Q4 2023 Unity Software Inc Earnings Call

Welcome to <unk> fourth quarter of 2023 and year end earnings call. My name is Daniel Amir VP and head of Investor Relations.

Daniel Mir: Welcome to Unity's fourth quarter 2023 and year-end earnings call. My name is Daniel Mir, VP and Head of Investor Relations. After the closing of the market today, we issued our shareholder letter.

After the closing of the market today, we issued our shareholder letter.

Daniel Mir: 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 forward-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 risk, uncertainties, and assumptions, and you can find more information about these risks and uncertainties in the risk factors section of our filing at sec.gov. Actual results may differ, and we take no obligation to revise or update any forward-looking statement. 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.

That material is now available on our website at investors Dot unity dotcom.

Today, I'm joined by Jim Whitehurst, our interim CEO and by Louis B cells, So our CFO.

But before we begin I want to note that today's discussion contains forward looking statements, including statements about gold business outlook industry trends market opportunities expectations for future financial performance of 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 filing at SEC Dot 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 as substitute for or superior to measures of financial performance prepared in accordance with GAAP.

Daniel Mir: A full reconciliation of GAAP to non-GAAP is available in our shareholder letter and on the sec.gov website. Okay. What we'll do now is similar to what we've done in previous quarters. We get a number of inbound questions during the quarter, and we will start with two key questions. The first one to Jim, and then the second one to Luis.

A full reconciliation of GAAP to non-GAAP is available in our shareholder letter and on the SEC Dot Gov website.

Speaker Change: Great what we'll do now a civil like what we've done in previous quarters, we get a number of inbound quest.

Speaker Change: <unk> during the quarter and we will start with two quick questions.

Speaker Change: The first to Jim and then the second one to Luis.

Speaker Change: So the first question is for Jim.

Daniel Mir: So the first question is to Jim. After five months here, can you give your take on Unity and kind of provide us with an update on the CEO search? Sure, yeah. I can't believe it's been almost five months.

Jim Whitehurst: After five months here can you give your take on unity and kind of provide US also an update on the CEO search.

Sure Yeah, I can't believe it's been almost five months I have to say I'm, even more excited now about the opportunity in front of us than I was when I joined yeah. We're obviously in the midst of a reset but let me spend maybe just a minute talking about why I'm. So optimistic and then I'll come back to the CEO search afterwards, so first off I.

Jim Whitehurst: I have to say, I'm even more excited now about the opportunity in front of us than I was when I joined. Yeah, we're obviously in the midst of a reset, but let me spend maybe just a minute talking about why I'm so optimistic, and then I'll come back to the CEO search afterward. So first off, I believe we're making the right interventions to position this to win for our customers, not just today, but for the long term. And let me just quickly hit three of those.

Jim Whitehurst: I believe we're making the right interventions to position us to win for our customers not just today, but for the long term and let me just quickly hit three of those so first off we've substantially focused our portfolio on products, where we are confident that we have unique value for our customers and therefore have permission to win and we're hearing great feedback.

Jim Whitehurst: So first off, we've substantially focused our portfolio on products where we're confident that we have unique value for our customers and, therefore, have permission to win. And we're hearing great feedback. For our games customers, they're seeing the focus in our product roadmaps and our attentiveness to their needs, and so we're hearing great feedback there. Same on the industry side, where not just from what we've been doing the last few months but, in particular, our focus on repeatable software and the partnership we announced with Capgemini. It has, I've heard from several customers, a really positive view of that direction around focus.

Jim Whitehurst: For our games customers, they're seeing the feet the focus in our product Roadmaps and our intended attentiveness to their needs and so we're hearing great feedback there same on the industry side, where not just from what we've been doing the last few months, but in particular, our focus on repeatable software.

Jim Whitehurst: <unk> and the partnership we announced with cap Gemini. It has I've heard from several customers are really positive view that direction around focus.

Jim Whitehurst: We've also instituted a much leaner cost structure that provides us with a healthy profile, and then from there, we can scale in a profitable way. And third, we're in the process of improving our growth performance, specifically our user acquisition through better use of data and stronger models. And I'm very confident you'll see accelerating growth in our growth business going forward. The second reason I'm optimistic is that while 2023 was obviously a challenging year for us, we saw some key proof points around the durability of our franchise.

Jim Whitehurst: We've also instituted a much leaner cost structure that provides us a healthy profile.

Jim Whitehurst: Then from there we can scale in a profitable way.

Jim Whitehurst: And third we're in the process of improving our growth performance, specifically, our user acquisition through better use of data and stronger models and I'm very confident you'll see accelerating growth in our grow business.

Jim Whitehurst: Going forward.

Jim Whitehurst: The second reason I'm optimistic is that while 2023 was obviously a challenging year for us we saw some key proof points around the durability of our franchise.

Jim Whitehurst: Yeah, so first off, even in the aftermath of the pricing change, our core subscription business, excluding China, grew 18% in Q4. Put it simply, we are essential to the games industry. And then, with industry, it was actually our fastest-growing segment, and I believe we've just gotten started, and we have meaningful growth potential there, and the partnership with Capgemini should accelerate growth there. And finally, our engagement with our editor continues to be super, super strong.

Jim Whitehurst: So first off even in the aftermath of the pricing change our core subscription business, excluding China grew 18% in Q4.

Jim Whitehurst: Put it simply we are essential to the games industry and did with industry. It was actually our fastest growing segment and I believe we've just gotten started and we have meaningful growth potential there and the partnership with cap Gemini should even further accelerate growth there.

Jim Whitehurst: And finally, our engagement with our editor continues to be Super Super strong we saw that at unite in November and we plan to exceed our customer expectations with our next releases of the editor through the course of this year.

Jim Whitehurst: We saw that at Unite in November, and we plan to exceed our customer expectations with our next releases of the editor through the course of this year. And the final reason I'm optimistic is that, obviously, the reset work continues through Q1. It obscures our financial progress, but we expect to see strong financials in the back half of this year. To the second part of the question, you know, I don't have a super long update. The board continues to conduct a thorough process to make sure we hire the best leader to write the next chapter of Unity's story, and I'm very committed to supporting the board and its decisions. Thank you. Louise, this question is for you. Can you provide additional perspective on the company's direction following the reset? Hey Daniel,

Jim Whitehurst: And the final reason I'm optimistic is that obviously the reset work continues their key wanted obscures, our our financial progress, but we expect to see strong financials in the back half of this year.

Jim Whitehurst: To the second part of the question, Yes, I don't have a super long update the board continues to conduct a thorough process to make sure. We hire the best leader to write the next chapter of your entity story and I'm very committed to supporting the board and the Board's decision.

Speaker Change: Thank you Luisa. This question is for you can you provide additional perspective on the company's direction following the reset.

Luisa: Hey, Danielle. Thank you yeah, absolutely, we actually feel very a proud of what we've accomplished.

Luis Visoso: Thank you. Yeah, absolutely. We actually feel very proud of what we've accomplished.

