Highlights
- Engine maker Unity is expecting more layoffs as it chases profitability, with its fourth round of job cuts in 17 months being mentioned in its Q3 2023 report.
- Unity's recent CEO change prompted a comprehensive assessment of its products and services, which is "likely" to result in more layoffs, product discontinuations, and office closures.
- The cost-cutting efforts continue despite the fact that Unity experienced a 69% revenue growth while halving its net losses in Q3 2023.
More Unity employees are set to lose their jobs in the near future as the company continues to seek ways to stabilize its business. The last round of layoffs to hit Unity happened in May, when the engine maker laid off 600 people and halved the number of its global offices to 30.
Prior to that, Unity laid off nearly 300 employees in January, with its then-CEO John Riccitiello citing worrying "economic conditions" as one of the main reasons for that move. The company previously laid off approximately 200 staffers in June 2022.
Unity Changes How Fees Work After Backlash
Unity decides to go back on the controversial changes proposed to its licensing model after strong backlash from several developers.
The fourth round of layoffs at the company in 17 months was mentioned in Unity's Q3 2023 report. Reflecting on the new developments in its business, the engine maker noted how its recent CEO shift prompted it to begin a "comprehensive assessment" of its products and services aimed at making better use of its resources. That ongoing review is expected to result in more cost-cutting efforts, including layoffs, product discontinuations, and additional office closures. The extent of those cutbacks has yet to be determined, same as their exact timing, the report reads.
Unity Software Q3 2023 Financials
Q3 2023 | Q3 2022 | Change | |
|---|---|---|---|
Create Solutions | $118.9m | $189.2m | -0.14% |
Grow Solutions | $355.3m | $133.7m | +166% |
Total Revenue | $544.2m | $322.9m | +69% |
Net Income | -$125.3m | -$250m | -50% |
Following the last three rounds of layoffs, Unity was left with approximately 7,000 employees across the globe. Its recent workforce cutbacks were partially motivated by a company-wide need to cut costs in order to improve its deeply red bottom line. For context, Unity has yet to post a profit since going public in 2020. The company lost another $125 million in Q3 2023, though that figure was only half the size of its third-quarter losses in the previous year. An even more promising indicator found in its latest report concerns its overall revenue, which surpassed $544 million over the three-month period ending September 30, a 69% annual improvement.
In the fourth quarter of 2023, we underwent a CEO change and began a comprehensive assessment of our product portfolio to focus on those offerings that are most valuable to our customers, which are the core aspects of our Create and Grow Solutions. This assessment will likely lead us to decide to discontinue certain offerings, reduce our workforce and reduce our office footprint.
The leadership change preceding the company's ongoing portfolio assessment that's expected to result in more layoffs happened in October, when Unity CEO John Riccitiello stepped down following a pricing controversy. Specifically, the tech giant attempted to introduce an engine runtime fee that would have required developers to pay between $0.005 and $0.20 for each Unity-powered game download.
The move prompted widespread developer backlash, with many studios threatening to drop the engine altogether. Apart from public criticism, hundreds of game developers resorted to boycotting Unity's advertising network in protest of the fees. The company eventually scraped the plan to retroactively impose the controversial pricing structure on older versions of Unity. The runtime fee will still be attached to future versions of the engine starting in January 2024.
