UNITY SOFTWARE INC., 10-Q filed on 8/8/2024
Quarterly Report
v3.24.2.u1
Cover - shares
 6 Months Ended
Jun. 30, 2024
Aug. 01, 2024
Cover [Abstract]    
Document Type 10-Q  
Document Quarterly Report true  
Document Period End Date Jun. 30, 2024  
Document Transition Report false  
Entity File Number 001-39497  
Entity Registrant Name UNITY SOFTWARE INC.  
Entity Incorporation, State or Country Code DE  
Entity Tax Identification Number 27-0334803  
Entity Address, Address Line One 30 3rd Street  
Entity Address, City or Town San Francisco  
Entity Address, State or Province CA  
Entity Address, Postal Zip Code 94103‑3104  
City Area Code 415  
Local Phone Number 638-9950  
Title of 12(b) Security Common stock, $0.000005 par value  
Trading Symbol U  
Security Exchange Name NYSE  
Entity Current Reporting Status Yes  
Entity Interactive Data Current Yes  
Entity Filer Category Large Accelerated Filer  
Entity Small Business false  
Entity Emerging Growth Company false  
Entity Shell Company false  
Entity Common Stock, Shares Outstanding   396,857,800
Amendment Flag false  
Document Fiscal Year Focus 2024  
Document Fiscal Period Focus Q2  
Entity Central Index Key 0001810806  
Current Fiscal Year End Date --12-31  
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CONDENSED CONSOLIDATED BALANCE SHEETS - USD ($)
$ in Thousands
Jun. 30, 2024
Dec. 31, 2023
Current assets:    
Cash and cash equivalents $ 1,267,957 $ 1,590,325
Accounts receivable, net 573,220 611,723
Prepaid expenses and other 142,889 122,843
Total current assets 1,984,066 2,324,891
Property and equipment, net 112,080 140,887
Goodwill 3,166,304 3,166,304
Intangible assets, net 1,230,716 1,406,745
Other assets 190,568 204,614
Total assets 6,683,734 7,243,441
Current liabilities:    
Accounts payable 12,693 14,517
Accrued expenses and other 264,469 307,704
Publisher payables 388,253 385,113
Deferred revenue 176,127 186,769
Total current liabilities 841,542 894,103
Convertible notes 2,237,245 2,711,750
Long-term deferred revenue 10,173 6,015
Other long-term liabilities 178,198 217,195
Total liabilities 3,267,158 3,829,063
Commitments and Contingencies (Note 7)
Redeemable noncontrolling interests 226,056 225,797
Stockholders' equity:    
Common stock, $0.000005 par value: Authorized shares - 1,000,000 and 1,000,000; Issued and outstanding shares - 395,444 and 384,872 2 2
Additional paid-in capital 6,682,060 6,259,479
Accumulated other comprehensive loss (8,898) (5,009)
Accumulated deficit (3,488,478) (3,071,830)
Total Unity Software Inc. stockholders' equity 3,184,686 3,182,642
Noncontrolling interest 5,834 5,939
Total stockholders' equity 3,190,520 3,188,581
Total liabilities and stockholders' equity $ 6,683,734 $ 7,243,441
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CONDENSED CONSOLIDATED BALANCE SHEETS (Parenthetical) - $ / shares
Jun. 30, 2024
Dec. 31, 2023
Statement of Financial Position [Abstract]    
Common stock, par value (USD per share) $ 0.000005 $ 0.000005
Common stock, authorized (in shares) 1,000,000,000 1,000,000,000
Common stock, issued (in shares) 395,444,000 384,872,000
Common stock, outstanding (in shares) 395,444,000 384,872,000
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CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS - USD ($)
shares in Thousands, $ in Thousands
 3 Months Ended 6 Months Ended
Jun. 30, 2024
Jun. 30, 2023
Jun. 30, 2024
Jun. 30, 2023
Income Statement [Abstract]        
Revenue $ 449,259 $ 533,478 $ 909,639 $ 1,033,839
Cost of revenue 108,875 158,827 253,262 320,791
Gross profit 340,384 374,651 656,377 713,048
Operating expenses        
Research and development 208,935 267,955 491,663 548,435
Sales and marketing 169,854 209,131 400,479 425,258
General and administrative 91,015 89,017 268,584 185,791
Total operating expenses 469,804 566,103 1,160,726 1,159,484
Loss from operations (129,420) (191,452) (504,349) (446,436)
Interest expense (5,829) (6,142) (11,864) (12,271)
Interest income and other income (expense), net 10,457 9,061 87,100 22,676
Loss before income taxes (124,792) (188,533) (429,113) (436,031)
Provision for (benefit from) Income taxes 946 4,791 (11,897) 10,996
Net loss (125,738) (193,324) (417,216) (447,027)
Net loss attributable to noncontrolling interest and redeemable noncontrolling interests (164) (1,164) (568) (1,836)
Net loss attributable to Unity Software Inc. $ (125,574) $ (192,160) $ (416,648) $ (445,191)
Basic net loss per share attributable to Unity Software Inc. (USD per share) $ (0.32) $ (0.51) $ (1.07) $ (1.18)
Diluted net loss per share attributable to Unity Software Inc. (USD per share) $ (0.32) $ (0.51) $ (1.07) $ (1.18)
Weighted-average shares used in computation of basic net loss per share (in shares) 392,537 380,355 389,844 378,145
Weighted-average shares used in computation of diluted net loss per share (in shares) 392,537 380,355 389,844 378,145
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CONDENSED CONSOLIDATED STATEMENTS OF COMPREHENSIVE LOSS - USD ($)
$ in Thousands
 3 Months Ended 6 Months Ended
Jun. 30, 2024
Jun. 30, 2023
Jun. 30, 2024
Jun. 30, 2023
Statement of Comprehensive Income [Abstract]        
Net loss $ (125,738) $ (193,324) $ (417,216) $ (447,027)
Other comprehensive loss, net of taxes:        
Change in foreign currency translation adjustment (1,393) (12,155) (4,854) (8,998)
Change in unrealized gains (losses) on derivative instruments 0 616 0 289
Other comprehensive loss (1,393) (11,539) (4,854) (8,709)
Comprehensive loss (127,131) (204,863) (422,070) (455,736)
Net loss attributable to noncontrolling interest and redeemable noncontrolling interests (164) (1,164) (568) (1,836)
Foreign currency translation attributable to noncontrolling interest and redeemable noncontrolling interests (255) (2,506) (965) (1,857)
Comprehensive loss attributable to noncontrolling interest and redeemable noncontrolling interests (419) (3,670) (1,533) (3,693)
Comprehensive loss attributable to Unity Software Inc. $ (126,712) $ (201,193) $ (420,537) $ (452,043)
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CONDENSED CONSOLIDATED STATEMENTS OF STOCKHOLDERS' EQUITY - USD ($)
$ in Thousands
Total
Unity Software Inc. Stockholders' Equity
Common Stock
Additional Paid-In Capital
Accumulated Other Comprehensive Loss
Accumulated Deficit
Noncontrolling Interest
Beginning balance (in shares) at Dec. 31, 2022     374,243,196        
Beginning balance at Dec. 31, 2022 $ 3,534,566 $ 3,528,268 $ 2 $ 5,779,776 $ (1,691) $ (2,249,819) $ 6,298 [1]
Increase (Decrease) in Stockholders' Equity [Roll Forward]              
Issuance of common stock from employee equity plans (in shares)     3,569,851        
Issuance of common stock from employee equity plans 41,944 41,944   41,944      
Issuance of common stock for settlement of RSUs (in shares)     5,477,580        
Stock‑based compensation expense 327,543 327,543   327,543      
Net loss (445,316) (445,191)       (445,191) (125) [1]
Adjustments to redeemable noncontrolling interest 368 368   368      
Other comprehensive loss (6,979) (6,852)     (6,852)   (127) [1]
Ending balance (in shares) at Jun. 30, 2023     383,290,627        
Ending balance at Jun. 30, 2023 3,452,126 3,446,080 $ 2 6,149,631 (8,543) (2,695,010) 6,046 [1],[2]
Beginning balance (in shares) at Mar. 31, 2023     378,373,685        
Beginning balance at Mar. 31, 2023 3,466,296 3,460,000 $ 2 5,962,358 490 (2,502,850) 6,296 [2]
Increase (Decrease) in Stockholders' Equity [Roll Forward]              
Issuance of common stock from employee equity plans (in shares)     2,094,090        
Issuance of common stock from employee equity plans 19,973 19,973   19,973      
Issuance of common stock for settlement of RSUs (in shares)     2,822,852        
Stock‑based compensation expense 161,098 161,098   161,098      
Net loss (192,239) (192,160)       (192,160) (79) [2]
Adjustments to redeemable noncontrolling interest 6,202 6,202   6,202      
Other comprehensive loss (9,204) (9,033)     (9,033)   (171) [2]
Ending balance (in shares) at Jun. 30, 2023     383,290,627        
Ending balance at Jun. 30, 2023 $ 3,452,126 3,446,080 $ 2 6,149,631 (8,543) (2,695,010) 6,046 [1],[2]
Beginning balance (in shares) at Dec. 31, 2023 384,872,000   384,871,561        
Beginning balance at Dec. 31, 2023 $ 3,188,581 3,182,642 $ 2 6,259,479 (5,009) (3,071,830) 5,939 [1]
Increase (Decrease) in Stockholders' Equity [Roll Forward]              
Issuance of common stock from employee equity plans (in shares) 3,865,467   4,416,613        
Issuance of common stock from employee equity plans $ 37,302 37,302   37,302      
Issuance of common stock for settlement of RSUs (in shares)     6,156,124        
Stock‑based compensation expense 386,966 386,966   386,966      
Net loss (416,687) (416,648)       (416,648) (39) [1]
Adjustments to redeemable noncontrolling interest (1,687) (1,687)   (1,687)      
Other comprehensive loss $ (3,955) (3,889)     (3,889)   (66) [1]
Ending balance (in shares) at Jun. 30, 2024 395,444,000   395,444,298        
Ending balance at Jun. 30, 2024 $ 3,190,520 3,184,686 $ 2 6,682,060 (8,898) (3,488,478) 5,834 [1],[2]
Beginning balance (in shares) at Mar. 31, 2024     390,396,930        
Beginning balance at Mar. 31, 2024 3,189,988 3,184,125 $ 2 6,554,787 (7,760) (3,362,904) 5,863 [2]
Increase (Decrease) in Stockholders' Equity [Roll Forward]              
Issuance of common stock from employee equity plans (in shares)     1,904,693        
Issuance of common stock from employee equity plans 11,305 11,305   11,305      
Issuance of common stock for settlement of RSUs (in shares)     3,142,675        
Stock‑based compensation expense 117,678 117,678   117,678      
Net loss (125,585) (125,574)       (125,574) (11) [2]
Adjustments to redeemable noncontrolling interest (1,710) (1,710)   (1,710)      
Other comprehensive loss $ (1,156) (1,138)     (1,138)   (18) [2]
Ending balance (in shares) at Jun. 30, 2024 395,444,000   395,444,298        
Ending balance at Jun. 30, 2024 $ 3,190,520 $ 3,184,686 $ 2 $ 6,682,060 $ (8,898) $ (3,488,478) $ 5,834 [1],[2]
[1]
(1)    Excludes redeemable noncontrolling interests.
