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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 March 31, 2022
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) 539‑3162
(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 filerAccelerated filer
Nonaccelerated 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 April 29, 2022, there were 296,013,003 shares of the registrant’s common stock outstanding.



UNITY SOFTWARE INC.
FORM 10‑Q
For the Quarter Ended March 31, 2022
TABLE OF CONTENTS
Page
Item 1.
Item 2.
Item 3.
Item 4.
Item 1.
Item 1A.
Item 2.
Item 6.




NOTE REGARDING FORWARD-LOOKING STATEMENTS
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 “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. These forward-looking statements include, but are not limited to, statements concerning the following:
our expectations regarding our financial performance, including revenue, cost of revenue, gross profit or gross margin, operating expenses, key metrics, and our ability to achieve or maintain future profitability;
our ability to effectively manage our growth;
anticipated trends, growth rates, and challenges in our business and in the markets in which we operate;
our expectations regarding the demand for real-time 3D ("RT3D") content in gaming and other industries and our ability to increase revenue from these industries;
economic and industry trends;
our ability to increase sales of our solutions;
our ability to attract and retain customers;
our ability to expand our offerings and cross-sell to our existing customers;
our expectations regarding the plans implemented or announced by Apple with respect to access of advertising identifiers and related matters, and the potential impact on our financial performance;
our ability to maintain and expand our relationships with strategic partners;
our ability to continue to grow across all major global markets;
the effects of increased competition in our markets and our ability to successfully compete with companies that are currently in, or may in the future enter, the markets in which we operate;
our estimated market opportunity;
our ability to timely and effectively scale and adapt our solutions;
our ability to continue to innovate and enhance our solutions;
our ability to develop new products, features and use cases and bring them to market in a timely manner, and whether our customers and prospective customers will adopt these new products, features and use cases;
our ability to maintain, protect, and enhance our brand and intellectual property;
our ability to identify, complete, and integrate acquisitions that complement and expand the functionality of our platform;
our ability to comply or remain in compliance with laws and regulations that currently apply or become applicable to our business in the United States ("U.S.") and globally;
our reliance on key personnel and our ability to attract, maintain, and retain management and skilled personnel;



the effects of the COVID-19 pandemic or other public health crises; and
the future trading prices of our common stock.
We caution you that the foregoing list may not contain all of the forward-looking statements made in this Quarterly Report on Form 10‑Q.
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 below, under “Part II—Other Information, Item 1A. Risk Factors” and elsewhere herein. Moreover, we operate in a very competitive and rapidly changing environment. New risks and uncertainties emerge from time to time, and it is not possible for us to predict all risks and uncertainties that could have an impact on the forward-looking statements contained in this Quarterly Report on Form 10‑Q. 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 made in this Quarterly Report on Form 10‑Q 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. Other trade names, trademarks, and service marks used in this Quarterly Report on Form 10-Q are the property of their respective owners.
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.



RISK FACTORS SUMMARY
Investing in our common stock involves numerous risks, including the risks described in "Part II—Other Information, Item 1A. Risk Factors" of this Quarterly Report on Form 10-Q. Below are some of these risks, any one of which could materially adversely affect our business, financial condition, results of operations, and prospects.
We have a history of losses and may not achieve or sustain profitability in the future.
We have a limited history operating our business at its current scale, and as a result, our past results may not be indicative of future operating performance.
Our core value of putting our users first may cause us to forgo short-term gains and may not lead to the long-term benefits we expect.
Our business and operations have experienced recent rapid growth, which may not be indicative of our future growth. Our rapid growth also makes it difficult to evaluate our future prospects.
If we are unable to retain our existing customers and expand their use of our platform, our growth and operating results could be adversely affected, and we may be required to reconsider our growth strategy.
If we are unable to attract new customers, our business, financial condition and results of operations will be adversely affected.
We derive a significant portion of our revenue from our Operate Solutions. If we fail to attract and retain Operate Solutions customers, our business and results of operations would be adversely affected.
Operating system platform providers or application stores may change terms of service, policies or technical requirements to require us or our customers to change data collection and privacy practices, business models, operations, practices, advertising activities or application content, which could adversely impact our business.
If we are unable to further expand into new industries, or if our solutions for any new industry fail to achieve market acceptance, our growth and operating results could be adversely affected, and we may be required to reconsider our growth strategy.
