Unity Company Brief
Unity is the world’s leading platform for creating and operating interactive, real-time 3D content. They are going public on 9/18/2020. If you are interested in investing in Unity, we have read through their S-1 and compiled a simple brief below outlining what we think you should know. This is for informational purposes only and does not constitute investment advice.
Technology Sector: Focuses on development and distribution of games through the development App Unity.
CEO: John Riccitiello
About: American business executive who is chief executive officer of Unity Technologies. Previously, he served as CEO, chief operating officer and president of Electronic Arts, and co-founded private equity firm Elevation Partners in 2004.
Offering Size & Company Valuation – Add on Offering of:
Shares Issued: 25,000,000
Additional 3,750,000 available to underwriters
Price: $34 - $42
Valuation: $850m - $1,207.5m
Common stock to be outstanding after offering: 263,366,733 shares
Emerging Growth Company: less than $1.07 billion in revenue during the last fiscal year, UNITY qualifies as an “emerging growth company” – Due to this > they have reduced and limited reporting and disclosure requirements about operations and financial activities.
- General corporate purposes, including working capital, operating expenses and capital expenditures.
- Repay the outstanding $125 million of indebtedness under our credit facility.
- acquisitions of, or strategic investments in, complementary businesses, products, services or technologies
Quick over View:
- Our platform provides a comprehensive set of software solutions to create, run and monetize interactive, real-time 2D and 3D content for mobile phones, tablets, PCs, consoles, and augmented and virtual reality devices.
- Crowd source developers around the globe to continuously generate and produce gaming content
- Own app UNITY > provides access to games developed.
- Popular Games: Playrix, Moon, FallGuys: Knock Out
- estimate that in 2019, on a
- Global basis, 53% of the top 1,000 mobile games on the Apple App Store and Google Play and over 50% of such mobile games, PC games and console games combined were made with Unity
- Major portion of revenue comes from end-users who download and play the games developed by the platform
- Inability to scale or enter new markets
- Company operates at a loss, and may not become profitable
Product: Unity Development platform
- Create Solutions: Used by content creators/developers/designers/engineers/architects – to create interactive 2D & 3D content
- Operate Solutions: offer consumers the ability to grow and engage their end-user, as well as monetize their content
- Create Solutions: Monthly subscription based solution
- Operate Solution: revenue share and usage based model
- Revenue generated from the developers who build and create
2018-2019: revenue of $541.8m – reflects a growth of 42% year-over-year
Generate Loss: of $131m
$29 billion market across both gaming and other industries. Create Solutions and Operate Solutions estimated: $12 billion in 2019 across over 15 million potential creators, growing to over $16 billion in 2025,
• Industries Beyond Gaming: In industries beyond gaming, we estimate the market opportunity for our Create Solutions and Operate Solutions to be approximately $17 billion today, based on the number of software developers, architects and designers the solutions could potentially serve.
Looking to the future, maybe large opportunities within and beyond the industries and use cases we currently serve that are not captured by the above market opportunity estimates.
• Gaming: We believe there is a large future opportunity for Unity in gaming that is not captured by the above analysis. Goal to expand the applicability of our platform to creators with new solutions we are designing for the future, such as assisted artistry workflows, higher performance rendering capabilities and additions to our Operate Solutions.
• AR & VR: We are the leading platform for creating content for augmented reality and virtual reality applications, which we believe will represent large opportunities for our business in the future as innovations in hardware and connectivity increase capability and drive adoption.
• Industries Beyond Gaming: There are 37 million engineers and technicians, based on data published by Cambashi, who could be additional users of various current and future products that comprise our platform
Our Platform Our core competitive strength is the breadth and depth of our platform. We offer a comprehensive set of solutions to create, run and monetize real-time 3D games and applications. Creators can onboard through any of our solutions and leverage our platform to serve their needs at every stage of growth.
Market leader for the creation of all types of video games, ranging from games developed by the largest global publishers, including AAA studios, to games developed by mid-sized, small and independent developers and freelancers
Invested over $450 million in research and development over the last two fiscal years alone to further develop our solutions
Data Analytics: Our scale affords us access to a vast amount of end-user engagement and platform performance data. We continuously capture and analyze valuable end-user behavior and application performance data from over 50 billion in-app events per day across over 20 different platforms as end-users interact with games and applications made with Unity.
- We have a history of losses and may not achieve or sustain profitability in the future.
- We have a limited history operating our business at its current scale, and as a result, our past results may not be indicative of future operating performance.
- Our business depends on our ability to retain our existing customers and expand their use of our platform. If we are unable to attract new customers, our business, financial condition and results of operations will be adversely affected.
- We derive a significant portion of our revenue from our Operate Solutions. If we fail to attract and retain Operate Solutions customers, our business and results of operations would be adversely affected. Operating system platform providers or application stores may change guidelines or technical requirements to require us or
- If we are unable to further expand into new industries, or if our solutions for any new industry fail to achieve market acceptance, our growth and operating results could be adversely affected, and we may be required to reconsider our growth strategy.
- Our business relies on strategic relationships with hardware, operating system, device, game console platforms and other technology providers. If we are unable to maintain favorable terms and conditions and business relations with respect to our strategic relationships, our business could be harmed.
- If we do not make our platform, including new versions or technology advancements, easier to use or properly train customers on how to use our platform and solutions, our ability to broaden the appeal of our platform and solutions and to increase our revenue could suffer.
- Interruptions, performance problems or defects associated with our platform and solutions may adversely affect our business, financial condition and results of operations.
- The markets in which we participate are competitive, and if we do not compete effectively, our business, financial condition and results of operations could be harmed.
- After this offering, and based on 238,366,733 shares outstanding as of June 30, 2020, our executive officers, directors and greater than 5% stockholders, in the aggregate, will beneficially own approximately 62% of our outstanding common stock and, if they choose to act together, will continue to have the ability to control or significantly influence all matters submitted to stockholders for approval. Furthermore, many of our current directors were appointed by our principal stockholders.