Unity delivered $297.0 million in revenue
during the second quarter of 2022, up 9% year-over-year
Unity Software Inc. (NYSE: U), the world’s leading platform for
creating and operating interactive, real-time 3D (RT3D) content,
today announced second quarter 2022 financial results, including
revenue of $297.0 million, which is up 9% from the same period in
2021.
“The second quarter of 2022 was consistent with our guidance
with strong performance in Create Solutions,” said John
Riccitiello, President and Chief Executive Officer, Unity. “We are
encouraged by the progress we are making to get Operate Solutions
back on stable footing.”
“In Create we have momentum with customers in and outside of
Games,” said Luis Visoso, Chief Financial Officer, Unity. “Our
Business outside of Games is growing even faster and now represents
40% of our total Create Solutions revenue, up from 25% in
2021.”
Second Quarter 2022 Financial Highlights
- Revenue was $297.0 million, an increase of 9% from the second
quarter of 2021.
- Create Solutions revenue was $120.9 million, an increase of
66%; Operate Solutions revenue was $158.5 million, a decrease of
13%; Strategic Partnerships and Other revenue was $17.7 million, a
decrease of 2%, each as compared to the second quarter of
2021.
- Loss from operations was $197.7 million, or 67% of revenue,
compared to loss from operations of $149.2 million, or 55% of
revenue, in the second quarter of 2021.
- Non-GAAP loss from operations was $44.1 million, or 15% of
revenue, compared to a non-GAAP loss from operations of $0.7
million, or less than 1% of revenue, in the second quarter of
2021.
- Basic and diluted net loss per share was $0.69, compared to
basic and diluted net loss per share of $0.53 in the second quarter
of 2021.
- Basic and diluted non-GAAP net loss per share was $0.18,
compared to basic and diluted non-GAAP net loss per share of $0.01
in the second quarter of 2021.
- 1,085 customers each generated more than $100,000 of revenue in
the trailing 12 months as of June 30, 2022, compared to 888 as of
June 30, 2021.
- Dollar-based net expansion rate as of June 30, 2022 was 121% as
compared to 142% as of June 30, 2021.
- Net cash used in operating activities was $42.9 million for the
second quarter of 2022, compared to $26.7 million for the same
period last year. Free cash flow in the second quarter of 2022 was
$(58.3) million, compared to $(33.5) million for the same period
last year. Cash, cash equivalents, and restricted cash were $1.2
billion as of June 30, 2022, compared to $1.0 billion as of June
30, 2021.
Recent Business Highlights
- Unity announces intent to merge with ironSource. Unity
announced that it entered into a definitive agreement under which
ironSource will merge into a wholly-owned subsidiary of Unity. The
companies’ complementary offerings create a unique end-to-end
platform that allows creators to create, publish, run, monetize,
and grow live games and RT3D content seamlessly. The proposed
all-stock transaction has been approved by the boards of directors
of both companies, is expected to close during Unity’s fourth
quarter of 2022 and is subject to customary closing conditions, and
regulatory and shareholder approval. Additional details and
information about the terms and conditions of the transaction are
available in Current Reports on Form 8-K or Form 6-K, as
applicable, filed by Unity and ironSource with the Securities and
Exchange Commission.
- Unity forms a new joint-venture to grow its business in
China. Unity announced it will contribute its operations in
China, other than Unity Ads, and including its local operating
teams, local customer relationships, and locally developed IP
across its Create Solutions, Unity Gaming Services, and Strategic
Partnerships portfolio into a new venture, Unity China, which will
be majority owned and controlled by Unity. Joining Unity in this
venture are several of Unity’s strategic partners in China
including Alibaba, China Mobile, G-Bits, miHoYo, OPPO, PCI Tech,
and Douyin Group. Together with our sustained investment, these
partners will help Unity China unlock new local technology
development, provide strategic support, and drive deeper engagement
as preferred customers. The transaction is subject to customary
closing conditions, which we expect to complete within the next few
weeks.
- Unity announces partnership with Microsoft. Unity
jointly announced with Microsoft that it has selected Azure as its
cloud partner to build and operate real-time 3D (RT3D) experiences
from the Unity engine, and to grow the mutual commitment to
bringing game developers the tools they need to more easily build
games and reach more players around the world.
- Unity announces Unity Gaming Services general
availability. In June, Unity Gaming Services graduated into
general availability. The effort gives creators one dashboard with
centralized data and SDKs designed for interoperability, which
means less time managing a tech stack and more time creating, so
developers can focus on great gameplay.
- Second Dinner launches MARVEL SNAP into several global
markets. Made with Unity, MARVEL SNAP is a fast-paced strategic
card battler for mobile and PC where players build their Marvel
dream team from a massive roster of heroes and villains.
