First Quarter 2025 Earnings Call. My name is Alex Giaimo, and I recently joined Unity to lead Investor Relations. I'm thrilled to join the team and look forward to working with all of you. Today I'm joined by Matt Bromberg, our CEO; and Jarrod Yahes, our CFO. Before we begin, I'd like to note that this conference call includes forward-looking statements, including statements about goals, business outlook, industry trends, market opportunities, financial performance, and similar items, which are subject to risks, uncertainties, and assumptions that could cause actual results to differ from those expressed in these forward-looking statements. We undertake no obligation to update any of our forward-looking statements. For more information about factors that may cause results to differ, please refer to the risks described in our most recent Form 10-K, particularly in the section entitled Risk Factors, as updated by additional filings we make with the SEC from time to time. Today's call will include both GAAP and non-GAAP financial measures. Non-GAAP financial measures are an addition to, and not a substitute for, or superior to GAAP results. A full reconciliation of GAAP to non-GAAP financial results is available in our earnings release, which can be found on our investor relations website and on the sec.gov website. With that, I'll pass the call over to Matt. Thanks, Alex. That'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 of 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%-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, they 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 quarter. 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 from New Gen Apps 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, not four or five, but 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 Studios, 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. Finally, the growth of the Unity platform beyond games and to 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 Philips, using Unity for minimally invasive surgery simulation, Siemens, who is modernizing its training and workforce development, and Toshiba Elevator and Building Systems, who is 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. Jarrod? 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 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 at $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 prepaids, 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 comp 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 zero coupon, and it 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-$425 million and adjusted EBITDA of $70 million-$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. I would like to thank you for joining us on Unity's First Quarter 2025 Conference Call. Let me turn the call over to Alex, so that we can take your questions. Thanks, Jarrod. We'll now open the call up for questions. If you'd like to ask a question, please click the raise hand button on the bottom left. We'll take a few moments here. We'll take our first question from Matt Kost at Morgan Stanley. Matt, go ahead. Hi everybody, can you hear me? Hello? Yes, go ahead, Matt. Matt, we can hear you. Yeah, sorry about that. Yeah, yeah, sorry. Great. Thanks for taking the question. I guess on the Vector rollout, I guess if we could just dig down one level deeper there, are you seeing the customers that are on Vector respond to that 15%-20% lift in installs and IIP by increasing their spend? Are you seeing customers shift over spend from legacy ad products onto the Vector-enabled products? 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. I think the best way to think about it is not to try to get too cute. What's really important is that performance of Vector is really positive. It's much more positive than even we had expected, and it's driving return for advertisers. What that means is they spend more. We're seeing across the broad set of our customers, we're seeing customers begin 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 they are customers are moving budgets around all the time. The point is that it's not capped. It's not a winner-take-all business. We're really excited about the broad growth we're seeing across the segment. Great. Thanks. Then on the subscription side, you noted kind of strong growth in the subscription revenue. You're seeing a lot of adoption of Unity 6, it seems, 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. That is not what you are seeing there. You are seeing both growth in the core business as well as some of the impacts of some older pricing increases that we have made. Great. Thank you. 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? Yeah. We're being prudent about how we're guiding this business, Andrew, just simply because it's a new business for us. It's a new system. We want to be really—we really want to be thoughtful about how we think about it as we go, which is why we reverted to quarterly guidance at this point. I guess 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, and you've heard me say this many times, is an iterative one. The business starts with small improvements, small daily iterative improvements, and then 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 would tell you at this point is that, again, we're ahead of schedule. We're seeing measurable increases of, as I said, about 15%-20%, both in the scale that we're able to provide advertisers and in the quality of the users that are obtaining. As a consequence, we have customers who, on a broad basis, are beginning to spend more. As I mentioned in the preamble here, that's really positive. What it's also doing is giving us the ability to go back and fully get into modernizing the whole advertising business. Back to what Matt was asking a couple of minutes ago, we're focused on really driving Vector and Vector revenues. If there's some movement from one product to another inside, that's fine with us. We're investing really heavily in the Vector business because we are very confident that over the long term, we'll be able to fundamentally compete in a different way. A couple of quarters ago, when we were just beginning this build, there was a lot on the line for us. I guess what I just want to say is how pleased I am and proud of our team that we've been able to deliver a brand new system that is now delivering measurable improvements for customers. We're just really excited about continuing to lean into that over time. That makes sense. I want to ask the obligatory macro question. Have you guys seen anything to date? Is there anything that we should keep in mind, just given the spectrum of potential outcomes for the broader economy as we think about the back half of 2025? Thanks so much. Yeah. 