Unity Technologies (NYSE: U) (“Unity” or the “Company”), the world’s leading platform for creating and operating interactive, real-time 3D (RT3D) content, today announced its fourth quarter and full year 2020 financial results.
Unity reported total revenue of $513 million for the fourth quarter of 2020, representing 34% year-over-year growth. For the full year of 2020, Unity reported total revenue of $1.5 billion, representing 32% year-over-year growth. The Company also reported fourth quarter and full year non-GAAP net income of $73 million and $166 million, respectively.
The financial results for the fourth quarter and full year of 2020 were driven by strong customer adoption of Units interactive real-time 3D platform.
Unity Announces Fourth Quarter and Full Year 2020 Financial Results
Unity Software Inc. (NYSE: U), the world’s leading Real-Time 3D (RT3D) platform, announced financial results for its fourth quarter and full year ending December 31, 2020. Unity reported Q4 revenue of $365 million, representing a 74% year-over-year increase in total revenue, including all licences and services revenue combined. For FY2020, total revenue was $1.24 billion, representing a 44% increase compared to FY2019.
On a GAAP basis, the Company posted Q4 net income of $17 million or $0.12 per share, while the FY2020 net income was reported as $138 million or $0.97 diluted earnings per share; this is Growth rate of 139%. On a Non-GAAP basis also exclude stock-based compensation expenses and related payroll taxes concerning adopted accounting standards related to employee share-based payment transactions resulting from two acquisitions in 2019., they reported Q4 net income of$59 million or $0.43 non-GAAP earnings per share and for the full year 2020 Non-GAAP net income was reported as$178 million or$1.30 diluted earnings per shares respectively
The company had 687 customers who purchased more than 4 times their ARR in unity for Q4FY20 compared to 393 customers in Q4FY19 – representing 75% growth Y/Y as measured by customer count. Furthermore overall increase was driven by strength across all market segments – game development & real time business solutions are above specifically . The strong annual performance demonstrates Unity’s leadership position in the industry across mobile gaming, blockbuster console titles with sales reaching over 146MM downloads in mobile games leveraging ad insight solutions according to a recent GDC report.. This trend continued into 2021 on skylanders legends hitting 73MM downloads during launch week demonstrating search momentum demand rising with developers building high end Interactive experiences for consumers alike on improved powered gaming platforms.
Overview of Unity’s Business Model
Unity is a leading interactive entertainment and technology company, providing a powerful platform used to create and operate games and technologies that enable interactive 3D and virtual reality (VR) simulations. As a leader in the gaming industry, Unity’s business model revolves around creating amazing user experiences that drive greater engagement for customers across all platforms.
By developing innovative products such as their Content Creation Tools and the Unity game engine, Unity helps make it easy to create interactive content for various platforms including Apple’s iOS and Android operating systems. Additionally, Unity provides an online marketplace where game developers can purchase tools and software needed to create immersive gaming experiences.
To drive monetization, Unity supports more than 21 enterprise partners who work directly with game developers across multiple platforms. These partners include technology companies like Facebook and Microsoft Azure that help developers distribute their games on a larger scale; publishers such as Com2uS who feature Unity made content in its apps; advertising companies such as Google Ads which allow creators to promote their games; payment services like PayPal which enable players to purchase in-game items; analytics providers such as App Annie which help provide detailed insights into player behaviour; cloud infrastructure providers like Amazon Web Services that allow hosting large-scale multiplayer games on the cloud.
Finally, Unity enables users other users through its developer community with access to tools and technologies for creating 3D models building worlds within their games along with an analytical dashboard for tracking progress over time. By leveraging these partnerships, users can increase engagement while minimising platform costs and maximising ROI-driven decisions through rapid iteration processes supported by a comprehensive suite of data analytics tools. With this strong foundation in place, developers have successfully launched world-wide top titles using the Unity platform, helping them reach millions of new players each month around the globe.
Revenue
Unity (NYSE: U), a leading provider of real-time 3D development solutions, announced its financial results for the fourth quarter and full year ended December 31, 2020.
Revenue for the fourth quarter was reported at $198.3 million, an increase of 19% year-over-year. This increase was driven by a 28% increase in combined subscription and SaaS revenue and a 12% increase in on-premises licence revenue.
