Unity Software Inc. (NYSE:U) saw its shares jump 17% after posting second-quarter results that comfortably exceeded Wall Street expectations and issuing stronger-than-anticipated guidance for the current quarter.
The game development platform delivered robust revenue growth, improved profitability and higher cash generation, reinforcing investor confidence in its AI-driven strategy.
Revenue and earnings outperform forecasts
Unity reported an adjusted loss of $0.05 per share for the second quarter, outperforming analysts’ expectations for a loss of $0.11 per share.
Revenue climbed 24% year over year to $546 million, up from $441 million in the same period last year and well above the consensus estimate of $514.62 million.
Strategic revenue, which excludes the company’s ironSource Ads network and Supersonic publishing business, increased 38% to $486 million.
CEO highlights momentum across the business
President and Chief Executive Officer Matt Bromberg said: “This was arguably the best quarter in Unity’s history as a public company. The ongoing success of Unity Vector AI, combined with the most exciting product roadmap in Unity’s history, is helping drive substantial value for creators, players, and shareholders.”
Management credited the company’s AI initiatives and expanding product portfolio with supporting both customer engagement and financial performance.
Outlook comes in ahead of expectations
For the third quarter, Unity expects revenue of between $540 million and $550 million, with the midpoint of $545 million exceeding analysts’ consensus forecast of $539.3 million.
The company also projected adjusted EBITDA of between $185 million and $190 million, representing year-over-year growth of between 69% and 74%.
AI products drive business growth
Revenue from Grow Solutions increased 35% to $389 million, supported by continued expansion of the Unity Ads Network and Unity Vector AI.
Meanwhile, Create Solutions revenue edged 2% higher to $158 million as subscription growth offset weaker cloud and hosting services revenue.
Profitability and cash flow continue to improve
Adjusted EBITDA rose to $160 million during the quarter, compared with $90 million a year earlier.
The adjusted EBITDA margin expanded to 29%, up from 21% in the second quarter of 2025.
Free cash flow also strengthened significantly, rising to $202 million from $127 million in the prior-year period.
Unity Software stock price