Our business relies on strategic relationships with hardware, operating system, device, game console and other technology providers. If we are unable to maintain favorable terms and conditions and business relations with respect to our strategic relationships, our business could be harmed.
If we do not make our platform, including new versions or technology advancements, easier to use or properly train customers on how to use our platform, our ability to broaden the appeal of our platform and solutions and to increase our revenue could suffer.
Interruptions, performance problems, or defects associated with our platform may adversely affect our business, financial condition, and results of operations.
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.
If we or our third-party service providers experience a security breach or unauthorized parties otherwise obtain access to our customers’ data, our data, or our platform, our platform may be perceived as not secure, our reputation may be harmed, our business operations may be disrupted, demand for our products may be reduced, and we may incur significant liabilities.



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.
We may not be able to successfully manage our growth, and if we are not able to grow efficiently, our business, financial condition, and results of operations could be harmed.
We rely on the performance of highly skilled personnel, including our management and other key employees, and the loss of one or more of such personnel, or of a significant number of our employees, or the inability to attract and retain executives and employees we need to support our operations and growth, could harm our business.
Our business depends on the interoperability of our solutions across third-party platforms, operating systems, and applications, and on our ability to ensure our platform and solutions operate effectively on those platforms. If we are not able to integrate our solutions with third-party platforms in a timely manner, our business may be harmed.
We are dependent on the success of our customers in the gaming market. Adverse events relating to our customers or their games could have a negative impact on our business.
We rely upon third-party data centers and providers of cloud-based infrastructure to host our platform. Any disruption in the operations of these third-party providers, limitations on capacity or interference with our use could adversely affect our business, financial condition, and results of operations.
Our results of operations have fluctuated in the past and are expected to fluctuate in the future, making it difficult to project future results, and if we fail to meet the expectations of securities analysts or investors with respect to our results of operations, our stock price, and the value of your investment could decline.
Seasonality may cause fluctuations in our sales and results of operations.
Downturns or upturns in our sales may not be immediately reflected in our financial position and results of operations.
Third parties with whom we do business may be unable to honor their obligations to us or their actions may put us at risk.
We use resellers and other third parties to sell, market, and deploy our solutions to a variety of customers, and our failure to effectively develop, manage, and maintain our indirect sales channels would harm our business.
Our direct sales force targets larger customers, and sales to these customers involve risks that may not be present or that are present to a lesser extent with respect to sales to smaller customers.
If we fail to maintain and enhance our brand, our ability to expand our customer base will be impaired and our business, financial condition, and results of operations may suffer.
Our culture emphasizes innovation, and if we cannot maintain this culture as we grow, our business could be harmed.
We are subject to rapidly changing and increasingly stringent laws, contractual obligations, and industry standards relating to privacy, data security, and the protection of children. The restrictions and costs imposed by these requirements, or our actual or perceived failure to comply with them, could harm our business.
If we are unable to adequately address these and other risks we face, our business may be harmed.


Unity Software Inc.
PART I—FINANCIAL INFORMATION
Item 1. Financial Statements
UNITY SOFTWARE INC.