[2]
(1)    Excludes redeemable noncontrolling interests.
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CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS - USD ($)
$ in Thousands
 6 Months Ended
Jun. 30, 2024
Jun. 30, 2023
Operating activities    
Net loss $ (417,216) $ (447,027)
Adjustments to reconcile net loss to net cash provided by operating activities:    
Depreciation and amortization 203,219 220,639
Stock-based compensation expense 381,276 320,562
Gain on repayment of convertible note (61,371) 0
Impairment of property and equipment 21,918 0
Other 15,383 1,521
Changes in assets and liabilities, net of effects of acquisitions:    
Accounts receivable, net 38,066 1,633
Prepaid expenses and other (19,815) 22,849
Other assets (2,386) 24,311
Accounts payable (460) (3,069)
Accrued expenses and other (40,301) (33,727)
Publisher payables 3,140 328
Other long-term liabilities (34,636) (37,802)
Deferred revenue (5,814) (27,674)
Net cash provided by operating activities 81,003 42,544
Investing activities    
Purchases of short-term investments 0 (212)
Proceeds from principal repayments and maturities of short-term investments 0 102,673
Purchases of non-marketable investments 0 (500)
Purchases of intangible assets (360) 0
Purchases of property and equipment (15,956) (28,468)
Net cash provided by (used in) investing activities (16,316) 73,493
Financing activities    
Repayments of convertible note (414,999) 0
Proceeds from issuance of common stock from employee equity plans 37,302 41,944
Net cash provided by (used in) financing activities (377,697) 41,944
Effect of foreign exchange rate changes on cash, cash equivalents, and restricted cash (9,460) (8,785)
Increase (decrease) in cash, cash equivalents, and restricted cash (322,470) 149,196
Cash, cash equivalents, and restricted cash, beginning of period 1,604,267 1,505,688
Cash, cash equivalents, and restricted cash, end of period 1,281,797 1,654,884
Supplemental disclosure of cash flow information:    
Cash paid for interest 10,000 10,389
Cash paid for income taxes, net of refunds 16,307 5,746
Cash paid for operating leases 26,658 20,206
Supplemental disclosures of non‑cash investing and financing activities:    
Assets acquired under operating lease $ 13,859 $ 37,293
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Accounting Policies
 6 Months Ended
Jun. 30, 2024
Accounting Policies [Abstract]  
Accounting Policies Accounting Policies
Basis of Presentation and Consolidation
We prepared the accompanying unaudited condensed consolidated financial statements in accordance with United States ("U.S.") generally accepted accounting principles ("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., its wholly owned subsidiaries, and entities consolidated under the voting interest model. 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 periods presented are not necessarily indicative of the results to be expected for the full year or other periods. The unaudited condensed consolidated financial statements should be read in conjunction with the audited consolidated financial statements and notes included in our 2023 Annual Report on Form 10-K.
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. Actual results could differ from those estimates, and such differences could be material to our financial position and results of operations.
Employee Separation and Restructuring Costs
In January 2024, we committed to a plan to eliminate approximately 25% of our workforce, and we mutually agreed to the departure of the founders of ironSource Ltd. Following these announcements, we incurred incremental employee separation costs of approximately $201 million in the six months ended June 30, 2024, which included $128 million of incremental stock-based compensation. Of the incremental employee separation costs, $15 million are within cost of revenue, $44 million are within research and development, $52 million are within sales and marketing, and $90 million are within general and administrative. Additionally, in November 2023, we committed to a plan to reassess our real estate footprint. We incurred $38 million of restructuring costs, primarily related to office closures in the six months ended June 30, 2024.
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Revenue
 6 Months Ended
Jun. 30, 2024
Revenue from Contract with Customer [Abstract]  
Revenue Revenue
The following table presents our revenue disaggregated by source, which also have similar economic characteristics (in thousands):
Three Months Ended June 30,Six Months Ended June 30,
2024202320242023
Create Solutions$150,777 $193,110 $314,447 $380,479 
Grow Solutions298,482 340,368 595,192 653,360 
Total revenue$449,259 $533,478 $909,639 $1,033,839 
The following table presents our revenue disaggregated by geography, based on the invoice address of our customers (in thousands):
Three Months Ended June 30,Six Months Ended June 30,
2024202320242023
United States$130,843 $141,905 $269,962 $274,899 
Greater China (1)
62,063 69,750 121,753 129,298 
EMEA (2)
164,064 188,219 330,834 374,943 
APAC (3)
81,119 119,107 165,155 226,635 
Other Americas (4)
11,170 14,497 21,935 28,064 
Total revenue$449,259 $533,478 $909,639 $1,033,839 
(1)    Greater China includes China, Hong Kong, and Taiwan.
(2)    Europe, the Middle East, and Africa ("EMEA")
(3)    Asia-Pacific, excluding Greater China ("APAC")
(4)    Canada and Latin America ("Other Americas")
Accounts Receivable, Net
Accounts receivable are recorded at the original invoiced amount, net of allowances for uncollectible amounts. We estimate losses on uncollectible amounts based on expected losses, including our historical experience of actual losses. The estimated losses on uncollectible amounts are recorded in general and administrative expense on our condensed consolidated statements of operations. As of June 30, 2024 and December 31, 2023, the allowance for uncollectible amounts was $19.3 million and $16.9 million, respectively. For the six months ended June 30, 2024 and 2023, the provision for uncollectible amounts was $5.3 million and $7.8 million, respectively.
Sales Commissions
Sales commissions that have a benefit beyond one year are capitalized and amortized on a straight-line method over the expected period of benefit, which is generally three years. As of June 30, 2024, capitalized commissions, net of amortization, included in prepaid expenses and other and other assets were $6.5 million and $5.2 million, respectively. As of December 31, 2023, capitalized commissions, net of amortization, included in prepaid expenses and other and other assets were $6.8 million and $4.8 million, respectively. During the three and six months ended June 30, 2024, we recorded amortization costs of $2.3 million and $4.7 million in sales and marketing expenses, as compared to $2.5 million and $5.0 million during the three and six months ended June 30, 2023, respectively.
Contract Balances and Remaining Performance Obligations
Contract assets (unbilled receivables), primarily included in accounts receivable, net, are recorded when revenue is earned in advance of customer billing schedules. Unbilled receivables totaled $22.3 million and $31.3 million as of June 30, 2024 and December 31, 2023, respectively. Of this total as of June 30, 2024, $8.3 million was included in Other Long-Term Assets on our consolidated balance sheets.
Contract liabilities (deferred revenue) relate to payments received in advance of performance under the contract. Revenue recognized during the six months ended June 30, 2024 that was included in the deferred revenue balances at January 1, 2024 was $124.7 million.
Additionally, we have performance obligations associated with commitments in customer contracts to perform in the future that had not yet been recognized in our consolidated financial statements. For contracts with original terms that exceed one year, those commitments not yet recognized as of June 30, 2024, were $352 million and relate primarily to Create Solutions subscriptions, Enterprise Support, and Strategic Partnerships. These commitments generally extend over the next one to five years and we expect to recognize approximately $203 million or 58% of this revenue during the next 12 months.
