Skip to Content
Business Wire

Unity Announces Third Quarter 2021 Financial Results

Unity Announces Third Quarter 2021 Financial Results

Q3 revenue up 43% year-over-year, exceeding expectations; company raises guidance and announces intent to acquire Weta Digital

Unity Software Inc. (NYSE: U), the world’s leading platform for creating and operating interactive, real-time 3D (RT3D) content, today announced third quarter 2021 revenue of $286.3 million, which is up 43% from the same period in 2020 and ahead of guidance. The company is increasing full year revenue guidance.

Additionally, Unity announced today it has entered into a definitive agreement to acquire Weta Digital, specifically its award-winning engineering talent and artist pipeline, tools and technology. This acquisition is designed to put the most exclusive and sophisticated visual effects (VFX) tools into the hands of millions of creators and artists around the world, and once integrated onto the Unity platform, enable the next generation of RT3D creativity.

“Unity’s strong performance this quarter was driven by innovation in data science, vertical growth and making significant strides in bringing RT3D technologies and tools to as many creators and artists as possible,” said John Riccitiello, President and Chief Executive Officer, Unity. “And today we are proud to announce our intentions to acquire Weta Digital as we aim to bring their dozens of tools and assets to creators around the world. This sends a powerful message: all types of creators and digital artists can turn to Unity to create rich, interactive content and build experiences regardless of industry.”

“We delivered another strong quarter in Q3 2021 with $286 million in revenue, continuing to add new customers and expanding our business within existing customers. The strong momentum gives us the confidence to raise our revenue growth guidance to 40% for the full year,” said Luis Visoso, Chief Financial Officer, Unity. "Bringing Weta Digital into the Unity family will materially advance our relevance with artists, and increase our addressable market, setting us up well for our long term growth prospects.”

Third Quarter 2021 Financial Highlights

  • Revenue was $286.3 million, an increase of 43% from the third quarter of 2020.
  • Create Solutions and Operate Solutions revenue was $83.7 million and $185.0 million, respectively, an increase of 34% and 54%, respectively, from the third quarter of 2020. Strategic Partnerships and Other revenue was $17.6 million, a decrease of 3% from the third quarter of 2020.
  • Loss from operations was $126.8 million, or 44% of revenue, compared to loss from operations of $141.7 million, or 71% of revenue, in the third quarter of 2020.
  • Non-GAAP loss from operations was $12.1 million, or 4% of revenue, compared to a non-GAAP loss from operations of $8.4 million, or 4% of revenue, in the third quarter of 2020.
  • Basic and diluted net loss per share was $0.41, compared to basic and diluted net loss per share of $0.97 in the third quarter of 2020.
  • Basic and diluted non-GAAP net loss per share was $0.06, compared to basic and diluted non-GAAP net loss per share of $0.09 in the third quarter of 2020.
  • 973 customers each generated more than $100,000 of revenue in the trailing 12 months as of September 30, 2021, compared to 739 as of September 30, 2020.
  • Dollar-based net expansion rate as of September 30, 2021 was 142% as compared to 144% as of September 30, 2020.
  • Net cash provided by operating activities was $43.6 million for the third quarter of 2021, compared to net cash provided by operating activities of $20.6 million for the same period last year. Free cash flow in the third quarter of 2021 was $34.2 million, compared to $10.9 million for the same period last year. Cash, cash equivalents, and restricted cash were $766.3 million as of September 30, 2021, compared to $1.8 billion as of September 30, 2020.

Recent Business Highlights

  • Unity announces general availability of Tech Stream 2021.2. The latest release includes key functionality updates focused on quality, productivity and performance, including extensive work on the Universal Render Pipeline (URP), an introduction to feature sets, the one-click package installation and configuration tool and improved deferred rendering URP support for some mobile platforms.
  • Unity’s Operate Solutions introduces new offerings. Unity introduced Unity Gaming Services (UGS), a new platform experience that unifies Unity’s existing Operate Solutions for games and introduces new tools and services that are designed to simplify any developer’s ability to launch cross platform, multiplayer games. Additionally, Unity launched Unity Mediation, which includes waterfall and bidding within Unity Ads. These Mediation offerings are designed to help developers build strong revenue streams by easily optimizing demand from their best-performing ad formats and network partners within the same editor and interface they build and manage their game experience.
  • Unity Sports & Live Entertainment goes live with Metacast. Metacast, Unity’s first RT3D sports platform for creating and delivering interactive content directly to the consumer, launched in partnership with UFC, the leading mixed martial arts organization. Together, Unity and UFC will collaborate on research and development of potential applications for Unity Metacast within UFC content.