CONDENSED CONSOLIDATED BALANCE SHEETS
(In thousands, except par value)
(Unaudited)
As of
March 31, 2022December 31, 2021
Assets
Current assets:
Cash and cash equivalents$1,152,014 $1,055,776 
Marketable securities656,581 681,323 
Accounts receivable, net of allowances of $6,259 and $5,447 as of March 31, 2022 and December 31, 2021, respectively
332,958 340,491 
Prepaid expenses48,734 39,097 
Other current assets33,910 34,423 
Total current assets2,224,197 2,151,110 
Property and equipment, net110,170 106,106 
Operating lease right‑of‑use assets101,486 98,393 
Goodwill1,657,817 1,620,127 
Intangible assets, net789,144 814,386 
Restricted cash10,678 10,823 
Other assets53,168 40,401 
Total assets$4,946,660 $4,841,346 
Liabilities and stockholders’ equity
Current liabilities:
Accounts payable$13,005 $14,009 
Accrued expenses and other current liabilities121,976 144,873 
Publisher payables213,857 237,637 
Income and other taxes payable54,740 64,759 
Deferred revenue200,218 140,528 
Operating lease liabilities26,464 23,729 
Total current liabilities630,260 625,535 
Convertible notes1,704,145 1,703,035 
Long-term deferred revenue145,676 15,945 
Long-term operating lease liabilities94,340 92,539 
Other long-term liabilities10,097 9,901 
Total liabilities2,584,518 2,446,955 
Commitments and contingencies (Note 11)
Stockholders’ equity:
Common stock, $0.000005 par value; 1,000,000 and 1,000,000 shares authorized as of March 31, 2022 and December 31, 2021, respectively; 295,847 and 292,592 shares issued and outstanding as of March 31, 2022 and December 31, 2021, respectively
2 2 
Additional paid-in capital3,879,589 3,729,874 
Accumulated other comprehensive loss(8,267)(3,858)
Accumulated deficit(1,509,182)(1,331,627)
Total stockholders’ equity2,362,142 2,394,391 
Total liabilities and stockholders’ equity$4,946,660 $4,841,346 
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 Ended
March 31,
20222021
Revenue$320,126 $234,772 
Cost of revenue93,833 58,734 
Gross profit226,293 176,038 
Operating expenses
Research and development221,040 154,015 
Sales and marketing103,939 69,793 
General and administrative72,475 63,132 
Total operating expenses397,454 286,940 
Loss from operations(171,161)(110,902)
Interest expense(1,111)(115)
Interest income and other expense, net941 1,565 
Loss before provision for income taxes(171,331)(109,452)
Provision for (benefit from) income taxes6,224 (1,992)
Net loss(177,555)(107,460)
Basic and diluted net loss per share:
Net loss per share attributable to our common stockholders, basic and diluted$(0.60)$(0.39)
Weighted-average shares used in per share calculation attributable to our common stockholders, basic and diluted294,341 276,068 
See accompanying Notes to Condensed Consolidated Financial Statements.
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Unity Software Inc.
UNITY SOFTWARE INC.
CONDENSED CONSOLIDATED STATEMENTS OF COMPREHENSIVE LOSS
(In thousands)
(Unaudited)
Three Months Ended
March 31,
20222021
Net loss$(177,555)$(107,460)
Other comprehensive loss, net of taxes:
Change in foreign currency translation adjustment19 (31)
Change in unrealized losses on marketable securities(4,428)(103)
Other comprehensive loss(4,409)(134)
Comprehensive loss$(181,964)$(107,594)
See accompanying Notes to Condensed Consolidated Financial Statements.
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Unity Software Inc.
UNITY SOFTWARE INC.
CONDENSED CONSOLIDATED STATEMENTS OF STOCKHOLDERS’ EQUITY
(In thousands, except share data)
(Unaudited)
Three Months Ended March 31, 2022
Accumulated
AdditionalOtherTotal
Common StockPaid-InComprehensiveAccumulatedStockholders’
SharesAmountCapitalLossDeficitEquity
Balance at December 31, 2021292,592,356 $2 $3,729,874 $(3,858)$(1,331,627)$2,394,391 
Issuance of common stock from employee equity plans2,160,044 — 30,216 — — 30,216 
Issuance of common stock for settlement of RSUs925,030 — — — —  
Common stock issued in connection with acquisitions169,321 — 16,072 — — 16,072 
Stock‑based compensation expense— — 103,195 — — 103,195 
Stock-based compensation expense in connection with modified awards for certain employees— — 232 — — 232 
Net loss— — — — (177,555)(177,555)
Other comprehensive loss— — — (4,409)— (4,409)
Balance at March 31, 2022295,846,751 $2 $3,879,589 $(8,267)$(1,509,182)$2,362,142 
Three Months Ended March 31, 2021
Accumulated
AdditionalOtherTotal
Common StockPaid-InComprehensiveAccumulatedStockholders’
SharesAmountCapitalLossDeficitEquity
Balance at December 31, 2020273,537,218 $2 $2,838,057 $(3,418)$(797,498)$2,037,143 
Cumulative effect of accounting change— — — — (1,522)(1,522)
Issuance of common stock from employee equity plans4,544,498 — 22,624 — — 22,624 
Issuance of common stock for settlement of RSUs1,088,445 — — — —  
Stock‑based compensation expense— — 64,424 — — 64,424 
Stock-based compensation expense in connection with modified awards for certain employees— — 2,137 — — 2,137 
Net loss— — — — (107,460)(107,460)
Other comprehensive loss— — — (134)— (134)
Balance at March 31, 2021279,170,161 $2 $2,927,242 $(3,552)$(906,480)$2,017,212 
See accompanying Notes to Condensed Consolidated Financial Statements.
