Unity Software Inc.

John Riccatello, President, Chief Executive Officer and Executive Chairman, and Kim Jabal, Senior Vice President and Chief Financial Officer. Now, one of our goals on this call is to help investors understand our business model, and we're going to try to do this in an efficient manner. So, after the close, we published a shareholder letter with financial commentary and guidance. And on this call, we will begin with brief remarks from John. Then we will answer questions that we collected and consolidated from analysts, investors, and investors. And finally, time permitting, we'll have the last 10 minutes or so for panelists to ask additional questions. So let's go on to the safe harbor statement. And I'd like to remind participants that during this conference call, we will be making forward-looking statements, including our financial outlook for the first quarter and full year ahead. of fiscal 2021, as well as statements about goals, business outlook, expectations for future financial performance, and similar items, all of which are subject to risks, uncertainties, and assumptions. Now, you can find more information about these risks and uncertainties in the risk factors section of our filings with the SEC at sec.gov. And we remind everyone that our actual results may differ and we undertake no obligation to revise or update any forward-looking statements. We will also be discussing non-GAAP financial measures today, reconciliations between our GAAP and non-GAAP financial results and discussion of the limitations of our non-GAAP financial measures can be found in our earnings press release. With that, let me turn it over to John for some introductory remarks.

Thank you, Richard, and thanks for joining us today and for your ongoing support. Today, we're happy to share our fourth quarter and full year 2020 results. I hope you've had the chance to read our shareholder letter where we provided highlights for the quarter and the year as well as our 2021 guidance. Now, we hope that you and your family and friends are safe and healthy in these challenging times. Our team at Unity, more than 4,000 strong, extends these well wishes to our customers, partners, and the end users of the products built with Unity and operated by Unity. Now, we believe we're in the early phases of a once-in-a-generation technology transition. In this case, a world in which the majority of digital content is two-dimensional and moving to real-time 3D. Those of you who have followed history of technology understand that revolutions don't happen again. You need change agents. For real-time 3D, we're seeing a virtuous cycle of software and hardware innovation change agents. For example, faster GPUs, 5G bandwidth, 4K displays, and new XR devices are making real-time 3D from any endpoint a reality. At Unity, our software development platform and services is the change that lets creators build engaging real-time 3D applications and environments. And we're privileged to lead in this new world and are investing to realize the massive opportunity we see in our future. We just reported a strong Q4 with revenues of $220 million, up 39% to prior year. In 2020 revs, 772, up 43%. versus 2019. These strong results were a result of a combination of strong execution and the great work of our team delivering innovation across the board for our customers. And we also recognize that we benefited from some COVID-related tailwinds and estimate this contributed a net of around $25 million to our total revenues in 2020. In our shareholder letter, we included some statistics that speak to the growth of our ecosystem. including Unity's market share among the top 1,000 games, the number of monthly downloads of apps built with Unity, and the number of monthly active users that engage with content built with or operated by Unity. All of these metrics hit record levels, with our market share of the top 1,000 in 58 countries reaching 71%. Downloads averaged 5 billion times per month in Q4, and MAUs reached an average of 2.7 billion per month in Q4 2020. These record results don't directly translate to revenue in many cases, but they're indicative of the strength of our franchise and the ecosystem we support. We're thankful that our amazing customers are realizing great success in the marketplace. Now at Unity, good metrics and outcomes come from one source, innovation. At Unity, we expand the boundaries of innovation. In 2020, we delivered hundreds of improvements to our core Create platform, and our iCreate team helped studios optimize for lifetime customer value with new services like Game Growth. We upgraded and introduced applications for our customers beyond gaming. For example, in December, We highlighted Volkswagen's innovative use of our vertical application Forma to build an engaging virtual e-commerce showroom. We're laying the foundation for a future in which most of the world's content will, in time, be real-time 3D. Today, we're also providing our guidance for 2021. We're projecting revenues of $950 million to $970 million for the year. This guidance takes into account multiple factors. I'd like to reference three. One, underlying revenue growth of 30% plus, which is our long-term goal. Two, the recognition that 2020 had somewhat elevated revenue due to COVID tailwinds. And three, the recognition that we estimate a one-time hit in 2021 of approximately $30 million in revenues, or just over 3%, as advertisers become accustomed to the new IDFA approach being implemented by Apple. We look forward to a strong 2021 knowing that none of this would be possible without the incredible, dedicated, and innovative employees at Unity. It's an honor for me to be part of this world-class team. And with that, I will turn this over to the operator and Kim and Richard, and we will take questions.

Great. Thanks very much. Well, you know, why don't we start with a question on IDFA. Kim, do you want to get us started on that one? And the question was, just so you know, because what we did is collected all these questions. Specifically, do we have any update on the expected timing around IDFA, ILS 14 changes? If you've changed, what impact do we see on our businesses, and is that factored into our guidance?