Sysco Q4 2023 Earnings Call Transcript

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Provided by Quartr
February 26, 2024

There are 12 speakers on the call.

Operator

Welcome to Uniti's 4th Quarter 2023 and Year End Earnings Call. My name is Daniel Amir, VP and Head of Investor Relations. After the closing of the market today, we issued our shareholder letter. That material is now available on our website at investors. Unity.com.

Operator

Today, I'm joined by Jim Whitehurst, our Interim CEO and by Louis Visoso, our CFO. But before we begin, I want to note that today's discussion contains forward looking statements, including statements about goals, business outlook, industry trends, market opportunities, expectations for future financial performance and similar items, all of which are subject to risks, uncertainties and assumptions. And you can find more information about these risks and uncertainties in the Risk Factors section of our filing at sec.gov. Actual results may differ, and we take no obligation to revise or update any forward looking statements. Finally, during today's meeting, we will discuss non GAAP financial measures.

Operator

These non GAAP financial measures are in addition to and not a substitute for or superior to measures of financial performance prepared in accordance with GAAP. A full reconciliation of GAAP to non GAAP is available in our shareholder letter and on the sec.gov website. Great. What we'll do now is similar like what we've done in previous quarters. We get a number of inbound questions during the quarter, and we will start with 2 quick questions.

Operator

The first to Jim and then the second one to Luis. So the first question is to Jim. After 5 months here, can you give your take on Unity and kind of provide us also an update on the CEO search?

Speaker 1

Sure. Yes, I can't believe it's been almost 5 months. I have to say I'm even more excited now about the opportunity in front of us, than I was when I joined. You know, we're obviously in the midst of a reset, but let me spend maybe just a minute talking about why I'm so optimistic, and then I'll come back to the CEO search afterwards. So first off, I believe we're making the right interventions to position us to win for our customers, not just today, but for the long term.

Speaker 1

And let me just quickly hit 3 of those. So first off, we've substantially focused our portfolio on products. We're confident that we have unique value for our customers and therefore have permission to win. And we're hearing great feedback. From our games customers, they're seeing the focus in our product roadmaps and our attentiveness to their needs.

Speaker 1

And so we're hearing great feedback there. Same on the industry side where not just from what we've been doing the last months, but in particular, our focus on repeatable software and the partnership we announced with Cap Gemini. It has I've heard from several customers, really positive view of that direction around focus. We've also instituted a much leaner cost structure that provides us a healthy profile. And then from there, we can scale in a profitable way.

Speaker 1

And 3rd, we're in the process of improving our Gro performance, specifically our user acquisition through better use of data and stronger models. And I'm very confident you'll see accelerating growth in our Gro business going forward. The second reason I'm optimistic is that while 2023 was obviously a challenging year for us, we saw some key proof points around the durability of our franchise. So first off, even in the aftermath of the pricing change, our core subscription business, excluding China, grew 18% in Q4. Put it simply, we are essential to the games industry.

Speaker 1

And then with industry, it was actually our fastest growing segment and I believe we've just gotten started and we have meaningful growth potential there. And the partnership with Capgemini should even further accelerate growth there. And finally, our engagement with our editor continues to be super, super strong. We saw that at Unite in November, and we plan to exceed our customer expectations with our next releases of the editor through the course of this year. And the final reason I'm optimistic is that obviously the reset work continues through q one.

Speaker 1

It obscures our financial progress, but we expect to see strong financials in the back half of this year. To the second part of the question, you know, I don't have a super long update. The Board continues to conduct a thorough process to make sure we hire the best leader to write the next chapter of Unity's story, and I'm very committed to supporting the Board and the Board's decision.

