Unity Software (U) 9 Nov 232023 Q3 Earnings call transcript

Before we begin, I want to note that today's discussion contains forward-looking statements, including statements about goals, business outlook, industry trends, market opportunities, expectations for future financial performance and similar items, all of which are subject to risks, uncertainties and assumptions.

So you can find more information about these risks and uncertainties in the Risk Factors section of our filings at sec.gov. And actual results may differ, and we take no obligation to revise or update any forward-looking statements.

Finally, during today's meeting, we will discuss non-GAAP financial measures.

Now these non-GAAP financial measures are in addition to and not a substitute for or superior to measures of financial performance prepared in accordance with GAAP.

GAAP on is the of shareholder in reconciliation and letter sec.gov full to available non-GAAP our A website. Great.

opening So over let some to call comments. Jim to me kind of turn the make

I thank that. let Well, right. good everyone, describes us our We thank that today's And QX as results. you All the me earnings shareholder joining for letter assume today you. afternoon read say to call. you've released all on and well our as

points quick before get let me X So highlight Q&A. we just into

we First been month. that Unity design of impressed role job level community. our best-in-class more start for And so unquestionably inside broadly make creators and now of I from passion, Unity now the to is shows good the successful It's is so It that more the from that a the monetization. elicit off, engagement help much I'm build in thing on to which at passion most I've And we community. in about that our company and of from the task, to our have finish importance a the to to focus with community. platform have our both a say, important that

more most Unity a to ensuring has losing even profitability Second, into transform top once do position to That's by technology a we to to some a accelerate that. succeed, good We'll amazing naturally cash we tripling need we'll company bring we're but from with large positive and first And If importantly, and there focused year. changed, examining talk the about money Unity but by growth it. frankly, doubling, more flow customers not world in that steps that. from from an business, that, good nimble Unity expenses changing we're We've succeed. bottom, building down than on markets less if helps and get we on growth. a the taken that first growing to our down, third, step, company focusing sure flow we changing I'm and

that, call to over turn let with So Richard. me the

Great. Well, thanks lot. a

So what things as kind the that. inbound questions we quarter get of done we've the past which in during we'll like maybe do, and

we'll maybe the So Luis X common then we'll with hit to and get. kind we We'll things most of and to often go like then like Jim questions Q&A that. we'll and go open start

a been back, kind What's if term here So in the X step for maybe looking of like do it's vision? your fair not, you see or short for do month, Jim, company know see years? X you to I what what but you've you and but

start saying, community. of as Yes, I've broad sure. a And off let a in had building part business company a me experience

So I we and naturally about community. come think how focus on back

from of their if I And for of an the put be simply and of trusted X creations. technology. leader of be just our community build, want dollars game in profit to a alone operate indispensable to building hundreds So on that us we'll market. creators creators partner years, of is that, billions That because I

our with Secondly, impressed to is so incredibly of is I've enterprise, the been enterprises. and things coming technology, from this relevant X

and for that a that technology of choice the untapped is Again, individuals is content. with And default the and to well. enterprises so interact second piece potential our tremendous as create like see as XD I'd to

really leader game the partner if we things in that's exciting And of to, an be world comes technology being a and X kind XD so visualization developers, those helping that do a can business. indefensible the

letter, some interventions to of kind that are considered? the the in addressed but degree you shareholder being it's key some Luis, could of then And Great. explain

ago. weeks comprehensive a started portfolio through, several every product we're I And would Sure. Thank We X our Richard. say, you, of lenses. evaluating assessment portfolio in product our

others. us we differentiates First, need way unique our meeting a that in customer are from

revenue, are over to is a grow we're enough in early able Second, opportunity planning, we time. share flow and at and levels; the business attractive build this expand and specifics. to large And meaningful great it margins is generate sustainable cash while evaluation to making and progress third, free still more

making completed end the we Now what QX. is product that full of we changes expect QX, implementation you portfolio be this our expect of can and by be will the changes in quarter the to to

said, our structure in announcing next reduction to to we force, Jim reduction a months. continuing will be few office improve to a locations, and we're which the Back As you, cost adjust in lead will also margins, Richard. to this over

much. very Thanks Great.

