Chit Chat Stocks - Deep Dive: Unity Software (U)

Episode Date: October 1, 2020

Unity Technologies builds and supplies the pickaxes for the meta-verse. This week, hosts Ryan Henderson and Brett Schafer are joined by Ian Gray as they perform a deep dive on Unity Technologies. Hot off of a crazy IPO, investors are optimistic about Unity's future. In this episode we break down their business model and explore their potential outside the meta-verse. Enjoy! Follow Ian and check out his work on Twitter: https://twitter.com/IanGrayLive Follow Chit Chat Money on Twitter: https://twitter.com/chitchatmoney Subscribe to Chit Chat Money on Youtube: https://www.youtube.com/channel/UCG5Ni-SI-jyrEsoNUhqftNQ --- Support this podcast: https://anchor.fm/chit-chat-money/support Learn more about your ad choices. Visit megaphone.fm/adchoices Learn more about your ad choices. Visit megaphone.fm/adchoices

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All right, everyone. This is the Thursday Deep Dive on Chit Chat Money. I'm here with Ian Gray and Ryan Henderson. As always, Ian, how's it going down in Phoenix? It's pretty good. It's still 100 degrees out here, but about to drop below maybe next week. So starting to cool off a little bit and to get those fall temperatures. Yeah, up in Seattle. Yeah, still nice in Seattle up here, but in a few weeks, the pendulum is going to start switching where we're going to be wishing we're going to be down in phoenix but i would not want to be there right now ryan ready to talk about unity yes um so you're up first what do they do and do you want to talk about the history of the company yeah so unity

enables creators to bring interesting things to life using 3d technology so they do that by offering different software solutions that allow developers to create run and monetize various forms of interactive content. So while Unity really got its start in gaming, and they've built a pretty big reputation in that industry, there's also other industries that are seeking out the technology that Unity has. And so some of those industries include AEC, which is short for architecture, engineering, and construction, as well as automotive and manufacturing, and even film and television. There might have been another one on the S1, but those are the ones that I got down. The platform consists primarily of two solutions. So it's the create solutions and the

operate solutions. Create solutions allow developers to really build out the functional content and that's paid for on a subscription basis. So think about that really allows the creativity on the development side. If you're thinking about like an Apex Legends, that's how they build out the game. And then the operate solutions makes it so customers can grow and monetize their end user base. So if you buy a new skin or whatever in Apex, I keep using Apex as an example, that's you pay the company, the content creator, and they have a kickback essentially for Unity. And so it's paid through revenue sharing and usage-based models. And a lot of this is advertising, correct? From what I read? Yeah. So there's a lot of advertising. Then there's also in-app

purchases. They didn't really break out the operate solution revenue, but I imagine a lot of it's ad based history unity technologies was founded as over the edge entertainment or ot good name change right yeah that's a good one and they were founded in copenhagen denmark in 2004 by three different guys david helgeson nicholas francis and joachim ante might be butchering those so that's on me um but helgeson is now an independent director ante is still on as the cto like he was when they first started and nicholas francis is nowhere to be found rest invest rest invest right i could not find him anywhere um but yeah in 2005 they released their first game called goo ball and it was a total flop but in the process of building that game they built out the

tools so that it would make it easier for them that ended up being the business that unity is today so that was super valuable and the first uh it was the first engine that was truly catered to developers for mobile um so and since at the time the focus was on bigger consoles so most of the people that were creating tools were doing it for the xbox i don't know if there's 360 at that point or xbox one but basically the bigger consoles and unity came in and focused a lot on ios and because of that they've held the lead with market share 53 of the top 1000 mobile games on the apple app store and google play were made with unity um and then they ipo'd on august 24th hot ipo when berserk the first day if i remember correct yeah well we'll get into the head on the valuation

