What changed in this filing

/stocks — the workspaceLOADING

Item 8. Financial Statements and Supplementary Data

2025-02-21 compared with 2024-02-29 · 178 added, 174 removed, 826 unchanged (30% of the section changed)

38 unchanged sentences

This determination influences whether the software is a distinct and separate performance obligation that should be recognized at a point in time or whether the software should be combined with other promises and recognized over time.

Management has concluded that the Company’s software subscription is a single combined performance obligation because the software and software updates are highly interdependent and interrelated.

As such, the combined performance obligation is recognized over the contract term as the subscription is delivered.

Auditing the Company's determination whether the promises included in the Company’s Create Solutions subscriptions should be accounted for as distinct performance obligations or as one combined performance obligation required a significant level of auditor judgment.

How We Addressed the Matter in Our Audit We obtained an understanding, evaluated the design and tested the operating effectiveness of internal controls over the Company's determination of performance obligations.

We also obtained an understanding of the Company’s Create Solutions subscriptions and tested the application of the revenue recognition accounting model to determine distinct performance obligations.

Our audit procedures also included, among others, assessing the nature, level of integration and interdependency between the software and software updates.

We also assessed key assumptions related to the software and software updates with the Company’s product specialists and further reviewed information externally available on the Company’s Create Solutions subscriptions.

Management has concluded that the Company’s Create Solutions subscription is a single performance obligation because the software and software updates are highly interdependent and interrelated.

As such, the single performance obligation is recognized over the contract term as the subscription is delivered.

Auditing the Company's determination whether the promises included in the Company’s Create Solutions subscriptions should be accounted for as a single performance obligation required a significant level of auditor judgment.

How We Addressed the Matter in Our Audit We evaluated the design and tested the operating effectiveness of internal controls over the Company's determination that the Company’s Create Solutions subscriptions represent a single performance obligation.

Our audit procedures also included, among others, assessing the nature and frequency of the software updates and the level of integration and interdependency between the software and software updates by performing inquiries with the Company’s product specialists and further reviewing communication to the Company’s customers on its Create Solutions subscriptions.

We have also evaluated the Company’s revenue disclosures in relation to these matters.

6 unchanged sentences

CONSOLIDATED BALANCE SHEETS

(In thousands, except share data)

(In thousands, except per share data)

December 31, 2024 December 31, 2023

1 unchanged sentence

Cash and cash equivalents $ 1,517,672 $ 1,590,325

Short-term investments — 101,711

Accounts receivable, net 573,884 611,723

50 unchanged sentences

Loss before income taxes ( 667,133 ) ( 797,845 ) ( 882,425 )

Provision for Income taxes 28,477 37,063 1,377

Provision for (benefit from) Income taxes ( 2,846 ) 28,477 37,063

Net loss ( 664,287 ) ( 826,322 ) ( 919,488 )

35 unchanged sentences

Balance at December 31, 2021 292,592,356 $ 2 $ 3,729,874 $ ( 3,858 ) $ ( 1,331,627 ) $ 2,394,391 $ — $ 2,394,391

Cumulative effect of accounting change — — — — ( 1,522 ) ( 1,522 ) — ( 1,522 )

Issuance of common stock from employee equity plans 5,119,859 — 63,493 — — 63,493 — 63,493

1 unchanged sentence

Common stock issued in connection with acquisitions 112,716,696 — 2,932,228 — — 2,932,228 — 2,932,228

Purchase of capped calls — — ( 48,127 ) — — ( 48,127 ) — ( 48,127 )

Purchase and retirement of common stock ( 42,731,179 ) — ( 1,500,000 ) — — ( 1,500,000 ) — ( 1,500,000 )

Stock‑based compensation expense — — 549,671 — — 549,671 — 549,671

Capital contribution from minority interest holder — — 7,380 — — 7,380 6,387 13,767

Net loss — — — — ( 918,192 ) ( 918,192 ) ( 89 ) ( 918,281 )

Other comprehensive loss — — — ( 440 ) — ( 440 ) — ( 440 )

Adjustments to redeemable noncontrolling interest — — ( 2,870 ) — — ( 2,870 ) — ( 2,870 )

Other comprehensive income — — — 2,167 — 2,167 — 2,167

Balance at December 31, 2022 374,243,196 $ 2 $ 5,779,776 $ ( 1,691 ) $ ( 2,249,819 ) $ 3,528,268 $ 6,298 $ 3,534,566

6 unchanged sentences

Issuance of common stock for settlement of RSUs 11,944,558 — — — — — — —

Common stock issued in connection with acquisitions 112,716,696 — 2,932,228 — — 2,932,228 — 2,932,228

Purchase and retirement of common stock ( 7,558,415 ) — ( 250,000 ) — — ( 250,000 ) — ( 250,000 )

Stock‑based compensation expense — — 664,853 — — 664,853 — 664,853

Capital contribution from minority interest holder — — 7,380 — — 7,380 6,387 13,767

Net loss — — — — ( 822,011 ) ( 822,011 ) ( 294 ) ( 822,305 )

Adjustments to redeemable noncontrolling interest — — ( 11,135 ) — — ( 11,135 ) — ( 11,135 )

Other comprehensive income — — — 2,167 — 2,167 — 2,167

Other comprehensive loss — — — ( 3,318 ) — ( 3,318 ) ( 65 ) ( 3,383 )

Balance at December 31, 2023 384,871,561 $ 2 $ 6,259,479 $ ( 5,009 ) $ ( 3,071,830 ) $ 3,182,642 $ 5,939 $ 3,188,581

11 unchanged sentences

Issuance of common stock for settlement of RSUs 14,568,665 — — — — — — —

Purchase and retirement of common stock ( 7,558,415 ) — ( 250,000 ) — — ( 250,000 ) — ( 250,000 )

Stock‑based compensation expense — — 605,909 — — 605,909 — 605,909

16 unchanged sentences

Stock-based compensation expense 596,249 648,696 550,065

Gain on repayment of convertible note ( 61,371 ) — —

Impairment of property and equipment 22,791 — —

Other 23,309 24,613 21,418

15 unchanged sentences

Sales of non-marketable investments — — 1,000

Purchases of intangible assets ( 12,860 ) — —

Purchases of property and equipment ( 29,549 ) ( 55,921 ) ( 57,138 )

3 unchanged sentences

Proceeds from issuance of convertible notes — — 1,000,000

Purchase of capped calls — — ( 48,127 )

Payment of debt issuance costs — — ( 379 )

Capital contribution from noncontrolling interest holders — — 210,252

Repayments of convertible note ( 414,999 ) — —

Repurchase and retirement of common stock — ( 250,000 ) ( 1,500,000 )

Proceeds from issuance of common stock from employee equity plans 76,692 75,985 63,493

Net cash provided by (used in) financing activities ( 174,015 ) ( 226,634 ) 1,721,002

Net cash used in financing activities ( 338,307 ) ( 174,015 ) ( 226,634 )

Effect of foreign exchange rate changes on cash, cash equivalents, and restricted cash ( 11,223 ) ( 6,146 ) 1,926

21 unchanged sentences

Description of Business

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, Israel, Belgium, Canada, China, Colombia, Czech Republic, Finland, France, Germany, Ireland, Japan, Lithuania, Portugal, Singapore, South Korea, Spain, Sweden, Switzerland, the U.K., and the United Arab Emirates.

