Unity Software Inc. (NYSE:U) Q4 2022 Earnings Call Transcript

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Arsenije Matovic: Thank you. That’s helpful. And then just quickly on one of the metrics in terms of customers over $100,000 in the contribution from ironSource, I believe that the last published number for ironSource for customers contributing over $100,000 was $446 million and that number is now $284 million backing that out. Is that just due to the revenue recognition for ironSource due to the timing of the acquisition? Or was there some kind of churn that happened in ironSource relative to they last published in 2Q 2022. Thank you.

Luis Visoso: No, it’s not bad. What happens is, obviously, some of the larger customers were also large customers for us. So you cannot just add the numbers. So some customers just became even larger for us, but they were already counted in our customers above $100,000. You see that?

Arsenije Matovic: Yes. Perfect. Thank you. Makes sense.

Luis Visoso: Which is a good combination, right? Because basically, what it does is we acquire new customers, which is terrific, but we also penetrated some customers even more, which is also very helpful. So we had a healthy combination of both.

Arsenije Matovic: Perfect. Thank you very much.

Richard Davis: Right. Do we have any other questions from folks in the audience? Mario from Barclays.

Mario Lu: Hey guys, thanks for taking the question. I just have one on the seasonality of the joint business now. In terms of what we saw in the fourth quarter, you guys said it was on the combined financials versus the guidance of 1Q of 475. So just curious, is that sequential step down mostly from the create side of the business? Or is it on the growth segment? Thanks.

Luis Visoso: Yes €“ do you want me to take that, John?

John Riccitiello: Yes, please. Yes

Luis Visoso: So Mario, it’s very difficult to talk about seasonality over the last few years given all the factors that John explained, right? I mean COVID, the economy, I mean, just name it. But to answer your question, yes, we are taking a prudent view on the market and it’s for both businesses, but particularly for the growth business. That’s where we are being even more conservative on the business. And I don’t want to give you a forecast for each of them for Q1. But yes, we are being prudent there on the assumptions in the market. You will see normally in Q4 kind of a strong professional services business. So that will be one thing to always watch in Q4 and then seasonality driven by the other factors that we mentioned. So that’s the way to think about it, Mario.

John Riccitiello: Seasonality right now just in terms of speaking to it is I’ve continued to say today that we’ve seen stabilization in the ads business starting in the middle of last year. The beginning of last year was exceptionally strong. We had the second wave of COVID. People returned home or went home from school. And we had very elevated Q1s in the industry. And so it’s very hard to read seasonality. In a normal year, you’d say across the growth side of the business, Q4 is the strongest quarter. Q1 is the second strongest quarter essentially staying a little bit elevated after the Christmas holidays and then a little bit of growth as you go to Q2 to Q3. And then within the game side of the business, you’d say it’s a business that is similar with Q4 is the strongest, although in mobile, it tends to be more even, but there is increased consumption in the fourth quarter.

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