I recently joined Unity to lead investor relations. I'm excited to be part of the team and look forward to working with everyone. Today, I am joined by Matt Bromberg, our CEO, and Jarrod Yahes, our CFO. Before we begin, I want to mention that this conference call includes forward-looking statements about goals, business outlook, industry trends, market opportunities, financial performance, and similar items, which are subject to risks, uncertainties, and assumptions that could result in actual outcomes differing from those expressed in these forward-looking statements. We are not obligated to update any of our forward-looking statements. For more details on factors that may lead to differences in results, please refer to the risks outlined in our latest Form 10-K, specifically in the Risk Factors section, as updated by additional filings with the SEC as needed. Today's call will feature both GAAP and non-GAAP financial measures. Non-GAAP financial measures complement but do not replace or take precedence over GAAP results. A full reconciliation of GAAP to non-GAAP financial results is provided in our earnings release, available on our investor relations website and the sec.gov website. Now, I'll turn the call over to Matt.

Thanks, Alex. It's really good to have you with us, and good morning, everybody. On behalf of all the people of Unity, I'd like to thank each of you for joining us today. The transformation of our company gained significant momentum in the first quarter. Through our commitment to building a culture of execution and discipline, reestablishing trust with our customers and the community, and accelerating both the pace and quality of our product innovation, we're creating the conditions to catalyze rapid growth at Unity. In the first quarter, strength across both the Grow and Create segments helped drive results that exceeded expectations, beating the high end of our guidance for revenue by 5% and adjusted EBITDA by 29%. The progress in our Grow business has been particularly encouraging. Last quarter, we announced the intention to migrate the Unity ad network to our new AI platform, Unity Vector, by the end of Q2. Today, we're excited to report that this migration has already been fully completed, with all the iOS and Android traffic on the Unity ad network now running on Vector, well ahead of schedule. This is a significant first milestone and a testament to our commitment to rapid, continuous product innovation in our advertising business. With Vector now operational, we can begin to leverage data from across the Unity ecosystem to provide deeper insights, optimize performance, and deliver better return on investment for our customers. Our journey to compete in a fundamentally new way has now officially started as our self-learning models adapt in real time, helping customers navigate an increasingly competitive mobile marketplace. The accelerated timeframe of the Vector rollout means that our customers are already experiencing a lift in the return they're seeing from spending with Unity. In iOS, where we've now had enough time to develop reliable data, Vector is providing a 15% to 20% lift in both the number of installs and the value of in-app purchases when compared to our old model. That means more players and more players who spend more, providing our advertisers with a higher return on their investment with us. Although our Android migration is more recent, it's happily on a similar trajectory to where iOS was during the same period of development. Now, we look forward to the next phase of our plan, where we'll work closely with our customers to help optimize and enhance the performance of their user acquisition capabilities over time, while also continuing to invest in improving the fundamental AI each day. These strong early results not only provide confidence that we're on the right track with Vector, but also enable us to continue to take an aggressive approach with respect to the modernization of our ad business overall. Our primary focus is on creating meaningful, sustainable revenue growth over the long term. That means, we don't hesitate to move resources to our best performing products, short-term revenue impacts notwithstanding. As a consequence, in Q2, investors won't yet fully see the Vector-driven lift in our financial results. That said, our confidence in the future of our Grow business has never been stronger. We're equally excited about progress in the Create business. Unity 6, the most stable and performant version of Unity we've ever shipped, has now registered more than 4.4 million downloads since launch. 43% of our active users have already moved to Unity 6, with recent survey data suggesting that more than 80% of users are currently intending to upgrade. We can see this enhanced connection to our customers flowing through to our financial results as well, with subscription revenues in Create growing double digits year-over-year in the quarters. In April, we launched Unity 6.1. 6.1 is the first release to leverage our new production testing methodology, which validates our software in real production environments to ensure that our customers never again have to choose between adopting new features and maintaining stability. Unity 6.1 also significantly enhances the number of platforms our developers can reach, including day one support for Nintendo Switch 2, Meta Quest, Android XR, foldable Android screens, instant games, and web GPU. For the Switch 2, we battle-tested Unity through a first-of-its-kind partnership with Konami, where our internal teams built a full launch title called Survival Kids. The valuable feedback obtained during the development process of this game will drive future enhancements to the Unity engine. We're particularly optimistic about the future potential of AR and VR gaming and entertainment, with recent research predicting the market will reach 216 million players worldwide by 2025. Our goal is to stay at the forefront of this evolution and for Unity to continue to be the go-to platform powering AR and VR experiences, where we're already powering the majority of the top applications in the marketplace. As one measure of Unity's continued strength with the next generation of game developers, all nine of the nine game categories at the Independent Gaming Festival Awards of 2025 went to games made with Unity. In addition, Neva by Nomada Studio and Thank Goodness You're Here by Coal Supper both won 2025 BAFTA awards with Made with Unity titles. An incredible recognition of the talent and creativity in our community. The growth of the Unity platform beyond games into other industry verticals continues to represent the fastest growing part of our subscription business. Consistent strong demand across a wide variety of industries and use cases has resulted in both nine straight quarters of sequential revenue growth, as well as meaningful year-over-year revenue growth as well. New customers include Phillips using Unity for minimally invasive surgery simulation, Siemens, who is modernizing its training and workforce development, and Toshiba Elevator and Building Systems, who are creating digital twins of installation sites. The Unity platform has tremendous potential outside of gaming, and we are increasingly optimistic about our ability to capitalize on this opportunity at scale. I'd like to thank all of our teams globally for their relentless efforts as we continue to transform Unity and earn our customers' trust each day. As the only company we know of that is capable of supporting developers across the full life cycle of development, Unity plays a unique role in helping our customers move from prototype to profitability faster and more efficiently than ever before. It's a role we feel privileged to play. Thank you again for your time and attention this morning. With that, I'll pass it over to Jarrod for an overview of our financial performance.