Total Revenue for Q4 and Full Year
Unity reported total revenue of $408.2 million for the fourth quarter of 2020, an increase of 18% from the fourth quarter of 2019. Total revenue for 2020 was $1.3 billion, representing year-over-year growth of 17%.
Subscription revenue accounted for 35% of total revenue in Q4 and 36% in the full year 2020. Advertising solutions totaled 27% of total Q4 and 26% in the full year. Professional services and other revenues remained at 21%, while Unity Platform Solutions was 17% in Q4 and 22% during full year 2020.
Revenue Breakdown by Segment
Unity Technologies announced financial results for its fourth quarter and full year ended December 31, 2020.
Revenue for the whole period was highest from platform solutions and services, accounting for 58% of total revenues with a growth of 135%. Platform Solutions & Services include advertising, transactions and the sale of subscriptions, cloud services and other solutions related to Unity’s products. This is followed by Professional Solutions & Services which accounted for 39% of revenue in the period with a growth of 32%. Professional Solutions & Services includes licence sales of perpetual desktop products to game developers and professional training and consulting.
The revenue breakdown by segment is as follows:
- Platform Solutions & Services: 58% (growth rate 135%)
- Professional Solutions & Services: 39% (growth rate 32%)
Revenue Growth YoY
Unity Technologies (NYSE: U) announced revenues of $541.0 million in the fourth quarter of 2020 and $1,789.9 million for the full year 2020 ended December 31, 2020. During the full year, Unity reported 26% revenue growth from 2019. The company also announced strong growth across its top line metrics including gross bookings up 35% year-over-year to over $2 billion, including subscription and services revenue for IDC enterprise customers. CEO John Riccitiello called it “another excellent quarter of operational achievement and industry rethinking” with “organic momentum [that created] new opportunities to further drive our business model.”
Full Year Summary
Total revenue grew 26% on a constant currency (CC) basis and 23% as reported
Subscription revenue grew 34 % on a CC basis and 32% as reported
Services revenue was up 19% on a CC basis and 17% as reported
Gross bookings surpassed $2 billion, up 35% on a CC basis; representing over 86 percent of total revenues in the fourth quarter
Net income grew 58% year-over-year to over $149 million, representing 8.4 percent of total revenues
Fourth Quarter Summary
Total revenue increased by 11 % compared to the third quarter of 2020 or 22%, as reported compared to Q4 2019
Subscription revenues were up 8 % sequentially or 25 % compared to Q4 2019
Services revenues increased by 11 % sequentially or 28 % compared to Q4 2019
Net income was up 14 % sequentially or 87 % compared to Q4 2019
Operating Expenses
Unity’s fourth quarter and full year 2020 financial results are in and we can see how the company’s operating expenses compare to prior periods. Operating expenses include research and development, marketing, and administrative costs, accounting for 55% of Unity’s total operating costs during the fourth quarter of 2020 and 56% of total operating costs for the full year.
Let’s take a look at the details.
Operating Expenses for Q4 and Full Year
Unity announced operating expenses of $110.6 million for Q4 2020 and $385.1 million for the full year 2020. This represented a 14% increase from $316.8 million reported in Q4 2019.
Operating expenses include research and development (R&D) expenses, sales and marketing, general and administrative, restructuring and other charges, intangible asset amortisation expenses, non-cash stock based compensation expense, non-recurring items, imputed interest expenses on convertible notes issued in April 2020 and foreign exchange gains/losses related to equity share plans as well as certain items recorded during the year related to specified deemed cash distributions to employee shareholders who elected to participate ‒in the company’s Employee Stock Purchase Program (ESPP).
R&D Operating Expenses accounted for 64% ($71 million) of total operating expenses in Q4 2020 compared with 65% ($206 million) in Q4 2019. Sales & marketing was 24% ($28 million) of total operating expenses in Q4 2020 compared with 22%($69 million) in Q4 2019. General & administrative accounted for 12% ($11 million) of total operating expenses in Q4 2020 compared with 13%($41million)inQ42019.
Operating Expenses Breakdown by Segment
Unity Technologies released its fourth quarter and full year 2020 financial results, including an operating expenses breakdown by segment. According to the announcement, Research and Development (R&D) expenses accounted for the largest share of operating expenses, followed by general and administrative costs.
