After a tumultuous 2023, Unity made several changes to its business this year including a mass layoff that impacted around 25% of its workforce. In a recent filing with the United States Securities and Exchange Commission, the company has revealed the cost of making mass layoffs.
“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 $205 million in the nine months ended September 30, 2024, which included $127 million of incremental stock-based compensation,” Unity disclosed in the filing.
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“Of the incremental employee separation costs, $15 million are within cost of revenue, $46 million are within research and development, $52 million are within sales and marketing, and $92 million are within general and administrative. Additionally, in November 2023, we committed to a plan to reassess our real estate footprint. We incurred $45 million of restructuring costs, primarily related to office closures in the nine months ended September 30, 2024.”
The layoffs and administrative changes came after the company announced a controversial change to its runtime fee which led to a backlash from the gaming community. The company was later forced to reverse the changes.
In the company’s recent earnings call, it revealed that its year-over-year revenue for the quarter fell to $446.5 million compared to $544.2 million it recorded the same time last year. This decline is coming despite the company’s expenses falling from $520.3 million to $461.6 million. Unity reported an overall net loss of $124.5 million in the third quarter.
The company said third-party investors hold 20.5% ownership in Unity China. However, they are considering repurchasing the third-party interest in Unity China. Consequently, the redeemable noncontrolling interests in Unity China are recorded as temporary equity on the company’s condensed consolidated sheet.