Outlook

Unity is providing the following guidance for the fourth quarter and raising guidance for the full year ending December 31, 2021.

 

Q4 2021

 

2021

 

Guidance

 

Guidance

Revenue (in millions)

$285 — $290

 

$1,080 — $1,085

Year-over-year revenue growth

29% — 32%

 

40%

Non-GAAP loss from operations (in millions)

($20) — ($25)

 

($59) — ($64)

Non-GAAP operating margin

(7%) — (9%)

 

(5%) — (6%)

Fully diluted shares outstanding

329M

 

329M

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 third quarter 2021 financial results and outlook for its fourth quarter and full year 2021. 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.

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.”

Forward-Looking Statements

This press release and the earnings call referencing this press release contain “forward-looking statements,” as that term is defined under federal securities laws, including, but not limited to, statements regarding Unity’s fourth quarter and full year 2021 outlook and future financial performance, including the evolution to RT3D content; the closing of the Weta Digital acquisition; the Weta Digital acquisition’s impact on Unity’s momentum and prospects, on Unity’s ability to introduce Weta Digital’s world-class content creation tools to creators and on Unity’s addressable market; Unity’s ability to provide all types of creators and digital artists the ability to create rich, interactive content and build experiences regardless of industry; Unity’s ability to continue to exceed expectations and continue to grow; Unity’s ability to help developers build strong revenue streams with Unity Mediation; and Unity’s ability to successfully collaborate with the UFC strategies, business plans, priorities and objectives, potential market and growth opportunities; product features, functionality, and expected benefits to the business and our customers; competitive position; product strategies and future product and platform features; technological or market trends; and industry environment. The words “believe,” “may,” “will,” “estimate,” “continue,” “intend,” “expect,” “plan,” “project,” and similar expressions are intended to identify forward-looking statements. These forward-looking statements are subject to risks, uncertainties, and assumptions. If the risks materialize or assumptions prove incorrect, actual results could differ materially from the results implied by these forward-looking statements. Risks include, but are not limited to: (i) the impact of the ongoing COVID-19 pandemic on our business, as well as our customers, prospects, partners, and service providers; (ii) our ability to achieve profitability and the timing for any such achievement; (iii) our 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) our 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) our 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; (xii) costs related to the acquisition; (xiii) whether potential benefits of the transaction extend to Unity and Weta Digital's customers and other potential creators; (xiv) Unity’s and Weta Digital’s success developing new products or modifying existing products and the degree to which these gain market acceptance; (xvi) any unanticipated impact of accounting for the acquisition; and (xvii) the conditional closing of the transaction. Further information on these and additional risks that could affect Unity’s results is included in our filings with the Securities and Exchange Commission (SEC), including our Quarterly Report on Form 10-Q filed with the SEC on August 11, 2021, and our future reports that we may file with the SEC from time to time, which could cause actual results to vary from expectations. Copies of reports filed with the SEC are available on the Unity Investor Relations website. Unity assumes no obligation to, and does not currently intend to, update any such forward-looking statements after the date of this release.

Any unreleased services, features, or functions referenced in this document, our website, or other press releases or public statements that are not currently available are subject to change at Unity’s discretion and may not be delivered as planned or at all. Customers who purchase Unity services should make their purchase decisions based upon services, features, and functions that are currently available.

© 2021 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.

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 and employer tax related to employee stock transactions. 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, and amortization of acquired intangible assets expense. 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, a one-time expense for the termination of a future lease agreement, and non-cash charitable contribution expense. We define non-GAAP loss from operations as loss from operations excluding stock-based compensation expense, employer tax related to employee stock transactions, and amortization of acquired intangible assets expense.

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, a one-time expense for the termination of a future lease agreement, and non-cash charitable contribution expense, 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, 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; 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, a one-time expense for the termination of a future lease agreement, and non-cash charitable contribution expense, as well as the related tax effects of these items. Non-GAAP net loss per share also adds back expense relating to deemed dividends representing excess paid over initial issuance price to repurchase convertible preferred stock. 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;
  • 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 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, 2020, the non-GAAP tax rate was (17)%. For the year ending December 31, 2021, we have determined the projected non-GAAP tax rate to be (22)%. We will periodically re-evaluate this tax rate, as necessary, for significant events, based on 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 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 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.