Thanks, Matt. I'm pleased to report that Unity exceeded the top end of our guidance on all measures in the first quarter. Revenue exceeded the top end of our guidance by $20 million, with adjusted EBITDA coming in $19 million above the top end of our guidance. Grow revenue in the first quarter was $285 million, down 4% year-over-year, with revenue upside compared to our guidance partially driven by an acceleration of the rollout of Unity Vector, where we're seeing better performance than expected at this early stage. In Create, revenue was $150 million, down 8% year-over-year, driven by our transition away from the low margin professional services business. Through this deliberate transformation, we've optimized our revenue mix with the high-margin subscription business now representing nearly 80% of Create revenue. Our core subscription business continues to demonstrate strong momentum, delivering double-digit year-over-year growth this quarter, positioning us for sustainable, profitable expansion. Turning from revenue to non-GAAP profitability, adjusted EBITDA for the quarter was $84 million with 19% margins. Adjusted EBITDA margins expanded 200 basis points year-over-year in the first quarter, driven by operating leverage in the platform and solid cost management across expense lines, particularly in G&A and sales and marketing, where total expense was down roughly $20 million year-over-year. R&D costs are up $10 million over the last few quarters as a result of heavy investment in Unity Vector. We would expect those costs to normalize in the back half of the year as we transition away from running both our legacy and new Unity ad models in parallel. Free cash flow in the first quarter was $7 million, an improvement of $22 million year-over-year. The first quarter is traditionally the most modest seasonally from a free cash flow standpoint, given the concentration of prepaid personnel costs, as well as payments to the supply side of the Grow network. As we focus on driving per-share returns, in the first quarter, we've started to report out on adjusted EPS in our disclosures. Adjusted EPS in the first quarter was $0.24, and investors should expect to see a sharper focus on minimizing shareholder dilution and stock compensation expense, which came down nearly $45 million year-over-year as we lapped M&A-related vestings. In terms of our balance sheet, cash at the end of the quarter was $1.5 billion and debt was $2.2 billion. In February, we priced a $690 million convert and the offering was extremely well received. The deal was upsized and priced with a zero coupon and a capped call with a cap price of $47.74. We used the proceeds of the offering to repurchase $688 million of principal balance of 2026 notes and effectively extend those maturities into 2030. This transaction ensures that Unity has the capital structure with a smoother debt maturity profile, and we now feel extremely comfortable with where we are from a financing standpoint. With that, I'd now like to turn to guidance for the second quarter. We're expecting total second quarter revenues of $415 million to $425 million and adjusted EBITDA of $70 million to $75 million. In Grow, we expect steady sequential revenues driven by improved performance of Unity Vector. This revenue growth is expected to be offset by declines in select legacy ad products in the second quarter. However, as the performance of Vector continues to improve, we expect to see the overall Grow business return to revenue growth, with the performance improvement from Vector outpacing any other headwinds we face. In Create, we expect continued momentum in our subscription business across the gaming and industry verticals. However, we're forecasting a slight sequential decline in Create due to an expected runoff in non-strategic revenues. Before turning the call over for questions, I'd like to extend a warm welcome to Alex Giaimo, who recently joined Unity as our new Head of Investor Relations. And with that, I'd like to thank you for joining us on Unity's first quarter 2025 conference call. And let me turn the call over to Alex so that we can take your questions.

