Unity celebrates its first profitable quarter on a non-GAAP basis since going public

The company generated $451 million in Q4 2022

Unity celebrates its first profitable quarter on a non-GAAP basis since going public

Unity generated $451 million in the fourth quarter of 2022, representing a 43% year-on-year increase from $315.9 million in the same period of 2021.

This marks the company’s first profitable quarter as a public company on a non-GAAP basis with an operating profit of $13 million, and saw the company exceed guidance.

The company provides separate revenue views, and going forward Create Solutions will include all products included in the category in 2022, plus Unity Gaming services, while Grow Solutions covers ad products, Supersonic, Aura, and Luna.

“2022 was a highly transformational year for the company. Create Solutions grew our already strong gaming business by increasing our partnerships with existing and new customers,” said the company in its latest Shareholder Letter. “This was complemented with increased momentum with customers in industries (our business beyond gaming) where growth accelerated with digital twins. And very importantly, Unity and ironSource merged, creating a true platform with even more opportunities to better serve customers and shareholders and drive profitability and cash flow. The integration is progressing as planned.”

GAAP gross profit stood at $311 million compared to $242.2 million in Q4 2021, representing an increase of 28%. However, the GAAP gross profit margin fell from 77% to 69%.

The power of Unity

2022 saw Unity generate record revenue of $1.4 billion, representing a year-on-year increase of 25% from $1.1 billion in 2021. Gross profit for the year also rose, standing at $948.5 million compared to $856.9 million, representing a year-on-year increase of 9%. However, Unity reported Non-GAAP losses of $90 million over the whole year, despite the company’s success in other metrics.

Based on its success in 2022, Unity has forecast another successful year ahead, with revenue estimated to reach between $2.05 billion and $2.20 billion, representing a year-on-year increase of between 47% and 58%, with growth in both Create Solutions and Grow Solutions.

For Q1 2023, the company expects revenue between $470 million and $480 million, representing a year-on-year rise of between 47% and 50%. The company expects revenue growth to exceed the market for both the full year and the first quarter, allowing the company to increase revenue across both Create Solutions and Grow Solutions.

“It is hard to predict how the markets will evolve in the current economic environment,” their letter states. “Most economies are soft, some in recession. The economic environment has less of an impact on Create Solutions than on Grow Solutions. Within Create Solutions, we expect to see continued growth in 2023. The gaming industry continues to build and launch games at a level similar to last year, and their consumers are engaging well with their content. In industries, we see increased interest in Unity’s technologies as real-time digital twins are a critical part of our customer’s future.”

“Within Grow Solutions, we expect the in-game ads market in 2023 to remain stable versus trends we have seen in recent quarters starting in Q3 2022. This translates to the overall ingame ads market to contract by approximately 10% as compared to an uneven 2022”

We listed Unity as one of the top 50 mobile game makers of 2022.

Staff Writer

Lewis Rees is a journalist, author, and escape room enthusiast based in South Wales. He got his degree in Film and Video from the University of Glamorgan. He's been a gamer all his life.