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Unity hits $500m of revenue in Q1 financials

John Riccitiello: “The very nature of our platform will benefit from AI tools”
Unity hits $500m of revenue in Q1 financials

Game-creation platform Unity has reported $500m of revenue for Q1 2023, up 56% year-over-year with CEO John Riccitiello promising even greater profits and streamlining in the future through their deep dive into AI.

The increase is another significant improvement in profitability after Unity hit its first profitable quarter last year at $451m of revenue. Unity also boasted of their partnership with a number of high profile studios, such as Outfit7 (Talking Tom) and Second Dinner (Marvel Snap). Their create solutions - their main business of development and monetisation tools - generated $187m of revenue, up 14% year-over-year while their grow solutions - such as in-game ads and user acquisition - generated $313m, up a whopping 101% year-over-year.

Unity beat its own expectations for revenue. Last year they predicted $480m of revenue and an increase of 47-50%, so by their own margins it has been a very good quarter for the company.

Unity has been actively keeping its costs in check recently, cutting hundreds of staff in part due to economies made possible via its merger with the ironSource monetisation platform.

In terms of the future in their earnings call chief financial officer Luis Visoso commented, “We beat the high end of the revenue guide by $20 million. We beat the high end of the EBITDA guide by $20 million as well. And if you compare this to the first quarter of 2022, that's a $55 million EBITDA improvement. We're also pleased with the Unity and ironSource integration.

“We're guiding Q2 above consensus for both revenue and EBITDA, and for the full year, we're being prudent. I mean, we all read the same news and the economic environment is still volatile and uncertain. So, what we did is we raised the low end of the revenue guide by $30 million, and we raised the low end of the EBITDA guide by $20 million. And we expect to continue to perform better than the market,” he added.

Focusing on AI

There was a significant focus on AI in the opening remarks of Unity’s investor call, with CEO John Riccitiello commenting, “The very nature of our platform will benefit from AI tools and content creation, and we're uniquely able to enable creators to make things where worlds come alive or digital twins coming live and in ways that were never possible before.” Given Unity's ongoing drive for simplicity and speed, the role of AI is clearly on the increase within the company. Their own AI-powered game creation teaser from GDC earlier this year clearly shows the direction in which the company intends to travel.

This quarter’s financials will be encouraging to Unity and assurance for those looking on that the ironSource merger has been a great help to the company. The significant increase in grow solutions compared to create solutions also suggests that the company has a potential goldmine in the form of advertising, something echoed by their recent addition of ad bidding to LevelPlay.

Visoso also confirmed that Unity is still pursuing a “$1 billion EBITDA run rate by the end of 2024,” an ambitious target, but if their initial success this year is any indication, it’s feasible if the company stays above turbulent waters in the wider macroeconomic environment.