Luis Visoso: We've accomplished a lot in a short period of time, and we believe that, as Jim just said, this intervention has positioned Unity for success going forward. If you look back at the end of last year, we started a two-phase company reset that we expect will enable us to sustainably win with both customers and shareholders. The good news is that phase one is mostly behind us.

Luisa: <unk> accomplished a lot in a short period of time, and we believe that as Jim just said that they think their bachelors position uniti for success going forward. If you look back at the end of last year. We started at two phase company reset that we expect will enable us to sustainably win with both customers and shareholders.

Luisa: Good news is that phase one is mostly behind US. This first phase was all about resetting our portfolio resetting our cost structure. So.

Luis Visoso: Now, this first phase was all about resetting our portfolio, resetting our cost structure so that we can refocus on our core business, the engine, the cloud, monetization, while narrowing our investments in new businesses. As a result, we're focusing on businesses where we believe we can sustainably create value for customers and generate a return for the company. The unfortunate consequence of this first phase is that we had to let go of about 25% of our staff, which was super hard. These employees made many, many contributions to Unity and helped customers achieve their goals. We thank them for all their work and are really sad to see them go.

Luisa: So that we can refocus on our core businesses the ALJ in the cloud monetization, we're narrowing our investment for new businesses and as a result, we're focusing on businesses, where we believe we can sustainably create value for customers and generate a return for the company.

Unfortunately, a consequence of this periphery Faye its first phase is that we have two late golf about 25% of our colleagues at Super hard.

Luisa: Employees made many many contributions to uniti and help customers achieve their goals. We thank them for all their work and are really sad to see them go now what's exciting is actually the second phase of the reset basis about reigniting revenue growth with healthy financials and the good news is that that starts this year.

Luis Visoso: Now what's exciting is actually the second phase of the reset. This is about reigniting revenue growth with healthy finance. And the good news is that that starts this year.

Daniel Mir: We expect revenue growth to accelerate in the second half of 2024 and maintain attractive levels of revenue growth thereafter while maintaining and extending our profitability. Thank you. So, just for housekeeping, if anybody wants to ask a question, they need to hit the raise the hand button on the bottom of their screen.

Luisa: We expect revenue growth to accelerating the second half of 2024 and maintain attractive levels of revenue growth thereafter, while maintaining and extending our profitability.

Speaker Change: Thank you. So now we go kind of the second part here for Q&A. So just for a housekeeping if anybody wants to ask a question.

Speaker Change: You need to raise hit the raise the hand button on the bottom of your screen.

Daniel Mir: So we'll take a couple seconds here for people to ask any questions. Okay, so the first question comes from Jason Bazinet from Citi. Thanks so much.

Speaker Change: So we will take a couple of seconds here for people to now.

Speaker Change: For any questions.

Speaker Change: Okay. So the first question comes from Jason Bazinet from Citi.

Jason Boisvert Bazinet: Thanks, So much I was just wondering if you could.

Jason Boisvert Bazinet: I was just wondering if you could unpack a bit just sort of the recast 2023 numbers after the portfolio review. I think the revenues came down $450 million, but EBITDA came down $174 million. And then I tried to read the text to understand if some of the things that you divested were EBITDA loss making, and it said they were, but then in some of the footnotes, there were no real numbers in there.

Jason Boisvert Bazinet: Unpack a bit just sort of the recast 2023 numbers after the.

Portfolio review.

Jason Boisvert Bazinet: The revenues came down $450 million.

Jason Boisvert Bazinet: But the EBITDA came down $1 74.

Jason Boisvert Bazinet: And then I tried to read the text to understand if some of the things that you divested where EBITDA loss, making.

Speaker Change: And it said they were but then in some of the footnotes there was no real number in there. So can you just talk a little bit about.

Luis Visoso: So can you just talk a little bit about the Recast 2023 base and those adjustments? Yeah, we know it's not easy to follow all these numbers. So we put a table in our shareholder letter. I think the first thing is, we had this one-time gain from what I said, right? We show that as $99 million in revenue, for example. So you see that in the table, which had a $102 million benefit in EBITDA. So you have to take that into account because that's a one-time gain.

Speaker Change: The recast 2023 base and those adjustments yeah, we know it's not easy to follow all these numbers. So we put a table on our shareholder letter I think the first thing Gabe. So we knew we had this one time gain from <unk> right. We show that as $99 million seen in revenue for example, so you see that in the table.

<unk> had a $102 million benefit do you need the debt. So you have to take that into account because thats a one time gain.

Luis Visoso: The second thing is the portfolio changes that you alluded to, that's $283 million in 2023. Most of that is in Grow, a small portion, to be precise, 15 million is within Grow, which is the Luna business. So you have to take that into account.

Speaker Change: One thing is the portfolio changes that you alluded to that's $283 million in 2023. Most of that is seen grow a small portion to be precise 15 million is within girl, which is.

The Loopnet business. So you have to take that into account that operated at a significant loss, which is why we're exiting these businesses because we could not create a return for us while providing value to our customers. We did not quantify that for you because it's not audited, but it has very significant numbers that we're getting rid off and third you.

Luis Visoso: These businesses operated at a significant loss, which is why we're exiting these businesses because we could not create a return for us while providing value to our customers. We did not quantify that for you because it's not audited, but it's a very significant number that we're getting rid of. And third, you have these customer credits that we explained in the shareholder letter and which we mentioned in the thank you last quarter, which was $72 million in revenue and $72 million in EBITDA. So if you really look at the comparable base for 23, you should start with $1.7 billion in revenue and $274 million in EBITDA. And that's what we're building. Thank you. Yep, thank you. Thank you. The next question is from Dylan Becker from William Blair.

Speaker Change: These customer credits that we explained in the shareholder letter in which we mentioned in the 10-Q last quarter, which was $72 million in revenue and $72 million in EBITDA. So if you really look at the comparable base for 'twenty. Three you should start wave one $7 billion in revenue and 200.

Speaker Change: $74 million in EBITDA, and that's why we're building from.

Speaker Change: Thanks, Greg.

Greg: Thank you.

Speaker Change: Thank you our next question is.

Speaker Change: Dylan Becker from William Blair.

Dylan Becker: Yep. Thanks, guys. Two if I could squeeze them.

Dylan Becker: Thanks, guys.

Dylan Becker: Two if I could squeeze maybe first combination for Jim and Luis here, you are kind of nearing the end of the strategic review I Wonder how youre thinking about maybe the earlier point Luis on getting rid of some loss generating businesses, but also kind of catching up investment.

Dylan Becker: Maybe this is the first combination for Jim and Luis here. You're kind of nearing the end of the strategic review. I wonder how you're thinking about, to maybe the earlier point, Luis, getting rid of some loss-generating businesses but also kind of catching up on investment as we think about kind of doubling down around the core. What's the right way of thinking about kind of the trade-off of the two and how that layers into kind of the growth and margin outlook in the business over time? Yeah,

Dylan Becker: As we think about kind of doubling down around the core kind of what's the right way of thinking about some of the trade off of the two and how that layers into kind of the growth and margin outlook in the business over time.

