Unity Posts $622M Q3 Revenue and First GAAP Profit Since IPO
Unity reported $622M Q3 revenue, up 32%, and $122M in GAAP net income, its first profitable quarter since its IPO, and guided Q4 higher.
San Francisco-based Unity Software Inc. said Thursday that third-quarter revenue rose 32% to $622 million from $471 million a year earlier and that it recorded GAAP net income of $122 million, or 25 cents a diluted share, its first profitable quarter since its initial public offering.
Strategic revenue, which excludes businesses Unity is exiting, was $597 million, up 59%. Strategic Grow revenue was $432 million, up 90%, and strategic Create revenue was $165 million, up 11%. Non-strategic revenue fell 73% to $25.5 million after Unity sunset its ironSource Ads network in the second quarter and sold its Supersonic publishing business on Aug. 4.
Profitability and cash
GAAP basic earnings were 27 cents a share and diluted earnings were 25 cents, compared with a 30-cent diluted loss a year earlier. The company said the GAAP net margin was 20%. Adjusted EBITDA, a non-GAAP measure Unity emphasizes, was $257 million, or a 41% margin, up from $109 million a year earlier. Adjusted earnings were 44 cents a share. Operating cash flow was $224 million and free cash flow was $220 million. Cash, cash equivalents and restricted cash stood at $2.65 billion as of Sept. 30.
President and Chief Executive Officer Matt Bromberg said Vector grew 126% year over year and 40% from the prior quarter. Grow Solutions revenue was $457 million, up 44%, which Unity attributed mainly to the Unity Ads Network and Vector, partly offset by declines in ironSource Ads. Create Solutions revenue was $165 million, up 8%.
Fourth-quarter outlook
For the fourth quarter, Unity guided to strategic revenue of $683 million to $691 million, strategic Grow revenue of $515 million to $520 million, strategic Create revenue of $168 million to $171 million, about $5 million of non-strategic revenue, and adjusted EBITDA of $290 million to $295 million. The company said it expects to repay convertible notes due Nov. 15 with cash on hand.
Unity shares trade on the New York Stock Exchange under the ticker U. The Motley Fool published a transcript of the company’s earnings call that matched the release’s headline figures.
Sources: Nasdaq, Unity Investor Relations, The Motley Fool
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