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Financial Instruments
 6 Months Ended
Jun. 30, 2024
Investments, Debt and Equity Securities [Abstract]  
Financial Instruments Financial Instruments
Cash, Cash Equivalents, and Restricted Cash
Cash, cash equivalents, and restricted cash are recorded at fair value. Fair value is defined as the price that would be received to sell an asset or paid to transfer a liability in an orderly transaction between market participants at the measurement date. To increase the comparability of fair value measures, the following hierarchy prioritizes the inputs to valuation methodologies used to measure fair value:
•Level 1—Valuations based on quoted prices in active markets for identical assets or liabilities.
•Level 2—Valuations based on 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.
•Level 3—Valuations based on unobservable inputs reflecting our own assumptions used to measure assets and liabilities at fair value. These valuations require significant judgment.
The following table summarizes, by major security type, our cash, cash equivalents, and restricted cash that are measured at fair value on a recurring basis and are categorized using the fair value hierarchy (in thousands):
June 30, 2024December 31, 2023
Fair Value (1)
Cash$978,584 $834,877 
Level 1:
Restricted cash and cash equivalents:
Restricted cash$13,840 $13,942 
Money market funds93,976 502,754 
Time deposits195,397 252,694 
Total restricted cash and cash equivalents$303,213 $769,390 
Total cash, cash equivalents, and restricted cash$1,281,797 $1,604,267 
(1)    Due to the highly liquid nature of our investments, amortized cost approximates fair value.
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 use the measurement alternative to account for adjustments to these investments for observable transactions for the same or similar investments of the same issuer in any given quarter. If we determine an impairment has occurred, the investment is written down to the estimated fair value. As of June 30, 2024 and December 31, 2023, such equity investments totaled $33.6 million. No adjustments to the carrying value of these equity investments were recorded for the three and six months ended June 30, 2024 and 2023.
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Investment in Unity China
 6 Months Ended
Jun. 30, 2024
Noncontrolling Interest [Abstract]  
Investment in Unity China Investment in Unity China
The results of Unity China, of which third-party investors hold a 20.5% ownership interest, are included in our condensed consolidated financial statements. Under certain conditions we may be required to repurchase the third-party interest in Unity China. The redeemable noncontrolling interests in Unity China are recorded as temporary equity on our condensed consolidated balance sheet.
The following table presents the changes in redeemable noncontrolling interests (in thousands):
Three Months Ended June 30,Six Months Ended June 30,
2024202320242023
Balance at beginning of period$224,736 $225,376 $225,797 $219,563 
Net loss attributable to redeemable noncontrolling interests(153)(1,086)(529)(1,712)
Accretion for redeemable noncontrolling interests2,867 3,676 5,942 6,374 
Foreign currency translation and foreign exchange adjustments for redeemable noncontrolling interests(1,394)(12,217)(5,154)(8,476)
Balance at end of period$226,056 $215,749 $226,056 $215,749 
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Leases
 6 Months Ended
Jun. 30, 2024
Leases [Abstract]  
Leases Leases
We have operating leases for offices, which have remaining lease terms of up to nine years.
Components of lease expense were as follows (in thousands):
Three Months Ended June 30,Six Months Ended June 30,
2024202320242023
Operating lease expense$10,579 $10,375 $20,832 $19,768 
Variable lease expense1,497 1,164 3,218 2,442 
Sublease income(552)(440)(796)(824)
Total lease expense$11,524 $11,099 $23,254 $21,386 
Supplemental balance sheet information related to leases was as follows (in thousands, except weighted-average figures):
As of
ClassificationJune 30, 2024December 31, 2023
Operating lease assetsOther assets$90,444 $113,256 
Current operating lease liabilitiesAccrued expenses and other$36,065 $39,132 
Long-term operating lease liabilitiesOther long-term liabilities90,885 111,669 
Total operating lease liabilities$126,950 $150,801 
As of June 30, 2024 and December 31, 2023, our operating leases had a weighted-average remaining lease term of 4.7 and 5.1 years, respectively, and a weighted-average discount rate of 5.3% and 5.2%, respectively.
In November 2023, we committed to a plan to reassess our real estate footprint, focusing on optimizing efficiency and reducing costs. In connection with this plan, during the three and six months ended June 30, 2024, we recorded $8.6 million and $12.2 million of impairment charges on operating lease assets, respectively.
As of June 30, 2024, our lease liabilities were as follows (in thousands):
Operating Leases
Gross lease liabilities$143,358 
Less: imputed interest16,408 
Present value of lease liabilities$126,950 
As of June 30, 2024, we had entered into a lease that has not yet commenced with future minimum lease payments of $5.0 million which are not yet reflected on our consolidated balance sheet. This operating lease will commence in 2024 with a lease term of 3 years.
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Borrowings
 6 Months Ended
Jun. 30, 2024
Debt Disclosure [Abstract]  
Borrowings Borrowings
Convertible Notes
As of June 30, 2024, we had $2.2 billion of unsecured convertible notes outstanding including $1.0 billion issued in November 2022 (the "2027 Notes") and $1.2 billion issued in November 2021 (the "2026 Notes"). The table below summarizes the principal and unamortized debt issuance costs and other material features of the Notes (in thousands):
Carrying Amount as of
Conversion Rate per
$1,000 Principal
Conversion Price
MaturitiesStated Interest RatesJune 30, 2024December 31, 2023
Convertible notes:
Principal – 2026 Notes
3.2392 $308.72 20260.0%$1,245,232 $1,725,000 
Principal – 2027 Notes
20.4526 $48.89 20272.0%1,000,000 1,000,000 
Unamortized debt issuance costs, net(7,987)(13,250)
Net carrying amount$2,237,245 $2,711,750 
Interest on the Notes is payable semi-annually in arrears. The combined interest expense on the Notes related to regular interest and the amortization of debt issuance cost was $5.8 million and $11.9 million for the three and six months ended June 30, 2024, respectively, and $1.1 million and $2.2 million for the three and six months ended June 30, 2023, respectively.
As of June 30, 2024 and December 31, 2023, the estimated fair value of the 2027 Notes were approximately $1.0 billion and $1.3 billion, respectively, and the estimated fair value of the 2026 Notes were approximately $1.1 billion and $1.4 billion, respectively. The fair value of the 2027 Notes was based on a combination of a discounted cash flow and Black-Scholes option-pricing model. The fair value of the 2026 Notes was based on quoted prices as of that date.
The 2026 Notes are convertible at the option of the holder if a conversion condition of the 2026 Notes is triggered. During the three and six months ended June 30, 2024, none of the conversion conditions of the 2026 Notes were triggered and the 2026 Notes were not convertible as of June 30, 2024. The holders of the 2027 Notes may elect to convert the notes prior to maturity. Any such conversion may be satisfied at our election with either cash, shares of our common stock, or a combination of cash and shares of our common stock. The conversion rates for the Notes is subject to customary adjustments for certain events as described in the indentures governing the Notes.
The Notes are subject to additional terms. In connection with certain corporate events, as described in the Indentures, we will increase the conversion rate for a holder of the Notes who elects to convert those notes in connection with the event. Additionally, upon the occurrence of certain corporate events and subject to certain exceptions, as described in the Indentures, holders of the Notes may require us to repurchase all or a portion of their notes at a price equal to 100% of the principal amount to be repurchased, plus any accrued and unpaid interest to date. The 2026 Notes are also redeemable at our option if certain conditions are met, as described in the Indenture governing the 2026 Notes.
As of June 30, 2024, no holders of the 2027 and 2026 Notes have exercised the conversion rights, and the if-converted value of the 2027 and 2026 Notes did not exceed the principal amount.
Convertible Note Repurchase
During the first quarter of 2024, the Company repurchased in privately negotiated transactions and extinguished a portion of the 2026 Notes, with a total principal balance of $480 million. The aggregate
repurchase price for these notes was $415 million, resulting in pre-tax gains of $61.4 million, net of the write-off of unamortized issuance costs. The gain was included in Interest income and other income (expense), net, in the condensed consolidated statement of operations.
Capped Call Transactions
To reduce the potential dilutive effect of the 2026 Notes, in connection with their pricing, we entered into the Capped Call Transactions at a net cost of $48.1 million, with call options totaling approximately 5.6 million of our common shares, and with expiration dates ranging from September 18, 2026 to November 12, 2026. The strike price is $308.72, and the cap price is initially $343.02 per share, subject to adjustments in certain circumstances. The Capped Call Transactions are freestanding and are considered separately exercisable from the 2026 Notes. As of June 30, 2024, the Capped Call Transactions met the conditions for equity classification and were not in the money.
v3.24.2.u1
Commitments and Contingencies
 6 Months Ended
Jun. 30, 2024
Commitments and Contingencies Disclosure [Abstract]  
Commitments and Contingencies Commitments and Contingencies
The following table summarizes our non-cancelable contractual commitments as of June 30, 2024 (in thousands):
Total
Remainder of 2024
2025‑2026
2027‑2028
Thereafter
Operating leases (1)
$148,332 $21,494 $65,856 $40,223 $20,759 
Purchase commitments (2)
611,190 148,449 433,317 29,424 — 
Convertible note principal and interest (3)
2,315,232 10,000 1,285,232 1,020,000 — 
Total$3,074,754 $179,943 $1,784,405 $1,089,647 $20,759 
(1)    Operating leases consist of obligations for real estate, including leases that are not yet commenced.