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

 

September 30,
2021

 

December 31,
2020

Assets

 

 

 

Current assets:

 

 

 

Cash and cash equivalents

$

755,429

 

 

$

1,272,578

 

Marketable securities

524,969

 

 

479,406

 

Accounts receivable, net of allowances of $4,936 and $2,714 as of September 30, 2021 and December 31, 2020, respectively

301,035

 

 

274,255

 

Prepaid expenses

31,158

 

 

32,025

 

Other current assets

24,379

 

 

22,396

 

Total current assets

1,636,970

 

 

2,080,660

 

Property and equipment, net

98,688

 

 

95,544

 

Operating lease right‑of‑use assets

104,762

 

 

103,609

 

Goodwill

638,868

 

 

286,251

 

Intangible assets, net

131,927

 

 

57,459

 

Restricted cash

10,823

 

 

21,369

 

Other assets

56,239

 

 

26,333

 

Total assets

$

2,678,277

 

 

$

2,671,225

 

Liabilities and stockholders’ equity

 

 

 

Current liabilities:

 

 

 

Accounts payable

$

10,587

 

 

$

11,303

 

Accrued expenses and other current liabilities

133,656

 

 

106,306

 

Publisher payables

198,686

 

 

182,269

 

Income and other taxes payable

81,334

 

 

64,116

 

Deferred revenue

129,294

 

 

113,853

 

Operating lease liabilities

25,405

 

 

25,375

 

Total current liabilities

578,962

 

 

503,222

 

Long-term deferred revenue

18,614

 

 

20,523

 

Long-term operating lease liabilities

96,967

 

 

98,532

 

Other long-term liabilities

16,632

 

 

11,805

 

Total liabilities

711,175

 

 

634,082

 

Commitments and contingencies

 

 

 

Stockholders’ equity:

 

 

 

Preferred stock, $0.000005 par value; 100,000 shares authorized, and no shares issued and outstanding as of September 30, 2021; 100,000 shares authorized, no shares issued and outstanding as of December 31, 2020

 

 

 

Common stock, $0.000005 par value; 1,000,000 and 1,000,000 shares authorized as of September 30, 2021 and December 31, 2020, respectively; 285,711 and 273,537 shares issued and outstanding as of September 30, 2021 and December 31, 2020, respectively

2

 

 

2

 

Additional paid-in capital

3,140,485

 

 

2,838,057

 

Accumulated other comprehensive loss

(3,411

)

 

(3,418

)

Accumulated deficit

(1,169,974

)

 

(797,498

)

Total stockholders’ equity

1,967,102

 

 

2,037,143

 

Total liabilities and stockholders’ equity

$

2,678,277

 

 

$

2,671,225

UNITY SOFTWARE INC.

CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS AND COMPREHENSIVE LOSS

(In thousands, except per share amounts)

(Unaudited)

 

 

 

 

 

 

 

 

 

Three Months Ended

 

Nine Months Ended

 

September 30,

 

September 30,

 

2021

 

2020

 

2021

 

2020

Revenue

$

286,328

 

 

$

200,784

 

 

$

794,662

 

 

$

552,109

 

Cost of revenue

63,517

 

 

47,540

 

 

179,976

 

 

119,840

 

Gross profit

222,811

 

 

153,244

 

 

614,686

 

 

432,269

 

Operating expenses

 

 

 

 

 

 

 

Research and development

178,413

 

 

116,648

 

 

486,644

 

 

283,507

 

Sales and marketing

97,425

 

 

60,764

 

 

242,106

 

 

147,739

 

General and administrative

73,723

 

 

117,515

 

 

272,772

 

 

194,988

 

Total operating expenses

349,561

 

 

294,927

 

 

1,001,522

 

 

626,234

 

Loss from operations

(126,750

)

 

(141,683

)

 

(386,836

)

 

(193,965

)

Interest expense

 

 

(615

)

 

(600

)

 

(1,403

)

Interest income and other expense, net

(64

)

 

(2,023

)

 

1,571

 

 

(829

)

Loss before provision for income taxes

(126,814

)

 

(144,321

)

 