- Unity Accelerate Solutions Propels V-Rising to Overnight
Success. PC games developed on Unity rose to the top of the
Steam charts in the quarter, including V Rising from Stunlock,
demonstrating how Unity enables small teams with big ideas to punch
above their weight and achieve both critical and commercial
success.
- Unity announces partnership with Capgemini. The two
companies announced that they will jointly define and execute
sector-specific solutions and professional services to deliver
tailored platforms for their customers. This new global partnership
will focus on sectors and use cases where digital customer or
employee experiences will benefit most: consumer goods &
retail, manufacturing, life sciences, telecommunications, media
& technology, energy & utilities, financial services, and
public services.
- Unity strengthens partnership with Mercedes/Daimler.
This quarter Unity announced that, from 2024 onwards, Mercedes-Benz
cars will be equipped with an HMI made with Unity. With this
agreement, Unity is now an integral partner of one of the world’s
leading and most storied luxury automotive OEMs. Together,
Mercedes-Benz and Unity are taking next-generation user interaction
– such as maps, avatars/AI concierges and in-car entertainment – to
a new level by implementing a real-time 3D engine. We are proud to
have found a new partner in Mercedes-Benz to equip their vehicles
with our visual fidelity and performance – including our years of
experience in mobile gaming.
- Unity partners with CACI International. Unity was
awarded an exciting three-year multi-million dollar contract to
Advance the Development of Smart Human Machine Interfaces by CACI
International. This win is the single largest Digital Twin
Solutions deal for Unity to date and is a strategic deal that helps
to solidify Unity as the preferred real-time 3D platform for future
systems design and simulation programs across the US
Government.
Outlook
Unity is providing the following guidance for the third quarter
and for the full year ending December 31, 2022.
Q3 2022
2022
Guidance
Guidance
Revenue (in millions)
$315 — $335
$1,300 — $1,350
Year-over-year revenue growth
10% — 17%
17% — 22%
Non-GAAP loss from operations (in
millions)
($35) — ($50)
($95) — ($115)
Non-GAAP operating margin
(10%) — (16%)
(7%) — (9%)
Fully diluted shares outstanding
375M
376M
A reconciliation of non-GAAP guidance measures to corresponding
GAAP measures is not available on a forward-looking basis without
unreasonable effort due to the uncertainty of expenses that may be
incurred in the future and cannot be reasonably determined or
predicted at this time, although it is important to note that these
factors could be material to Unity’s results computed in accordance
with GAAP.
Earnings Webcast Details
Unity plans to host a video webcast for analysts and investors
today to discuss its second quarter and year-to-date 2022 financial
results and outlook for its third quarter and full-year 2022. The
video webcast is scheduled to begin at 2:00 p.m. Pacific Time/5:00
p.m. Eastern Time and can be accessed at the Unity Investor
Relations website at investors.unity.com. The video webcast will be
available live, and a replay will be available on the Investor
Relations website following completion of the live broadcast for
approximately 90 days.
A copy of the prepared remarks for the video webcast has been
posted on the Unity Investor Relations website at
investors.unity.com, simultaneously with the issuing of this press
release.
About Unity
Unity is the world’s leading platform for creating and operating
interactive, real-time 3D content. Our platform provides a
comprehensive set of software solutions to create, run, and
monetize interactive, real-time 2D and 3D content for mobile
phones, tablets, PCs, consoles, and augmented and virtual reality
devices. We serve customers of all sizes, at every stage of
maturity, from individual creators to large enterprises. For more
information, visit unity.com.
Unity uses its Investor Relations website (investors.unity.com),
filings with the SEC, press releases, public conference calls, and
public webcasts as means of disclosing material nonpublic
information and for complying with its disclosure obligations under
Regulation FD.
Use of Non-GAAP Financial Measures
Reconciliations of non-GAAP financial measures to Unity’s
financial results as determined in accordance with GAAP are
included at the end of this press release following the
accompanying financial data. For a description of these non-GAAP
financial measures, including the reasons management uses each
measure, please see the section of the tables titled “About
Non-GAAP Financial Measures.”