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Unity Software Inc.
UNITY SOFTWARE INC.
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
(In thousands)
(Unaudited)
Three Months Ended March 31,
20222021
Operating activities
Net loss$(177,555)$(107,460)
Adjustments to reconcile net loss to net cash provided by (used in) operating activities:
Depreciation and amortization41,472 11,832 
Stock-based compensation expense103,195 64,424 
Stock-based compensation expense in connection with modified awards for certain employees232 2,137 
Other3,260 1,441 
Changes in assets and liabilities, net of effects of acquisitions:
Accounts receivable, net7,532 (25,061)
Prepaid expenses (9,624)(9,888)
Other current assets508 (2,318)
Operating lease right-of-use ("ROU") assets6,337 5,907 
Deferred tax, net(629)(1,824)
Other assets(2,242)(11,569)
Accounts payable38 6,303 
Accrued expenses and other current liabilities(22,439)(13,767)
Publisher payables(23,780)4,047 
Income and other taxes payable(10,012)(10,104)
Operating lease liabilities(4,894)(7,492)
Other long-term liabilities487 309 
Deferred revenue189,414 4,201 
Net cash provided by (used in) operating activities101,300 (88,882)
Investing activities
Purchase of marketable securities(82,777)(129,082)
Proceeds from principal repayments on marketable securities23,182 2,017 
Maturities of marketable securities77,701 78,000 
Purchase of non-marketable investments(15,000)(4,000)
Purchase of property and equipment(14,929)(11,744)
Business acquisitions, net of cash acquired(23,637)(24,817)
Net cash used in investing activities(35,460)(89,626)
Financing activities
Proceeds from issuance of common stock from employee equity plans30,216 22,624 
Net cash provided by financing activities30,216 22,624 
Effect of foreign exchange rate changes on cash, cash equivalents, and restricted cash37 9 
Increase (decrease) in cash, cash equivalents, and restricted cash96,093 (155,875)
Cash and restricted cash, beginning of period1,066,599 1,293,947 
Cash, cash equivalents, and restricted cash, end of period$1,162,692 $1,138,072 
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Unity Software Inc.
UNITY SOFTWARE INC.
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
(In thousands)
(Unaudited)
Three Months Ended March 31,
20222021
Supplemental disclosure of cash flow information:
Cash paid for interest$ $84 
Cash paid for income taxes, net of refunds$1,087 $(1,197)
Supplemental disclosures of non‑cash investing and financing activities:
Fair value of common stock issued as consideration for business acquisitions$16,072 $ 
Accrued property and equipment$6,416 $2,358 
The below table provides a reconciliation of cash and restricted cash reported within the condensed consolidated balance sheets to the total of the same amounts shown on the condensed consolidated statements of cash flows (in thousands):
As of March 31,
20222021
Cash and cash equivalents$1,152,014 $1,119,935 
Restricted cash10,678 18,137 
Total cash, cash equivalents, and restricted cash$1,162,692 $1,138,072 
See accompanying Notes to Condensed Consolidated Financial Statements.

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Unity Software Inc.
UNITY SOFTWARE INC.
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
(Unaudited)
1. Description of Business and Summary of Significant Accounting Policies
Description of Business
We were founded as Over the Edge Entertainment in Denmark in 2004. We reorganized as a Delaware corporation on May 28, 2009 as Unity Software Inc. (collectively referred to with its wholly owned subsidiaries as "we," "our" or "us"). We provide a comprehensive set of software solutions to create, run and monetize interactive, real-time 2D and 3D content for mobile phones, tablets, PCs, consoles, and augmented and virtual reality devices, among others.
We are headquartered in San Francisco, California and have operations in North America, Europe, Asia Pacific, the Middle East, and Latin America. We market our solutions directly through our online store and field sales operations and indirectly through independent distributors and resellers worldwide.
