Q4 2020 Form 10-K
Total Page：16
File Type：pdf, Size：1020Kb
UNITED STATES SECURITIES AND EXCHANGE COMMISSION Washington, D.C. 20549 FORM 10-K (Mark One) ☒ ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 For the fiscal year ended December 31, 2020 OR ☐ TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 For the transition period from _______ to _______ Commission File Number: 001-39497 UNITY SOFTWARE INC. (Exact name of registrant as specified in its charter) Delaware 27-0334803 (State or other jurisdiction of (I.R.S. Employer incorporation or organization) Identification No.) 30 3rd Street San Francisco, California 94103‑3104 (Address, including zip code, of principal executive offices) (415) 539‑3162 (Registrant's telephone number, including area code) Securities registered pursuant to Section 12(b) of the Act: Title of each class Trading Symbol(s) Name of each exchange on which registered Common stock, $0.000005 par value U The New York Stock Exchange Securities registered pursuant to Section 12(g) of the Act: None Indicate by check mark if the registrant is a well-known seasoned issuer, as defined in Rule 405 of the Securities Act. Yes o No x Indicate by check mark if the registrant is not required to file reports pursuant to Section 13 or 15(d) of the Act. Yes o No x Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days. Yes x No o Indicate by check mark whether the registrant has submitted electronically every Interactive Data File required to be submitted pursuant to Rule 405 of Regulation S‑T (§232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit such files). Yes x No o Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non‑accelerated filer, a smaller reporting company, or an emerging growth company. See the definitions of “large accelerated filer,” “accelerated filer,” “smaller reporting company,” and “emerging growth company” in Rule 12b‑2 of the Exchange Act. Large accelerated filer ☐ Accelerated filer ☐ Non‑accelerated filer ☒ Smaller reporting company ☐ Emerging growth company ☒ If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act. ☐ Indicate by check mark whether the registrant has filed a report on and attestation to its management’s assessment of the effectiveness of its internal control over financial reporting under Section 404(b) of the Sarbanes-Oxley Act (15 U.S.C. 7262(b)) by the registered public accounting firm that prepared or issued its audit report. Yes ☐ No x Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b‑2 of the Exchange Act). Yes ☐ No x The aggregate market value of the voting and non-voting common equity held by non-affiliates of the registrant, based on the closing price of a share of the registrant’s common stock on December 31, 2020, as reported by the New York Stock Exchange on that date, was approximately $14.4 billion. The registrant has elected to use December 31, 2020, which was the last trading date of the registrant’s most recently completed fiscal year, as the calculation date because the registrant was a privately held company on June 30, 2020 (the last business day of the registrant’s second fiscal quarter). This calculation also does not reflect a determination that certain persons are affiliates of the registrant for any other purpose. As of February 26, 2021, there were 277,904,478 shares of the registrant’s common stock outstanding. DOCUMENTS INCORPORATED BY REFERENCE Portions of the registrant’s definitive proxy statement for the 2021 Annual Meeting of Stockholders, which will be filed with the Securities and Exchange Commission within 120 days after the registrant's fiscal year ended December 31, 2020, are incorporated by reference into Part III of this Annual Report on Form 10-K where indicated. UNITY SOFTWARE INC. FORM 10‑K For the Year Ended December 31, 2020 TABLE OF CONTENTS Page PART I Item 1. Business 1 Item 1A. Risk Factors 17 Item 1B. Unresolved Staff Comments 62 Item 2. Properties 62 Item 3. Legal Proceedings 62 Item 4. Mine Safety Disclosures 62 PART II Market For Registrant’s Common Equity, Related Stockholder Matters, and Issuer Item 5. Purchases of Equity Securities 62 Item 6. Selected Financial Data 64 Management’s Discussion and Analysis of Financial Condition and Results of Item 7. Operations 65 Item 7A. Quantitative and Qualitative Disclosures About Market Risk 84 Item 8. Financial Statements and Supplementary Data 86 Changes in and Disagreements with Accountants on Accounting and Financial Item 9. Disclosure 126 Item 9A. Controls and Procedures 127 Item 9B. Other Information 128 PART III Item 10. Directors, Executive Officers, and Corporate Governance 128 Item 11. Executive Compensation 128 Security Ownership of Certain Beneficial Owners and Management