FALSE2024Q3000181080612/31P1Yhttp://fasb.org/us-gaap/2024#OtherAssetsNoncurrenthttp://fasb.org/us-gaap/2024#OtherAssetsNoncurrenthttp://unity.com/20240930#AccruedExpensesAndOtherLiabilitiesCurrenthttp://unity.com/20240930#AccruedExpensesAndOtherLiabilitiesCurrenthttp://fasb.org/us-gaap/2024#OtherLiabilitiesNoncurrenthttp://fasb.org/us-gaap/2024#OtherLiabilitiesNoncurrent0.00323920.0204526P6Y487297276459xbrli:sharesiso4217:USDiso4217:USDxbrli:sharesxbrli:pure00018108062024-01-012024-09-3000018108062024-10-3000018108062024-09-3000018108062023-12-3100018108062024-07-012024-09-3000018108062023-07-012023-09-3000018108062023-01-012023-09-300001810806us-gaap:CommonStockMember2024-06-300001810806us-gaap:AdditionalPaidInCapitalMember2024-06-300001810806us-gaap:AccumulatedOtherComprehensiveIncomeMember2024-06-300001810806us-gaap:RetainedEarningsMember2024-06-300001810806us-gaap:ParentMember2024-06-300001810806us-gaap:NoncontrollingInterestMember2024-06-3000018108062024-06-300001810806us-gaap:CommonStockMember2024-07-012024-09-300001810806us-gaap:AdditionalPaidInCapitalMember2024-07-012024-09-300001810806us-gaap:ParentMember2024-07-012024-09-300001810806us-gaap:RetainedEarningsMember2024-07-012024-09-300001810806us-gaap:NoncontrollingInterestMember2024-07-012024-09-300001810806us-gaap:AccumulatedOtherComprehensiveIncomeMember2024-07-012024-09-300001810806us-gaap:CommonStockMember2024-09-300001810806us-gaap:AdditionalPaidInCapitalMember2024-09-300001810806us-gaap:AccumulatedOtherComprehensiveIncomeMember2024-09-300001810806us-gaap:RetainedEarningsMember2024-09-300001810806us-gaap:ParentMember2024-09-300001810806us-gaap:NoncontrollingInterestMember2024-09-300001810806us-gaap:CommonStockMember2023-06-300001810806us-gaap:AdditionalPaidInCapitalMember2023-06-300001810806us-gaap:AccumulatedOtherComprehensiveIncomeMember2023-06-300001810806us-gaap:RetainedEarningsMember2023-06-300001810806us-gaap:ParentMember2023-06-300001810806us-gaap:NoncontrollingInterestMember2023-06-3000018108062023-06-300001810806us-gaap:CommonStockMember2023-07-012023-09-300001810806us-gaap:AdditionalPaidInCapitalMember2023-07-012023-09-300001810806us-gaap:ParentMember2023-07-012023-09-300001810806us-gaap:RetainedEarningsMember2023-07-012023-09-300001810806us-gaap:NoncontrollingInterestMember2023-07-012023-09-300001810806us-gaap:AccumulatedOtherComprehensiveIncomeMember2023-07-012023-09-300001810806us-gaap:CommonStockMember2023-09-300001810806us-gaap:AdditionalPaidInCapitalMember2023-09-300001810806us-gaap:AccumulatedOtherComprehensiveIncomeMember2023-09-300001810806us-gaap:RetainedEarningsMember2023-09-300001810806us-gaap:ParentMember2023-09-300001810806us-gaap:NoncontrollingInterestMember2023-09-3000018108062023-09-300001810806us-gaap:CommonStockMember2023-12-310001810806us-gaap:AdditionalPaidInCapitalMember2023-12-310001810806us-gaap:AccumulatedOtherComprehensiveIncomeMember2023-12-310001810806us-gaap:RetainedEarningsMember2023-12-310001810806us-gaap:ParentMember2023-12-310001810806us-gaap:NoncontrollingInterestMember2023-12-310001810806us-gaap:CommonStockMember2024-01-012024-09-300001810806us-gaap:AdditionalPaidInCapitalMember2024-01-012024-09-300001810806us-gaap:ParentMember2024-01-012024-09-300001810806us-gaap:RetainedEarningsMember2024-01-012024-09-300001810806us-gaap:NoncontrollingInterestMember2024-01-012024-09-300001810806us-gaap:AccumulatedOtherComprehensiveIncomeMember2024-01-012024-09-300001810806us-gaap:CommonStockMember2022-12-310001810806us-gaap:AdditionalPaidInCapitalMember2022-12-310001810806us-gaap:AccumulatedOtherComprehensiveIncomeMember2022-12-310001810806us-gaap:RetainedEarningsMember2022-12-310001810806us-gaap:ParentMember2022-12-310001810806us-gaap:NoncontrollingInterestMember2022-12-3100018108062022-12-310001810806us-gaap:CommonStockMember2023-01-012023-09-300001810806us-gaap:AdditionalPaidInCapitalMember2023-01-012023-09-300001810806us-gaap:ParentMember2023-01-012023-09-300001810806us-gaap:RetainedEarningsMember2023-01-012023-09-300001810806us-gaap:NoncontrollingInterestMember2023-01-012023-09-300001810806us-gaap:AccumulatedOtherComprehensiveIncomeMember2023-01-012023-09-3000018108062024-01-012024-01-310001810806us-gaap:EmployeeSeveranceMember2024-01-012024-09-300001810806unity:StockBasedCompensationMember2024-01-012024-09-300001810806us-gaap:CostOfSalesMember2024-01-012024-09-300001810806us-gaap:ResearchAndDevelopmentExpenseMember2024-01-012024-09-300001810806us-gaap:SellingAndMarketingExpenseMember2024-01-012024-09-300001810806us-gaap:GeneralAndAdministrativeExpenseMember2024-01-012024-09-300001810806us-gaap:FacilityClosingMember2024-01-012024-09-300001810806unity:CreateSolutionsMember2024-07-012024-09-300001810806unity:CreateSolutionsMember2023-07-012023-09-300001810806unity:CreateSolutionsMember2024-01-012024-09-300001810806unity:CreateSolutionsMember2023-01-012023-09-300001810806unity:GrowSolutionsMember2024-07-012024-09-300001810806unity:GrowSolutionsMember2023-07-012023-09-300001810806unity:GrowSolutionsMember2024-01-012024-09-300001810806unity:GrowSolutionsMember2023-01-012023-09-300001810806country:US2024-07-012024-09-300001810806country:US2023-07-012023-09-300001810806country:US2024-01-012024-09-300001810806country:US2023-01-012023-09-300001810806unity:GreaterChinaMember2024-07-012024-09-300001810806unity:GreaterChinaMember2023-07-012023-09-300001810806unity:GreaterChinaMember2024-01-012024-09-300001810806unity:GreaterChinaMember2023-01-012023-09-300001810806us-gaap:EMEAMember2024-07-012024-09-300001810806us-gaap:EMEAMember2023-07-012023-09-300001810806us-gaap:EMEAMember2024-01-012024-09-300001810806us-gaap:EMEAMember2023-01-012023-09-300001810806unity:AsiaPacificExcludingGreaterChinaMember2024-07-012024-09-300001810806unity:AsiaPacificExcludingGreaterChinaMember2023-07-012023-09-300001810806unity:AsiaPacificExcludingGreaterChinaMember2024-01-012024-09-300001810806unity:AsiaPacificExcludingGreaterChinaMember2023-01-012023-09-300001810806unity:OtherAmericasMember2024-07-012024-09-300001810806unity:OtherAmericasMember2023-07-012023-09-300001810806unity:OtherAmericasMember2024-01-012024-09-300001810806unity:OtherAmericasMember2023-01-012023-09-300001810806us-gaap:PrepaidExpensesAndOtherCurrentAssetsMember2024-09-300001810806us-gaap:OtherAssetsMember2024-09-300001810806us-gaap:PrepaidExpensesAndOtherCurrentAssetsMember2023-12-310001810806us-gaap:OtherAssetsMember2023-12-310001810806us-gaap:OtherNoncurrentAssetsMember2024-09-300001810806srt:MinimumMember2024-01-012024-09-300001810806srt:MaximumMember2024-01-012024-09-3000018108062024-10-012024-09-300001810806us-gaap:FairValueInputsLevel1Member2024-09-300001810806us-gaap:FairValueInputsLevel1Member2023-12-310001810806us-gaap:MoneyMarketFundsMemberus-gaap:FairValueInputsLevel1Member2024-09-300001810806us-gaap:MoneyMarketFundsMemberus-gaap:FairValueInputsLevel1Member2023-12-310001810806us-gaap:BankTimeDepositsMemberus-gaap:FairValueInputsLevel1Member2024-09-300001810806us-gaap:BankTimeDepositsMemberus-gaap:FairValueInputsLevel1Member2023-12-310001810806unity:UnityChinaMemberunity:ThirdPartyInvestorsMember2024-09-300001810806srt:MaximumMember2024-09-300001810806us-gaap:ConvertibleDebtMember2024-09-300001810806unity:A2ConvertibleSeniorNotesDue2027Memberus-gaap:ConvertibleDebtMember2024-09-300001810806unity:A0ConvertibleSeniorNotesDue2026Member2024-09-300001810806unity:A0ConvertibleSeniorNotesDue2026Memberus-gaap:ConvertibleDebtMember2024-09-300001810806unity:A0ConvertibleSeniorNotesDue2026Memberus-gaap:ConvertibleDebtMember2023-12-310001810806unity:A2ConvertibleSeniorNotesDue2027Memberus-gaap:ConvertibleDebtMember2023-12-310001810806unity:A2ConvertibleSeniorNotesDue2027And0ConvertibleSeniorNotesDue2026Memberus-gaap:ConvertibleDebtMember2024-09-300001810806unity:A2ConvertibleSeniorNotesDue2027And0ConvertibleSeniorNotesDue2026Memberus-gaap:ConvertibleDebtMember2023-12-310001810806unity:A2ConvertibleSeniorNotesDue2027And0ConvertibleSeniorNotesDue2026Memberus-gaap:ConvertibleDebtMember2024-07-012024-09-300001810806unity:A2ConvertibleSeniorNotesDue2027And0ConvertibleSeniorNotesDue2026Memberus-gaap:ConvertibleDebtMember2024-01-012024-09-300001810806unity:A2ConvertibleSeniorNotesDue2027And0ConvertibleSeniorNotesDue2026Memberus-gaap:ConvertibleDebtMember2023-07-012023-09-300001810806unity:A2ConvertibleSeniorNotesDue2027And0ConvertibleSeniorNotesDue2026Memberus-gaap:ConvertibleDebtMember2023-01-012023-09-300001810806unity:A2ConvertibleSeniorNotesDue2027Memberus-gaap:ConvertibleDebtMember2024-01-012024-09-300001810806unity:A0ConvertibleSeniorNotesDue2026Memberus-gaap:ConvertibleDebtMember2024-03-310001810806unity:A0ConvertibleSeniorNotesDue2026Memberus-gaap:ConvertibleDebtMember2024-01-012024-03-310001810806unity:A0ConvertibleSeniorNotesDue2026Member2024-01-012024-09-300001810806unity:A0ConvertibleSeniorNotesDue2026Memberus-gaap:ConvertibleDebtMember2024-01-012024-09-300001810806us-gaap:LetterOfCreditMember2024-09-300001810806us-gaap:LetterOfCreditMember2023-12-310001810806us-gaap:CostOfSalesMember2024-07-012024-09-300001810806us-gaap:CostOfSalesMember2023-07-012023-09-300001810806us-gaap:CostOfSalesMember2023-01-012023-09-300001810806us-gaap:ResearchAndDevelopmentExpenseMember2024-07-012024-09-300001810806us-gaap:ResearchAndDevelopmentExpenseMember2023-07-012023-09-300001810806us-gaap:ResearchAndDevelopmentExpenseMember2023-01-012023-09-300001810806us-gaap:SellingAndMarketingExpenseMember2024-07-012024-09-300001810806us-gaap:SellingAndMarketingExpenseMember2023-07-012023-09-300001810806us-gaap:SellingAndMarketingExpenseMember2023-01-012023-09-300001810806us-gaap:GeneralAndAdministrativeExpenseMember2024-07-012024-09-300001810806us-gaap:GeneralAndAdministrativeExpenseMember2023-07-012023-09-300001810806us-gaap:GeneralAndAdministrativeExpenseMember2023-01-012023-09-3000018108062023-01-012023-12-310001810806us-gaap:RestrictedStockUnitsRSUMember2023-12-310001810806us-gaap:RestrictedStockUnitsRSUMember2024-01-012024-09-300001810806us-gaap:RestrictedStockUnitsRSUMember2024-09-300001810806unity:PriceVestedOptionsMember2024-01-012024-09-300001810806unity:PriceVestedUnitsMember2024-01-012024-09-300001810806unity:ShareBasedPaymentArrangementOptionPriceVestedUnitsAndPriceVestedOptionsMember2024-07-012024-09-300001810806unity:ShareBasedPaymentArrangementOptionPriceVestedUnitsAndPriceVestedOptionsMember2023-07-012023-09-300001810806unity:ShareBasedPaymentArrangementOptionPriceVestedUnitsAndPriceVestedOptionsMember2024-01-012024-09-300001810806unity:ShareBasedPaymentArrangementOptionPriceVestedUnitsAndPriceVestedOptionsMember2023-01-012023-09-300001810806unity:ShareBasedPaymentArrangementOptionPriceVestedUnitsAndPriceVestedOptionsMembersrt:MinimumMember2024-07-012024-09-300001810806unity:ShareBasedPaymentArrangementOptionPriceVestedUnitsAndPriceVestedOptionsMembersrt:MaximumMember2024-07-012024-09-300001810806unity:ShareBasedPaymentArrangementOptionPriceVestedUnitsAndPriceVestedOptionsMembersrt:MinimumMember2024-01-012024-09-300001810806unity:ShareBasedPaymentArrangementOptionPriceVestedUnitsAndPriceVestedOptionsMembersrt:MaximumMember2024-01-012024-09-300001810806unity:ShareBasedPaymentArrangementOptionPriceVestedUnitsAndPriceVestedOptionsMembersrt:MinimumMember2023-01-012023-09-300001810806unity:ShareBasedPaymentArrangementOptionPriceVestedUnitsAndPriceVestedOptionsMembersrt:MaximumMember2023-01-012023-09-300001810806us-gaap:EmployeeStockMember2024-07-012024-09-300001810806us-gaap:EmployeeStockMember2023-07-012023-09-300001810806us-gaap:EmployeeStockMember2024-01-012024-09-300001810806us-gaap:EmployeeStockMember2023-01-012023-09-300001810806us-gaap:EmployeeStockMembersrt:MinimumMember2024-01-012024-09-300001810806us-gaap:EmployeeStockMembersrt:MaximumMember2024-01-012024-09-300001810806us-gaap:EmployeeStockMembersrt:MinimumMember2023-01-012023-09-300001810806us-gaap:EmployeeStockMembersrt:MaximumMember2023-01-012023-09-300001810806unity:ConvertibleNoteMember2024-01-012024-09-300001810806unity:ConvertibleNoteMember2023-01-012023-09-300001810806unity:ShareBasedPaymentArrangementOptionAndPriceVestedOptionsMember2024-01-012024-09-300001810806unity:ShareBasedPaymentArrangementOptionAndPriceVestedOptionsMember2023-01-012023-09-300001810806us-gaap:RestrictedStockUnitsRSUMember2024-01-012024-09-300001810806us-gaap:RestrictedStockUnitsRSUMember2023-01-012023-09-300001810806unity:AnirmaGuptaMay2023PlanMemberunity:AnirmaGuptaMember2024-07-012024-09-300001810806unity:AnirmaGuptaAugust2024PlanMemberunity:AnirmaGuptaMember2024-07-012024-09-300001810806unity:TomerBarZeevMember2024-07-012024-09-300001810806unity:TomerBarZeevMember2024-09-300001810806unity:DavidHelgasonMember2024-07-012024-09-300001810806unity:MarkBarrysmithMember2024-07-012024-09-300001810806unity:DavidHelgasonMember2024-09-30

UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 10-Q
(Mark One)
☒QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
For the quarterly period ended September 30, 2024
OR
☐TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
For the transition period from _______ to _______
Commission File Number: 001-39497
UNITY SOFTWARE INC.
(Exact name of registrant as specified in its charter)
Delaware27-0334803
(State or other jurisdiction of
incorporation or organization)		(I.R.S. Employer
Identification No.)
30 3rd Street
San Francisco, California 94103‑3104
(Address, including zip code, of principal executive offices)
(415) 638-9950
(Registrant's telephone number, including area code)
Securities registered pursuant to Section 12(b) of the Act:
Title of each classTrading Symbol(s)Name of each exchange on which registered
Common stock, $0.000005 par valueUThe New York Stock Exchange
Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days. Yes x No o
Indicate by check mark whether the registrant has submitted electronically every Interactive Data File required to be submitted pursuant to Rule 405 of Regulation S‑T (§232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit such files). Yes x No o
Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non‑accelerated filer, a smaller reporting company, or an emerging growth company. See the definitions of “large accelerated filer,” “accelerated filer,” “smaller reporting company,” and “emerging growth company” in Rule 12b‑2 of the Exchange Act.
Large accelerated filer☒Accelerated filer☐
Non‑accelerated filer
☐Smaller reporting company☐
Emerging growth company☐
If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act.☐
Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b‑2 of the Exchange Act). Yes ☐ No x
As of October 30, 2024, there were 402,840,097 shares of the registrant's common stock outstanding.


