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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 September 30, 2021
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 November 3, 2021, there were 286,010,592 shares of the registrant’s common stock outstanding.



UNITY SOFTWARE INC.
FORM 10‑Q
For the Quarter Ended September 30, 2021
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 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, including the proposed acquisition of Weta Digital;
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 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,” and “Unity” 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 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.
Our business depends on our ability to retain our existing customers and expand their use of our platform.
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.
We expect fluctuations in our financial results, 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.
Adverse changes in the geopolitical relationship between the United States and China or changes in China's economic and regulatory landscape could have an adverse effect on business conditions.
Concentration of ownership of our common stock among our existing executive officers, directors, and principal stockholders may prevent new investors from influencing significant corporate decisions.
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
September 30, 2021December 31, 2020
Assets
Current assets:
Cash and cash equivalents$755,429 $1,272,578 
Marketable securities524,969 479,406 
Accounts receivable, net of allowances of $4,936 and $2,714 as of September 30, 2021 and December 31, 2020, respectively
301,035 274,255 
Prepaid expenses31,158 32,025 
Other current assets24,379 22,396 
Total current assets1,636,970 2,080,660 
Property and equipment, net98,688 95,544 
Operating lease right‑of‑use assets104,762 103,609 
Goodwill638,868 286,251 
Intangible assets, net131,927 57,459 
Restricted cash10,823 21,369 
Other assets56,239 26,333 
Total assets$2,678,277 $2,671,225 
Liabilities and stockholders’ equity
Current liabilities:
Accounts payable$10,587 $11,303 
Accrued expenses and other current liabilities133,656 106,306 
Publisher payables198,686 182,269 
Income and other taxes payable81,334 64,116 
Deferred revenue129,294 113,853 
Operating lease liabilities25,405 25,375 
Total current liabilities578,962 503,222 
Long-term deferred revenue18,614 20,523 
Long-term operating lease liabilities96,967 98,532 
Other long-term liabilities16,632 11,805 
Total liabilities711,175 634,082 
Commitments and contingencies (Note 11)
Stockholders’ equity:
Preferred stock, $0.000005 par value; 100,000 shares authorized, and no shares issued and outstanding as of September 30, 2021; 100,000 shares authorized, no shares issued and outstanding as of December 31, 2020
  
Common stock, $0.000005 par value; 1,000,000 and 1,000,000 shares authorized as of September 30, 2021 and December 31, 2020, respectively; 285,711 and 273,537 shares issued and outstanding as of September 30, 2021 and December 31, 2020, respectively
2 2 
Additional paid-in capital3,140,485 2,838,057 
Accumulated other comprehensive loss(3,411)(3,418)
Accumulated deficit(1,169,974)(797,498)
Total stockholders’ equity1,967,102 2,037,143 
Total liabilities and stockholders’ equity$2,678,277 $2,671,225 
See accompanying Notes to Condensed Consolidated Financial Statements.


Unity Software Inc.
UNITY SOFTWARE INC.
CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS
(In thousands, except per share amounts)
(Unaudited)
Three Months EndedNine Months Ended
September 30,September 30,
2021202020212020
Revenue$286,328 $200,784 $794,662 $552,109 
Cost of revenue63,517 47,540 179,976 119,840 
Gross profit222,811 153,244 614,686 432,269 
Operating expenses
Research and development178,413 116,648 486,644 283,507 
Sales and marketing97,425 60,764 242,106 147,739 
General and administrative73,723 117,515 272,772 194,988 
Total operating expenses349,561 294,927 1,001,522 626,234 
Loss from operations(126,750)(141,683)(386,836)(193,965)
Interest expense (615)(600)(1,403)
Interest income and other expense, net(64)(2,023)1,571 (829)
Loss before provision for income taxes(126,814)(144,321)(385,865)(196,197)
Provision for (benefit from) income taxes(11,662)398 (14,911)2,609 
Net loss(115,152)(144,719)(370,954)(198,806)
Basic and diluted net loss per share:
Net loss per share attributable to our common stockholders, basic and diluted$(0.41)$(0.97)$(1.32)$(1.47)
Weighted-average shares used in per share calculation attributable to our common stockholders, basic and diluted283,714 149,256 280,080 135,671 
See accompanying Notes to Condensed Consolidated Financial Statements.
2


