Unity Software(US:U)2025-05-07 20:20Revenue Performance - Total revenue for the three months ended March 31, 2025, was $435 million, a decrease of 5.5% compared to $460.38 million in the same period of 2024[88]. - Create Solutions revenue decreased to $150.38 million in Q1 2025 from $163.67 million in Q1 2024, while Grow Solutions revenue decreased to $284.62 million from $296.71 million[92]. - The dollar-based net expansion rate as of March 31, 2025, was 97%, down from 101% in the prior year, primarily due to decreases in Grow Solutions revenue[84]. - The company expects revenue associated with non-strategic portfolio to decline further through the remainder of 2025, with approximately $34 million in Q1 2024 and $17 million in Q1 2025[92]. - The company is migrating a portion of its traffic to a new AI platform called "Unity Vector," which is expected to improve revenue performance in the future[94]. Profitability and Loss - Gross profit for Q1 2025 was $321.04 million, resulting in a gross margin of 74%, compared to 69% in Q1 2024[88]. - Net loss for Q1 2025 was $77.91 million, compared to a net loss of $291.48 million in Q1 2024[88]. - Adjusted EBITDA for the same period was $83,943 thousand, an increase from $78,515 thousand in the prior year, while GAAP net loss improved to $(77,907) thousand from $(291,478) thousand[119]. - Adjusted EPS for Q1 2025 was $0.24, compared to $0.28 in Q1 2024, with a GAAP diluted net loss per share of $(0.19) versus $(0.75) in the prior year[120]. Expenses and Cost Management - Operating expenses totaled $448.98 million in Q1 2025, significantly reduced from $690.92 million in Q1 2024, primarily due to workforce reductions[88]. - Research and development expenses decreased to $220.63 million in Q1 2025 from $282.73 million in Q1 2024, reflecting headcount reductions[88]. - The company incurred approximately $14 million in employee separation costs and $6 million in non-employee charges related to workforce reductions in Q1 2025[81]. Cash Flow and Financial Position - Free cash flow for the three months ended March 31, 2025, was $7,308 thousand, a significant improvement from $(14,563) thousand in the same period last year[122]. - As of March 31, 2025, the company had cash and cash equivalents totaling $1.5 billion, primarily held for working capital purposes[123]. - Net cash provided by operating activities was $13,026 thousand for Q1 2025, compared to $(7,373) thousand in Q1 2024[129]. - The accumulated deficit as of March 31, 2025, was $3.8 billion, with expectations of continued operating losses on a GAAP basis for the foreseeable future[126]. - The company plans to meet future capital requirements through a combination of cash flows from operating activities, available cash balances, and potential future equity or debt transactions[128]. - The company issued $690 million in aggregate principal amount of the 2030 Notes in Q1 2025, using the proceeds to repurchase outstanding 2026 Notes[125]. - The company may seek additional strategic partnerships and acquisitions to enhance its offerings, which could increase cash requirements[128].