and Related Item 12. Stockholder Matters 128 Item 13. Certain Relationships and Related Transactions, and Director Independence 128 Item 14. Principal Accountant Fees and Services 129 PART IV Item 15. Exhibits and Financial Statement Schedules 130 Item 16. Form 10-K Summary 131 SIGNATURES 132 3 NOTE REGARDING FORWARD-LOOKING STATEMENTS This Annual Report on Form 10-K contains forward-looking statements about us and our industry that involve substantial risks and uncertainties. All statements other than statements of historical fact, including statements regarding our future results of operations or financial condition, business strategy and plans, and objectives of management for future operations are forward-looking statements. In some cases, you can identify forward-looking statements because they contain words such as “anticipate,” “believe,” “contemplate,” “continue,” “could,” “estimate,” “expect,” “intend,” “may,” “plan,” “potential,” “predict,” “project,” “should,” “target,” “toward,” “will,” “would,” or the negative of these words or other similar terms or expressions. These forward-looking statements include, but are not limited to, statements concerning the following: • our expectations regarding our financial performance, including revenue, cost of revenue, gross profit or gross margin, operating expenses, key metrics, and our ability to achieve or maintain future profitability; • our ability to effectively manage our growth; • anticipated trends, growth rates, and challenges in our business and in the markets in which we operate; • our expectations regarding the demand for real-time 3D content in gaming and other industries and our ability to increase revenue from these industries; • economic and industry trends; • our ability to increase sales of our solutions; • our ability to attract and retain customers; • our ability to expand our offerings and cross-sell to our existing customers; • our expectations regarding the plans announced by Apple with respect to access of advertising identifiers and related matters, and the potential impact on our financial performance; • our ability to maintain and expand our relationships with strategic partners; • our ability to continue to grow across all major global markets; • the effects of increased competition in our markets and our ability to successfully compete with companies that are currently in, or may in the future enter, the markets in which we operate; • our estimated market opportunity; • our ability to timely and effectively scale and adapt our solutions; • our ability to continue to innovate and enhance our solutions; • our ability to develop new products, features and use cases and bring them to market in a timely manner, and whether our customers and prospective customers will adopt these new products, features and use cases; • our ability to maintain, protect, and enhance our brand and intellectual property; • our ability to identify and complete acquisitions that complement and expand the functionality of our platform; • our ability to comply or remain in compliance with laws and regulations that currently apply or become applicable to our business in the United States and globally; • our reliance on key personnel and our ability to attract, maintain, and retain management and skilled personnel; 4 • the effects of the COVID-19 pandemic or other public health crises; and • the future trading prices of our common stock. We caution you that the foregoing list may not contain all of the forward-looking statements made in this Annual Report on Form 10‑K. You should not rely on forward-looking statements as predictions of future events. We have based the forward-looking statements contained in this Annual Report on Form 10‑K primarily on our current expectations and projections about future events and trends that we believe may affect our business, financial condition, and operating results. Readers are cautioned that these forward‑looking statements are only predictions and are subject to risks, uncertainties, and assumptions that are difficult to predict, including those identified below, under “Part I, Item 1A. Risk Factors” and elsewhere herein. Moreover, we operate in a very competitive and rapidly changing environment. New risks and uncertainties emerge from time to time, and it is not possible for us to predict all risks and uncertainties that could have an impact on the forward-looking statements contained in this Annual Report on Form 10‑K. The results, events, and circumstances reflected in the forward-looking statements may not be achieved or occur, and actual results, events, or circumstances could differ materially from those described in the forward-looking statements.