Operator

Thank you. Luis, this question is for you. Can you provide additional

Speaker 2

We've accomplished a lot in a short period of time, and we believe that, as Jim just said, that this intervention has positioned Unity for success going forward. If you look back at the end of last year, we started a 2 phase company reset that we expect will enable us to sustainably win with both customers and shareholders. The good news is that phase 1 is mostly behind us. You know, this first phase was all about resetting our portfolio, resetting our cost structure so that we can refocus on our core businesses, the engine, the cloud, monetization, while narrowing our investments on new businesses. And as a result, we're focusing on businesses where we believe we can sustainably create value for customers and generate a return for the company.

Speaker 2

The unfortunate consequence of this first phase is that we had to let go of about 25% of our colleagues. That's too hard. These employees made many, many contributions to Unity and helped customers achieve their goals. We thank them for all their work and and are really sad to see them go. Now what's exciting is actually the 2nd phase of the reset.

Speaker 2

This is about reigniting revenue growth with healthy financials. And the good news is that that starts this year. We expect revenue growth to accelerate in

Operator

Thank you. So now we go kind of the second part here for Q and A. So just for housekeeping, if anybody wants ask a question, you need to raise hit the raise the hand button on the bottom of your screen. So we'll take a couple of seconds here for people to now put in questions.

Speaker 3

Thanks so much. I was just wondering if you could unpack a bit just sort of the recast 2023 numbers after the portfolio review. I think the revenues came down $450,000,000 but the EBITDA came down 174. And then I tried to read the text to understand if some of the things that you divested were EBITDA loss making and it said they were, but then in some of the footnotes, there was no real number in there. So can you just talk a little bit about the recast 2023 base and those adjustments?

Speaker 2

Yes. We know it's not easy to follow all these numbers. So we put a table on our share the first thing is, obviously, we had this one time gain from wet effects. Right? We we show that as $99,000,000 in in revenue, for example.

Speaker 2

You see that in the table, which had a $102,000,000 benefit in EBITDA. So you have to take that into account because that's a one time game. The second thing is the portfolio changes that you alluded to. That's $283,000,000 in 2023. Most of that is in Grow, a small portion to be precise, 15,000,000 is within Grow, which is the Luna business.

Speaker 2

So you have to take that into account. That operated at a at a significant loss, which is why we're exiting these businesses because we could not create a return for us while providing value to our customers. We did not quantify that for you because it's not audited, but but it's a very significant number that we're getting rid of. And 3rd, you have this customer credits that we explained in the share order letter and which we mentioned in the 10 Q last quarter, which was $72,000,000 in revenue and $72,000,000 in EBITDA. So if you really look at the comparable base for 2023, you should start with $1,700,000,000 in revenue and $274,000,000 in EBITDA and that's what we're building from.

Speaker 2

Is that clear

Speaker 1

what you're saying? Okay.

Speaker 3

Yes. Thank you.

Operator

Thank you. Next question is Dylan Becker from William Blair.

Speaker 4

Yes. Thanks, guys. 2, if I could squeeze them. Maybe first combination for Jim and Luis here. You're kind of nearing the end of the strategic review.

Speaker 4

Wonder how you're thinking about to maybe the earlier point, Luis, on getting rid of some loss generating businesses, but also kind of catching up investment as we think about kind of doubling down around the core. Kind of what's the right way of thinking about kind of the trade off of the 2 and how that layers into kind of the growth and margin outlook in the business over time?

Speaker 2

Yeah.

Speaker 1

Well, I'll just start quickly on look, the core of this and we try to be consistent all along internally as we've been going through the reset is this is all focused on getting a portfolio where we believe we can win and then making sure that we are appropriately resourcing that portfolio to win. And so I was clear internally that this exercise wasn't about optimizing 2024 EBITDA. It was about getting us lean and efficient and fully resourcing the areas we expect to win because ultimately, we believe there is a tremendous amount of growth in the company. So Luis, I want to talk a little more about this.

Speaker 2

I totally agree, Jim. Dylan, the way to think about it is we fully funded the priorities that we had in mind, and those are funded to the right levels. And those that we just didn't think we we could generate or return for us or for our customer, we totally defunded. You know, being half pregnant, if you wish, just doesn't make sense. So that's why we feel confident about our ability to reaccelerate growth because we're funding those things that really matter.

