[Unity 2Q25] 10배냐 ,0.1배냐... AI에 달렸도다

TLDR;

This video discusses Unity's recent earnings announcement, focusing on the impact of their AI-driven Vector model and their strategic moves in the Chinese market. The second quarter performance exceeded expectations, driven by Vector's growth in the advertising sector and the successful launch of Unity 6. However, future guidance was somewhat disappointing, leading to a mixed market reaction. The discussion also touches on Unity's partnerships, the competitive landscape in the advertising industry, and the importance of Unity leveraging its unique position with its game engine and developer ecosystem.

• Unity's Q2 performance beat expectations, driven by Vector and Unity 6.
• Vector shows promise in ad solutions, but specific data is lacking.
• China is a key growth market for Unity.
• Unity's unique position with its game engine gives it a competitive edge.

Introduction: Unity's Stock Performance and the Vector Model [0:00]

The video starts by noting Unity's significant stock price increase over the past year, which has doubled. This rise is attributed to a Morgan Stanley report highlighting the improved performance of Unity ads due to the Vector model, which has increased installs and purchases by 15-20%. The Vector model is seen as a crucial catalyst for Unity's future, especially after facing challenges from changes in Apple's advertising policies and subsequent executive replacements. Vector's early release in the previous quarter has made it a central focus of Unity's performance analysis.

Q2 2024 Performance: Exceeding Expectations [1:52]

Unity's second-quarter performance was strong, initially causing an 8% stock increase upon the earnings announcement. The company exceeded its guidance, reporting approximately $441 million in revenue against a guidance of $415-425 million. Evita also surpassed expectations at $90 million, compared to the guided $70-75 million. Create Solutions generated $154 million, while Grow Solutions reached $287 million. Excluding non-strategic factors, year-over-year growth was 16%. Vector is integrated into Grow Solutions, specifically within Unity's advertising network, contributing to a 15% quarter-over-quarter growth in Unity's advertising sector.

Grow and Create Solutions: Vector's Impact and Industrial Sector Growth [3:52]

Advertising now accounts for 49% of Grow Solutions' sales, driven by Vector. While Vector-driven advertising is growing, other advertising products are experiencing a slight decrease of -4% year-over-year. The industrial sector within Create Solutions has shown consistent growth for ten consecutive years, albeit slower than initially expected.

Guidance and Future Expectations: Vector's Continued Growth [4:41]

Unity's guidance for the next quarter remains relatively flat, with revenue projected between $440 to $450 million. Grow Solutions experienced a -4% year-over-year decrease this quarter, but Vector's influence is expected to drive growth in the coming months. The company anticipates mid-single-digit growth, with Vector playing a significant role. All efforts are focused on Vector, potentially overshadowing other products. From the third quarter onward, Vector's AI capabilities will expand towards Vector B, and the Unity Ad Network, which currently accounts for half of Grow's revenue, is expected to increase its proportion as Vector grows.

Vector's Performance and Unity 6: Key Highlights [7:00]

Vector has shown a 15-20% increase in both the quantity and quality of new users. Unity 6 has seen a successful transition with over 6.6 million downloads, marking a 50% increase quarter-over-quarter. Positive reviews of Unity 6 have also been noted in the Morgan Stanley report.

Strategic Partnerships: Tencent and Nintendo [8:43]

Unity has partnered with Tencent and the creators of Monopoly Blue Marble to develop games, providing engine design and advertising support. Additionally, they announced a partnership with Nintendo, leveraging Unity's engine for game development on Nintendo platforms.

China's Market Growth and Future Expectations [9:31]

The Chinese gaming industry has shown a 14% quarter-over-quarter growth, positively impacting the stock prices of Tencent and Alibaba. This growth suggests potential for Unity in the next quarter. There is optimism that Vector's success could lead to raised guidance in the future.

Q&A Analysis: Vector's Future and Growth Drivers [10:38]

The Q&A session highlighted the potential for Vector to improve further through continuous learning and expansion into Create and Vector B. Grow Solutions is expected to achieve mid-single-digit growth, with Vector contributing significantly. China is identified as a crucial growth area, with Unity focusing on crate development and Grow Solutions expansion in the region.

Advertising Market Dynamics: Cannibalization and Value Creation [13:26]

Unity asserts that its advertising growth is not cannibalizing Iron Source's market share, emphasizing that the advertising market is not a zero-sum game. Effective advertising increases the overall marketing budget and benefits all parties involved. The key is providing value to advertisers through AI-driven targeting.

Investor Perspective: Confidence and Future Potential [15:09]

While Vector shows promise, the lack of specific data raises concerns. The successful transition to Unity 6 is a positive sign. Vector is still in its early stages, with significant data utilization starting in July. The direction of Unity's performance is positive, but more concrete evidence is needed to instill confidence.

Competitive Landscape: Meta, Embin, and Unity's Unique Position [17:15]

In the advertising sector, Meta and Embin have performed well, while others like Makt Tre Tradedesk and Snap have struggled. Unity's unique advantage lies in its game engine and developer ecosystem, allowing for more effective in-game advertising. If Unity can prove that its in-game advertising targeting is superior, it can shift the focus from market share to value creation.

Final Thoughts: Ambiguity and Long-Term Potential [20:20]

Unity needs to better utilize its engine and partnerships to drive growth. The earnings announcement was somewhat ambiguous, but the overall direction is positive. Long-term investors should hold and wait for more data in the next quarter. The key is whether Unity can demonstrate superior targeting and effectiveness in its advertising solutions.