Unity Software(U) - 2024 Q4 - Annual Results

Revenue Performance - Fourth quarter revenue was $457 million, down 25% year-over-year, primarily due to a portfolio reset[5] - Revenue from the strategic portfolio was $442 million, up 4% year-over-year[5] - Create Solutions revenue was $152 million, down 47% year-over-year, with a 20% decline when excluding the impact of the Wētā FX termination[7] - Grow Solutions revenue was $305 million, down 5% year-over-year, but would have increased by 2% excluding prior customer credits[8] - Full year revenue was $1,813 million, down 17% year-over-year[12] - Revenue for Q4 2024 was $457.1 million, down 25% from $609.3 million in Q4 2023[37] Profitability Metrics - GAAP net loss for the quarter was $123 million, with a margin of (27)%, an improvement from (42)% in the same quarter last year[10] - Adjusted EBITDA for the quarter was $106 million, with a margin of 23%, compared to $186 million and 30% margin in Q4 2023[11] - Full year GAAP net loss was $664 million, with a margin of (37)%, an improvement from (38)% in the previous year[17] - For Q4 2024, Unity reported a net loss of $122.5 million, a decrease from a net loss of $254 million in Q4 2023, representing a 52% improvement year-over-year[30] - Adjusted EBITDA for Q4 2024 was $106.1 million, with an adjusted EBITDA margin of 23%, compared to $185.6 million and 30% in Q4 2023[37] Cash Flow and Liquidity - Free Cash Flow for the quarter was $106 million, compared to $61 million in Q4 2023[12] - The company experienced a net cash provided by operating activities of $112.2 million in Q4 2024, an increase from $72.1 million in Q4 2023[30] - Cash, cash equivalents, and restricted cash at the end of Q4 2024 totaled $1.53 billion, down from $1.60 billion at the end of Q4 2023[30] - Free cash flow for the year ended December 31, 2024, was $286.00 million, compared to $178.78 million for the year ended December 31, 2023, indicating a 60.1% increase[39] Expenses and Cost Management - Stock-based compensation expense for Q4 2024 was $110.2 million, compared to $181 million in Q4 2023, indicating a 39% reduction[37] - GAAP gross profit for Q4 2024 was $341.6 million, with a gross margin of 75%, compared to $347.7 million and 57% in Q4 2023[37] - Non-GAAP cost of revenue for Q4 2024 was $76.1 million, representing 17% of revenue, compared to $86.6 million and 14% in Q4 2023[37] - GAAP research and development expense for Q4 2024 was $217.97 million, a decrease from $265.15 million in Q4 2023, representing a 17.7% decline[39] - GAAP sales and marketing expense for Q4 2024 was $175.75 million, down from $215.37 million in Q4 2023, reflecting a 18.4% reduction[39] - GAAP general and administrative expense for Q4 2024 was $71.50 million, a decrease from $126.13 million in Q4 2023, showing a 43.4% decline[39] Future Outlook and Strategic Initiatives - Q1 2025 guidance projects revenue of $405 to $415 million and adjusted EBITDA of $60 to $65 million[23] - Unity plans to allocate R&D to high-impact initiatives and focus on revenue growth while managing shareholder capital prudently[40] - The company expects to release its new product, Vector, with anticipated improvements and scalability over time[40] - Unity aims to reduce shareholder dilution from stock-based compensation and enhance per share returns[40] - The company anticipates gradual de-leveraging over the next several years[40] - Unity's financial guidance for Q1 2025 will be provided in future communications[40]