Speaker 4

Okay. Great. Super helpful there. And then maybe 1 I

Speaker 1

guess what I would say on that, Dylan, just what I mean, as we kind of exit the years, we get I think we're in generally have our mind, this should be a rule of 40 company and be that way for quite a while, if that gives you a sense of kind of roughly where we see ourselves.

Speaker 4

Absolutely. Yes, okay. Appreciate the color there, Jim. Maybe, you mentioned some of the platform investments too and Unity 6 upselling. I guess how should we think about the pricing and maybe conversion, how you're kind of incentivizing new features within that platform as well?

Speaker 4

It's probably more of a 2025 kind of type of story, but how that kind of fuels the commentary around kind of accelerating momentum throughout the back half of this year as well and kind of thoughts on

Speaker 1

Unity 6? Thanks. Well, I so so I'll start. And, you know, frankly, we are resourcing both Unity 6 and Unity 7. You know, because, well, we won't go too far in the details of that.

Speaker 1

Please come to GDC and you'll hear a lot more details. So we do think that we are heavily funding our road map, road maps against our core kind of product offering. And we'll talk more about that here in a couple of weeks at GDC. In terms of how we're thinking about kind of pricing against that, you're right, it's mainly a 2025 kind of story. So it really doesn't affect the numbers that you see this year.

Speaker 1

What I will say is we think there is a lot of organic growth in this portfolio. So we're not heavily reliant on just kind of raising price. I do think there's more value we provide in our offering. But when we look at our position in the games industry, when we talked about long term growth, that has more to do with our current product suite and kind of future offerings we can have more than pricing leverage. Though we haven't really kind of laid that out for 2025 and beyond in a way that could give you a quantified stretch.

Speaker 2

Yes. Dylan, maybe just two points to reinforce some of the things Jim is saying. You saw that our core business exclude our core subscription business, so that's the editor, excluding China is growing 18%, so very healthy levels of growth. And when we look at engagement, so new projects being started, so the engagement with the editor continues to be very, very healthy. So we're very excited about that.

Speaker 2

And, obviously, there is great interest in all our AI tools from our customers. So they are they are Muse is now available, so they are using it, and and we are happy with the progress we're making, Dylan.

Speaker 4

Great. Thank you, both.

Operator

Great. So our next question is Brian Fitzgerald from Wells Fargo.

Speaker 5

Thanks, guys. In the shareholder letter and maybe just a follow on to Dylan's question, you unpack growth reacceleration in the second half of the year. Can you parse that out a little bit? Is that just primarily from runtime fees? Is it the release of Unity 6?

Speaker 5

Or is there something else feeding into that, maybe the growth of industries like you talked about? Thanks.

Speaker 2

Yes, really, these run time fees does not have an impact in the second half half or nothing meaningful. So the reason why we are excited about and confident that we'll see some acceleration is really back end innovation that we are bringing across for our product lines. Jim talked a little bit about some of the innovation we're bringing on growth to make our products more competitive, data performance, return on ad spending. So we're making a ton of interventions then there so that our business can accelerate. And it's really that.

Speaker 2

It's the innovation across both businesses, both in games and across industries where we expect a secondary growth.

Speaker 1

Yes. Another thing I would say I would add is we're in the middle of a reset. And so we were pretty conservative in the first half of the year because obviously when we are especially dealing with people, right, that gets to be very distracting. And so we're pretty conservative in the first half of the year, but we just kind of look at kind of the market and where we expect as we go forward is another reason you're seeing that. It's both we have confidence in the back half, but it's also if you look at first half to back half, there's also an assumption around a little bit more distraction right now that we will get behind this year as we finalize the reset.