(2)    The substantial majority of our purchase commitments are related to agreements with our data center hosting providers.
(3)    Convertible notes due 2026 and 2027. See Note 6, "Borrowings," above for further discussion.
We expect to meet our remaining commitments.
Legal Matters
In the normal course of business, we are subject to various legal matters. We accrue a liability when management believes that it is both probable that a liability has been incurred and the amount of loss can be reasonably estimated. We also disclose material contingencies when we believe a loss is not probable but reasonably possible. Legal costs related to such potential losses are expensed as incurred. In addition, recoveries are shown as a reduction in legal costs in the period in which they are realized. With respect to our outstanding matters, based on our current knowledge, we believe that the resolution of such matters will not, either individually or in aggregate, have a material adverse effect on our business or our condensed consolidated financial statements. However, litigation is inherently uncertain, and the outcome of these matters cannot be predicted with certainty. Accordingly, cash flows or results of operations could be materially affected in any particular period by the resolution of one or more of these matters.
Indemnifications
In the ordinary course of business, we may provide indemnifications of varying scope and terms to customers, vendors, lessors, investors, directors, officers, employees and other parties with respect to certain matters. Indemnification may include losses from our breach of such agreements, services we provide, or third-party intellectual property infringement claims. These indemnifications may survive termination of the underlying agreement and the maximum potential amount of future indemnification payments may not be subject to a cap. As of June 30, 2024, there were no known events or circumstances that have resulted in a material indemnification liability to us and we did not incur material costs to defend lawsuits or settle claims related to these indemnifications.
Letters of Credit
We had $13.8 million and $13.9 million of secured letters of credit outstanding as of June 30, 2024 and December 31, 2023, respectively. These primarily relate to our office space leases and are fully collateralized by certificates of deposit which we record in restricted cash as other assets on our condensed consolidated balance sheets.
v3.24.2.u1
Stock-Based Compensation
 6 Months Ended
Jun. 30, 2024
Share-Based Payment Arrangement [Abstract]  
Stock-Based Compensation Stock‑Based Compensation
Stock-based compensation expense is as follows (in thousands):
Three Months Ended June 30,Six Months Ended June 30,
2024202320242023
Cost of revenue$7,911 $19,801 $24,717 $38,650 
Research and development56,908 71,058 144,646 147,541 
Sales and marketing22,282 34,680 86,253 70,197 
General and administrative28,298 31,999 125,660 64,178 
Total stock-based compensation expense$115,399 $157,538 $381,276 $320,566 
Included in the above expenses for the three and six months ended June 30, 2024, is $3 million and $97 million, respectively, of incremental stock-based compensation expense from modifications, primarily within general and administrative. These amounts predominately relate to the modification of awards held by the founders of ironSource Ltd. that departed in the first quarter of 2024.
Stock Options
A summary of our stock option, including price-vested options ("PVO"), activity is as follows:
Options Outstanding
Stock
Options
Outstanding		Weighted-Average
Exercise
Price		Weighted-Average
Remaining
Contractual
Term
(In Years)
Balance as of December 31, 202331,541,466 $19.35 4.79
Granted2,119,253 $22.50 
Exercised(3,865,467)$6.04 
Forfeited, cancelled, or expired(1,345,771)$52.00 
Balance as of June 30, 202428,449,481 $19.85 4.31
The calculated grant-date fair value of stock options and PVOs granted, were estimated using the Black-Scholes option-pricing model and a Monte Carlo stimulation, respectively, with the following assumptions:
Three Months Ended June 30,Six Months Ended June 30,
2024202320242023
Expected dividend yield————
Risk-free interest rate
4.3% - 4.7%
3.8%
4.1% - 4.7%
3.8% - 4.2%
Expected volatility
60.0% - 66.5%
56.3%
60.0% - 66.5%
54.7% - 56.3%
Expected term (in years)
6.25 - 10.00
6.25
6.25 - 10.00
6.25
Fair value of underlying common stock
$17.95 - $24.27
$35.84
$17.95 - $26.89
$29.33 - $35.84
Restricted Stock Units
A summary of our restricted stock unit ("RSU"), including price-vested unit ("PVU"), activity is as follows:
Unvested RSUs
Number of
Shares		Weighted-Average
Grant-Date
Fair Value
Unvested as of December 31, 202337,332,551 $38.31 
Granted3,996,991 $25.55 
Vested(6,161,752)$43.62 
Forfeited(6,924,178)$41.80 
Unvested as of June 30, 202428,243,612 $34.49 
Price-Vested Units and Price-Vested Options
The vesting for each of the PVOs and PVUs is subject to the fulfillment of both a service period that extends up to four years and the achievement of a stock price hurdle during the relevant performance period that extends up to six and seven years, respectively. The fair value of each PVO and PVU award is estimated using a Monte Carlo simulation that uses assumptions determined on the date of grant. During the three and six months ended June 30, 2024, the stock price hurdles were not met.
Employee Stock Purchase Plan
The fair value of shares offered under our Employee Stock Purchase Plan ("ESPP") was determined on the grant date using the Black-Scholes option pricing model. The following table summarizes the assumptions used and the resulting grant-date fair values of our ESPP:
Six Months Ended June 30,
20242023
Expected dividend yield——
Risk-free interest rate5.3%5.2%
Expected volatility56.0%94.5%
Expected term (in years)0.500.50
Grant-date fair value per share$9.11$12.44
Additional information related to the ESPP is provided below (in thousands, except per share amounts):
Six Months Ended June 30,
20242023
Shares issued under the ESPP551,146532,643
Weighted-average price per share issued$24.92$25.87
v3.24.2.u1
Income Taxes
 6 Months Ended
Jun. 30, 2024
Income Tax Disclosure [Abstract]  
Income Taxes Income Taxes
Our tax provision for interim periods is determined using an estimated annual effective tax rate, adjusted for discrete items arising in that quarter. In each quarter, we update the estimated annual effective tax rate and make a year-to-date adjustment to the provision. The estimated annual effective tax rate is subject to volatility due to several factors, including variability in accurately predicting our pre-tax income or loss and the mix of jurisdictions to which they relate, intercompany transactions, changes in how we do business, and tax law developments.
Our effective tax rate for the three and six months ended June 30, 2024 differs from the U.S. federal statutory tax rate of 21% primarily due to the need to record a valuation allowance on U.S. losses and to a lesser extent tax expense on foreign earnings taxed at different rates. In addition, during the first quarter of 2024, we recorded a tax benefit on foreign losses in connection with employee separation costs and we continued to restructure our tax operations which resulted in a reduction to our U.S. valuation allowance. Our effective tax rate for the three and six months ended June 30, 2023 differed from the U.S. federal statutory tax rate of 21% primarily due to the need to record a valuation allowance in the U.S. on losses and to a lesser extent, tax expense on foreign earnings taxed at different rates. In addition, the Company undertook certain tax restructuring efforts that enhanced our ability to offset deferred tax liabilities in the U.S. in future periods, thereby partially reducing the need for a valuation allowance.
The realization of deferred tax assets is dependent upon the generation of sufficient taxable income of the appropriate character in future periods. We regularly assess the ability to realize our deferred tax assets and establish a valuation allowance if it is more-likely-than-not that some portion of the deferred tax assets will not be realized. In performing this assessment with respect to each jurisdiction, we review all available positive and negative evidence. Primarily due to our history of losses, we believe that it is more likely than not that the deferred tax assets of our U.S. federal, certain U.S. states, Denmark, U.K., and other non-U.S. jurisdictions will not be realized and we have maintained a full valuation allowance against such deferred tax assets.
As of June 30, 2024, we had $185.9 million of gross unrecognized tax benefits, of which $30.7 million would impact the effective tax rate, if recognized. It is reasonably possible that the amount of unrecognized tax benefits as of June 30, 2024 could increase or decrease significantly as the timing of the resolution, settlement, and closure of audits is highly uncertain. We believe that we have adequately provided for any reasonably foreseeable outcome related to our tax audits and that any settlement will not have a material impact on our financial condition and operating results at this time.
v3.24.2.u1
Net Loss per Share of Common Stock
 6 Months Ended
Jun. 30, 2024
Earnings Per Share [Abstract]  
Net Loss per Share of Common Stock Net Loss per Share of Common Stock
Basic and diluted net loss per share is the same for all periods presented because the effects of potentially dilutive items were antidilutive given our net loss in each period.
