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Video Game Engine Maker Unity Technologies Files for IPO

By Eric Volkman – Aug 25, 2020 at 3:39PM

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The company will be a somewhat under-the-radar play in the gaming segment when it hits the market.

It helps power video games; now its powering a big round of capital raising. Unity Technologies, a company whose core asset is the Unity "engine" upon which many games are built, has filed for an initial public offering (IPO).

Unity claims that it is "the world's leading platform for creating and operating interactive, real-time 3D content." According to its own figures, 53% of the top 1,000 titles available on Apple's (AAPL -2.63%) App Store and Alphabet's Google Play in 2019 were made with its tools. That year, around 3 billion Unity-fueled apps were downloaded monthly by users.

Woman on a couch playing a video game.

Image source: Getty Images.

In addition to volume, the company says in its IPO filing that one of its major competitive advantages is the fact that "[c]ontent made with Unity is real-time, allowing it to instantly adapt to end-user behavior and feedback."

It also "allows graphics to be expressed with 3D shape and depth, permitting multiple viewing angles, and enabling augmented and virtual reality."

Games made with Unity can be deployed on any major platform, mobile or otherwise. Video game titles run on Microsoft's (MSFT -2.31%) Windows and Apple's macOS operating systems, plus Microsoft's Xbox gaming console, among many other platforms.

In spite of its prominence and reach, Unity has not been profitable. Its net loss was just over $54 million in the first six months of this year, although this was narrower than the $67 million shortfall of the same period in 2019. Revenue, meanwhile, rose by nearly 39% year over year from January to June of 2020 to hit $351 million.

Unity has not yet set a date for its IPO, and it has determined neither the number of shares it will sell nor the price. Following the IPO, it plans to list its shares on the New York Stock Exchange.

Suzanne Frey, an executive at Alphabet, is a member of The Motley Fool's board of directors. Teresa Kersten, an employee of LinkedIn, a Microsoft subsidiary, is a member of The Motley Fool's board of directors. Eric Volkman has no position in any of the stocks mentioned. The Motley Fool owns shares of and recommends Alphabet (A shares), Alphabet (C shares), Apple, and Microsoft and recommends the following options: long January 2021 $85 calls on Microsoft and short January 2021 $115 calls on Microsoft. The Motley Fool has a disclosure policy.

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