UNITY SOFTWARE INC.
FORM 10‑Q
For the Quarter Ended September 30, 2024
TABLE OF CONTENTS
Page
Item 1.
Item 2.
Item 3.
Item 4.
Item 1.
Item 1A.
Item 2.
Item 3.
Item 4.
Item 5.
Item 6.



NOTE REGARDING FORWARD-LOOKING STATEMENTS AND RISK FACTOR SUMMARY
This Quarterly Report on Form 10‑Q contains forward-looking statements about us and our industry that involve substantial risks and uncertainties. All statements other than statements of historical fact, including statements regarding our future results of operations or financial condition, business strategy and plans, and objectives of management for future operations are forward-looking statements. In some cases, you can identify forward-looking statements because they contain words such as "aim," "anticipate," "believe," "contemplate," "continue," "could," "estimate," "expect," "intend," "may," "plan," "potential," "predict," "project," "should," "target," "toward," "will," "would," or the negative of these words or other similar terms or expressions.
You should not rely on forward-looking statements as predictions of future events. We have based the forward-looking statements contained in this Quarterly Report on Form 10‑Q primarily on our current expectations and projections about future events and trends that we believe may affect our business, financial condition, and operating results. Readers are cautioned that these forward‑looking statements are only predictions and are subject to risks, uncertainties, and assumptions that are difficult to predict, including those identified and discussed in greater detail below, under "Part II, Item 1A. Risk Factors" and summarized below.
•We have a history of losses and may not achieve or sustain profitability on a GAAP basis in the future.
•If we fail to successfully execute our plans to reset our portfolio to focus on our Strategic Portfolio and to right-size our investments, our business will be harmed.
•If we are not able to grow efficiently and manage our costs, we may not achieve profitability on a GAAP basis.
•If we fail to timely release updates and new features to our platform and adapt and respond effectively to rapidly changing technology, evolving industry standards, changing regulations, or changing customer needs, requirements, or preferences, our platform may become less competitive.
•If we are unable to retain our existing customers and expand their use of our platform, or attract new customers, our growth and operating results could be adversely affected, and we may be required to reconsider our growth strategy.
•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. We periodically review our pricing structure and business models. Decisions to change how we price our products or services have in the past and may in the future be viewed unfavorably and harm our business.
•Operating system platform providers or application stores may change terms of service, policies or technical requirements applicable to us or our customers, which could adversely impact our business.
•Negative macroeconomic factors, such as inflation, high interest rates, and limited credit availability have and could further cause economic uncertainty and volatility, which could harm our business.
•Competition in the advertising market and ongoing restrictions related to the gaming industry in China have impacted our growth rates and may continue to do so.
•Ongoing geopolitical instability, particularly in Israel, where a significant portion of our Grow Solutions operations is located, has impacted and may further adversely affect our business.
•Our ability to successfully manage executive transitions and to retain senior executives and key employees could impact our operations and our business.


The results, events, and circumstances reflected in the forward-looking statements may not be achieved or occur, and actual results, events, or circumstances could differ materially from those described in the forward-looking statements.
In addition, statements that "we believe" and similar statements reflect our beliefs and opinions on the relevant subject. These statements are based on information available to us as of the date of this Quarterly Report on Form 10‑Q. While we believe such information provides a reasonable basis for these statements, such information may be limited or incomplete. Our statements should not be read to indicate that we have conducted an exhaustive inquiry into, or review of, all relevant information. These statements are inherently uncertain, and investors are cautioned not to unduly rely on these statements.
The forward-looking statements made in this Quarterly Report on Form 10‑Q relate only to events as of the date on which the statements are made. We undertake no obligation to update any forward-looking statements to reflect events or circumstances after the date of this Quarterly Report on Form 10‑Q or to reflect new information, actual results, revised expectations, or the occurrence of unanticipated events, except as required by law. We may not actually achieve the plans, intentions, or expectations disclosed in our forward-looking statements, and you should not place undue reliance on our forward-looking statements. Our forward-looking statements do not reflect the potential impact of any future acquisitions, mergers, dispositions, joint ventures, or investments.
Additional Information
Unless the context otherwise requires, all references in this Quarterly Report on Form 10-Q to "we," "us," "our," "our company," "Unity," and "Unity Technologies" refer to Unity Software Inc. and its consolidated subsidiaries. The Unity design logos, "Unity" and our other registered or common law trademarks, service marks, or trade names appearing in this Quarterly Report on Form 10-Q are the property of Unity Software Inc. or its affiliates.
Investors and others should note that we may announce material business and financial information using our investor relations website (www.investors.unity.com), our filings with the Securities and Exchange Commission, press releases, public conference calls, and public webcasts as means of complying with our disclosure obligations under Regulation FD. We encourage investors and others interested in our company to review the information that we make available.

Unity Software Inc.
PART I—FINANCIAL INFORMATION
Item 1. Financial Statements
UNITY SOFTWARE INC.
CONDENSED CONSOLIDATED BALANCE SHEETS
(In thousands, except per share data)
(Unaudited)
As of
September 30, 2024December 31, 2023
Assets
Current assets:
Cash and cash equivalents$1,405,276 $1,590,325 
Accounts receivable, net576,436 611,723 
Prepaid expenses and other134,656 122,843 
Total current assets2,116,368 2,324,891 
Property and equipment, net108,085 140,887 
Goodwill3,166,304 3,166,304 
Intangible assets, net1,154,699 1,406,745 
Other assets180,399 204,614 
Total assets$6,725,855 $7,243,441 
Liabilities and stockholders' equity
Current liabilities:
Accounts payable$15,195 $14,517 
Accrued expenses and other289,340 307,704 
Publisher payables382,552 385,113 
Deferred revenue189,810 186,769 
Total current liabilities876,897 894,103 
Convertible notes2,238,083 2,711,750 
Long-term deferred revenue17,257 6,015 
Other long-term liabilities167,058 217,195 
Total liabilities3,299,295 3,829,063 
Commitments and Contingencies (Note 7)
Redeemable noncontrolling interests236,914 225,797 
Stockholders' equity:
Common stock, $0.000005 par value:
Authorized shares - 1,000,000 and 1,000,000
Issued and outstanding shares - 402,578 and 384,872
2 2 
Additional paid-in capital6,799,899 6,259,479 
Accumulated other comprehensive loss(2,987)(5,009)
Accumulated deficit(3,613,217)(3,071,830)
Total Unity Software Inc. stockholders' equity3,183,697 3,182,642 
Noncontrolling interest5,949 5,939 
Total stockholders' equity3,189,646 3,188,581 
Total liabilities and stockholders' equity$6,725,855 $7,243,441 
See accompanying Notes to Condensed Consolidated Financial Statements.

