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Unity Software
(NYSE:U)
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Rating:61Neutral
Price Target:
$32.00
▲(11.81% Upside)
Action:Reiterated
Date:07/28/26
The score is driven primarily by mixed financial performance—strong free cash flow and moderate leverage offset by persistent GAAP losses and negative returns. The latest earnings call meaningfully supports the outlook with strong growth and EBITDA guidance plus a clearer path to GAAP profitability, while technicals are moderately positive but not fully above the long-term (200-day) trend. Valuation remains constrained by a negative P/E and lack of dividend support.
Positive Factors
Strong free cash flow generation
Unity’s persistent positive free cash flow despite GAAP losses provides durable financial flexibility. Strong FCF funds AI/cloud investment, supports the planned $558M convertible paydown, enables opportunistic M&A or R&D, and reduces reliance on external financing while management executes margin improvement.
Negative Factors
Persistent GAAP losses and negative margins
Despite cash flow strength, ongoing GAAP losses and negative operating margins show the company has not yet converted scale into consistent profitability. Continued negative returns imply execution risk: management must sustain revenue momentum and margin conversion to justify retained capital and deliver long-term shareholder returns.
Read all positive and negative factors
Positive Factors
Negative Factors
Strong free cash flow generation
Unity’s persistent positive free cash flow despite GAAP losses provides durable financial flexibility. Strong FCF funds AI/cloud investment, supports the planned $558M convertible paydown, enables opportunistic M&A or R&D, and reduces reliance on external financing while management executes margin improvement.
Read all positive factors
Unity Software Key Performance Indicators (KPIs)
Any
Revenue by Geography
Shows how sales are split across regions (e.g., North America, EMEA, APAC), revealing where Unity is strongest, where growth is fastest, and how macro or regulatory issues in specific markets could impact overall revenue and strategy.
Shows how sales are split across regions (e.g., North America, EMEA, APAC), revealing where Unity is strongest, where growth is fastest, and how macro or regulatory issues in specific markets could impact overall revenue and strategy.
Data provided by:
The Fly
The FlyUnity Software (U) vs. SPDR S&P 500 ETF (SPY)
Market Cap
$14.55B
Dividend YieldN/A
Average Volume (3M)6.58M
Price to Earnings (P/E)―
Beta (1Y)2.21
Revenue Growth7.55%
EPS Growth-39.50%
CountryUS
Employees4,412
SectorTechnology
Sector Strength88
IndustrySoftware - Application
Share Statistics
EPS (TTM)-1.57
Shares Outstanding436,535,000
10 Day Avg. Volume6,662,398
30 Day Avg. Volume6,581,361
Financial Highlights & Ratios
PEG Ratio1.07
Price to Book (P/B)5.74
Price to Sales (P/S)10.05
P/FCF Ratio46.03
Enterprise Value/Market Cap<0.01
Enterprise Value/Revenue<0.01
Enterprise Value/Gross Profit<0.01
Enterprise Value/Ebitda>-0.01
Forecast
1Y Price Target
$36.08Price Target Upside26.08% Upside
Rating ConsensusModerate Buy
Number of Analyst Covering15
EPS Forecast (FY)-0.94
Revenue Forecast (FY)$2.13B
Unity Software Business Overview & Revenue Model
Company Description
Unity Software Inc. provides a foundational platform for developing and operating interactive, real-time 3D content. This comprehensive platform offers robust software solutions that empower users to create, deploy, and monetize dynamic 2D and 3D ...
How the Company Makes Money
Unity primarily makes money through two broad revenue streams: (1) subscriptions and services tied to its Create (engine/tools) offerings and (2) advertising/monetization services for customer applications. On the Create side, Unity charges subscr...
Unity Software Earnings Call Summary
Earnings Call Date:May 07, 2026
(Q1-2026)
| % Change Since: |
Next Earnings Date:Aug 06, 2026
Earnings Call Sentiment Positive
The call emphasized strong top-line and margin momentum across both Create and Grow businesses, driven by rapid adoption of Vector and an expanding AI-native product roadmap. Management provided clear financial improvements (revenue growth, record adjusted EBITDA, margin expansion, strong cash flow) and a pulled-forward path to GAAP profitability, while noting near-term transitional costs from strategic exits, elevated cloud/AI investments and that runtime data benefits will compound over time rather than produce immediate spikes.Positive Updates
Strong Strategic Revenue Growth
Company reported strategic revenue growth of 35% year-over-year for Q1 2026 with Q2 strategic revenue guidance of $455M–$465M implying 29%–32% year-over-year growth.
