Unity disclosed its financial performance for the fourth quarter and full year of 2023, marking a notable surge in revenue and a reduction in net losses for both periods.
Despite these positive outcomes, CNBC reported a significant drop of 17% in Unity’s shares following the announcement.
Here’s a breakdown of the numbers:
Fourth Quarter 2023:
- Revenue: $609 million (a 35% increase compared to the previous year)
- Net loss: $254 million (compared to $288 million in the corresponding period last year)
- Create Solutions revenue: $290 million (a 47% increase year-on-year)
- Grow Solutions revenue: $319 million (a 26% increase year-on-year)
Full Year 2023:
- Revenue: $2.1 billion (a 57% increase)
- Net loss: $826.3 million (a 10% decrease)
Key Points:
In its Q4 2023 report, Unity attributed the revenue boost to the termination of its service agreement with VFX studio Weta, a move made as part of a broader “company reset,” which led to the elimination of 265 jobs.
The termination of this agreement brought in an additional $99 million in revenue but also contributed $27 million to the net loss. However, despite this impact, Unity managed to reduce its overall net loss to $826.3 million. Unity stated that without this transaction, its revenue would have been $510 million, a 2% decrease year-on-year.
The Create Solutions vertical, responsible for Unity’s engine, saw positive effects from this decision. Without the termination of the transaction with Weta, revenue for this division would have been $190 million, a 4% decrease year-on-year.
The decline in revenue was primarily due to businesses affected by Unity’s company reset, including professional services, gaming services, and Weta Tools.
The Industries segment, which focuses on partnerships with non-gaming sectors like retail and automotive, accounted for 23% of core subscriptions, up from 20% in the previous quarter and 19% in Q4 of the previous year.
Despite a 26% year-on-year increase in revenue in the Grow Solutions segment (Unity’s ads and products and services), Unity acknowledged that its performance was impacted by a controversial runtime fee proposal announced in September.
Looking forward, Unity anticipates generating revenue of $1.76 billion to $1.8 billion for FY 2023, representing a 2% to 4% decline year-on-year.
