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Bear and Bull Cases for Unity’s IPO – TechCrunch

Part 2: Important points from the S-1 filing and what to look out for

In the first As part of my presentation of the company, I explained the scope of Unity̵

7;s multidimensional business, its research and development efforts and competitive position, and its great vision for 3D interactive content across all industries.

Finally, I will look at Unity Finance and how it markets its public listing before dealing with the bear and bull cases for its future.

Key data points from Unity’s S-1 filing

  • Revenue increased 42% year over year from $ 381 million in 2018 to $ 542 million in 2019, with operating losses of $ 130 million and $ 150 million, respectively. As of June 30th of this year, sales were $ 351 million. That pace suggests a 2020 grand total of between $ 700 million and $ 750 million (+ 30% year over year).
  • The company has a gross margin of around 79%, although costs are mostly focused on research and development and sales and marketing, which account for 47% and 32% of sales, respectively.
  • The company has lost a total of $ 569 million to date, including a net loss of $ 163 million in 2019.

Unity’s geographic revenue stream in 2019 was:

  • 34% EMEA
  • 28% US
  • 21% APAC – excluding China
  • 12% China
  • 5% America – excluding the USA

In contrast to many other western technology companies, Unity operates freely in China.

In Part 1, I discussed each of Unity’s seven main sources of income. In the first half of 2020, sales by segment were:

  • $ 216.9 million, or 62%, of Operate Solutions (content management and monetization products), of which the “substantial majority” comes from the advertising business.
  • $ 101.8 million (29%) from Create Solutions (content creation products and advice), two-thirds of which from Unity Pro subscriptions.
  • $ 32.7 million (9%) from strategic partnerships and others (Unity Asset Store and Verified Solutions Partners).

The S-1 indicates that less than 10% of total sales are generated with “newer products and services such as Vivox and deltaDNA” (with reference to important acquisitions for 2019 for the Operate segment).

Some lessons from this data:

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