We market our solutions directly through our online store and field sales operations in North America, Denmark, China, Finland, the U.K., Germany, Israel, Japan, Singapore, South Korea, and Spain, and indirectly through independent distributors and resellers worldwide.

We offer a suite of tools across all major platforms from mobile, PC, and console, to extended reality.

We are headquartered in San Francisco, California and have operations in the United States, Denmark, Israel, Canada, China, Finland, India, Japan, Lithuania, Singapore, South Korea, the U.K., and the United Arab Emirates.

We market our solutions directly through our online store and field sales operations in North America, China, France, the U.K., Israel, Japan, and South Korea, and indirectly through independent distributors and resellers worldwide.

Basis of Presentation and Consolidation

We prepared the accompanying consolidated financial statements in accordance with U.S.

generally accepted accounting principles ("GAAP").

generally accepted accounting principles ("GAAP") and applicable rules and regulations of the Securities and Exchange Commission ("SEC").

The consolidated financial statements include the accounts of Unity Software Inc., its wholly owned subsidiaries, and entities consolidated under the voting interest model.

3 unchanged sentences

The preparation of 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 are used for, but not limited to, revenue recognition, the measurement of liabilities for uncertain tax positions and deferred tax assets and liabilities, the fair value of tangible and intangible assets acquired and liabilities assumed through business combinations, the fair value of redeemable noncontrolling interests, impairments of right of use assets, and customer life for capitalized commissions.

For us, these estimates are used for, but not limited to, revenue recognition, the measurement of liabilities for uncertain tax positions and deferred tax assets and liabilities, the fair value of stock-based compensation, the fair value of redeemable noncontrolling interests, and impairments of right of use assets.

Actual results could differ from those estimates, and such differences could be material to our financial position and results of operations.

Employee Separation and Restructuring Costs

In January 2024, we committed to a plan to eliminate approximately 25 % of our workforce, and we mutually agreed to the departure of the founders of ironSource Ltd.

Following these announcements, we incurred incremental employee separation costs of approximately $ 214 million in the year ended December 31, 2024, which included $ 127 million of incremental stock-based compensation.

Of the incremental employee separation costs, $ 15 million are within cost of revenue, $ 48 million are within research and development, $ 58 million are within sales and marketing, and $ 93 million are within general and administrative.

Additionally, in November 2023, we committed to a plan to reassess our real estate footprint.

We incurred $ 53 million of restructuring costs, primarily related to office closures in the year ended December 31, 2024.

Revenue Recognition

4 unchanged sentences

When observable pricing is not available, we use cost plus margin analysis to determine SSP.

Unity Software Inc.

Our business focuses on two complementary sets of solutions:

2 unchanged sentences

Create Solutions are a combination of software and services that enable customers to edit, run, and iterate real-time 2D and 3D experiences.

Revenue is primarily derived from Create Solution Subscriptions, Enterprise Support, Professional Services, and Cloud and Hosting services.

Unity Software Inc.

Revenue is primarily derived from Create Solution Subscriptions, Enterprise Support, Professional services, and Consumption services.

Create Solutions subscriptions provide customers with software, embedded cloud functionality, and software updates.

As the software and software updates are highly interdependent and interrelated and these services have the same pattern of performance as the embedded cloud functionality, we combine these promises and account for them as a single performance obligation that is recognized over time.

Enterprise customers may purchase an enhanced support offering ("Enterprise Support") that is sold separately and is considered its own performance obligation.

Enterprise customers may purchase an enhanced support offering ("Enterprise Support") that is generally sold separately and is considered its own performance obligation.

Create Solutions subscriptions and enterprise support typically have a term of one to five years and are billed in monthly, quarterly and annual installments, and recognized ratably over the service period.

2 unchanged sentences

We typically invoice our customers on a milestone basis or when promised services are delivered.

Our Cloud and Hosting service arrangements are based on a fixed fee or consumption-based model.

For fixed fee arrangements revenue is recognized ratably over the contractual service term as our obligations are generally fulfilled evenly throughout the hosting period.

For consumption-based arrangements, we recognize revenue as services are provided.

Our Consumption service arrangements are based on a fixed fee or usage-based model.

For fixed fee arrangements revenue is recognized ratably over the contractual service term as our obligations are generally fulfilled evenly throughout the contractual period.

For usage-based arrangements, we recognize revenue as services are provided.

Grow Solutions

3 unchanged sentences

Cost of Revenue

Cost of revenue for the delivery of software services, professional services, and advertising consists primarily of hosting expenses, personnel costs (including salaries, stock-based compensation, and benefits) for employees associated with our product support and professional services organizations, credit card fees, third-party license fees, and allocated shared costs, including facilities, IT, and security costs, as well as amortization of related capitalized software costs and depreciation of related property and equipment and amortization if acquired intangible assets.

Cost of revenue for the delivery of software services, professional services, and advertising consists primarily of hosting expenses, personnel costs (including salaries, stock-based compensation, and benefits) for employees associated with our product support and professional services organizations, credit card fees, third-party license fees, payments to developers where we are the publisher, and allocated shared costs, including facilities, IT, and security costs, as well as amortization of related capitalized software costs and depreciation of related property and equipment and amortization of acquired intangible assets.

Stock-Based Compensation

4 unchanged sentences

Options granted during the year have a maximum contractual term of ten years .

We have limited historical stock option activity and therefore estimate the expected term of stock options granted using the simplified method, which represents the average of the contractual term of the stock option and its weighted-average vesting period.

Unity Software Inc.

have limited historical stock option activity and therefore estimate the expected term of stock options granted using the simplified method, which represents the average of the contractual term of the stock option and its weighted-average vesting period.

The expected volatility of stock options and employee stock purchase plan ("ESPP") purchases are based upon our historical volatility and the historical volatility of a number of publicly traded companies in similar industries over similar durations.

2 unchanged sentences

Department of Treasury ("U.S.

Treasury") yield in effect

Unity Software Inc.

at the time of grant for zero-coupon U.S.

Treasury") yield in effect at the time of grant for zero-coupon U.S.

Treasury notes with maturities approximately equal to the expected term of the stock options and ESPP purchases.

The fair value of price-vested units ("PVUs"), which are RSUs that contain both service-based and market-based vesting conditions, is estimated using the Monte Carlo simulation model and is based on the closing stock price of our common stock on the grant date modified to reflect the impact of the market-based vesting condition, including the estimated payout level based on that condition.

