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Unity's Peak Revenue Era Not a Panacea for Layoffs

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By Erika John - - 5 Mins Read
A smartphone screen displaying the Unity company logo
Unity | Shutterstock

Unity announces layoffs as a means to cut down costs despite an overall successful year.

The company will limit offerings, cut jobs, and downsize offices, per Q3 2023 report.


In the recent release of financial results for the three months ending September 30, 2023, Unity has revealed positive and negative updates, which amazed its developers.


Despite a 69% increase in revenue, reaching $544 million compared to the previous year, the company announced layoffs as part of a comprehensive product portfolio assessment.


Unity's revenue growth aside, the company's net loss decreased to $125 million from $250 million in the same period last year.


Moreover, the company's Q3 2023 report explained that assessing its product portfolio would lead to discontinuing specific offerings, reducing the workforce, and minimizing its office space.


Thus, as a result, Unity could not provide any guidance for Q4 or the full year 2023, as the full impact of these changes remains uncertain.


During the earnings call following the release of the Q3 results, Unity's CFO, Luis Visoso, confirmed that decisions would be made during this quarter to finalize the restructuring plans by Q4 2023.


Meanwhile, the company views these changes as necessary for future growth and describes them as a "rip off the band-aid reset."


Looking closer at the revenue breakdown, Unity's Create Solutions division, responsible for its engine, experienced a 19% increase in core subscriptions during Q3, but revenue remained flat compared to the previous year.


Unity logo on an office building in Vilnius, Lithuania
Unity office complex, Vilnius, Lithuania | Shutterstock


Meanwhile, the report attributed negative impacts on growth to Unity Game Services (UGS), China, and professional services.


UGS had a record third quarter last year due to new game launches, but this year's revenue declined due to ongoing government restrictions on gaming. Unity also aims to reduce reliance on professional services, which sounds terrible to its users.


Meanwhile, on the other hand, Unity's Grow Solutions vertical, which includes its ad products and services, saw a remarkable 166% year-on-year increase in revenue, reaching $355 million.


This growth occurred despite backlash after announcing a proposed runtime fee in September.


The company believes it is gaining market share and expects the impact of the runtime fee introduction to diminish.


In a letter to shareholders, interim CEO James Whitehurst, who took over after the unimpressive resignation of John Riccitiello, acknowledged that Unity was previously attempting to do too much.


To ensure future growth, he expressed plans to focus on core areas, including Unity Editor and Runtime, Monetization Solutions, and utilising AI, which is a good idea.


Moreover, Unity intends to concentrate on more extensive and advantageous businesses with a clear competitive advantage, such as Digital Twins.


Unity's Q3 earnings report highlights the implementation of layoffs as part of broader cost-saving measures.


However, the company aims to streamline its product portfolio and adjust its cost structure to align with its more focused approach. Thus, these changes are expected to be completed by the end of Q1 2024.



Despite announcing layoffs, Unity's revenue experienced significant growth in Q3 2023.


Meanwhile, Unity remains focused on strategic restructuring and refining its product offerings to achieve a leaner and more prosperous future.