Dylan Becker: Yes.

Luis: Well I'll just start quickly on the core of this and we tried to be consistent all along internally as we've.

Jim Whitehurst: Well, I'll just start quickly on what the core of this, and we try to be consistent all along internally as we've been going through the reset, is that this is all focused on getting a portfolio where we believe we can win and then making sure that we are appropriately resourcing that portfolio to win. And so, you know, I was clear internally that this exercise wasn't about optimizing 2024 EBITDA; it was about getting us lean and efficient and fully resourcing the areas we expect to win because, ultimately, we believe there is a tremendous amount of growth in the company. So Luis, I think you want to talk a little more about this. I totally agree, Jim. You know, Dylan, the way to think about it is that we fully funded the priorities that we had in mind, and those are funded at the right levels, and those that we just didn't think we could generate or return for us or for our customers, we totally defunded. You know, being half-pregnancies, if you wish, just doesn't matter.

Luis: <unk> been going through the reset is this is all focused on getting a portfolio, where we believe we can win and then making sure that we are appropriately resourcing that portfolio to win and so.

Luis: It was clear internally that this exercise wasn't about optimizing 2020 for EBITDA. It was about getting us lean and efficient and fully resourcing. The areas. We expect to win because ultimately we believe there is a tremendous amount of growth in the company. So Luis anything let's talk a little more about this.

Luis: We agree Jim.

Luis: And the way to think about it is we fully funded the priorities that we had in mind and those are funded to the right levels and those that we just didn't think we could generate a return for us or for our customer we totally be funded youll being half pragmatic view, which just doesn't make sense. So that's why we feel confident about our ability to react.

Luis Visoso: So that's why we feel confident about our ability to re-accelerate growth because we're funding those things that really matter. Okay, great. Very helpful there.

<unk> growth because we're funding those things that really matter.

Okay, Great Super helpful. There.

Jim Whitehurst: And maybe one thing I would say on that, Dylan, just what I mean, as we kind of exit the years we get, I think we're generally in general have in mind, this should be a rule of 40 company and be that way for quite a while. If that gives you a sense of kind of roughly where we see ourselves. Absolutely. Yeah. Okay. Okay. Appreciate that color there, Jim.

Speaker Change: I would say on that deal and just what I mean.

Speaker Change: As we kind of exit the year.

Speaker Change: In General you have our mind this should be a rule of 40 company and be that wafer for quite a while if that gives you a sense of kind of roughly where we see ourselves.

Speaker Change: Absolutely, yes, okay. Okay I appreciate the color there Jim maybe you mentioned some of the pipeline investments to you and <unk> 86 up selling I guess, how should we think about the pricing and maybe conversion how youre kind of incentivizing new features within that platform as well as probably more of a 2025 kind of type of story, but how that kind of fuel.

Jim Whitehurst: Maybe you mentioned some of the platform investments too, and Unity 6 upselling. I guess, how should we think about the pricing and maybe conversion, and how you're kind of incentivizing new features within that platform as well? It's probably more of a 2025 kind of story, but how that kind of fuels the commentary around kind of accelerating momentum throughout the back half of this year as well as thoughts on Unity 6. Thanks.

Speaker Change: The <unk>.

Speaker Change: Commentary around kind of accelerating momentum throughout the back half of this year as well and kind of thoughts on the 86.

Jim Whitehurst: Well, so I'll start and frankly, we are resourcing, both unity <unk> and unity seven.

Jim Whitehurst: Well, so I'll start. And, you know, frankly, we are resourcing both Unity 6 and Unity 7 because, well, we won't go too far into the details of that. Please come to GDC, and you'll hear a lot more detail. So we do think that we are heavily funding our roadmaps against our core kind of product offering, and we'll talk more about that here in a couple of weeks at GDC. In terms of, you know, how we're thinking about kind of pricing against that, you're right, it's mainly a 2025 kind of story. So it really doesn't affect the numbers that you see this year.

Speaker Change: Yes.

Jim Whitehurst: Well, we won't go too far the deep the details of that please come to GTC and you'll hear a lot more detail. So we do think that we are heavily funding our roadmap.

Jim Whitehurst: Roadmaps against our core kind of product offering and we will talk more about that.

Jim Whitehurst: Here in a couple of weeks at GTC.

Jim Whitehurst: In terms of how we're thinking about kind of pricing against that you're right. It's mainly a 2025.

Jim Whitehurst: Kind of story, so it really doesn't affect the numbers that you see this year, what I will say is we think there is a lot of organic growth in this.

Luis Visoso: What I will say is we think there is a lot of organic growth in this portfolio. So we're not heavily reliant on just, you know, kind of raising prices. I do think there's more value we provide in our offering, but when we look at our position in the games industry, when we talk about long-term growth, that has more to do with our current product suite and the kind of future offerings we can have more than pricing leverage. So we haven't really kind of laid that out for 2025 and beyond in a way that could give you a, you know, quantification. Yeah, Dylan, maybe just two points to reinforce some of the things Jimmy said you saw that our core business excludes our core subscription business. So that's the editor excluding China is growing 18. So very healthy levels of growth.

Portfolio. So we're not heavily reliant on just kind of raising price I do think there's more value we provide in our offering but when we look at our position in the games industry. When we talked about long term growth.

Jim Whitehurst: That has more to do with our current product suite and kind of future offerings. We can have more than pricing leverage that we haven't really kind of laid that out for 2025 and beyond in a way that could give you.

Speaker Change: Quantify entity stretch, yes Dylan.

Speaker Change: Maybe just two points to reinforce some of the things Jamie saying you saw that our core business exclude our core subscription business. So that's the heavy door, excluding China is growing 18%, so very healthy levels of growth and when we look at engagement. So on new projects being started so the engagement with the heavy door continues to be very very helpful.

Luis Visoso: And when we look at engagement, new projects being started, the engagement with the editor continues to be very, very healthy. So we're very excited about that. And obviously, there is great interest in all our AI tools from our customers. So Muse is now available, so they are using it, and we're happy with the progress we're making.

Speaker Change: So we're very excited about that and obviously there is great interest in all our AI tools from our customers. So they are they are <unk> is now available. So they are using it and we are happy with the progress we're making.

Luis Visoso: Great, thank you both. All right, so our next question is from Brian Fitzgerald from Wells Fargo. Thanks, guys.

Speaker Change: Great. Thank you Bob.

Great. So our next question is Brian Fitzgerald from Wells Fargo.

Brian Fitzgerald: Thanks, guys I am shareholder letter, where maybe it's fallen dawn's question Hugh.

Brian Fitzgerald: In the shareholder letter, and maybe to follow on Dylan's question, you unpacked growth reacceleration in the second half of the year. Can you parse that out a little bit? Is that just primarily from runtime fees? Is it the release of Unity 6? Or is there something else feeding into that?