Thanks, Jarrod. We'll now open the call for questions. We'll take our first question from Matt Cost at Morgan Stanley. Matt, go ahead.

Hi, everybody. Can you hear me? Hello?

Yes, go ahead, Matt.

Matt, we can hear you.

Yes. Sorry about that. Yeah, sorry. Great. Well, thanks for taking the question. I guess on the Vector rollout, if we could just dig down one level deeper there, are you seeing the customers that are on Vector respond to that 15% to 20% lift in installs and IAP by increasing their spend? And are you seeing customers shift over their spend from legacy ad products onto the Vector-enabled product? Or is this a dynamic where you're kind of losing business on one hand, but trying to offset it by growing wallet share and increasing spend for the people who are on the new product?

Hey, Matt. Thank you very much for the question. Good to hear from you. The advertising business is a very competitive business, which means there's internal competition and external competition. And I think the best way to think about it is not to try to get into Q2. What's really important is that the performance of Vector is much more positive than even we had expected. It's driving return for advertisers, and what that means is they spend more. We're seeing across the broad set of our customers customers beginning to spend more with us. As all of you know who are following the company, folks in performance-based advertising do not have fixed budgets. They will spend up to the point they hit their ROAS targets. When we perform better and provide more players and more high-value players, they spend more with us. I would imagine that their customers are moving budgets around all the time. But the point is that it's not capped. It's not a winner-take-all business. And so, we're really excited about the broad growth we're seeing across the segment.

Great, thanks. And then on the subscription side, you noted strong growth in the subscription revenue. You're seeing a lot of adoption of Unity 6, which is great. Is this mostly being driven by customers becoming subject to the higher pricing on Unity 6, or is there a meaningful element of subscriber growth in that subscription revenue growth as well?

You will start to see the impacts of some of the significant price increases that we made recently until the back half of the year. So that's not what you're seeing there. You're seeing both growth in the core business, as well as some of the impacts of some older pricing increases that we've made.

Thanks, Matt. We'll go next to Andrew Boone and JMP Securities.

Hi. Thanks so much for taking the question. I wanted to ask again on Vector. Matt, you talked about incorporating data across the Unity ecosystem and optimizing performance. Can you just speak to the trajectory of the improvements to the model that we should be expecting for the back half of the year?

Yes, I think we're being prudent about how we're guiding this business, Andrew, simply because it's a new business for us. It's a new system. We just want to be really thoughtful about how we think about this as we go, which is why we reverted to quarterly guidance at this point. What I can tell you is that it continues to pace out in front of our expectations authentically. As I said, we were able to pull in the launch of Vector by quite a number of weeks, which is going to have a positive impact on our business. It's just not one that we anticipated. The nature of this business, as you've heard me say many times, is an iterative one. The business starts with small improvements, small daily iterative improvements, and we continue to work on the models. The models learn, they adapt. We find new sources of data for those models, and they get better over time. At some point, you begin to see step change functions. We're sort of learning right along with our self-learning models. What I'd tell you at this point is that we're ahead of schedule. We're seeing measurable increases of about 15% to 20%, both in the scale that we're able to provide advertisers and in the quality of the users they are obtaining. Consequently, we have customers who on a broad basis are beginning to spend more. As I mentioned in the preamble here, that's really positive. But what it's also doing is giving us the ability to go back and fully get into modernizing the whole advertising business.

That makes sense. And then I want to ask the obligatory macro question. Have you guys seen anything to date? And is there anything we should keep in mind given the spectrum of potential outcomes for the broader economy as we think about the back half of 2025? Thanks so much.

