Unity Software (NYSE:U) Announces Earnings Results

Key Points

• Unity reported quarterly revenue of $622.1 million, up 32.2% year over year, and adjusted EPS of $0.44, beating analyst estimates of $567.0 million in revenue and $0.03 EPS. It posted its first GAAP-profitable quarter since its 2020 IPO, with $122 million in net income.
• Growth was led by its advertising business: Vector revenue rose 126% year over year, helping strategic Grow revenue increase 90% to $432 million. Unity forecast Q4 strategic revenue of $683 million–$691 million and adjusted EBITDA of $290 million–$295 million.
• Management highlighted strong momentum in advertising but said growth in its creator tools business is more modest, with Q4 Create revenue expected to rise 4%–6%.

Unity Software (NYSE:U - Get Free Report) announced its quarterly earnings results on Thursday. The company reported $0.44 earnings per share (EPS) for the quarter, beating analysts' consensus estimates of $0.03 by $0.41, FiscalAI reports. The company had revenue of $622.09 million for the quarter, compared to the consensus estimate of $567.03 million. Unity Software had a negative net margin of 28.97% and a positive return on equity of 4.64%. Unity Software's revenue for the quarter was up 32.2% compared to the same quarter last year. During the same period in the previous year, the firm posted $0.20 EPS.

Here are the key takeaways from Unity Software's conference call:

• Unity reported Q3 strategic revenue of $597 million, up 59% year over year, while adjusted EBITDA rose 134% to $257 million, a 41% margin. The company said this was its seventh consecutive quarter of accelerating revenue growth.
• Strategic Grow revenue increased 90% to $432 million, powered by Vector, whose revenue grew 126% year over year and 40% sequentially—twice Unity’s expected sequential growth. Management attributed the gains mainly to more installs and higher player values, not a higher take rate, and said advertiser accounts grew 27% sequentially.
• Unity reached GAAP profitability for the first time since its IPO, reporting $122 million of net income and a 20% net margin. Record free cash flow of $220 million lifted cash to $2.65 billion; the company plans to repay convertible debt due November 15 with cash on hand.
• Q4 guidance calls for strategic revenue of $683 million–$691 million, up 65%–67% year over year, and adjusted EBITDA of $290 million–$295 million. Unity expects Grow revenue to rise 105%–107%, including 21%–23% sequential Vector growth, and projects another 100 basis points of adjusted EBITDA margin expansion.
• Unity said daily active users were up 25% since it opened its authoring platform to coding agents, and expects its Google-backed Spark creation tool to broaden the creator base; Spark is slated for closed beta this year and full launch in 2027. Nearer-term Create growth is more modest: Q4 is expected to rise 4%–6%, with about 9% growth for full-year 2026.

Unity Software Trading Up 14.3%

NYSE U traded up $6.09 during trading hours on Thursday, hitting $48.55. 49,995,764 shares of the company were exchanged, compared to its average volume of 9,844,125. Unity Software has a 52 week low of $16.78 and a 52 week high of $52.15. The company has a quick ratio of 2.03, a current ratio of 2.03 and a debt-to-equity ratio of 0.55. The stock has a 50-day moving average price of $42.32 and a 200 day moving average price of $31.79. The stock has a market cap of $21.37 billion, a PE ratio of -35.70, a price-to-earnings-growth ratio of 1.85 and a beta of 2.08.

Insider Buying and Selling

In other news, SVP Rebecca Boyden sold 1,032 shares of the business's stock in a transaction that occurred on Tuesday, August 25th. The stock was sold at an average price of $45.32, for a total transaction of $46,770.24. Following the transaction, the senior vice president owned 308,413 shares of the company's stock, valued at approximately $13,977,277.16. The trade was a 0.33% decrease in their position. The transaction was disclosed in a document filed with the SEC, which can be accessed through the SEC website. The sale was made to cover tax withholding obligations related to the vesting of equity awards. Also, COO Alexander Blum sold 43,556 shares of the stock in a transaction on Friday, August 28th. The shares were sold at an average price of $43.51, for a total value of $1,895,121.56. Following the sale, the chief operating officer owned 661,855 shares in the company, valued at $28,797,311.05. The trade was a 6.17% decrease in their position. The disclosure for this sale is available in the SEC filing. The transaction was executed under a pre-arranged Rule 10b5-1 trading plan. Insiders sold 109,547 shares of company stock valued at $4,884,202 over the last quarter. Company insiders own 0.77% of the company's stock.

Analysts Set New Price Targets

A number of research analysts have recently weighed in on the company. Citizens Jmp raised their price objective on Unity Software from $37.00 to $45.00 and gave the company a "market outperform" rating in a research report on Friday, August 7th. Wells Fargo & Company boosted their target price on Unity Software from $48.00 to $53.00 and gave the stock an "overweight" rating in a research report on Monday, October 12th. Weiss Ratings reissued a "sell (d-)" rating on shares of Unity Software in a research note on Monday. Bank of America upgraded Unity Software from a "neutral" rating to a "buy" rating and raised their price target for the company from $30.00 to $50.00 in a report on Friday, August 7th. Finally, BTIG Research raised their price target on Unity Software from $53.00 to $60.00 and gave the company a "buy" rating in a report on Thursday. One investment analyst has rated the stock with a Strong Buy rating, seventeen have assigned a Buy rating, four have issued a Hold rating and one has issued a Sell rating to the company's stock. According to data from MarketBeat.com, the stock has an average rating of "Moderate Buy" and a consensus target price of $49.51.

Key Unity Software News

Here are the key news stories impacting Unity Software this week:

• Positive Sentiment: Unity reported its first GAAP-profitable quarter since its 2020 IPO, with net income of $122 million. Revenue rose 32.2% year over year to $622.1 million, beating expectations, while adjusted earnings of $0.44 per share also topped estimates. Unity Reports Third Quarter 2026 Financial Results
• Positive Sentiment: Growth in Unity Vector, the company’s AI-powered advertising business, was a key driver: Vector revenue increased 126% year over year. Management forecast fourth-quarter strategic revenue of $683 million–$691 million and an adjusted EBITDA margin of about 42%, citing continued Vector momentum. Unity forecasts Q4 strategic revenue and margin
• Positive Sentiment: Reuters reported that Silver Lake and Saudi Arabia’s Public Investment Fund have held talks about acquiring Unity. The report has fueled takeover speculation, but discussions do not guarantee a transaction. Report on acquisition talks
• Positive Sentiment: BTIG raised its price target to $60 and maintained a Buy rating, reflecting improved confidence following the results.
• Negative Sentiment: One earnings takeaway cautioned that Unity’s creator tools business is slowing, leaving investors watching whether advertising growth can offset weakness in that segment. Earnings analysis of Vector ads and creator tools

Unity Software Company Profile

Unity Software Inc develops software and services for creating, operating and monetizing interactive, real-time content. Its core product is the Unity engine, a development platform used to build video games and experiences for mobile devices, personal computers, consoles, augmented and virtual reality systems, and other platforms.

The company also provides tools and services that support the development and operation of interactive applications, including collaboration and cloud-based development tools, multiplayer and voice communication capabilities, analytics, advertising, and in-app monetization solutions.

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