The fair value of price-vested options ("PVOs") and price-vested units ("PVUs"), which are options and RSUs respectively, that contain both service-based and market-based vesting conditions are estimated using the Monte Carlo simulation model and use inputs such as the fair value of the underlying common stock, expected term before exercise, expected volatility of our common stock, expected dividend yield, and a risk-free interest rate, modified to reflect the impact of market-based vesting conditions, including the estimated payout level based on that condition.

We do not adjust compensation cost for subsequent changes in the expected outcome of the market-based vesting conditions.

We recognize stock-based compensation expense for RSUs, stock options, and PVUs, on a straight-line basis, over the requisite service period, generally, a vesting period of one year to four years .

We recognize stock-based compensation expense for RSUs, stock options, PVUs, and PVOs, on a straight-line basis, typically over the requisite service period of the entire award, generally, a vesting period of one year to four years .

We recognize stock-based compensation expense related to the 2020 ESPP on a straight-line basis over the offering period.

2 unchanged sentences

We consider all highly liquid investments with original maturities of three months or less at date of purchase to be cash equivalents.

Our cash equivalents include money market funds, time deposits, and commercial paper.

Our cash equivalents include money market funds and time deposits.

As of December 31, 2024 and 2023, restricted cash was $ 10.2 million and $ 13.9 million, respectively.

1 unchanged sentence

Restrictions typically lapse at the end of the lease term, and restricted cash is classified as current or non-current based on the remaining term of the restriction.

Short-term Investments

Our short-term investments consisted of investments in short-term deposits, U.S.

treasury securities, asset-backed securities, corporate bonds, commercial paper, and supranational bonds.

We classified our investments in debt securities as available-for-sale at the time of purchase.

We considered all debt securities as available for use in current operations, including those with maturity dates beyond one year, and therefore classified these securities as current assets in the consolidated balance sheets.

Unrealized gains and losses, net of taxes, were included in accumulated other comprehensive loss, which was reflected as a separate component of stockholders’ equity in our consolidated balance sheets.

During the year ended December 31, 2022, we sold the entirety of our available-for-sale debt securities portfolio.

During the year ended December 31, 2023, we sold the remainder of our short-term investments.

Accounts Receivable

3 unchanged sentences

As of December 31, 2024 and 2023, the allowance for uncollectible amounts was $ 17.3 million and $ 16.9 million, respectively.

For the years ended December 31, 2023 and 2022, the provision for uncollectible amounts was $ 14.3 million and $ 5.4 million.

For the years ended December 31, 2024 and 2023, the provision for uncollectible amounts was $ 7.7 million and $ 14.3 million, respectively.

Credit Risk and Concentrations

4 unchanged sentences

To reduce credit risk, management performs credit evaluations of our customers’ financial condition, as warranted, and continually analyzes the allowance for doubtful accounts, which we maintain based upon the expected collectability of accounts receivable.

Unity Software Inc.

As of December 31, 2024 and 2023, no individual customer represented 10% or more of the aggregate receivables.

For the years ended December 31, 2024, 2023, and 2022, no individual customer represented 10% or more of total revenue.

Unity Software Inc.

Fair Value of Financial Instruments

1 unchanged sentence

When determining the fair value measurements for assets and liabilities, which are required to be recorded at fair value, we consider the principal or most advantageous market in which to transact and the market-based risk.

The carrying amounts reported in the consolidated financial statements approximate the fair value for cash and cash equivalents, short-term investments, accounts receivable, accounts payable, and accrued liabilities, due to their short-term nature.

The carrying amounts reported in the consolidated financial statements approximate the fair value for cash and cash equivalents, accounts receivable, accounts payable, and accrued liabilities, due to their short-term nature.

Comprehensive Loss

20 unchanged sentences

Unity Software Inc.

Goodwill and Intangible Assets

We allocate the fair value of purchase consideration to the tangible assets acquired, liabilities assumed, and intangible assets acquired based on their estimated fair values as of the acquisition date.

The excess of the fair value of purchase consideration over the fair values of these identifiable assets and liabilities is recorded as goodwill.

Intangible assets, with the exception of certain contractual relationships, which have a finite life are amortized on a straight-line basis over their estimated useful lives, which typically range from three to six years .

Certain contractual relationships are amortized using an accelerated method of amortization, which reflects the pattern in which the economic benefits from the intangible assets are expected to be recognized.

On an annual basis, we evaluate the estimated remaining useful life of acquired intangible assets and whether events or changes in circumstances warrant a revision to the remaining amortization period.

No changes to the useful lives of our intangible assets were deemed necessary during the years ended December 31, 2023, 2022, and 2021 based on management's evaluation.

We operate as a single operating segment.

1 unchanged sentence

Accordingly, we have determined that we have a single reportable segment and operating segment structure.

See Note 15, "Segment Information" for additional information about our reportable segment.

Capitalized Software Costs and Software Implementation Costs

5 unchanged sentences

Capitalized implementation costs are expensed over the term of the hosting arrangement, which is the fixed, non-cancellable term of the arrangement, plus any reasonably certain renewal periods.

The amount of capitalized software costs and capitalized implementation costs was $ 49.9 million and $ 1.1 million, respectively, during the year ended December 31, 2023 and $ 5.7 million and $ 5.9 million, respectively, during the year ended December 31, 2022.

The increases in these costs were driven by the acquisition of ironSource in late 2022, and development projects related to offerings within Create Solutions.

The closing amount of capitalized software costs and capitalized implementation costs on the balance sheet was $ 52.0 million and $ 4.6 million, respectively, as of December 31, 2023 and $ 5.8 million and $ 10.2 million, respectively, as of December 31, 2022.

Capitalized software costs are included in property and equipment, net, on the consolidated balance sheets.

The amount of capitalized software costs was $ 33.2 million and $ 49.9 million, respectively, during the years ended December 31, 2024 and 2023.

The closing amount of capitalized software costs on the balance sheet was $ 56.2 million and $ 52.0 million, respectively, as of December 31, 2024 and 2023.

The current portion of capitalized implementation costs are included in prepaid expenses on the consolidated balance sheets, and the non-current portion of capitalized implementation costs are included in other assets on the consolidated balance sheets.

The amount of capitalized implementation costs was not material for the years ended December 31, 2024 and 2023.

The costs to develop software that is marketed externally consist of payroll and payroll related costs for employees, who are directly associated with the development of the software.

1 unchanged sentence

All costs outside of this window are charged to research and development expense.

Unity Software Inc.

amount of costs capitalized for software developed for external use was $ 3.3 million during the year ended December 31, 2023.

The amount of costs capitalized for software developed for external use was not material for the years ended December 31, 2024 and 2023.

Impairment Analysis

4 unchanged sentences

We evaluate and test the recoverability of our goodwill for impairment at least annually during our fourth quarter of each calendar year or more often if and when circumstances indicate that goodwill may not be recoverable.