Basis of Presentation and Consolidation
We prepared the accompanying unaudited condensed consolidated financial statements in accordance with generally accepted accounting principles in the United States ("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. and its wholly owned subsidiaries. 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 three months ended March 31, 2022 shown in this report are not necessarily indicative of the results to be expected for the full year ending December 31, 2022 or any other period. The unaudited condensed consolidated financial statements should be read in conjunction with the audited consolidated financial statements and notes included in our Annual Report on Form 10-K for the year ended December 31, 2021, filed with the SEC on February 22, 2022.
There have been no material changes in our significant accounting policies as described in our consolidated financial statements for the year ended December 31, 2021, other than the adoption of accounting pronouncements as described below in Note 2, "Summary of Accounting Pronouncements," of the Notes to Condensed Consolidated Financial Statements.
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. For us, these estimates include, but are not limited to, revenue recognition, allowances for doubtful accounts, fair values of financial instruments, useful lives of fixed assets, the incremental borrowing rate ("IBR") we use to determine our operating lease liabilities, income taxes, valuation of deferred tax assets and liabilities, valuation of intangible assets, useful lives of intangible assets, assets acquired and liabilities assumed through business combinations, valuation of stock-based compensation, capitalization of software costs and software implementation costs, customer life for capitalized commissions, among others. Actual results could differ from those estimates, and such differences could be material to our financial position and results of operations.
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Unity Software Inc.
2. Summary of Accounting Pronouncements
Recent Accounting Pronouncements
There have been no recent accounting pronouncements, changes in accounting pronouncements or recently adopted accounting guidance during the three months ended March 31, 2022 that have a significant or will have a potentially significant impact on our financial statements.
3. Revenue
Disaggregation of Revenue
Revenue by Source
The following table presents our revenue disaggregated by source (in thousands):
Three Months Ended March 31,
20222021
Create Solutions$116,413 $70,387 
Operate Solutions184,019 146,578 
Strategic Partnerships and Other19,694 17,807 
Total revenue$320,126 $234,772 
Additional information regarding our revenue by source is discussed under the heading “Revenue Recognition” in Note 1, “Description of Business and Summary of Significant Accounting Policies,” of the Notes to Consolidated Financial Statements in our Annual Report on Form 10-K for the year ended December 31, 2021.
Revenue by Geographic Area
The following table presents our revenue disaggregated by geography, based on the invoice address of our customers (in thousands):
Three Months Ended March 31,
20222021
United States$73,962 $57,006 
Greater China (1)(2)
43,841 36,549 
EMEA (1)(3)
115,304 86,102 
APAC (1)(4)
76,689 45,679 
Other Americas (1)(5)
10,330 9,436 
Total revenue$320,126 $234,772 
(1)    No individual country, other than those disclosed above, exceeded 10% of our total revenue for any period presented.
(2)    Greater China includes China, Hong Kong, and Taiwan.
(3)    Europe, the Middle East, and Africa ("EMEA")
(4)    Asia-Pacific, excluding Greater China ("APAC")
(5)    Canada and Latin America ("Other Americas")
Contract Balances
Timing of revenue recognition may differ from the timing of invoicing to customers. Contract assets relate to performance completed in advance of scheduled billings. The primary changes in our contract assets and contract liabilities are due to our performance under the contracts and billings.
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Unity Software Inc.
Contract assets (unbilled receivables) included in accounts receivable are recorded when revenue is recognized in advance of customer invoicing. Unbilled receivables totaled $20.5 million and $28.3 million as of March 31, 2022 and December 31, 2021, respectively. Contract liabilities (deferred revenue) relate to payments received in advance of performance under the contract. Revenue recognized during the three months ended March 31, 2022 that was included in the deferred revenue balances at January 1, 2022 was $60.6 million. The satisfaction of performance obligations typically lags behind payments received under contract from customers, which may lead to an increase in our deferred revenue balance over time.
Remaining Performance Obligations
As of March 31, 2022, we had total remaining performance obligations of $553.5 million, which represents the total contract transaction price allocated to undelivered performance obligations primarily for Create Solutions subscriptions, Enterprise Support, and Strategic Partnership contracts, which are generally recognized over the next one to four years. Transaction price allocated to the remaining performance obligations represents contracted revenue that has not yet been recognized, which includes deferred revenue and unbilled amounts that will be recognized as revenue in future periods. This amount excludes contracts with an original expected term of one year or less and contracts for which we recognize revenue in the amount and in the same period in which we invoice for services performed. We expect to recognize $205.1 million or 37% of this revenue during the next 12 months. We expect to recognize the remaining $348.4 million or 63% of this revenue thereafter.