Cautionary Statement Regarding Forward-Looking
Statements
This communication includes forward-looking statements. These
forward-looking statements generally can be identified by phrases
such as “will,” “expects,” “anticipates,” “foresees,” “forecasts,”
“estimates” or other words or phrases of similar import. These
statements are based on current expectations, estimates and
projections about the industry and markets in which Unity Software
Inc. (“Unity”) and ironSource Ltd. (“ironSource”) operate and
management’s beliefs and assumptions as to the timing and outcome
of future events, including the transactions described in this
communication. While Unity’s and ironSource’s management believe
the assumptions underlying the forward-looking statements are
reasonable, such information is necessarily subject to
uncertainties and may involve certain risks, many of which are
difficult to predict and are beyond management’s control. These
risks and uncertainties include, but are not limited to: (i) the
impact of the ongoing COVID-19 pandemic and challenging
macroeconomic environment on our business, as well as our
customers, prospects, partners, and service providers; (ii) Unity’s
ability to achieve profitability and the timing for any such
achievement; (iii) Unity’s ability to retain existing customers and
expand the use of our platform; (iv) our ability to further expand
into new industries and attract new customers; (v) the impact of
any changes of terms of service, policies or technical requirements
from operating system platform providers or application stores
which may result in changes to our or our customers’ business
practices; (vi) Unity’s ability to maintain favorable relationships
with hardware, operating system, device, game console and other
technology providers; (vii) our ability to compete effectively in
the markets in which we participate; (viii) breaches in our
security measures, unauthorized access to our platform, our data,
or our customers’ or other users’ personal data; (ix) Unity’s
ability to manage growth effectively; (x) the rapidly changing and
increasingly stringent laws, contractual obligations and industry
standards that relate to privacy, data security and the protection
of children; (xi) Unity’s ability to successfully integrate Weta
Digital’s technology and business, and related costs and expenses;
(xii) the expected benefits of partnerships and joint ventures,
including Unity China; (xiii) the expected timing and likelihood of
completion of the proposed transaction with ironSource, including
the timing, receipt and terms and conditions of any required
governmental and regulatory approvals of the proposed transaction;
(xiv) the occurrence of any event, change or other circumstances
that could give rise to the termination of the merger agreement;
(xv) the outcome of any legal proceedings that may be instituted
against the parties and others following announcement of the merger
agreement; (xvi) the inability to consummate the transaction due to
the failure to obtain the requisite stockholder approvals or the
failure to satisfy other conditions to completion of the
transaction; (xvii) risks that the proposed transaction disrupts
current plans and operations of Unity and ironSource; (xviii) the
ability to recognize the anticipated benefits of the transaction,
including anticipated synergies; (xix) the amount of the costs,
fees, expenses and charges related to the transaction; (xx) Unity’s
expected stock buyback occurring as planned or at all; (xxi) and
the other risks and important factors contained and identified in
Unity’s and ironSource’s filings with the Securities and Exchange
Committee (“SEC”), such as Unity’s Annual Report on Form 10-K for
the fiscal year ended December 31, 2021 and subsequent Quarterly
Reports on Form 10-Q and Current Reports on Form 8-K, and
ironSource’s Annual Report on Form 20-F for the fiscal year ended
December 31, 2021 and subsequent Current Reports on Form 6-K, any
of which could cause actual results to differ materially from the
forward-looking statements in this communication. There can be no
assurance that the proposed transaction will in fact be
consummated. We caution investors not to unduly rely on any
forward-looking statements. The forward-looking statements speak
only as of the date of this press release. Neither Unity nor
ironSource is under any duty to update any of these forward-looking
statements after the date of this communication, nor to conform
prior statements to actual results or revised expectations, and
neither Unity nor ironSource intends to do so.
Important Information for Investors and Stockholders
In connection with the proposed transaction, Unity has filed
with the SEC a registration statement on Form S-4 that includes a
preliminary joint proxy statement of Unity and ironSource that also
constitutes a preliminary prospectus of Unity, which joint proxy
statement/prospectus will be mailed or otherwise disseminated to
Unity’s and ironSource’s respective securityholders, as applicable,
when it is declared effective by the SEC. Unity and ironSource also
plan to file other relevant documents with the SEC regarding the
proposed transaction. INVESTORS ARE URGED TO READ THE PRELIMINARY
JOINT PROXY STATEMENT/PROSPECTUS AND OTHER RELEVANT DOCUMENTS FILED
WITH THE SEC IF AND WHEN THEY BECOME AVAILABLE, BECAUSE THEY WILL
CONTAIN IMPORTANT INFORMATION.
Investors and securityholders may obtain free copies of the
registration statement and the preliminary joint proxy
statement/prospectus and other relevant documents filed by Unity
and ironSource with the SEC at the SEC’s website at www.sec.gov.
Copies of the documents filed by the companies will be available
free of charge on their respective websites at www.unity.com and
www.is.com.
Participants in Solicitation
Unity, ironSource and their respective directors and executive
officers may be considered participants in the solicitation of
proxies in connection with the proposed transaction. Information
about the directors and executive officers of Unity is set forth in
its proxy statement for its 2022 annual meeting of stockholders,
which was filed with the SEC on April 20, 2022. Information about
the directors and executive officers of ironSource is set forth in
its Annual Report on Form 20-F for the fiscal year ended December
31, 2021, which was filed with the SEC on March 30, 2022. These
documents can be obtained free of charge from the sources indicated
above. Additional information regarding the participants in the
proxy solicitations and a description of their direct and indirect
interests, by security holdings or otherwise, are contained in the
preliminary joint proxy statement/prospectus and other relevant
materials to be filed with the SEC when they become available.
