In This Article:
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Revenue: $442 million, up 4% year-over-year, $15 million above guidance.
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Create Solutions Revenue: $139 million, up 9% year-over-year, 6% sequentially.
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Growth Solutions Revenue: $303 million, up 2% year-over-year, 2% sequentially.
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Non-Strategic Portfolio Revenue: $15 million, down 92% year-over-year.
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Adjusted EBITDA: $106 million, 23% margins, exceeded guidance by 26%.
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Adjusted Gross Margins: Improved from 82% in 2023 to 83% in 2024.
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Free Cash Flow: $106 million in Q4, up 74% year-over-year; $286 million for the full year, up 60% year-over-year.
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Cash and Debt: $1.5 billion in cash, $2.2 billion in debt.
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Share Count Dilution: Reduced from just under 3% in 2023 to just under 2% in 2024.
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Q1 2025 Revenue Guidance: $405 million to $415 million.
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Q1 2025 Adjusted EBITDA Guidance: $60 million to $65 million.
Release Date: February 20, 2025
For the complete transcript of the earnings call, please refer to the full earnings call transcript.
Positive Points
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Unity Software Inc (NYSE:U) exceeded its guidance for both revenue and adjusted EBITDA in Q4 2024, with revenue from its strategic portfolio reaching $442 million, up 4% year-over-year.
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The company's Create Solutions revenue grew by 9% year-over-year, driven by a 15% increase in subscription revenues and a 50% growth in industry revenue.
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Unity 6 has been well-received, with 38% of active users upgrading and 2.8 million downloads since launch, contributing to the company's strong performance.
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Unity's advertising business exceeded expectations in Q4, driven by strong holiday demand and improved ROI for customers.
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The company announced a significant co-development partnership with Google for the new Android XR platform, reinforcing its position in the XR market.
Negative Points
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Unity Software Inc (NYSE:U) anticipates some disruption in its existing ad business due to the transition to the new AI platform, Unity Vector, which may impact Q1 2025 revenue.
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The company is cautious about the time needed to mature the Unity Vector product as it begins to operate at scale, reflecting prudence in its Q1 guidance.
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Revenue from Unity's non-strategic portfolio was down 92% year-over-year, indicating a significant decline in this segment.
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The transition to Unity Vector is a significant undertaking, and the benefits are not expected to be immediate, requiring patience from stakeholders.
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Unity's guidance for Q1 2025 reflects a step down in revenue compared to Q4 2024, partly due to seasonal demand and the transition to the new ad model.
Q & A Highlights
Q: Can you break down the expected revenue step-down in Q1, particularly regarding strategic revenue and legacy ad products? A: Matthew Bromberg, CEO, explained that the revenue guidance reflects prudence regarding the timing of revenue lift from the transition to Unity Vector. Jarrod Yahes, CFO, added that the majority of the conservatism is due to the transformation in the ad business, with existing models performing well in Q4.