During the year ended December 31, 2023 we recorded $ 16.5 million of impairment charges on operating lease assets, primarily related to closures of corporate offices in the fourth quarter of 2023.

Apart from those operating lease asset impairments, there were no material impairments of capitalized software costs, capitalized implementation costs, intangible assets, long-lived assets, or goodwill during the years ended December 31, 2023, 2022, and 2021.

During the years ended December 31, 2024 and 2023, we recorded $ 16.2 million and $ 16.5 million of impairment charges on operating lease assets respectively, and during the year ended December 31,

Unity Software Inc.

2024 we recorded $ 22.8 million of impairment charges on property and equipment.

These charges were primarily within general and administrative, and related to closures of corporate offices.

The fair values of these assets were determined using active market prices.

Apart from those operating lease asset, and property and equipment impairments, there were no material impairments of capitalized software costs, capitalized implementation costs, intangible assets, long-lived assets, or goodwill during the years ended December 31, 2024, 2023, and 2022.

We are subject to income taxes in the United States and numerous foreign jurisdictions.

12 unchanged sentences

Accrued interest and penalties are included in income and other taxes payable on the consolidated balance sheets.

Unity Software Inc.

Translation of Foreign Currencies

7 unchanged sentences

dollars are recorded in accumulated other comprehensive loss in stockholders’ equity.

Goodwill and Intangible Assets

The excess of the fair value of purchase consideration over the fair values of these identifiable assets and

Unity Software Inc.

liabilities is recorded as goodwill.

No material changes to the useful lives of our intangible assets were deemed necessary during the years ended December 31, 2024, 2023, and 2022 based on management's evaluation.

Warranties and Indemnifications

10 unchanged sentences

Recent Accounting Pronouncements Not Yet Adopted

In November 2023, the Financial Accounting Standards Board (FASB) issued a new Accounting Standards Update ("ASU 2023-07"), amending the existing segment reporting disclosure guidance, primarily requiring enhanced disclosure of significant segment expenses on an annual and interim basis.

ASU 2023-07 is effective for annual reporting periods beginning after December 15, 2023, with early adoption permitted and should be applied on a retroactive basis.

We are currently evaluating ASU 2023-07 to determine its impact on our segment disclosures.

In December 2023, the FASB issued a new Accounting Standards Update ("ASU 2023-09") amending existing income tax disclosure guidance, primarily requiring more detailed disclosure for income taxes paid and the effective tax rate reconciliation.

1 unchanged sentence

We are currently evaluating ASU 2023-09 to determine its impact on our income tax disclosures.

In November 2024, the FASB issued a new Accounting Standards Update ("ASU 2024-03") amending the existing disclosure requirement for expenses within Statement of Operations, primarily requiring more disaggregated disclosure for certain costs and expenses on an annual and interim basis.

ASU 2024-03 is effective for annual reporting periods beginning after December 15, 2026, with early adoption permitted and can be applied on either a prospective or retroactive basis.

We are currently evaluating ASU 2024-03 to determine its impact on our expense disclosures.

Unity Software Inc.

27 unchanged sentences

Contract Balances and Remaining Performance Obligations

Contract assets (unbilled receivables) included in accounts receivable, net, are recorded when revenue is earned in advance of customer billing schedules.

Contract assets (unbilled receivables), primarily included in accounts receivable, net, are recorded when revenue is earned in advance of customer billing schedules.

Unbilled receivables totaled $ 20.5 million and $ 31.3 million as of December 31, 2024 and 2023, respectively.

The long term portion of those unbilled receivables was included in other long-term assets on our consolidated balance sheets, and was not material as of December 31, 2024 and 2023.

Contract liabilities (deferred revenue) relate to payments received in advance of performance under the contract.

Revenue recognized during the year ended December 31, 2024 that was included in the deferred revenue balances at January 1, 2024 was $ 170 million.

Included in that amount was $ 146 million of deferred revenue from Wētā FX Limited which was recognized in the current year, primarily due to the termination of Wētā FX Limited's subscription rights in exchange for a perpetual license in the fourth quarter of 2023.

Additionally, we have performance obligations associated with commitments in customer contracts to perform in the future that had not yet been recognized in our consolidated financial statements.

For contracts with original terms that exceed one year, those commitments not yet recognized as of

Unity Software Inc.

contracts with original terms that exceed one year, those commitments not yet recognized as of December 31, 2023 were $ 384 million and relate primarily to Create Solutions subscriptions, Enterprise Support, and Strategic Partnerships.

December 31, 2024 were $ 334 million and relate primarily to Create Solutions subscriptions, Enterprise Support, and Strategic Partnerships.

These commitments generally extend over the next one to five years and we expect to recognize approximately $ 188 million or 56 % of this revenue during the next 12 months.

Financial Instruments

Cash, Cash Equivalents, Restricted Cash, and Short-term Investments

Cash, cash equivalents, restricted cash, and short-term investments are recorded at fair value.

Cash, Cash Equivalents, and Restricted Cash

Cash, cash equivalents, and restricted cash are recorded at fair value.

Fair value is defined as the price that would be received to sell an asset or paid to transfer a liability in an orderly transaction between market participants at the measurement date.

4 unchanged sentences

These valuations require significant judgment.

The following table summarizes, by major security type, our cash, cash equivalents, restricted cash, and short-term investments that are measured at fair value on a recurring basis and are categorized using the fair value hierarchy (in thousands):

The following table summarizes, by major security type, our cash, cash equivalents, and restricted cash that are measured at fair value on a recurring basis and are categorized using the fair value hierarchy (in thousands):

December 31, 2024 December 31, 2023

6 unchanged sentences

Total restricted cash and cash equivalents $ 532,079 $ 769,390

Short-term investments $ — $ 101,711

Total cash, cash equivalents, restricted cash, and short-term investments $ 1,604,267 $ 1,607,399

Total cash, cash equivalents, and restricted cash $ 1,527,881 $ 1,604,267

(1) Due to the highly liquid nature of our investments, amortized cost approximates fair value.

We did not recognize any credit losses related to our available-for-sale debt securities during the year ended December 31, 2022.

There were no material realized or unrealized gains or losses, either individually or in the aggregate, during the years ended December 31, 2024 and 2023.

During the year ended December 31, 2022, we sold the entirety of our available-for-sale debt securities portfolio.

During the year ended December 31, 2023, we sold the remainder of our short-term investments.

2 unchanged sentences

These strategic investments represent less than a 20 % ownership interest in each of the entities, and we do not have significant influence over or control of the entities.

We use the measurement alternative to account for adjustments to these investments for observable transactions for the same or

Unity Software Inc.

similar investments of the same issuer in any given quarter.

We use the measurement alternative to account for adjustments to these investments for observable transactions for the same or similar investments of the same issuer in any given quarter.

