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Unity’s Q2 Earnings Beat Expectations, ‘Just Getting Started’ with AI

Industries beyond games continue to account for 30% of Create Solutions’ total revenue

Game engine Unity Software has shared its second quarter 2023 earnings call which shows that the company’s revenue rose 11% to $533 million in its second quarter from its previous $500 million in Q2. 

Unity’s Create Solutions’ second-quarter revenue of $193 million marked a 17% year-over-year increase, primarily fueled by a 22% rise in the core subscription business, excluding China. Excluding Strategic Partnerships, the company’s revenue also grew by 17% year-over-year.

Industries beyond games continue to account for 30% of Create Solutions’ total revenue, consistent with the fourth quarter of 2022. To achieve a scalable and profitable business, Unity is reducing its reliance on Professional Services to focus on subscription and consumption models in partnership with Capgemini and Booz Allen

The company’s Grow Solutions revenue soared by 157% YoY to $340 million, showing a 7% increase on a pro-forma basis, an improvement from the 9% pro forma YoY decline in the first quarter. Also, the quarter-over-quarter growth stood at 9%. Unity says that the ads market remained relatively stable, but the prior year’s ads market was still influenced by the lingering effects of COVID.

Luis Felipe Visoso, Unity’s EVP and CFO said, “We had a great quarter. We were ahead of expectations. We’re bringing a ton of innovation to the market, which we believe will position us well into the future.” 

Unity’s AI offerings 

During the call, Unity’s CEO John S. Riccitiello said, “I couldn’t be more excited about the two AI products that we announced some weeks ago, a huge amount of interest from our customers. We’re there on the creation side and the operations side for applications with Muse and Sentis.

“We’ll be looking at a business model for these as much like what Microsoft has announced with some of their AI products.” 

The CEO adds that users are going to want to use AI because it will expand their ability to build what they have in their mind’s eye to get it on the screen to get into the hands of their customers.

“We are using AI and machine learning to strengthen our algorithms to deliver better ROI for our customers. And frankly, I think we’re just getting started,” said CFO Luis Felipe Visoso.

During the Q&A section, Riccitiello confirmed that Unity is planning to charge more for its AI offerings. “There will be some volume levels, we’re going to charge more.” 

Overall, Unity’s second-quarter earnings call was positive. The company reported strong growth and provided an optimistic outlook for the future. “We’re really sort of pleased as we can be about our long-term perspective. It’s our job to strengthen the short term and long term together in a way that works,” said Riccitiello. 

Written By

Isa Muhammad is a writer and video game journalist covering many aspects of entertainment media including the film industry. He's steadily writing his way to the sharp end of journalism and enjoys staying informed. If he's not reading, playing video games or catching up on his favourite TV series, then he's probably writing about them.

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