Unity has reported financial results for Q3 2024, which surpassed adjusted profit expectations despite a modest decline in revenue.
The company recorded a 2% drop in revenue compared to last year, totalling $429 million, yet this remained above Unity’s guidance of $415 million to $420 million.
In a letter to shareholders, Unity expressed optimism about its current trajectory, emphasising a period of “meaningful and productive change” after a period of turmoil.
The company highlighted its position as what it calls the sole provider capable of offering comprehensive value to developers across the entire game lifecycle—from prototyping to live service operation and monetisation.
According to Unity, there are more than three billion monthly downloads of applications created with its platform.
The company reported a net loss of $125 million for the quarter, consistent with the same period last year, and a slight improvement from a $126 million net loss in the second quarter of this year.
On an adjusted basis, Unity posted a $92 million profit in EBITDA (earnings before interest, taxes, depreciation, and amortisation), exceeding its forecast of $75 million to $80 million. In comparison, adjusted EBITDA for the previous year’s same quarter was $94 million, excluding $37 million in customer credits as mentioned in the shareholder letter from the end of 2023.
Unity’s game engine division, Create Solutions, performed notably well, with third-quarter revenue from its strategic portfolio hitting $132 million—up 5% year-over-year and 2% over the preceding quarter. This growth was primarily driven by a 12% increase in subscription revenue as customers renewed and upgraded their subscriptions at higher rates.
Unity credits this growth to initiatives such as the cancellation of the Runtime Fee in favour of a subscription-based model, which has facilitated renewals and sparked new business relationships.
Within its advertising division, Grow Solutions, Unity recorded $298 million in revenue from its strategic portfolio during the quarter – a 5% year-over-year decrease – though there was a 1% increase quarter-over-quarter.
Total company revenue for the quarter amounted to $447 million, representing an 18% decline year-over-year due to a portfolio reset and diminishing Grow Solutions revenue.
Unity’s non-strategic portfolio contributed $17 million to third-quarter revenue, a significant 84% decrease year-over-year—again, attributed to the portfolio reset. The company expects this segment to decline further in the fourth quarter.
Looking towards the future, Unity projects its portfolio will generate revenue between $422 million and $427 million in the fourth quarter, with adjusted EBITDA forecasted at $79 million to $84 million. This projection underscores Unity’s guarded optimism for a rebound in its Grow business.
Unity’s commitment to innovation and stability was demonstrated with the launch of Unity 6. The company has also revamped its upgrade philosophy to support customers in integrating new features without compromising on system stability, thereby easing decision-making for developers choosing to build long-term businesses using Unity’s platform.
In line with its focus on talent acquisition, Unity has strengthened its leadership team by appointing Steve Collins as CTO, effective in October. Collins brings a wealth of experience, having previously served as CTO at King – the studio behind Candy Crush – and co-founder and CTO of Havok.
In January, Jarrod Yahes will join Unity as the new Chief Financial Officer—bringing experience from Shutterstock, where he played a pivotal role in the company’s expansion.
Unity has been advancing its machine learning stack and data infrastructure to enhance ROI for advertising clients. Early testing results are promising, indicating potential improvements not only in user acquisition and monetisation but also in generating insights crucial for game production and live service management.
The company says its overarching vision remains to create a unified platform that delivers value throughout the game development lifecycle, a goal that the company is steadily pursuing with enhanced internal processes, a revitalised executive team, and strategic changes based on community feedback.
(Photo by Mahdi Bafande)
See also: Halo developers shelve own game development engine for Unreal
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