Unity Software Inc.
UNITY SOFTWARE INC.
CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS
(In thousands, except per share data)
(Unaudited)
Three Months EndedNine Months Ended
September 30,September 30,
2024202320242023
Revenue$446,517 $544,210 $1,356,156 $1,578,049 
Cost of revenue112,054 151,349 365,316 472,140 
Gross profit334,463 392,861 990,840 1,105,909 
Operating expenses
Research and development215,197 240,003 706,860 788,438 
Sales and marketing176,423 194,000 576,902 619,258 
General and administrative69,989 86,256 338,573 272,047 
Total operating expenses461,609 520,259 1,622,335 1,679,743 
Loss from operations(127,146)(127,398)(631,495)(573,834)
Interest expense(5,839)(6,154)(17,703)(18,425)
Interest income and other income (expense), net15,350 16,013 102,450 38,689 
Loss before income taxes(117,635)(117,539)(546,748)(553,570)
Provision for (benefit from) Income taxes6,913 7,771 (4,984)18,767 
Net loss(124,548)(125,310)(541,764)(572,337)
Net income (loss) attributable to noncontrolling interest and redeemable noncontrolling interests191 (1,239)(377)(3,075)
Net loss attributable to Unity Software Inc.$(124,739)$(124,071)$(541,387)$(569,262)
Basic and diluted net loss per share attributable to Unity Software Inc.$(0.31)$(0.32)$(1.38)$(1.49)
Weighted-average shares used in computation of basic and diluted net loss per share398,810 383,674 392,855 382,939 
See accompanying Notes to Condensed Consolidated Financial Statements.
2

Unity Software Inc.
UNITY SOFTWARE INC.
CONDENSED CONSOLIDATED STATEMENTS OF COMPREHENSIVE LOSS
(In thousands)
(Unaudited)
Three Months EndedNine Months Ended
September 30,September 30,
2024202320242023
Net loss$(124,548)$(125,310)$(541,764)$(572,337)
Other comprehensive income (loss), net of taxes:
Change in foreign currency translation adjustment7,412 (1,405)2,558 (10,403)
Change in unrealized gains on derivative instruments— — — 289 
Other comprehensive income (loss)7,412 (1,405)2,558 (10,114)
Comprehensive loss(117,136)(126,715)(539,206)(582,451)
Net income (loss) attributable to noncontrolling interest and redeemable noncontrolling interests191 (1,239)(377)(3,075)
Foreign currency translation attributable to noncontrolling interest and redeemable noncontrolling interests1,501 (302)536 (2,159)
Comprehensive loss attributable to noncontrolling interest and redeemable noncontrolling interests1,692 (1,541)159 (5,234)
Comprehensive loss attributable to Unity Software Inc.$(118,828)$(125,174)$(539,365)$(577,217)
See accompanying Notes to Condensed Consolidated Financial Statements.
3

Unity Software Inc.
UNITY SOFTWARE INC.
CONDENSED CONSOLIDATED STATEMENTS OF STOCKHOLDERS' EQUITY
(In thousands, except share data)
(Unaudited)
Three Months Ended September 30, 2024
Accumulated
AdditionalOtherUnity Software Inc.
Common StockPaid-InComprehensiveAccumulatedStockholders'NoncontrollingTotal
SharesAmountCapitalLossDeficitEquity
Interest (1)
Equity
Balance at June 30, 2024395,444,298 $2 $6,682,060 $(8,898)$(3,488,478)$3,184,686 $5,834 $3,190,520 
Issuance of common stock from employee equity plans2,592,849 — 20,000 — — 20,000 — 20,000 
Issuance of common stock for settlement of RSUs4,540,993 — — — — — — — 
Stock‑based compensation expense— — 107,120 — — 107,120 — 107,120 
Net loss— — — — (124,739)(124,739)13 (124,726)
Adjustments to redeemable noncontrolling interest— — (9,281)— — (9,281)— (9,281)
Other comprehensive loss— — — 5,911 — 5,911 102 6,013 
Balance at September 30, 2024402,578,140 $2 $6,799,899 $(2,987)$(3,613,217)$3,183,697 $5,949 $3,189,646 
Three Months Ended September 30, 2023
Accumulated
AdditionalOther
Unity Software Inc.
Common StockPaid-InComprehensiveAccumulatedStockholders'NoncontrollingTotal
SharesAmountCapitalLossDeficitEquity
Interest (1)
Equity
Balance at June 30, 2023383,290,627 $2 $6,149,631 $(8,543)$(2,695,010)$3,446,080 $6,046 $3,452,126 
Issuance of common stock from employee equity plans1,551,912 — 23,050 — — 23,050 — 23,050 
Issuance of common stock for settlement of RSUs2,435,827 — — — — — — — 
Purchase and retirement of common stock(7,558,415)— (250,000)— — (250,000)— (250,000)
Stock‑based compensation expense— — 151,155 — — 151,155 — 151,155 
Net loss— — — — (124,071)(124,071)(85)(124,156)
Adjustments to redeemable noncontrolling interest— — (2,627)— — (2,627)— (2,627)
Other comprehensive loss— — — (1,103)— (1,103)(20)(1,123)
Balance at September 30, 2023379,719,951 $2 $6,071,209 $(9,646)$(2,819,081)$3,242,484 $5,941 $3,248,425 
.
(1)    Excludes redeemable noncontrolling interests.
See accompanying Notes to Condensed Consolidated Financial Statements.
4

Unity Software Inc.
UNITY SOFTWARE INC.
CONDENSED CONSOLIDATED STATEMENTS OF STOCKHOLDERS' EQUITY—CONTINUED
(In thousands, except share data)
(Unaudited)
Nine Months Ended September 30, 2024
Accumulated
AdditionalOtherUnity Software Inc.
Common StockPaid‑InComprehensiveAccumulatedStockholders’NoncontrollingTotal
SharesAmountCapitalLossDeficitEquity
Interest (1)
Equity
Balance at December 31, 2023384,871,561 $2 $6,259,479 $(5,009)$(3,071,830)$3,182,642 $5,939 $3,188,581 
Issuance of common stock from employee equity plans7,009,462 — 57,302 — — 57,302 — 57,302 
Issuance of common stock for settlement of RSUs10,697,117 — — — — — — — 
Stock‑based compensation expense— — 494,086 — — 494,086 — 494,086 
Net loss— — — — (541,387)(541,387)(26)(541,413)
Adjustments to redeemable noncontrolling interest— — (10,968)— — (10,968)— (10,968)
Other comprehensive income— — — 2,022 — 2,022 36 2,058 
Balance at September 30, 2024402,578,140 $2 $6,799,899 $(2,987)$(3,613,217)$3,183,697 $5,949 $3,189,646 
Nine Months Ended September 30, 2023
Accumulated
AdditionalOtherUnity Software Inc.
Common StockPaid-InComprehensiveAccumulatedStockholders'NoncontrollingTotal
SharesAmountCapitalLossDeficitEquity
Interest (1)
Equity
Balance at December 31, 2022374,243,196 $2 $5,779,776 $(1,691)$(2,249,819)$3,528,268 $6,298 $3,534,566 
Issuance of common stock from employee equity plans5,121,763 — 64,994 — — 64,994 — 64,994 
Issuance of common stock for settlement of RSUs7,913,407 — — — — — — — 
Purchase and retirement of common stock(7,558,415)— (250,000)— — (250,000)— (250,000)
Stock‑based compensation expense— — 478,698 — — 478,698 — 478,698 
Net loss— — — — (569,262)(569,262)(210)(569,472)
Adjustments to redeemable noncontrolling interest— — (2,259)— — (2,259)— (2,259)
Other comprehensive loss— — — (7,955)— (7,955)(147)(8,102)
Balance at September 30, 2023379,719,951 $2 $6,071,209 $(9,646)$(2,819,081)$3,242,484 $5,941 $3,248,425 
(1)    Excludes redeemable noncontrolling interests.
See accompanying Notes to Condensed Consolidated Financial Statements
5

Unity Software Inc.
UNITY SOFTWARE INC.
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
(In thousands)
(Unaudited)
Nine Months Ended September 30,
20242023
Operating activities
Net loss$(541,764)$(572,337)
Adjustments to reconcile net loss to net cash provided by operating activities:
Depreciation and amortization305,819 331,662 
Stock-based compensation expense485,893 467,743 
Gain on repayment of convertible note(61,371)— 
Impairment of property and equipment22,874 — 
Other14,735 11,557 
Changes in assets and liabilities, net of effects of acquisitions:
Accounts receivable, net35,463 28,346 
Prepaid expenses and other(11,949)22,354 
Other assets4,367 33,533 
Accounts payable90 568 
Accrued expenses and other(15,367)(24,021)
Publisher payables(2,561)(37,362)
Other long-term liabilities(46,782)(59,262)
Deferred revenue13,914 (40,184)
Net cash provided by operating activities203,361 162,597 
Investing activities
Purchases of short-term investments— (212)
Proceeds from principal repayments and maturities of short-term investments— 102,673 
Purchases of non-marketable investments— (2,500)
Purchases of intangible assets(12,860)— 
Purchases of property and equipment(23,107)(44,560)
Net cash provided by (used in) investing activities(35,967)55,401 
Financing activities
Repayments of convertible note(414,999)— 
Repurchase and retirement of common stock— (250,000)
Proceeds from issuance of common stock from employee equity plans57,302 64,994 
Net cash used in financing activities(357,697)(185,006)
Effect of foreign exchange rate changes on cash, cash equivalents, and restricted cash2,004 (17,656)
Increase (decrease) in cash, cash equivalents, and restricted cash(188,299)15,336 
Cash, cash equivalents, and restricted cash, beginning of period1,604,267 1,505,688 
Cash, cash equivalents, and restricted cash, end of period$1,415,968 $1,521,024 
Supplemental disclosure of cash flow information:
Cash paid for interest$10,000 $10,389 
Cash paid for income taxes, net of refunds$19,341 $15,869 
Cash paid for operating leases$39,027 $31,645 
Supplemental disclosures of non‑cash investing and financing activities:
Assets acquired under operating lease$14,586 $37,479 
See accompanying Notes to Condensed Consolidated Financial Statements.
6