but it's barely a month old and yeah i'll get into the industry and competition this is a special one we do for the deep dives so we can kind of get more of an overview on who their competition is and how their industry works so their most well-known competitor is epic games they make the unreal engine the unreal engine is a little different they're more focused for those high profile console games while unity like you just said is focused on mobile and the two business lines are like you said operate and create those are the you know what the majority there's no other business lines at all right there's the strategic partnerships okay which is small as well yeah that's okay that's like 10 yeah um so unity is really riding the wave of this new real

time 3D content market that's a lot more feasible over, you know, probably the last five years here because more and more devices can actually have the compute to run these things. And then the Unity engine can help companies do that a lot well because going and making a real time 3D content game is difficult from scratch. So Unity is actually increasing their value proposition as they can help these developers do that. There's hundreds of mobile studios who work with Unity and competitors. For example, 93 of the top 100 work with Unity. It's tough because they're kind of building a new market here. So they cite on the S1 that they have some pricing pressure on the competition from Unreal. And a lot of the times from third parties, magazines, developer

reviews, things like that, they kind of have Unity as not low quality, but less quality than the Unreal Engine. So if you want to do something fast and cheap, you build it in Unity. If you want to make it the best possible you build it on the unreal engine those are kind of the oligopoly they have there well duopoly i guess and then lastly uh opera solutions doesn't really have any direct competition they're kind of in a weird niche market you could say they're competitors with facebook and google but they're not direct competitors right because like with the advertising side they're kind of competing with them but there's no big competitors out there it's a lot of small small companies does unreal not i mean i guess we don't know but i believe i mean you

could buy skins in fortnite i imagine they've created the tools to have in-app purchases much like unity unreal has done that but unity was first to market there so they're they're a little ahead of the game on that front um ian do you want to get into management and ownership yep so i'll start off by just saying the the ceo um he's not one of the founders he was brought in in 2014 his name is John Riccatello. He joined the board of Unity in 2013, and the founder, Helgeson, has said, you know, he kind of brought him on the board thinking that someday he might make this transition to CEO, as Helgeson decided to kind of take a little bit of a step back. Before that, he was the CEO of EA, the popular game manufacturer, from 2007 to 2013. So he's been in the space for a while.

Before that, he had a fund that was kind of interested in kind of the gaming space. One of the things that really runs throughout the S1 and the management team is this idea of creators. And they have this quote at the beginning of their S1 that says, we believe the world is a better place with more creators in it. And that's something that really seems to run throughout the management team. uh riccatello he took the reins like i said four years ago and he believes that traditional businesses such as construction car design and filmmaking will eventually replace video games as unity's main customer base and source of revenue um and i think that kind of goes to that creator aspect where they just look out at the world and see lots of creators lots of creatives

and think we can we can capture that market because we have a great tool for creators Yeah, and creator doesn't necessarily only apply to developers. I feel like some people get that wrong. In, you know, the architecture space, it's architects that are creating. Engineers with the architects, construction managers, things like that. It can really go down and it can go down to even less technical positions as the process gets a lot easier and easier. Yeah, exactly. There's just and that's what they're they've really tried to kind of open up the the minds of investors with to say, look at all these people who are creating things out there, whether it's games or movies or, you know, architecture. There's just so many different markets where people are creating things. And this tool can really be helpful in a lot of those places. One thing I'm going to note that's a little bit of a red flag. The company was sued by the former VP of talent acquisition last year, kind of suing the company because of sexual harassment claims against the CEO.

The HR head was also involved and is no longer at the company. It's worth, you know, those are just allegations and stuff. And it's worth mentioning that Riccatello and Unity have denied allegations. Helgeson has said that if they believe the claims, Riccatello would no longer be at the company. But it is something that's kind of out in the periphery that has not been settled yet. And there's still some questions about exactly what happened.

