U Earnings: Unity Software Stock Rallies After Q1 Results Blow Past Expectations

Unity Software Inc. (U) delivered stronger-than-expected earnings for Q1 2025, reporting an adjusted EPS of $0.24, significantly above analysts’ expectations of $0.12. Meanwhile, adjusted EBITDA stood at $83.9 million, also beating the forecast of $64.9 million. On the downside, revenue fell 6% year-over-year to $435 million in Q1, yet managed to exceed the consensus estimate of $417.13 million. Following the release, U stock rose nearly 3% in pre-market trading at the time of writing.

Unity Software is widely known for its powerful game engine that enables developers to build interactive experiences across gaming, film, automotive, architecture, and more.

Unity Software Issues Softer Outlook

For Q2 2025, Unity forecasts adjusted EBITDA between $70 million and $75 million, falling short of the expected $81.4 million. In terms of revenue, the company expects revenue between $415 million and $425 million, compared to the consensus forecast of $424.2 million.

All Eyes on Unity Vector

Unity’s CEO, Matt Bromberg highlighted the early success of Unity Vector and the strong demand for Unity 6 in the Q1 results. He also credited the company’s success to its focus on “execution and discipline.”

Earlier in Q1, Unity announced that it is transitioning its ad network to the AI-driven Vector platform. This shift will use data from the Unity ecosystem to improve ad performance, enabling advertisers to connect with their target audience more effectively and at the optimal time. Analysts believe that the launch of Vector marked a crucial catalyst that could drive the company’s market share growth in the mobile gaming advertising industry.

What Is the Target Price for Unity Stock?

According to TipRanks, Wall Street has a Moderate Buy consensus rating on U stock, based on eight Buys and nine Holds assigned in the last three months. The average Unity Software stock price target of $27.39 implies 28.5% upside potential.

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