Brian Fitzgerald: Pac growth Reacceleration in the second half of the year.

Brian Fitzgerald: Can you parse that out a little bit is that just primarily from one time fees.

Brian Fitzgerald: The release of units six Moore's.

Brian Fitzgerald: Or is there something else.

Brian Fitzgerald: Feeding into that maybe the growth of industry. It's actually you talked about thanks.

Luis Visoso: Maybe the growth of industries like you talked about? Thanks. Yeah, really these runtime fees do not have an impact in the second half, or they have no meaningful impact. So the reason why we are excited about and confident that we'll see some acceleration is really the back-end innovation that we're bringing across all our product lines. You know, Jim talked a little bit about some of the innovation we're bringing to growth to make our products more competitive, data, performance, return on ad spending. So we're making a ton of interventions there so that our business can accelerate. And it's really that, you know, it's the innovation across both businesses, both in-games, and across industries that we expect to accelerate. Yeah, the only thing I would say I would add is that, you know, we're in the middle of a reset. And so we were pretty conservative in the first half of the year because obviously, you know, when we are especially dealing with people, right, that gets to be very distracting.

Speaker Change: Yeah really the runtime fees does not have an impact in the second half or nothing meaningful. So the reason why we are excited about and confident that we'll see some acceleration is really.

Speaker Change: Backend innovation that we're bringing across all our product lines, Jim talk a little bit about some of the innovation that we're bringing on growth to make our products more competitive data.

Jim Whitehurst: Performance return on AD spending so we're making a ton of interventions band there.

Jim Whitehurst: So that our business can accelerate and it's really that no. It's the innovation across both businesses both in games and across industries, where we expect to exit nearly growth yes.

Yes, the only thing I would say I would add is we're in the middle of a reset and so we were pretty conservative in the first half of the year because obviously.

Jim Whitehurst: When we are especially dealing with people right that gets to be very distracting and so we're pretty conservative in the first half of the year, but we just kind of looked at kind of the market.

Jim Whitehurst: And so we're pretty conservative in the first half of the year. But we just kind of look at the market, you know, and where we expect as we go forward. Another reason you're seeing that it's both we have confidence in the back half. But it's also if you look at the first half and the back half, there's also an assumption around a little bit more distraction right now, that we will get behind us here as we finalize the reset. And it sounds like there's growth in the growth side of the business as well. What when you talked a little bit about what's happening sequentially and it being down, was that just kind of developer discontent with kind of how the real-time, runtime fees were rolled out?

Jim Whitehurst: And where we expect as we go forward is another reason you're seeing that is both we have confidence in the back half, but it's also if you look at first half to back half. There's also an assumption around a little bit more distraction right now.

Jim Whitehurst: We will get behind us here as we finalize the reset.

Jim Whitehurst: And it sounds like there is growth in the growth side of the business as well.

Jim Whitehurst: When you when you talked a little bit about what's happening sequentially.

Jim Whitehurst: And it being down.

Jim Whitehurst: Just kind of.

Jim Whitehurst: Developer.

Jim Whitehurst: <unk> kind of how the real time.

Jim Whitehurst: One time fees were rolled out in.

Jim Whitehurst: And, and, or is it more to what you're talking about, we're going to develop the tool sets and make the growth side of the business more data-informed and more competitive? Yeah, we didn't really see as much of an impact. There was an impact, as you mentioned, but it was not very meaningful in Q4. We are not guiding by segment going into 2024. But yes, you're right.

Jim Whitehurst: Or is it more.

Speaker Change: So what you're talking about we're going to develop on the tool sets in and make the grow side of the business more data informed board competitive.

Speaker Change: Yes, we didn't really see much of an impact there was an impact as you mentioned, but it was not very meaningful in Q4.

Speaker Change: We are not guiding by segment going into 2024 pack, but yes, you are right, we're expecting an excel in improvement in both businesses throughout the year for the reasons that Jim mentioned.

Luis Visoso: We're expecting an improvement in both businesses throughout the year for the reasons that Jay mentioned. Yeah, I guess a little bit more on that. To be blunt, last year we were doing a lot of kind of integration with IronSource and Unity. And frankly, when that happens, you become maybe a little less focused on driving feature velocity.

Speaker Change: I appreciate it I guess, a little bit more on that just to be blunt last year, we were doing a lot of kind of integration with iron sourcing unity and frankly when that happens you become maybe a little less focused on driving feature velocity and so I do think that level of.

Jim Whitehurst: And so I do think that level of distraction kind of put us a bit behind, but that's now behind us. We have the team integrated, and we have a plan that I think we're very confident in, that closes any competitive gaps that we have. So, and that's somewhat reflected in the growth numbers in the back half of the year. Excellent. Thanks, guys.

Speaker Change: Extra distraction I kind of put us a bit behind that's now behind us we have the team integrated and Oasis.

Speaker Change: Plan that I think we're very confident in.

Speaker Change: Closes any competitive gaps that we have so.

Speaker Change: That's somewhat reflected in the growth numbers in the back half of the year.

Speaker Change: Excellent thanks, guys.

Tim Nolan: Great. The next question is Tim Nolan from Macquarie. OK. Great, thanks.

Speaker Change: Next question, Tim Nolan from Macquarie.

Tim Nolan: Great. Thanks actually perfect segue into my question from the last bit there, which is about the iron source integration could you just talk a little bit more about I guess, what was not an immediate integration when the when the when the acquisition was made now it sounds like you feel like you have completed the acquisition.

Jim Whitehurst: Actually, a perfect segue into my question from the last bit there, which is about the IronSource integration. Could you just talk a little bit more about, I guess, what was not an immediate integration when the acquisition was made? Now it sounds like you feel like you have completed the acquisition. I've noticed some fairly big name departures from IronSource. If there's anything you could talk about that, And then could you just clarify about the $72 million in credits? Is this something that was done to roll people onto the level play platform back in the day?

Tim Nolan: I've noticed some fairly big named departures from Iron source, if theres anything you could talk about that and then could you just clarify about the $72 million in credits.

Tim Nolan: Just is this something that was done to roll people onto level play platform back in the day and then why is that being unwound now.

Luis Visoso: And then why is that being unwound now? Well, let me maybe start on the work stuff. Well, you know, I mean, naturally, when two companies come together, first off, you need to make sure that you're retaining the right people. You have continuity of business. And then over time, you bring the pieces together.

Speaker Change: Well, let me maybe start on that work stuff.

Speaker Change: Naturally when two companies come together.

Speaker Change: First off you need to make sure that you are retaining the right people your have a continuity of business and then over time you bring the pieces together and so we were working on that through the course of last year and that kind of culminated ultimately without say kind of a full integration.

