雅虎香港財經 Unity Software Inc. (NYSE:U) Q4 2022 Earnings Call Transcript
Unity Software Inc. (NYSE:U) Q4 2022 Earnings Call Transcript February 22, 2023
Richard Davis: game market in industries and digital twins side of our business. So again, before we go into broader Q&A, maybe you could explain how you kind of see the macro environment playing out for Unity. And then I'll have one quick question for Luis as well.
Luis Visoso: Sure. So broadly, the macro environment remains surprisingly resilient. If you look at the gaming industry, we're seeing our developers are as productive as they've been before. They're producing a huge number of games. Their investment against game development is holding up well. We're seeing strong DAUs or users in our network suggestive of overall game play that remains strong. And then within the industry side where we reported over 100% growth last year in digital twins, there continues to be very robust demand. And so maybe some elongated sales cycles where people take a little bit longer to decide, but when you've got demand far in excess of our ability to supply, we're in a pretty good spot and we're not feeling a pinch.
So all in, the market seems stronger. And I'd offer than you might expect, especially when we're indexing against such unusual years to work from home or learn from home era, but a couple of very specific points. The ads market has stabilized as of the middle of 2022 and continues to be stable now. What's actually happening is strong user engagement offset by weaker eCPMs than we historically see, but again it's been stable. At some point, that flips and we're not expecting it to flip. We're using that in our models looking forward. We want to be conservative. But all in, the markets are solid. There is not a lot of concern here.
Richard Davis: Great. Thanks very much. And Luis, the question that we get oftentimes for you would be how are you thinking about balancing growth and profitability? And kind of how does that fit into the guidance that we issued today?
Luis Visoso: Yes. Thank you, Richard. So what I would say is on the revenue side, just like John just mentioned, we're taking a prudent assumption on the market and that is reflected in our revenue guide. It is clearly better to plan this way in this environment. Now on the cost side, we're taking very clear actions to improve profitability. And this includes things like the elimination of close to 300 roles that we announced before being very selective in any future new hires that we add to the company being more focused in our investments and reducing the number of beds that we make at Unity, raising the bar on cost, and we've been turning every stone once or twice and finding new opportunities in a few places. And that frankly includes reducing the number of shares that we grant as part of compensation.
Photo by Florian Olivo on Unsplash
So we're taking a very holistic view on cost and making sure that costs are adding value. And as a result, you should expect to see costs relatively flat during the year as revenue growth quarter-over-quarter. Now what happens then is that we expect to significantly improve profitability in 2023. If you look at we had a loss of $90 million non-GAAP in 2022 and we expect adjusted EBITDA to be about somewhere in the range of $230 million to $300 million in 2023, so very significant swing from one year to another. Now what's interesting is in 2022, we were only profitable in Q4. In 2023, we expect obviously to be profitable every single quarter. And one more point I would like to make is that the profitability improvement that you see year-over-year comes about 50:50 from create and grow.
So we're making progress across the board. We're taking, as John said, more conservative assumptions on the market and being very proactive on cost with decisive actions to improve profitability in this environment.
A - Richard Davis: Great. Thank you very much. Well, now we can open it up to questions from the analysts on the call. Here we go. First question from Matt Cost at Morgan Stanley.
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