Okay.

Q&A the Now from to open we it analysts. up can

Thomas, So Yes, people in Becker queue, can the are and them the see Blair. that in drop Dylan William you if we can at there.

that But the some how initiatives maybe to letter, business seen. looking month opportunity Jim, shareholder a of the at the it narrowing you've maybe seeing of you've you, and prior starting on in, maybe with there's your you're playbook some -- think, to underway, obviously, scope but that and in the I a here. done some focus focus there's efficiency drive experiences utilize maybe relative past the again, some of lot

but but got product be I Red the a Hat you Linux, and throughout are the is Red always And this. a first or things. and winning doing amount and X just too I Enterprise where is an of Frankly, of right Red not the more And you management to win. fewer careful doing or we're question. to with to not a there spending which time broadly, X Hat, expense have it's it much lot parallels, that tremendous get Hat it, Great from focus frankly, want organization other things. of parallel had when frankly, with time to associated the clarity drawing X attention is industry-leading

have there other some things. we leading off product do actually very, fit of nicely. then synergies. are and simply. I in well of frankly, lot very which But that's so there share of we're doing that, obviously And a parallels lot extensions a with good are growing doing a things, see just We're And

think there's And too is to let's very that. business narrowing we we down, path doing other the our our one directly get off just make so before Red sure full to that core start Hat, to achieving tied potential are similar on busy I of things aren't

number two then And execution. sharpening is just our

to products, there's of lot of think running a stack. think that's where run kind of less start obviously, point of you're we're you're you that's the driving efficiency. a experiments has experiment off, got focus get around I really voted. engine and whether whether core the natural market companies kind I leading and where of Mark evolution product We trying effectiveness fit, our your time, you to a And couple monetization on

business focus have do from KPIs in profitable down, a the solid our that, to things. these we positions. put place, can belts as tighten we into scale we And leading and right execute And that those

And things. really so at it both just other build of leading to a bunch operating around things now doing of those is point Hat, not to and naturally terms and but effective a similar of being Red efficient in until product, looking losing an kind the little model of focus. And

very, so very think feel X And I ones are those that similar. the big

dedicated brilliant incredibly mission-driven people equally deeply a deeply who are company. passionate, Also in

easier. you execute, are And your that do so with aligned when so what much definitely just you passionate Red when about to is And people have and ability that, Hat. shared

Awesome. Sure.

iron Helpful about synergistic a of across from color Grow think did product a how source and platform guys out importance you of a think there. maybe the base the and you're coming mention together then seeing you between to call Create the kind And play perspective, I the you But Okay. little over Grow. early maybe solution But called of level there. too. time? the -- synergies lot it's out value integration tightening to But and do within that

and Luis, if add. want to start, Yes. you I'll

really an value working model operating both Grow. build So and Create first off, data that kind to of across drives in

I there the of area, of is we just that. We've but on which of of integration kind has on, think an things, focus really working value. and a better I building down job been doing do think our we flywheel the double of can kind people can a lot

things middle help game of that success. we're of X bit we're just what with together developer our in And we talk offerings. still to create all have little of about pieces. value have we And customers, together, The fully engage of X monetization. create so And of development portfolio life because ability the how -- to can kind single are value talk the go those view disjointed pulled single of to a having integration how is other those kind deal drives still our developer kind a it's a can from across them just get customer, time those and and about cycle can best through way the we to we

So there's and to kind of way, steel data-ish, the being view act operational customer able of I broader say, stuff, to set and the stuff. then of want that there's

grow is valuable only And were We're and both I if or over the on us, remember, agree, to businesses, I very to share Jim. create to And on customers. something, have market Editor, that's XX% operate the say just I add and our unique mobile. Yes, would particularly to us and this has company right? we who

build a very us that upon. gives So to strong base

Bank at And then of Funk Michael America.

