Unity Reports Third Quarter 2026 Financial Results

SAN FRANCISCO--(BUSINESS WIRE)--Unity (NYSE: U), the world’s leading game engine, today announced financial results for the third quarter ended September 30, 2026.

"Third-quarter performance was our strongest ever, with Vector growing 126% year-over-year and 40% quarter-over-quarter, and the first GAAP profitable quarter since our IPO," said Matt Bromberg, President and CEO of Unity.

"We are seeing the compounding impact of our flywheel strategy: more creators make more games on our platform, and more games fuel the need for more discovery through advertising."

Select revenue highlights for Q3 2026 are as follows (in thousands):

Q4 2026 Guidance²

• Strategic Revenue of $683 million to $691 million, up 65% - 67% year-over-year
  • Strategic Grow Revenue of $515 million to $520 million, up 105% - 107% year-over-year
  • Strategic Create Revenue of $168 million to $171 million up 4% - 6% year-over-year
• Non-Strategic Revenue of $5 million
• Adjusted EBITDA of $290 million to $295 million, up 132% - 136% year-over-year

Earnings Webcast

Unity will hold a public webcast at 8:30 a.m. ET today to discuss the results for its third quarter 2026. The live public webcast can be accessed on Unity’s Investor Relations website at https://investors.unity.com. The webcast replay will also be available on the site.

Third Quarter 2026 Results:

Total Revenue Highlights:

• Revenue was $622 million, compared to $471 million in the third quarter 2025.
• Grow Solutions revenue was $457 million, compared to $318 million in the third quarter 2025.
• Create Solutions revenue was $165 million, compared to $152 million in the third quarter 2025.

Profitability Highlights:

• GAAP net income was $122 million, with a margin of 20%; GAAP basic net income per share was $0.27; GAAP diluted net income per share was $0.25.
• Adjusted EBITDA was $257 million, with a margin of 41%; adjusted EPS was $0.44.
• Net cash provided by operating activities was $224 million; free cash flow was $220 million.

Revenue

Revenue was $622 million, up 32% year-over-year. Strategic revenue was $597 million, up 59% year-over-year.

Grow Solutions revenue was $457 million, up 44% year-over-year. The change was due to growth in the Unity Ads Network, driven by Unity Vector, partially offset by decreases in the ironSource Ads Network.

Create Solutions revenue was $165 million, up 8% year-over-year. The increase was driven by increases in subscription revenue, partially offset by decreases in cloud and hosting services revenue, driven by our portfolio reset in 2025.

Basic and Diluted Net Income (Loss) per share

Basic net income per share was $0.27, as compared to a basic net loss per share of $0.30 for the same period in 2025.

Diluted net income per share was $0.25, as compared to a diluted net loss per share of $0.30 for the same period in 2025.

Net Income (Loss) and Net Cash Provided by Operating Activities

Net income for the quarter was $122 million, compared to a net loss of $127 million in the third quarter of 2025.

Net income (loss) margin was 20%, compared to (27)% in the third quarter of 2025.

Net cash provided by operating activities for the quarter was $224 million, compared to $155 million in the third quarter of 2025.

Adjusted EBITDA, Free Cash Flow, and Adjusted EPS

Adjusted EBITDA for the quarter was $257 million, with a margin of 41%, compared to $109 million in the third quarter of 2025, with a margin of 23%. The year-over-year improvement was driven by higher revenue and continued cost control.

Free cash flow for the quarter was $220 million, compared to $151 million in the third quarter of 2025.

Adjusted EPS for the quarter was $0.44, compared to $0.20 in the third quarter of 2025.

Liquidity

As of September 30, 2026, our cash, cash equivalents, and restricted cash was $2,651 million, an increase of $587 million, compared with $2,064 million as of December 31, 2025. This increase was primarily driven by our operations.