Jim Whitehurst: And so we were working on that through the course of last year, and that kind of culminated ultimately without, say, kind of a full integration, you know, at the end of the year, as we kind of came into January as part of our overall restructuring. So we're a little bit more of a functional organization. So for the first time, we have one owner of a commercial for kind of a CRO for the ads business across both Unity and IronSource. And we have one leader of product and technology across both. So, you know, we frankly had two data science teams until January. We now have one. We had two different kinds of data engineering teams. We now have one.

Speaker Change: At the end of the year as we kind of came into January as part of our overall restructuring. So we're a little bit more of a functional organization. So for the first time, we have one owner of commercial.

Speaker Change: Our kind of our CRO for the ads business across both unity and iron source and we have one leader of product and technology across both so we frankly had to data science teams until January we now have one we had two different kind of data engineering teams. We now have one and so naturally.

Jim Whitehurst: And so, you know, naturally, just how you think about sequencing that in an acquisition, kind of takes a period of time. And so we are there now, and we feel like these single teams and singular focus will serve us well. You know, as part of that, naturally, the founders who ran Iron Source were kind of ready to step back and create room for, you know, people within Iron Source to come in and take roles. And so, as part of that whole integration, I think they decided it was time to step back. I still talk to many of those leaders every week.

Speaker Change: Just.

Speaker Change: How you think about sequencing thing that in and acquisitions.

Speaker Change: It takes a period of time and so we are there now we feel like these are single teams and singular focus.

Speaker Change: Will serve us well as part of that naturally the founders who ran kind of iron source, we're kind of ready to step back and create room for people within iron sourced to come in and take roles and so as part of that whole integration.

Speaker Change: I think.

Speaker Change: <unk> decided it was time to step back.

Speaker Change: I still talk to.

Speaker Change: Sure.

Speaker Change: Many of those leaders every week they are heavily engaged in care about the success obviously of their baby.

Jim Whitehurst: They're heavily engaged in caring about the success, obviously of their baby, Iron Source, but more broadly for Unity as we go forward. Yeah, to the second part of your question, Tim. There were some incentives that Iron Source provided to its customers before the merger, and some of those integration fees were returned to us, and we recorded those as revenue throughout the year.

Speaker Change: And iron source, but more broadly for unity as we go forward.

Speaker Change: Yes, so the second part of your question, Tim So we've communicated with for some time now there were some incentive that <unk> provided to their customers before the merger right and some of those integration fees were returned to us and we reported dose of revenue throughout the year.

Luis Visoso: So what we wanted to make sure that you all had all the transparency in what those amounts were. So we included that in the table where we show revenue by quarter for growth. So most of the difference between that and our reported number is the integration fees that were returned. The only difference is $15 million from Luna, which basically spreads consistently throughout the year.

Speaker Change: So what we wanted to make sure that you all had all transparency what those amounts were so we included that in the table on on where we show a revenue by quarter four grow so most of the difference between that and our reported number is the integration fees that were returned.

Speaker Change: The only difference is $15 million from Loopnet, which basically spreads consistent throughout the year. So you can assume $3 million to $4 million per quarter, but everything else is related to the integration fees that were returned to you any data.

Luis Visoso: So you can assume $3 to $4 million per quarter, but everything else is related to the integration fees that were returned. So we're just giving you that exact number, team. Okay, great. Very helpful. Thank you.

Speaker Change: So we're just giving you that exact number so you are having it is in the base.

Speaker Change: Okay, great all very helpful. Thank you.

Michael J. Funk: So the next question is from Michael Funk at Bank of America. Yeah, thank you for the questions. A couple, if I could.

Speaker Change: So next question is from Michael <unk> at Bank of America.

Michael: Yes. Thank you for the questions a couple if I could looking at the revenue and the margin guidance for the year. I think you said, 25% plus EBITDA margin exiting fourth quarter I mean, it seems like trajectory that could be predicted throughout the year would imply a higher margin by fourth quarter.

Michael J. Funk: Looking at the revenue and the margin guidance for the year, I think you said 25% plus EBITDA margin exiting the fourth quarter. I mean, it seems like the trajectory that could be predicted throughout the year would imply a higher margin by the fourth quarter. So just curious if that is maybe the headcount reduction benefit going away in the second half or reinvesting back into the business. So the first question is on the EBITDA margin. Yeah, hey, Mike, Michael, we are, we'll be including our guide, as Jim mentioned, but we also want to make sure that we're properly investing back, as you know, back to one of the first questions during the meeting. So we were hitting the right balance; we want to be a rule of 40 company. And we think we can be close to that goal towards the end of the year.

Speaker Change: <unk> sort of curious if that is.

Maybe the head count reduction benefit going away in the second half or a reinvestment back into the business. So the first question is on.

Speaker Change: On the EBITA margin.

Speaker Change: Yeah, Hey, Mike Michael we are we're being prudent in our guide as Jim mentioned, we're also want to make sure that we're appropriately investing back is back to one of the first questions. During the meeting. So we are hitting the right balance we want to be our rule of 40 company and we think we can be close to that towards the end of the year. So that's part of it.

Luis Visoso: So that's what we're trying to achieve, and we clearly see a path to get there. But we're driving, as you've seen, our margins and cost efficiency is hard, but never at the expense of, Okay, so, the comment was to rule a 40 company by the end of the year. Was that correct?

Speaker Change: We're trying to achieve and we clearly see a path to get there but.

Speaker Change: We are driving as <unk> seen we are driving our margins and cost efficiencies hard but never at the expense of growth.

Speaker Change: Okay. So so the comment was hopefully rule of 40 company by the end of the year, which are correct, yes that would be our target.

Luis Visoso: Yeah, that would be our target. Okay, and then the last one, if I could, on the competitive environment, you mentioned the shareholder letter, competitive intensity, impacting the business. Can you expand on that comment, please?

Speaker Change: And then the last one if I could on the competitive environment you mentioned in the shareholder letter.

Pattern of intensity impacting the business can you expand on that commonplace.

Speaker Change: Yeah, I mean on the growth side, we're just seeing a more intense competitive environment right and you've all seen some of our competitors report numbers some of them had been better than ours. So it just being a more intense.

Luis Visoso: Yeah, I mean, on the growth side, we're just seeing a more intense competitive environment, right? And you've all seen some of our competitors' numbers. Some of them have been better than ours.

Luis Visoso: So it's just been more intense, you know, and some of the innovation they brought to the market has been strong. And as Jim said, we were busy doing integration work. Now we have a great team, we know what our gaps are, and we have aggressive plans to close those in a very short period of time. So we're working towards that. That's why we refer to, " Great, thank you so much.

Speaker Change: And some of the innovation they brought to the market has been strong and as Jim said, we were basically doing integration work and now we have very great. We know what our gaps are and we have aggressive plans to close those in a very short period of time. So we're working towards so that's why we referred to in the note.

Speaker Change: Great. Thank you so much sure.

Chris Guntarich: Great, so the next question is from Chris Guntarich at UBS. Okay, thanks for taking the question. Maybe the first one on the multiplayer business. You guys talked about shifting the service to orchestration and managed solutions. Can you just unpack this a bit?

