Unity Software Inc. (NYSE:U) Q1 2024 Earnings Call Transcript

Unity Software Inc. (NYSE:U) Q1 2024 Earnings Call Transcript May 9, 2024

Unity Software Inc. isn't one of the 30 most popular stocks among hedge funds at the end of the third quarter (see the details here).

Daniel Amir: Welcome to Unity's First Quarter 2024 Earnings Call. My name is Daniel Amir, VP and Head of Investor Relations. After the closing of the market today, we issued our shareholder letter. That material is now available on our website at investors.unity.com. Today, I'm joined by Jim Whitehurst, our Interim CEO, and by Luis Visoso, our CFO. But before we begin, I want to note that today's discussion contains four looking statements, including statements about goals, business outlook, industry trends, market opportunities, expectations for future financial performance, and similar items, all of which are subject to risks, uncertainties, and assumptions. And you can find more information about these risks and uncertainties in the risk factors section of our filings at sec.gov.

Actual results may differ, and we take no obligation to revise or update any forward-looking statements. Finally, during today's meeting, we will discuss non-GAAP financial measures. These non-GAAP financial measures are in addition to, and not a substitute for, or superior to measures of financial performance prepared in accordance with GAAP. A full reconciliation of GAAP to non-GAAP is available in our shareholder letter and on the sec.gov website. Great. So what we'll do now is similar like what we have done in previous quarters. We get a number of inbound questions during the quarter, and we will start with kind of two key questions here. The first is to Jim, and then the next is to Luis. So the first question to Jim is, with the recent announcement of the new CEO and your new role as Chairman of the Board, how do you see Unity going forward?

A software engineer coding while surrounded by the latest industry tools and technology.

Jim Whitehurst: Well, let me start off just saying I am thrilled to have Matt Bromberg joining us as Unity's CEO. He starts next Wednesday. We conducted a super thorough search and really am thrilled with him. He has a great combination; he is super strategic; he really has a sense of the industry, what are the trends? What are the subtleties? What are the disruptions happening? So I think he'll be a great strategic steward of the business. But in addition, he is a down in the weeds operational leader who I think can continue to drive improvements in our execution. And finally, he knows the business extremely well, both the development kind of game development side as well as the monetization side. So I think he will be a great leader for the company going forward.

Secondly, I'm not going anywhere. I'm remaining as Executive Chairman. And what I'm really excited about working on is the industry side of the business. I am obviously in an area where I've spent a lot of time and I continue to be super excited about the opportunity we have there. I'm probably biased, but I still think that's a bigger opportunity in the long run in the gaming business. And I'm looking forward to partnering with Matt to help, however, I can and ensure the success and growth of that business. In terms of how I see the business today, I guess let me address that in the short-term and the long-term. I'd say in the short-term, I am even more confident in our ability to deliver the plan this year. The reason I say that several fold is things have unfolded.

First off, we are seeing customers who were a bit ruffled at the end of last year, feeling much more confident with us. We've gone from what and why of runtime fee to I think a recognition that the industry wants to make sure that we invest in the runtime. And so it's a matter of how and let's kind of work through that. So we're having super productive conversations with our large customers. We had a phenomenal GDC, really, really great engagement across the board. So also it makes me feel good about our relationships with developers and where those are moving. On Unity 6, obviously that doesn't release until later this year, but if we look at the leading metrics, both the downloads and usage, but importantly, our measures around quality and our timelines, it's the highest quality release at this stage that we've ever had.

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