Unity reported financial results for the third quarter of its fiscal year, posting modest but better-than-expected results in most segments, including solution creation and solution development. Total revenue increased 5% year over year to $471 million.
Here's what you need to know:
Numbers
- Revenue: $471 million (up 5% year over year)
- Create Solutions revenue: $152 million (up 3% year-over-year)
- Grow Solutions revenue: $318 million (up 6% year over year)
- Net loss: $127 million (with a margin of 27%).
Highlights
The company attributed Create Solutions' 3% revenue increase to strong growth in subscription revenue, “offset by lower consumer services revenue driven by [its] portfolio reset.”
Grow Solutions' 6% revenue growth, the company added, was also driven by strong performance from its Unity advertising network. However, this growth was “slightly offset” by a year-on-year decline in Grow's “other businesses.”
Calling the progress in the Create business “exciting,” Unity CEO, President and Director Matthew Bromberg confirmed that “after the impact of non-strategic revenues has diminished, [Unity's] The subscription software business grew 13% year over year, reflecting fundamental improvements. [it has] made both in the quality of our products and in the connection we have with [its] clients.”
“Unity has always been committed to democratizing access to technology. We are committed to providing every software developer with the tools and platform to become a game developer,” he said. “It's in our DNA. Advances in artificial intelligence will allow us to improve and expand this mission.”
According to Bromberg, since launch Unity 6 – which now has more than 9.4 million downloads, up 42% from last quarter – has seen a 22% drop in customer-reported issues, and thanks to improved quality and features, the firm says it's “seeing significant continued momentum and adoption.”
“Third quarter results once again significantly exceeded expectations for both revenue and adjusted EBITDA, driven by Unity Vector AI as well as the continued development of Create,” the company said. “As consumer enthusiasm for interactive entertainment continues to grow, Unity will grow with it.”
Looking ahead, Unity expects revenue to be around $480-$490 in the next reporting period, with mid-digit growth in digital funnel revenue for Grow and high single-digit year-over-year growth for Create. Bromberg also hinted that Unity will be “entirely rooted” in augmented and augmented reality and will “ensure Unity is positioned to support sustainable industry growth” as shipments of AR and VR headsets are expected to grow 38% in 2025 (thanks, Looking for Alpha).
Last month Unity has discovered a “major security vulnerability” affecting games created using their development tool back in 2017. Unity Director of Communications and Advocacy Larry Grieb explained that “there is [was] there is no evidence of any exploitation of the vulnerability and there was no impact to users or customers.”