Accounts Receivable
We record accounts receivable at the original invoiced amount, net of allowances for credit losses for any potential uncollectible amounts. We make estimates of expected credit losses for the allowance for doubtful accounts based upon our assessment of various factors, including historical experience, the age of the accounts receivable balances, credit quality of our customers, current economic conditions, reasonable and supportable forecasts of future economic conditions, and other factors that may affect our ability to collect from customers. Accounts receivable deemed uncollectible are charged against the allowance for credit losses when identified. The estimated credit loss allowance is recorded as a general and administrative expense on our condensed consolidated statement of operations. As of March 31, 2022, the allowance for credit losses was $6.3 million.
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Unity Software Inc.
4. Cash Equivalents and Marketable Securities
Cash equivalents and marketable securities consisted of the following as of March 31, 2022 (in thousands):
Amortized CostUnrealized GainsUnrealized LossesFair Value
Restricted cash:
Restricted cash$10,678 $— $— $10,678 
Total restricted cash$10,678 $— $— $10,678 
Cash equivalents:
Money market funds$187,655 $— $— $187,655 
Total cash equivalents$187,655 $— $— $187,655 
Marketable securities:
Commercial paper$96,060 $ $ $96,060 
Asset-backed securities35,949  (126)35,823 
Corporate bonds231,184  (2,666)228,518 
U.S. treasury securities235,651  (1,789)233,862 
Supranational bonds63,134  (816)62,318 
Total marketable securities$661,978 $ $(5,397)$656,581 
Cash equivalents and marketable securities consisted of the following as of December 31, 2021 (in thousands):
Amortized CostUnrealized GainsUnrealized LossesFair Value
Restricted cash:
Restricted cash$10,823 $— $— $10,823 
Total restricted cash$10,823 $— $— $10,823 
Cash equivalents:
Money market funds$73,138 $— $— $73,138 
Total cash equivalents$73,138 $— $— $73,138 
Marketable securities:
Commercial paper$59,792 $ $ $59,792 
Asset-backed securities40,965  (23)40,942 
Corporate bonds237,735 20 (353)237,402 
U.S. treasury securities272,678 1 (379)272,300 
Supranational bonds71,121 1 (235)70,887 
Total marketable securities$682,291 $22 $(990)$681,323 
We do not intend to sell any of the securities in an unrealized loss position and we expect to realize the full value of all these investments which may be upon maturity. We did not recognize any credit losses related to our available-for-sale debt securities during the three months ended March 31, 2022 and 2021.
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Unity Software Inc.
The following table summarizes the amortized cost and fair value of our marketable securities as of March 31, 2022, by contractual years to maturity (in thousands):
Amortized CostFair Value
Due within one year$487,419 $485,480 
Due between one and three years174,559 171,101 
Total$661,978 $656,581 
There were no material realized or unrealized gains or losses, either individually or in the aggregate during the three months ended March 31, 2022 and 2021.
5. Fair Value Measurements
We categorize assets and liabilities recorded or disclosed at fair value on our consolidated balance sheets based upon the level of judgment associated with inputs used to measure their fair value. The categories are as follows:
Level 1—Inputs are unadjusted quoted prices in active markets for identical assets or liabilities.
Level 2—Inputs are 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, for substantially the full term of the financial instruments.
Level 3—Inputs are unobservable inputs based on our own assumptions used to measure assets and liabilities at fair value. The inputs require significant management judgment or estimation.
The following table presents the fair value of our financial assets and liabilities measured at fair value on a recurring basis using the above input categories as of March 31, 2022 (in thousands):
Level 1Level 2Level 3Total
Restricted cash:
Restricted cash$10,678 $ $ $10,678 
Total restricted cash$10,678 $ $ $10,678 
Cash equivalents:
Money market funds$187,655 $ $ $187,655 
Total cash equivalents$187,655 $ $ $187,655 
Marketable securities:
Commercial paper$ $96,060 $ $96,060 
Asset-backed securities 35,823  35,823 
Corporate bonds 228,518  228,518 
U.S. treasury securities 233,862  233,862 
Supranational bonds 62,318  62,318 
Total marketable securities$ $656,581 $ $656,581 
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Unity Software Inc.