If we determine an impairment has occurred, the investment is written down to the estimated fair value.

As of December 31, 2024 and December 31, 2023, such equity investments totaled $ 33.0 million and $ 33.6 million, respectively.

No adjustments to the carrying value of these equity investments were recorded for the year ended December 31, 2023 and 2022.

No material adjustments to the carrying value of these equity investments were recorded for the years ended December 31, 2024 and 2023.

Unity Software Inc.

Investment in Unity China

9 unchanged sentences

Subsequent and contingent to the initial investment from third-party investors, a management investor contributed $ 14.4 million for an ownership interest of 1.5 % with no redemption rights.

The results of Unity China are included in our consolidated financial statements, and the redeemable noncontrolling interests are recorded as temporary equity on our consolidated balance sheet.

The results of Unity China are included in our consolidated financial statements.

The redeemable noncontrolling interests in Unity China are recorded as temporary equity on our consolidated balance sheet.

The following table presents the changes in redeemable noncontrolling interests (in thousands):

Year Ended December 31,

2024 2023 2022

Balance at beginning of period $ 225,797 $ 219,563 $ —

Initial fair value measurement of investors' equity interest and redemption right — — 217,900

Net loss attributable to redeemable noncontrolling interests ( 4,017 ) ( 1,207 )

Net gain/(loss) attributable to redeemable noncontrolling interests ( 161 ) ( 4,017 ) ( 1,207 )

Accretion for redeemable noncontrolling interests 11,250 15,543 3,699

5 unchanged sentences

The identifiable intangible assets are subject to amortization on a straight-line basis over their estimated useful lives, as this best approximates the benefit period related to these assets.

Unity Software Inc.

The excess of the purchase price over the identified tangible and intangible assets, less liabilities assumed, is recorded as goodwill.

1 unchanged sentence

income tax purposes.

The measurement period for the fair values of assets acquired and liabilities assumed in previous years is now closed, including for the merger with ironSource Ltd., for which we have now substantially completed our tax returns.

2023 Acquisitions

During the year ended December 31, 2023, we completed no acquisitions.

Unity Software Inc.

During the years ended December 31, 2024 and 2023, we completed no acquisitions.

2022 Acquisitions

3 unchanged sentences

The revenue and earnings of the acquired businesses have been included in our results since the acquisition dates.

2021 Acquisitions

During the year ended December 31, 2021, we completed the acquisitions of certain companies for a total purchase consideration of approximately $ 2.1 billion payable in cash and stock.

The purchase consideration was primarily allocated to goodwill of approximately $ 1.3 billion and intangible assets of approximately $ 790 million.

These acquisitions were strategic in nature as they enhanced our product offerings.

The revenue and earnings of the acquired businesses have been included in our results since the acquisition date.

Goodwill and Intangible Assets

19 unchanged sentences

Trademark 2.3 106,100 ( 65,528 ) 40,572

Contractual relationship (2)

Total intangible assets $ 1,932,386 $ ( 866,151 ) $ 1,066,235

7 unchanged sentences

Trademark 3.0 106,400 ( 39,588 ) 66,812

Contractual relationship 6.9 200,000 ( 40,792 ) 159,208

Total intangible assets $ 1,922,726 $ ( 515,981 ) $ 1,406,745

(1) Based on weighted-average useful life remaining.

(2) Decrease in 2023, due to amendment of our Wētā FX Limited agreement.

The following table presents the amortization of finite-lived intangible assets included on our consolidated statements of operations (in thousands):

29 unchanged sentences

EMEA, excluding United Kingdom (1)

18,111 22,336

10,095 12,243

Total long-lived assets, net $ 43,701 $ 88,664

6 unchanged sentences

Accrued expenses and other $ 294,951 $ 307,704

We have operating leases for offices which have remaining lease terms of up to nine years , some of which include options to extend the lease with renewal terms from one to five years .

We have operating leases for offices which have remaining lease terms of up to eight years , some of which include options to extend the lease with renewal terms from one to five years .

Some leases include an option to terminate the lease for up to five years from the lease commencement date.

12 unchanged sentences

As of December 31, 2024 and December 31, 2023, our operating leases had a weighted-average remaining lease term of 4.3 years and 5.1 years, respectively, and a weighted-average discount rate of 5.4 % and 5.2 %, respectively.

On November 28, 2023, we committed to a plan to close corporate offices in approximately 14 locations, to reduce our real estate costs.

In connection with this plan, during the three months ended December 31, 2023 we recorded $ 15.6 million of impairment charges on operating lease assets, which we currently estimate to be the majority of the costs associated with this plan.

As of December 31, 2024, our lease liabilities were as follows (in thousands):

3 unchanged sentences

Present value of lease liabilities $ 114,796

As of December 31, 2023, we have not entered into any leases that have not yet commenced .

As of December 31, 2024, we have not entered into any material leases that have not yet commenced.

Convertible Notes

10 unchanged sentences

Interest on the Notes is payable semi-annually in arrears.

The combined interest expense on the Notes related to regular interest and the amortization of debt issuance cost was $ 24.6 million and $ 7.4 million for the year ended December 31, 2023 and December 31, 2022, respectively.

As of December 31, 2023 the estimated fair value of the 2027 Notes were approximately $ 1.3 billion and the estimated fair value of the 2026 Notes were approximately $ 1.4 billion.

The combined interest expense on the Notes related to regular interest and the amortization of debt issuance cost was $ 23.5 million and $ 24.6 million for the years ended December 31, 2024 and December 31, 2023, respectively.

As of December 31, 2024 and December 31, 2023, the estimated fair value of the 2027 Notes were approximately $ 1.0 billion and $ 1.3 billion, respectively, and the estimated fair value of the 2026 Notes were approximately $ 1.1 billion and $ 1.4 billion, respectively.

The fair value of the 2027 Notes was based on a combination of a discounted cash flow and Black-Scholes option-pricing model.

The fair value of the 2026 Notes was based on quoted prices as of that date.

The Notes are convertible into cash, shares of our common stock, or a combination of cash and shares of our common stock, at our election, subject to customary adjustments for certain events as described in the indentures governing the Notes.

The 2026 Notes are convertible at the option of the holder if a conversion condition of the 2026 Notes is triggered.

During the year ended December 31, 2024, none of the conversion conditions of the 2026 Notes were triggered and the 2026 Notes were not convertible as of December 31, 2024.

The holders of the 2027 Notes may elect to convert the 2027 Notes at any time prior to maturity.

Any such conversion of the Notes may be satisfied at our election with either cash, shares of our common stock, or a combination of cash and shares of our common stock.

The conversion rates for the Notes are subject to customary adjustments for certain events as described in the relevant indenture governing the Notes.

The Notes are subject to additional terms.

In connection with certain corporate events, as defined and described in the Indentures, we will increase the conversion rate for a holder of the Notes who elects to convert those notes in connection with the event.

