we are nearing that that three handle here and the dollar also higher. And gold, as you mentioned, another standout in reaction of about 8 tens of a percent. And so a resolution I do think is definitely sought out by these markets. But every day, it's like we digest how much longer that this could go on. And that's sort of what we see now is this tug of war back and forth, but today, obviously, talking a bit more to the downside day end. Yeah, indeed. And then, you know, I'm glad you mentioned volatility with the big sitting above 29 right now. So we've got volatility elevated today.

3:02And then the pattern recently has been investors taking off risk heading into the weekend because why would you want to go risk on when there's still uncertainty in front of us? Because, you know, by this weekend, we'll be hitting 30 days with the war with Iran. And I know that's a key point to think about, especially when the other original indications from the president were that this would be a four to five week war. So we'll see if we end up coming to that timeline because now we're taking things into April. Let's talk about a mover that you're across. Unity, those shares soaring this morning up, double digits. Walk us through some of your takeaways here. Yeah, I mean, this is interesting because Unity now releasing its preliminary, at least first quarter results by exceeding guidance. And I mean, giving some enthusiastic metrics as they did say that they'll be enhancing their growth and profitability by exiting their non-strategic ad business. And so this is obviously a company that falls in broader tech, which does operate various game engines. And so it has seen a bit of, I mean, definitely exposure

4:06to some of the pressure we've seen in broader tech. But this outline obviously enthusiastic as they did give adjusted even now for their first quarter, 2026 above guidance. They also do expect to report revenues of 505 to 508 million. Previous guidance was roughly 480 million to 490 million. And they expect adjusted even of 130 to 135 million. Also would be substantially ahead of the prior guide of 105 to 110 million. And that represents, I mean, a whopping 58% pace of growth on a year-over-year basis. But this is driven by Unity Vector, which is expected to increase about 15% sequentially in the first quarter of this year, as well as better than expected performance in their create segment. So they expect to grow their revenue of approximately 352 million and create revenue of approximately 155 million. They did also announce that they will be sunsetting the iron source ads and that work that's effective April 30th. And that they've also engaged a financial advisor

5:07to assist with the divestor of their supersonic game publishing business. So once completed, they do expect that those changes will result in faster revenue growth and increase their adjusted EBITDA and also higher adjusted EBITDA margins. And so in the first quarter of 2026 strategy, Mr. Shijit grow, which does include contribution right now from iron source ads network as well as supersonic. That's expected to also grow 48% now, almost double the year-over-year growth that we saw in the first quarter. And so very, very late to begin to talk about such solid growth metrics, especially at, I mean, this point and seems like the, of course, season were sort of in the tail end of earnings waiting for the next wave of big banks. But I mean, 48% year-over-year growth for some of their segments and 58% again increase as far as some of their revenue metrics are concerned. These are really phenomenal growth numbers. And so we're seeing a pretty big pop today in Unity Shares, I mean, double digit percentages, at least this morning Diane. Okay, and it may not be merger Monday, but there's some merger talk that I know you're across,

6:09brown form and the parent company of Jack Daniels. So they think of it as like brown looker, obviously. Take us through the latest here. That's so funny. That's exactly how I always think about it. And I know that they have many other brands under their portfolio, but that is first thing that always comes to mind naturally. But we are seeing right now some merger talks, of course. And it's really interesting as we do, sort of, I just, what, I mean, a lot of these, these alcohol and beverage exposed names could look like in the next several years. I don't feel like the theme of consolidation is going away any time soon. And so we did see that from from France, Fernandes Ricard and Jack Daniels, of course, brown form and in these merger talks, they did say the move would unite the world's second largest spirits makers with then the largest producer of American whiskey, of course, bring brown form in. But spirits companies have been battling, I mean, this multi-year slump, they're not alone. We felt to see it from beer wine. I mean, all the various sectors of alcohol consumption amid the slowing demand and also various tarot pressures,

7:12which have triggered, I mean, a massive slide in some of these companies' valuations. And so CEO, exits have also been pretty common all these companies as well as some pretty substantial cuts their costs and sales declines. And so shares of brown form and which has a market cap roughly now, $11 billion ended up nearly 90% on Thursday after those talks, of course, that we saw overall in regards to making a more conglomerate type company. And so right now, I mean, this would obviously be subject to regulatory scrutiny. Both companies have recently announced restructuring plans including like job cuts recently in brown form and cash dropped in health conscious drinkers in the US have also been driving huge, I mean, volume declines over the last several years. And so right now again, we are seeing some emerging threats to like competitive nature of this industry and potential merger could result in some of these significant operational synergies. But also there's still a degree of I think macro uncertainty

8:13just given consumers' health habits and obviously choices to consume less alcohol on an even global basis. But also the fact that it has been a very different environment post that really boom we saw during the pandemic. And so still reeling a bit from that. But you could argue both of these companies would be getting a better deal because frankly, both of them have shed a bit off their market caps in the last couple years. All right, thank you, Jenny. That's Jenny Horn co-host of NextGen. Appreciate the deep dive there.