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 sort of macroeconomic moves. It's a very efficient and effective form of entertainment on a kind of per-hour basis for folks historically. That may be part of it. 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. The last thing I'd say is I'd reiterate the answer from the question a couple of minutes ago, which is that 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 all probably partial reasons that we're just not seeing anything yet. We want to be prudent about that, and we're obviously watching it very, very closely. Thanks, And. 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? How does that map to your R&D staff and resourcing behind that growth? 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. Yeah. 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 is going to have everything it needs. To enable that transformation, we significantly increased our investment across the board in machine learning. We brought in new leadership. We hired new teams. We're obviously allocating money to GPU and CPU resources and infrastructure and tooling. We're making all the investments we feel that we need to. That includes, as Jarrod mentioned in his preamble, some increases in cloud costs that we expect to normalize in the back half. 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 be able to provide focus on both some of the newer ad products that we have and also some of the more legacy ad products. As I said also 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. The fact is that there's movement across the whole market. 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 is sort of how we think about it. Thank you. 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? 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. Yeah. Listen, the way to think about Vector is that in a way, we've just begun. In some ways, it's a sort of Vector 1.0. What I've shared with you today is that we literally just completed the migration a couple of weeks ago. We're now up and running fully for the first time in these models. It is the very, very early innings for us on this. By definition, this process is a process of investment and learning. We're going to continue at that process. I guess the first thing I'd say is, as I think about milestones, we are just very much at the beginning. That's really, really important. As I look forward sort of strategically, I think I guess what I'd reiterate, and we've talked about this on prior calls, is that we're not just an ad network. We're a platform provider. We have a first-party relationship with all of our customers who are frequently building their games on our platform, as well as a direct connect to billions of customers through our runtime. It has always been our contention that that provides some fundamental advantages to us in this business. The real upside for Unity is as we begin to take advantage of those opportunities. Those still sit out in front of us, not way out in front of us. They're the kinds of things that in the back half of this year and into 2026, the kinds of opportunities that we'll be really focused on. I guess the way we think about this internally is like we're at the starting gate. We're just beginning to run. It's all in front of us. I'll let Jarrod pick up some of the cost commentary. As we mentioned, we do have some increased cloud costs as we've been running the two models in parallel, the old model and the new model. One of the advantages of sort of getting to the starting gate and moving is that we'll only be operating one model, which is really helpful from a cost perspective. Yeah, Brent. We feel great about where we started the year with 19% EBITDA margins. There's a couple 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. We think there's a great opportunity there. With 80%+ 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. We're being prudent about the way we run and operate the business operationally. There's lots of opportunity for automation. We're taking a prudent approach to headcount. We are rationalizing our software spend, which are all the things you'd expect us to do quarter in and quarter out. Again, first and foremost, we think there's a great revenue growth acceleration opportunity. We are 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? Yep. Perfect. Jarrod, I was wondering if you could deconstruct the sequential decline that you're looking for and create a little bit more. Coming off a double-digit subscription growth there, strong industries momentum, pricing benefits. Is it simply the non-strategic revenues that are influencing that number down quarter over quarter? 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. 