Yes. I mean, we're obviously really closely monitoring the situation as everybody is. We have not seen any noticeable impact thus far on our business from some of the macro factors that we're seeing out in the world. A couple of just notes on that. The vast majority of our customers are obviously game makers. In general, historically, gaming has been relatively insulated from macroeconomic moves. It's a very efficient and effective form of entertainment on a kind of per hour basis for folks historically. The other thing I'd direct you to is that the vast majority of our advertising spenders, for example, are promoting mobile games and principally free-to-play mobile games. If there is any product that one would expect to be resilient in difficult times, it would be free mobile products. And the last thing I'd say is that I'd reiterate the answer from the question a couple of minutes ago; as long as we're dealing with advertisers who are spending on ROAS, they don't pull back spend based on sentiment like a brand advertiser would. I think those are probably partial reasons that we're just not seeing anything yet. But we want to be prudent about that. We're obviously watching it very, very closely.

We'll go next to Tom Champion at Piper Sandler.

Hi, guys. Good morning. Hopefully, you can hear me. Matt, I just wanted to get your perspective on the timing and sequencing of events here between Vector, legacy Unity, and ironSource. Where are we in kind of the staging of this transition to Vector to the extent you can provide some color on that? And then how does that map to your R&D staff and resourcing behind that growth? And just maybe a broader comment on organizationally, do you feel like the company structure is where you want to be and in a good place to move forward? Thank you.

Great. Thank you so much for the question. I appreciate it. Listen, we've been really focused on making all the investments we need to ensure that Vector and the kind of fundamental power that that brings to our ad stack has everything it needs. To enable that transformation, we significantly increased our investment across the board in machine learning. We brought in new leadership, hired new teams, and are obviously allocating money to GPU and CPU resources and infrastructure and tooling. We're making all the investments we feel that we need to. As Jarrod mentioned in his preamble, some increases in cloud costs that we expect to normalize in the back half of the year. We feel really good about those investments and the impact that it's having. We also reorganized our go-to-market teams a while back, splitting our revenue organization into two global teams, supply and demand, to provide a focus on both some of the newer ad products that we had and also some of the more legacy ad products. But as I said in my opening remarks, we're really focused on having the full advertising segment grow. I'm agnostic with respect to what that mix is. I’m not going to be overly precious or cautious in the immediate term about trying to optimize that. We're structuring ourselves for swift, sharp, long-term growth. I'm sure there will be some movement of customers from our internal products, but the fact is that there's movement across the whole market and that's what's really important. We're going to take hopefully as much share externally, if not, more than we are going to take internally. In the end, we're going to have a fast-growing ad business. That’s how we think about it.

Thanks, Tom. We'll go next to Brent Thill at Jefferies.

Thanks, Alex. Welcome. Matt, if you can just maybe give us your mile markers for the rest of the year on Vector. What are the big milestones you would like to hit through this year at a high level? And for Jarrod, really good margin upside, maybe discuss the cost base and where you see the continued opportunity to drive continued margin efficiency. Thank you.

Yes. The way to think about Vector is that we are just at the beginning. This is essentially Vector 1.0. As I mentioned today, we recently completed the migration and are now fully operational for the first time with these models. We are in the very early stages of this process, which involves investment and learning. The key milestone to highlight is that we are still at the beginning. Looking ahead strategically, I want to emphasize that we are not just an ad network; we are a platform provider. We maintain a first-party relationship with our customers, who often build their games on our platform, and we have a direct connection to billions of customers through our runtime. We believe this gives us significant competitive advantages in this business. The real potential for Unity lies in leveraging these opportunities in the near future. We are not looking too far ahead; there are several initiatives we will focus on in the latter half of this year and into 2026. Internally, we see ourselves at the starting line, just beginning to run, with everything ahead of us.

Yes, Brent. We feel great about where we started the year with 19% EBITDA margins. There's a couple of hundred basis points of year-over-year margin expansion. As we think about profitability for the business, first and foremost, the priority is to be able to resource the business to accelerate the growth, particularly of our ad business. That's extremely important. As Matt pointed out, we are putting a lot of resources into Vector, and we think there's a great opportunity there. With 80% plus gross margins, there's a lot of operating leverage in our business. As you've seen, as ad businesses scale, they can really drop that to the bottom line and significantly improve EBITDA margins over time. We're being thoughtful and prudent about the way we run and operate the business operationally. There's lots of opportunities for automation. We're taking a prudent approach to headcount and we’re rationalizing our software spend, which are all the things you'd expect us to do quarter in and quarter out. But, again, first and foremost, we think there's a great revenue growth acceleration opportunity, and we're making sure to resource that appropriately while keeping an eye on the bottom line.

