Unity Software Inc.

What they do

Unity sells two sets of solutions: Create Solutions, a real-time 3D engine and development environment with subscriptions, enterprise support, professional services and consumption services, and Grow Solutions, primarily advertising products that help customers acquire and monetize users. Create tools serve games as well as automotive, retail, manufacturing, healthcare, public sector and robotics; Grow products include the Unity Ad Network powered by Unity Vector, a mediation platform and offerwall. Grow products work regardless of whether content was built in Unity.

Revenue drivers

• Strategic Grow Solutions — Primarily the Unity Ad Network powered by Unity Vector, plus mediation and offerwall; generated $328.955M in Q2 2026, up 63% year-over-year, and is now the largest revenue line.
• Strategic Create Solutions — Engine subscriptions, enterprise support, professional services and consumption services; generated $157.456M in Q2 2026, up 5% year-over-year (14% excluding a $12M one-time item in Q2 2025).
• Non-Strategic Revenue — Primarily the ironSource Ads Network, sunset effective April 30, 2026, and the Supersonic publishing business, sold August 4, 2026; was $60.057M in Q2 2026, down 33% year-over-year, and is being wound down.

Recent performance

Q2 2026 total revenue was $546.5M, up 24% from $440.9M a year earlier, with strategic revenue of $486.4M up 38%. Grow Solutions revenue was $389M (up 35%) and Create Solutions revenue was $158M (up 2%). GAAP net loss narrowed to $22.7M, or $0.05 per diluted share, from $107.4M a year earlier, and adjusted EBITDA was $160M at a 29% margin. Operating cash flow was $206M and free cash flow $202M for the quarter; six-month revenue was $1,054.7M against a $369.6M net loss, which included $279M of impairments on ironSource Ads and Supersonic long-lived assets.

Strategy

Since the fourth quarter of 2023 Unity has been resetting its portfolio around a 'Strategic Portfolio': primarily the Unity Engine and related consumption services, plus monetization solutions. In 2026 it exited non-core monetization, sunsetting the ironSource Ads Network effective April 30, 2026 and completing the sale of the Supersonic publishing business on August 4, 2026. The company has also cut workforce and office footprint, incurring roughly $33M of employee separation costs and $14M of non-employee charges in 2025. Management is emphasizing Unity Vector AI and what it calls its most exciting product roadmap as the basis for growth.

Risks

• History of GAAP losses — Unity has posted net losses every year since inception, including $402.8M in 2025, and says it may not achieve or sustain profitability on a GAAP basis.
• Portfolio reset execution — The ironSource Ads and Supersonic exits produced $279M of impairments in the first half of 2026 and shift a large share of revenue into a shrinking non-strategic bucket.
• Revenue concentration in advertising — Strategic Grow revenue of $328.955M in Q2 2026 was the majority of strategic revenue, making results dependent on Unity Vector and the mobile ad ecosystem.
• Competition in both segments — Create faces in-house studio engines, Unreal Engine, Godot and Cocos2d-x, while Grow operates in a fragmented ecosystem of private and large competitors.

Outlook

For Q3 2026 Unity guides strategic revenue of $540M to $550M, up 44%–47% year-over-year, and non-strategic revenue of about $20M, which includes roughly one month of Supersonic revenue. Within that, strategic Grow revenue is guided to $380M–$385M (up 68%–70%) and strategic Create revenue to $159M–$163M (up 7%–10%). Management guides adjusted EBITDA of $185M to $190M, up 69%–74% year-over-year, and has not reconciled these non-GAAP estimates to GAAP.