Speaker Change: So next question is from Chris <unk> at UBS.

Great. Thanks for taking the question maybe the first one on the multiplayer business you guys talked about shifting the service to orchestration and managed solutions can you just unpack this a bit and then maybe just how we should be thinking about this margin profile going forward.

Luis Visoso: And then maybe just how we should be thinking about this margin profile going forward. Yeah, if you think about our multiplayer business, really, we had two things. One is to think about the hardware component of that. And that is, that's just not our strength.

Yes, if you think about our multiplayer business really we had two things one is kind of think about the hardware component of that and that is that's just not our strength that's not a business, where we can generate a good return and thats not a business, where we have the scale to offer competitive prices to our customers. So it's exactly what we are not trying to do.

Luis Visoso: That's not a business where we can generate a good return, and that's not a business where we have the scale to offer competitive prices to our customers. So that's exactly what we're not trying to do.

Luis Visoso: Having said that, what we offer a unique value is in the orchestration layer of that hosting of the multiplayer games. So we're going to continue to be in that business. That's a software business, that's a profitable business, that's something that we uniquely can provide to our customers. And we're getting out of the hardware business because, as I just said, we're just not, that's not unique for Unity to provide value. Maybe just one follow-up on China.

Speaker Change: Having said that what we can but we offer a unique valuation in the orchestration layer of that hosting of their of the game multiplayer multiplayer games. So we're going to continue to be in that business that is a software business that is a profitable business thats something that we uniquely can provide to our customers and.

Speaker Change: And we are getting out of the hardware bid.

Speaker Change: Business because as I just said, we're just not that's not unique for unity to provide value to our customers.

Speaker Change: Got it and maybe just one follow up on China, I know you had.

Luis Visoso: I know you talked about GrowthX China within the engine, but just curious, we've heard it across the space that Chinese gaming ad spend has been a source of outperformance. Can you just talk a bit about how this performed for you and just kind of the opportunity for Unity on a go forward basis? Thanks. Yeah. So you have to think about China in different ways, right?

Speaker Change: <unk> talked about growth ex China.

Speaker Change: Within the engine, but just curious we've heard at across the space that the Chinese gaming AD spend has been a source of outperformance can you just talk a bit about how this performed in <unk> for you and just kind of the opportunity for unity on a go forward basis, yes.

Yes, so you have to think about China in different ways right. They create business is mostly.

Luis Visoso: The create business is mostly, you know, what our customers in China do, you know, developing games in China. That business has been tough. As we know, there are some restrictions in the Chinese market, and that continues to impact our growth in creating specific, on GROW, our growth in China, which reflects two things again, that reflects business in China but also Chinese-based customers doing business outside of China that has been performing well, just like any other region. So we've been seeing good. I got it.

Speaker Change: Our customers in China developing games in China that business has been tough as we know there are some restrictions in the Chinese market and that continues to impact our growth in create specifically on grow our growth in China, which reflects two things again.

Speaker Change: Business in China, but also Chinese based customers doing business outside of China that has been performing well just like any other regions. So we've been we've been seeing good growth there.

Speaker Change: Got it thank you.

Luis Visoso: Thank you. Great, my next question is Andrew Boone from JMP Securities. Great, thanks so much for taking my questions.

Speaker Change: Great next question is Andrew Boone from JMP Securities.

Great. Thanks, so much for taking my questions.

Andrew Boone: Can you talk about the slimming down of the portfolio and whether that changes the trajectory at all for non-gaming, your industry's business? And then, for my second question, how do we think about professional services following the Capgemini partnership? Is there any change in strategy or anything else we should note there? Thanks so much.

Andrew Boone: Can you talk about the slimming down to the portfolio and whether that changes the trajectory at all for non gaming sure industries business and then for my second how do we think about professional services, calling the cap Gemini partnership is there any change in strategy or anything else. We should note there. Thanks so much.

Speaker Change: Yes, maybe I'll start there. So look obviously revenue goes down because professional services, there's a lot of dollars.

Jim Whitehurst: Yeah, maybe I'll start there. So, like, look, obviously, revenue goes down because professional services cost a lot of money. So, yeah, but we kind of showed the reset in the numbers. Our strategy, I come from an enterprise background; I have been blown away at how much interest there is and, frankly, how much patience there has been from our customers, you know, kind of with us to get this right. Because, you know, Frankly, there is no other solution.

Speaker Change: So yes, that's why we kind of showed the reset in the numbers our strategy I come from an enterprise background.

Speaker Change: <unk> been blown away and how much interest there is and frankly, how much patients there has been from our customers.

Speaker Change: Kind of with us to get this right because frankly, there is no other solution that's anywhere near as compelling as what we can offer.

Jim Whitehurst: That's nowhere near as compelling as what we can offer. And that goes from, you know, visualization. So how do you connect within customers with a richer view of the product to, you know, configuration through distribution, you know, all the way back to obviously the design things. There's a whole education and training component with AR VR.

And that goes from <unk>.

Speaker Change: Visualization, so how do you connect within customers with a richer view of product too.

Speaker Change: Configuration through distribution.

Speaker Change: All the way back to obviously the design things there is a whole education and training component with AR VR, but one of the things you can realize that I talked to all of these things visualization as a component of a solution.

Jim Whitehurst: But one of the things you can realize that I talked about all of these things, visualization is a component of a solution. You know, whether that is a way that you're interacting with your customers in a richer way, or whether that is, you know, building education content, right? So, as you will often see with infrastructure software companies, you know, you're very much partner-led in how you go to market because building those solutions is not our forte. And so, we've made a decision to be a software company and double down on delivering excellent software and working with partners like Capgemini who can take that software and build solutions, that's their business. So I feel highly confident that by focusing on software and building partnerships with people who frankly have more scale and expertise in delivering solutions, we will substantially accelerate that business. I'm super excited about it.

Speaker Change: Whether that is a.

Speaker Change: Way that you're interacting with your customers and a richer way or whether that is building education content right.

Speaker Change: So.

Speaker Change: As you will often see with infrastructure software companies.

Speaker Change: We're very much partner led and how your go to market because building the solutions is not our forte and so we've made a decision to be a software company and double down our roadmaps on delivering excellent software and working with partners like cap Gemini who can take that software.

Speaker Change: And build solutions and Thats their business, so I feel highly confident that by focusing on software and building partnerships with people, who frankly have more scale and expertise on delivering in solutions, we will substantially accelerate that business. We are super excited about it obviously higher margin profile because it's a software.

Jim Whitehurst: Obviously, higher margin profile because it's a software business. But again, if you look at infrastructure software companies, if you think about visualization and what we do as a component of infrastructure, virtually all software companies that do that are heavily partner led. And so what you're seeing as a strategy for us to move in that direction, we'll get much better distribution. I think we'll get much better outcomes by working with, you know, people like Capgemini who are experts in delivering solutions, and we'll just get a lot more scale. Capgemini can bring a lot more people to this than we certainly can in professional services.