No Offer or Solicitation
This communication is not intended to and shall not constitute
an offer to sell or the solicitation of an offer to sell or the
solicitation of an offer to buy any securities or a solicitation of
any vote of approval, nor shall there be any sale of securities in
any jurisdiction in which such offer, solicitation or sale would be
unlawful prior to registration or qualification under the
securities laws of any such jurisdiction. No offer of securities
shall be made except by means of a prospectus meeting the
requirements of Section 10 of the Securities Act of 1933, as
amended.
© 2022 Unity Software Inc. All rights reserved. The Unity design
logos, “Unity” and our other registered or common law trademarks,
service marks, or trade names are the property of Unity Software
Inc. or its affiliates. Other trade names, trademarks, and service
marks are the property of their respective owners.
About Non-GAAP Financial Measures
To supplement our consolidated financial statements prepared and
presented in accordance with generally accepted accounting
principles in the United States (GAAP) we use certain non-GAAP
performance financial measures, as described below, to evaluate our
ongoing operations and for internal planning and forecasting
purposes. We believe the following non-GAAP measures are useful in
evaluating our operating performance. We are presenting these
non-GAAP financial measures because we believe, when taken
collectively, they may be helpful to investors because they provide
consistency and comparability with past financial performance. In
the future, we may also exclude non-recurring expenses and other
expenses that do not reflect our overall operating results.
However, non-GAAP financial measures have limitations in their
usefulness to investors because they have no standardized meaning
prescribed by GAAP and are not prepared under any comprehensive set
of accounting rules or principles. In addition, other companies,
including companies in our industry, may calculate similarly-titled
non-GAAP financial measures differently or may use other measures
to evaluate their performance, all of which could reduce the
usefulness of our non-GAAP financial measures as tools for
comparison. As a result, our non-GAAP financial measures are
presented for supplemental informational purposes only and should
not be considered in isolation or as a substitute for our
consolidated financial statements presented in accordance with
GAAP.
Non-GAAP Gross Profit, Non-GAAP Operating Expenses, and
Non-GAAP Loss from Operations
We define non-GAAP gross profit as gross profit excluding
stock-based compensation expense, employer tax related to employee
stock transactions, amortization of acquired intangible assets
expense, and restructuring charges. We define non-GAAP research and
development expense and non-GAAP sales and marketing expense as
research and development expense and sales and marketing expense,
respectively, excluding stock-based compensation expense, employer
tax related to employee stock transactions, amortization of
acquired intangible assets expense, and restructuring charges. We
define non-GAAP general and administrative expense as general and
administrative expense excluding stock-based compensation expense,
employer tax related to employee stock transactions, costs incurred
from a legal entity reorganization in China, acquisition-related
costs, restructuring charges, and a one-time expense for the
termination of a future lease agreement. We define non-GAAP loss
from operations as loss from operations excluding stock-based
compensation expense, employer tax related to employee stock
transactions, amortization of acquired intangible assets expense,
costs incurred from a legal entity reorganization in China,
acquisition-related costs, restructuring charges, and a one-time
expense for the termination of a future lease agreement.
We use non-GAAP gross profit and non-GAAP loss from operations
in conjunction with traditional GAAP measures to evaluate our
financial performance. We believe that non-GAAP gross profit and
non-GAAP loss from operations provides our management and investors
consistency and comparability with our past financial performance
and facilitates period-to-period comparisons of operations, as
these metrics exclude stock-based compensation expense, employer
tax related to employee stock transactions, amortization of
acquired intangible assets expense, costs incurred from a legal
entity reorganization in China, acquisition-related costs,
restructuring charges, and a one-time expense for the termination
of a future lease agreement, which we do not consider to be
indicative of our overall operating performance.
Non-GAAP gross profit, non-GAAP operating expenses, and non-GAAP
loss from operations have limitations as analytical tools, and you
should not consider them in isolation or as a substitute for
analysis of our results as reported under GAAP. Some of these
limitations are:
- they exclude expense associated with our equity compensation
plan, although equity compensation has been, and will continue to
be, an important part of our compensation strategy;
- non-GAAP research and development expense, non-GAAP sales and
marketing expense, non-GAAP gross profit, and non-GAAP loss from
operations exclude the expense of amortization of acquired
intangible assets, and although these are non-cash expenses, the
assets being amortized may have to be replaced in the future and
the aforementioned non-GAAP measures do not reflect cash
expenditure for such replacements;
- they exclude costs incurred from a legal entity reorganization
in China;
- they exclude costs incurred from our acquisitions;
- they exclude costs incurred from restructuring activities that
we initiated during the three months ended June 30, 2022;
- non-GAAP loss from operations excludes the one-time expense for
the termination of a future lease agreement, although there is no
guarantee that the company will not incur similar expenses in the
future; and
- the expenses and other items that we exclude in our calculation
of non-GAAP gross profit, non-GAAP operating expenses, and non-GAAP
loss from operations may differ from the expenses and other items,
if any, that other companies may exclude from this measure or
similarly titled measures, which reduces their usefulness as
comparative measures.
