U Q2 2023 Earnings

Call Details

• Call Title: Unity Software Inc. Q2 2023 Earnings Call
• Date: August 2, 2023 at 9:00 PM UTC
• Management Team:
  • Richard Davis (Head of Investor Relations)
  • John Riccitiello (CEO, President and Chairman)
  • Luis Visoso (CFO)

Call Summary

Financial Performance

• Company reported a record quarter and stated results were ahead of expectations on a non-GAAP basis.
• Non-GAAP EBITDA was $99M for the quarter, representing an 18.5% non-GAAP operating margin.
• The company reported positive operating cash flow of $33M in the quarter and described cash generation as sustainably positive.
• Revenue growth accelerated to 11% year over year in the quarter versus prior periods.
• The midpoint of the full-year revenue guide was increased to $2.16B after sequential mid-point increases of $15M in the prior quarter and $20M in this quarter.
• Core Create subscription growth excluding China was 22% year over year.
• Industries represented 30% of total Create revenue for the period.

Guidance

• The full-year revenue midpoint was raised to $2.16B reflecting stronger visibility and incremental confidence in the year.
• Guidance assumptions explicitly include a largely level ad market for the year with modest seasonality around the holidays.
• Executives stated that material revenue from new AI and platform releases is expected to ramp more meaningfully in 2024 rather than materially in 2023.
• The company continues to provide both GAAP and non-GAAP disclosures and will reference non-GAAP measures in commentary unless noted.
• No quantitative FY impact was provided for VisionOS or specific AI products in 2023 beyond the qualitative expectation of some 2023 traction.
• Management cited that recent guide increases represent progress against the original $2.125B midpoint set at the start of the year.