KEY TAKEAWAYS
- Shares of videogame development platform maker Unity Software tumbled after saying it plans to lay off 25% of its workforce.
- The cuts are part of a corporate restructuring plan and mark the company’s fourth round of layoffs since July 2022.
- Unity Software is also severing ties with Weta FX’s professional services.
Shares of videogame development platform provider Unity Software (U) tumbled 8% Tuesday after saying it plans to lay off about 1,800 employees or 25% of its workforce.
The cuts are part of a restructuring plan to streamline operations and come after interim CEO Jim Whitehurst announced a “comprehensive assessment” of the company’s portfolio in November that he warned would likely lead to a reduction of the company’s headcount.
The company said it cannot currently estimate the total costs related to the move such as severance packages and employee benefits, though it expects most costs will be incurred in the first quarter of 2024.
The layoffs come after a tough 2023 for Unity, with a pricing change in September drawing criticism and protests from game developers who rely on Unity’s technology. Just a month later in October, there were changes in leadership, as former CEO John Riccitiello stepped down and former Red Hat CEO Jim Whitehurst was named interim CEO and president.
Analysts at Jefferies said in a research note this week that they believe Interim CEO Jim Whitehurst “is already having a positive impact on the business,” adding that “while painful, we believe this is the right approach to align the company with the reality of the demand environment.”
Unity shares fell 8% to $35.87 per share Tuesday following the layoff news, though they’ve gained more than 15% over the past year.