Kind of a yellow flag to watch out for. Exactly. Something to keep your eye on. It's always hard to know in these types of situations what exactly happened because there's just not a whole lot of evidence on either side, but something to keep an eye on. Moving more into the ownership,

Riccatello owns about 3.1% of the shares. Helgeson, the founder, 4%. All told, all the insiders hold about 16.7%. So a good healthy chunk of the company like to see that, you know, management and insiders are definitely aligned with shareholders. And then kind of a final note, Sequoia Capital and Silverlake own about 38% of the company. They were both early investors in Unity. And actually, if you go to Sequoia capital's um website right now they have a letter saying something about um how proud they are of the unity team and excited about the ipo so if you want to read more about their ownership you can you can head over there nice yeah i think silver lake especially i believe started in on the series

d but they averaged up um each funding round so they were constantly in each uh sequential funding round so interesting note there it's the soft bank strategy but it actually worked because it was a good business yeah yeah all right I'll get into the valuation uh it says it just went public I like to note on these ones the share is outstanding because it's really hard none of the aggregator sites calculate the EV sales and stuff you have to do on your own so they have 267.2 million shares post IPO uh the EV or the enterprise value we are an enterprise value podcast uh is calculated this may be a little off but I think from what I tried to estimate from whatever is trading today. It's about 25.1 billion. Obviously that changes day to day. The price

right now is $94.23. And the ticker is U, one of the one out of 26 that actually have a single letter there, which is kind of cool, I guess. EV to revenue though, that is where we might get a little disappointed because it is 35.8 if you analyze the last six months. And that is when they got the COVID boost from everyone playing games. So that's a high valuation, no matter how you put it, their operating margin is negative 14.8%, so they're not profitable. Free cash flow margin, a little better, but still not growing cash flow. They're losing cash every year at about negative 10%. And then stock-based compensation at about 6.1% of revenue. So at this valuation, I shouldn't dilute it too much. Yeah. And I'll dive into the earnings numbers,

and this is all based off their S1. And I did full year 2019 numbers, not the last six months. So they have more recent ones if you want to go look at it. But in 2019, they had $542 million in revenue, up 42% year over year with about 78% gross margins. Gross margins have fluctuated, but they tend to stay right between around 77% and 81%. So it's pretty stable. And then negative $68 million in operating cash flow for 2019. That's a negative 12.5% operating cash flow margin. The year prior was negative 21%.

So it's trending in the right direction. And then obviously free cash flow is negative as well. 45% of their operating expenses were spent on research and development. I like to see that. I like that. Much better than having it all in sales and marketing. And they had a dollar-based net expansion rate of 133% for 2019. That was actually 142% in the first six months of 2020.

That was due to the hike in gaming this year that we got from COVID, like Brett mentioned. And then they had 600 customers spending $100,000 or more. And that number grew 24% year-over-year. Of note, I'm pretty sure 92% of the customers spending $100,000 or more are gaming companies. That is correct. So while they talk a lot about branching out outside of gaming, they are very much a gaming provider right now. Yeah, currently. Yep. Yep. And I'll go ahead and talk a little bit about the balance sheet and liquidity. so as Brett was mentioning a little bit earlier it's hard to calculate a few of these numbers because we don't have financial statements from post IPO but they raised about 1.3 billion dollars

from the IPO so they have somewhere around a billion and a half a billion point seven in cash right now that feels um it is high and it's it really strengthened their balance sheet a lot um their current ratio now sits at about five times but I think one of the reasons they raised so much cash is they're looking forward and saying we're going to have to continue to fund some losses and they're they're also looking to make some acquisitions they've said in their s1 that they're going to continue to pursue acquisitions of products teams and technologies that complement and expand the functionality of our platform add to our technology expertise and bolster our leadership potential or position by providing access to new customers and markets

So they made about a $200,000 cash acquisition last year. I would expect to see some similar type acquisitions in the next, in the coming years. Sorry, that's $200 million. And one of the things before they had this IPO, they had a lot of money in goodwill, which is basically just the premium you pay on a business over its book value. And so sometimes that can be concerning because oftentimes goodwill is written down as you realize that the acquisition wasn't worth as much as you paid for it, which can hit earnings, scare investors, that type of stuff. And so when you see an elevated level of goodwill relative to total assets, it's a little bit concerning. But with all the cash they just raised, that was lowered to about 10% of total assets, which is much more reasonable and isn't a big concern at the moment.

