U Q2 2024 Earnings

Call Details

• Call Title: Unity Software Inc. Q2 2024 Earnings Call
• Date: August 8, 2024 at 9:00 PM UTC
• Management Team:
  • Daniel Amir (VP and Head of Investor Relations)
  • Matt Bromberg (Chief Executive Officer)
  • Luis Visoso (Chief Financial Officer)
  • Mark Barry-Smith (Chief Accounting Officer and Interim CFO)

Call Summary

Financial Performance

• Revenue from the strategic portfolio was $426 million in Q2, down 6% year-over-year.
• GAAP net loss for the quarter was $126 million, which represents a 35% improvement from a $193 million net loss in Q2 2023.
• Adjusted EBITDA was $113 million for the quarter, a 29% improvement versus $88 million in the prior year quarter, excluding customer credits in the prior year.
• Non-GAAP gross margin expanded to 84% in the quarter compared to 81% in the same period last year.
• Non-GAAP operating expenses were down 21% year-over-year and represented 59% of revenue versus 63% in the prior-year quarter.
• Adjusted EBITDA margin was 25% for the quarter, an 850 basis point year-over-year increase when excluding prior-year customer credits.
• Free cash flow was $80 million for the quarter, up 137% from $34 million in the prior-year quarter.
• Cash and cash equivalents totaled $1.3 billion at quarter end, and fully diluted share count was 476.5 million at quarter end.

Guidance

• Full-year strategic portfolio revenue guidance was updated to $1,680 to $1,690 million from a prior range of $1,760 to $1,800 million.
• The updated full-year revenue guidance implies a decrease of roughly 2% to 3% year-over-year on the strategic portfolio.
• Full-year unadjusted EBITDA guidance was lowered to $340 to $350 million from a prior range of $400 to $425 million.
• The company expects to realize an additional $5 to $15 million of cost savings that are included in the updated guidance.
• Third-quarter strategic revenue is guided to $415 to $420 million, representing down 4% to 6% year-over-year.
• Third-quarter adjusted EBITDA is guided to $75 to $80 million and includes investments to strengthen the growth business and annual merit increases.
• The company reiterated an expectation of continued double-digit growth in the create subscription business for the year.