(385,865

)

 

(196,197

)

Provision for (benefit from) income taxes

(11,662

)

 

398

 

 

(14,911

)

 

2,609

 

Net loss

(115,152

)

 

(144,719

)

 

(370,954

)

 

(198,806

)

Other comprehensive loss, net of taxes:

 

 

 

 

 

 

 

Change in foreign currency translation adjustment

(9

)

 

209

 

 

41

 

 

132

 

Change in unrealized losses on marketable securities

72

 

 

 

 

(34

)

 

 

Comprehensive loss

$

(115,089

)

 

$

(144,510

)

 

$

(370,947

)

 

$

(198,674

)

Basic and diluted net loss per share:

 

 

 

 

 

 

 

Net loss per share attributable to our common stockholders, basic and diluted

$

(0.41

)

 

$

(0.97

)

 

$

(1.32

)

 

$

(1.47

)

Weighted-average shares used in per share calculation attributable to our common stockholders, basic and diluted

283,714

 

 

149,256

 

 

280,080

 

 

135,671

 

UNITY SOFTWARE INC.

CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS

(In thousands)

(Unaudited)

 

 

 

 

 

 

 

Three Months Ended September 30,

 

Nine Months Ended September 30,

 

2021

 

2020

 

2021

 

2020

Operating activities

 

 

 

 

 

 

 

Net loss

$

(115,152

)

 

$

(144,719

)

 

$

(370,954

)

 

$

(198,806

)

Adjustments to reconcile net loss to net cash provided by (used in) operating activities:

 

 

 

 

 

 

 

Depreciation and amortization

15,120

 

 

11,274

 

 

39,222

 

 

31,284

 

Common stock charitable donation expense

 

 

63,615

 

 

 

 

63,615

 

Stock-based compensation expense

97,317

 

 

61,806

 

 

236,654

 

 

83,460

 

Stock-based compensation expense in connection with modified awards for certain employees

 

 

 

 

12,624

 

 

 

Other

3,324

 

 

125

 

 

11,004

 

 

1,518

 

Changes in assets and liabilities, net of effects of acquisitions:

 

 

 

 

 

 

 

Accounts receivable, net

41,213

 

 

(5,890

)

 

(26,336

)

 

(14,718

)

Prepaid expenses

3,769

 

 

1,697

 

 

963

 

 

(3,173

)

Other current assets

6,188

 

 

1,754

 

 

(3,771

)

 

(10,083

)

Operating lease right-of-use ("ROU") assets

5,931

 

 

6,250

 

 

17,826

 

 

18,258

 

Deferred tax, net

(23,773

)

 

1,595

 

 

(26,912

)

 

1,709

 

Other assets

2,283

 

 

166

 

 

(6,536

)

 

(143

)

Accounts payable

1,091

 

 

(5,363

)

 

(183

)

 

(4,158

)

Accrued expenses and other current liabilities

4,019

 

 

13,864

 

 

23,963

 

 

19,683

 

Publisher payables

(22,682

)

 

11,808

 

 

16,417

 

 

13,479

 

Income and other taxes payable

31,798

 

 

1,162

 

 

15,321

 

 

(2,238

)

Operating lease liabilities

(8,022

)

 

(5,415

)

 

(20,826

)

 

(17,480

)

Other long-term liabilities

(340

)

 

174

 

 

(191

)

 

5,347

 

Deferred revenue

1,539

 

 

6,664

 

 

9,775

 

 

17,594

 

Net cash provided by (used in) operating activities

43,623

 

 

20,567

 

 

(71,940

)

 

5,148

 

Investing activities

 

 

 

 

 

 

 

Purchase of marketable securities

(5,051

)

 

 

 

(295,859

)

 

 

Proceeds from principal repayments on marketable securities

3,229

 

 

 

 

14,853

 

 

 

Maturities of marketable securities

61,800

 

 

 

 

229,800

 

 

 

Purchase of non-marketable investments

 

 

 

 

(4,600

)

 

 

Purchase of property and equipment

(9,408

)

 

(9,681

)

 

(27,959

)

 

(28,956

)

Acquisition of intangible assets

 

 

 

 

 

 

(750

)

Business acquisitions, net of cash acquired

(355,768

)

 

(11,630

)

 

(425,198

)

 

(34,968

)

Net cash used in investing activities

(305,198

)

 