Speaker 5

And it sounds like there's growth in the growth side of the business as well. When you talked a little bit about what's happening sequentially and it being down, was that just kind of developer discontent with kind of how the real time runtime fees were rolled out? Or is it more to what you're talking about, we're going to develop on the tool sets and make the growth side of the business more data informed, more competitive?

Speaker 2

Yeah. We didn't really see as much of an impact. There was an impact, as you mentioned, but it was not very meaningful in Q4. We are not guiding by segment going into 2024, but yes, you're right. We're expecting an improvement in both businesses throughout the year for the reasons that Jim mentioned.

Speaker 5

Appreciate it.

Speaker 1

Thanks. Yes. I guess a little bit more on that. Just to be blunt, last year, we were doing a lot of kind of integration with IronSource and Unity. And frankly, when that happens, you become maybe a little less focused on driving feature velocity.

Speaker 1

And so I do think that level of distraction kind of put us a bit behind. That's now behind us. We have the team integrated and we have a plan that I think we're very confident in, closes any competitive gaps that we have. So and that's somewhat reflected in the growth numbers in the back half of the year.

Speaker 5

Excellent. Thanks guys.

Operator

Great. Next question is Tim Nollen from Macquarie.

Speaker 6

Great, thanks. Actually, perfect segue into my question from the last bit there, which is about the IronSource integration. Could you just talk a little bit more about, I guess, what was not an immediate integration when the acquisition was made? Now, it sounds like you feel like you have completed the acquisition. I've noticed some fairly big name departures from IronSource.

Speaker 6

If there's anything you could talk about that. And then could you just clarify about the $72,000,000 in credits? Just is this something that was done to roll people onto Levelplay platform back in the day and then why is that being unwound now?

Speaker 1

Well, let me maybe start on the work stuff. Well, I mean, naturally, when 2 companies come together, first off, you need to make sure that you're retaining the right people, you have a continuity of business and then over time, you bring the pieces together. And so we were working on that through the course of last year and that kind of culminated ultimately with, I'd say, kind of a full integration at the end of the year as we kind of came into January as part of our overall restructuring. We're a little bit more of a functional organization. So for the first time, we have one owner of commercial, for or kind of a CRO for the ads business across both Unity and IronSource.

Speaker 1

And we have 1 leader of product and technology across both. So we frankly had 2 data science teams until January. We now have 1. We had 2 different kind of data engineering teams. We now have 1.

Speaker 1

And so naturally just how you think about sequencing that in an acquisitions kind of takes a period of time. And so we are there now and we feel like these single teams and singular focus will serve us well. As part of that naturally, the founders who ran kind of IronSource were kind of ready to step back and create room for people within IronSource to come in and take roles. And so as part of that whole integration, I think they decided it was time to step back. I still talk to many of those leaders every week.

Speaker 1

They're heavily engaged and care about the success of their baby and IronSource more broadly for Unity as a forward?

Speaker 2

Yeah. So the second part of your question, Tim, so we've communicated this for some time now. There were some incentives that IronSource provided to their customers before the merger, right? And some of those integration fees were returned to us, and we recorded those as revenue throughout the year. So what we wanted to make sure is that you all had all transparency in what those amounts were.

Speaker 2

So we included that in the table on where we show a revenue by quarter for growth. So most of the difference between that and our reported number is the integration fees that were returned. The only difference is $15,000,000 from Luna, which basically spreads consistent throughout the year. So you can assume $3,000,000 to $4,000,000 per quarter. But everything else is related to the integration fees that were returned to Unity.

Speaker 2

So we're just giving you that exact number so you have it. It's in the base.

Speaker 6

Okay, great. All very helpful. Thank you.

Operator

Thanks. So next question is from Michael Funk at Bank of America.

Speaker 7

Yes. Thank you for the questions. So a couple if I could. Looking at the revenue and the margin guidance for the year, I think you said 25 percent plus EBITDA margin exiting 4th quarter. I mean, it seems like trajectory that could be predicted throughout the year would imply a higher margin by Q4.