Thanks, Brent. We will go next to Parker Lane at Stifel.

Hey guys, thanks for taking the question. Can you hear me okay?

Yes.

Perfect. Jarrod, I was wondering if you could deconstruct the sequential decline that you're looking for in Create a little bit more. Coming off of double-digit subscription growth there, strong industry momentum, pricing benefits. Is it simply the non-strategic revenues that are influencing that number down quarter-over-quarter, or are there other things that we should be looking for that would explain that away?

No, that's right, Parker. We experienced another quarter of strong double-digit subscription revenue growth. The industry continues to grow at an accelerated basis. If you think back to the fourth quarter, we had about $15 million of non-strategic revenue that we disclosed. We also spoke about $30 million of non-strategic revenue for the full year. So a bit of a step down from the run rate. You're really just starting to see some of that come off the business in the second quarter.

Got it. Matt, maybe just to follow up on some earlier answers here. So it doesn't sound like there's a hard line in the sand for the transition away from the legacy models. Is that correct? You're kind of just waiting and seeing on the performance of Vector as opposed to setting that date, influencing the way you think about the cost structure in the second half?

No, I wouldn’t. Let me clarify that. This cutover means that we will no longer be running the two models in parallel. We do expect to see some of this cloud cost come off in the back half of the year, and you’ll see effectively the additional costs that we’re seeing come out. Just I want to be super clear about that.

Yes, I was just wondering if there's a specific date where you said this is when it will no longer support or run the legacy models or if it's sort of a moving target based on the performance of Vector.

Yes. No, with the launch of Vector that we've talked about today on the Unity ad network, we are now no longer running on legacy models.

Got it, thanks for the clarification.

Thanks, Parker. We'll go next to Clark Lampen at BTIG. Clark, do you hear us?

Can you guys hear me?

Oh, now we got you.

Yeah, sorry about that. I had two more on Vector. I'm just curious in Q1, did you see any pressure on ironSource or Tapjoy or any of the legacy products or is that something where maybe you're anticipating for a different reason in Q2 that that's going to materialize or there's greater concentration of resources now around Vector? And then Matt, going back to the comment you made around data and ROAS improvements, I'm curious if you could help us understand how the data flow is going to improve potentially as Vector continues to season and the model evolves. At one point, you guys had sort of talked to us generally about cross stats as a product. I'm curious if that's something that you guys have revisited or in the process of introducing? And if so, could you give us a general sense of what you'll have access to and how it could be accretive? Thank you.

Yes. Thanks, Clark. I really appreciate the question. Let me take one at a time. You are right. Your observation is correct. We are aggressively pushing resources into Vector, both from a go-to-market perspective, as well as a technical perspective, and that does have some impact on the iAds business. In addition, again, the iAds business and the Unity ads business operates in a free marketplace with every other ad network in the world. We hope in fact to move some share from iAds, and we are seeing some of that, but we also much more importantly are expecting to move share from others as well. As we provide more returns, we expect overall expenditures to be up with us. But there's no question that there is some movement inside those products, inside our ad segment, absolutely. In terms of your second question, you'll begin to see from us, beginning in the back half of the year but continuing onward, a real focus on trying to bring to bear the additional insights that we have into consumer behavior on our platform and to bring that value not just for our advertising customers, but also for customers of our editor and engine. The opportunity that we have to unlock across the company is this. We have billions of customers who interact on our platform. We have not historically used that insight to develop really clear, valuable insights at a consumer level as to who folks are and how they behave and to think about how we provide value back to our customers.

Thanks very much.

Thanks, Clark. We'll go next to Chris Kuntarich at UBS.

Great. Can you hear me OK?

We can hear you, yes.

Great, thanks. Just wanted to go back to Vector here and how it's going to play with ironSource specifically. Curious if this better than expected progress that you're seeing today has changed how you're philosophically thinking about the need for the ironSource ad network?

