U Q1 2022 Earnings

Call Details

• Call Title: Unity Software Inc. Q1 2022 Earnings Call
• Date: May 10, 2022 at 9:00 PM UTC
• Management Team:
  • Richard Davis (Head of Investor Relations)
  • John Riccitiello (CEO, President and Chairman)
  • Luis Visoso (CFO)
  • Ingrid Lestiyo (SVP, Operate Business)
  • Marc Whitten (Senior Vice President of Create Solutions)

Call Summary

Financial Performance

• Total company revenue was $320M, which was up 36% year over year and came in at the top end of the guidance range.
• Create revenue was $116M, which was up 65% year over year.
• Operate revenue was $184M, which was up 26% year over year.
• Strategic partnerships and other revenue were $20M, which was up 11% year over year.
• Non-GAAP operating margin was negative 7.2%, which improved 280 basis points from the first quarter a year earlier.
• Non-GAAP gross margin was 76.2%, which was down 210 basis points year over year and was partially driven by added engineers in cost of goods sold.
• Cash flow from operations was $101M, which included Weta's FX $200M subscription payment covering four years of license.
• The company had 1,083 customers with trailing 12-month revenue above $100,000, which was up from 837 a year earlier, representing a 29% year-over-year increase.
• Fully diluted shares were 348M at the end of the first quarter and headcount was 5,864 employees versus 4,389 a year ago.

Guidance

• The company lowered full-year revenue guidance to $1,350M to $1,425M, which implies 22% to 28% year-over-year growth.
• Second-quarter revenue guidance was $290M to $295M, representing growth of 6% to 8% versus the second quarter last year.
• The company quantified a 2022 monetization headwind of approximately $110M, with roughly 60% of the impact in Q2, 30% in Q3, and 10% in Q4.
• The revenue recovery is modeled as data rebuilding, model training, and then customer spend scale-up, which results in a front-loaded and back-loaded growth profile for 2022.
• The company expects a non-GAAP operating loss for Q2 of $62M to $64M.
• Full-year non-GAAP operating loss guidance was lowered to a range of $60M to $75M.
• The company now expects to achieve profitability in Q4 2022 and to be profitable for the full year 2023.
• The guidance range was widened to reflect uncertainty in the speed of monetization recovery versus prior guidance that assumed more even quarterly growth.