Unity Software (U)
NYSE:U
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Unity Software
(NYSE:U)
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Rating:56Neutral
Price Target:
$23.00
▲(4.50% Upside)
Action:ReiteratedDate:03/28/26
The score is driven primarily by improving financial quality (strong gross margins and solid, rising free cash flow) and a constructive outlook from the latest earnings call (Vector momentum and expected margin expansion). These positives are held back by still-material net losses and weak technicals, with valuation constrained by a negative P/E and no dividend support.
Positive Factors
Free cash flow and liquidity
Sustained positive free cash flow and a >$2B cash balance provide durable financial flexibility. This reduces refinancing risk, funds product and AI investments, and supports reinvestment and margin expansion over multiple quarters even as GAAP profitability normalizes.
Negative Factors
Ongoing GAAP losses
Despite cash generation, the company remains materially loss‑making on a GAAP basis. Persistent net losses and negative ROE limit retained‑earnings buildup, constrain return generation for shareholders, and may require continued reliance on cash reserves or capital markets during strategic investments.
Read all positive and negative factors
Positive Factors
Negative Factors
Free cash flow and liquidity
Sustained positive free cash flow and a >$2B cash balance provide durable financial flexibility. This reduces refinancing risk, funds product and AI investments, and supports reinvestment and margin expansion over multiple quarters even as GAAP profitability normalizes.
Read all positive factors
Unity Software (U) vs. SPDR S&P 500 ETF (SPY)
Market Cap
$9.63B
Dividend YieldN/A
Average Volume (3M)16.30M
Price to Earnings (P/E)―
Beta (1Y)2.09
Revenue Growth-8.23%
EPS Growth48.57%
CountryUS
Employees4,987
SectorTechnology
Sector Strength88
IndustrySoftware - Application
Share Statistics
EPS (TTM)-0.21
Shares Outstanding432,987,600
10 Day Avg. Volume19,631,096
30 Day Avg. Volume16,302,364
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 Cap1.03
Enterprise Value/Revenue5.38
Enterprise Value/Gross Profit7.62
Enterprise Value/Ebitda120.10
Forecast
1Y Price Target
$32.50Price Target Upside47.66% Upside
Rating ConsensusModerate Buy
Number of Analyst Covering17
EPS Forecast (FY)-0.66
Revenue Forecast (FY)$2.11B
Unity Software Business Overview & Revenue Model
Company Description
Unity Software Inc. creates and operates an interactive real-time 3D content platform. Its platform provides software solutions to create, run, and monetize interactive, real-time 2D and 3D content for mobile phones, tablets, PCs, consoles, and au...
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 Key Performance Indicators (KPIs)
Any
Revenue by Geography
Breaks down revenue across different regions, revealing where the company is strongest and where it may face risk or growth potential due to local economic conditions or market share shifts.
Breaks down revenue across different regions, revealing where the company is strongest and where it may face risk or growth potential due to local economic conditions or market share shifts.
Data provided by:
The Fly
The FlyUnity Software Earnings Call Summary
Earnings Call Date:Feb 11, 2026
(Q4-2025)
| % Change Since: |
Next Earnings Date:May 12, 2026
Earnings Call Sentiment Positive
The call highlights a clear positive momentum: rapid and accelerating Vector growth, a returning Create business, improving profitability and exceptional free cash flow conversion, plus multiple product catalysts (runtime integration, browser authoring, AI authoring, commerce). Near‑term items tempering the picture include the decline of the IronSource network, seasonality in Q1, elevated near‑term operating spend, and some investor concerns about competitive dynamics and the multi‑quarter nature of runtime benefits. Overall, the positives (sustained high‑growth Vector, improving Create, strong margins and cash flow, and a constructive product roadmap) outweigh the lowlights.Positive Updates
Vector Rapid Growth and Traction
Vector delivered its third consecutive quarter of mid‑teen sequential revenue growth, grew 53% across its first three quarters since launch, and had its best month in January (January revenue >70% year‑over‑year). Management expects Vector to exceed a $1 billion annual run rate by 2026 and to continue compounding performance as runtime data is integrated.
Negative Updates
IronSource Ad Network Decline
IronSource ad network revenue declined by $7 million sequentially in Q4, represented 11% of Grow revenue in the quarter, and management expects it to decline to below ~6% of total revenue in Q1—creating near‑term mix pressure and a drag while the business winds down.
Read all updates
Q4-2025 Updates
Positive
Negative
Vector Rapid Growth and Traction
Vector delivered its third consecutive quarter of mid‑teen sequential revenue growth, grew 53% across its first three quarters since launch, and had its best month in January (January revenue >70% year‑over‑year). Management expects Vector to exceed a $1 billion annual run rate by 2026 and to continue compounding performance as runtime data is integrated.