Speaker Change: Business, but again, if you look at infrastructure software companies. If you think about visualization and what we do as a component of infrastructure virtually all software companies that do that are heavily partner led and so what youre seeing is a strategy for us to move in that direction, we will get much better distribution I think we get much better.

Speaker Change: Outcomes by working with.

Speaker Change: People like cap Gemini who are experts in delivering.

Speaker Change: Solutions, and we will just get a lot more scale cap Gemini can bring a lot more people to this then we certainly can and professional services. So.

Jim Whitehurst: So we are, I am absolutely convinced, the company is absolutely convinced that we call them industries, but selling into non-gaming enterprise customers is a tremendous opportunity for us going forward. But again, we want to say we're a software company, and we're going to build an efficient, effective kind of go-to-market in a way that that infrastructure is turning into solutions for our customers, and Capgemini is part of that. And again, talking to some of our customers, they're really excited about it because I think they know that we're better at building, you know, interactive 3D software, not necessarily building their industry vertical solutions out of that. Great, thanks.

Speaker Change: We are.

Speaker Change: I am absolutely convinced the company's absolutely convinced that.

Speaker Change: If we call it industries, but selling into non gaming enterprise customers is a tremendous opportunity for us going forward, but again, we want to recognize we're a software company and we're going to build an efficient effective.

Speaker Change: Kind of go to market in a way that that infrastructure has turned into solutions for our customers and capture the nice part of that and again talking to some of our customers are really excited about it because I think they know that we're better at building interactive <unk> software not necessarily building their industry vertical solutions out of that.

Speaker Change: Alright. Thanks. Our next question is Matthew cost from Morgan Stanley.

Matthew Kost: So the next question is Matthew Kost from Morgan Stanley. Hi, thanks for taking the question. Maybe I'll just start by following up on industries. I think that you said in the opening paragraph of the shareholder letter that you think it can be a bigger business than gaming. So I guess are there specific use cases or industry verticals that you're seeing really strong uptake in that you feel you can have that level of confidence in it that it can get from, I think you said, 23% of the subscription business to the majority of it over time? And then I have a follow-up. Thank you.

Matthew Cost: Hi, Yes, hi, thanks for taking the question maybe I'll just start by following up on industries I think that you said in the opening paragraph of the shareholder letter that you think it can be a bigger business than gaming.

Matthew Cost: So I guess are there are there specific use cases or or <unk>.

Industry verticals that Youre seeing really strong uptake in that you feel you can have that level of confidence in it that it can get from I think you said, 23% at the subscription business due to the majority of it over time and then I have a follow up thank you.

Speaker Change: Yes, well I will start and maybe I'll, just give you a little bit of color on a couple of them.

Jim Whitehurst: Yeah, well, I will start. And maybe I'll just give you a little bit of color on a couple of the use cases. And I'm going to try to take names out of it, because honestly, I'm not sure who we actually have commitments to be able to use their names. So, let me just do several real quick.

Speaker Change: The use cases, and I'm going to try to take names out of it because honestly I'm not sure who we actually have.

Speaker Change: Have commitments to be able to use their names so and let me just do several real quick. So one is there a number of luxury retailers, who don't necessarily have all of their inventory in every single store that they have but they want to have rich experiences. So people can see in detail there.

Jim Whitehurst: So one is, there are a number of luxury retailers who don't necessarily have all of their inventory in every single store that they have, but they want to have rich experiences so people can see in detail their products, and this goes from jewelry to clothing. And so we have multiple customers who use our technology to be able to have iPads in the store, where you can have immersive real time so you can spin around the product, you can zoom in, you can look at it closely. And, you know, according to these customers, there's no other way to do it in a performant way on an iPad.

Speaker Change: Products and this goes from jewelry to clothing, and so we have multiple customers, who are who use our technology to be able to have and ipads in the store, where you can have immersive real time. So you can spin around the product you can zoom in and you can look at.

Speaker Change: At it closely and accordingly to these customers there is no other way to do it in a pro forma way on an iPad I know that sounds simple, but again to have a real time engine that is efficient enough that somebody can spin it around in real time.

Jim Whitehurst: I know that sounds simple, but again, to have a real-time engine that's efficient enough that somebody can spin it around in real time, zoom in, it just, we are the best way to do that. So there are a whole series of luxury retailers who see that. Obviously, that can go beyond luxury retail.

Speaker Change: In it we are the best way to do that so there's a whole series of.

Speaker Change: I'll call it luxury retailers, who see that obviously that can go beyond luxury retail we're seeing on the industrial side customers, saying, Hey, we have 10 different different <unk> system or CAD Cam systems, we want to have Glenn and visualization layer that can take data from all of those and make it available widely whether it's too.

Jim Whitehurst: We're seeing on the industrial side, customers saying, hey, we have 10 different PLM systems or CAD CAM systems. We want to have one visualization layer that can take data from all of those and make it available widely, whether it's to end customers or to engineers across the company. Now again, if you have AutoCAD and you have a $5,000 workstation, you can spin around interactive real-time 3D.

Speaker Change: In customers or two engineers across the company now again, if you have a big Autocad and you have a 5000 dollar workstation you can spin around interactive real time, three D. But when you want to be able to show that to people on a web browser on iPad or iPhone.

Jim Whitehurst: But when you want to be able to show that to people on a web browser or an iPad or a phone, we are the best solution to be able to do that. So in all types of industries, whether that's, you know, automotive, aerospace, etc., there's a lot of interest in us being the visualization solution in those markets. And finally, the kind of education and training, especially with AR and VR. I was talking to one large construction company that is using this. So when a worker kind of gets on site, they can put a VR headset on and kind of have a sense of how something is supposed to look. But that can be used for training, especially for high-stakes training, like in a nuclear power facility where you want to train people.

Speaker Change: Are the best solution to be able to do that so in all types of industry, whether thats kind of automotive aerospace et cetera, There's a lot of interest in us being the visualization solution.

Speaker Change: In those markets, and finally kind of education and training, especially with.

Speaker Change: VR.

Speaker Change: Tuck into one large construction company that is using this so when a worker kind of gets on site. They can put a VR headset on and kind of have a sense of how something is supposed.

Speaker Change: To look but thats can be used for.

Speaker Change: <unk> training, especially like high Stakes training like it.

Speaker Change: Nuclear power facility, where you want to train people.

Jim Whitehurst: The AR and VR aspect of that's pretty interesting. I think with the launch of the Vision Pro, I know people talk about it a lot for some of the consumer use cases, but we're excited to work with Apple on some of the industry's use cases around it. So those would be three examples.

Speaker Change: The AR VR aspect of that is pretty interesting I think with the launch of the vision Pro I know people talk about it a lot for some of the consumer use cases, but we're excited to work with Apple on some of the industries use cases around it. So those will be three examples but again to emphasize the reason I'm so excited about it.