Speaker 7

So just curious if that is maybe the headcount reduction benefit going away in second half or reinvestment back into the business. So that's first question is the on the EBITDA margin.

Speaker 2

Yes. Hey, Michael, we are we've been prudent in our guide, as Jim mentioned. We also want to make sure that we're properly investing back as you know back to one of the first questions during the meeting. So we were hitting the right balance. We want to be our rule of 40 company, and we think we can be close to that towards the end of the year.

Speaker 2

So that's what we're trying to achieve. And we clearly see a path to get there. But we're driving as you've seen, we're driving our margins and cost efficiencies hard, but never at the expense of growth.

Speaker 7

Okay. So so the comment was, hope to roll a 40 company by the end of the year. Was that correct?

Speaker 2

Yeah. That would be our target.

Speaker 7

Okay. And then the last one, if I could, on the competitive environment, you mentioned in the shareholder letter, competitive intensity impacting the business. Can you expand on that comment, please?

Speaker 2

Yeah. I mean, on the growth side, we're just seeing a more intense competitive environment. Right? And you've all seen some of our competitors report numbers. Some of them have been better than ours.

Speaker 2

So it's just been a more intense, you know, and and some of the innovation they brought to the market has been strong. And as Jim said, we were busy doing integration work, and now we have very great we know what our gaps are, and we have aggressive plans to close those in the very short period of time. So we're working towards. So that's what we referred to in the note.

Speaker 7

Great. Thank you so much.

Speaker 1

Sure.

Operator

Great. So next question is from Chris Contarich at UBS.

Speaker 8

Great. Thanks for taking the question. Maybe the first one on the multiplayer business. You guys talked about shifting the service to orchestration and managed solutions. Can you just unpack this a bit?

Speaker 8

And then maybe just how we should be thinking about this margin profile going forward?

Speaker 2

Yeah. If you think about our multiplayer business, really, we had 2 things. 1 is kind of think about the hardware component of that, and that is that's just not our strength. That's not a business where we can generate a good return, and that's not a business where we have the scale to offer competitive prices to our customers. So it's exactly what we're not trying to do.

Speaker 2

Having said that, what we can what we offer a unique value is in the orchestration layer of that hosting of the of the game multiplayer or the multiplayer games. So we're going to continue to be in that business. That's a software business. That's a profitable business. That's something that we uniquely can provide to our customers.

Speaker 2

And we're getting out of the hardware business because as I just said, we're just not that's not unique for Unity to provide value to our customers.

Speaker 8

Got it. And maybe just one one follow-up on China. I know you had talked about growth ex China within the engine. But just curious, we've heard it across the space that the Chinese gaming ad spend has been a source of outperformance. Can you just talk a bit about how this performed in 4Q for you and just kind of the opportunity for Unity on a go forward basis?

Speaker 8

Thanks.

Speaker 2

Yeah. So you have to think about China in different ways, right? The Create business is mostly, you know, our customers in China do you know, developing games in China. That business has been tough. As we know, there are some restrictions in the Chinese market, and that continues to impact our growth in Create specifically.

Speaker 2

On Grow, our growth in China, which reflects 2 things again. It reflects business in China, but also Chinese based customers doing business outside of China, that has been performing well just like any other region. So we've been seeing good growth there.

Speaker 8

Got it. Thank you.

Operator

Great. Next question is Andrew Boone from JMP Securities.

Speaker 9

Great. Thanks so much for taking my questions. Can you talk about the slimming down of the portfolio and whether that changes the trajectory at all for non gaming, your industry's business? And then for my second, how do we think about professional services following the Capgemini partnership? Is there any change in strategy or anything else we should note there?

Speaker 9

Thanks so much.

Speaker 1

Yes. Maybe I'll start there. So like look, obviously revenue goes down because professional services is a lot of dollars. So, yeah, but that's why we kind of showed the reset in the numbers. Our strategy, I come from an enterprise background.