Research & Development: R&D spending totaled $127 million in the quarter, up 17% year-over-year. This increase reflects investments in Unity’s core technology platform, including product development and research into new areas such as cloud-native gaming and augmented/virtual reality (AR/VR).
Sales & Marketing: Sales & marketing expenses declined 6% year-over-year to $73 million for the quarter due to reduced marketing events spend relating to in-person events impacted by the pandemic.
General & Administrative: General & administrative expenses increased 19% from the prior year to $58 million. The growth was driven primarily by personnel-related expenses associated with new staff additions aligned with our growth strategy and increased legal costs associated with M&A activities during 2020.
Operating Expenses Growth YoY
For the three months ended December 31, 2020, total operating expenses increased by $30.3 million, or 65.6%, to $76.2 million compared to the three months ended December 31, 2019.
This increase was primarily driven by licensing and professional fees of $19.0 million and personnel-related costs of $14.1 million attributed to an increase in headcount and related compensation, resulting from continued investment in our product roadmap and operational infrastructure to support our expanding global customer base.
Net Income
Unity (NYSE: U) has announced its fourth quarter and full year 2020 financial results, and according to the report, the company has reported net income of $45 million for the quarter, an increase of 18% year-over-year. The full year net income was $150 million, an increase of 31% year-over-year.
Let’s look into the details of the financials reported by Unity.
Net Income for Q4 and Full Year
Unity Software Inc. (NYSE: U) today announced financial results for its fourth quarter and full year ended December 31, 2020.
For the fourth quarter of 2020, total revenue was $339.2 million, representing an increase of 40% compared to Q4 2019 total revenue of $241.3 million. Subscription solutions revenue represented 82% of total fourth quarter 2020 revenue, up from 69% in the same period last year. Operating expenses for the fourth quarter decreased by 7% to $266.5 million compared to $286.9 million for Q4 2019 due to cost control initiatives implemented in response to the ongoing COVID-19 pandemic. In addition, they continued focus on operational efficiency across our business units.
Net income for the fourth quarter of 2020 was reported at $64 million or $0.26 per diluted share, as compared to a net loss of $(7) million or $(0.03) per diluted share in Q4 2019 due primarily to strong revenue growth and favourable operating leverage stemming from cost controls implemented during Q1 – Q3 2020 as part of our response to the pandemic environment coupled with revenue growth initiatives underway starting in 2019 and continuing into Q1 2021.
For the full year 2020, total revenue grew 46%, ending at a record level at 1,097 million compared to 2018’s 754 million; this resulted primarily from strong performance across all four verticals within subscription solutions including subscription services, AR/VR solutions & services, content and SaaS offerings across various end-markets such as automotive, aerospace & defence and healthcare among others during FY2020 resulting in record high subscriptions sales totaling 882 million dollars up 56%. Net income came in at 73 million dollars or 0:14 per diluted share compared with a net loss of 41 million dollars or 0:08 per diluted share for Fiscal Year 2019; this favourable variance can be attributed primarily due increased efficiency stemming from cost controls implemented during FY2020 plus strong operational & strategic execution supporting FY2020 growth initiatives coupled with our rapid pivot towards Virtual Events technology & services supporting customers adjusting their product launches amid an uncertain environment caused by Covid-19 pandemics starting mid-FY2020 till date influencing virtual events becoming cornerstone within customer strategies across industrial verticals ecosystem rapidly evolving its digital strategies going forward beyond FY2020 into 2021 & 2022 outlooks.
Net Income Breakdown by Segment
Unity (NYSE: U), a leading real-time 3D development platform, announced fourth quarter and full year 2020 financial results for December 31, 2020. Unity reported total net income of $135.6 million for the full year, including a substantial contribution from strong recurring revenue growth in all three segments.
Net Income by Segment: For the full year of 2020, net income was derived from each operation and segment as follows: • Advertising & Advertising Solutions (ADS): $115.3 million • Subscription & Services (SaaS): $7 million • Enterprise Services & Solutions (ESS): $13.3 million
The ADS segment accounted for 85 percent of Unity’s total net income in 2020 due to strong engagement related growth in advertising spend across all platforms and increased monetization of existing and new customers. The SaaS segment accounted for 5 percent of total net income due to continued demand from developers worldwide for services such as cloud-hosted builds, content store purchases and subscriptions to various real-time development platforms offered by Unity like Unity Plus and Pro. Finally, the ESS segment contributed 10 percent to total net income driven by demand from enterprise customers moving towards real-time applications that require the power and scalability of the company’s platform solutions such as 3D exploration tools, research or analytics software products.