Negative Updates
Near-term Impact from Strategic Exits
Sunsetting the ironSource Ad Network and selling Supersonic introduces transitional nonstrategic revenue and cost effects: Q2 includes 1 month of ironSource revenue and Grow expects ~$50M nonstrategic revenue in Q2 (≈$45M into Q3) while related cost removals will phase through the back half of 2026.
Read all updates
Q1-2026 Updates
Positive
Negative
Strong Strategic Revenue Growth
Company reported strategic revenue growth of 35% year-over-year for Q1 2026 with Q2 strategic revenue guidance of $455M–$465M implying 29%–32% year-over-year growth.
Read all positive updates
Company Guidance
Unity guided Q2 strategic revenue of $455–465M (up 29–32% YoY), with strategic Grow pegged to grow 50–52% YoY and strategic Create to grow 11–14% YoY (ex‑a large 2025 customer comp); Q2 guidance includes roughly $50M of non‑strategic Grow revenue (one month of the ironSource Ad Network) and management expects about $45M of non‑strategic revenue in Q3 until the Supersonic exit. They guided adjusted EBITDA of $130–135M (up 44–49% YoY) and said margins should continue to expand in H2 2026 as Unity targets GAAP net‑income profitability by Q4 2026; supporting metrics called out on the call included a $2.15B cash balance, a $558M convert due in November planned to be paid with cash, Q1 adjusted EBITDA of $138M (up 65% YoY) with a 27% adjusted EBITDA margin (up 800 bps YoY), stock‑based comp down 20% YoY to $76M (15% of revenue), and M&A amortization stepping down from $117M in Q1 to ~$80M in Q2/Q3, $55M in Q4 and sub‑$25M in 2027.Unity Software Financial Statement Overview
Summary
Income Statement
34
Negative
Balance Sheet
56
Neutral
Cash Flow
72
Positive
| Breakdown | TTM | Dec 2025 | Dec 2024 | Dec 2023 | Dec 2022 | Dec 2021 |
|---|---|---|---|---|---|---|
Income Statement | ||||||
| Total Revenue | 1.92B | 1.85B | 1.81B | 2.19B | 1.39B | 1.11B |
| Gross Profit | 1.14B | 1.37B | 1.33B | 1.45B | 948.52M | 856.90M |
| EBITDA | -157.33M | 89.75M | -234.61M | -209.35M | -663.45M | -465.53M |
| Net Income | -672.05M | -402.76M | -664.11M | -822.01M | -919.49M | -532.61M |
Balance Sheet | ||||||
| Total Assets | 6.52B | 6.84B | 6.74B | 7.24B | 7.83B | 4.84B |
| Cash, Cash Equivalents and Short-Term Investments | 2.14B | 2.06B | 1.52B | 1.59B | 1.59B | 1.74B |
| Total Debt | 2.24B | 2.39B | 2.35B | 2.71B | 2.71B | 1.82B |
| Total Liabilities | 3.28B | 3.34B | 3.31B | 3.83B | 4.08B | 2.45B |
| Stockholders Equity | 2.98B | 3.24B | 3.19B | 3.18B | 3.53B | 2.39B |
Cash Flow | ||||||
| Free Cash Flow | 463.08M | 403.93M | 273.14M | 178.78M | -116.57M | -153.39M |
| Operating Cash Flow | 481.21M | 422.95M | 315.55M | 234.70M | -59.43M | -111.45M |
| Investing Cash Flow | -23.14M | -24.02M | -42.41M | 44.04M | 723.23M | -1.84B |
| Financing Cash Flow | 109.49M | 110.09M | -338.31M | -174.01M | -226.63M | 1.72B |
Unity Software Technical Analysis
Positive
28.62
Price Trends
29.09
Positive
26.28
Positive
31.40
Positive
Market Momentum
0.27
Positive
46.27
Neutral
18.84
Positive
Evaluating momentum and price trends is crucial in stock analysis to make informed investment decisions. For U, the sentiment is Positive. The current price of 28.62 is below the 20-day moving average (MA) of 30.46, below the 50-day MA of 29.09, and below the 200-day MA of 31.40, indicating a bullish trend. The MACD of 0.27 indicates Positive momentum. The RSI at 46.27 is Neutral, neither overbought nor oversold. The STOCH value of 18.84 is Positive, not indicating any strong overbought or oversold conditions. Overall, these indicators collectively point to a Positive sentiment for U.