Unity Software Inc.
UNITY SOFTWARE INC.
CONDENSED CONSOLIDATED STATEMENTS OF COMPREHENSIVE LOSS
(In thousands)
(Unaudited)
Three Months EndedNine Months Ended
September 30,September 30,
2021202020212020
Net loss$(115,152)$(144,719)$(370,954)$(198,806)
Other comprehensive loss, net of taxes:
Change in foreign currency translation adjustment(9)209 41 132 
Change in unrealized losses on marketable securities72  (34) 
Other comprehensive loss63 209 7 132 
Comprehensive loss$(115,089)$(144,510)$(370,947)$(198,674)
See accompanying Notes to Condensed Consolidated Financial Statements.
3


Unity Software Inc.
UNITY SOFTWARE INC.
CONDENSED CONSOLIDATED STATEMENTS OF STOCKHOLDERS’ EQUITY
(In thousands, except share data)
(Unaudited)
Three Months Ended September 30, 2021
Accumulated
AdditionalOtherTotal
Convertible Preferred StockCommon StockPaid-InComprehensiveAccumulatedStockholders’
SharesAmountSharesAmountCapitalLossDeficitEquity
Balance at June 30, 2021 $ 282,177,044 $2 $3,028,077 $(3,474)$(1,054,822)$1,969,783 
Issuance of common stock from exercise of stock options— — 2,764,097 — 15,091 — — 15,091 
Issuance of common stock for settlement of RSUs— — 770,143 — — — —  
Stock‑based compensation expense— — — — 97,317 — — 97,317 
Net loss— — — — — — (115,152)(115,152)
Foreign currency translation adjustment— — — — — (9)— (9)
Unrealized loss on investments— — — — — 72 — 72 
Balance at September 30, 2021 $ 285,711,284 $2 $3,140,485 $(3,411)$(1,169,974)$1,967,102 
Three Months Ended September 30, 2020
Accumulated
AdditionalOtherTotal
Convertible Preferred StockCommon StockPaid-InComprehensiveAccumulatedStockholders’
SharesAmountSharesAmountCapitalLossDeficitEquity
Balance at June 30, 2020102,717,396 $836,529 135,649,337 $1 $383,871 $(3,709)$(569,277)$647,415 
Issuance of common stock in connection with initial public offering, net of underwriting discounts and commissions and offering costs— — 28,750,000 — 1,417,582 — — 1,417,582 
Issuance of common stock in connection with charitable donation— — 750,000 — 63,615 — — 63,615 
Issuance of common stock from exercise of stock options— — 3,027,896 — 11,980 — — 11,980 
Common stock issued in connection with acquisitions— — 72,479 — 2,018 — — 2,018 
Conversion of convertible preferred stock to common stock upon initial public offering(102,717,396)(836,529)102,717,396 1 836,528 — —  
Stock‑based compensation expense— — — — 61,806 — — 61,806 
Net loss— — — — — — (144,719)(144,719)
Foreign currency translation adjustment— — — — — 209 — 209 
Balance at September 30, 2020 $ 270,967,108 $2 $2,777,400 $(3,500)$(713,996)$2,059,906 
See accompanying Notes to Condensed Consolidated Financial Statements.