Speaker 1

I have been blown away at how much interest there is and frankly, how much patience there has been from our customers kind of with us to get this right because frankly, there is no other solution that's anywhere near as compelling as what we can offer. And that goes from visualization,

Speaker 10

so how

Speaker 1

do you connect within customers with a richer view of product to configuration through distribution, all the way back to obviously the design things. There's a whole education and training component with ARVR. But one of the things you can realize as I talk through all of these things, visualization is a component of a solution. You know, whether that is a, you know, a way that you're interacting with your customers in a richer way or whether that is, you know, building education content. Right?

Speaker 1

So as you will often see with infrastructure software companies, you're very much partner led in how you go to market because building those solutions is not our forte. And so we've made a what we're doing. Who can take that software and build solutions and that's their business. So I feel highly confident that by focusing on software and building partnerships with people who frankly have more scale and expertise on delivering in solutions, we will substantially accelerate that business. I'm super excited about it.

Speaker 1

Obviously, higher margin profile because it's a software business. But again, if you look at infrastructure software companies, if you think about visualization and what we do as a component of infrastructure, virtually all software companies that do that are heavily partner led. And so what you're seeing is a strategy for us to move in that direction. We'll get much better distribution. I think we'll get much better outcomes by working with people like Capgemini who are experts in delivering solutions and we'll just get a lot more scale.

Speaker 1

Capgemini can bring a lot more people to this than we certainly can in professional services. So we are I am absolutely convinced the company is absolutely convinced that we call it industries, but selling into non gaming enterprise customers is a tremendous opportunity for us going forward. But again, we want to recognize we're a software company and we're going to build an efficient, effective kind of go to market in a way that, that infrastructure is turned into solutions for our customers and Capgemini is part of that. And again, talking to some of our customers, they're really excited about it because I think they know that we're better at building interactive 3 d software, not necessarily building their industry vertical solutions out of that. Great.

Operator

Thanks. So next question is Matthew Cost from Morgan Stanley.

Speaker 2

Hey, Matt.

Speaker 10

Hi. Thanks for taking the question. Maybe I'll just start by following up on industries. I think that you said in the opening paragraph of the shareholder letter that you think it can be a bigger business than gaming. So I guess, are there specific use cases or industry verticals that you're seeing really strong uptake in that you feel you can have that level of confidence in it that it can get from, I think you said 23% of the subscription business to the majority of it over time?

Speaker 10

And then I have a follow-up. Thank you.

Speaker 1

Yes. Well, I will start and maybe I'll just give you a little bit of color on a couple of the use cases. And I'm going to try to take names out of it because honestly I'm not sure who we actually have commitments to be able to use their names. So and let me just do several real quick. So one is there are a number of luxury retailers who don't necessarily have all of their inventory in every single store that they have, but they want to have rich experiences so people can see in detail their products.

Speaker 1

And this goes from jewelry to clothing. And so we have multiple customers who use our technology to be able to have an iPad in the store where they have immersive real time, so you can spin around the product, you can zoom in, you can look at it closely. And according to these customers, there's no other way to do it in a performant way on an iPad. I know that sounds simple, but again, to have a real time engine that's efficient enough that somebody can spin it around in real time, zoom in, It just we are the best way to do that. So there's a whole series of, I luxury retailers who see that.

Speaker 1

Obviously, that can go beyond luxury retail. We're seeing on the industrial side customers saying, hey, we have 10 different PLM system or CADCAM systems. We want to have one visualization layer that can take data from all of those and make it available widely, whether it's to end customers or to engineers across the company. Now again, if you have a big AutoCAD and you have a $5,000 workstation, you can spin around interactive real time three d. But when you want to be able to show that to people on a web browser or an iPad or a phone, we are the best solution to be able to do that.

