Unity Software Inc. has recently released its 10-K report, providing a detailed look into the company's financial performance and operations. Unity operates a platform that offers real-time 3D content and experiences, providing artificial intelligence solutions to support creators in building and growing immersive, real-time 2D and 3D content for various devices. The company serves enterprises, mid-market companies, and government and non-profit institutions across industries and operates in multiple countries.
In the year ended December 31, 2024, Unity Software Inc. recognized approximately $90 million of revenue associated with non-strategic portfolios and began substantially reducing its workforce and office footprint, resulting in approximately $214 million in employee separation costs. The company also announced changes to its pricing model for Create Solutions in the third quarter of 2023, experiencing a high volume of negative customer feedback and a slowdown in new contracts and renewals. However, in the third quarter of 2024, Unity announced the cancellation of those pricing changes and a reversion to a subscription-based model, with price increases for gaming customers.
Key metrics monitored by Unity include the number of customers generating more than $100,000 of revenue in the trailing 12 months, which increased to 1,254 in 2024 from 1,222 in 2023. The dollar-based net expansion rate declined to 96% in 2024 from 100% in 2023, primarily driven by decreases in Grow Solutions revenue due to competition in the advertising market.
In terms of financial performance, total revenue decreased to $1.81 billion in 2024 from $2.19 billion in 2023, primarily due to a decrease in Create Solutions revenue and professional services revenue, as well as a decrease in Grow Solutions revenue driven by competition. The cost of revenue decreased, while operating expenses also saw reductions, reflecting the company's efforts to restructure and streamline its organizational structure.
Unity's 10-K report provides a comprehensive overview of the company's operations and financial performance, shedding light on its strategic shifts, revenue streams, and key metrics. The report also highlights the company's ongoing efforts to adapt to market dynamics and customer needs while focusing on its core businesses. Following these announcements, the company's shares moved 1.2%, and are now trading at a price of $28.34. For more information, read the company's full 10-K submission here.
