Unity Software(U) - 2024 Q4 - Annual Report

Revenue Performance - Total revenue for the year ended December 31, 2024, was $1,813,255, a decrease of 17$2,187,317 in 2023[240]. - Create Solutions revenue decreased to $613,966 in 2024 from$859,174 in 2023, primarily due to the termination of a subscription agreement with Wētā FX Limited, which accounted for approximately $99 million in the fourth quarter of 2023[245]. - Grow Solutions revenue also declined to$1,199,289 in 2024 from $1,328,143 in 2023, impacted by competition and the return of customer incentives from ironSource[246]. - The dollar-based net expansion rate as of December 31, 2024, was 96$90 million in revenue from non-strategic portfolios in 2024, which is expected to decline throughout 2025[229]. - Total revenue for Unity Software Inc. in 2024 was $1,813,255, a decrease of 17.0$2,187,317 in 2023[308]. - Create Solutions revenue decreased to $614.0 million in 2024 from$859.2 million in 2023, while Grow Solutions revenue decreased to $1,199.3 million from$1,328.1 million[379]. Financial Performance - Gross profit for the year ended December 31, 2024, was $1,332,402, with a gross margin of 73$664,287, compared to a net loss of $826,322 in 2023[240]. - Adjusted gross profit for the year ended December 31, 2024 was$1,509,315, compared to $1,801,488 in 2023, with an adjusted gross margin of 83$669,831 in 2024, compared to $830,589 in 2023, reflecting a 19.4$664,114, compared to a net loss of $822,011 in 2023, indicating a 19.2$1.68, an improvement from $2.16 in 2023[308]. Operating Expenses - Operating expenses totaled$2,087,551 in 2024, a decrease from $2,286,389 in 2023, with significant reductions in research and development costs[240]. - Employee separation costs amounted to approximately$214 million in 2024, related to workforce reductions and modifications of equity awards[230]. - Research and development expenses for 2024 were $924,830, down from$1,053,588 in 2023, a decrease of 12.2%[308]. - Sales and marketing expenses decreased to $752,649 in 2024 from$834,625 in 2023, a decline of 9.8%[308]. - General and administrative expenses increased for the year ended December 31, 2024, primarily due to higher personnel-related costs from employee separation[258]. Cash Flow and Liquidity - Free cash flow for the year ended December 31, 2024 was $286,004, compared to$178,779 in 2023, indicating improved liquidity[272]. - As of December 31, 2024, Unity's cash and cash equivalents totaled $1.5 billion, primarily held for working capital purposes[273]. - Net cash provided by operating activities for the year ended December 31, 2024, was$315,553 thousand, an increase from $234,700 thousand in 2023[280]. - The company anticipates that existing liquidity sources will be sufficient for at least the next 12 months, but may require additional equity or debt financing sooner than expected[278]. - Cash, cash equivalents, and restricted cash totaled$1,527.9 million as of December 31, 2024, compared to $1,604.3 million in 2023[386]. Strategic Focus and Workforce - The company plans to focus on its core businesses, the Unity Engine and related consumption services, while narrowing investments in new businesses[229]. - In January 2024, Unity committed to eliminating approximately 25$214 million in 2024[252]. - Research and development expenses are expected to increase in the long term as Unity expands its teams, but are projected to decrease in the short term due to a reset of the Strategic Portfolio[253]. Assets and Liabilities - Total assets decreased to $6,737,407 in 2024 from$7,243,441 in 2023, a decline of 7.0%[305]. - Total liabilities decreased to $3,310,259 in 2024 from$3,829,063 in 2023, a reduction of 13.5%[305]. - The company had cash and cash equivalents of $1,517,672 as of December 31, 2024, down from$1,590,325 in 2023, a decrease of 4.6%[305]. - The company reported a depreciation and amortization expense of $408.980 million in 2024, down from$563.916 million in 2023[319]. Legal and Compliance - The company is involved in multiple legal proceedings, including a securities class action and derivative suits, but believes these will not have a material adverse effect on its business[414]. - The company intends to vigorously defend itself against the allegations in the ongoing litigation[413].