The S-1 Club | Unity is Manifesting the Metaverse

Founded in 2004 as a game studio, Unity has risen to become a foundational piece of infrastructure in the space. The company’s engine — which makes it easier to develop a new game — is used by 53% of the top 1,000 mobile games. Though unprofitable, Unity brought in $541M in revenue in 2019, an annual growth rate of 42%. Big winners of this IPO include Sequoia Capital and Silver Lake Partners.

Below, we delve into Unity’s performance. We discuss the product, profile the management team, and share our takeaways from the balance sheet. But unlike other companies, comprehending Unity and its potential may be less an analytical question, more a philosophical one. This is a business with ambitions far beyond gaming — Unity wants to power realities.

In that positioning, the company radically expands its TAM, an obvious priority of the S-1. Unity hammers its established use in the corporate world, leveraged for construction, urban planning, and other built world projects. Its gaming performance is nothing to sniff at, but management is clearly in pursuit of greater goals.

The sum is a prospect attractive to both sages and shareholders. Not only is Unity angling to be the rails for the Metaverse, the infrastructure that undergirds new worlds, but it’s also a recurring revenue business selling a popular product into a rapidly growing market.