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Key Takeaways
- Unity shares jumped 8% after third-quarter revenue rose 32% to $622 million and the company posted its first GAAP profit since its IPO.
- Unity’s Vector ad engine grew 126%, and Unity expects its Grow ad revenue to more than double in the fourth quarter.
- Rival ad platforms’ results show app makers still spending on ads as brand advertisers pull back.
- Analysts expected Unity’s earnings to nearly double from 2026 to 2028, and their 2026 estimate already looks low.
Unity Software (U) is up 8% today after a third quarter that CEO Matt Bromberg called “the first GAAP profitable quarter since our IPO.”
Vector is carrying the business
Here’s Unity’s quarter:
- Strategic revenue, which leaves out businesses Unity has shut or sold, rose 59% to $597 million.
- Strategic Grow revenue rose 90% to $432 million.
- Adjusted EBITDA hit $257 million, a 41% margin, up from 23% a year earlier.
Unity also guided fourth-quarter Grow revenue up 105% to 107%, with adjusted EBITDA up 132% to 136%. Going in, analysts expected normalized EPS to nearly double from 2026 to 2028:
Unity has already earned $0.95 of adjusted EPS through September, so that $1.21 estimate for 2026 looks low to me.
The profit is the bigger milestone. Unity lost money in each of the eight quarters before this one:
Then Unity earned $122 million in the third quarter.
TIKR tracks 26 analysts on Unity Software. How many say “Buy”?
See the full breakdown of Buy, Hold, and Sell ratings on Unity Software, along with Wall Street’s revenue and earnings estimates, all in one place. More than 500,000 investors use TIKR to research stocks like this one. See Unity Software’s Analyst Ratings
Brand budgets are the weak spot
AppLovin (APP) is up 29%, and Snap (SNAP) is down 16% as brand advertisers pulled back. AppLovin had a quarter like Unity’s: revenue up 55% to $2.19 billion, at an 84% adjusted EBITDA margin. That’s double Unity’s margin on the same kind of ads, so I think Unity’s has room to climb.
Snap’s revenue rose 14% to $1.72 billion, but Chief Commercial Officer Ronan Harris said on its call that “upper funnel brand advertising declined year-over-year, weighing on our overall growth.” Meanwhile, Snap said purchase volume on its campaigns optimized for app purchases more than doubled.
So Snap’s drop looks like a brand-budget problem to me. App makers are still paying for ads that bring in players, and that’s Vector’s market.
Still a fair price
Unity traded at 26x forward earnings at the last close, and today’s jump takes it higher. For earnings growing this fast, I think that’s reasonable.
The catch: Unity guided Create revenue up just 4% to 6%, so Unity is counting on Vector for nearly all its growth. And it’s one profitable quarter. Unity has to deliver that Grow guidance when it reports early next year.
So what is Unity stock actually worth?
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