Speaker 1

So in all types of industry, whether that's kind of automotive, aerospace, etcetera, there's a lot of interest in us being the visualization solution, in those markets. And finally, kind of education and training, especially with ARVR. I was talking to one large construction company that is using this. So when a worker kind of gets on-site, they can put a VR headset on and kind of have a sense of how something is supposed to look. But that could be used for training, especially like high stakes training, like in a nuclear power facility where you want to train people.

Speaker 1

The ARVR aspect of that's pretty interesting. I think with the launch of the VisionPRO, I know people talk about it a lot some of the consumer use cases, but we're excited to work with Apple on some of the industry's use cases around it. So those would be three examples. But again, to emphasize, the reason I'm so excited about it is it's not like we're a player in this. We're about the only player who can do real time interactive, you know, 3 d on lighter weight devices like web browsers, iPads and phones.

Speaker 1

And that's why I think there's so much interest from enterprises in us, for those types of use cases. And obviously we have more digital twins in the world in general, whether it's kind of products and supply chains are more kind of digitally connected, it just creates more and more opportunity for us.

Speaker 10

Great. Thank you. And then secondly on the growth side, I think it's been addressed a little bit already in the Q and A that there's a pretty big disparity between a public competitor and how fast they're growing their ad network versus what Gro has been doing recently. But it strikes me that it's actually a very big opportunity for Gro to catch up. So I guess, are there specific investments or go to market strategies that you're seeing have changed in the competitive landscape, maybe new technology that you're specifically focused on to try to close that gap that you would call out?

Speaker 1

Yeah. I mean, I'll start a little bit. So the answer is simply yes. There's a lot of incremental investment in technology, both in our data stack and our data manipulation capabilities. There's investments in our product suite to make sure that we are best getting the data that's most helpful, to help our monetization customers, you know, kind of increase their effectiveness at data science.

Speaker 1

Those investments, I will say, those are incremental dollars investment. But as we looked bringing the or completing the merger of IronSource and Unity rather than dropping some of those synergies to the bottom line, we've told those teams to reinvest those synergies to be able to fund a much higher faster feature velocity to both close gaps and take some leadership in those areas. I agree with you. I think there's a lot of opportunity there. What I hear over and over from our customers is, hey, we want to have multiple ad networks.

Speaker 1

That is good for us long term. So our customers really, really, really want to see us win in this space and so which also gives me confidence that there's a real desire to see us continue to improve in the space and a desire to work with us as we go forward.

Speaker 10

Thank you so much.

Operator

Great. So, last question is Jonathan Kees from Daiwa.

Speaker 11

Hi, can you hear me? Yes. I will. Okay, great. Thanks.

Speaker 11

Thanks for taking my questions. I'll keep mine simple. In the previous call you talked about looking for the right KPIs and measuring going forward from that. Can you talk about in terms of what you've agreed to in terms of what you think would be better KPIs? Are we still looking at like previous metrics like over 100 ks, how many 100 ks customers, the number of customers over 100 k yearly revenues, a dollar based net expansion rate, or are those separate metrics that will still be given no matter what?

Speaker 11

Thanks.

Speaker 2

Yeah. I think there are there are several go ahead, Jim. It seemed like you wanted to

Speaker 1

No. No. No. Go ahead. I think there are

Speaker 2

several metrics that are important, you know, that we've shared with you over time. I think that the percent of our of the percentage of our business going to industries is important given the size of the opportunity that we've discussed and Jim has talked extensively. I think the number of customers and net expansion rate are good indications. Obviously, it's a tricky number because it's total company, so it's not as indicative as I think we've consistently also talked about the market share. How many what percentage of the games of the top 1,000 games are made with Unity on both platforms is a good indicator of how engaged the community is.

Speaker 2

So we'll keep on providing those metrics, and we'll we'll add some more as we continue to make progress across industries. That would be my view, Jonathan.

Speaker 11

Great.

Operator

Great. Thank you so much for everybody dialing in to the call here. We're looking forward to seeing some of you at kind of our upcoming conferences this quarter. Thank you, and have a great day.

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