opening tax did today in with really rebuild the impact -- well. the letter fourth you game wondering, change that pricing I'm I over them? doing been the out you from as was [indiscernible] What into the mention quarter. appreciate trusted developers to Jim, have and just reach to there that a limited relationship And I blood

-- the focus obviously, all that off couple first to to a actually upset that. you of actually who Unity, or them things were people did, first that think have talked talking on of good like, of oh, next a with who one well, I'm all developers these talked the almost start to is game it's set number get you with them, makes others them. we by okay, sense. of, to action, I to hear the Well, talked that in thing I've I've And once of been

the features drive and we That's deal some right we of be early customer feature what from, some the beta we're into oh, to, actually a and can driving, they get sudden in there of with met to who honestly, we're driving, -- negative future when that helped but started helps feature tweaked, So velocity soon the talking with we I about we're then we just a and developer, went game changes had as think, talk very off is very, potentially was But that. we do. getting help back biggest trying into all here know can someone an as want you we went the I set the we lot. started thing with to

thing saying So important I this -- at is talk rebuild dealt we with Unity internally in past talk quite to want, build think product. the trust dollars we going how we I've but most what forward having been we the is behaviors and all and can the and efficiently communities reinvesting effectively bit, behaviors our can a make we them are decisions we'll are those taking and extraordinary are

kind a noise we're they of week, so around, And we'll product replacing doing? value kind get delivering, number the are focusing of kind what that And of next buzz launches. really have of we'll I on well, think

I could. if more, X And

CEO decision think new your coming of all view for the Was [indiscernible] about the numbers. and wondering are the of assessing investors I year. on guidance business. pull based in the best a as practices that on or lot any a to

of A of people it, need rid get X when we of about the do you the some wildly to businesses, looking move we'll the slow that. in Look, better is are to do part fast. the down move, to I anybody your what run. wind the here anything short problem shape which grumpy are. down. lot longer And to revenue move wait we incentive for faster We we you looks need Yes. is or to want No. better the and are

out will plumb for it you. we the all fact So after

what have this. kind But happen transparent. of know want is don't we'll people guided exactly You'll we completely say, "Well, to I be

XX. end I And fast, maybe another be say don't we better. close November so got think we make wait of we're got to you move if of decisive But do the we month sandbagging to before can that we the just until emphasize merge, numbers we I January and I that, instead -- X when and going want to we're will say, we QX. by look to

we faster get do done, to the and are have we faster but reset focused can I do we faster hoping it that. I'm X kind that. anything of lot a the than want and for we The these things can anybody incentive better,

it and can year think you we to weren't this fast be it's the after And will no to and move promise I be not we you we will guidance and do but be tell in better after So we and then a think move important color all popular period that say the give fact. move. QX we'll provide the to you time, you I our I have fast. I numbers, going in it's was it, transparent confident that, just and I them of for barriers to want. reset, clarity

next then Wells. Brian And Great. is Fitzgerald at

noted could, couple, on letter a comps. UGS I had if year-over-year I tough

right business? there's the anything comment how And and relative think cross-sell second maybe about on there? that say stands company on UGS where ironSource Just Or business expectations is, that performed you're can one right from. across the the part whether not where to quarter the the the follow-up the for maybe Are shareholder that's talking that that now, we in business hoping opportunity a you sense of comes to and that assume you synergies in softness waiting you exists what all you When that's at the is to portfolio? can achieving give letter for and

want Jim, ahead, do to... you Go Yes.

Well you sense I'll kind if to give go of give you head performing you across. by what meant not want performance I of expectations, that versus start, a

share very and to Frankly, we're specifics ready whether we about business, I have outside to we want UGS. of to be on drive But I of the transparent is didn't because and Yes. not right? need business don't out we expected question faster. business the a quarter to will mean or business on grow therefore, portfolio the continue that, our And I'll choices. inside address any we your single

you So piece. that I'll give

portfolio, use say on actually mean just broadly that UGS. pick I'll the I that, an I example. When across as will I say I'll but

