Unity Software : M&A Call(opens in new window)

ironSource Ltd. NYSE:IS

M&A Call

Wednesday, July 13, 2022 1:00 PM GMT

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Contents

Table of Contents

Call Participants..................................................................................	3
Presentation..................................................................................	4
Question and Answer..................................................................................	12

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IRONSOURCE LTD. M&A CALL - PRELIMINARY COPY | JUL 13, 2022

Call Participants

EXECUTIVES

Ingrid Lestiyo

Senior VP & GM of Unity Operate

Solutions

Unity Software Inc.

John S. Riccitiello

CEO, President & Executive

Chairman

Unity Software Inc.

Luis Felipe Visoso

Senior VP & CFO

Unity Software Inc.

Richard Hugh Davis

Vice President Investor Relations &

Strategy

Unity Software Inc.

Tomer Bar-ZeevCo-Founder,Chairman & CEO ironSource Ltd.

Unknown Executive

ANALYSTS

Franco Rafael Granda

Penaherrera

D.A. Davidson & Co., Research

Division

Jason Boisvert Bazinet

Citigroup Inc., Research Division

Matthew Andrew Cost

Morgan Stanley, Research Division

Unknown Analyst

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IRONSOURCE LTD. M&A CALL - PRELIMINARY COPY | JUL 13, 2022

Presentation

Unknown Executive

[ Richard Davis ], Vice President of Investor Relations, and I would want to announce that we have a merger announcement that we're going to talk about today, Unity and ironSource. We're very excited about it. First, I'll start with the safe harbor and then roll into the more important interesting thing.

So I would like to remind participants that during this conference call, we will be making forward-looking statements, including statements about goals, business outlook, industry trends, market opportunities and expectations for future financial performance, all of which are subject to risks, uncertainties and assumptions. You can find more information about these risks and uncertainties in the Risk Factors section of our filings at sec.gov in the press release that we released this morning. Actual results may differ and would take no obligation to revise or update any forward-looking statements.

We will also be discussing non-GAAP financial measures today and reconciliations between our GAAP and non-GAAP financial results and a discussion of the limitations of non-GAAP financial measures can be found in our earnings release, which was issued earlier today and is available on our website under the Investor Relations tab in the appendix to this call's slide deck.

Now with that, let me turn the call over to John.

John S. Riccitiello

CEO, President & Executive Chairman

Good morning, and thank you, everyone, for coming on to this call in short notice. We have some exciting news to share with you today, and we've signed a definitive agreement to combine with one of the industry's best run and [ physician ] growth and monetization platforms out there, ironSource.

Now with me today, we have Tomer Bar-Zeev, the Founder and CEO of ironSource, Luis Visoso, our CFO. And for the Q&A part of the call. Joining us are Marc Whitten, SVP, Unity Create; Ingrid Lestiyo, SVP and GM of Operate business; and Omer Kaplan, the Co-Founder and CRO of ironSource. And we have a presentation to walk you through all of us in describing the transaction, and then we'll open up for some questions.

Numbers-wise, Luis will go through the specifics of the combination, but also provide a guidance preview of an improving but lowered full year 2022 growth trajectory designed to proactively reflect our current assessment of macro trends product launch and competitive dynamics with our monetization business.

But with that, let's get on to the transformative days. Start with a little bit of our shared vision. From our founding in Copenhagen in 2006 to today, Unity has had a single vision, our [ North Star ], and that is to help creators build amazing content in later to operate and grow their businesses in the app economy.

Half a world away in [ Tel Aviv ] in 2010, a team of engineers started a company whose mission is to help any app developer turn their app into a scalable, successful business. By combining massive and differentiated data at scale with an iterative design feedback loop, they took the mystery of how hard it is to predict driven game development business. That company is called ironSource. And we think it's great that we can -- when we combine Unity, we will have 2 major hubs, one in Copenhagen and one in [ Tel Aviv ] that are our foundation and just an hour apart in time zones.

That brings us to today and the reason we're joining forces with ironSource. We have a huge, shared vision that we plan to unlock years before either of us might otherwise have gotten to this alone. This shared vision is predicated on a few simple thoughts.

First, we believe that the majority of the world's content will be real-time 3D. We see evidence of this every day in our shared market. Second, we know that only a fraction of creators today find the economic success they're looking for. And third, we are combining to realize a [ Krisvision ] years ahead of its time, where we combine creation and growth in a single platform to increase creator success. We will help

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IRONSOURCE LTD. M&A CALL - PRELIMINARY COPY | JUL 13, 2022

creators fund success consistently based on science, not just intuition and luck. And through this, we expect to increase the success of our customers and thereby earn an increase in our pave way, first in games and in verticals beyond gaming.

We'll talk you through each of these benefits later on this call, but let me summarize the key ideas we'd like you to take away from this discussion today. We tend to accelerate our path to becoming a leading end-to-end platform, combining creation and growth in a way that creates great value for our customers. Game companies and companies and industries beyond gaming will produce better content and enjoy superior user acquisition, [ way to gain ] customer success. We expect that this will propel their success and ours.

Second, we captured 3 specific synergies from combining our platforms, driving greater customer success and enabling the new Unity to deliver a $1 billion EBITDA run rate by the end of 2024.

And I think this may surprise some of you on this call. Our combined company will enjoy a roughly 50-50 revenue mix between our creation and growth technologies and services.

The next 2 slides outline our vision for the Unity platform. The first slide is a high-level visualization of our plan, and the next slide is a requisite LEGO block product topography. The third highlights the powerful vision we share.

Now as many of you may know, I joined Unity with 2 decades of experiencing and publishing games. I knew from experience that the traditional model employed by most game companies in the industry is a separated process with big silos. Traditionally, it works like this. You build your game, then there's a prelaunch testing phase. And then the focus is on marketing and user acquisition.

At Unity, we were in the early stages of the evolution of the industry's business model. And once we joined with joint forces with ironSource, we immediately improve upon and accelerate both companies' progress.

But we are going after the biggest price, a unified creation and growth platform that leads to both better and more commercially successful content and games from our customers that will bring even more innovation and success for creators of real-time 3D content.

Let's take this discussion one level deeper. We have a technical deep dive or we will have a technical deep dive on a future Analyst Day. But for now, I'd focus your attention on how the modules complement each other and complete the platform, connecting more [ rich fleet ] than creation and growth equation for our customers.

Look closely at this slide, and you'll see why we believe this is a powerful combination. Unity's strength and creation is entirely unique. We have a leading position in mobile gaming with the Unity engine gaming services. We also have strength in the other end of the capability spectrum and monetization and user acquisition. As you can see, ironSource brings critical key capabilities in the center of the capabilities map, pulling together and strengthening the entire platform. These connecting and complementary capabilities will deliver superior value to our customers.

At Unity, our ongoing goal is to provide a superset of functionality at a lower cost of ownership. If you do that, customers will pay you more. And in my experience, they'll do it and grow. Or more succinctly, we intend to substantially increase our value to our customers to help them grow their businesses to be more successful. And through this, expect to increase our industry take rates.

This slide represents where we're heading. It's the bottom bar from 2 slides back of the evolution we're driving towards shown on a flywheel. It depicts a highly integrated integration platform that helps creators in every step of the journey, from getting the core game up and running quickly to optimizing it for the largest number of users, devices and platforms.

Both Unity and ironSource could see this on the horizon. By combining forces, we pulled forward this vision by several years for the benefit of creators and save millions of dollars of spending on development.

Here's a few key ideas. The work of creating content engaging users will be united in one iterative process. It will start with a piece of content, perhaps a single [indiscernible] for a mobile game that will be married

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