Q1 2025 Unity Software Inc Earnings Call Transcript
Key Points
- Unity Software Inc (U) exceeded the high end of its guidance for revenue by 5% and adjusted EBITDA by 29% in the first quarter.
- The migration of the Unity ad network to the new AI platform, Unity Vector, was completed ahead of schedule, providing a 15% to 20% lift in installs and in-app purchases.
- Unity 6, the latest version of the Unity engine, has seen strong adoption with 43% of active users already upgraded, contributing to double-digit year-over-year growth in subscription revenues.
- The company has expanded its platform reach with Unity 6.1, supporting new platforms like Nintendo Switch 2 and Meta Quest, enhancing its position in AR and VR gaming.
- Unity Software Inc (U) continues to see strong demand beyond gaming, with new customers like Philips and Siemens using Unity for various industry applications, contributing to nine straight quarters of sequential revenue growth.
- Grow revenue in the first quarter was down 4% year over year, despite the rollout of Unity Vector.
- Create revenue decreased by 8% year over year due to a transition away from low-margin professional services.
- The full financial impact of the Vector-driven improvements is not expected to be visible until later quarters.
- R&D costs have increased by $10 million due to investments in Unity Vector, impacting short-term profitability.
- The company is facing internal competition between its ad products, which may lead to shifts in revenue allocation.
(audio in progress) risks, uncertainties, and assumptions that could cause actual results to differ from those expressed in these forward-looking statements. We undertake no obligation to update any of our forward-looking statements. For more information about factors that may cause results to differ, please refer to the risks described in our most recent Form 10-K, particularly in the section entitled Risk Factors as updated by additional filings we make with the SEC from time to time.
Today's call will include both GAAP and non-GAAP financial measures. Non-GAAP financial measures are in addition to, and not a substitute for, or superior to GAAP results. A full reconciliation of GAAP to non-GAAP financial results is available in our earnings release, which can be found on our Investor Relations website and on the sec.gov website.
With that, I'll pass the call over to Matt.
Thanks, Alex. It's really good
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