Non-GAAP Net Loss and Non-GAAP Net Loss per Share
We define non-GAAP net loss and non-GAAP net loss per share as
net loss and net loss per share excluding stock-based compensation
expense, employer tax related to employee stock transactions,
amortization of acquired intangible assets expense, costs incurred
from a legal entity reorganization in China, acquisition-related
costs, restructuring charges, and a one-time expense for the
termination of a future lease agreement, as well as the related tax
effects of these items. We use non-GAAP net loss and non-GAAP net
loss per share in conjunction with traditional GAAP measures to
evaluate our financial performance. We believe that these non-GAAP
measures provide our management and investors consistency and
comparability with our past financial performance and facilitates
period-to-period comparisons of operations.
Non-GAAP net loss and non-GAAP net loss per share have
limitations as analytical tools, and you should not consider them
in isolation or as a substitute for analysis of our results as
reported under GAAP. Some of these limitations are:
- they exclude expense associated with our equity compensation
plan, although equity compensation has been, and will continue to
be, an important part of our compensation strategy;
- they exclude the expense of amortization of acquired intangible
assets, and although these are non-cash expenses, the assets being
amortized may have to be replaced in the future and non-GAAP loss
from operations does not reflect cash expenditure for such
replacements;
- they exclude costs incurred from a legal entity reorganization
in China;
- they exclude the costs incurred from our acquisitions;
- they exclude costs incurred from restructuring activities that
we initiated during the three months ended June 30, 2022;
- they exclude the one-time expense for the termination of a
future lease agreement, although there is no guarantee that the
company will not incur similar expenses in the future;
- as further described below, we must make certain assumptions in
order to determine the income tax effect adjustment for non-GAAP
net loss, which assumptions may not prove to be accurate; and
- the expenses and other items that we exclude in our calculation
of non-GAAP net loss and non-GAAP net loss per share may differ
from the expenses and other items, if any, that other companies may
exclude from this measure or similarly titled measures, which
reduces their usefulness as comparative measures.
Income Tax Effects of Non-GAAP Adjustments
We utilize a fixed annual projected tax rate in our computation
of non-GAAP income tax effects to provide better consistency across
interim reporting periods. In projecting this non-GAAP tax rate, we
utilize a financial projection that excludes the direct impact of
the non-GAAP adjustments described above, and eliminates the
effects of non-recurring and period specific items which can vary
in size and frequency. The projected rate considers other factors
such as our current operating structure, existing tax positions in
various jurisdictions, and key legislation in major jurisdictions
where we operate. For the year ended December 31, 2021, the
non-GAAP tax rate was (22)%. For the year ending December 31, 2022,
we have determined the projected non-GAAP tax rate to be (10)%. We
will periodically re-evaluate this tax rate, as necessary, for
significant events, relevant tax law changes, material changes in
the forecasted geographic earnings mix, and any significant
acquisitions.
Free Cash Flow
We define free cash flow as net cash provided by (used in)
operating activities less cash used for purchases of property and
equipment. We believe that free cash flow is a useful indicator of
liquidity as it measures our ability to generate cash, or our need
to access additional sources of cash, to fund operations and
investments.
Free cash flow has limitations as an analytical tool, and you
should not consider it in isolation or as a substitute for analysis
of our results as reported under GAAP. Some of these limitations
are:
- it is not a substitute for net cash provided by (used in)
operating activities;
- other companies may calculate free cash flow or similarly
titled non-GAAP measures differently or may use other measures to
evaluate their performance, all of which could reduce the
usefulness of free cash flow as a tool for comparison; and
- the utility of free cash flow is further limited as it does not
reflect our future contractual commitments and does not represent
the total increase or decrease in our cash balance for any given
period.
Adjusted EBITDA and EBITDA
We define Adjusted EBITDA as net income, less income taxes,
interest expense, depreciation and amortization and stock-based
compensation expense. We define EBITDA as Earnings before Interest,
Taxes, Depreciation and Amortization. We believe Adjusted EBITDA
and EBITDA are useful in evaluating our operating performance
Key Metrics
We monitor the following key metrics to help us evaluate the
health of our business, identify trends affecting our growth,
formulate goals and objectives, and make strategic decisions.