The following table presents potentially dilutive common stock excluded from the computation of diluted net loss per share (in thousands) because the impact of including them would have been antidilutive:
As of June 30,
20242023
Convertible notes24,488 26,042 
Stock options and PVOs28,449 32,342 
Unvested RSUs and PVUs28,244 32,165 
v3.24.2.u1
Pay vs Performance Disclosure - USD ($)
$ in Thousands
 3 Months Ended 6 Months Ended
Jun. 30, 2024
Jun. 30, 2023
Jun. 30, 2024
Jun. 30, 2023
Pay vs Performance Disclosure        
Net Income (Loss) $ (125,574) $ (192,160) $ (416,648) $ (445,191)
v3.24.2.u1
Insider Trading Arrangements
 3 Months Ended
Jun. 30, 2024
shares
Trading Arrangements, by Individual  
Material Terms of Trading Arrangement
The adoption or termination of contracts, instructions or written plans for the purchase or sale of our securities by our directors and officers (as defined in Rule 16a-1(f) under the Exchange Act) during the three months ended June 30, 2024, each of which is intended to satisfy the affirmative defense conditions of Rule 10b5-1(c) under the Exchange Act, were as follows:
NameTitleActionDate AdoptedExpiration DateAggregate # of Securities to be Purchased/Sold
Carol Carpenter (1)
Senior Vice President, Chief Marketing Officer (2)
AdoptedMay 24, 2024August 1, 202525,000
Marc Whitten (1)
Chief Technology Officer, Create (3)
AdoptedMay 28, 2024December 31, 2024
264,570 (4)
(1)     Each of Ms. Carpenter's and Mr. Whitten's plans provides for the potential sale of our common stock currently held in account and future vesting events. The plans expire on the respective dates shown above, or upon the earlier completion of all authorized transactions under the plans.
(2)    Carol Carpenter resigned as our Senior Vice President and Chief Marketing Officer, effective as of June 30, 2024, and will serve as a Strategic Marketing Advisor and assist with the transition of her responsibilities until she departs from the Company, effective December 1, 2024.
(3)    Marc Whitten resigned as our Chief Product and Technology Officer, Create, effective as of June 1, 2024, and served as a Strategic Advisor until he resigned from that role on July 9, 2024.
(4)    Represents the maximum number of shares subject to the trading plan, only a portion of which would have been sold as the trading plan was designed to sell the net shares following the sell to cover of taxes for each vesting event for all remaining awards under his plan until December 31, 2024.
Non-Rule 10b5-1 Arrangement Adopted false
Rule 10b5-1 Arrangement Terminated false
Non-Rule 10b5-1 Arrangement Terminated false
Carol Carpenter [Member]  
Trading Arrangements, by Individual  
Name Carol Carpenter
Title Senior Vice President, Chief Marketing Officer
Rule 10b5-1 Arrangement Adopted true
Adoption Date May 24, 2024
Expiration Date August 1, 2025
Arrangement Duration 434 days
Aggregate Available 25,000
Marc Whitten [Member]  
Trading Arrangements, by Individual  
Name Marc Whitten
Title Chief Technology Officer, Create
Rule 10b5-1 Arrangement Adopted true
Adoption Date May 28, 2024
Expiration Date December 31, 2024
Arrangement Duration 217 days
Aggregate Available 264,570
v3.24.2.u1
Accounting Policies (Policies)
 6 Months Ended
Jun. 30, 2024
Accounting Policies [Abstract]  
Basis of Presentation
Basis of Presentation and Consolidation
We prepared the accompanying unaudited condensed consolidated financial statements in accordance with United States ("U.S.") generally accepted accounting principles ("GAAP") and applicable rules and regulations of the Securities and Exchange Commission ("SEC") for interim financial reporting.
Consolidation The condensed consolidated financial statements include the accounts of Unity Software Inc., its wholly owned subsidiaries, and entities consolidated under the voting interest model. 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 periods presented are not necessarily indicative of the results to be expected for the full year or other periods. The unaudited condensed consolidated financial statements should be read in conjunction with the audited consolidated financial statements and notes included in our 2023 Annual Report on Form 10-K.
Use of Estimates
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. Actual results could differ from those estimates, and such differences could be material to our financial position and results of operations.
Accounts Receivable, Net
Accounts Receivable, Net
Accounts receivable are recorded at the original invoiced amount, net of allowances for uncollectible amounts. We estimate losses on uncollectible amounts based on expected losses, including our historical experience of actual losses.
Sales Commissions and Contract Balances and Remaining Performance Obligations
Sales Commissions
Sales commissions that have a benefit beyond one year are capitalized and amortized on a straight-line method over the expected period of benefit, which is generally three years.Contract assets (unbilled receivables), primarily included in accounts receivable, net, are recorded when revenue is earned in advance of customer billing schedules.Contract liabilities (deferred revenue) relate to payments received in advance of performance under the contract.Additionally, we have performance obligations associated with commitments in customer contracts to perform in the future that had not yet been recognized in our consolidated financial statements. For contracts with original terms that exceed one year, those commitments not yet recognized as of June 30, 2024, were $352 million and relate primarily to Create Solutions subscriptions, Enterprise Support, and Strategic Partnerships.
Cash, Cash Equivalents, and Restricted Cash
Cash, Cash Equivalents, and Restricted Cash
Cash, cash equivalents, and restricted cash are recorded at fair value. Fair value is defined as the price that would be received to sell an asset or paid to transfer a liability in an orderly transaction between market participants at the measurement date. To increase the comparability of fair value measures, the following hierarchy prioritizes the inputs to valuation methodologies used to measure fair value:
•Level 1—Valuations based on quoted prices in active markets for identical assets or liabilities.
•Level 2—Valuations based on 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.
•Level 3—Valuations based on unobservable inputs reflecting our own assumptions used to measure assets and liabilities at fair value. These valuations require significant judgment.
v3.24.2.u1
Revenue (Tables)
 6 Months Ended
Jun. 30, 2024
Revenue from Contract with Customer [Abstract]  
Schedule of Revenue Disaggregated by Source
The following table presents our revenue disaggregated by source, which also have similar economic characteristics (in thousands):
Three Months Ended June 30,Six Months Ended June 30,
2024202320242023
Create Solutions$150,777 $193,110 $314,447 $380,479 
Grow Solutions298,482 340,368 595,192 653,360 
Total revenue$449,259 $533,478 $909,639 $1,033,839 
Schedule of Revenue Disaggregated by Geography
The following table presents our revenue disaggregated by geography, based on the invoice address of our customers (in thousands):
Three Months Ended June 30,Six Months Ended June 30,
2024202320242023
United States$130,843 $141,905 $269,962 $274,899 
Greater China (1)
62,063 69,750 121,753 129,298 
EMEA (2)
164,064 188,219 330,834 374,943 
APAC (3)
81,119 119,107 165,155 226,635 
Other Americas (4)
11,170 14,497 21,935 28,064 
Total revenue$449,259 $533,478 $909,639 $1,033,839 
(1)    Greater China includes China, Hong Kong, and Taiwan.
(2)    Europe, the Middle East, and Africa ("EMEA")
(3)    Asia-Pacific, excluding Greater China ("APAC")
(4)    Canada and Latin America ("Other Americas")
v3.24.2.u1
Financial Instruments (Tables)
 6 Months Ended
Jun. 30, 2024
Investments, Debt and Equity Securities [Abstract]  
Schedule of Cash, Cash Equivalents, and Restricted Cash Measured at Fair Value on a Recurring Basis
The following table summarizes, by major security type, our cash, cash equivalents, and restricted cash that are measured at fair value on a recurring basis and are categorized using the fair value hierarchy (in thousands):
June 30, 2024December 31, 2023
Fair Value (1)
Cash$978,584 $834,877 
Level 1:
Restricted cash and cash equivalents:
Restricted cash$13,840 $13,942 
Money market funds93,976 502,754 
Time deposits195,397 252,694 
Total restricted cash and cash equivalents$303,213 $769,390 
Total cash, cash equivalents, and restricted cash$1,281,797 $1,604,267 
(1)    Due to the highly liquid nature of our investments, amortized cost approximates fair value.