Unity Software Inc.
UNITY SOFTWARE INC.
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
(Unaudited)
1. Accounting Policies
Basis of Presentation and Consolidation
We prepared the accompanying unaudited condensed consolidated financial statements in accordance with United States ("U.S.") generally accepted accounting principles ("GAAP") and applicable rules and regulations of the Securities and Exchange Commission ("SEC") for interim financial reporting. The condensed consolidated financial statements include the accounts of Unity Software Inc., its wholly owned subsidiaries, and entities consolidated under the voting interest model. We have eliminated all intercompany balances and transactions. Certain information and footnote disclosures normally included in the financial statements prepared in accordance with GAAP have been condensed or omitted pursuant to such rules and regulations. In our opinion, all adjustments, which include normal recurring adjustments necessary for a fair presentation, have been included. The results of operations for the periods presented are not necessarily indicative of the results to be expected for the full year or other periods. The unaudited condensed consolidated financial statements should be read in conjunction with the audited consolidated financial statements and notes included in our 2023 Annual Report on Form 10-K.
Use of Estimates
The preparation of condensed consolidated financial statements in conformity with GAAP requires management to make certain estimates, judgments, and assumptions that affect the reported amounts of assets and liabilities and disclosure of contingent assets and liabilities at the date of the financial statements, as well as the reported amounts of revenue and expenses during the reporting period. Actual results could differ from those estimates, and such differences could be material to our financial position and results of operations.
Employee Separation and Restructuring Costs
In January 2024, we committed to a plan to eliminate approximately 25% of our workforce, and we mutually agreed to the departure of the founders of ironSource Ltd. Following these announcements, we incurred incremental employee separation costs of approximately $205 million in the nine months ended September 30, 2024, which included $127 million of incremental stock-based compensation. Of the incremental employee separation costs, $15 million are within cost of revenue, $46 million are within research and development, $52 million are within sales and marketing, and $92 million are within general and administrative. Additionally, in November 2023, we committed to a plan to reassess our real estate footprint. We incurred $45 million of restructuring costs, primarily related to office closures in the nine months ended September 30, 2024.
2. Revenue
The following table presents our revenue disaggregated by source, which also have similar economic characteristics (in thousands):
Three Months Ended September 30,Nine Months Ended September 30,
2024202320242023
Create Solutions$147,369 $188,900 $461,816 $569,379 
Grow Solutions299,148 355,310 894,340 1,008,670 
Total revenue$446,517 $544,210 $1,356,156 $1,578,049 
7

Unity Software Inc.
The following table presents our revenue disaggregated by geography, based on the invoice address of our customers (in thousands):
Three Months Ended September 30,Nine Months Ended September 30,
2024202320242023
United States$128,114 $142,612 $398,076 $417,511 
Greater China (1)
65,679 65,092 187,432 194,390 
EMEA (2)
157,369 200,927 488,203 575,870 
APAC (3)
81,691 122,001 246,846 348,636 
Other Americas (4)
13,664 13,578 35,599 41,642 
Total revenue$446,517 $544,210 $1,356,156 $1,578,049 
(1)    Greater China includes China, Hong Kong, and Taiwan.
(2)    Europe, the Middle East, and Africa ("EMEA")
(3)    Asia-Pacific, excluding Greater China ("APAC")
(4)    Canada and Latin America ("Other Americas")
Accounts Receivable, Net
Accounts receivable are recorded at the original invoiced amount, net of allowances for uncollectible amounts. We estimate losses on uncollectible amounts based on expected losses, including our historical experience of actual losses. The estimated losses on uncollectible amounts are recorded in general and administrative expense on our condensed consolidated statements of operations. As of September 30, 2024 and December 31, 2023, the allowance for uncollectible amounts was $17.3 million and $16.9 million, respectively. For the nine months ended September 30, 2024 and 2023, the provision for uncollectible amounts was $6.5 million and $10.3 million, respectively.
Sales Commissions
Sales commissions that have a benefit beyond one year are capitalized and amortized on a straight-line method over the expected period of benefit, which is generally three years. As of September 30, 2024, capitalized commissions, net of amortization, included in prepaid expenses and other and other assets were $6.4 million and $5.3 million, respectively. As of December 31, 2023, capitalized commissions, net of amortization, included in prepaid expenses and other and other assets were $6.8 million and $4.8 million, respectively. During the three and nine months ended September 30, 2024, we recorded amortization costs of $2.2 million and $6.9 million in sales and marketing expenses, as compared to $2.5 million and $7.5 million during the three and nine months ended September 30, 2023, respectively.
Contract Balances and Remaining Performance Obligations
Contract assets (unbilled receivables), primarily included in accounts receivable, net, are recorded when revenue is earned in advance of customer billing schedules. Unbilled receivables totaled $19.4 million and $31.3 million as of September 30, 2024 and December 31, 2023, respectively. Of this total as of September 30, 2024, $8.3 million was included in Other Long-Term Assets on our consolidated balance sheets.
Contract liabilities (deferred revenue) relate to payments received in advance of performance under the contract. Revenue recognized during the nine months ended September 30, 2024 that was included in the deferred revenue balances at January 1, 2024 was $157.7 million.
Additionally, we have performance obligations associated with commitments in customer contracts to perform in the future that had not yet been recognized in our consolidated financial statements. For contracts with original terms that exceed one year, those commitments not yet recognized as of September 30, 2024, were $327 million and relate primarily to Create Solutions subscriptions, Enterprise
8

Unity Software Inc.
Support, and Strategic Partnerships. These commitments generally extend over the next one to five years and we expect to recognize approximately $194 million or 59% of this revenue during the next 12 months.
3. Financial Instruments
Cash, Cash Equivalents, and Restricted Cash
Cash, cash equivalents, and restricted cash are recorded at fair value. Fair value is defined as the price that would be received to sell an asset or paid to transfer a liability in an orderly transaction between market participants at the measurement date. To increase the comparability of fair value measures, the following hierarchy prioritizes the inputs to valuation methodologies used to measure fair value:
•Level 1—Valuations based on quoted prices in active markets for identical assets or liabilities.
•Level 2—Valuations based on quoted prices for similar assets and liabilities in active markets or inputs that are observable for the assets or liabilities, either directly or indirectly through market corroboration.
•Level 3—Valuations based on unobservable inputs reflecting our own assumptions used to measure assets and liabilities at fair value. These valuations require significant judgment.
The following table summarizes, by major security type, our cash, cash equivalents, and restricted cash that are measured at fair value on a recurring basis and are categorized using the fair value hierarchy (in thousands):
September 30, 2024December 31, 2023
Fair Value (1)
Cash$1,107,850 $834,877 
Level 1:
Restricted cash and cash equivalents:
Restricted cash$10,692 $13,942 
Money market funds95,130 502,754 
Time deposits202,296 252,694 
Total restricted cash and cash equivalents$308,118 $769,390 
Total cash, cash equivalents, and restricted cash$1,415,968 $1,604,267 
(1)    Due to the highly liquid nature of our investments, amortized cost approximates fair value.
Nonrecurring Fair Value Measurements
We hold equity investments in certain unconsolidated entities without a readily determinable fair value. These strategic investments represent less than a 20% ownership interest in each of the entities, and we do not have significant influence over or control of the entities. We use the measurement alternative to account for adjustments to these investments for observable transactions for the same or similar investments of the same issuer in any given quarter. If we determine an impairment has occurred, the investment is written down to the estimated fair value. As of September 30, 2024 and December 31, 2023, such equity investments totaled $33.0 million and $33.6 million, respectively. No material adjustments to the carrying value of these equity investments were recorded for the three and nine months ended September 30, 2024 and 2023.
4. Investment in Unity China
The results of Unity China, of which third-party investors hold a 20.5% ownership interest, are included in our condensed consolidated financial statements. Under certain conditions we may be required to repurchase the third-party interest in Unity China. The redeemable noncontrolling interests in Unity China are recorded as temporary equity on our condensed consolidated balance sheet.
9