Customers Contributing More Than $100,000 of Revenue
We focus on the number of customers that generated more than
$100,000 of revenue in the trailing 12 months, as this segment of
our customer base represents the majority of our revenue and
revenue growth. We define a customer as an individual or entity
that generated revenue during the measurement period. A single
organization with multiple divisions, segments, or subsidiaries is
generally counted as a single customer, even though we may enter
into commercial agreements with multiple parties within that
organization.
Dollar-Based Net Expansion Rate
We track our performance by measuring our dollar-based net
expansion rate, which compares our Create and Operate Solutions
revenue from the same set of customers across comparable periods,
calculated on a trailing 12-month basis. Our dollar-based net
expansion rate as of a period end is calculated as current period
revenue divided by prior period revenue. Prior period revenue is
the trailing 12-month revenue measured as of such prior period end
and includes revenue from all customers that contributed revenue
during such trailing 12-month period. Current period revenue is the
trailing 12-month revenue from these same customers as of the
current period end. Our dollar-based net expansion rate includes
the effect of any customer renewals, expansion, contraction, and
churn but excludes revenue from new customers in the current
period.
Source: Unity
UNITY SOFTWARE INC.
CONDENSED CONSOLIDATED BALANCE
SHEETS
(In thousands, except par
value)
(Unaudited)
As of
June 30, 2022
December 31,
2021
Assets
Current assets:
Cash and cash equivalents
$
1,162,385
$
1,055,776
Marketable securities
591,475
681,323
Accounts receivable, net
322,332
340,491
Prepaid expenses and other
81,559
73,520
Total current assets
2,157,751
2,151,110
Property and equipment, net
112,489
106,106
Goodwill
1,657,920
1,620,127
Intangible assets, net
758,109
814,386
Restricted cash
10,755
10,823
Other assets
143,152
138,794
Total assets
$
4,840,176
$
4,841,346
Liabilities and stockholders’
equity
Current liabilities:
Accounts payable
$
11,633
$
14,009
Accrued expenses and other
214,217
233,976
Publisher payables
197,631
237,637
Deferred revenue
202,990
140,528
Total current liabilities
626,471
626,150
Convertible notes
1,705,268
1,703,035
Long-term deferred revenue
131,519
15,945
Other long-term liabilities
94,847
101,825
Total liabilities
2,558,105
2,446,955
Commitments and contingencies
Stockholders’ equity:
Common stock, $0.000005 par value;
Authorized shares - 1,000,000 and
1,000,000
Issued and outstanding shares - 298,028
and 292,592
2
2
Additional paid-in capital
4,005,333
3,729,874
Accumulated other comprehensive loss
(9,924
)
(3,858
)
Accumulated deficit
(1,713,340
)
(1,331,627
)
Total stockholders’ equity
2,282,071
2,394,391
Total liabilities and stockholders’
equity
$
4,840,176
$
4,841,346
UNITY SOFTWARE INC.
CONDENSED CONSOLIDATED
STATEMENTS OF OPERATIONS AND COMPREHENSIVE LOSS
(In thousands, except per
share amounts)
(Unaudited)
Three Months Ended
Six Months Ended
June 30,
June 30,
2022
2021
2022
2021
Revenue
$
297,043
$
273,562
$
617,169
$
508,334
Cost of revenue
96,836
57,725
190,669
116,459
Gross profit
200,207
215,837
426,500
391,875
Operating expenses
Research and development
215,960
154,216
437,000
308,231
Sales and marketing
100,908
74,888
204,847
144,681
General and administrative
81,005
135,917
153,480
199,049
Total operating expenses
397,873
365,021
795,327
651,961
Loss from operations
(197,666
)
(149,184
)
(368,827
)
(260,086
)
Interest expense
(1,123
)
(485
)
(2,234
)
(600
)
Interest income and other expense, net
(3,058
)
70
(2,117
)
1,635
Loss before income taxes
(201,847
)
(149,599
)
(373,178
)
(259,051
)
Provision for (benefit from) income
taxes
2,311
(1,257
)
8,535
(3,249
)
Net loss
(204,158
)
(148,342
)
(381,713
)
(255,802
)
Other comprehensive loss, net of
taxes:
Change in foreign currency translation
adjustment
(366
)
81
(347
)
50
Change in unrealized losses on marketable
securities
(1,291
)
(3
)
(5,719
)
(106
)
Comprehensive loss
$
(205,815
)
$
(148,264
)
$
(387,779
)
$
(255,858
)
Basic and diluted net loss per share
$
(0.69
)
$
(0.53
)
$
(1.29
)
$
(0.92
)
Weighted-average shares used in
computation of basic and diluted net loss per share
296,849
280,374
295,602
278,233
UNITY SOFTWARE INC.
