Unity Turns Profitable For First Quarter Since IPO As Revenue Climbs 32%
Vector powered advertising growth, while Unity forecasts a further jump in the businesses it is prioritizing.
Unity Software, which builds tools for developing and monetizing games, delivered its first quarterly profit under standard accounting since its IPO as third-quarter revenue climbed 32% to $622 million. The results announced Thursday put net income at $122 million, against a $127 million loss a year earlier.
Vector Powers The Advertising Business
Unity's advertising business supplied the larger sales gain: Grow Solutions brought in $457 million, up 44% from a year earlier. The company credited Vector with growth in the Unity Ads Network, partly offset by declining ironSource Ads revenue.
Unity President and CEO Matt Bromberg said Vector grew 126% from a year earlier and 40% from the previous quarter. He described the connection between game creation and advertising: "more games fuel the need for more discovery through advertising."
Create Solutions generated $165 million, an 8% increase. Subscription gains outweighed declines in cloud and hosting revenue tied to Unity's 2025 portfolio reset.
Create houses Unity's real-time 3D engine and development tools, used in games and industries including automotive, manufacturing and healthcare. Grow's advertising network, mediation platform and offerwall help customers attract users and make money from content, including games built without Unity.
Profit And Cash Improve Together
Diluted earnings reached $0.25 per share, compared with a $0.30 loss a year earlier. Unity's net margin was 20%, versus a negative 27%, while adjusted earnings per share increased to $0.44 from $0.20.
Adjusted earnings before interest, taxes, depreciation and amortization reached $257 million, representing 41% of revenue. A year earlier, that measure was $109 million, or 23% of revenue; Unity attributed the improvement to higher sales and cost control.
The quarter also produced $220 million in free cash flow—operating cash left after purchases of property and equipment—against $151 million a year earlier. Operating cash generation increased to $224 million from $155 million.
Unity shares jumped about 6% to $51.82 in Friday trading.
A Smaller Portfolio, Faster Strategic Growth
Unity discontinued ironSource Ads in the second quarter of 2026 and sold its Supersonic publishing business on August 4, 2026. Those operations account for most of what Unity calls non-strategic revenue, separating them from the businesses management is prioritizing.
That distinction changes the growth comparison. Strategic revenue reached $597 million in the third quarter, up 59% year over year, while non-strategic revenue fell 73% to $25.520 million. Strategic Grow revenue increased 90%, and strategic Create revenue rose 11%.
For the fourth quarter, Unity forecasts strategic revenue of $683 million to $691 million, an increase of 65% to 67% from a year earlier. The outlook includes $515 million to $520 million from strategic Grow, up 105% to 107%, and $168 million to $171 million from strategic Create, up 4% to 6%; non-strategic revenue is forecast at $5 million.
Management expects adjusted earnings before interest, taxes, depreciation and amortization of $290 million to $295 million, up 132% to 136% year over year.
Unity's fourth-quarter outlook puts strategic advertising growth above 100%, compared with single-digit growth for its strategic development-tools business.
Sources
- 8-K Filing — Unity Software Inc. (U) — SEC EDGAR
- Exhibit a2026q3ex-991.htm — Unity Software Inc. 8-K exhibit — SEC EDGAR
- Unity Software (U) Q3 2026 Earnings Call Transcript - The Globe and Mail — theglobeandmail.com
- Unity Reports Third Quarter 2026 Financial Results — businesswire.com