Yes. Let me back up and offer a little bit of context. We're in the market with both our ad networks, the Unity ad network and the ironSource ad network, and they are different and they offer different value to different kinds of customers. On any one individual geography or genre of game or actual game, you will see different performance across different networks. That's true not just of our network, but with all the networks in the marketplace. We're currently really happy and really proud of the ironSource team and the network in terms of the value they're providing. We're out in the marketplace offering both products to customers. We plan to continue to do that. So I wouldn't think of this as a zero-sum game between the two networks that we own. We want all our networks to perform the best they possibly can and then customers will move their spend accordingly across the marketplace. We're going to continue to operate in that way. We have four or five different ad products. They provide different value to different sets of customers, and we're going to keep selling those products aggressively and happily.

Got it. And maybe just one follow-up on gross margin. If I heard you correctly, you're going to be sun setting the legacy Unity model here, so you're going to be running on one model through the entirety of Q2. Are there any puts and takes with some of the non-strategic revenue that's going to be coming off in Q2 that would cause gross margin to be down sequentially from Q1?

No, I don't think there's anything that we'd expect in that regard, Chris. I think we should expect relatively stable gross margins into the second quarter. There's no reason why the trajectory of our EBITDA shouldn't be stable to our current EBITDA performance in the first quarter.

Thanks, Chris. We'll go next to David Mak at Arete Research.

Hi, thanks for taking my question. Just one more on Vector from me. Just really to drill into the detail on the timeline of these new Vector-powered DSP products. Is there a reason why there's no discernible financial impact quite yet, maybe due to advertisers still testing, dipping their toes, needing sales support for example? Or is it more the case that these models still need to improve further to be truly competitive on, say, a ROAS basis versus the other offerings out there? And I have a short one for Jarrod as well after that.

Hi, David. Thanks for your call. No, listen, I think it's just two things. One, it's still very early for us. We literally just launched these new models, and we're rolling them out to customers, and so there's a timing element here. But to be really clear, we are already seeing better ROAS, as I said. We're seeing more installs, we're seeing more scale, and our advertisers are seeing better returns. But we're just at the beginning of bringing this to market. So there is a timing element as well. The second element is really just, and we've talked about it a couple of times over the last few minutes, is there are some internal puts and takes on the new Unity ad network versus the ironSource ad network, as we've identified. We're investing really aggressively. So we're going to see some movements there. It's timing and some of the internal revenue mix that is masking some of that upside at this stage.

Great, thanks. And just the one for Jarrod is just, are you able to quantify the non-strategic revenue in the first quarter across Create and Grow? And then what is embedded for each of those in the Q2 guidance? I think you mentioned $30 million for 2025. Is this mostly in Q1 then trailing off after that? That would be helpful. Thanks very much.

Yes, David. There was about $17 million of non-strategic revenue in the first quarter. Our expectation of $30 million for the full year is consistent. Yes, there will be a trail off in Q2 and beyond, and we'll see a bit of a step down in that regard. The good news is that this has now become a small part of our revenues. It's under 2% of the company's total revenues. It gives us the opportunity to be a little bit more clear and transparent and straightforward in our disclosures and really just talk about total revenue and growth in Create and Grow.

Hi, thank you for taking my question. My question is about subscription growth trends. Can you maybe talk about how subscription revenue was trending on a sequential basis and how do you see the key drivers for subscription revenue overall in 2025, both on the user and user per revenue perspective? Thank you.

Sure, Martin. Thank you so much for your question. Subscription revenue growth in the first quarter was 13% year-over-year. So another double-digit growth quarter for us. We feel really great about the trajectory. There are several tailwinds that are driving that subscription growth. Number one, you've heard about some of our success in the industry segment. Matt spoke about some of the new customer wins in areas outside of gaming. We're seeing a lot of new seat growth and expansion in that area. We have very good efforts across the company to ensure we're executing on our strategy around price improvements, and we're seeing that start to flow through the P&L. That'll be a bit of a waterfall, and the impact of those price improvements will increase over the course of the year and we'll continue to benefit from that. Broadly speaking, we feel really good about subscription being 80% of our Create segment at this point and getting larger. Over time, there's the ability to achieve consistent double-digit growth in Create.

Thanks, Martin. We'll go next to Alec Brondolo at Wells Fargo.

Hey, thanks can you hear me okay?

Yes, we can hear you.

So maybe first I would love to ask what percent of Grow revenue Unity ad network represents. I think what you guys are describing is there's a little bit of noise as Vector improves the performance of Unity ad network, but there's a little bit of noise as kind of baby ironSource seeds and shares as some of the other products fall off. Is there any rough math or rough mix you could give us to help us understand what percent of the base Vector might be impacting?