(21,311

)

 

(508,963

)

 

(64,674

)

Financing activities

 

 

 

 

 

 

 

Proceeds from revolving loan facility

 

 

 

 

 

 

125,000

 

Payment of principal related to revolving loan facility

 

 

(125,000

)

 

 

 

(125,000

)

Payment of debt issuance costs

 

 

 

 

 

 

(247

)

Proceeds from initial public offering, net of underwriting discounts, commissions, and offering costs

 

 

1,420,145

 

 

 

 

1,420,145

 

Proceeds from issuance of convertible preferred stock, net of issuance costs

 

 

 

 

 

 

149,970

 

Proceeds from issuance of common stock

 

 

 

 

 

 

100,000

 

Purchase and retirement of treasury stock

 

 

 

 

 

 

(110

)

Proceeds from exercise of stock options

15,091

 

 

11,523

 

 

53,150

 

 

15,459

 

Proceeds from exercise of stock options in connection with nonrecourse promissory note

 

 

 

 

 

 

8,856

 

Net cash provided by financing activities

15,091

 

 

1,306,668

 

 

53,150

 

 

1,694,073

 

Effect of foreign exchange rate changes on cash, cash equivalents, and restricted cash

(31

)

 

233

 

 

58

 

 

181

 

Increase (decrease) in cash, cash equivalents, and restricted cash

(246,515

)

 

1,306,157

 

 

(527,695

)

 

1,634,728

 

Cash and restricted cash, beginning of period

1,012,767

 

 

475,667

 

 

1,293,947

 

 

147,096

 

Cash, cash equivalents, and restricted cash, end of period

$

766,252

 

 

$

1,781,824

 

 

$

766,252

 

 

$

1,781,824

UNITY SOFTWARE INC.

RECONCILIATION BETWEEN GAAP AND NON-GAAP FINANCIAL MEASURES

(In thousands, except percentages and per share data)

(Unaudited)

 

 

 

 

 

 

Three Months Ended

Nine Months Ended

 

September 30,

September 30,

 

2021

2020

2021

2020

Gross profit reconciliation

 

 

 

 

GAAP gross profit

$

222,811

 

$

153,244

 

$

614,686

 

$

432,269

 

Add:

 

 

 

 

Stock-based compensation expense

7,780

 

5,072

 

18,237

 

6,319

 

Employer tax related to employee stock transactions

975

 

629

 

4,247

 

11

 

Non-GAAP gross profit

$

231,566

 

$

158,945

 

$

637,170

 

$

438,599

 

GAAP gross margin

78

%

76

%

77

%

78

%

Non-GAAP gross margin

81

%

79

%

80

%

79

%

 

 

 

 

 

Operating expenses reconciliation

 

 

 

 

Research and development

 

 

 

 

GAAP research and development expense

$

178,413

 

$

116,648

 

$

486,644

 

$

283,507

 

Add:

 

 

 

 

Stock-based compensation expense

(49,169

)

(31,334

)

(114,046

)

(42,113

)

Employer tax related to employee stock transactions

(6,759

)

(2,033

)

(20,206

)

(2,198

)

Amortization of intangible assets expense

(4,304

)

(3,083

)

(10,817

)

(9,036

)

Non-GAAP research and development expense

$

118,181

 

$

80,198

 

$

341,575

 

$

230,160

 

GAAP research and development expense as a percentage of revenue

62

%

58

%

61

%

51

%

Non-GAAP research and development expense as a percentage of revenue

41

%

40

%

43

%

42

%

 

 

 

 

 

Sales and marketing

 

 

 

 

GAAP sales and marketing expense

$

97,425

 

$

60,764

 

$

242,106

 

$

147,739

 

Add:

 

 

 

 

Stock-based compensation expense

(22,168

)

(10,722

)

(48,728

)

(14,846

)

Employer tax related to employee stock transactions

(1,611

)

(315

)

(4,696

)

(333

)

Amortization of intangible assets expense

(2,840

)

(1,668

)

(5,495

)

(4,009

)

Non-GAAP sales and marketing expense

$

70,806

 

$

48,059

 

$

183,187

 

$

128,551

 

GAAP sales and marketing expense as a percentage of revenue

34

%

30

%

30

%

27

%

Non-GAAP sales and marketing expense as a percentage of revenue

25

%

24

%

23

%

23

%

 