Additionally, subject to certain other events, as described in the Indentures, holders of the Notes may require us to repurchase all or a portion of their notes at a price equal to 100 % of the principal amount to be repurchased, plus any accrued and unpaid interest to date.

As of December 31, 2023, no holders of the 2027 and 2026 Notes have exercised the conversion rights, and the if-converted value of the 2027 and 2026 Notes did not exceed the principal amount.

In connection with certain corporate events, as described in the indentures governing the Notes, we will increase the conversion rate for a holder of the Notes who elects to convert those Notes in connection with the event.

Additionally, upon the occurrence of certain corporate events and subject to certain exceptions, as described in the indentures governing the Notes, holders of the Notes may require us to repurchase all or a portion of their Notes at a price equal to 100 % of the principal amount to be repurchased, plus any accrued and unpaid interest to date.

The 2026 Notes are also redeemable at our option if certain conditions are met, as described in the indenture governing the 2026 Notes.

As of December 31, 2024, no holders of the 2027 Notes and 2026 Notes have exercised the conversion rights, and the if-converted value of the 2027 Notes and 2026 Notes did not exceed the principal amount.

Convertible Note Repurchase

During the first quarter of 2024, the Company repurchased in privately negotiated transactions and extinguished a portion of the 2026 Notes, with a total principal balance of $ 480 million.

The aggregate repurchase price for these notes was $ 415 million, resulting in pre-tax gains of $ 61.4 million, net of the write-off of unamortized issuance costs.

The gain was included in Interest income and other income (expense), net, in the consolidated statement of operations.

Capped Call Transactions

In connection with the pricing of the 2026 Notes, we entered into the Capped Call Transactions at a net cost of $ 48.1 million, with call options totaling approximately 5.6 million of our common shares, and expiration dates ranging from September 18, 2026 to November 12, 2026.

The strike price is $ 308.72 , and the cap price is initially $ 343.02 per share, subject to certain adjustments.

To reduce the potential dilutive effect of the 2026 Notes, in connection with their pricing, we entered into the Capped Call Transactions at a net cost of $ 48.1 million, with call options totaling approximately 5.6 million of our common shares, and with expiration dates ranging from September 18, 2026 to November 12, 2026.

The strike price is $ 308.72 , and the cap price is initially $ 343.02 per share, subject to adjustments in certain circumstances.

The Capped Call Transactions are freestanding and are considered separately exercisable from the 2026 Notes.

The Capped Call Transactions are intended to reduce potential dilution to our common stock upon any conversion of the 2026 Notes and/or offset any cash payments we are required to make in excess of the principal amount of converted 2026 Notes, as the case may be, with such reduction and/or offset subject to a cap.

As of December 31, 2024, the Capped Call Transactions met the conditions for equity classification and were not in the money.

Unity Software Inc.

Commitments and Contingencies

8 unchanged sentences

Total $ 3,377,064 $ 366,461 $ 2,716,067 $ 283,544 $ 10,992

(1) Operating leases consist of obligations for leased real estate.

(1) Operating leases consist of obligations for real estate, including leases that are not yet commenced.

(2) The substantial majority of our purchase commitments are related to agreements with our data center hosting providers.

14 unchanged sentences

5:22-cv-3962 (N.D.

The operative complaint names as defendants Unity, its former Chief Executive Officer, Chief Financial Officer, and General Manager of Operate Solutions, as well as Unity shareholders, Sequoia Capital, Silver Lake Group, and OTEE 2020 ApS.

The complaint asserts claims under Sections 10(b) and 20(a) of the Securities Exchange Act of 1934, and alleges that the Company and its executives made false or misleading statements and/or failed to disclose issues with the Company's product platform and the likely impact of those issues on the Company's fiscal 2022 guidance.

The plaintiffs seek to represent a class of all persons and entities (other than the defendants) who acquired Unity securities between May 11, 2021 and May 10, 2022, and requests unspecified damages, pre- and post-judgment interest, and an award of attorneys' fees and costs.

The Company intends to vigorously defend the case.

On May 25, 2023, all defendants moved to dismiss the amended complaint.

1 unchanged sentence

The Company filed a response to the plaintiffs' opposition on September 1, 2023.

The motion is fully briefed and the Company is awaiting a ruling.

On March 15, 2024, the court granted the Company's motion to dismiss the complaint, and on April 12, 2024, the plaintiffs' filed a second amended complaint.

The Company has moved to dismiss the amended complaint.

The plaintiffs have filed an opposition to the motion to dismiss, and the Company has filed a response to the plaintiff's opposition.

A hearing on the motion to dismiss was held on February 5, 2025, and the Company is awaiting the ruling.

The operative complaint names as defendants Unity, its former Chief Executive Officer, former Chief Financial Officer, and former General Manager of Operate Solutions, as well as Unity shareholders, Sequoia Capital, Silver Lake Group, and David Helgason.

The plaintiffs seek to represent a class of all persons and entities (other than the defendants) who acquired Unity securities between May 11, 2021 and May 10, 2022, and requests unspecified

Unity Software Inc.

damages, pre- and post-judgment interest, and an award of attorneys' fees and costs.

The Company intends to continue to vigorously defend the case.

On November 22, 2022, a derivative suit, captioned Movva v.

9 unchanged sentences

Botha, et al., Case No.

Unity Software Inc.

2023-0499 (the "Wen Suit"), was filed in the Court of Chancery of the State of Delaware.

19 unchanged sentences

Stock Award Plans

Our stock compensation plans allow us to grant or assume through acquisition stock options and RSUs, including PVUs, to employees and non-employee directors.

Our stock compensation plans allow us to grant or assume through acquisition stock options and RSUs, including PVOs and PVUs, to employees and non-employee directors.

As of December 31, 2024, we had reserved a total of 88.7 million shares of common stock under our collective compensation plans, of which 35.5 million were available for future grant.

6 unchanged sentences

The maximum number of shares of our common stock that may be issued under our 2020 ESPP is 18.5 million shares, of which 15.7 million were available for issuance as of December 31, 2024.

Share Repurchase Program

In July 2022, our board of directors approved our Share Repurchase Program, which authorized the repurchase of up to $ 2.5 billion of shares of our common stock through November 2024.

During the years ended December 31, 2023 and 2022, we repurchased 7.6 million and 42.7 million shares of common stock under this program for an aggregate purchase price of $ 250 million and $ 1.5 billion, respectively.

As of December 31, 2023, $ 750 million remained available for future share repurchases under this program.

Employee 401(k) Plan

16 unchanged sentences

Total stock-based compensation expense $ 596,249 $ 648,696 $ 550,065

Included in the above expenses for the year ended December 31, 2023, is $ 14.3 million of incremental stock expense primarily within general and administrative, associated with the modification of awards held by key employees that departed in the fourth quarter of 2023.