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 are really just seeing some of that come off the business in the second quarter. Got it. Matt, maybe just to follow up on some earlier answers here. It does not sound like there is a hard line in the sand for the transition away from the legacy models. Is that correct? You are kind of just waiting and seeing on the performance of Vector as opposed to setting that date and that influencing the way you think about the cost structure in the second half? No, let me clarify that. This cutover means that we will no longer be running the two models in parallel. We expect to see some of this cloud cost come off in the back half of the year. You'll see effectively the additional cost that we're seeing. You'll see that come out. I want to be super clear about that. Is it principally the cost piece that you're interested in? Yeah. I was just wondering if there's a specific date where you've said this is when it'll no longer support or run the legacy models, or if it's sort of a moving target based on the performance of Vector. Yeah. 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. Yep. Thanks, Parker. We'll go next to Clark Lampin at BTIG. Clark, do you hear us? Maybe with that. Can you guys hear me? Oh, now we got you. [audio distortion] Yep. 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? 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 sort of introducing. Could you give us a general sense for maybe what you'll have access to and how it could be accretive? Thank you. Yeah. Thanks, Clark. Really appreciate the question. Let me take them 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. 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 both from iAds, and we are seeing some of that. Much more importantly, we are expecting to move share from others as well. Also, as we provide more return, we expect overall expenditures to be up with us. There is 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 then 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 to bear, not just for our advertising customers, but also for customers of our editor and engine. What I mean by that is 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. Just let me give you an example from the create side, and then we can move to the grow side. The vast majority of our big customers are operating live services with us. There are games with millions of players. We can provide much greater insight to them on the behavior of those players, how they're pathing through the game, what they're spending, why things are crashing, why the game might be performing better in one geography than another. All these insights that we have not yet begun to package and offer back to our customers. Again, that's an example on the create side that is going to enable them to fully optimize the live services that they're making with us. At the same time, on the grow side, those insights and that understanding of live players obviously has an impact, potential impact on understanding how to better and more efficiently acquire the right kinds of players who are going to be happy inside the game that you're building, and who are going to convert well and engage and spend over time. This is sort of a fundamental wellspring of insight that historically we've not brought to bear on either side of our business. It is our primary strategy. Again, you'll start to see this in the back half of the year, but it will be the work of the next several years in total. It's our primary strategy to deliver that value, which we think nobody else in the world can do, back to our customers. Thanks very much. Thanks, Clark. We'll go next to Chris Kantarich at UBS. Great. Can you hear me okay? 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 ironSource ad network. Yeah. 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. 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. I wouldn't think of this kind of as a zero-sum game in the world between the two networks that we own. I don't know that that's really the way this marketplace plays out. We want all our networks to perform the best they possibly can. Customers will move spend accordingly across the whole marketplace. We are going to continue to operate in that way. As I said, we have four or five different ad products. They provide different value to different sets of customers. We are going to keep selling those products really aggressively and happily. Got it. Maybe just one follow-up on gross margin. If I heard you correctly, you're going to be sunsetting the legacy Unity model here. You're going to be running on one model through the entirety of 2Q. Are there any puts and takes with some of the non-strategic revenue that's going to be coming off in 2Q that would cause gross margin to be down sequentially from 1Q? 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. I think there's no reason why the trajectory of our EBITDA shouldn't be stable to our current EBITDA performance in the first quarter. Great. Thank you. 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. 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? 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've literally just launched these new models, and we're just rolling them out to customers. There is a timing element here. 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. We're just at the beginning of bringing this to market. 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, 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. We're going to see some movements there. It's really timing and some of the internal revenue mix that is masking some of that upside at this stage. Great. Thanks. Just the one for Jarrod is just, are we able to just quantify the non-strategic revenue in the first quarter across create and grow, and then what is embedded for each of those in the 2Q guidance? I think you mentioned $30 million for 2025. Is this mostly in Q1 and then trailing off after that? That would be helpful. Thanks very much. Yeah, 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. I think 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 and create and grow. Great. Thanks very much. Thanks, Alex. Welcome as well. Thanks, David. We will go next to Martin Yang at Oppenheimer. Hi. Thank you for taking my question. My question is about subscription growth trend. 