Unity Software IPO: What Investors Need To Know

This week’s hot IPO market will continue on Friday with the largest platform for creating video games going public.

The Filing: Unity Software U is planning on selling 25 million shares. The company will trade on the NYSE with symbol U.

The company had originally planned a pricing range of $34 to $42. After the successful IPO pricings of Snowflake Inc SNOW and JFrog Ltd FROG, Unity priced its IPO at $52 per share, valuing the company at just under $14 billion.

Rival Epic Games was recently valued at $17.2 billion in a funding round that included an investment from Sony Corporation SNE. Epic Games is owned by the world’s largest gaming company, Tencent Holdings TCEHY.

About Unity Software: Unity Software is the world’s leading platform for creating and operating interactive, real-time 3D content. Over 50% of mobile games, PC games, and console games are made with Unity. The company has 1.5 million monthly active creators.

Industries using Unity Software’s platform include video games, artists, architectures, automotive designers, and filmmakers.

Unity Software estimates 53% of the top 1,000 mobile games were made with Unity: “Unity’s platform helps game developers build and operate high quality games, rapidly and efficiently."

Growing Market Size: Unity Software has listed its estimated market size at $29 billion across gaming and other industries. The gaming market has grown from $15 billion in revenue 20 years ago to $140 billion annually, according to the filing.

The create solutions segment of gaming is estimated to grow from $12 billion in 2019 to $16 billion in 2025. Unity believes its industries beyond gaming represent a market size of $17 billion.

“Looking to the future, we believe there are large opportunities within and beyond the industries and use cases we currently serve that represent a market potential multiple times larger than our opportunity today,” the filing reads.

Growth Plans: Unity is “investing aggressively to strengthen our global leadership in gaming” according to the filing. The company has listed the following as its key growth strategies going forward:

• Investing in product innovation for growth
• Growth within existing gaming customers
• Growth in new gaming customers
• Growth in industries and use cases beyond gaming
• Continued growth across all major global markets

Financials: Unity Software had revenue of $541.8 million in 2019, growing 42% year over year. Six-month revenue in 2020 was $351.3 million, growth of 39% year over year. The company reported a net loss of $163.2 million in 2019. The net loss in the first six months of 2020 shrank from $61 million to $52 million.

Epic Games had revenue of $4.2 billion in 2019.