Included in the above expenses for the year ended December 31, 2024 and 2023, are $ 93.8 million and $ 14.3 million respectively, of incremental stock-based compensation expense from modifications, primarily within general and administrative.

These amounts predominately relate to modifications to accelerate vesting or extend the exercise period, of awards held by the founders of ironSource Ltd.

that departed in the first quarter of 2024, and awards held by key employees that departed in the fourth quarter of 2023, respectively.

Unrecognized compensation expense is as follows (in thousands, except for weighted-average remaining vesting period):

1 unchanged sentence

Unrecognized Compensation Expense Weighted-Average Remaining Vesting Period (In Years)

Outstanding stock options $ 83,985 2.11

Outstanding stock options and PVOs

$ 45,908 2.77

Unvested RSUs and PVUs $ 707,085 2.74

ESPP $ 1,195 0.17

In future periods, stock-based compensation expense may increase as we issue additional equity-based awards to continue to attract and retain employees.

Unity Software Inc.

In future periods, stock-based compensation expense may increase as we issue additional equity-based awards to continue to attract and retain employees.

Stock Options

A summary of our stock option activity is as follows:

A summary of our stock option, including price-vested options ("PVO"), activity is as follows:

Options Outstanding

1 unchanged sentence

Price Weighted-Average

(In Years) Aggregate pretax intrinsic value (1)

(in thousands)

Balance as of December 31, 2022 35,718,803 $ 18.05 5.60

8 unchanged sentences

Exercisable as of December 31, 2024 19,295,154 $ 20.30 3.25 $ 170,418

(1) Includes assumed equity awards from the ironSource Merger.

(1) The intrinsic value is the difference between the estimated fair value of our common stock on December 31, 2024 and the exercise price for in-the-money options.

A summary of intrinsic and fair values of our stock options is as follows (in thousands, except fair value amounts):

5 unchanged sentences

(1) The intrinsic value is the difference between the estimated fair value of our common stock on the date of exercise and the exercise price for in-the-money options.

The calculated grant-date fair value of stock options granted was estimated using the Black-Scholes option-pricing model with the following assumptions:

December 31, 2023 December 31, 2022 December 31, 2021

Expected dividend yield — — —

Risk-free interest rate 3.8 % - 4.9 %

1.7 % - 3.8 %

0.9 % - 1.3 %

Expected volatility 54.7 % - 65.8 %

33.3 % - 52.2 %

32.9 % - 36.2 %

Expected term (in years) 6.25 6.25 6.25

Fair value of underlying common stock $ 28.13 - $ 39.29

$ 36.17 - $ 89.01

$ 100.60 - $ 152.34

Unity Software Inc.

12 unchanged sentences

Unvested as of December 31, 2024 30,013,275 $ 26.03

(1) Includes assumed equity awards from the ironSource Merger.

The total fair value of RSUs vested as of the vesting dates during the years ended December 31, 2024, 2023, and 2022 was $ 330 million, $ 448 million, and $ 322 million, respectively.

Price-Vested Units

In October 2022, we granted to certain of our executive officers a total of 989,880 PVUs, which are RSUs for which vesting is subject to the fulfillment of both a service period that extends up to four years and the achievement of a stock price hurdle during the relevant performance period that extends up to seven years .

The fair value of each PVU award is estimated using a Monte Carlo simulation that uses assumptions determined on the date of grant.

During the years ended December 31, 2023 and 2022, the stock price hurdles were not met, and no units vested.

The following table summarizes the weighted-average assumptions relating to our PVUs:

Year Ended December 31,

Share price on grant date $ 27.88

Price-Vested Units and Price-Vested Options

The vesting for each of the PVUs and PVOs is subject to the fulfillment of both a service period that extends up to four years and the achievement of a stock price hurdle during the relevant performance period that extends up to six and seven years , respectively.

The fair value of each PVU and PVO award is estimated using a Monte Carlo simulation that uses assumptions determined on the date of grant.

During the year ended December 31, 2024, the price hurdle on 62,578 outstanding PVU units were met, resulting in 3,911 PVU units vesting during the year.

The price hurdle was not met on any other units for the years ended December 31, 2024, and 2023.

Fair Value Assumptions

The calculated grant-date fair value of stock options, PVUs, and PVOs granted, were estimated using the Black-Scholes option-pricing model for stock options, and a Monte Carlo stimulation for the PVUs and PVOs, with the following assumptions:

December 31, 2024 December 31, 2023 December 31, 2022

Expected dividend yield — — —

Risk-free interest rate 3.5 % - 4.4 %

3.8 % - 4.9 %

1.7 % - 4.0 %

Expected volatility 60.0 % - 68.0 %

Expected dividend yield — %

54.7 % - 65.8 %

33.3 % - 52.2 %

Expected term (in years) 6.25 - 10.00

6.25 6.25 - 7.00

Fair value of underlying common stock $ 15.60 - $ 26.89

$ 28.13 - $ 39.29

$ 27.88 - $ 89.01

Unity Software Inc.

Employee Stock Purchase Plan

6 unchanged sentences

5.2 % - 5.5 %

0.6 % - 3.3 %

Expected volatility 49.3 % - 56.0 %

65.9 % - 94.5 %

35.5 % - 40.0 %

Expected term (in years) 0.50 0.50 0.50

1 unchanged sentence

$ 12.44 - $ 12.65

Unity Software Inc.

$ 10.51 - $ 27.42

Additional information related to the ESPP is provided below (in thousands, except per share amounts):

Year Ended December 31,

2024 2023 2022

Shares issued under the ESPP 1,161,604 1,064,463 607,009

Weighted-average price per share issued $ 19.13 $ 25.56 $ 54.87

No shares were issued under the ESPP during the year ended December 31, 2021.

Loss before provision for income taxes consisted of the following for the years ended December 31, 2023, 2022, and 2021 (in thousands):

Loss before provision for (benefit from) income taxes consisted of the following for the years ended December 31, 2024, 2023, and 2022 (in thousands):

Year Ended December 31,

9 unchanged sentences

Foreign 17,748 29,502 26,255

Total current tax expense (benefit) 33,479 40,118 13,702

Total current tax expense 22,833 33,479 40,118

Federal ( 421 ) 5,184 4,347

1 unchanged sentence

Foreign ( 26,119 ) ( 6,437 ) ( 4,235 )

Total deferred tax expense (benefit) ( 5,002 ) ( 3,055 ) ( 12,325 )

Total tax provision $ 28,477 $ 37,063 $ 1,377

Total deferred tax benefit ( 25,679 ) ( 5,002 ) ( 3,055 )

Total tax provision (benefit) $ ( 2,846 ) $ 28,477 $ 37,063

Unity Software Inc.

