Unity's fourth-quarter revenue decreased by 25% to $457 million
In its latest financial report, Unity disclosed a decline in revenue for the fourth quarter, surpassing prior expectations of $422 million to $427 million. For the entire year, the results outdid the projected range of $1.7 billion to $1.71 billion.
Financial Performance
Fourth Quarter 2024
- Revenue: $457 million, marking a 25% decrease from the previous year
- Create Solutions Revenues: $152 million, a decline of 47%
- Grow Solutions Revenues: $305 million, representing a 5% reduction
- Net Loss: $123 million, improving from $254 million in the same quarter the prior year
Full Year 2024
- Revenue: $1.81 billion, down 17% compared to the previous year
- Net Loss: $664 million, an improvement from $826 million in 2023
Key Developments
Unity's decrease in revenues has been linked to a "portfolio reset". In September 2024, Unity did away with its controversial runtime fee. Subsequent leadership changes followed with the appointments of CTO Steve Collins, COO Alex Blum, and CFO Jarrod Yahes across October and November.
The company reportedly undertook workforce reductions earlier this month, though specific numbers were not disclosed. CEO Matthew Bromberg, in a communication seen by 80.lv, cited the cuts as aligning with the company's strategic direction future.
Despite a 25% revenue decline year-over-year for Q4, Unity's strategic portfolio revenue rose 4% to reach $442 million, covering sectors like its engine, cloud services, and monetization.
"Unity's fourth quarter exceeded revenue and profit expectations, indicating our progress," commented Bromberg. He pointed to the strong reception of Unity 6 and new pricing strategies alongside advancements in AI for advertising as encouraging signs for the company's future trajectory.
The Create Solutions segment experienced a 47% revenue drop to $152 million, impacted by portfolio restructuring, yet was partly balanced by a 15% rise in subscription and a 50% increase in strategic revenue.
The Grow Solutions unit, though 5% lower YoY at $305 million, "exceeded expectations" per Bromberg, suggesting the company has the tools to further accelerate growth.
During the earnings discussion, Bromberg touched on transitioning the Unity Ad network to Unity Vector, an AI-driven platform anticipated to enhance data insights and performance. This transition is slated to start at the end of Q1 2025, with completion expected by the close of Q2.
Bromberg also noted the successful release of Unity 6 in October 2024, which has amassed 2.8 million downloads, with 38% of users upgrading.
Annual performance insights reveal a 29% fall in Create Solutions revenue to $614 million, though subscription and strategic revenues grew by 13% and 55%, respectively. Meanwhile, Grow Solutions saw a 10% downturn to $1.19 billion.