4


Unity Software Inc.
UNITY SOFTWARE INC.
CONDENSED CONSOLIDATED STATEMENTS OF STOCKHOLDERS’ EQUITY—CONTINUED
(In thousands, except share data)
(Unaudited)
Nine Months Ended September 30, 2021
Accumulated
AdditionalOtherTotal
Convertible Preferred StockCommon StockPaid‑InComprehensiveAccumulatedStockholders’
SharesAmountSharesAmountCapitalLossDeficitEquity
Balance at December 31, 2020 $ 273,537,218 $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 exercise of stock options— — 9,596,079 — 53,150 — — 53,150 
Issuance of common stock for settlement of RSUs— — 2,577,987 — — — —  
Stock‑based compensation expense— — — — 236,654 — — 236,654 
Stock-based compensation expense in connection with modified awards for certain employees— — — — 12,624 — — 12,624 
Net loss— — — — — — (370,954)(370,954)
Foreign currency translation adjustment— — — — — 41 — 41 
Unrealized loss on investments— — — — — (34)— (34)
Balance at September 30, 2021 $ 285,711,284 $2 $3,140,485 $(3,411)$(1,169,974)$1,967,102 
5


Unity Software Inc.
UNITY SOFTWARE INC.
CONDENSED CONSOLIDATED STATEMENTS OF STOCKHOLDERS’ EQUITY—CONTINUED
(In thousands, except share data)
(Unaudited)
Nine Months Ended September 30, 2020
Accumulated
AdditionalOtherTotal
Convertible Preferred StockCommon StockPaid-InComprehensiveAccumulatedStockholders’
SharesAmountSharesAmountCapitalLossDeficitEquity
Balance at December 31, 201995,899,214 $686,559 123,261,024 $1 $226,173 $(3,632)$(515,190)$393,911 
Issuance of common stock— — 4,545,455 — 100,000 — — 100,000 
Issuance of common stock in connection with initial public offering, net of underwriting discounts and commissions and offering costs— — 28,750,000 — 1,417,582 — — 1,417,582 
Issuance of common stock in connection with charitable donation— — 750,000 — 63,615 — — 63,615 
Issuance of common stock from exercise of stock options— — 4,188,116 — 15,916 — — 15,916 
Issuance of common stock from exercise of stock options in connection with nonrecourse promissory note— — 5,656,927 — 8,856 — — 8,856 
Common stock issued in connection with acquisitions— — 1,103,190 — 25,380 — — 25,380 
Purchase and retirement of treasury stock— — (5,000)— (110)— — (110)
Issuance of convertible Series E preferred stock, net of issuance costs6,818,182 149,970 — — — — — 149,970 
Conversion of convertible preferred stock to common stock upon initial public offering(102,717,396)(836,529)102,717,396 1 836,528 — —  
Stock‑based compensation expense— — — — 83,460 — — 83,460 
Net loss— — — — — — (198,806)(198,806)
Foreign currency translation adjustment— — — — — 132 — 132 
Balance at September 30, 2020 $ 270,967,108 $2 $2,777,400 $(3,500)$(713,996)$2,059,906 
See accompanying Notes to Condensed Consolidated Financial Statements.
6


Unity Software Inc.
UNITY SOFTWARE INC.
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
(In thousands)
(Unaudited)
Nine Months Ended September 30,
20212020
Operating activities
Net loss$(370,954)$(198,806)
Adjustments to reconcile net loss to net cash provided by (used in) operating activities:
Depreciation and amortization39,222 31,284 
Common stock charitable donation expense 63,615 
Stock-based compensation expense236,654 83,460 
Stock-based compensation expense in connection with modified awards for certain employees12,624  
Other11,004 1,518 
Changes in assets and liabilities, net of effects of acquisitions:
Accounts receivable, net(26,336)(14,718)
Prepaid expenses 963 (3,173)
Other current assets(3,771)(10,083)
Operating lease right-of-use ("ROU") assets17,826 18,258 
Deferred tax, net(26,912)1,709 
Other assets(6,536)(143)
Accounts payable(183)(4,158)
Accrued expenses and other current liabilities23,963 19,683 
Publisher payables16,417 13,479 
Income and other taxes payable15,321 (2,238)
Operating lease liabilities(20,826)(17,480)
Other long-term liabilities(191)5,347 
Deferred revenue9,775 17,594 
Net cash used in operating activities(71,940)5,148 
Investing activities
Purchase of marketable securities(295,859) 
Proceeds from principal repayments on marketable securities14,853  
Maturities of marketable securities229,800  
Purchase of non-marketable investments(4,600) 
Purchase of property and equipment(27,959)(28,956)
Acquisition of intangible assets (750)
Business acquisitions, net of cash acquired(425,198)(34,968)
Net cash used in investing activities(508,963)(64,674)
7