I has say, between, quite think actually made Unity correlation if selling something multiplay Games, look like quite actually successful been it's you low. the UGS gaming. into Unity at and with But

the around what have I that ecosystem. when where to doing we so right sure is is win, Unity we're want And our to make which

So saying around we Unity. win I'm not unreal is the have the revenue base right multi-play to place where to should go game. in and awful sell it's win things But fundamentally,

portfolio that to are Unity better self-reinforcing. And so what do that things make it that we going. is things our that get sure I'm do looking easy really we at Unity across The making other things our make Games and use using and really, flywheel people

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earnest. something in that's so we're kicking And off

Unity is within Yes, before, of we've grow, seeing talked source. Brian, and iron as growth synergies we're good what

is the But we to as grow forward. Jim where that So capabilities, that's need do to a data well, they job and agreed is sharpen that's pens growing working saying, well. technologies, better going

next is And BTIG. Lampen Clark from Great.

revenue period But is start get X, close questions of you got we you've I I've business a that of of from a engine with for with upside? can the big of start please. developer to investors there model the Jim, Or high around been adjustments think short ensure that market. to need that other we the sort look time. to time and and it dominant Is Unity made picture variable piece grow? run really gap of fairly the business, at to at maybe understand you only are X really the as big present? rate share between key like a be view how that your share you unlocking can

even back we larger the we the there's gaming argue as on by think come And haven't can the I side, for but Well that. industry way, than around a a which lot. would us, market market I started on actually

the off, first So is lower-margin market. a market gaming

started change you price X to it, you're backlash. when to at get want point going some So you obviously

way market, than I'd think the to the a very, all think So operating through right? of a share development less very, way a about X% game rather that. it is if is you small, very about billion $XXX We're

So a you driving our kind to that do shop, management. security, or about developers other about think things automated identity DevOps that to developer testing or whether not around looking doing, but working thinking about when what just compliance, where tremendous of the teams they're There's development raising opportunity whole ability it's price side. with like we do a things thinking especially us, of what are someone set things has on costs on does the at we're we're

for operate our and strength the of on continuing have and places to the that. doing frankly, around and obviously, time and of how where, because uniqueness understand run right are win our a then the what people editor look to we side, And to ability

run you revenue the And look people know we it but have makes the with explain easier when I actually if we of frankly, recognize it. One functionality can velocity right? kind to multiple value conceptually to you're much is run more drive much but that. fee I value paying time into internally now saying time you associated managerially it there's at think something, feature the easier it, it's need for so for can run easier else, the do and the to say internally in around and there's And around I customers it's reasons. time, value, that is think nothing important accelerate that.

the I second-order run of monetization not making in citizen think like we how think is a So about kind important. time

run on looks where in that what especially around and forward, going velocity times a time you that whether run about in important. price I out, industry side, like that more think it's it's exact about, broadly that or thinking I the think as the feature how themselves, you think having scale

specifics et we the So I of cetera. value. has cetera, the into pricing around the run run that think what kind time model games, and of and concept can et the time get types what But

run And on so all the we business. have the a healthy time run around for we is how price

in are Understood. And guys there's shareholder guess, interventions, guess, of in letter. the exploring I as flux, a you sort mentioned lot as I you

do beta could One in on be update share give willing could is tools you'd think forward closed seem to to things us you I'm [indiscernible] those an moving realistically, gone of be focus And appreciated terms have the does beta? if thoughts has the consistent call if commercialization AI. that this around far? would curious also. products. you the on any of How that incentive so When you exit be

everything of mean, saying Amsterdam whole honestly, think a will we're and that mean we're how to comment. about if want to be, more kind don't first broadly. kind I'll today. you to the But of reaction we lot I coming hear here and week, want that Unite, given front-run I the you Luis my things let will I about next doing Well, night

us and/or Amsterdam. tuned join come Stay So in

I is, didn't much. Yes. The thing say say well, only would Jen

see something take excited You in his that. so away can kind how from he of is tone you can

So it's exciting. very

Okay.