Jim Whitehurst: But again, to emphasize the reason I'm so excited about it, it's not like we're a player in this. We're about the only player who can do real-time interactive 3D on lighter weight devices like web browsers, iPads, and phones. And that's why I think there's so much interest from enterprises in us for those types of use cases. And obviously, we have more digital twins in the world in general. You know, whether it's products and supply chains that are more kind of digitally connected; it just creates more and more opportunity for them. Great, thank you. And then secondly, on the Grow side, I think it's been addressed a little bit already in the Q&A that there's a pretty big disparity between a public competitor and how fast they're growing their ad network versus what Grow has been doing recently. But it strikes me that it's actually a very big opportunity for Grow to catch up.

Speaker Change: It's not like we are a player in this we're about the only player who can do real time interactive three D. On lighter weight devices like web browsers ipads in phones and Thats why I think there is so much interest from enterprises in us for those types of use cases, and obviously as we have more digital twins.

Speaker Change: The world in general.

Speaker Change: Whether it's kind of products and supply chains are more kind of digitally connected.

Speaker Change: It just creates more and more opportunity for us.

Speaker Change: Great. Thank you and then secondly on the growth side.

Speaker Change: I think it's been addressed a little bit already in the Q&A that there is.

Speaker Change: Pretty big disparity between public competitor and how fast they are growing their AD network versus what grow.

Speaker Change: Been doing recently, but it strikes me that it's actually a very big opportunity for growth to catch up.

Jim Whitehurst: So I guess, are there specific investments or go-to-market strategies that you're seeing have changed in the competitive landscape, maybe new technology that you're specifically focused on to try to close that gap that you would call out? Yeah, I mean, I'll start with a little bit. So the answer is simply, yes, there's a lot of incremental investment in technology, both in our data stack and our data manipulation capabilities. There are investments in our product suite to make sure that we are getting the data that's most helpful to help our monetization customers, you know, kind of increase their effectiveness at data science. Those investments, I will say, Those are incremental dollars, but as we looked at bringing the or completing the merger of IronSource and Unity, rather than dropping some of those synergies to the bottom line, we've told those teams to reinvest those synergies to be able to fund a much higher, faster feature velocity to both close gaps and take some leadership in those areas. I agree with you. I think there's a lot of opportunity for them there. What I hear over and over from our customers is, "Hey, we want to have multiple ad networks."

Speaker Change: Are there specific investments or go to market strategies that you are seeing have changed in the competitive landscape may be new technology that you're specifically focused on to try to close that gap that you would call out.

Speaker Change: Yes, I'll start a little bit. So the answer is simply yes. There is a lot of incremental investment in technology, both in our <unk>.

Data stack and our data manipulation capabilities. There is investments in our product suite to make sure that we are best getting the data that is most helpful to help our monetization customers got it.

Speaker Change: Increase there their effectiveness.

Speaker Change: Data science.

Speaker Change: Those investments I will say.

Speaker Change: Those are incremental dollars investment, but as we looked at bringing the.

Speaker Change: We are completing the merger of iron sourcing unity, rather than dropping some of those synergies to the bottom line.

Speaker Change: We've told those teams to reinvest those synergies to be able to fund.

Speaker Change: A much higher faster feature velocity to both close gaps and take some leadership in those areas. Yes, I agree with you I think there's a lot of opportunity there what I hear over and over from our customers is hey, we want to have multiple AD networks that is good for us long term. So our customers really really really want to see us win in there.

Jim Whitehurst: That is good for us long term. So our customers really, really, really want to see us win in this space, which also gives me confidence that there is a real desire to see us continue to improve in this space and a desire to work with us as we go forward. Thank you so much. My last question is Jonathan Keys from Daiwa. Can you hear me?

Speaker Change: Space and.

Speaker Change: So which also gives me confidence that there is a real desire to see us continue to improve in this space and a desire to work with us as we go forward.

Speaker Change: Thank you so much.

Speaker Change: Alright. So last question is Jonathan Kees from Taiwan.

Jonathan Kees: Hi can you hear me okay.

Jonathan Keys: Yep. Very well. Okay, great. Thanks. Thanks for taking my questions. I'll keep mine simple.

Jonathan Kees: Okay great.

Jonathan Kees: Thanks for taking my questions.

Jonathan Kees: I'll keep mine simple.

Jonathan Keys: In the previous call, you talked about looking for the right KPIs and measuring going forward from that. Can you talk about what you agreed to in terms of what you think would be better KPIs? Are we still looking at previous metrics like, you know, over 100K, how many 100K customers? You know, the number of customers over 100K yearly revenues, the dollar-based net expansion rate, or those separate metrics that will still be given no matter what? Thanks. Yeah, I think there are several.

Jonathan Kees: In the previous call you talked about.

Jonathan Kees: Looking for the right Kpis and measuring.

Jonathan Kees: Measuring going forward from that.

Jonathan Kees: Have.

Speaker Change: Can you talk about in terms of what you've agreed to in terms of where do you think we'd be <unk> are we still looking at.

Speaker Change: Like previous.

Metrics like.

Speaker Change: Well over 100 cake hammered cake 100 key customers.

Speaker Change: The number of customers over 100, K yearly revenues are dollar based net expansion rate.

Speaker Change: Or are those separate metrics that we will still be given no matter what.

Speaker Change: <unk>.

Yes, I think they are they are settlement go ahead James.

Luis Visoso: Go ahead, Jim. Seems like you wanted to- No, no, no, go ahead. I think there are several metrics that are important that we've shared with you over time. I think that the percentage of our business going to industries is important given the size of the opportunity that we've discussed. And Jim has talked extensively about this. I think the number of customers and the net expansion rate are good indicators. Obviously, it's a tricky number because it's the total company, so it's not as indicative.

James: Go ahead I think there are several metrics that are important to note that we've shared with you over time I think that the percent of the percentage of our business going to industry. I think it's important given the size of the opportunity that we've discussed and Jim Jim has talked extensively I think the number of customers on net expansion rate are good indications, obviously, it's tricky.

James: Number because its total company so it's not as as indicative I think we've consistently also talked about the market share how many what percentage of the gains of the top 1000 games are made with unity on both platforms is a good indicator of how engaged the community. So we'll keep on providing those metrics and we will add some more.

Luis Visoso: I think we've also consistently talked about market share; what percentage of the games in the top 1,000 games are made with Unity on both platforms is a good indicator of how engaged the community is. So we'll keep on providing those metrics, and we'll add some more as we continue to make progress across the industry. So that would be my general view.

James: As we continue to make progress across industries.

Speaker Change: That would be my view Jonathan.

Speaker Change: Great.

Daniel Mir: Great. Great. Thank you so much for everybody dialing in to the call here. We're looking forward to seeing some of you at some of our upcoming conferences this quarter. Thank you, and have a great day. Goodbye!

Jonathan Kees: Great. Thank.

Speaker Change: Thank you so much for everybody dialing into the call here, we're looking forward to seeing some of you at kind of our upcoming conferences. This quarter. Thank you and have a great day.

Speaker Change: Goodbye.