Unity Software Earnings Beat, Guidance Falls Short
Unity Software earnings had a Q4 beat while Q1 2026 revenue guidance fell below consensus, prompting traders to reassess near-term demand and positioning.
KEY TAKEAWAYS
- Q4 revenue was $503 million and adjusted EBITDA about $125 million, results that exceeded estimates.
- Q1 2026 revenue guidance was $480-$490 million and adjusted EBITDA $105-$110 million, both below consensus.
- Unity Vector drove Grow Solutions, making up 56% of Grow and delivering mid-teen sequential growth.
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Unity Software Inc. (U) reported fourth-quarter 2025 earnings on Feb. 11, 2026, that exceeded estimates, while issuing Q1 2026 revenue guidance below Wall Street consensus and signaling ongoing product momentum.
Fourth-Quarter Results and Product Performance
The company said in a press release that fourth-quarter revenue reached $503 million, up 10.0% year over year from $457 million. Adjusted earnings per share were $0.24, and adjusted EBITDA, a proxy for operating profit, was about $125 million, representing a 25.0% margin compared with $106 million and a 23.0% margin a year earlier. GAAP gross profit was $374 million, a 74.0% margin. GAAP net loss narrowed to $89 million, about an 18.0% margin, from $123 million a year earlier. GAAP net loss per share was $0.21.
Grow Solutions revenue rose 11.0% to $338 million, with Unity Vector accounting for 56% of the segment and delivering mid-teen sequential revenue growth for the third consecutive quarter. The IronSource ad network declined to 11% of Grow Solutions revenue. Create Solutions revenue increased 8.0% to $165 million, driven by subscription growth. Matt Bromberg, president and chief executive, said, "Fourth quarter results once again comfortably exceeded the high-end of our guidance, led by exceptional performance from Vector, which experienced its third consecutive quarter of mid-teen sequential revenue growth, and the best growth we've seen in Create in over two years."
Cash generation improved, with net cash from operating activities rising to $121 million from $112 million a year earlier. Free cash flow increased to $119 million from $106 million. For the full fiscal year 2025, revenue totaled about $1.8 billion, and the company reported a GAAP net loss of $401 million.
Guidance and Cash Position
Unity set Q1 2026 revenue guidance at $480 million to $490 million and projected adjusted EBITDA of $105 million to $110 million, both below Wall Street consensus. The company held $2.1 billion in cash, equivalents, and restricted cash as of Dec. 31, 2025.