v3.24.2.u1
Investment in Unity China (Tables)
 6 Months Ended
Jun. 30, 2024
Noncontrolling Interest [Abstract]  
Schedule of Changes in Redeemable Noncontrolling Interests
The following table presents the changes in redeemable noncontrolling interests (in thousands):
Three Months Ended June 30,Six Months Ended June 30,
2024202320242023
Balance at beginning of period$224,736 $225,376 $225,797 $219,563 
Net loss attributable to redeemable noncontrolling interests(153)(1,086)(529)(1,712)
Accretion for redeemable noncontrolling interests2,867 3,676 5,942 6,374 
Foreign currency translation and foreign exchange adjustments for redeemable noncontrolling interests(1,394)(12,217)(5,154)(8,476)
Balance at end of period$226,056 $215,749 $226,056 $215,749 
v3.24.2.u1
Leases (Tables)
 6 Months Ended
Jun. 30, 2024
Leases [Abstract]  
Schedule of Components of Lease Expense
Components of lease expense were as follows (in thousands):
Three Months Ended June 30,Six Months Ended June 30,
2024202320242023
Operating lease expense$10,579 $10,375 $20,832 $19,768 
Variable lease expense1,497 1,164 3,218 2,442 
Sublease income(552)(440)(796)(824)
Total lease expense$11,524 $11,099 $23,254 $21,386 
Schedule of Supplemental Balance Sheet Information Related to Leases
Supplemental balance sheet information related to leases was as follows (in thousands, except weighted-average figures):
As of
ClassificationJune 30, 2024December 31, 2023
Operating lease assetsOther assets$90,444 $113,256 
Current operating lease liabilitiesAccrued expenses and other$36,065 $39,132 
Long-term operating lease liabilitiesOther long-term liabilities90,885 111,669 
Total operating lease liabilities$126,950 $150,801 
Schedule of Lease Liabilities
As of June 30, 2024, our lease liabilities were as follows (in thousands):
Operating Leases
Gross lease liabilities$143,358 
Less: imputed interest16,408 
Present value of lease liabilities$126,950 
v3.24.2.u1
Borrowings (Tables)
 6 Months Ended
Jun. 30, 2024
Debt Disclosure [Abstract]  
Schedule of Principal and Unamortized Debt Issuance Costs and Other Material Features of Notes The table below summarizes the principal and unamortized debt issuance costs and other material features of the Notes (in thousands):
Carrying Amount as of
Conversion Rate per
$1,000 Principal
Conversion Price
MaturitiesStated Interest RatesJune 30, 2024December 31, 2023
Convertible notes:
Principal – 2026 Notes
3.2392 $308.72 20260.0%$1,245,232 $1,725,000 
Principal – 2027 Notes
20.4526 $48.89 20272.0%1,000,000 1,000,000 
Unamortized debt issuance costs, net(7,987)(13,250)
Net carrying amount$2,237,245 $2,711,750 
v3.24.2.u1
Commitments and Contingencies (Tables)
 6 Months Ended
Jun. 30, 2024
Commitments and Contingencies Disclosure [Abstract]  
Schedule of Non-Cancelable Contractual Commitments
The following table summarizes our non-cancelable contractual commitments as of June 30, 2024 (in thousands):
Total
Remainder of 2024
2025‑2026
2027‑2028
Thereafter
Operating leases (1)
$148,332 $21,494 $65,856 $40,223 $20,759 
Purchase commitments (2)
611,190 148,449 433,317 29,424 — 
Convertible note principal and interest (3)
2,315,232 10,000 1,285,232 1,020,000 — 
Total$3,074,754 $179,943 $1,784,405 $1,089,647 $20,759 
(1)    Operating leases consist of obligations for real estate, including leases that are not yet commenced.
(2)    The substantial majority of our purchase commitments are related to agreements with our data center hosting providers.
(3)    Convertible notes due 2026 and 2027. See Note 6, "Borrowings," above for further discussion.
v3.24.2.u1
Stock-Based Compensation (Tables)
 6 Months Ended
Jun. 30, 2024
Share-Based Payment Arrangement [Abstract]  
Schedule of Stock-Based Compensation Expense
Stock-based compensation expense is as follows (in thousands):
Three Months Ended June 30,Six Months Ended June 30,
2024202320242023
Cost of revenue$7,911 $19,801 $24,717 $38,650 
Research and development56,908 71,058 144,646 147,541 
Sales and marketing22,282 34,680 86,253 70,197 
General and administrative28,298 31,999 125,660 64,178 
Total stock-based compensation expense$115,399 $157,538 $381,276 $320,566 
Schedule of Stock Option Activity
A summary of our stock option, including price-vested options ("PVO"), activity is as follows:
Options Outstanding
Stock
Options
Outstanding		Weighted-Average
Exercise
Price		Weighted-Average
Remaining
Contractual
Term
(In Years)
Balance as of December 31, 202331,541,466 $19.35 4.79
Granted2,119,253 $22.50 
Exercised(3,865,467)$6.04 
Forfeited, cancelled, or expired(1,345,771)$52.00 
Balance as of June 30, 202428,449,481 $19.85 4.31
Schedule of Grant-Date Fair Value of Stock Options Granted
The calculated grant-date fair value of stock options and PVOs granted, were estimated using the Black-Scholes option-pricing model and a Monte Carlo stimulation, respectively, with the following assumptions:
Three Months Ended June 30,Six Months Ended June 30,
2024202320242023
Expected dividend yield————
Risk-free interest rate
4.3% - 4.7%
3.8%
4.1% - 4.7%
3.8% - 4.2%
Expected volatility
60.0% - 66.5%
56.3%
60.0% - 66.5%
54.7% - 56.3%
Expected term (in years)
6.25 - 10.00
6.25
6.25 - 10.00
6.25
Fair value of underlying common stock
$17.95 - $24.27
$35.84
$17.95 - $26.89
$29.33 - $35.84
Schedule of Restricted Stock Unit Activity
A summary of our restricted stock unit ("RSU"), including price-vested unit ("PVU"), activity is as follows:
Unvested RSUs
Number of
Shares		Weighted-Average
Grant-Date
Fair Value
Unvested as of December 31, 202337,332,551 $38.31 
Granted3,996,991 $25.55 
Vested(6,161,752)$43.62 
Forfeited(6,924,178)$41.80 
Unvested as of June 30, 202428,243,612 $34.49 
Schedule of Grant-Date Fair Values of ESPP The following table summarizes the assumptions used and the resulting grant-date fair values of our ESPP:
Six Months Ended June 30,
20242023
Expected dividend yield——
Risk-free interest rate5.3%5.2%
Expected volatility56.0%94.5%
Expected term (in years)0.500.50
Grant-date fair value per share$9.11$12.44
Schedule of Additional Information Related to ESPP
Additional information related to the ESPP is provided below (in thousands, except per share amounts):
Six Months Ended June 30,
20242023
Shares issued under the ESPP551,146532,643
Weighted-average price per share issued$24.92$25.87
v3.24.2.u1
Net Loss per Share of Common Stock (Tables)
 6 Months Ended
Jun. 30, 2024
Earnings Per Share [Abstract]  
Schedule of Antidilutive Securities Excluded from Computation of Diluted Net Loss Per Share
The following table presents potentially dilutive common stock excluded from the computation of diluted net loss per share (in thousands) because the impact of including them would have been antidilutive:
As of June 30,
20242023
Convertible notes24,488 26,042 
Stock options and PVOs28,449 32,342 
Unvested RSUs and PVUs28,244 32,165 
v3.24.2.u1
Accounting Policies (Details) - USD ($)
$ in Millions
 1 Months Ended 6 Months Ended
Jan. 31, 2024
Jun. 30, 2024
Restructuring Cost and Reserve [Line Items]    
Percentage of reduction in workforce 25.00%  
Cost of revenue    
Restructuring Cost and Reserve [Line Items]    
Employee separation costs   $ 15
Research and development    
Restructuring Cost and Reserve [Line Items]    
Employee separation costs   44
Sales and marketing    
Restructuring Cost and Reserve [Line Items]    
Employee separation costs   52
General and administrative    
Restructuring Cost and Reserve [Line Items]    
Employee separation costs   90
Employee Severance    
Restructuring Cost and Reserve [Line Items]    
Employee separation costs   201
Stock-Based Compensation    
Restructuring Cost and Reserve [Line Items]    
Employee separation costs   128
Facility Closing    
Restructuring Cost and Reserve [Line Items]    
Restructuring costs   $ 38
v3.24.2.u1
Revenue - Schedule of Revenue Disaggregated by Source (Details) - USD ($)
$ in Thousands
 3 Months Ended 6 Months Ended
Jun. 30, 2024
Jun. 30, 2023
Jun. 30, 2024
Jun. 30, 2023
Disaggregation of Revenue [Line Items]        
Revenue $ 449,259 $ 533,478 $ 909,639 $ 1,033,839
Create Solutions        
Disaggregation of Revenue [Line Items]        
Revenue 150,777 193,110 314,447 380,479
Grow Solutions        
Disaggregation of Revenue [Line Items]        
Revenue $ 298,482 $ 340,368 $ 595,192 $ 653,360
v3.24.2.u1
Revenue - Schedule of Revenue Disaggregated by Geography (Details) - USD ($)
$ in Thousands
 3 Months Ended 6 Months Ended
Jun. 30, 2024