Read all positive updates
Company Guidance
Unity guided Q1 2026 revenue of $480–$490 million and adjusted EBITDA of $105–$110 million (with adjusted EBITDA margins expected to expand ~300 basis points year‑over‑year in Q1 and to improve through the year despite heavy product/AI investment). Management expects total Grow revenue to be flat sequentially in Q1 (partly due to seasonality and two fewer calendar days) while Vector should grow ~10% sequentially in Q1 and is expected to reach a run‑rate comfortably above $1 billion annually by 2026; the IronSource ad network is expected to be <6% of total revenue in Q1. Create is forecast to deliver double‑digit year‑over‑year Q1 growth excluding non‑strategic revenue, and management expects a similar cadence through 2026 excluding roughly $40 million of non‑strategic and one‑time items, with Grow returning to sequential growth in Q2.Unity Software Financial Statement Overview
Summary
Income Statement
41
Neutral
Balance Sheet
55
Neutral
Cash Flow
68
Positive
| Breakdown | Dec 2025 | Dec 2024 | Dec 2023 | Dec 2022 | Dec 2021 |
|---|---|---|---|---|---|
Income Statement | |||||
| Total Revenue | 1.85B | 1.81B | 2.19B | 1.39B | 1.11B |
| Gross Profit | 1.37B | 1.33B | 1.45B | 948.52M | 856.90M |
| EBITDA | 38.37M | -234.61M | -209.35M | -663.45M | -465.53M |
| Net Income | -402.76M | -664.11M | -822.01M | -919.49M | -532.61M |
Balance Sheet | |||||
| Total Assets | 6.84B | 6.74B | 7.24B | 7.83B | 4.84B |
| Cash, Cash Equivalents and Short-Term Investments | 2.06B | 1.52B | 1.59B | 1.59B | 1.74B |
| Total Debt | 2.39B | 2.35B | 2.71B | 2.71B | 1.82B |
| Total Liabilities | 3.34B | 3.31B | 3.83B | 4.08B | 2.45B |
| Stockholders Equity | 3.24B | 3.19B | 3.18B | 3.53B | 2.39B |
Cash Flow | |||||
| Free Cash Flow | 403.93M | 273.14M | 178.78M | -116.57M | -153.39M |
| Operating Cash Flow | 422.95M | 315.55M | 234.70M | -59.43M | -111.45M |
| Investing Cash Flow | -24.02M | -42.41M | 44.04M | 723.23M | -1.84B |
| Financing Cash Flow | 110.09M | -338.31M | -174.01M | -226.63M | 1.72B |
Unity Software Technical Analysis
Positive
22.01
Price Trends
22.02
Positive
32.81
Negative
34.64
Negative
Market Momentum
-0.05
Negative
55.61
Neutral
77.93
Neutral
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 22.01 is above the 20-day moving average (MA) of 20.03, below the 50-day MA of 22.02, and below the 200-day MA of 34.64, indicating a neutral trend. The MACD of -0.05 indicates Negative momentum. The RSI at 55.61 is Neutral, neither overbought nor oversold. The STOCH value of 77.93 is Neutral, 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 62 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 | $7.15B | -168.64 | -2.19% | ― | 50.91% | 54812.50% | |
70 Outperform | $51.05B | 145.12 | 11.05% | 0.37% | -1.45% | -11.99% | |
67 Neutral | $50.78B | 47.92 | 39.89% | ― | 15.62% | 2.59% | |
65 Neutral | $3.63B | -103.64 | -6.24% | ― | 27.35% | 18.18% | |
61 Neutral | $37.18B | 12.37 | -10.20% | 1.83% | 8.50% | -7.62% | |
56 Neutral | $9.63B | -46.16 | -12.57% | ― | -8.23% | 48.57% | |
52 Neutral | $39.28B | -52.47 | -290.61% | ― | 32.70% | 12.57% |
* Technology Sector Average
U
Unity Software
22.24
2.25
11.26%
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Unity Software Corporate Events
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...
Business Operations and StrategyExecutive/Board Changes
Unity Software Reshapes Board With New Director Appointment
Positive
Feb 10, 2026
Unity Software announced on February 10, 2026, that gaming and technology veteran Bernard Kim will join its Board of Directors as an independent Class I director and member of the Nominating and Corporate Governance Committee, effective May 1, 202...
Executive/Board Changes
Unity Software Announces Planned Retirement of Chief Accounting Officer
Neutral
Feb 10, 2026
On February 9, 2026, Unity Software Inc. announced that its Chief Accounting Officer, Mark Barrysmith, has notified the company of his intention to retire, effective June 15, 2026. Barrysmith is expected to remain in his current role until that da...
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.