Unity Software (NYSE:U) Issues Quarterly Earnings Results

Unity Software (NYSE:U) released its earnings results on Wednesday. The company reported $0.24 earnings per share (EPS) for the quarter, beating analysts’ consensus estimates of $0.20 by $0.04, FiscalAI reports. The firm had revenue of $503.09 million during the quarter, compared to the consensus estimate of $490.64 million. Unity Software had a negative net margin of 24.15% and a negative return on equity of 9.45%. Unity Software’s revenue was up 10.1% compared to the same quarter last year. During the same period in the previous year, the firm earned ($0.30) earnings per share.

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

• Vector ad product delivered mid‑teen sequential growth for a third straight quarter, was Unity’s largest Grow contributor (56% of Grow revenue), posted a January revenue record (≈+70% YoY) and is expected to exceed a $1 billion annual run rate by end of 2026.
• Unity plans to integrate its runtime/Developer Data Framework behavioral signal into Vector in Q2, which management says will compound model improvements and improve install volumes and ROAS over time.
• The legacy ironSource ad network is rapidly shrinking (forecasted to be <6% of total revenue in Q1), and Unity is displacing lower‑margin network revenue with higher‑quality AI platform revenue to boost long‑term growth and profitability.
• Create returned to growth (≈16% YoY ex‑nonstrategic revenue) with rapid Unity 6 adoption, strong China traction, a move to browser‑based collaborative authoring (Unity Studio) and an AI authoring beta at GDC aimed at expanding the addressable market and monetization paths.
• Financial momentum accelerated — Q4 Adjusted EBITDA of $125M (25% margin), 2025 free cash flow >$400M (+41%), reduced stock comp and a stronger balance sheet (> $2B cash, converted notes extended to 2030); Q1 guidance: $480–$490M revenue and continued margin expansion.

Unity Software Stock Down 33.1%

Unity Software stock traded down $9.63 during midday trading on Wednesday, hitting $19.43. 42,348,864 shares of the stock were exchanged, compared to its average volume of 16,392,139. Unity Software has a 1 year low of $15.33 and a 1 year high of $52.15. The company has a debt-to-equity ratio of 0.70, a current ratio of 2.78 and a quick ratio of 2.78. The firm has a market cap of $8.31 billion, a P/E ratio of -18.63, a P/E/G ratio of 28.86 and a beta of 2.04. The company has a 50 day moving average price of $41.68 and a two-hundred day moving average price of $39.96.

Analyst Upgrades and Downgrades

Several research firms have recently weighed in on U. Morgan Stanley lifted their price objective on Unity Software from $48.00 to $52.00 and gave the company an “overweight” rating in a research note on Tuesday, January 13th. Piper Sandler upgraded shares of Unity Software from a “neutral” rating to an “overweight” rating and boosted their price objective for the stock from $43.00 to $59.00 in a research note on Thursday, December 11th. Freedom Capital raised shares of Unity Software to a “strong-buy” rating in a research report on Thursday, January 15th. Weiss Ratings restated a “sell (d-)” rating on shares of Unity Software in a report on Wednesday, January 21st. Finally, The Goldman Sachs Group upped their price target on shares of Unity Software from $42.00 to $47.00 and gave the stock a “neutral” rating in a research report on Tuesday, January 13th. Two investment analysts have rated the stock with a Strong Buy rating, thirteen have given a Buy rating, seven have issued a Hold rating and two have assigned a Sell rating to the company’s stock. According to data from MarketBeat.com, Unity Software currently has an average rating of “Moderate Buy” and an average price target of $44.46.

