Unity Software has joined the ranks of private companies that have filed to come public via an initial public offering. The San Francisco-based company claims to be the world’s leading platform for creating and operating interactive and real-time 3D content.
The company has chosen the typical filing amount of up to $100 million in common stock, although these are generally nominal amounts that can be higher or lower by the time the final paperwork is submitted and IPO terms are set. Unity Software plans to trade under the stock ticker U on the New York Stock Exchange.
The IPO filing indicated that Credit Suisse and Goldman Sachs are the lead underwriters. Other underwriters listed: Barclays, BofA Securities, Oppenheimer, Piper Sandler, Stifel Nicolaus, Wedbush Securities and William Blair. Two additional firms listed were Academy Securities and Siebert Williams Shank.
Unity’s IPO filing indicated that it has 1.5 million monthly active creators using its platform and that it is used in over 50% of mobile games, PC games and console games combined. Based on 2019 data, the company’s own estimate is that some 53% of the top 1,000 mobile games from the Apple App Store and Google Play and over 50% of such mobile games, PC games and console games combined were made with Unity.
Content built on the Unity platform offers end-users a fundamentally more engaging and immersive experience than traditional static content. Content made with Unity is interactive, allowing end-users to connect with the content and with one another. Content made with Unity is real-time, allowing it to adapt instantly to end-user behavior and feedback. Content made with Unity allows graphics to be expressed with 3D shape and depth, permitting multiple viewing angles, and enabling augmented and virtual reality.
Unity Software is also looking to grow its market share. The company’s filing indicated that it sees a total addressable market opportunity of approximately $29 billion after combining gaming and other industries. Unity’s revenue grew from $380.8 million in 2018 to $541.8 million in 2019. For the first six months of 2020, the $351.3 million in revenues compared to $252.8 million for the first six months of 2019.
The company has generated net losses to date. For the fiscal years 2018 and 2019, and for the six-month periods of 2019 and 2020, those losses were as follows: $131.6 million (FY/18), $163.2 million (FY/19), $67.1 million (H1/2019) and $54.1 million (H1/20), respectively. Those losses included stock-based compensation expenses.
Monday’s IPO filing included some key shareholders that have put up capital behind the company. Entities affiliated with Sequoia Capital had a 24.1% stake, followed by entities of Silver Lake Partners with an 18.2% stake and J.A. Technologies with an 8.2% stake.
Unity’s filing indicated that its use of proceeds are to increase our capitalization and financial flexibility, and also to create a public market for its common stock. It listed the “for general corporate purposes” and that included working capital, operating expenses and capital expenditures. One additional item was that Unity intends to use a portion of the IPO proceeds to repay an outstanding $125 million of debt under its credit facility.
The filing noted that that debt was borrowed to provide liquidity “in case of any material impact on the financial markets related to COVID-19,” but the filing also specified that the company has not used those to date. An additional inclusion was made for acquisitions or strategic investments.
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