Next is Kash Rangan Goldman. from

unchanged keep don't It's the it person that past years. been know you XX use And I is in exactly a while. what your to

And definitely think as a see company. I helps. at you it's you, that Hat. a the you know that chances with Create one. X months a, exactly and can lot I that. XXXX you [indiscernible] between not a that we or there Can coming job that same bit the first was where and the -- Grow how synergy? more permanently to synergies the to go businesses. it but it the integration maybe itself. manifest I it's tighter look easy question, what is I so. over take in tighter And on increased took It's tough expand you And clearly a did very can You does see you One I do a when when are met thought? digest or little secondly, Red the hinted next particular

Yes.

first the process. So respectful on be to Board, question, a I the want Board of the running

as a think say a I said, screws up. I'm So want of I say about I'm to not, And I because that it they so I want be messes careful I say -- process. candidate, If they of run anything to up. kind if that kind

saying I'm So just it. on anything not

really just that they're I to respect process So the of through. going Board the sorry, Kash. want

I a through. but they're want going to answer, duck because duck that one, the to So hate not willing not I'm process respect Board I going I'm the but to to question,

lot information how work and of tight integration, look, how have a In we engagement games of about like, terms more works.

of how And on their developers do So play we the do help people ad can the how trying job flywheel think how better space. profit and engine extent, where We to piece that to a from monetization we we their just and that we we provide, we engagement of success. our who get And with with some in. some analytics works if are games that's using kind analytics is that. obviously, use already and ad games. the making we're going works art. developers about them of to and a money, what know products to for helping people think monetize I understand broadly how But that's for great start And and maximize kind the thinking what game it's comes of others, actually

bit on. that like early map that early, a So we quite we're road we're there's think long early, we can excited continue to about. a things And literally, with there build of days in

Tilton Wolfe. at Josh

got how give that sense flavor the at maybe first is, one left for two is or since us business already as maybe that to the I become how actually. -- you you guys know you we confidence did some And do can cut you I or a you about layoffs My do gives plan a internally maintaining business? like look what just what you to guys on talked previously. passion guys that a more leaner

came start that business, feel airline business of actually mean, kind Look, I is kind just and we're actually efficient operationally I'll sure making of so Well, focused the there. part the an I model you in. you're I support to organizational effective, like optimized. of from and structure building very get much operating and when that on core that

that. get naturally doing efficient more You much

be inspired And sense painful that I will And mission have you we're we're the the so proud people able very we come do get our hear, going out good generate. in this and I both are success that see growing. by fewer and very, people, phase, values. doing our profitable very as kind will to to is what feel think you we're engaged, the of to and going that is of inspired what the in by we people be as around all will it of while and mission success

passes let's a from -- different saying and let's it's It's there. lot spend just hope and it's our bit a revenue then effective efficient and model you -- scale to optimize that versus get and a more, business and make money. little ultimately a Look,

that, a efficient the a scale businesses let's growth from fits there. we it lot of like bit call And we're an lovely, and in I'll reset and this, effective, get is in. have of that so them, And build business the that model in let's operating a we're so then

So the think that. very while I it's out in painful, soon reset, of coming

better core winning. against to able our we're be people I mission, deliver think see we're will and to able

Yes. I question do what on I to how you cost keep which finding say don't [indiscernible] question, was structure. would is your the our opportunities remember -- was optimize we

as one, number say, focus different would exit And obviously, as you the I can drive right? there. continue you So choices, you efficiencies we're portfolio, businesses, portfolio then to making

doing very is internally to and we'll taking different to sharp drive at customers love Second with at last, we dollars how that teams thing we're across else. and will of look our our we're so continue levels and can another drive And and the synergies continue everything looking cash. that expansion products organizations, margins do drive most efficiencies the G&A G&A between layers drive drive and revenue the and

what that's So we're doing.

