Unity Software lays off 25% of workforce in restructuring
Unity Software (U) is cutting 1,800 jobs, approximately 25% of its workforce, as the company restructures and refocuses on its core business.
In a filing, the videogame software provider said it expects the costs and charges associated with this reduction to be "substantially incurred" in the first quarter of 2024 and "primarily relate to employee transition, severance payments, and employee benefits."
Yahoo Finance's Seana Smith and Bradley Smith break down the details with insight into the company's transition to a customer-focused model.
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Editor's note: This article was written by Angel Smith.
Video Transcript
SEANA SMITH: We got to start with Unity Software, a top trender here this morning, after the company announced plans to slash 1,800 jobs, which amounts to about 25% of its workforce. Now Unity is saying that the move is all part of a corporate restructuring plan, a plan that seems to have been in place now for quite some time.
But the significance of this move and why we're seeing-- we're actually looking at shares off under a bit of pressure right now. I think a lot of that has to do with the uncertainty in terms of the direction of this company moving forward, Brad, because we have seen a shakeup at the executive level. The CEO left not too long ago. There was lots of backlash just about a pricing plan that he put forward-- a number of unhappy customers and developers-- he left following that.
And this is not the first round of layoffs that Unity Software has announced as the company tries to restructure its business and really look ahead what is turning out to be a pretty tough time, at least for the gaming industry right now.
BRAD SMITH: Yeah, we might not hear more from the company until February-- late February. Monday, February 26, in fact, is when they're going to be reporting earnings. But as of right now, here's how you can evaluate this, if you're an investor trying to wrap your head around the latest fallout around a pandemic darling. Of course, Unity, when they went public, they saw a 31% pop on the IPO day.
You think about the frame of time that they were publicly traded during 2020, and those pandemic darlings were soaring, Unity moved higher by about 120%. Since then, things have drastically changed. They've had to completely overhaul and become more of a customer focused model is what the internals and the conversations there are really focusing in on.
And what does that mean? That means a cut like this that follows two or three actually other cuts that took place in last year. And so now, you're looking at net net, some back of the folder calculations of 35% worth of headcount reductions versus-- or compared to the total figure and the total headcount figure that they had at the top in the beginning of 2023.
So that is certainly in focus here on the day, and potentially could be one of the other unfortunate themes amid this cost discipline environments that we might hear from some of those other pandemic darlings as well.