Jun. 30, 2023
Jun. 30, 2024
Jun. 30, 2023
Disaggregation of Revenue [Line Items]        
Revenue $ 449,259 $ 533,478 $ 909,639 $ 1,033,839
United States        
Disaggregation of Revenue [Line Items]        
Revenue 130,843 141,905 269,962 274,899
Greater China        
Disaggregation of Revenue [Line Items]        
Revenue 62,063 69,750 121,753 129,298
EMEA        
Disaggregation of Revenue [Line Items]        
Revenue 164,064 188,219 330,834 374,943
APAC        
Disaggregation of Revenue [Line Items]        
Revenue 81,119 119,107 165,155 226,635
Other Americas        
Disaggregation of Revenue [Line Items]        
Revenue $ 11,170 $ 14,497 $ 21,935 $ 28,064
v3.24.2.u1
Revenue - Accounts Receivable, Net (Narrative) (Details) - USD ($)
$ in Millions
 6 Months Ended
Jun. 30, 2024
Jun. 30, 2023
Dec. 31, 2023
Revenue from Contract with Customer [Abstract]      
Accounts receivable, allowances $ 19.3   $ 16.9
Provision for uncollectible amounts $ 5.3 $ 7.8  
v3.24.2.u1
Revenue - Sales Commissions (Narrative) (Details) - USD ($)
$ in Millions
 3 Months Ended 6 Months Ended
Jun. 30, 2024
Jun. 30, 2023
Jun. 30, 2024
Jun. 30, 2023
Dec. 31, 2023
Disaggregation of Revenue [Line Items]          
Capitalized contract cost, amortization period 3 years   3 years    
Capitalized contract cost, amortization $ 2.3 $ 2.5 $ 4.7 $ 5.0  
Prepaid Expenses and Other Current Assets          
Disaggregation of Revenue [Line Items]          
Capitalized contract costs 6.5   6.5   $ 6.8
Other Assets          
Disaggregation of Revenue [Line Items]          
Capitalized contract costs $ 5.2   $ 5.2   $ 4.8
v3.24.2.u1
Revenue - Contract Balances (Narrative) (Details) - USD ($)
$ in Millions
 6 Months Ended
Jun. 30, 2024
Dec. 31, 2023
Capitalized Contract Cost [Line Items]    
Unbilled receivables $ 22.3 $ 31.3
Revenue recognized 124.7  
Other Noncurrent Assets    
Capitalized Contract Cost [Line Items]    
Unbilled receivables $ 8.3  
v3.24.2.u1
Revenue - Remaining Performance Obligations (Narrative) (Details)
$ in Millions
 6 Months Ended
Jun. 30, 2024
USD ($)
Disaggregation of Revenue [Line Items]  
Revenue, remaining performance obligation, amount $ 352
Revenue, Remaining Performance Obligation, Expected Timing of Satisfaction, Start Date [Axis]: 2024-07-01  
Disaggregation of Revenue [Line Items]  
Revenue, remaining performance obligation, amount $ 203
Revenue, remaining performance obligation, percentage 58.00%
Recognition period 12 months
Minimum  
Disaggregation of Revenue [Line Items]  
Commitment term 1 year
Maximum  
Disaggregation of Revenue [Line Items]  
Commitment term 5 years
v3.24.2.u1
Financial Instruments - Schedule of Cash, Cash Equivalents, and Restricted Cash Measured at Fair Value on a Recurring Basis (Details) - USD ($)
$ in Thousands
Jun. 30, 2024
Dec. 31, 2023
Jun. 30, 2023
Dec. 31, 2022
Debt Securities, Available-for-sale [Line Items]        
Cash $ 978,584 $ 834,877    
Restricted cash and cash equivalents:        
Total cash, cash equivalents, and restricted cash 1,281,797 1,604,267 $ 1,654,884 $ 1,505,688
Level 1:        
Restricted cash and cash equivalents:        
Restricted cash 13,840 13,942    
Total restricted cash and cash equivalents 303,213 769,390    
Level 1: | Money market funds        
Restricted cash and cash equivalents:        
Cash equivalents 93,976 502,754    
Level 1: | Time deposits        
Restricted cash and cash equivalents:        
Cash equivalents $ 195,397 $ 252,694    
v3.24.2.u1
Financial Instruments - Narrative (Details) - USD ($)
$ in Millions
 6 Months Ended
Jun. 30, 2024
Dec. 31, 2023
Debt Securities, Available-for-sale [Line Items]    
Equity investments $ 33.6 $ 33.6
Maximum    
Debt Securities, Available-for-sale [Line Items]    
Ownership interest less than 20.00%  
v3.24.2.u1
Investment in Unity China - Narrative (Details)
Jun. 30, 2024
Third Party Investors | Unity China  
Noncontrolling Interest [Line Items]  
Noncontrolling interest, percentage sold 20.50%
v3.24.2.u1
Investment in Unity China - Schedule of Changes in Redeemable Noncontrolling Interests (Details) - USD ($)
$ in Thousands
 3 Months Ended 6 Months Ended
Jun. 30, 2024
Jun. 30, 2023
Jun. 30, 2024
Jun. 30, 2023
Increase (Decrease) in Temporary Equity [Roll Forward]        
Balance at beginning of period $ 224,736 $ 225,376 $ 225,797 $ 219,563
Net loss attributable to redeemable noncontrolling interests (153) (1,086) (529) (1,712)
Accretion for redeemable noncontrolling interests 2,867 3,676 5,942 6,374
Foreign currency translation and foreign exchange adjustments for redeemable noncontrolling interests (1,394) (12,217) (5,154) (8,476)
Balance at end of period $ 226,056 $ 215,749 $ 226,056 $ 215,749
v3.24.2.u1
Leases - Narrative (Details) - USD ($)
$ in Millions
 3 Months Ended 6 Months Ended
Jun. 30, 2024
Jun. 30, 2024
Dec. 31, 2023
Lessee, Lease, Description [Line Items]      
Operating lease, weighted average remaining lease term 4 years 8 months 12 days 4 years 8 months 12 days 5 years 1 month 6 days
Operating lease, weighted average discount rate, percent 5.30% 5.30% 5.20%
Operating lease, impairment loss $ 8.6 $ 12.2  
Lease not yet commenced future payment $ 5.0 $ 5.0  
Lessee, operating lease, lease not yet commenced, term 3 years 3 years  
Maximum      
Lessee, Lease, Description [Line Items]      
Operating lease term (up to) 9 years 9 years  
v3.24.2.u1
Leases - Schedule of Components of Lease Expense (Details) - USD ($)
$ in Thousands
 3 Months Ended 6 Months Ended
Jun. 30, 2024
Jun. 30, 2023
Jun. 30, 2024
Jun. 30, 2023
Leases [Abstract]        
Operating lease expense $ 10,579 $ 10,375 $ 20,832 $ 19,768
Variable lease expense 1,497 1,164 3,218 2,442
Sublease income (552) (440) (796) (824)
Total lease expense $ 11,524 $ 11,099 $ 23,254 $ 21,386
v3.24.2.u1
Leases - Schedule of Supplemental Balance Sheet Information Related to Leases (Details) - USD ($)
$ in Thousands
Jun. 30, 2024
Dec. 31, 2023
Leases [Abstract]    
Operating Lease, Right-of-Use Asset, Statement of Financial Position [Extensible Enumeration] Other assets Other assets
Operating lease assets $ 90,444 $ 113,256
Operating Lease, Liability, Current, Statement of Financial Position [Extensible Enumeration] Accrued expenses and other Accrued expenses and other
Current operating lease liabilities $ 36,065 $ 39,132
Operating Lease, Liability, Noncurrent, Statement of Financial Position [Extensible Enumeration] Other long-term liabilities Other long-term liabilities
Long-term operating lease liabilities $ 90,885 $ 111,669
Total operating lease liabilities $ 126,950 $ 150,801
v3.24.2.u1
Leases - Schedule of Lease Liabilities (Details) - USD ($)
$ in Thousands
Jun. 30, 2024
Dec. 31, 2023
Leases [Abstract]    
Gross lease liabilities $ 143,358  
Less: imputed interest 16,408  
Present value of lease liabilities $ 126,950 $ 150,801
v3.24.2.u1
Borrowings - Convertible Notes (Narrative) (Details) - USD ($)
$ in Millions
 1 Months Ended 3 Months Ended 6 Months Ended
Nov. 30, 2022
Jun. 30, 2024
Jun. 30, 2023
Jun. 30, 2024
Jun. 30, 2023
Dec. 31, 2023
Principal – 2026 Notes            
Debt Instrument [Line Items]            
Debt face amount   $ 1,200.0   $ 1,200.0    
Convertible Debt            
Debt Instrument [Line Items]            
Debt face amount   2,200.0   2,200.0    
Convertible Debt | 2026 and 2027 Notes            
Debt Instrument [Line Items]            
Interest expense related to amortization of debt   5.8 $ 1.1 11.9 $ 2.2  
Convertible Debt | Principal – 2026 Notes            
Debt Instrument [Line Items]            
Debt instrument, fair value   1,100.0   1,100.0   $ 1,400.0
Convertible Debt | Principal – 2027 Notes            
Debt Instrument [Line Items]            
Debt face amount   1,000.0   1,000.0    
Debt instrument, fair value   $ 1,000.0   $ 1,000.0   $ 1,300.0
Redemption price percentage 100.00%          
v3.24.2.u1
Borrowings - Schedule of Principal and Unamortized Debt Issuance Costs and Other Material Features of Notes (Details)
$ / shares in Units, $ in Thousands
 6 Months Ended
Jun. 30, 2024
USD ($)
$ / shares
Dec. 31, 2023
USD ($)
Debt Instrument [Line Items]    
Net carrying amount $ 2,237,245 $ 2,711,750
2026 and 2027 Notes | Convertible Debt    
Debt Instrument [Line Items]    
Unamortized debt issuance costs, net (7,987) (13,250)
Net carrying amount $ 2,237,245 2,711,750
Principal – 2026 Notes | Convertible Debt    
Debt Instrument [Line Items]    
Conversion ratio 0.0032392  