They also have about $125 million drawn on a low interest revolving line of credit. The projections were that they'd pay that off once they get the proceeds from the IPO. Again, very small amount of debt compared to how much cash they have now and not really concerned. And it was low interest in the first place. So really the balance sheet is looking pretty nice. Yeah, no concerns there. All right, we're going to hit the ad break here and then we're going to get back to the

second half of the show, talk more about Unity and their potential going forward. all right welcome back in first up is competitive advantages for unity ryan do you want to go first sure yes switching engines is pretty tough and so that's sort of my advantage here according to developers online it's it's hard to switch and sticking with the same engine allows you to reuse tons of code that you've written before which is a major time saver it also takes time to switch almost they said and this was through like cora or all those reddit forums or whatever and uh they said it takes months or sometimes multiple game releases to get really to get used to a new engine and be as good as you were with like an older engine so when since they have such

a head start on the mobile or the ios it's going to keep a lot of those businesses to just stay Now, for the bigger consoles, that might be a little tough, but yeah, I think a lot of these developers are just going to be like, well, we don't need to upgrade. Unity has the tools we want. It leads to a lot of stickiness and potential price and power. No, that makes sense. It looks like Unity's business model is very sticky. 142% dollar-based net expansion rate. That is a good indicator of that as well.

Yeah, hard to beat that. Hard to beat that for sure. All right, I'll talk about mine. And I like how they make it free and easy to get in early with students. So they may be giving up some revenue in the short term, but it does build that developer base and helps them go on to Unity first. And then they learn all this stuff and the hours needed to learn Unity, which, you know, it's the friction that keeps people on, like you were saying. That can really be a big advantage because no one can just start up an engine now. There is Unreal.

People learn Unreal, but no one can just start up an engine like Unity. And it's kind of got this, you know, you're in the universities. you're in the high schools everyone's doing it as a hobby they're able to do it for free without the tools that might the tools might be like 10 of what you actually get when you pay for unity but you learn how to use it it feels a lot like mongo db versus oracle it was tough for mongo db to just start out and take over versus oracle but they made it you know open source it allowed the developer community to kind of flourish um and i think that can happen with the unity as well it's going to be tough to beat them while they're like this. And they don't even have a competitor like

Oracle. They're kind of building this market on their own. And the other component to add to that is I've talked, I don't know if we've talked about it on this show before, but there's a moat about being, there's a moat that's ingrained when you are deeply rooted in university system. So you're taught it as a student and then it leads to easier onboarding at a firm level. But this is not taught really in the classes this is essentially saying if you're a student if you're a developer you can get free access to unity i don't believe it's like a requirement for a lot of developers or development programs i think yeah because gaming is not they're not teaching it that much in the universities but you use your skills that you learn as a computer science

major or hobbyist to uh you know build stuff on unity all right ian what do you got yeah so It's somewhat similar to what Ryan was talking about. It's about switching engines. But one thing, one piece of that that they really highlight is this idea of create once and deploy anywhere. And this is particularly focused on the gaming industry right now. But I think it's, there could be some cross application as they move out into other industries. But basically what they do is they say, hey, build your world, build your game.

And then we do all the back end coding, right? They don't have to figure out how to code it for an iPhone and then, you know, recode the whole world to put it onto the xbox and and so on right they can just build their world once and then they can deploy it anywhere for all these different games and so they don't have to be constantly um learning you know different software languages or different types of things to make it work for these different consoles or different different types of uh platforms out there they can just focus on their craft and less on making sure that it's ready for distribution No, I think that's a huge value proposition. And it honestly feels like the take rate that