CONDENSED CONSOLIDATED
STATEMENTS OF CASH FLOWS
(In thousands)
(Unaudited)
Three Months Ended June
30,
Six Months Ended June
30,
2022
2021
2022
2021
Operating activities
Net loss
$
(204,158
)
$
(148,342
)
$
(381,713
)
$
(255,802
)
Adjustments to reconcile net loss to net
cash provided by (used in) operating activities:
Depreciation and amortization
42,636
12,270
84,108
24,102
Stock-based compensation expense
118,242
85,400
221,669
151,961
Other
2,630
6,239
5,890
7,680
Changes in assets and liabilities, net of
effects of acquisitions:
Accounts receivable, net
10,341
(42,488
)
17,873
(67,549
)
Prepaid expenses and other
1,091
(559
)
(8,025
)
(14,778
)
Other assets
8,465
8,792
13,333
(7,753
)
Accounts payable
(620
)
(7,577
)
(582
)
(1,274
)
Accrued expenses and other
13,178
27,705
(16,468
)
3,970
Publisher payables
(16,226
)
35,052
(40,006
)
39,099
Other long-term liabilities
(7,049
)
(7,208
)
(15,663
)
(3,455
)
Deferred revenue
(11,400
)
4,035
178,014
8,236
Net cash provided by (used in)
operating activities
(42,870
)
(26,681
)
58,430
(115,563
)
Investing activities
Purchases of marketable securities
(68,134
)
(161,726
)
(150,911
)
(290,808
)
Proceeds from principal repayments on
marketable securities
7,501
9,607
30,683
11,624
Maturities of marketable securities
122,965
90,000
200,666
168,000
Purchases of non-marketable
investments
—
(600
)
(15,000
)
(4,600
)
Sales of non-marketable investments
1,000
—
1,000
—
Purchases of property and equipment
(15,428
)
(6,807
)
(30,357
)
(18,551
)
Business acquisitions, net of cash
acquired, and other
(2,010
)
(44,613
)
(25,647
)
(69,430
)
Net cash provided by (used in)
investing activities
45,894
(114,139
)
10,434
(203,765
)
Financing activities
Proceeds from issuance of common stock
from employee equity plans
7,502
15,435
37,718
38,059
Net cash provided by financing
activities
7,502
15,435
37,718
38,059
Effect of foreign exchange rate changes
on cash, cash equivalents, and restricted cash
(78
)
80
(41
)
89
Increase (decrease) in cash, cash
equivalents, and restricted cash
10,448
(125,305
)
106,541
(281,180
)
Cash and restricted cash, beginning of
period
1,162,692
1,138,072
1,066,599
1,293,947
Cash, cash equivalents, and restricted
cash, end of period
$
1,173,140
$
1,012,767
$
1,173,140
$
1,012,767
UNITY SOFTWARE INC.
RECONCILIATION BETWEEN GAAP
AND NON-GAAP FINANCIAL MEASURES
(In thousands, except
percentages and per share data)
(Unaudited)
Three Months Ended
Six Months Ended
June 30,
June 30,
2022
2021
2022
2021
Gross profit reconciliation
GAAP gross profit
$
200,207
$
215,837
$
426,500
$
391,875
Add:
Stock-based compensation expense
11,839
5,340
20,633
10,457
Employer tax related to employee stock
transactions
205
511
1,593
3,272
Amortization of intangible assets
expense
7,630
—
15,185
—
Restructuring charges
264
—
264
—
Non-GAAP gross profit
$
220,145
$
221,688
$
464,175
$
405,604
GAAP gross margin
67
%
79
%
69
%
77
%
Non-GAAP gross margin
74
%
81
%
75
%
80
%
Operating expenses
reconciliation
Research and development
GAAP research and development expense
$
215,960
$
154,216
$
437,000
$
308,231
Add:
Stock-based compensation expense
(49,981
)
(33,227
)
(105,234
)
(64,877
)
Employer tax related to employee stock
transactions
(1,955
)
(3,349
)
(7,729
)
(13,447
)
Amortization of intangible assets
expense
(18,521
)
(3,336
)
(36,626
)
(6,513
)
Restructuring charges
(1,896
)
—
(1,896
)
—
Non-GAAP research and development
expense
$
143,607
$
114,304
$
285,515
$
223,394
GAAP research and development expense as a
percentage of revenue
73
%
56
%
71
%
61
%
Non-GAAP research and development expense
as a percentage of revenue
48
%
42
%
46
%
44
%
Sales and marketing
GAAP sales and marketing expense
$
100,908
$
74,888
$
204,847
$
144,681
Add:
Stock-based compensation expense
(23,194
)
(14,523
)
(47,028
)
(26,560
)
Employer tax related to employee stock
transactions
(478
)
(857