Key Headlines Impacting Unity Software

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

• Positive Sentiment: Q4 beat: Unity reported $0.24 EPS vs. a $0.20 consensus and revenue of $503.1M (up 10.1% YoY), surprising on the upside and improving from a loss a year ago. This is the primary near-term bullish driver. Zacks: Q4 beat
• Positive Sentiment: Product momentum cited by management: management flagged strong performance from Vector (third consecutive quarter of mid‑teen sequential growth) and Create subscription strength — a positive signal for sustainable revenue. BusinessWire: Q4 results
• Positive Sentiment: Analyst upgrades and bullish price targets: Oppenheimer upgraded U to “outperform” with a $38 target, and Needham reaffirmed a “buy” with a $50 target — both add buy-side momentum and coverage support. Oppenheimer upgrade Needham note
• Positive Sentiment: Bullish options activity: unusually large call buying (≈75,900 calls) indicates speculative/institutional bullish interest that can amplify intraday moves.
• Neutral Sentiment: Board addition: Unity appointed Bernard Kim to its board, a governance/strategic development that may aid partnerships and execution but is not an immediate revenue driver. Board appointment
• Negative Sentiment: Q1 revenue guide slightly light: Unity guided Q1 revenue to $480–$490M vs. a $491.8M consensus — a mild miss that tempers the beat and can pressure the stock if investors focus on near‑term growth.
• Negative Sentiment: Analyst pushback: UBS cut its target from $46 to $32 and holds a “neutral” view, reducing some of the upside narrative. UBS note
• Negative Sentiment: Macro/AI skepticism and profitability risk: public commentary (e.g., Jim Cramer) that Unity could be hurt by AI plus continued negative net margin and ROE remind investors the company must maintain execution while scaling. Cramer comment

Insider Buying and Selling

In other news, Director Tomer Bar-Zeev sold 250,000 shares of the firm’s stock in a transaction dated Monday, December 1st. The stock was sold at an average price of $41.93, for a total transaction of $10,482,500.00. Following the completion of the sale, the director directly owned 1,048,146 shares in the company, valued at $43,948,761.78. This trade represents a 19.26% decrease in their ownership of the stock. The sale was disclosed in a legal filing with the Securities & Exchange Commission, which is available at this hyperlink. Also, CFO Jarrod Yahes sold 34,719 shares of Unity Software stock in a transaction dated Tuesday, November 25th. The stock was sold at an average price of $41.38, for a total value of $1,436,672.22. Following the sale, the chief financial officer directly owned 573,871 shares in the company, valued at approximately $23,746,781.98. The trade was a 5.70% decrease in their ownership of the stock. The SEC filing for this sale provides additional information. Insiders sold a total of 1,338,021 shares of company stock worth $63,138,575 over the last quarter. Company insiders own 3.61% of the company’s stock.

Institutional Investors Weigh In On Unity Software

A number of institutional investors have recently made changes to their positions in the company. Vise Technologies Inc. bought a new position in Unity Software during the fourth quarter worth $269,000. Cibc World Market Inc. raised its holdings in shares of Unity Software by 7.7% during the fourth quarter. Cibc World Market Inc. now owns 6,974 shares of the company’s stock worth $308,000 after purchasing an additional 496 shares during the period. Northwestern Mutual Wealth Management Co. lifted its position in shares of Unity Software by 41.2% in the 4th quarter. Northwestern Mutual Wealth Management Co. now owns 6,416 shares of the company’s stock worth $283,000 after buying an additional 1,871 shares during the last quarter. IFP Advisors Inc bought a new position in shares of Unity Software in the 3rd quarter worth about $33,000. Finally, Danske Bank A S acquired a new position in shares of Unity Software in the 3rd quarter valued at about $80,000. 73.46% of the stock is currently owned by institutional investors.

Unity Software Company Profile

Unity Software is a leading provider of a real-time 3D development platform that enables creators across industries to design, build and operate interactive, real-time experiences. Originally focused on the game development market, Unity’s technology now extends into sectors such as film, automotive, architecture, engineering and construction, delivering immersive content for mobile, desktop, console, augmented reality and virtual reality devices. The company’s core offering comprises a suite of authoring tools, runtime engines and cloud services that streamline the creation and deployment of interactive 3D applications.

The Unity Editor serves as the central hub where developers design scenes, script behavior and iterate on assets.