Unity is getting right now is not really what the value they're creating. So it makes me think that Unity may have pricing power, but that's something I'm not confident saying. It feels like they do, but I don't know yet. All right. What do you have for future growth opportunities? Okay. Well, mine is a little small, but it's partnering with Autodesk. I think that's very interesting for getting into the AEC market, which Autodesk is huge in, and again, AEC is just, you know, architecture, engineering, construction, that's kind of those design markets for the technical fields, mainly, you know, buildings, whatever. So, they estimate that the non-gaming market is an equal market opportunity,

excuse me, to the gaming market. The easiest thing to see, you know, is working with construction design, that's a huge market, you know, you can even integrate stuff with AR and VR there, it seems like that would work. They have a quote here, if you're kind of confused on what Unity would even do. They have a quote on here, and I hope this can help. So they say, now it's easier than ever to create rapid interactive designs with Autodesk 3D tools and Unity's real-time platform. So they make your designs real-time. They can easily transfer files between Autodesk products and Unity, take advantage of Unity's huge community of developer talent and support, and reach the broadest audience possible with Unity's compatibility across 25 plus platforms.

So you can get any of your products, like Ian was saying earlier, across mobile, PC, VR, and AR stuff, which is pretty big in those business communities. Yeah, and I'll hit my future growth opportunity next, but a lot of these are going to be outside of gaming because there's not a whole lot more they can do in terms of customer expansion. like they're not going to be able to branch out it's a duopoly and i mean they might be able to get some of the smaller development teams that are not using the toolkit yet but it's more of gaming grows they'll grow with it and it's going pretty quickly so you know that's good and so the uh the one i took here is the automotive industry as my future growth opportunity they are the leader of virtual experiences at volvo was quoted saying our cases for unity are increasing almost every week from car design all the way to the consumer facing experiences we are using unity to bridge

departments and enable better collaboration as the race to self-driving starts to ramp up like i mean that's sort of one of the big things and even evs like they have to be able to design and use unity like tools i think that's going to be i think unity is going to be the big provider for the AR and VR possibilities for automotives and I mean that's an industry with deep pockets and there's a lot of R&D spend a lot of R&D spend in that industry yeah uh yeah like like you and Brett were talking about I think there's a lot of future growth in adjacent industries so um the one I'm going to pick out is the film industry I've got quite a few friends that are in the film industry and so I recently just heard about um an application of Unreal Engine from Epic

in the film industry and so I kind of was checking it out and there's a lot of cool stuff going on typically I don't want to get too in the weeds here but typically when people are shooting computer generated images for for movies it's been done using a green screen which has a lot of great you know applications but some of the issues are you can't change things in real time it's all done in post-production the director can't actually see the scene that's in front of them so he has to be able to kind of imagine what it's going to look like um you know sometimes even things as simple as lighting it's hard to light those types of scenes and if you've ever talked to a film major or a director you know that they they really care about lighting and so green

screens make that difficult what unity is kind of positioned to do is you can create these big um you'll have to look it up online it's hard to really explain it but just these massive screens go around an entire set and these screens have these backgrounds on them that have these um these super bright led lights that then can uh basically provide it looks like the scene is and so they're able to take these um to film these scenes in real time using things like unreal engine or unity to project backgrounds on it to project other characters on it um and mix mix both the real life people with these these screens in the background one recent example of this is for any of you disney plus fans the mandalorian used a lot um of these these

types of shooting atmospheres and used epic's unreal engine and so what's really cool about it is the director can say you know what i actually want more sunlight and then they can brighten up the screen they can provide a brighter sun they can say maybe the sun you know especially in stuff like star wars maybe the sun should be a little more orange or a little bit more blue or something like that and they can change it in real time someone's standing over there with an ipad adjusting the scene they can say i don't really like that rock formation in the back maybe we should take it out um so it just creates all sorts of um use for the directors they can really direct the scene in real time and just think if you're trying to shoot a sunset scene you're no longer

bound by the sun you can actually fix the sun in place for the sunset scene and you don't have to travel to the beach you can just be in your studio and so it's just it provides all sorts of benefits for the film industry yeah it seems like it's providing a lot of value and i think i said that before but the way that people use it the unity stuff is super helpful and like saves just a ton of time and makes it a lot easier to make all these films all right last uh section here highlights and lowlights ian do you want to keep things off yeah so i'd say some of the highlights are just I'm just going to touch on one main one really, but they're recreating life, you know, just in this virtual world.

