Unity Q3 revenues are up but losses deepen to $239.6m

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Unity has released its third quarter,showing a year-on-year increase in revenues from its game engine business, but a decline from its other tools and services and an overall loss from operations.

Unity has yet to record a profitable quarter since it was founded in 2004 so a loss is not out of the ordinary, but it is nearly double the loss reported in the same quarter last year.

Here's what you need to know:

The numbers

• Revenue: $322.9 million (up 13% year-on-year)
• Operate solutions revenue: $171.7 million (down 7%)
• Create Solutions revenue: $128.6 million (up 54%)
• Loss from operations: $239.6 million (compared to loss of $126.8 million in Q3 2021)

The highlights

Create Solutions, which handles the Unity game engine and other development tools, saw the biggest increase in revenue for the three months ended September 30, 2022.

This was followed by Strategic Partnerships and Other, which saw revenues rise 28% year-on-year to $22.6 million.

Unity listed a number of key events that have occurred during the last quarter, including the completion of its merger with IronSource, new pricing for Unity Pro and Unity Enterprise (the first price increase in nearly three years), and the launch of new features for Game Server Hosting and Matchmaker.

The company also reported the number of developers using its engine that generated more than $100,000 in revenue in the 12 months ended September 30 has increased. 1,075 customers hit this milestone in 2022, compared to 973 last year.

CEO John Riccitiello described it as a "solid quarter, with very strong results in Create." We recently interviewed Riccitiello about whether Unity can retain its focus on games as it continues to expand into other tech and entertainment spaces.

Chief financial officer Luis Visoso added: "The third quarter came in line with guidance for revenue and non-GAAP operating income, and we are taking a prudent approach in the fourth quarter, given the current macroeconomic environment.

“We have carefully managed costs this year, and will drive more efficiencies next year, as we continue to capture the large opportunity in front of us.”

Unity laid off around 4% of its workforce in June, affecting an estimated 200-plus employees.

Looking forward, Unity expects up to $445 million in revenue during the final quarter of the year, with non-GAAP income of up to $15 million.

However, it expects non-GAAP losses of between $88 million and $98 million for the full fiscal year, with revenues of up to $1.39 billion.