Reconciliations of the income tax provision at the U.S.

federal statutory tax rate to the provision for income taxes are as follows (in thousands):

federal statutory tax rate to the provision for (benefit from) income taxes are as follows (in thousands):

Year Ended December 31,

10 unchanged sentences

Other 11,156 ( 223 ) 4,243

Total tax provision $ 28,477 $ 37,063 $ 1,377

Total tax provision (benefit) $ ( 2,846 ) $ 28,477 $ 37,063

(1) Certain prior year amounts have been reclassified to conform to current year presentation.

Our income tax provision for the year ended December 31, 2024 was primarily driven by losses that cannot be benefited due to the valuation allowance on U.S., Denmark, United Kingdom ("U.K."), China, and Canada entities, and to a lesser extent, foreign earnings taxed at different tax rates.

In addition, during the first quarter of 2024, we recorded a tax benefit on foreign losses in connection with employee separation costs and we continued to restructure our tax operations which resulted in a reduction to our U.S.

valuation allowance.

Our income tax provision for the year ended December 31, 2023 was primarily driven by losses that cannot be benefited due to the valuation allowance on U.S., Denmark, U.K., China, and Canada entities, and to a lesser extent, foreign earnings taxed at different tax rates.

In addition, we undertook certain tax restructuring efforts during the first quarter of 2023 that enhanced our ability to offset deferred tax liabilities in the U.S.

in future periods, thereby partially reducing the need for a valuation allowance.

Our income tax provision for the year ended December 31, 2022 was primarily driven by the earnings of our foreign subsidiaries, which are taxed at rates that differ from the U.S.

statutory rate, losses that cannot be benefited due to the valuation allowance against the net deferred tax assets of our United States, Denmark, U.K., and China entities, base-erosion and anti-abuse tax ("BEAT") mainly arising as a result of the U.S.

mandatory research and development capitalization rules.

Following our acquisition of ironSource, the Company undertook certain tax restructuring efforts as part of the integration of the acquired business.

As a result of the restructuring, we recognized $ 192 million of US federal and state deferred tax liabilities, which reduce our need for a valuation allowance in the U.S., except for timing differences that resulted in $ 11.6 million of income tax expense.

Unity Software Inc.

1 unchanged sentence

As of December 31,

2024 2023 (1)

Deferred tax assets:

10 unchanged sentences

Intangible Asset ( 221,869 ) ( 307,466 )

Depreciation and Amortization ( 21,694 ) ( 9,727 )

Operating lease ROU assets ( 25,762 ) ( 39,239 )

1 unchanged sentence

Net deferred tax assets $ ( 72,669 ) $ ( 98,155 )

1) Certain prior year amounts have been reclassified to conform to current year presentation.

In the tax years ended December 31, 2024 and 2023, we capitalized certain research and development costs incurred by our U.S.

and foreign subsidiaries, which resulted in a deferred tax assets of $ 666 million and $ 255 million respectively.

and foreign subsidiaries, which resulted in deferred tax assets of $ 673 million and $ 666 million respectively.

These deferred tax assets associated with capitalized research and development costs are offset by valuation allowances and future taxable temporary differences.

10 unchanged sentences

Our NOL carryforwards for U.S.

federal, state, and foreign purposes were $ 642 million, $ 398 million, and $ 936 million, respectively, with most of our foreign NOL carryforward balances arising from Denmark and the U.K.

federal, state, and foreign purposes were $ 619 million, $ 472 million, and $ 1.0 billion, respectively, with most of our foreign NOL carryforward balances arising from Denmark and the U.K.

jurisdictions.

federal, state, and foreign NOL carryforwards, if not utilized, will begin to expire in 2032, 2025, and 2025, respectively.

federal, state, and foreign research and development credit carryforwards were $ 103 million, $ 48.9 million and $ 3.4 million,

Portions of the U.S.

federal and state NOL carryforwards, if not utilized, will begin to expire in 2032 and 2026, respectively.

The foreign NOL carryforwards, if not utilized,

Unity Software Inc.

respectively.

will not expire.

federal, state, and foreign research and development credit carryforwards were $ 107 million, $ 51.2 million and $ 1.6 million, respectively.

federal credit carryforwards, if not utilized, will begin to expire in 2032, while the California credit carryforwards have no expiration.

16 unchanged sentences

Unrecognized tax benefits, ending balance $ 179,780 $ 182,515 $ 176,584

As of December 31, 2023 and 2022, we had unrecognized tax benefits of $ 183 million and $ 177 million, respectively, of which $ 28.9 million and $ 24.3 million would affect the effective tax rate if recognized.

As of December 31, 2024 and 2023, we had $ 180 million and $ 183 million, respectively, of gross unrecognized tax benefits, of which $ 31.8 million and $ 28.9 million, respectively, would impact the effective tax rate, if recognized.

We recognize interest and penalties related to our unrecognized tax benefits within our provision for income taxes.

11 unchanged sentences

Basic and diluted net loss per share is the same for all periods presented because the effects of potentially dilutive items were antidilutive given our net loss in each period.

The following table presents potentially dilutive items excluded from the computation of diluted net loss per share for the following periods (in thousands) because the impact of including them would have been antidilutive:

The following table presents potentially dilutive common stock excluded from the computation of diluted net loss per share (in thousands) because the impact of including them would have been antidilutive:

As of December 31,

1 unchanged sentence

Convertible notes 24,488 26,042 26,042

Stock options 31,541 35,719 29,226

Stock options and PVOs 23,158 31,541 35,719

Unvested RSUs and PVUs 30,013 37,333 38,105

Subsequent Event (Unaudited)

As part of our efforts to restructure and streamline our organizational structure, in January 2024, we committed to a plan to eliminate approximately 25 % of our workforce, and we mutually agreed to the departure of the founders of ironSource Ltd.

In total, we currently estimate that we will incur approximately $ 195 million in employee separation costs, primarily in the first quarter of 2024, in connection with these decisions, largely driven by the modification of equity awards.

Segment Information

We have one reportable segment, software solutions.

See "Revenue Recognition" in Note 1 for detailed information regarding our products and services.

Our chief operating decision maker is the chief executive officer, who on a consolidated basis, assess the performance of, drives improvements in, and decides how to allocate resources in the reportable segment, based on multiple measures of performance including consolidated net income, adjusted EBITDA, and adjusted gross margin.

As such, consolidated net income, which is reported and reconciled with all significant segment expenses on our consolidated statement of operations, is the measure that is most consistent with GAAP, while adjusted EBITDA and adjusted gross margin are additional measures of our segment profitability.

The measure of segment assets is reported on the balance sheet as total consolidated assets.

We do not have material intra-entity sales or transfers.

Changes in and Disagreements with Accountants on Accounting and Financial Disclosure

Compared sentence by sentence after normalising whitespace, quotation marks, case and digits, so re-formatting and restated figures do not read as changed language. Wording changes appear as one removal and one addition. The current filing and the prior one are authoritative.

What changed 10-K

Item 8. Financial Statements and Supplementary Data