Earnings

Unity's Vector Ad Engine Grew 40% In One Quarter, Double The Guide — CEO Says Not Every Quarter Will Match

Unity's CEO said on the earnings call that Vector growth doubled management's guide, while the CFO called it an unforeseen step change.

Matteo Parrino Jonathan Ponciano

Matteo Parrino, Jonathan Ponciano

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Unity's Vector Ad Engine Grew 40% In One Quarter, Double The Guide — CEO Says Not Every Quarter Will Match

Unity Software, which makes tools for building and monetizing games and other interactive 3D content, saw revenue at its Vector ad engine grow 126% year over year and 40% from the prior quarter, CEO Matt Bromberg said on the company's earnings call Thursday. Management had guided for 20% sequential growth, and Bromberg cautioned that "every quarter is not going to be a 40% quarter."

Double the guide, with a caveat

Bromberg said management remains "very confident about the healthy levels of growth going forward." Pressed on durability, he said the business delivers "incremental solid growth and then occasional step change functions," and that Vector is "seven quarters into this."

He also said Vector's acceleration came mainly from more installs and higher player values, not changes in take rate.

An analyst asked CFO Jarrod Yahes whether guidance philosophy had changed. Yahes called the quarter "a significant unforeseen step change" and said any unexpected, unforecast gains would show up as excesses above guidance.

Who is driving the growth

Yahes said Vector advertiser accounts rose 27% from the prior quarter, but 90% of the quarter's growth came from existing advertisers. New advertisers, he said, have just started to spend.

Bromberg said 30% of Vector's top 1,000 spenders now share runtime data with Unity, and opt-in on newly created projects stays above 90%.

Strategic revenue was $597 million, up 59% from a year earlier. Strategic Grow, the advertising side, brought in $432 million, up 90%, and now makes up 69% of revenue. Strategic Create, the engine and tools business, had $165 million, up 11%.

First GAAP profit since the IPO

Yahes said net income was $122 million, a 20% margin and Unity's first quarter of profit under standard accounting since its IPO. Adjusted EBITDA was $257 million, a 41% margin, and free cash flow was a record $220 million. Cash stood at $2.65 billion, and Unity expects to repay convertible debt due November 15 from cash on hand.

For the fourth quarter, Unity guides to strategic revenue of $683 million to $691 million, up 65% to 67%, with Vector growth assumed at 21% to 23% from the third quarter. Adjusted EBITDA is guided to $290 million to $295 million.

Shares rose about 16% to $49.26 in Thursday trading, for a market value of $18.7 billion.

Spark, built with Google

Unity's browser-based creation tool Spark, built in partnership with Google, will enter close beta this year, with a full launch in 2027. Pricing has not been announced; Unity plans a mix of free and paid subscriptions, consumption-based revenue and advertising.

Bromberg said Unity's daily active user count is up 25% since early August, when it opened its platform to coding agents.

Sources

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