U · Unity Software Inc.

Unity's first quarter 2026 results reflect strong execution in its strategic growth areas, with total revenue increasing 17% year-over-year to $508 million. The standout was Strategic Revenue, which surged 35% to $432 million, driven by a 49% jump in Strategic Grow Revenue ($279 million) and a 15% rise in Strategic Create Revenue ($154 million). The Grow Solutions segment, which includes the Unity Ad Network, grew 24% to $352 million, benefiting from the 'Unity Vector' initiative, while Create Solutions rose 4% to $157 million on subscription growth. Non-Strategic Revenue declined 34% to $76 million, as expected due to the sunset of the ironSource Ad Network and planned divestiture of Supersonic.

Profitability showed significant improvement on an adjusted basis. Adjusted EBITDA more than doubled to $138 million, with margin expanding to 27% from 19% a year ago, driven by higher revenue and cost discipline. However, GAAP net loss widened to $347 million from $78 million, primarily due to $279 million in impairment charges related to the ironSource sunset and Supersonic divestiture. Adjusted EPS was $0.23, slightly down from $0.24 last year.

Management commentary highlighted 'exceptional revenue growth and margin expansion' and a strong product roadmap. For Q2 2026, Unity guided total revenue of $505-$515 million, strategic revenue of $455-$465 million (up 29%-32% YoY), and adjusted EBITDA of $130-$135 million (up 44%-49% YoY). The guidance implies continued momentum in strategic segments, with Grow revenue expected to grow 50%-52% and Create revenue up 11%-14% excluding a one-time item. Free cash flow was $66 million, up from $7 million a year ago, and cash and equivalents stood at $2.14 billion. The results underscore Unity's successful pivot toward higher-margin strategic revenue streams, though the GAAP loss highlights the cost of restructuring legacy assets.