The following table presents the fair value of our financial assets and liabilities measured at fair value on a recurring basis using the above input categories as of December 31, 2021 (in thousands):
Level 1Level 2Level 3Total
Restricted cash:
Restricted cash$10,823 $ $ $10,823 
Total restricted cash$10,823 $ $ $10,823 
Cash equivalents:
Money market funds$73,138 $ $ $73,138 
Total cash equivalents$73,138 $ $ $73,138 
Marketable securities:
Commercial paper$ $59,792 $ $59,792 
Asset-backed securities 40,942  40,942 
Corporate bonds 237,402  237,402 
U.S. treasury securities 272,300  272,300 
Supranational bonds 70,887  70,887 
Total marketable securities$ $681,323 $ $681,323 
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 elected the practical expedient in Financial Accounting Standards Board Accounting Standards Codification Topic 321, Investments-Equity Securities, and measure these investments at cost less any impairment, adjusted for observable price changes, if any. We estimate that the carrying value of the acquired shares represents the fair value of the investment.
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Unity Software Inc.
6. Acquisitions
MindKick, Inc.
On January 28, 2022, we completed the purchase of MindKick, Inc. ("MindKick") for a total purchase consideration of approximately $46.6 million. This amount was payable in a combination of approximately $26.8 million in cash and the issuance of 169,321 shares of common stock valued at approximately $16.1 million. An additional 42,330 shares of common stock subject to a service-based vesting condition were granted to certain employees of Mindkick; these shares of common stock are accounted for outside of the business combination and will be recognized as post-combination expense. MindKick provides 2D game creation tools and game templates with the goal of providing consumers the ability to create, play, and share their own 2D games on mobile. Prior to the completion of the acquisition, we held a minority investment in MindKick that we accounted for using the equity method of accounting. In circumstances where a business combination is achieved in stages, previously-held equity interests are remeasured at fair value. The remeasured fair value assigned to the previously-held equity interest in MindKick approximates cost, and therefore, no gain or loss was recognized.
The following table summarizes the consideration paid for MindKick and the estimated fair values of the assets acquired and liabilities assumed at the acquisition date (in thousands):
Consideration:
Cash$26,761 
Common stock issued16,072 
Fair value of previously held interest3,747 
Fair value of total consideration transferred$46,580 
Recognized amounts of identifiable assets acquired and liabilities assumed:
Cash$2,789 
Intangible assets7,450 
Deferred tax liability(685)
Other assets and liabilities, net(14)
Total identifiable net assets assumed9,540 
Goodwill (1)
37,040 
Total$46,580 
(1)    Goodwill reflects the expected future benefits of certain synergies and acquired assembled workforce, which does not qualify for separate recognition as an identifiable intangible asset. The goodwill balance is not subject to amortization, and it is not deductible for U.S. income tax purposes
We recorded $0.8 million in transaction costs associated with the acquisition for the three months ended March 31, 2022. These costs were recorded with general and administrative expenses.
The revenue and earnings of the acquired business have been included in our results since the acquisition date and are not material to our consolidated results.
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Unity Software Inc.
7. Goodwill and Intangible Assets
Goodwill
The following table presents the changes in the carrying amount of goodwill for the three months ended March 31, 2022 (in thousands):
Balance as of December 31, 2021$1,620,127 
Goodwill acquired37,040 
Measurement period adjustment650 
Balance as of March 31, 2022$1,657,817 
Intangible Assets, Net
The following tables present details of our intangible assets, excluding goodwill (in thousands, except for weighted-average useful life):
As of March 31, 2022
Weighted-Average
Useful Life
(1)
(In Years)
Gross
Carrying
Amount
Accumulated
Amortization
Net
Carrying
Amount
Developed technology8.8$586,704 $(69,565)$517,139 
Customer relationships2.951,121 (20,855)30,266 
Trademark5.760,567 (6,634)53,933 
Contractual relationship8.0200,000 (12,194)187,806 
Total intangible assets$898,392 $(109,248)$789,144 
As of December 31, 2021
Weighted‑Average
Useful Life
(1)
(In Years)
Gross
Carrying
Amount
Accumulated
Amortization
Net
Carrying
Amount
Developed technology8.8$580,204 $(52,811)$527,393 
Customer relationships2.950,171 (16,980)33,191 
Trademark5.760,557 (3,937)56,620 
Contractual relationship8.0200,000 (2,818)197,182 
Total intangible assets$890,932 $(76,546)$814,386 
(1)    Based on weighted-average useful life established as of the acquisition date.