Unity Software Inc.
UNITY SOFTWARE INC.
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
(In thousands)
(Unaudited)
Nine Months Ended September 30,
20212020
Financing activities
Proceeds from revolving loan facility 125,000 
Payment of principal related to revolving loan facility (125,000)
Payment of debt issuance costs (247)
Proceeds from initial public offering, net of underwriting discounts, commissions, and offering costs 1,420,145 
Proceeds from issuance of convertible preferred stock, net of issuance costs 149,970 
Proceeds from issuance of common stock 100,000 
Purchase and retirement of treasury stock (110)
Proceeds from exercise of stock options53,150 15,459 
Proceeds from exercise of stock options in connection with nonrecourse promissory note 8,856 
Net cash provided by financing activities53,150 1,694,073 
Effect of foreign exchange rate changes on cash, cash equivalents, and restricted cash58 181 
Increase (decrease) in cash, cash equivalents, and restricted cash(527,695)1,634,728 
Cash and restricted cash, beginning of period1,293,947 147,096 
Cash, cash equivalents, and restricted cash, end of period$766,252 $1,781,824 
Supplemental disclosure of cash flow information:
Cash paid for interest$110 $1,307 
Cash paid for income taxes, net of refunds$6,889 $17,696 
Supplemental disclosures of non‑cash investing and financing activities:
Fair value of common stock issued as consideration for business acquisitions$ $25,144 
Fair value of common stock issued as consideration for acquisition of intangible assets$ $236 
Stock option exercises in transit$ $457 
Accrued property and equipment$7,138 $3,036 
Accrued offering costs$ $2,563 
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 September 30,
20212020
Cash and cash equivalents$755,429 $1,759,415 
Restricted cash10,823 22,409 
Total cash, cash equivalents, and restricted cash$766,252 $1,781,824 
See accompanying Notes to Condensed Consolidated Financial Statements.

8


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 the United States, Denmark, Belgium, Canada, China, Colombia, Finland, France, Germany, Ireland, Israel, Japan, Lithuania, Portugal, Singapore, South Korea, Spain, Sweden, Switzerland, and the United Kingdom ("U.K.").
We market our solutions directly through our online store and field sales operations in North America, Denmark, China, Finland, Germany, Israel, Japan, Singapore, South Korea, and Spain, 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, the information contained herein reflects all adjustments necessary for a fair presentation of our results of operations, financial position, cash flows, and stockholders’ equity. All such adjustments are of a normal, recurring nature. The results of operations for the three and nine months ended September 30, 2021 shown in this report are not necessarily indicative of the results to be expected for the full year ending December 31, 2021 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, 2020, filed with the SEC on March 5, 2021.
There have been no material changes in our significant accounting policies as described in our consolidated financial statements for the year ended December 31, 2020, 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.
9


Unity Software Inc.
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, fair value of our common stock prior to our IPO, valuation of stock-based compensation, capitalization of software costs and software implementation costs, customer life for capitalized commissions, and other contingencies, among others. Actual results could differ from those estimates, and such differences could be material to our financial position and results of operations.
2. Summary of Accounting Pronouncements
Accounting Pronouncements Recently Adopted
In June 2016, the FASB issued ASU No. 2016-13, Financial Instruments—Credit Losses (Topic 326): Measurement of Credit Losses on Financial Instruments, and subsequent amendments, which requires the measurement and recognition of expected credit losses for financial assets held at amortized cost, including trade receivables. This update replaces the existing incurred loss impairment model with an expected loss methodology, which will result in more timely recognition of credit losses. The new impairment methodology eliminates the probable initial recognition threshold and, instead, estimates the expected credit losses in consideration of past events, current conditions and forecasted information. It also eliminates the concept of other-than-temporary impairment and requires credit losses related to available-for-sale debt securities to be recorded through an allowance for credit losses rather than as a reduction in the amortized cost basis of the securities.
We adopted this new standard effective January 1, 2021, using the modified-retrospective approach, which resulted in a cumulative-effect adjustment of $1.5 million to accumulated deficit. We updated the following accounting policies as a result of the adoption of this guidance.
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 September 30, 2021, the allowance for credit losses was $4.9 million.
10