kind of the I expect accelerate line there's you for give there is growth help excitement of to say which forward. And expectation near of if lack a catalyst guide will in. string lot are just term. not next the for the this? an where I grapple next with. don't you going quarter, -- could the sneak I the investor us full going to I guide time news numbers for a ease is been lot when of You're there's From perspective, Obviously, year, decision to how guess, interesting another anything important releases. maybe the piece a opportunities have But X more stock. be just investors. the still There's can of interesting pieces that we some and terms do understand of of know, to still news of around around that to in going year I worries 'XX in moving another,

generally I answer I'll even you're some in next Luis, execution And start able probably with the that year, more as focused think specifically. we comments. better to to success get Look, equipped be to marketplace. into leads

thinking go execute that performance. we drivers working against, being growth a just already portfolio we do 'XX work. improved those kind gross we of you'll of as And to again, And so are focused then see need more of -- series whole have I'm kind the through we

time the also have all both plans when February, the But just be speak we the size 'XX. -- side. leads markets and execution those get more talk in I without the around better we'll give position that. So to about next in of But we performance the that more am on I markets. lot confident having my confident laid time you a detail And experiences really in to -- all seen the you, of all able and to we'll revenue with guess, for our just I'm more have focused out seeing

next talk year. full of to the without ready So I'm in confident about, numbers kind

Totally earnings. agree. We'll give you more visibility our with QX

months. few So in a

the opportunities I portfolio just a need will strong be the we We just big, And XXXX, focused. -- we think But we we is already as very doing said, that's can have to execute. our right to mentioned have. Jim goal. think to we're more we Jim need that everything

last then Bazinet will our Citi. at be with Jason And question

of picture go The -- EBITDA or want is no we difficult it to matter don't 'XX to because you key coming there that berth will better just of about go you're quickly. the and in more a changes pursue as negative may that so what making changes cash of a we you to pruning magnitude want the going Appreciate guardrails some through matter it wide have period financial that terms portfolio. these happens, go in in there's you what or 'XX? paint that's happens, i.e., have on through we of negative? how really terms I changes, cares a the Are these wondered, any might obviously Or free no metrics in don't Street those

mean -- good off the highly I things. way, I that right? fit, a start. they mean, EBITDA are it's we're in because good I'll mean, businesses don't investing I we're at, and not peeling I a we're like looking think of the lot in we that positive news frankly, things

this at is so And looking of off aren't we at more that peeling that some about kind things doing frankly profitable. were

So see even a and real I don't this get we you're as Louis... certainly into dip think But going year. not next quarter at all to

quarter not be we're be a about and complete. should model or years other thing would will only like takes I business that's transition, These transition and made, now. planning decisions Once quarter, implementing to a are X the this a next which that quarter, to think or done things are not I right? Yes, It's this year XXX% will we execute X we're is it. add do thinking start years long

But year, I think it. Band-Aid I and QX wouldn't this be because reset margins different would the we're think a then our haven't QX that than QX mean next finished rip we off a going. be little in is might I no, right?

want hello or That X up, X you closing then have we'll wraps say Jim, done. it be some and to if

Yes.

more into a the that of just is of that. kind I I So of bluntly, I places. the on appreciate went this when in focus. the a the about really add on I very emphasize is get this long-term opportunities become in again to too in pathway mean at I company it's very results I to time. valuable go didn't and of technology. really have another. than one, say agreed look, powerful, a many kind come companies a focused that execution, thought, month some when and was to sure so up your And matter first of deliver to much doing ago. moat a of I really I got opportunity. what like some there's chance has I to lot want And growth We today defensible I'm company excited okay, convicted the deliver But another, call. more have It's and

the fact you of number nature X and of to is it's interactive the the that but could only think is in makes -- really platforms defensible. that areas of is argue XD, gaming, when of again, real-time it's have news is a way And And good highly it whether visualization. we which the about scale. that myriad across a XD. that's We're kind do and platform the the So opportunities. companies, like of industrial sense, feel products Obviously, business, just very technology companies I at because it consumer whether number

those transparent that that. a so we key is to profitable can clearly, order not and see each in that The you that can opportunity growth the continue making about is deliver appropriate be But is key by it. sure to we there. executing pathway results build of Our

you we'll much. future weeks and all, time. Thank and and very in the you you months Thank Great. see over

you. Thank

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