Unity Software Risk Analysis
Unity Software disclosed 63 risk factors in its most recent earnings report. Unity Software reported the most risks in the "Finance & Corporate" category.
Finance & Corporate - Financial and accounting risks. Risks related to the execution of corporate activity and strategy
Latest Risks Added 0 New Risks
Unity Software Peers Comparison
UnderperformOutperform
Sector (61)
Name | Overall Rating | Market Cap | P/E Ratio | ROE | Dividend Yield | Revenue Growth | EPS Growth |
|---|---|---|---|---|---|---|---|
75 Outperform | $49.58B | 33.94 | 49.42% | ― | 18.88% | 46.42% | |
69 Neutral | $52.90B | 59.12 | 14.19% | 0.36% | 1.72% | -17.04% | |
68 Neutral | $5.70B | -228.69 | -2.66% | ― | 24.90% | -233.01% | |
61 Neutral | $37.18B | 12.37 | -10.20% | 1.83% | 8.50% | -7.62% | |
61 Neutral | $14.55B | -20.20 | -21.33% | ― | 7.55% | -39.50% | |
54 Neutral | $34.85B | -24.90 | -288.77% | ― | 41.33% | 0.75% |
* Technology Sector Average
U
Unity Software
31.71
-0.12
-0.38%
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209.86
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35.60
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-71.53%
GTLB
Gitlab
34.51
-7.31
-17.48%
Unity Software Corporate Events
Business Operations and StrategyExecutive/Board ChangesRegulatory Filings and Compliance
Unity Software Names Michael Lieb Principal Accounting Officer
Positive
Jul 27, 2026
Effective July 27, 2026, Unity Software’s board appointed Chief Accounting Officer Michael Lieb as the company’s principal accounting officer, formalizing his leadership role over financial reporting and accounting functions. Lieb brin...
Executive/Board Changes
Unity Software Announces Upcoming Board Member Resignation
Neutral
Jul 17, 2026
On July 13, 2026, Unity Software Inc. disclosed that board member Shlomo Dovrat had informed the company’s Board of Directors of his intention to step down from his role. His resignation as a director is scheduled to take effect on July 24, ...
Executive/Board ChangesShareholder Meetings
Unity Software Shareholders Back Board, Pay and Auditor
Positive
May 14, 2026
On May 13, 2026, Unity Software Inc. held its Annual Meeting of Stockholders, where investors elected three Class III directors — Matthew Bromberg, Keisha Smith, and James M. Whitehurst — to serve until the 2029 annual meeting. Stockho...
Glossary
BuyA stock rated as a "Buy" is expected to perform better than the overall market or a specific benchmark over the near-to-medium term. This rating suggests the stock is likely to deliver higher returns compared to other stocks in the same sector or market index. Note: This is not investment advice; please consult a financial advisor before making investment decisions.
HoldA stock rated as a "Hold" is expected to perform in line with the overall market or a specific benchmark. This rating indicates that the stock is neither particularly compelling nor unfavorable for investment. Note: This is not investment advice; please consult a financial advisor before making investment decisions.
SellA stock rated as a "Sell" is expected to perform worse than the overall market or a specific benchmark over the near-to-medium term. This rating suggests the stock may deliver lower returns compared to other stocks in the same sector or market index. Note: This is not investment advice; please consult a financial advisor before making investment decisions.
Disclaimer
This AI Analyst Stock Report is automatically generated by our AI systems using advanced algorithms and publicly available financial, technical, and market data. While the information provided aims to be accurate and insightful, it is intended for informational purposes only and should not be considered financial advice. Any content created by an AI (Artificial Intelligence) system may contain inaccuracies and/or contain errors. Investing in stocks carries inherent risks, and past performance is not indicative of future results. This report does not account for your personal financial circumstances, objectives, or risk tolerance. Always conduct your own research or consult with a qualified financial advisor before making investment decisions. The analysis and recommendations provided are based on historical and current data and may not fully reflect future market conditions or unexpected developments. Neither the creators of this report nor its affiliated entities guarantee the accuracy, completeness, or reliability of the information presented. Use this report at your own discretion and risk.