Unity Software Inc.
The following table presents the changes in redeemable noncontrolling interests (in thousands):
Three Months Ended September 30,Nine Months Ended September 30,
2024202320242023
Balance at beginning of period$226,056 $215,749 $225,797 $219,563 
Net gain/(loss) attributable to redeemable noncontrolling interests178 (1,153)(351)(2,865)
Accretion for redeemable noncontrolling interests2,698 6,401 8,640 12,775 
Foreign currency translation and foreign exchange adjustments for redeemable noncontrolling interests7,982 (4,052)2,828 (12,528)
Balance at end of period$236,914 $216,945 $236,914 $216,945 
5. Leases
We have operating leases for offices, which have remaining lease terms of up to nine years.
Components of lease expense were as follows (in thousands):
Three Months Ended September 30,Nine Months Ended September 30,
2024202320242023
Operating lease expense$10,695 $10,524 $31,527 $30,292 
Variable lease expense1,395 1,408 4,613 3,850 
Sublease income(671)(493)(1,467)(1,317)
Total lease expense$11,419 $11,439 $34,673 $32,825 
Supplemental balance sheet information related to leases was as follows (in thousands, except weighted-average figures):
As of
ClassificationSeptember 30, 2024December 31, 2023
Operating lease assetsOther assets$82,378 $113,256 
Current operating lease liabilitiesAccrued expenses and other$34,452 $39,132 
Long-term operating lease liabilitiesOther long-term liabilities84,973 111,669 
Total operating lease liabilities$119,425 $150,801 
As of September 30, 2024 and December 31, 2023, our operating leases had a weighted-average remaining lease term of 4.6 years and 5.1 years, respectively, and a weighted-average discount rate of 5.4% and 5.2%, respectively.
In November 2023, we committed to a plan to reassess our real estate footprint, focusing on optimizing efficiency and reducing costs. In connection with this plan, during the nine months ended September 30, 2024, we recorded $12.2 million of impairment charges on operating lease assets. No impairment charges were recorded during the three months ended September 30, 2024.
As of September 30, 2024, our lease liabilities were as follows (in thousands):
Operating Leases
Gross lease liabilities$134,635 
Less: imputed interest15,210 
Present value of lease liabilities$119,425 
10

Unity Software Inc.
As of September 30, 2024, we had entered into a lease that has not yet commenced with future minimum lease payments of $4.9 million which are not yet reflected on our consolidated balance sheet. This operating lease will commence in 2024 with a lease term of 5 years.
6. Borrowings
Convertible Notes
As of September 30, 2024, we had $2.2 billion of unsecured convertible notes outstanding including $1.0 billion issued in November 2022 (the "2027 Notes") and $1.2 billion issued in November 2021 (the "2026 Notes"). The table below summarizes the principal and unamortized debt issuance costs and other material features of the Notes (in thousands):
Carrying Amount as of
Conversion Rate per
$1,000 Principal
Conversion Price
MaturitiesStated Interest RatesSeptember 30, 2024December 31, 2023
Convertible notes:
Principal – 2026 Notes
3.2392 $308.72 20260.0%$1,245,232 $1,725,000 
Principal – 2027 Notes
20.4526 $48.89 20272.0%1,000,000 1,000,000 
Unamortized debt issuance costs, net(7,149)(13,250)
Net carrying amount$2,238,083 $2,711,750 
Interest on the Notes is payable semi-annually in arrears. The combined interest expense on the Notes related to regular interest and the amortization of debt issuance cost was $5.8 million and $17.7 million for the three and nine months ended September 30, 2024, respectively, and $6.3 million and $18.5 million for the three and nine months ended September 30, 2023, respectively.
As of September 30, 2024 and December 31, 2023, the estimated fair value of the 2027 Notes were approximately $1.0 billion and $1.3 billion, respectively, and the estimated fair value of the 2026 Notes were approximately $1.1 billion and $1.4 billion, respectively. The fair value of the 2027 Notes was based on a combination of a discounted cash flow and Black-Scholes option-pricing model. The fair value of the 2026 Notes was based on quoted prices as of that date.
The 2026 Notes are convertible at the option of the holder if a conversion condition of the 2026 Notes is triggered. During the three and nine months ended September 30, 2024, none of the conversion conditions of the 2026 Notes were triggered and the 2026 Notes were not convertible as of September 30, 2024. The holders of the 2027 Notes may elect to convert the notes prior to maturity. Any such conversion may be satisfied at our election with either cash, shares of our common stock, or a combination of cash and shares of our common stock. The conversion rates for the Notes is subject to customary adjustments for certain events as described in the indentures governing the Notes.
The Notes are subject to additional terms. In connection with certain corporate events, as described in the Indentures, we will increase the conversion rate for a holder of the Notes who elects to convert those notes in connection with the event. Additionally, upon the occurrence of certain corporate events and subject to certain exceptions, as described in the Indentures, holders of the Notes may require us to repurchase all or a portion of their notes at a price equal to 100% of the principal amount to be repurchased, plus any accrued and unpaid interest to date. The 2026 Notes are also redeemable at our option if certain conditions are met, as described in the Indenture governing the 2026 Notes.
As of September 30, 2024, no holders of the 2027 and 2026 Notes have exercised the conversion rights, and the if-converted value of the 2027 and 2026 Notes did not exceed the principal amount.
Convertible Note Repurchase
During the first quarter of 2024, the Company repurchased in privately negotiated transactions and extinguished a portion of the 2026 Notes, with a total principal balance of $480 million. The aggregate
11

Unity Software Inc.
repurchase price for these notes was $415 million, resulting in pre-tax gains of $61.4 million, net of the write-off of unamortized issuance costs. The gain was included in Interest income and other income (expense), net, in the condensed consolidated statement of operations.
Capped Call Transactions
To reduce the potential dilutive effect of the 2026 Notes, in connection with their pricing, we entered into the Capped Call Transactions at a net cost of $48.1 million, with call options totaling approximately 5.6 million of our common shares, and with expiration dates ranging from September 18, 2026 to November 12, 2026. The strike price is $308.72, and the cap price is initially $343.02 per share, subject to adjustments in certain circumstances. The Capped Call Transactions are freestanding and are considered separately exercisable from the 2026 Notes. As of September 30, 2024, the Capped Call Transactions met the conditions for equity classification and were not in the money.
7. Commitments and Contingencies
The following table summarizes our non-cancelable contractual commitments as of September 30, 2024 (in thousands):
Total
Remainder of 2024
2025‑2026
2027‑2028
Thereafter
Operating leases (1)
$139,533 $10,746 $66,537 $41,240 $21,010 
Purchase commitments (2)
583,957 118,049 436,476 29,432 — 
Convertible note principal and interest (3)
2,315,232 10,000 1,285,232 1,020,000 — 
Total$3,038,722 $138,795 $1,788,245 $1,090,672 $21,010 
(1)    Operating leases consist of obligations for real estate, including leases that are not yet commenced.
(2)    The substantial majority of our purchase commitments are related to agreements with our data center hosting providers.
(3)    Convertible notes due 2026 and 2027. See Note 6, "Borrowings," above for further discussion.
We expect to meet our remaining commitments.
Legal Matters
In the normal course of business, we are subject to various legal matters. We accrue a liability when management believes that it is both probable that a liability has been incurred and the amount of loss can be reasonably estimated. We also disclose material contingencies when we believe a loss is not probable but reasonably possible. Legal costs related to such potential losses are expensed as incurred. In addition, recoveries are shown as a reduction in legal costs in the period in which they are realized. With respect to our outstanding matters, based on our current knowledge, we believe that the resolution of such matters will not, either individually or in aggregate, have a material adverse effect on our business or our condensed consolidated financial statements. However, litigation is inherently uncertain, and the outcome of these matters cannot be predicted with certainty. Accordingly, cash flows or results of operations could be materially affected in any particular period by the resolution of one or more of these matters.
Indemnifications
In the ordinary course of business, we may provide indemnifications of varying scope and terms to customers, vendors, lessors, investors, directors, officers, employees and other parties with respect to certain matters. Indemnification may include losses from our breach of such agreements, services we provide, or third-party intellectual property infringement claims. These indemnifications may survive termination of the underlying agreement and the maximum potential amount of future indemnification payments may not be subject to a cap. As of September 30, 2024, there were no known events or circumstances that have resulted in a material indemnification liability to us and we did not incur material costs to defend lawsuits or settle claims related to these indemnifications.
12