Conversion price (USD per share) | $ / shares $ 308.72  
Stated Interest Rates 0.00%  
Principal $ 1,245,232 1,725,000
Principal – 2027 Notes | Convertible Debt    
Debt Instrument [Line Items]    
Conversion ratio 0.0204526  
Conversion price (USD per share) | $ / shares $ 48.89  
Stated Interest Rates 2.00%  
Principal $ 1,000,000 $ 1,000,000
v3.24.2.u1
Borrowings - Convertible Note Repurchase (Narrative) (Details) - USD ($)
$ in Thousands
 3 Months Ended 6 Months Ended
Mar. 31, 2024
Jun. 30, 2024
Jun. 30, 2023
Debt Instrument [Line Items]      
Pre-tax gains   $ 61,371 $ 0
Principal – 2026 Notes | Convertible Debt      
Debt Instrument [Line Items]      
Repurchased principal amount $ 480,000    
Aggregate repurchase price 415,000    
Pre-tax gains $ 61,400    
v3.24.2.u1
Borrowings - Capped Call Transactions (Narrative) (Details) - Principal – 2026 Notes
$ / shares in Units, shares in Millions, $ in Millions
 1 Months Ended
Nov. 30, 2021
USD ($)
$ / shares
shares
Debt Instrument [Line Items]  
Net cost incurred | $ $ 48.1
Number of common shares (in shares) | shares 5.6
Strike price (USD per share) $ 308.72
Cap price (USD per share) $ 343.02
v3.24.2.u1
Commitments and Contingencies - Schedule of Non-Cancelable Contractual Commitments (Details)
$ in Thousands
Jun. 30, 2024
USD ($)
Operating leases  
Total $ 148,332
Remainder of 2024 21,494
2025‑2026 65,856
2027‑2028 40,223
Thereafter 20,759
Purchase commitments  
Total 611,190
Remainder of 2024 148,449
2025‑2026 433,317
2027‑2028 29,424
Thereafter 0
Convertible note principal and interest  
Total 2,315,232
Remainder of 2024 10,000
2025‑2026 1,285,232
2027‑2028 1,020,000
Thereafter 0
Total  
Total 3,074,754
Remainder of 2024 179,943
2025‑2026 1,784,405
2027‑2028 1,089,647
Thereafter $ 20,759
v3.24.2.u1
Commitments and Contingencies - Narrative (Details) - USD ($)
$ in Millions
Jun. 30, 2024
Dec. 31, 2023
Letter of Credit    
Long-term Purchase Commitment [Line Items]    
Letter of credit outstanding $ 13.8 $ 13.9
v3.24.2.u1
Stock-Based Compensation - Schedule of Stock-Based Compensation Expense (Details) - USD ($)
$ in Thousands
 3 Months Ended 6 Months Ended
Jun. 30, 2024
Jun. 30, 2023
Jun. 30, 2024
Jun. 30, 2023
Share-based Payment Arrangement, Expensed and Capitalized, Amount [Line Items]        
Total stock-based compensation expense $ 115,399 $ 157,538 $ 381,276 $ 320,566
Cost of revenue        
Share-based Payment Arrangement, Expensed and Capitalized, Amount [Line Items]        
Total stock-based compensation expense 7,911 19,801 24,717 38,650
Research and development        
Share-based Payment Arrangement, Expensed and Capitalized, Amount [Line Items]        
Total stock-based compensation expense 56,908 71,058 144,646 147,541
Sales and marketing        
Share-based Payment Arrangement, Expensed and Capitalized, Amount [Line Items]        
Total stock-based compensation expense 22,282 34,680 86,253 70,197
General and administrative        
Share-based Payment Arrangement, Expensed and Capitalized, Amount [Line Items]        
Total stock-based compensation expense $ 28,298 $ 31,999 $ 125,660 $ 64,178
v3.24.2.u1
Stock-Based Compensation - Narrative (Details) - USD ($)
$ in Millions
 1 Months Ended 3 Months Ended 6 Months Ended
May 31, 2024
Oct. 31, 2022
Jun. 30, 2024
Jun. 30, 2024
Share-based Payment Arrangement, Expensed and Capitalized, Amount [Line Items]        
Incremental stock expense     $ 3 $ 97
Price-Vested Options        
Share-based Payment Arrangement, Expensed and Capitalized, Amount [Line Items]        
Award requisite service period   4 years    
Award performance period 6 years      
Price-Vested Units        
Share-based Payment Arrangement, Expensed and Capitalized, Amount [Line Items]        
Award requisite service period   4 years    
Award performance period   7 years    
v3.24.2.u1
Stock-Based Compensation - Schedule of Stock Option Activity (Details) - $ / shares
 6 Months Ended 12 Months Ended
Jun. 30, 2024
Dec. 31, 2023
Stock Options Outstanding    
Beginning balance (in shares) 31,541,466  
Granted (in shares) 2,119,253  
Exercised (in shares) (3,865,467)  
Forfeited, cancelled, or expired (in shares) (1,345,771)  
Ending balance (in shares) 28,449,481 31,541,466
Weighted-Average Exercise Price    
Beginning balance (USD per share) $ 19.35  
Granted (USD per share) 22.50  
Exercised (USD per share) 6.04  
Forfeited, cancelled, or expired (USD per share) 52.00  
Ending balance (USD per share) $ 19.85 $ 19.35
Weighted-Average Remaining Contractual Term (In Years)    
Options outstanding, Weighted average remaining contractual term 4 years 3 months 21 days 4 years 9 months 14 days
v3.24.2.u1
Stock-Based Compensation - Schedule of Grant-Date Fair Value of Stock Options Granted (Details) - Stock options and PVOs - $ / shares
 3 Months Ended 6 Months Ended
Jun. 30, 2024
Jun. 30, 2023
Jun. 30, 2024
Jun. 30, 2023
Share-based Payment Arrangement, Expensed and Capitalized, Amount [Line Items]        
Expected dividend yield 0.00% 0.00% 0.00% 0.00%
Risk-free interest rate minimum 4.30%   4.10% 3.80%
Risk-free interest rate maximum 4.70%   4.70% 4.20%
Risk-free interest rate   3.80%    
Expected volatility minimum 60.00%   60.00% 54.70%
Expected volatility maximum 66.50%   66.50% 56.30%
Expected volatility   56.30%    
Expected term (in years)   6 years 3 months   6 years 3 months
Fair value of underlying common stock (USD per share)   $ 35.84    
Minimum        
Share-based Payment Arrangement, Expensed and Capitalized, Amount [Line Items]        
Expected term (in years) 6 years 3 months   6 years 3 months  
Fair value of underlying common stock (USD per share) $ 17.95   $ 17.95 $ 29.33
Maximum        
Share-based Payment Arrangement, Expensed and Capitalized, Amount [Line Items]        
Expected term (in years) 10 years   10 years  
Fair value of underlying common stock (USD per share) $ 24.27   $ 26.89 $ 35.84
v3.24.2.u1
Stock-Based Compensation - Schedule of Restricted Stock Unit Activity (Details) - Unvested RSUs and PVUs
 6 Months Ended
Jun. 30, 2024
$ / shares
shares
Number of Shares  
Unvested at beginning of period (in shares) | shares 37,332,551
Granted (in shares) | shares 3,996,991
Vested (in shares) | shares (6,161,752)
Forfeited (in shares) | shares (6,924,178)
Unvested at end of period (in shares) | shares 28,243,612
Weighted-Average Grant-Date Fair Value  
Unvested at beginning of period (USD per share) | $ / shares $ 38.31
Granted (USD per share) | $ / shares 25.55
Vested (USD per share) | $ / shares 43.62
Forfeited (USD per share) | $ / shares 41.80
Unvested at end of period (USD per share) | $ / shares $ 34.49
v3.24.2.u1
Stock-Based Compensation - Schedule of Grant-Date Fair Values of ESPP (Details) - Employee Stock Purchase Plan - $ / shares
 6 Months Ended
Jun. 30, 2024
Jun. 30, 2023
Share-based Compensation Arrangement by Share-based Payment Award [Line Items]    
Expected dividend yield 0.00% 0.00%
Risk-free interest rate 5.30% 5.20%
Expected volatility 56.00% 94.50%
Expected term (in years) 6 months 6 months
Grant-date fair value per share (USD per share) $ 9.11 $ 12.44
v3.24.2.u1
Stock-Based Compensation - Schedule of Additional Information Related to ESPP (Details) - Employee Stock Purchase Plan - $ / shares
 6 Months Ended
Jun. 30, 2024
Jun. 30, 2023
Share-based Compensation Arrangement by Share-based Payment Award [Line Items]    
Shares issued under the ESPP (in shares) 551,146 532,643
Weighted-average price per share issued (USD per share) $ 24.92 $ 25.87
v3.24.2.u1
Income Taxes (Details)
$ in Millions
Jun. 30, 2024
USD ($)
Income Tax Disclosure [Abstract]  
Unrecognized tax benefits $ 185.9
Unrecognized tax benefits that would impact effective tax rate $ 30.7
v3.24.2.u1
Net Loss per Share of Common Stock (Details) - shares
shares in Thousands
 6 Months Ended
Jun. 30, 2024
Jun. 30, 2023
Convertible notes    
Antidilutive Securities Excluded from Computation of Earnings Per Share [Line Items]    
Antidilutive securities excluded from computation of earnings per share (in shares) 24,488 26,042
Stock options and PVOs    
Antidilutive Securities Excluded from Computation of Earnings Per Share [Line Items]    
Antidilutive securities excluded from computation of earnings per share (in shares) 28,449 32,342
Unvested RSUs and PVUs    
Antidilutive Securities Excluded from Computation of Earnings Per Share [Line Items]    
Antidilutive securities excluded from computation of earnings per share (in shares) 28,244 32,165