)
(1,998
)
(3,085
)
Amortization of intangible assets
expense
(6,980
)
(1,373
)
(14,022
)
(2,655
)
Restructuring charges
(1,582
)
—
(1,582
)
—
Non-GAAP sales and marketing expense
$
68,674
$
58,135
$
140,217
$
112,381
GAAP sales and marketing expense as a
percentage of revenue
34
%
27
%
33
%
28
%
Non-GAAP sales and marketing expense as a
percentage of revenue
23
%
21
%
23
%
22
%
General and administrative
GAAP general and administrative
expense
$
81,005
$
135,917
$
153,480
$
199,049
Add:
Stock-based compensation expense
(20,981
)
(32,310
)
(36,527
)
(50,067
)
Employer tax related to employee stock
transactions
(390
)
(1,409
)
(1,460
)
(2,780
)
Legal entity reorganization costs
(2,315
)
—
(4,645
)
—
Acquisition-related costs
(3,437
)
(2,470
)
(4,518
)
(3,346
)
Restructuring charges
(1,893
)
—
(1,893
)
—
Lease termination expense
—
(49,795
)
—
(49,795
)
Non-GAAP general and administrative
expense
$
51,989
$
49,933
$
104,437
$
93,061
GAAP general and administrative expense as
a percentage of revenue
27
%
50
%
25
%
39
%
Non-GAAP general and administrative
expense as a percentage of revenue
18
%
18
%
17
%
18
%
Loss from operations
reconciliation
GAAP loss from operations
$
(197,666
)
$
(149,184
)
$
(368,827
)
$
(260,086
)
Add:
Stock-based compensation expense
105,995
85,400
209,422
151,961
Employer tax related to employee stock
transactions
3,028
6,126
12,780
22,584
Amortization of intangible assets
expense
33,131
4,709
65,833
9,168
Legal entity reorganization costs
2,315
—
4,645
—
Acquisition-related costs
3,437
2,470
4,518
3,346
Restructuring charges
5,635
—
5,635
—
Lease termination expense
—
49,795
—
49,795
Non-GAAP loss from operations
$
(44,125
)
$
(684
)
$
(65,994
)
$
(23,232
)
GAAP operating margin
(67
)%
(55
)%
(60
)%
(51
)%
Non-GAAP operating margin
(15
)%
—
%
(11
)%
(5
)%
Net loss and net loss per share
reconciliation
GAAP net loss
$
(204,158
)
$
(148,342
)
$
(381,713
)
$
(255,802
)
Add:
Stock-based compensation expense
105,995
85,400
209,422
151,961
Employer tax related to employee stock
transactions
3,028
6,126
12,780
22,584
Amortization of intangible assets
expense
33,131
4,709
65,833
9,168
Legal entity reorganization costs
2,315
—
4,645
—
Acquisition-related costs
3,437
2,470
4,518
3,346
Restructuring charges
5,635
—
5,635
—
Lease termination expense
—
49,795
—
49,795
Income tax effect of non-GAAP
adjustments
(2,520
)
(1,499
)
1,500
(8,312
)
Non-GAAP net loss
$
(53,137
)
$
(1,341
)
$
(77,380
)
$
(27,260
)
GAAP net loss per share attributable to
our common stockholders, basic and diluted
$
(0.69
)
$
(0.53
)
$
(1.29
)
$
(0.92
)
Total impact on net loss per share, basic
and diluted, from non-GAAP adjustments
0.51
0.52
1.03
0.82
Non-GAAP net loss per share attributable
to our common stockholders, basic and diluted
$
(0.18
)
$
(0.01
)
$
(0.26
)
$
(0.10
)
Weighted-average common shares used in
GAAP net loss per share computation, basic and diluted
296,849
280,374
295,602
278,233
Weighted-average common shares used in
non-GAAP net loss per share computation, basic and diluted
296,849
280,374
295,602
278,233
Free cash flow reconciliation
Net cash provided by (used in) operating
activities
$
(42,870
)
$
(26,681
)
$
58,430
$
(115,563
)
Less:
Purchases of property and equipment
(15,428
)
(6,807
)
(30,357
)
(18,551
)
Free cash flow
$
(58,298
)
$
(33,488
)
$
28,073
$
(134,114
)
Net cash provided by (used in) investing
activities
$
45,894
$
(114,139
)
$
10,434
$
(203,765
)
Net cash provided by financing
activities
$
7,502
$
15,435
$
37,718
$
38,059
View source
version on businesswire.com: https://www.businesswire.com/news/home/20220809005928/en/
Investor Relations: Richard Davis
richard.davis@unity3d.com
Media Relations: Ryan Wallace
ryan.wallace@unity3d.com
Unity Software (NYSE:U)
Historical Stock Chart
From Mar 2024 to Apr 2024
Unity Software (NYSE:U)
Historical Stock Chart
From Apr 2023 to Apr 2024