U Q1 2021 Earnings

Call Details

• Call Title: Unity Software Inc. Q1 2021 Earnings Call
• Date: May 11, 2021 at 9:00 PM UTC
• Management Team:
  • John Riccitiello (Chief Executive Officer, President and Executive Chairman)
  • Luis Visoso (Senior Vice President and Chief Financial Officer)
  • Richard Davis (Head of Investor Relations)

Call Summary

Financial Performance

• Q1 revenue was $235M, representing 41% year-over-year growth.
• This was Unity's 10th consecutive quarter with 30%+ revenue growth.
• Create (CRE) revenue was $70M, up 51% year-over-year.
• Operating revenue was $147M, up 40% year-over-year, and strategic partnership revenue was $18M, up 12% year-over-year.
• Q1 non-GAAP operating loss was $23.4M versus $13.4M in the year-ago quarter.
• Q1 non-GAAP gross margin decreased to 78% from 81% a year earlier due to mix and higher cloud hosting costs.
• Q1 free cash flow margin was minus 43%, driven by bonus payments, payroll taxes from stock vesting, software prepayments, rising working capital, and a one-time real estate payment.
• Total employee headcount was 4,389 at quarter end, which the company stated is up approximately 50% versus the prior-year March quarter.

Guidance

• Full-year 2021 revenue guidance was raised from a prior range of $950M–$970M to $1.0B–$1.015B, representing 29%–31% year-over-year growth.
• The company stated that the guidance increase of approximately $50M was driven by strength in the Operate business.
• The revenue outlook continues to assume roughly a $30M headwind related to Apple IDFA changes.
• Full-year non-GAAP operating loss guidance was narrowed to a range of $90M–$100M.
• Q2 2021 revenue guidance was provided at $240M–$245M, representing 30%–33% year-over-year growth and reflecting two months of IDFA impact.
• Q2 2021 non-GAAP operating loss guidance was provided at $30M–$40M.
• The company forecasts 329M fully diluted shares outstanding for the quarter and 334M for the full year.
• The company reiterated an expectation to reach non-GAAP operating income break-even within fiscal year 2023 and said gross margins are expected to fluctuate in the high 70% range.