Unity Software Gears Up for Q2 Earnings: What's in the Offing?

Unity Software Inc. U is scheduled to release second-quarter 2025 results on Wednesday. In the last reported quarter, the company’s earnings beat the Zacks Consensus Estimate by 50%.

U’s Q2 Estimate Revisions

The Zacks Consensus Estimate for Unity Software’s second-quarter 2025 loss per share is pegged at 25 cents. In the prior-year quarter, the company reported an adjusted loss per share of 32 cents. The consensus mark has been unchanged over the past seven days. 

The Zacks Consensus Estimate for revenues is pegged at $425.8 million, indicating a 5.2% decline from the year-ago quarter's reported figure.

Unity Software’s Earnings Surprise History

Unity Software has an impressive record of beating earnings expectations. Its earnings beat the consensus mark in each of the trailing four quarters, with an average surprise of 28%.

Factors to Influence U’s Q2 Performance

Unity Software’s top line in second-quarter 2025 is likely to have been pressured by a few key factors. While the rollout of the AI-powered Unity Vector platform was a strategic success, its positive financial impact might not have been fully realized within the quarter. At the same time, the company expects declines in revenues from certain legacy ad products, such as ironSource and Tapjoy, as resources have been increasingly shifted toward Vector. This internal product mix transition has created short-term revenue friction, offsetting some of the early gains from Vector’s stronger performance.

Additionally, Unity Software has forecasted a slight sequential decline in its Create segment due to the planned wind-down of non-strategic revenue streams, particularly lower-margin professional services. Though the subscription business within Create continued to grow, the runoff in these non-core areas has created a temporary drag on the segment’s overall revenues. Taken together, these factors are likely to have contributed to expectations for a modest top-line decline in the second quarter, even as long-term fundamentals appeared to be improving.

Unity Software incurred elevated R&D and cloud infrastructure costs during the transition period as it operated both the legacy ad model and the new Vector platform in parallel. These costs are expected to normalize in the second half but might have weighed on profitability in the second quarter.

Q2 Earnings Whispers for Unity Software

Our proven model predicts an earnings beat for Unity Software this time around. The combination of a positive Earnings ESP and a Zacks Rank #1 (Strong Buy), 2 (Buy) or 3 (Hold) increases the odds of an earnings beat. That is exactly the case here.

U’s Earnings ESP: Unity Software has an Earnings ESP of +40.00%. You can uncover the best stocks to buy or sell before they are reported with our Earnings ESP Filter.

U’s Zacks Rank: The company carries a Zacks Rank #2 at present.

Stocks Poised to Beat Earnings

Bumble Inc. BMBL has an Earnings ESP of +37.01% and a Zacks Rank of 1 at present. You can see the complete list of today’s Zacks #1 Rank stocks here.
 
For the to-be-reported quarter, Bumble’s earnings are expected to register a 68.2% decline. In the preceding quarter, Bumble's earnings missed the Zacks Consensus Estimate by 18.8%.
 
StoneCo Ltd. STNE currently has an Earnings ESP of +12.68% and a Zacks Rank of 1.

For the to-be-reported quarter, StoneCo’s earnings are expected to increase 20%. StoneCo’s earnings beat the consensus estimates in the trailing three out of four quarters and missed once, the average surprise being 6.4%.
 
PENN Entertainment, Inc. PENN currently has an Earnings ESP of +23.32% and a Zacks Rank of 3. 

For the to-be-reported quarter, PENN Entertainment’s earnings are expected to increase 61.1%. PENN Entertainment’s earnings beat estimates in three of the trailing four quarters and missed on one occasion, the average surprise being 13.5%.

Want the latest recommendations from Zacks Investment Research? Today, you can download 7 Best Stocks for the Next 30 Days. Click to get this free report

This article originally published on Zacks Investment Research (zacks.com).

Zacks Investment Research