Shares of video game platform company Unity Software (NYSE:U) are up by more than 4% after the company announced that it would cut 265 jobs, or about 3.8% of its roughly 7,000 employee workforce. The Unity Software layoffs come as part of a “reset” and “refocus” plan.
As part of the layoffs, the company will amend some of its agreements with Wētā FX Limited, which will result in Unity ending its obligation to provide certain services to Wētā. The two parties have also agreed to amend certain intellectual property (IP) rights between themselves. Unity acquired Wētā’s technology, pipeline, and engineering staff for $1.625 billion back in December 2021.
“The Company will recognize deferred revenue and additional consideration in connection with the amendments of approximately $114 million, and will expense the recorded cost of a related contract intangible asset of approximately $131 million, which will occur in the fourth quarter of 2023,” said Unity in a Form 8-K filing.
Unity Software Layoffs: Unity to Lay Off 3.8% of Global Workforce
On top of that news, Unity also announced that it has committed to a plan to close down corporate offices in 14 locations. Employees who work at these locations will be provided with the opportunity to work remotely, unless their jobs are location-dependent. The company stated that it is not yet able to accurately estimate the cost and charges associated with this plan, although they expect the costs to be incurred during Q4 2023 and Q1 2024.
During Unity’s third-quarter earnings, the company warned that it would “likely” enact layoffs in the near term and wind down certain product offerings and office exposure. Unity said that these changes would be completed before the end of the first quarter of 2024. The video game company has not reported profitability based on GAAP EPS since it became a publicly traded company in late 2020. GAAP EPS for the fourth quarter is forecast to be a loss of 42 cents.
Unity has now conducted three rounds of layoffs this year. The first round occurred in January and affected almost 300 employees while the second occurred in May, affecting 600 employees.
On the date of publication, Eddie Pan did not hold (either directly or indirectly) any positions in the securities mentioned in this article. The opinions expressed in this article are those of the writer, subject to the InvestorPlace.com Publishing Guidelines.
