Unity Software (U) AI Stock Analysis

• Market Cap: $18.46B
• Dividend Yield: N/A
• Average Volume (3M): 11.32M
• Price to Earnings (P/E): ―
• Beta (1Y): 2.11
• Revenue Growth: -8.23%
• EPS Growth: 48.57%
• Country: US
• Employees: 4,987
• Sector: Technology
• Sector Strength: 88
• Industry: Software - Application
• EPS (TTM): 0.20
• Shares Outstanding: 427,912,840
• 10 Day Avg. Volume: 13,112,354
• 30 Day Avg. Volume: 11,321,566
• PEG Ratio: 0.60
• Price to Book (P/B): 2.79
• Price to Sales (P/S): 4.91
• P/FCF Ratio: 32.57
• Enterprise Value/Market Cap: 0.96
• Enterprise Value/Revenue: 9.80
• Enterprise Value/Gross Profit: 13.19
• Enterprise Value/Ebitda: 471.15
• 1Y Price Target: $41.25
• Price Target Upside: 3.00% Upside
• Rating Consensus: Moderate Buy
• Number of Analyst Covering: 19
• EPS Forecast (FY): N/A
• Revenue Forecast (FY): N/A

• Rating: 64 Neutral
• Price Target: $45.00 ▲(12.36% Upside)

Unity Software's overall score reflects strong technical momentum and positive earnings call highlights, particularly in the Grow and Create segments. However, ongoing profitability challenges and valuation concerns weigh on the score. The company's strategic expansions and product advancements provide a solid foundation for future growth, but regional revenue concentration remains a potential risk.

Positive Factors

Revenue Growth

The significant growth in the Grow segment indicates strong demand and successful product offerings, supporting long-term revenue expansion.

Cash Flow Management

Improved cash flow management enhances financial stability, providing resources for reinvestment and strategic initiatives.

Product Adoption

Strong adoption of Unity 6 reflects customer satisfaction and market acceptance, bolstering Unity's competitive position.

Negative Factors

Profitability Challenges

Ongoing profitability issues could hinder long-term financial health and limit investment capacity in growth opportunities.

Regional Revenue Dependence

Over-reliance on specific regions like China poses risks if geopolitical or economic conditions change unfavorably.

Sequential Growth Concerns

Slower sequential growth guidance in the Grow segment may indicate challenges in sustaining recent momentum.

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 augmented and virtual reality devices. The company serves content creators and developers, artists, designers, engineers, and architects to create interactive and real-time 2D and 3D content. It offers its solutions directly through its online store, field sales operations, independent distributors, and resellers in the United States, Denmark, Belgium, Canada, China, Colombia, Finland, France, Germany, Ireland, Israel, Japan, Lithuania, Portugal, Singapore, South Korea, Spain, Sweden, Switzerland, and the United Kingdom. The company was founded in 2004 and is headquartered in San Francisco, California.

How the Company Makes Money

Unity generates revenue through multiple streams, primarily from its subscription services, which include Unity Pro and Unity Enterprise. These subscriptions provide users with access to advanced features, tools, and support necessary for professional game development. Additionally, Unity earns revenue from its Software as a Service (SaaS) offerings, such as Unity Cloud Build and Unity Collaborate, which facilitate collaboration and deployment for developers. Another significant revenue source comes from Unity Asset Store, where developers can purchase and sell assets, including 3D models, scripts, and plugins. Furthermore, Unity has established partnerships with major companies in the gaming and technology sectors, which often involve revenue-sharing agreements and joint ventures that contribute to its earnings. The company also benefits from an increasing trend of non-gaming industries adopting real-time 3D technology, further expanding its potential customer base and revenue opportunities.

Unity Software Financial Statement Overview

Summary

Unity Software shows strong revenue growth and gross profit margins, but profitability remains a challenge with negative net income and EBIT margins. The balance sheet is stable with moderate leverage, though returns on equity are negative. Cash flow management shows positive trends, particularly in free cash flow growth, but further improvements in operational efficiency are needed.

Income Statement

Unity Software shows a strong gross profit margin of 74.29% TTM, indicating efficient cost management. However, the company struggles with profitability, evidenced by a negative net profit margin of -24.15% TTM. Revenue growth is positive at 1.35% TTM, but the negative EBIT and EBITDA margins highlight ongoing operational challenges.