Yes. While we're not breaking down into more granularity the individual reporting areas of Create and Grow, what we can say is that Unity Vector is by far the largest ad product that we have in that Grow segment. We have a number of other ad products that are meaningfully smaller than that. So this is impacting a very substantial portion of the revenues. That's why it's garnering the heavy investment that we're making. This investment that we're making in Unity Vector and this capability that we've developed in machine learning is going to benefit all of the Unity ad products and Grow products over time.

If I can maybe follow up on that point, I guess it's clear that the first priority here was improving the performance of Unity ads on the demand side. Could you maybe help us think about where level play, where mediation kind of falls on your list of priorities for the business, Matt? Is that something that maybe you want to improve in 2025? Is that more of a medium-term story? Any feedback there would be helpful.

Absolutely. Thanks for the question. To your point, our primary focus is on improving user acquisition, both because we think that's the largest opportunity for us in the immediate and long term, but also because strength in mediation is often a function of strength and future acquisition. It's clearly the best place to start. Secondarily, I would say we don’t view mediation as strategically important as others in the market do. The reason is really simple. As I've said many times before, we're not an ad network; we're a development platform. We have first-party connections to customers and data. While mediation is helpful, it is not the only source of insight for us. So, while we're proud of our product and excited about how it's operating, it's perhaps less important to us than others. As a consequence, we're really focused on the user acquisition side.

Great. Thanks for taking the question. Just wanted to ask about where the current performance of Vector rates relative to prior peak performance levels for the Unity and ironSource ad networks. I know it's a tough question, but how would you expect that 10% to 20% improvement to trend over time?

Yes, I'd say this. Last weekend, we saw some of the peak days for ad spend that we had seen in many years. So just at a high level, the growth and the performance are encouraging, not just with respect to where we were yesterday or the day before, but overall in terms of the trajectory of our business. Can you repeat the second part of your question? I'm sorry.

Oh, yes. No, just the 15% to 20% improvement that you called out. How should we expect that to trend over time? You called out more of the data between Create and Grow. Just how should we expect that improvement?

Yes, I mentioned this earlier, but it's worth emphasizing. We're just at the very start of this process. What I'm saying is that we have just launched this product. Even if it provided the same performance, we would still have launched it because we wanted to start learning as soon as possible and because it's more cost-effective. Instead, we are seeing much better-than-expected performance, even at this early stage. However, the nature of our business involves continuous daily learning. My hope is that, as we look back over time, this will be seen as the low point of our business performance. This is especially true for some of the larger and more strategic opportunities we have yet to explore. We believe there's a very exciting long-term opportunity ahead.

Great. And just one follow-up if I could. We know performance marketing budgets can shift quickly and publishers are constantly evaluating, but that evaluation time, are we talking about days or weeks? Just trying to get a sense, given that the platform is so new, what the evaluation period is on the other side.

It depends on the nature of the advertiser. I think it's important to remember for us that the vast majority of our advertisers are game publishers and developers who are purchasing based on return on advertising spend in their games. Different publishers have different time horizons that they're optimizing for. But these are long-term return-based advertisers. I wouldn't expect that when you see shifts, you're going to see them immediately or sharply.

Thanks, Matt.

Hey guys, can you hear me?

Yes.

Oh, beautiful. I'm kind of diving deeper on what you just said, but looking at your advertiser base. You mentioned that those budgets don't really move the same way we would expect typical brand advisors. Any additional color you can add on spending behavior and potential downtimes? How does Vector layer an additional durability into that spend given the ROI you're seeing?

Absolutely. Here's the thing, and I believe, and I understand as well as the next person some of the disruptions and frictions in the macro marketplace. For us, our performance will be principally driven by the quality of our execution. We're not generally speaking moving up and down with macroeconomic trends. That's just not where we are as a business right now. I can tell you that when we provide meaningful and markedly better performance, we see increased advertiser spend. As we increase that performance, we will see more advertiser spend, and that's my expectation. We're already seeing that across a broad base of our customers. It's something that we've been seeing over the prior weeks, right in the midst of, again, all this macroeconomic uncertainty and friction. The beauty of what we do is that if we deliver, customers can see that, they can see it very quickly, and we expect over time for that to trend up.

Thanks for joining us this morning. We appreciate your participation and look forward to connecting with everyone in the coming days and weeks. Have a great day.