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. Another double-digit growth quarter for us. We feel really great about the trajectory. There are several tailwinds that are driving that subscription growth. I think 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 seek growth and expansion in that area. We have very good efforts across the company in order to ensure that we're executing on our strategy around price improvements, and we're seeing that start to flow through the P&L. That will be a bit of a waterfall. The impact of those price improvements will increase over the course of the year, and we'll continue to benefit from that. I think, broadly speaking, we feel really good about the 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. Thank you. That's it for me. Thanks, Martin. We'll go next to Alec Brondolo at Wells Fargo. Hey, thanks. Can you hear me okay? Yeah, we can hear you. Yeah. Maybe first, I would love to ask what% 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 the Unity ad network, but there's a little bit of noise as kind of maybe ironSource seeds some share as some of the other products fall off. Is there any kind of rough math or rough mix you could give us to help us understand what% of the base Vector might be impacting? Yeah. Alec, while we're not breaking down into more granularity, sort of 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. This is impacting a very substantial portion of the revenues. That is why it's garnering the heavy investment that we're making. What I would also add is 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. There is a tremendous opportunity to leverage some of the intellectual property and the capabilities that we've developed. We are focused on what is the largest area in our Grow segment with the most growth potential, but we expect that to eventually trickle down and benefit the Grow segment in its entirety. 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 LevelPlay, 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. Yeah, 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 the long term, but also because strength in mediation is often a function of strength of user acquisition. It is clearly the best place to start. Secondarily, I would say that we don't view mediation as strategic as maybe some other folks 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 that insight for us. While we're proud of our product and we're excited about how it's operating, it's perhaps less important to us than others. As a consequence, we're really focused on the UA side. Perfect. Thank you so much. Thanks, Alec. We'll go next to Bernie McTernan at Needham. Great. Thanks for taking the question. Just wanted to ask about just 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%-20% improvement to trend over time? Yeah. Thank you for the question. I'd say this. Last weekend, we saw some of the peak days for ad spend that we'd seen in many years. Just at a high level, the growth and the performance is 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 again the second part of your question? I'm sorry. Oh, yeah. No, just the 15%-20% improvement that you called out, how should we expect that to trend over time? You called out marrying more of the data between create and grow. Just how should we expect that improvement? Yeah. Listen, I mentioned this a little bit earlier, but it bears repeating. We are so much at the very beginning of this process. I mean, keep in mind, what I'm literally saying to you is we just launched this product. The fact that we're—and by the way, we would have launched the product if all it did was provide the same performance. We still would have launched it because we would have wanted to begin learning as quickly as possible and because it's more efficient from a cost perspective. That was one possible outcome here. Instead, what we're seeing is much greater than expected performance, even really early on. This business, the nature of this business is daily learning that goes on forever. I hope that this is, as we pull back the camera over time, that this will be the low point of the performance of this business. It is certainly our intention. As I said, particularly with respect to some of the larger and more strategic opportunities we have that we have not yet brought to bear, we think there is a really exciting long-term opportunity here. Great. Just one follow-up, if I could. We know performance marketing budgets can shift quickly, and publishers are constantly evaluating. That evaluation time, are we talking days or weeks? Just trying to get a sense, given the platform is so new, kind of 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. 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. Got it. Thanks, Matt. Thanks, Bernie. We'll take our final question from Faith Brunner at William Blair. Hey, guys. Can you hear me? Yes. Yes. Yes. Oh, beautiful. Kind of diving deeper on what you just said, but looking at your advertiser base, you mentioned that those budgets do not really move the same way we would expect typical brand advisors. Any additional color you can add on the spending behavior and potential downtimes, and then maybe how Vector layers in additional durability into that spend, given the ROI you are seeing? Yeah, absolutely. Here's the thing, and believe me, I understand as well as the next person some of the disruptions and frictions in the macro marketplace. For us, our performance is going to 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 meaningfully and markedly better performance, we see increased advertiser spend. As we increase that performance, we will see more advertiser spend. 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. That's the beauty of what we do is if we deliver, customers can see that. They can see it very quickly. We expect over time for that to trend up. All right. Great. Thank you, guys. Thanks, Faith. With that, we'll wrap up today's call. We want to thank everyone for joining this morning, and we look forward to connecting with you all in the coming days and weeks. Have a great day.