The following table presents the amortization of finite-lived intangible assets included on our condensed consolidated statements of operations and comprehensive loss (in thousands):
Three Months Ended March 31,
20222021
Amortization expense$32,702 $4,459 
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Unity Software Inc.
As of March 31, 2022, the estimated future amortization of finite-lived intangible assets for each of the next five years and thereafter was as follows (in thousands):
Remainder of 2022$103,715 
2023126,386 
2024121,868 
2025109,928 
202677,256 
Thereafter249,991 
Total$789,144 
8. Balance Sheet Components
The following tables provide details of selected balance sheet items (in thousands):
As of
March 31,
2022
December 31,
2021
Property and equipment, net:
Gross property and equipment
Leasehold improvements$90,661 $84,006 
Computer and other hardware82,878 74,953 
Furniture28,909 27,916 
Internally developed software3,508 3,508 
Purchased software1,013 1,449 
Construction in progress8,250 12,075 
Total gross property and equipment215,219 203,907 
Accumulated depreciation and amortization (1)
(105,049)(97,801)
Property and equipment, net$110,170 $106,106 
(1)    The following table presents the depreciation and amortization of property and equipment included on our condensed consolidated statements of operations (in thousands):
Three Months Ended March 31,
20222021
Depreciation and amortization expense$8,770 $7,373 
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Long-lived Assets, Net, by Geographic Area
The following table presents our long-lived assets, net, disaggregated by geography, which consists of our property and equipment, net, but excludes internally developed software and purchased software (in thousands):
As of
March 31,
2022
December 31,
2021
United States$36,937 $36,718 
Canada34,840 31,498 
United Kingdom14,702 15,011 
Greater China4,278 4,300 
EMEA, excluding United Kingdom (1)
13,377 12,587 
APAC (1)
2,916 3,052 
Other Americas, excluding Canada (1)
1,182 945 
Total long-lived assets, net$108,232 $104,111 
(1)    No individual country, other than those disclosed above, exceeded 10% of our total long-lived assets, net, for any period presented.
As of
March 31,
2022
December 31,
2021
Accrued expenses and other current liabilities:
Accrued expenses$63,466 $60,937 
Accrued compensation58,510 83,936 
Accrued expenses and other current liabilities$121,976 $144,873 
Sales Commissions
We consider internal sales commissions as incremental costs of obtaining the contract with a customer. We apply a practical expedient to expense incremental costs incurred if the period of the benefit is one year or less. Incremental costs that have a period of benefit greater than one year are capitalized and amortized over the estimated period of benefit. Capitalized commissions, net of amortization, are included in other current assets and other assets on our condensed consolidated balance sheets. We capitalized $1.2 million and $2.6 million of sales commissions for the three months ended March 31, 2022 and 2021, respectively.
As of March 31, 2022, capitalized commissions, net of amortization, included in other current assets and other assets were $8.2 million and $7.3 million, respectively. As of March 31, 2021, capitalized commissions, net of amortization, included in other current assets and other assets were $3.8 million and $5.1 million, respectively.
Capitalized commissions are amortized over the expected period of benefit, which we have determined, based on analysis, to be three years. Amortization of capitalized commissions are included in sales and marketing expenses on our condensed consolidated statements of operations and comprehensive loss. For the three months ended March 31, 2022 and 2021, we amortized $2.3 million and $1.0 million of capitalized commissions, respectively. We did not incur any impairment losses for the three months ended March 31, 2022 and 2021.
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9. Leases
We have operating leases for offices, which have remaining lease terms of less than one year to 9.8 years, some of which include options to extend the lease with renewal terms from one to five years. Some leases include an option to terminate the lease from less than one year up to five years from the lease commencement date.
Components of lease expense were as follows (in thousands):
Three Months Ended March 31,
20222021
Operating lease expense, excluding ROU asset impairment$7,620 $7,301 
Short-term lease expense270