 

 

 

 

General and administrative

 

 

 

 

GAAP general and administrative expense

$

73,723

 

$

117,515

 

$

272,772

 

$

194,988

 

Add:

 

 

 

 

Stock-based compensation expense

(18,200

)

(14,678

)

(68,267

)

(20,182

)

Employer tax related to employee stock transactions

(869

)

(93

)

(3,649

)

(129

)

Lease termination expense

 

 

(49,795

)

 

Charitable contribution to donor-advised fund

 

(63,615

)

 

(63,615

)

Non-GAAP general and administrative expense

$

54,654

 

$

39,129

 

$

151,061

 

$

111,062

 

GAAP general and administrative expense as a percentage of revenue

26

%

59

%

34

%

35

%

Non-GAAP general and administrative expense as a percentage of revenue

19

%

19

%

19

%

20

%

 

 

 

 

 

Loss from operations reconciliation

 

 

 

 

GAAP loss from operations

$

(126,750

)

$

(141,683

)

$

(386,836

)

$

(193,965

)

Add:

 

 

 

 

Stock-based compensation expense

97,317

 

61,806

 

249,278

 

83,460

 

Employer tax related to employee stock transactions

10,214

 

3,070

 

32,798

 

2,671

 

Amortization of intangible assets expense

7,144

 

4,751

 

16,312

 

13,045

 

Lease termination expense

 

 

49,795

 

 

Charitable contribution to donor-advised fund

 

63,615

 

 

63,615

 

Non-GAAP loss from operations

$

(12,075

)

$

(8,441

)

$

(38,653

)

$

(31,174

)

GAAP operating margin

(44

) %

(71

) %

(49

) %

(35

) %

Non-GAAP operating margin

(4

) %

(4

) %

(5

) %

(6

) %

 

 

 

 

 

Net loss and net loss per share reconciliation

 

 

 

 

GAAP net loss

$

(115,152

)

$

(144,719

)

$

(370,954

)

$

(198,806

)

Add:

 

 

 

 

Stock-based compensation expense

97,317

 

61,806

 

249,278

 

83,460

 

Employer tax related to employee stock transactions

10,214

 

3,070

 

32,798

 

2,671

 

Amortization of intangible assets expense

7,144

 

4,751

 

16,312

 

13,045

 

Lease termination expense

 

 

49,795

 

 

Charitable contribution to donor-advised fund

 

63,615

 

 

63,615

 

Income tax effect of non-GAAP adjustments

(14,333

)

(1,485

)

(23,712

)

(2,963

)

Non-GAAP net loss

$

(14,810

)

$

(12,962

)

$

(46,483

)

$

(38,978

)

 

 

 

 

 

GAAP net loss per share attributable to our common stockholders, basic and diluted

$

(0.41

)

$

(0.97

)

$

(1.32

)

$

(1.47

)

Total impact on net loss per share, basic and diluted, from non-GAAP adjustments

0.35

 

0.88

 

1.16

 

1.18

 

Non-GAAP net loss per share attributable to our common stockholders, basic and diluted

$

(0.06

)

$

(0.09

)

$

(0.16

)

$

(0.29

)

 

 

 

 

 

Weighted-average common shares used in GAAP net loss per share computation, basic and diluted

283,714

 

149,256

 

280,080

 

135,671

 

Weighted-average common shares used in non-GAAP net loss per share computation, basic and diluted

283,714

 

149,256

 

280,080

 

135,671

 

 

 

 

 

 

Free cash flow reconciliation

 

 

 

 

Net cash provided by (used in) operating activities

$

43,623

 

$

20,567

 

$

(71,940

)

$

5,148

 

Less:

 

 

 

 

Purchase of property and equipment

(9,408

)

(9,681

)

(27,959

)

(28,956

)

Free cash flow

$

34,215

 

$

10,886

 

$

(99,899

)

$

(23,808

)

Net cash used in investing activities

$

(305,198

)

$

(21,311

)

$

(508,963

)

$

(64,674

)

Net cash provided by financing activities

$

15,091

 

$

1,306,668

 

$

53,150

 

$

1,694,073

 

 

Investor Relations:
Richard Davis
richard.davis@unity3d.com

Media:
Marisa Graves
marisag@unity3d.com

View source version on businesswire.com: https://www.businesswire.com/news/home/20211109005472/en/