About Unity

Unity [NYSE: U] offers a suite of tools to develop, deploy, and grow games and interactive experiences across all major platforms from mobile, PC, and console, to extended reality. For more information, visit Unity.com.

About Non-GAAP Financial Measures

To supplement our consolidated financial statements prepared and presented in accordance with generally accepted accounting principles in the United States (GAAP) we use certain non-GAAP financial measures, as described below, to evaluate our ongoing operations and for internal planning and forecasting purposes. We believe the following non-GAAP measures are useful in evaluating our operating performance. We are presenting these non-GAAP financial measures because we believe, when taken collectively, they may be helpful to investors because they provide consistency and comparability with past financial performance.

However, non-GAAP financial measures have limitations in their usefulness to investors because they have no standardized meaning prescribed by GAAP and are not prepared under any comprehensive set of accounting rules or principles. In addition, other companies, including companies in our industry, may calculate similarly-titled non-GAAP financial measures differently or may use other measures to evaluate their performance, all of which could reduce the usefulness of our non-GAAP financial measures as tools for comparison. As a result, our non-GAAP financial measures are presented for supplemental informational purposes only and should not be considered in isolation or as a substitute for our consolidated financial statements presented in accordance with GAAP.

We define adjusted EBITDA as GAAP net income or loss excluding stock-based compensation expense, amortization and impairment of intangible assets, depreciation expense, gain on sale of business, restructuring and reorganization costs, interest expense, interest income and other income (expense), net and the provision for income taxes. We define adjusted EBITDA margin as adjusted EBITDA as a percentage of revenue. We define adjusted gross profit as GAAP gross profit excluding stock-based compensation expense, amortization and impairment of intangible assets, depreciation expense, and restructuring and reorganization costs. We define adjusted gross margin as adjusted gross profit as a percentage of revenue.

We define adjusted cost of revenue as GAAP cost of revenue, excluding stock-based compensation expense, amortization and impairment of intangible assets, depreciation expense, and restructuring and reorganization costs. We define adjusted research and development expense as GAAP research and development expense, excluding stock-based compensation expense, amortization and impairment of intangible assets, depreciation expense, gain on sale of business, and restructuring and reorganization costs. We define adjusted sales and marketing expense as GAAP sales and marketing expense, excluding stock-based compensation expense, amortization and impairment of intangible assets, depreciation expense, gain on sale of business, and restructuring and reorganization costs. We define adjusted general and administrative expense as GAAP general and administrative expense excluding stock-based compensation expense, depreciation expense, impairment of intangible assets, gain on sale of business, and restructuring and reorganization costs. We define free cash flow as net cash provided by operating activities less cash used for purchases of property and equipment.

We define adjusted EPS as GAAP net income or loss excluding stock-based compensation expense, amortization and impairment of intangible assets, depreciation expense, gain on sale of business, restructuring and reorganization costs, and the income tax impact of the preceding adjustments (cumulatively "adjusted net income"), increased by the tax effected impacts from any relevant dilutive securities, divided by the diluted weighted-average outstanding shares. The effective tax rate used in calculating adjusted EPS is estimated for each period, based on the net income or loss adjusted for the items noted above, and may differ from the effective rate used in our financial statements. Shares of common stock that are excluded in our calculation of GAAP diluted net loss per share due to their antidilutive impact on such calculations, are included in the diluted weighted average outstanding shares used in our calculation of adjusted EPS, to the extent they have a dilutive impact on adjusted EPS given the adjusted net income in each period.