Table of Contents
Unity Software Inc.
Letters of Credit
We had $10.7 million and $13.9 million of secured letters of credit outstanding as of September 30, 2024 and December 31, 2023, respectively. These primarily relate to our office space leases and are fully collateralized by certificates of deposit which we record in restricted cash as other assets on our condensed consolidated balance sheets.
8. Stock‑Based Compensation
Stock-based compensation expense is as follows (in thousands):
Three Months Ended September 30,Nine Months Ended September 30,
2024202320242023
Cost of revenue$10,334 $19,591 $35,051 $58,241 
Research and development58,582 66,618 203,228 214,159 
Sales and marketing21,885 35,075 108,138 105,272 
General and administrative13,816 25,893 139,476 90,071 
Total stock-based compensation expense$104,617 $147,177 $485,893 $467,743 
Included in the above expenses for the nine months ended September 30, 2024, is $94 million of incremental stock-based compensation expense from modifications, primarily within general and administrative. These amounts predominately relate to the modification of awards held by the founders of ironSource Ltd. that departed in the first quarter of 2024.
Stock Options
A summary of our stock option, including price-vested options ("PVO"), activity is as follows:
Options Outstanding
Stock
Options
Outstanding		Weighted-Average
Exercise
Price		Weighted-Average
Remaining
Contractual
Term
(In Years)
Balance as of December 31, 202331,541,466 $19.35 4.79
Granted2,614,966 $21.29 
Exercised(5,847,858)$5.99 
Forfeited, cancelled, or expired(2,073,825)$49.58 
Balance as of September 30, 202426,234,749 $20.12 4.40
Restricted Stock Units
A summary of our restricted stock unit ("RSU"), including price-vested unit ("PVU"), activity is as follows:
Unvested RSUs
Number of
Shares		Weighted-Average
Grant-Date
Fair Value
Unvested as of December 31, 202337,332,551 $38.31 
Granted18,743,697 $15.60 
Vested(10,722,702)$40.09 
Forfeited(10,401,800)$38.12 
Unvested as of September 30, 202434,951,746 $25.65 
13

Unity Software Inc.
Price-Vested Units and Price-Vested Options
The vesting for each of the PVOs and PVUs is subject to the fulfillment of both a service period that extends up to four years and the achievement of a stock price hurdle during the relevant performance period that extends up to six and seven years, respectively. The fair value of each PVO and PVU award is estimated using a Monte Carlo simulation that uses assumptions determined on the date of grant. During the three and nine months ended September 30, 2024, the stock price hurdles were not met.
Fair Value Assumptions
The calculated grant-date fair value of stock options, PVUs, and PVOs granted, were estimated using the Black-Scholes option-pricing model for stock options, and a Monte Carlo stimulation for the PVUs and PVOs, with the following assumptions:
Three Months Ended September 30,Nine Months Ended September 30,
2024202320242023
Expected dividend yield————
Risk-free interest rate
3.5% - 4.2%
4.4%
3.5% - 4.4%
3.8% - 4.4%
Expected volatility
60.0% - 67.3%
58.0%
60.0% - 67.3%
54.7% - 58.0%
Expected term (in years)
6.25 - 10.00
6.25
6.25 - 10.00
6.25
Fair value of underlying common stock
$15.60 - $16.75
$39.29
$15.60 - $26.89
$29.33 - $39.29
Employee Stock Purchase Plan
The fair value of shares offered under our Employee Stock Purchase Plan ("ESPP") was determined on the grant date using the Black-Scholes option pricing model. The following table summarizes the assumptions used and the resulting grant-date fair values of our ESPP:
Three Months Ended September 30,Nine Months Ended September 30,
2024202320242023
Expected dividend yield————
Risk-free interest rate4.9%5.5%
4.9% - 5.3%
5.2% - 5.5%
Expected volatility49.3%65.9%
49.3% - 56.0%
65.9% - 94.5%
Expected term (in years)0.500.500.500.50
Grant-date fair value per share$4.82$12.65
$4.82 - $9.11
$12.44 - $12.65
Additional information related to the ESPP is provided below (in thousands, except per share amounts):
Three Months Ended September 30,Nine Months Ended September 30,
2024202320242023
Shares issued under the ESPP610,458531,8201,161,6041,064,463
Weighted-average price per share issued$13.91$25.25$19.13$25.56
9. Income Taxes
Our tax provision for interim periods is determined using an estimated annual effective tax rate, adjusted for discrete items arising in that quarter. In each quarter, we update the estimated annual effective tax rate and make a year-to-date adjustment to the provision. The estimated annual effective tax rate is subject to volatility due to several factors, including variability in accurately predicting our pre-tax income or loss and the mix of jurisdictions to which they relate, intercompany transactions, changes in how we do business, and tax law developments.
14

Unity Software Inc.
Our effective tax rate for the three and nine months ended September 30, 2024 differs from the U.S. federal statutory tax rate of 21% primarily due to the need to record a valuation allowance on U.S. losses and to a lesser extent tax expense on foreign earnings taxed at different rates. In addition, during the first quarter of 2024, we recorded a tax benefit on foreign losses in connection with employee separation costs and we continued to restructure our tax operations which resulted in a reduction to our U.S. valuation allowance. Our effective tax rate for the three and nine months ended September 30, 2023 differed from the U.S. federal statutory tax rate of 21% primarily due to the need to record a valuation allowance in the U.S. on losses and to a lesser extent, tax expense on foreign earnings taxed at different rates. In addition, the Company undertook certain tax restructuring efforts that enhanced our ability to offset deferred tax liabilities in the U.S. in future periods, thereby partially reducing the need for a valuation allowance.
The realization of deferred tax assets is dependent upon the generation of sufficient taxable income of the appropriate character in future periods. We regularly assess the ability to realize our deferred tax assets and establish a valuation allowance if it is more-likely-than-not that some portion of the deferred tax assets will not be realized. In performing this assessment with respect to each jurisdiction, we review all available positive and negative evidence. Primarily due to our history of losses, we believe that it is more likely than not that the deferred tax assets of our U.S. federal, certain U.S. states, Denmark, U.K., and other non-U.S. jurisdictions will not be realized and we have maintained a full valuation allowance against such deferred tax assets.
As of September 30, 2024, we had $190.5 million of gross unrecognized tax benefits, of which $34.3 million would impact the effective tax rate, if recognized. It is reasonably possible that the amount of unrecognized tax benefits as of September 30, 2024 could increase or decrease significantly as the timing of the resolution, settlement, and closure of audits is highly uncertain. We believe that we have adequately provided for any reasonably foreseeable outcome related to our tax audits and that any settlement will not have a material impact on our financial condition and operating results at this time.
10. Net Loss per Share of Common Stock
Basic and diluted net loss per share is the same for all periods presented because the effects of potentially dilutive items were antidilutive given our net loss in each period.
The following table presents potentially dilutive common stock excluded from the computation of diluted net loss per share (in thousands) because the impact of including them would have been antidilutive:
As of September 30,
20242023
Convertible notes24,488 26,042 
Stock options and PVOs26,235 31,258 
Unvested RSUs and PVUs34,952 29,636 
15

Unity Software Inc.
Item 2. Management's Discussion and Analysis of Financial Condition and Results of Operations
Please read the following discussion and analysis of our financial condition and results of operations together with our condensed consolidated financial statements and related notes included under Part I, Item 1 of this Quarterly Report on Form 10-Q. The following discussion and analysis contains forward-looking statements that involve risks and uncertainties. Forward-looking statements are statements that attempt to forecast or anticipate future developments in our business, financial condition, or results of operations. When reviewing the discussion below, you should keep in mind the substantial risks and uncertainties that could impact our business. In particular, we encourage you to review the risks and uncertainties described in "Part II, Item 1A. Risk Factors" included elsewhere in this report. These risks and uncertainties could cause actual results to differ materially from those projected in forward-looking statements contained in this report or implied by past results and trends. Forward-looking statements, like all statements in this report, speak only as of their date (unless another date is indicated), and we undertake no obligation to update or revise these statements in light of future developments. See the section titled "Note Regarding Forward-Looking Statements and Risk Factor Summary" in this report.
Overview
Unity offers a suite of tools to create, market and grow games and interactive experiences across all major platforms from mobile, PC, and console, to extended reality (XR).
Our platform consists of two complementary sets of solutions: Create Solutions and Grow Solutions, which together comprise our strategic portfolio surrounding the Unity Engine, Cloud, and Monetization.
Impact of Macroeconomic Trends and Geopolitical Events
Recent macroeconomic factors, such as inflation, interest rates, and credit availability have and could further cause economic uncertainty and volatility, which could harm our business. Further, competition in the advertising market and ongoing restrictions related to the gaming industry in China have impacted our growth rates and may continue to do so. Ongoing geopolitical instability, particularly in Israel, where a significant portion of our Grow Solutions operations is located, may adversely affect our business.
Recent Developments in Our Business
Starting in the fourth quarter of 2023, we began to reset our product and service offerings to focus on our core businesses, which we refer to as our "Strategic Portfolio": the Unity Engine, Cloud, and Monetization, while narrowing our investments in new businesses to those most attractive, mainly industries beyond gaming. We also exited businesses where we do not believe that we can provide unique value to customers or generate a sound return to investors. Specifically, we have limited our Professional Services business to a few selected strategic engagements, we are shifting our multiplayer business to support the demands of live multiplayer games beyond infrastructure, and we have stopped the independent development of professional artistry tools, which we will instead consider integrating into the Unity Editor. During the three and nine months ended September 30, 2024 we recognized approximately $17 million and $75 million, respectively, of revenue associated with these non-strategic portfolios and we expect that these amounts will decline throughout the remainder of 2024.
In the nine months ended September 30, 2024, we substantially completed reductions to our workforce and our office footprint that were announced in the first quarter of 2024. This resulted in approximately $205 million in employee separation costs, primarily related to the acceleration and modifications of equity awards, and $45 million of non-employee charges associated with these reductions.
In the third quarter of 2023, we announced changes to our pricing model for our Create Solutions. We experienced a high volume of negative customer feedback including a boycott and a slow down of signing new contracts and renewals as a result of these changes. In the third quarter of 2024, before the
16