Balance Sheet

The debt-to-equity ratio of 0.70 TTM suggests moderate leverage, which is manageable. However, the return on equity is negative at -13.62% TTM, indicating inefficiencies in generating returns for shareholders. The equity ratio stands at 47.21% TTM, reflecting a stable capital structure.

Cash Flow

Unity Software's free cash flow growth is strong at 14.19% TTM, and the free cash flow to net income ratio is nearly 1, indicating effective cash management. However, the operating cash flow to net income ratio of 0.44 TTM suggests room for improvement in converting income into cash.

Breakdown	TTM	Dec 2024	Dec 2023	Dec 2022	Dec 2021	Dec 2020
Income Statement
Total Revenue	1.80B	1.81B	2.19B	1.39B	1.11B	772.45M
Gross Profit	1.34B	1.33B	1.45B	948.52M	856.90M	600.10M
EBITDA	37.51M	-234.61M	-209.35M	-663.45M	-465.53M	-231.84M
Net Income	-435.53M	-664.11M	-822.01M	-919.49M	-532.61M	-282.31M
Balance Sheet
Total Assets	6.78B	6.74B	7.24B	7.83B	4.84B	2.67B
Cash, Cash Equivalents and Short-Term Investments	1.90B	1.52B	1.59B	1.59B	1.74B	1.75B
Total Debt	2.23B	2.35B	2.71B	2.71B	1.82B	123.91M
Total Liabilities	3.33B	3.31B	3.83B	4.08B	2.45B	634.08M
Stockholders Equity	3.20B	3.19B	3.18B	3.53B	2.39B	2.04B
Cash Flow
Free Cash Flow	391.00M	273.14M	178.78M	-116.57M	-153.39M	-20.99M
Operating Cash Flow	413.71M	315.55M	234.70M	-59.43M	-111.45M	19.91M
Investing Cash Flow	-24.71M	-42.41M	44.04M	723.23M	-1.84B	-575.19M
Financing Cash Flow	95.50M	-338.31M	-174.01M	-226.63M	1.72B	1.70B

Unity Software Technical Analysis

• Technical Analysis Sentiment: Positive
• Last Price: 40.05
• 50DMA: Negative
• 100DMA: Positive
• 200DMA: Positive
• MACD: Negative
• RSI: Neutral
• STOCH: 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 40.05 is above the 20-day moving average (MA) of 37.90, below the 50-day MA of 40.14, and above the 200-day MA of 29.38, indicating a neutral trend. The MACD of 0.66 indicates Negative momentum. The RSI at 52.75 is Neutral, neither overbought nor oversold. The STOCH value of 73.35 is Neutral, not indicating any strong overbought or oversold conditions. Overall, these indicators collectively point to a Positive sentiment for U.

Unity Software Peers Comparison

Name	Overall Rating	Market Cap	P/E Ratio	ROE	Dividend Yield	Revenue Growth	EPS Growth
CWAN	74 Outperform	$4.88B	12.03	32.91%	―	50.91%	54812.50%
NICE	73 Outperform	$7.74B	14.89	15.07%	―	11.72%	37.05%
GRAB	69 Neutral	$24.04B	195.35	1.92%	―	20.22%	―
MNDY	66 Neutral	$8.44B	134.72	5.81%	―	28.62%	186.67%
U	64 Neutral	$18.46B	―	-13.64%	―	-8.23%	48.57%
GTLB	63 Neutral	$7.70B	―	-0.63%	―	28.97%	98.96%
Sector *	61 Neutral	$37.18B	12.37	-10.20%	1.83%	8.50%	-7.62%

Unity Software Corporate Events

Unity Software Reports Strong Q3 2025 Results

Unity Software, Inc. is a leading platform in the gaming and interactive experiences sector, offering a suite of tools for developing and growing content across various platforms including mobile, PC, console, and extended reality.

Unity Software’s Earnings Call Highlights Growth and Caution

Unity Software, Inc. recently held its earnings call, revealing a strong performance across its Grow and Create segments. The company showcased significant product advancements and strategic expansions, although there was a note of caution regarding sequential growth in the Grow segment and regional revenue dependence.

Unity Software, Inc. Highlights Q2 2025 Earnings Call

Unity Software, Inc. Shines in Q2 2025 Earnings Call

Unity Software Reports Mixed Q2 2025 Financial Results

Unity Software, Inc. is a leading platform in the gaming and interactive experiences industry, offering a suite of tools to create, market, and grow games across various platforms including mobile, PC, console, and extended reality (XR).