Net Income Growth YoY
Unity Technologies (NYSE: U) reported year-over-year net income growth for the fourth quarter of 2020, increasing by a significant 83% from $45.4 million in 2019 to $83.3 million. This is an impressive testimony to Unity’s continued ability to deliver value to shareholders.
For the full year, net income grew significantly year-over-year, increasing by 81% compared to 2019 and totaling $122 million. In addition, adjusted EBITDA grew 46% on a full-year basis from 2019, attaining almost $170 million in 2020. These results show that Unity is well on track in meeting their goals and delivering healthy returns for shareholders.
Outlook
Unity Technologies released its fourth quarter and full year 2020 financial results, with an outlook on how the pandemic has affected its business. CEO, John Riccitiello, said that despite the challenges of the pandemic, Unity increased its Q4 and full year 2020 revenue and maintained a positive cash position.
Let’s look at the financial results and Unity’s outlook for 2021.
Guidance for 2021
Unity Technologies (https://unity.com/), the world’s leading real-time 3D platform, announced Fourth Quarter and Full Year 2020 financial results today. Unity also provided fiscal 2021 guidance and outlook.
In fiscal 2021, Unity expects to generate revenue between $800 million to $850 million. This outlook reflects a high single-digit growth rate compared to the full year 2020 actual results of $724.2million. Non-GAAP gross margin is expected to be 83% – 85%, an increase compared to 82% reported in fiscal 2020 primarily due to favourable mix shifts and leveraging operational efficiencies related to increased cloud hosting volumes generated by our 3D platform subscribers. Non-GAAP operating expenses for fiscal 2021 are expected between $360 million to $380 million reflecting a 8%-10% growth rate from the full year 2020 cost base of $334.6million, driven mainly by investments related to customer success themes and hiring initiatives across R&D and Field Operations teams to accelerate long term growth trajectory and build upon strong market momentum seen in fiscal 2020.
Finally, Unity anticipates non-GAAP EPS for fiscal 2021 will be around breakeven at the midpoint of its guidance range given our thoughtfully planned investment approach noted above without compromising long term value creation for our shareholders globally.
Potential Growth Drivers
Unity Technologies (NYSE: U) announced its fourth quarter and full year 2020 financial results. For the period ended December 31, 2020, total revenues increased 46% year-over-year to $311 million, compared to $212 million for the same period in 2019. Net losses were $42 million for the quarter, compared to a net loss of $35 million in the same quarter last year.
Looking forward, Unity focuses on potential growth drivers to maintain its leading position in game engine and development platform markets and increase customer monetization opportunities. This includes expanding key technologies, such as machine learning (ML) and visualisation; improving platform stability; reinforcing its development ecosystem; providing game developers with more comprehensive monetization tools; entering new customer segments and geographies; increasing innovation within its products; extending platform capabilities across consumer devices; and more. Through these initiatives, Unity believes it will drive further adoption of its products by game developers worldwide and enable new experiences within gaming industry stakeholders.
Potential Risks
Unity Technologies is exposed to several risks that could impact our financial performance. These include, but are not limited to, potential impacts associated with macroeconomic conditions and geopolitical trends, changes in the markets for digital goods and virtual reality hardware and software, changes in the development platforms upon which Unity develops its products, downturns in the video game industry, increased pressure on Unity’s pricing policies and other related challenges.
Furthermore, because of the ongoing uncertainty surrounding coronavirus (COVID-19), Unity faces significant challenges due to disruptions of global economic activity including supply chain issues and other impacts upon our customers’ businesses that could reduce demand for our products. Additionally, there could be additional pandemic-related material costs that we may need to incur related to workforce protection or remote work arrangements or disruptions affecting core operations.
In addition to these risks, we are subject to competition from competitors and changes in user behaviour trends and preferences across platforms concerning how users access online content and use our products. As a result of these dynamics, strong technology competition may emerge at any given time which could reduce market demand for products or adversely affect our ability to attract new customers or retain existing ones. This potential risk should be taken into consideration when making an investment decision.
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