Unity Software Inc.
pricing changes took effect, we announced the cancellation of those pricing changes, the reversion to a subscription-based model, and price increases, for gaming customers. While the initial customer response to this announcement has been positive and we expect this change to benefit our business over the long term, the ultimate impact remains uncertain.
We have had significant executive transitions in 2024. In the fourth quarter of 2024, we announced the hiring of our permanent Senior Vice President and Chief Financial Officer, Jarrod Yahes, effective January 1, 2025. Mark Barrysmith, our Senior Vice President and Chief Accounting Officer and Interim Chief Financial Officer, will no longer serve as the Interim Chief Financial Officer as of January 1, 2025, but will continue in his role as Senior Vice President and Chief Accounting Officer and will continue as our Principal Accounting Officer. Our ability to successfully manage these executive transitions, and to retain senior executives is critical to our success and the timing and full impact on our future results of operations, cash flows, or financial condition are uncertain.
For additional details, refer to the section titled "Risk Factors."
Key Metrics
As further discussed in Item 2 of Part I, "Management's Discussion and Analysis of Financial Condition and Results of Operations" in our Annual Report on Form 10-K, we monitor the following key metrics to help us evaluate the health of our business, identify trends affecting our growth, formulate goals and objectives, and make strategic decisions. We have revised and restated these metrics to include inputs from our Strategic Portfolio only.
Customers Contributing More Than $100,000 of Revenue
We had 1,242 and 1,230 customers contributing more than $100,000 of revenue in the trailing 12 months as of September 30, 2024 and 2023, respectively. The year over year increase was largely a result of our core subscriptions growth. While these customers represented the substantial majority of revenue for the nine months ended September 30, 2024 and 2023, respectively, no one customer accounted for more than 10% of our revenue for either period.
Dollar-Based Net Expansion Rate
Our ability to drive growth and generate incremental revenue depends, in part, on our ability to maintain and grow our relationships with our Create and Grow Solutions customers and to increase their use of our platform. We track our performance by measuring our dollar-based net expansion rate, which compares our Create and Grow Solutions revenue, excluding Strategic Partnerships and Supersonic, from the same set of customers across comparable periods, calculated on a trailing 12-month basis.
As of
September 30, 2024September 30, 2023
Dollar-based net expansion rate94 %102 %
Our dollar-based net expansion rate as of September 30, 2024 was driven primarily by decreases in Grow Solutions revenue, due to competition in the advertising market, and to a lesser extent decreases in professional services revenue within Create Solutions, offset by growth in core subscriptions revenue. Our dollar-based net expansion rate as of September 30, 2023 was driven primarily by growth in professional services, and core subscriptions revenue, due to sales of additional subscriptions and services to our existing Create Solutions customers and cross-selling our solutions to all of our customers. The decrease in dollar-based net expansion rate, compared to the comparable prior year period, is attributable to declines in Grow Solutions, and professional services revenue, as noted above.
17

Unity Software Inc.
The chart below illustrates that our dollar-based net expansion rate has been declining over the last year.
MD1.40 - Q3'24 NER chart.jpg
Results of Operations
The following table summarizes our historical consolidated statements of operations data for the periods indicated (in thousands):
Three Months Ended September 30,Nine Months Ended September 30,
2024202320242023
Revenue$446,517 $544,210 $1,356,156 $1,578,049 
Cost of revenue112,054 151,349 365,316 472,140 
Gross profit334,463 392,861 990,840 1,105,909 
Operating expenses
Research and development215,197 240,003 706,860 788,438 
Sales and marketing176,423 194,000 576,902 619,258 
General and administrative69,989 86,256 338,573 272,047 
Total operating expenses461,609 520,259 1,622,335 1,679,743 
Loss from operations(127,146)(127,398)(631,495)(573,834)
Interest expense(5,839)(6,154)(17,703)(18,425)
Interest income and other income (expense), net15,350 16,013 102,450 38,689 
Loss before income taxes(117,635)(117,539)(546,748)(553,570)
Provision for (benefit from) Income taxes6,913 7,771 (4,984)18,767 
Net loss$(124,548)$(125,310)$(541,764)$(572,337)
18

Unity Software Inc.
The following table sets forth the components of our condensed consolidated statements of operations data as a percentage of revenue for the periods indicated:
Three Months Ended September 30,Nine Months Ended September 30,
2024202320242023
Revenue100 %100 %100 %100 %
Cost of revenue25 28 27 30 
Gross profit75 72 73 70 
Operating expenses
Research and development48 44 52 50 
Sales and marketing40 36 43 39 
General and administrative15 15 25 17 
Total operating expenses103 95 120 106 
Loss from operations(28)(23)(47)(36)
Interest expense(1)(2)(1)(1)
Interest income and other income (expense), net3 3 8 2 
Loss before income taxes(26)(22)(40)(35)
Provision for (benefit from) Income taxes2 1 — 1 
Net loss(28)%(23)%(40)%(36)%
Revenue
Create Solutions
We generate Create Solutions revenue primarily through our suite of Create Solutions subscriptions inclusive of enterprise support, professional services, and cloud and hosting services. Our subscriptions provide customers access to technologies that allow them to edit, run, and iterate interactive, RT3D and 2D experiences that can be created once and deployed to a variety of platforms. Enhanced support services are provided to our enterprise customers and are sold separately from the Create Solutions subscriptions. Professional services are provided to our customers and include consulting, platform integration, training, and custom application and workflow development. Cloud and hosting services are provided to our customers to simplify and enhance the way our users access and harness our solutions.
Grow Solutions
We generate Grow Solutions revenue primarily through our monetization solutions and game publishing services. Our monetization solutions allow publishers, original equipment manufacturers, and mobile carriers to sell available advertising inventory on their mobile applications or hardware devices to advertisers for in-application or on-device placements. Our revenue represents the amount we retain from the transaction we are facilitating through our Unified Auction and mediation platform. Our game publishing services provide game developers with the infrastructure and expertise to launch their mobile games and manage their growth; this is achieved through marketability testing tools, live games management tools and game design support, and optimizing the implementation of the customer's commercial model. Through these publishing services, we generate revenue from in-app advertising in published games and in some cases, in app purchase revenue.
19

Unity Software Inc.
Our total revenue is summarized as follows (in thousands):
Three Months EndedNine Months Ended
September 30,September 30,
2024202320242023
Create Solutions$147,369 $188,900 $461,816 $569,379 
Grow Solutions299,148 355,310 894,340 1,008,670 
Total revenue$446,517 $544,210 $1,356,156 $1,578,049 
Total revenue decreased in the three and nine months ended September 30, 2024, compared to the comparable prior year periods, primarily due to a decrease in Grow Solutions revenue, which was negatively impacted by competition. To be more competitive we are focused on enhancing our machine learning stack and data infrastructure capabilities, which we believe will take some time to manifest in sustainable increased performance. The decrease in total revenue was further driven by a decrease in Create Solutions revenue, primarily due to the termination of the subscription agreement with Wētā FX Limited, and a decrease in professional services revenue and cloud and hosting services revenue, both caused by the portfolio reset. The decrease in Create Solutions was partially offset by increases in subscription revenue.