And that just has so many potential markets there. It's hard to think of a market that wouldn't benefit from some sort of application of this. You know, they've got a lot of cash right now. Cash flows are trending in the right direction. A couple of my low lights are, we don't really know how it's going to respond as a public company. It hasn't even recorded or reported its first quarter yet. So I'll be keeping my eye on that.

Does have a high valuation, as you mentioned, Brett. There's, you know, as I mentioned, there's some HR concerns or allegations out there right now that just want to keep my eye on. And one final low light that I'll touch on is the CEO didn't really have a great tenure as CEO at EA. The stock was down, which was due in part to the Great Recession, but also it kind of stayed flat for a number of years, which was, it was a tough time in the gaming industry, but some of their competitors did perform better than EA. so he'll have to he'll have to do a little better job here than he did at EA for this to be a successful stock that is a good also to touch on that I don't know if EA had this reputation then but they're not necessarily known as being users user-friendly user-centric and it feels like that Unreal has a better reputation at least in the media of you know over Unity I could be

wrong on that though yeah and one thing I'll just touch on this too is they kind of talked about his tenure at ea being um you know the ea was kind of the the games for the non-gamers right it was the the mad and stuff same city you know that type of stuff and so he tried to do i just read they were trying to um do like a takeover of take two i believe and so he tried to kind of do some stuff and it just never quite caught on um but he's getting a second chance here and it'll be interesting to see what happens yeah also i do want to uh tell you for the next show uh because we forgot to mention this valuation cannot be a low light because it's like it's typically the easiest low light you obviously had a bunch of different ones yeah yeah it's always avoid that

one and the thing is it's good to think about like if the valuation is your only low light it probably means the business is high quality when you struggle to find the actual low lights but yeah okay ryan you want to you want me to go yeah go ahead okay financial side for me the the stock based compensation numbers and the sgna numbers as a percentage of revenue are very solid i like that R&D number as a percentage of revenue. Gross margin numbers look like they could get to conservatively 30% free cashflow margins at scale. The thing is though, like you mentioned before, you have to rate that to evaluation of an EV to sales of 36. So 36 divided by 0.3, that's pretty high. I think they do have a big time competitive advantage though, as making a high bar learning

for developers and getting in early with students and the freemium stuff. Lowlights for me, they're hard to find but to me like i mentioned before unreal engines seems like they're going to put a lot of pressure on them that new pricing uh thing that they did so you um when you're with unreal which is the epic games one you don't pay a cent even if you're a large developer until your game has brought in a million dollars in revenue that's a strong value proposition and it seems like epic has a lot of momentum with that right now it hasn't slowed down unity in the first half 2020 but it makes me uneasy um for you know the next few years here definitely all right my highlights it is as far as business concept goes it's supplying the pickaxes for the metaverse

that's typically something i like nice you know and those words gaming as a whole is something we love uh it's it's an industry that we focus on a lot yep um and developers will the developers that rely on unity solutions are going to be pretty sticky and that leads typically to sustainable growth um and i have to imagine that it's pretty difficult to switch like i said and then low lights though i actually have some real concerns here for the low lights over the next two years there's going to be the new xbox console there's going to be the new playstation console and there's going to be we believe potentially potentially yeah the switch pro yeah so all those consoles are supposed to be better tech higher quality more immersive that feels like

developers are going to lean towards unreal based off what we understand of the two engines yeah and so and and so that's a serious concern for me the other part is uh unity has basically said we're trying to go for beyond gaming we want all these adjacent markets but 60 of their revenue comes from operate solutions operate is solely gaming the create solutions are catered for those adjacent markets because operate i mean you're not doing like advertising revenue for an auto desk subscription you know what i mean yeah so i mean those are those are real concerns um i don't think i have to imagine they aren't as customer centric as maybe the unreal engine is And maybe that's just because Unreal has announced this battle

or Epic Games has announced this battle with Apple and it feels like people are going to, you know, it's going to have an army behind them of developers. Right. And so I just, you might get good cash flow out of Unity because it's got good unit economics, it looks like. But I don't know if it's going to have robust growth that we could see with Epic Games.

