Unity’s Create and Grow Solutions Show Promise as Recent M&As Start Paying Off

In its latest Q4 earnings report for 2022, Unity Software – a prominent platform for creating and operating interactive, real-time 3D (RT3D) content for gaming and beyond – provided new insights into its business plans and projections for the upcoming fiscal year. Its long standing Create Solutions and newer, burgeoning Grow Solutions were major contributors to the company’s overall success this year, especially as fresh acquisitions began to prove worthy of their initial investment.

During the earnings call, John Riccitiello, Chief Executive Officer of Unity Software, discussed a few of Unity’s most significant areas of growth this past year:

“...Right now, what we're seeing is really strong consumer engagement in games, really strong pipeline outside of games and create, stabilization in the Ads business based on strong consumer engagement and slightly weaker eCPMs, which is typical of a recessionary period...” said Riccitiello.

Unity’s Create Solutions includes its all-in-one gaming platform where clients have access to a diverse toolkit of resources to help envision, create and advertise their next big mobile, or independent, video game. The company’s Grow Solutions, on the other hand, provide analytics and other monetization tools via its Unity Ads service to ensure products designed on their platforms continue to thrive long after they’ve been published.

As demand grows across the greater tech ecosystem, Unity’s primary business strategy for the year is centered around meeting that increased demand and creating more allies than competitors.

This gives context to Unity’s recent move in November to merge with industry rival ironSource, a software company that develops app monetization and distribution technologies, in the efforts to deliver a complete end-to-end user experience for customers on the Unity platform. Prospective mobile game developers had the most to gain in this merger, as the two companies’ combined forces are now able to equip devs with the tools necessary to take their projects from conception to commercialization, including every step in between.

In the company’s Q4 Shareholder letter, Unity expressed confidence in its Create Solution's ability to thrive in an otherwise less stable economic ecosystem, pointing to the gaming industries’s healthy standing and consumer engagement as a positive sign for Create’s long term growth.

While interest in gaming remains high and revenues for Create are up across the board, data found in the letter suggests industries outside gaming are what helped the company reap the most profits this year:

“Create Solutions 2022 revenue grew 41% year-on-year. Revenue growth was broad-based with games up 24% year-over-year and industries (beyond games) up 118% year-over-year. In the last quarter of the year, industries represented 30% of the total Create Solutions revenue (41% under the previous reporting structure, up from 40% six months ago).”

Despite headwinds caused by instability within the in-game ads market in Q3, revenues for Grow Solutions also went up 12% compared to this time last year, signaling a major positive result of the ongoing business partnership established with ironSource in November.