Unity — Third Quarter 2026 Earnings Summary

Financial Performance:

• Total revenue was $622.1 million, a 32% increase year-over-year from $470.6 million in Q3 2025.
• Strategic revenue was $596.6 million, up 59% year-over-year.
• Strategic Grow revenue was $431.5 million, up 90% year-over-year.
• Strategic Create revenue was $165.1 million, up 11% year-over-year.
• Non-Strategic revenue was $25.5 million, down 73% year-over-year, primarily due to the sunset of the ironSource Ads Network and the sale of the Supersonic publishing business.
• GAAP net income was $121.6 million, compared to a net loss of $126.8 million in Q3 2025, resulting in a GAAP net income margin of 20%.
• Adjusted EBITDA was $256.6 million, up 134% year-over-year from $109.5 million, with an adjusted EBITDA margin of 41%.
• Free cash flow was $220 million, compared to $151 million in Q3 2025.
• Net cash provided by operating activities was $224 million, compared to $155 million in Q3 2025.
• Basic net income per share was $0.27, and diluted net income per share was $0.25, compared to a basic and diluted net loss of $0.30 per share in Q3 2025.
• Adjusted EPS was $0.44, compared to $0.20 in Q3 2025.
• Cash, cash equivalents, and restricted cash totaled $2.651 billion as of September 30, 2026, an increase of $587 million from December 31, 2025.
• Total assets were $6.964 billion as of September 30, 2026.
• Total liabilities were $3.436 billion as of September 30, 2026.

Guidance and Future Outlook:

• Q4 2026 Strategic Revenue guidance is $683 million to $691 million, representing 65% to 67% year-over-year growth.
• Q4 2026 Strategic Grow Revenue guidance is $515 million to $520 million, representing 105% to 107% year-over-year growth.
• Q4 2026 Strategic Create Revenue guidance is $168 million to $171 million, representing 4% to 6% year-over-year growth.
• Q4 2026 Non-Strategic Revenue guidance is $5 million.
• Q4 2026 Adjusted EBITDA guidance is $290 million to $295 million, representing 132% to 136% year-over-year growth.
• Management expects to pay off convertible notes due November 15, 2026.
• Forward-looking statements include expectations regarding Vector's growth, the flywheel strategy, Unity Spark launch timing, and continued investment in AI tools.

Business Segments and Product Lines:

• Grow Solutions revenue was $457 million, up 44% year-over-year, driven by growth in the Unity Ads Network and Unity Vector.
• Create Solutions revenue was $165 million, up 8% year-over-year, driven by increases in subscription revenue.
• Unity Vector grew 126% year-over-year and 40% quarter-over-quarter.
• The ironSource Ads Network was sunset in the second quarter of 2026.
• The Supersonic publishing business was sold on August 4, 2026.
• Cloud and hosting services revenue decreased, driven by a portfolio reset in 2025.

Market and Competitive Landscape:

• Unity describes itself as the world's leading game engine.
• Management highlighted the compounding impact of its flywheel strategy where more creators make more games, fueling the need for more discovery through advertising.
• The company is focusing on artificial intelligence tools and integrations with third-party coding agents to enhance developer adoption.
• Unity is developing Unity Spark and has a partnership with Google.

Risks and Challenges:

• Risks include macroeconomic conditions, inflation, high interest rates, and trade barriers.
• Competition and the ability to compete effectively are cited as risks.
• Geopolitical tensions between the U.S. and China could impact operations.
• Challenges related to developing and commercializing AI-enabled products and reliance on third-party AI models.
• Risks associated with the execution of business realignment plans, including the sunset of the ironSource Ads Network.
• Potential changes to terms of service or technical requirements from operating system platform providers.
• Data security breaches and compliance with privacy and data protection laws.

Management Commentary and Tone:

• Matt Bromberg, President and CEO, stated that third-quarter performance was the company's "strongest ever" and marked the first GAAP profitable quarter since the IPO.
• Management expressed confidence in the flywheel strategy and the growth trajectory of Vector.
• The tone indicates a focus on profitability, cost control, and strategic realignment following the sale of Supersonic and sunset of ironSource.

Other Key Points:

• The company achieved its first GAAP profitable quarter since its IPO.
• Proceeds from the sale of the Supersonic publishing business were $37.2 million in the third quarter.
• Stock-based compensation expense for the quarter was $63.1 million.
• The company has a plan to pay off convertible notes due November 15, 2026.
• The press release includes reconciliations of GAAP to non-GAAP financial measures, including Adjusted EBITDA, Adjusted Gross Profit, and Adjusted EPS.