I would love to see Epic Games IPO right now. It would go berserk. It would go berserk. Yeah, they would trade at like 45 times sales. uh but yeah the create solutions thing since their take rate is so low they might be in a lot of industries but i don't know what their potential revenue numbers could be and that is kind of kind of concerning um before we hit the last question ian do you have anything else or no i think you guys right okay uh all right final question we're going to wrap things up here

with a new question where this is going to replace our old rating system which we can't do anymore for each of us we just have to ask are we more or less interested in unity right now I'll go first. Go ahead, Ryan. Okay. I am actually less bullish than I would have been looking into it. After looking in, I mean, it seems weird that there's this massive TAM. It's a duopoly.

They have 53% market share or whatever, and they only have $500 million in revenue. That seems like they're dramatically underpriced or they can't raise prices for some reason, and a lot of it is from operate solutions, not from create. yeah so it um i don't know it's a little concerning to me and especially where it trades yeah especially for the valuation it has that's sort of an independent discussion on its own but it just seems like maybe the growth rates aren't as sustainable as i would have guessed they'd be yeah ian you want to go yeah for me i'd say i'm a little bit more interested than i was um just a couple of days ago i hadn't i hadn't ever looked into unity before i didn't know much about this space and so it was intriguing to me especially we've talked a lot about the different

industries they could hop into. And if they're really able to execute on that, I think there's a lot of potential. The one thing I will say, and I'd like to kind of hear your guys' thoughts on this too, is for me, I'm sitting on the sidelines for now. I got to see what happens over these next couple of quarters, but do you guys have an approach for whether you invest in new IPOs right away or do you give it a little bit of time? Anything IPO related, we tend to wait. Yeah, especially the last few years, it's been so volatile. It makes it really tough to hold on to, you know, like we've seen stuff trade up 100% and then down 30% within the next three days. And they don't have the public company filings.

Also, I think, Ian, I think you nailed it. If they can execute properly on the adjacent markets, they're going to be great. They can grow for the next decade. But they're priced like they are going to execute well. and so you don't know if they're going to win those markets over over the unreal engine and if the mandalorian is any example the unreal engine seems to be winning yeah yeah that's true um all right i guess i'll go with mine i'm less interested specific i think they can grow solidly for the next you know few years here but it's priced like they're going to grow like

someone like snowflake or zoom video they're priced at a superb premium uh ev to sales of 36 is, I mean, it's kind of, it's ridiculous. And you have to think that they're going to be able to grow sustainably for the next few years because at a, you know, whatever their cashflow margin that you think they can have or their earnings margins. It's just tough to get my head around. And that's why I'm less interested. All right. Before we wrap up, Ian, do you want to say where people can find you or stay in contact? Yeah, you can find me at iangreylive.com or on Twitter at iangraylock. All right. That's going to do it for the Unity episode. Hard to say there. Remember, we are not financial advisors. Ryan, one sec. Oh, yeah. Before the end disclosure,

remember, YouTube. You can find us on YouTube. You can watch this, yeah. Someone might be watching right now. Yeah, there you go. And then also Twitter and email, chitchatmoneypodcast at gmail.com. If you're interested in having us do a show or you have some recommendation, yes we'll gladly take those yeah we'll gladly take those uh all right further disclosure to wrap things up remember we are not financial advisors anything we say on this show is not formal advice or recommendation thank you all for listening we'll see you on our next episode Thank you. Thank you.