Cautionary Statement Regarding Forward-Looking Statements

This press release and the earnings call referencing this press release contain “forward-looking statements,” as that term is defined under federal securities laws, including statements regarding Unity’s outlook and future financial performance, including, but not limited to: (i) Unity’s ability to further enhance its platform, accelerate product innovation and enhance financial performance; (ii) expectations regarding Vector, including expectations regarding Vector’s improvements, performance, growth, leveraging of behavioral data available through Unity runtime, and impact on Unity’s overall future growth prospects; (iii) Unity’s strategic initiatives, including its continued investment and focus on artificial intelligence tools and integrations with third-party coding agents, and their expected impact on developer adoption; (iv) Unity’s flywheel strategy and its expected impact on Unity’s business; (v) expectations regarding Unity Spark and Unity’s partnership with Google, including Unity Spark’s launch timing, pricing and monetization model, and impact on Unity’s revenues; (vi) statements regarding Unity’s product roadmap, products, projects, technology, ongoing product development and improvements, and customer demand for Unity products; (vii) statements regarding industry trends and business model evolution; (viii) statements regarding Unity’s market opportunity; (ix) expectations regarding Unity’s competitive position, core value proposition, and growth prospects; (x) expectations regarding improvements in operating margins, operating leverage, operating discipline and cost management; (xi) expectations regarding future profitability, including anticipated benefits of GAAP profitability; (xii) Unity’s plan to pay off its convertible notes due November 15, 2026 and expectations regarding capital allocation; and (xiii) Unity’s financial guidance for future periods. The words “aim,” “believe,” “may,” “will,” “estimate,” “continue,” “intend,” “expect,” “plan,” “project,” and similar expressions are intended to identify forward-looking statements. These forward-looking statements are subject to risks, uncertainties, and assumptions. If the risks materialize or assumptions prove incorrect, actual results could differ materially from the results implied by these forward-looking statements. Risks include, but are not limited to, those related to: (i) the impact of macroeconomic conditions, such as inflation, high interest rates, tariffs, sanctions and trade barriers, and limited credit availability which could further cause economic uncertainty and volatility; (ii) Unity’s ability to compete effectively; (iii) adverse changes in the geopolitical relationship between the U.S. and China; (iv) Unity’s ability to develop, deploy, maintain, manage, or commercialize artificial intelligence-enabled products, its reliance on third-party artificial intelligence models, and the costs associated with such efforts; (v) Unity’s ability to address issues raised by the development or use of artificial intelligence in its offerings, or the use of artificial intelligence by its customers, personnel, vendors and competitors; (vi) Unity’s ability to execute its plans to realign its business and to right-size its investments, including the sunset of the ironSource Ads Network; (vii) the impact of any decisions to change how Unity prices its products and services; (viii) Unity’s ability to achieve and sustain profitability; (ix) Unity’s ability to retain existing customers and expand the use of its platform, or attract new customers; (x) Unity’s ability to further expand into adjacent business areas or new industries; (xi) the impact of any changes of terms of service, policies or technical requirements from operating system platform providers or application stores which may result in changes to Unity or its customers’ business practices; (xii) Unity’s ability to maintain favorable relationships with hardware, operating system, device, game console and other technology providers; (xiii) breaches in its security measures, unauthorized access to its platform, data, or its customers’ or other users’ personal data; (xiv) Unity’s ability to manage growth effectively and manage costs effectively; (xv) the rapidly changing and increasingly stringent laws, regulations, contractual obligations and industry standards that relate to privacy, data security and the protection of children; (xvi) Unity’s ability to attract, manage and retain its talent; (xvii) Unity’s ability to adapt effectively to rapidly changing technology, evolving industry standards, changing regulations, or changing customer needs, requirements, or preferences; and (xviii) the effectiveness of Vector. Further information on these and additional risks that could affect our results is included in our filings with the Securities and Exchange Commission (SEC), including our Annual Report on Form 10-K filed with the SEC on February 11, 2026, our Quarterly Reports on Form 10-Q filed with the SEC on May 7, 2026 and August 6, 2026, and our future reports that we may file with the SEC from time to time, which could cause actual results to vary from expectations. Copies of reports filed with the SEC are available on the Unity Investor Relations website. Statements herein speak only as of the date of this release, and Unity assumes no obligation to, and does not currently intend to, update any such forward-looking statements after the date of this release except as required by law.

Source: Unity Software Inc.