Unity Software Inc.
Marketable Securities
Our marketable securities consist of investments in U.S. treasury securities, asset-backed securities, corporate bonds, commercial paper, and supranational bonds. We classify our investments in debt securities as available-for-sale at the time of purchase. We consider all debt securities as available for use in current operations, including those with maturity dates beyond one year, and therefore classify these securities as current assets in the consolidated balance sheets. When the fair value of a security is below its amortized cost, the amortized cost will be reduced to its fair value if it is more likely than not that we are required to sell the impaired security before recovery of its amortized cost basis, or we have the intention to sell the security. If neither of these conditions is met, we determine whether the impairment is due to credit losses by comparing the present value of the expected cash flows of the security with its amortized cost basis. The amount of impairment recognized is limited to the excess of the amortized cost over the fair value of the security. An allowance for credit losses for the excess of amortized cost over the expected cash flows is recorded in interest income and other expense, net in our condensed consolidated statements of operations. Impairment losses that are not credit-related are included in accumulated other comprehensive loss in stockholders’ equity.
3. Revenue
Disaggregation of Revenue
Revenue by Source
The following table presents our revenue disaggregated by source (in thousands):
Three Months Ended September 30,Nine Months Ended September 30,
2021202020212020
Create Solutions$83,743 $62,591 $226,744 $164,378 
Operate Solutions185,021 120,023 514,515 336,904 
Strategic Partnerships and Other17,564 18,170 53,403 50,827 
Total revenue$286,328 $200,784 $794,662 $552,109 
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 Condensed Consolidated Financial Statements.
11


Unity Software Inc.
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 September 30,Nine Months Ended September 30,
2021202020212020
United States$68,668 $52,146 $188,240 $139,949 
Greater China (1)(2)
43,717 30,519 122,157 78,710 
EMEA (1)(3)
107,135 68,928 298,497 201,923 
APAC (1)(4)
57,303 39,816 156,887 105,464 
Other Americas (1)(5)
9,505 9,375 28,881 26,063 
Total revenue$286,328 $200,784 $794,662 $552,109 
(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.
Contract assets (unbilled receivables) included in accounts receivable are recorded when revenue is recognized in advance of customer invoicing. Unbilled receivables totaled $21.8 million and $26.3 million as of September 30, 2021 and December 31, 2020, respectively. Contract liabilities (deferred revenue) relate to payments received in advance of performance under the contract. Revenue recognized during the three and nine months ended September 30, 2021 that was included in the deferred revenue balances at July 1, 2021 and January 1, 2021 was $54.3 million and $96.5 million, respectively. 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 September 30, 2021, we had total remaining performance obligations of $225.6 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 three 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 $106.4 million or 47% of this revenue during the next 12 months. We expect to recognize the remaining $119.3 million or 53% of this revenue thereafter.
12


Unity Software Inc.
4. Cash Equivalents and Marketable Securities
Cash equivalents and marketable securities consisted of the following as of September 30, 2021 (in thousands):
Amortized CostUnrealized GainsUnrealized LossesFair Value
Cash equivalents:
Money market funds$35,237 $— $— $35,237 
Total cash equivalents$35,237 $— $— $35,237 
Marketable securities:
Asset-backed securities$44,922 $15 $(1)$44,936 
Corporate bonds136,854 29 (34)136,849 
U.S. treasury securities271,951 59 (14)271,996 
Supranational bonds71,222 4 (38)71,188 
Total marketable securities$524,949 $107 $(87)