Unity Software, Inc. (U)
NYSE:U
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Unity Software
(NYSE:U)
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Rating:64Neutral
Price Target:
$34.00
▲(31.17% Upside)
Action:Reiterated
Date:05/15/26
The score is driven primarily by improving fundamentals led by strong free cash flow and an earnings-call-supported outlook for faster strategic revenue growth and expanding EBITDA margins toward targeted GAAP profitability. Technicals add a modest tailwind with improving short-term momentum, while the biggest offset is still weak GAAP profitability and a valuation picture constrained by a negative P/E and no dividend support.
Positive Factors
Strong cash generation
Consistently positive and growing free cash flow provides durable internal funding for R&D, AI investments, and debt servicing without reliance on equity raises. Strong cash conversion versus accounting losses reduces liquidity risk and supports execution of margin expansion and the planned convertible payoff.
Negative Factors
Sustained GAAP losses and negative returns
Despite improving adjusted metrics, persistent GAAP losses and negative returns signal the company has not yet translated operational gains into shareholder returns. Continued negative ROE and reported net losses increase execution risk and mean the capital base must produce higher future profits to justify current investments.
Read all positive and negative factors
Positive Factors
Negative Factors
Strong cash generation
Consistently positive and growing free cash flow provides durable internal funding for R&D, AI investments, and debt servicing without reliance on equity raises. Strong cash conversion versus accounting losses reduces liquidity risk and supports execution of margin expansion and the planned convertible payoff.
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
$11.66B
Dividend YieldN/A
Average Volume (3M)11.04M
Price to Earnings (P/E)―
Beta (1Y)2.16
Revenue Growth7.55%
EPS Growth-39.50%
CountryUS
Employees4,987
SectorTechnology
Sector Strength88
IndustrySoftware - Application
Share Statistics
EPS (TTM)-1.57
Shares Outstanding436,535,000
10 Day Avg. Volume10,066,473
30 Day Avg. Volume11,038,932
Financial Highlights & Ratios
PEG Ratio1.08
Price to Book (P/B)5.74
Price to Sales (P/S)10.05
P/FCF Ratio46.03
Enterprise Value/Market Cap1.15
Enterprise Value/Revenue6.97
Enterprise Value/Gross Profit11.73
Enterprise Value/Ebitda-45.16
Forecast
1Y Price Target
$34.54Price Target Upside33.25% 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 generates revenue through (1) subscriptions and usage-based fees tied to its Create solutions and (2) services associated with operating and monetizing applications. On the creation side, Unity sells tiered subscriptions (and relat...
Unity Software Earnings Call Summary
Earnings Call Date:May 07, 2026
(Q1-2026)
| % Change Since: |
Next Earnings Date:Aug 11, 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 | -296.63M | 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
Negative
25.92
Price Trends
26.46
Positive
25.05
Positive
33.41
Negative
Market Momentum
0.40
Positive
47.89
Neutral
14.10
Positive
Evaluating momentum and price trends is crucial in stock analysis to make informed investment decisions. For U, the sentiment is Negative. The current price of 25.92 is below the 20-day moving average (MA) of 28.08, below the 50-day MA of 26.46, and below the 200-day MA of 33.41, indicating a neutral trend. The MACD of 0.40 indicates Positive momentum. The RSI at 47.89 is Neutral, neither overbought nor oversold. The STOCH value of 14.10 is Positive, not indicating any strong overbought or oversold conditions. Overall, these indicators collectively point to a Negative 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 |
|---|---|---|---|---|---|---|---|
71 Outperform | $43.38B | 28.62 | 49.42% | ― | 18.88% | 46.42% | |
69 Neutral | $50.92B | 57.29 | 14.19% | 0.37% | 1.72% | -17.04% | |
69 Neutral | $4.80B | -188.51 | -6.24% | ― | 24.90% | -233.01% | |
64 Neutral | $11.66B | -17.60 | -21.33% | ― | 7.55% | -39.50% | |
61 Neutral | $37.18B | 12.37 | -10.20% | 1.83% | 8.50% | -7.62% | |
61 Neutral | $7.28B | -149.23 | -2.40% | ― | 73.49% | -109.13% | |
55 Neutral | $31.14B | -28.12 | -276.20% | ― | 38.10% | -16.91% |
* Technology Sector Average
U
Unity Software
27.24
2.84
11.64%
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Unity Software Corporate Events
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...
Business Operations and StrategyFinancial DisclosuresM&A Transactions
Unity Software Posts Strong Preliminary Q1 Results, Refocuses Portfolio
Positive
Mar 26, 2026
On March 26, 2026, Unity reported preliminary, unaudited first-quarter 2026 results indicating revenue between $505 million and $508 million and Adjusted EBITDA of $130 million to $135 million, both above prior guidance and implying 17% revenue gr...
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.