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Unity Software
(NYSE:U)
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Rating:68Neutral
Price Target:
$39.00
▲(36.27% Upside)
Action:Reiterated
Date:08/06/26
The score is driven primarily by improving fundamentals and strong cash generation, reinforced by a highly optimistic earnings call with robust growth and margin guidance plus an accelerated path to GAAP profitability. Technicals also support the setup with strong trend momentum, though the stock looks extended. Offsetting these positives are still-deep GAAP losses and an unattractive valuation profile given the negative P/E and no dividend yield.
Positive Factors
Cash Generation
Sustained strong free cash flow provides durable funding for product investment, M&A or debt paydown without relying on equity raises. Convertibility of robust cash flow into net cash (flipped from net debt) underpins financial flexibility and long-term capital allocation optionality.
Negative Factors
GAAP Losses
Large trailing GAAP losses and negative ROE reflect that accounting profitability has not yet been consistently achieved. This structural gap raises execution risk: management must convert adjusted EBITDA progress into sustained GAAP profits to preserve equity value and avoid balance-sheet erosion.
Read all positive and negative factors
Positive Factors
Negative Factors
Cash Generation
Sustained strong free cash flow provides durable funding for product investment, M&A or debt paydown without relying on equity raises. Convertibility of robust cash flow into net cash (flipped from net debt) underpins financial flexibility and long-term capital allocation optionality.
Read all positive factors
Unity Software Key Performance Indicators (KPIs)
Any
Revenue by Geography
Shows how sales are split across regions (e.g., North America, EMEA, APAC), revealing where Unity is strongest, where growth is fastest, and how macro or regulatory issues in specific markets could impact overall revenue and strategy.
Shows how sales are split across regions (e.g., North America, EMEA, APAC), revealing where Unity is strongest, where growth is fastest, and how macro or regulatory issues in specific markets could impact overall revenue and strategy.
Data provided by:
The Fly
The FlyUnity Software (U) vs. SPDR S&P 500 ETF (SPY)
Market Cap
$20.15B
Dividend YieldN/A
Average Volume (3M)6.58M
Price to Earnings (P/E)―
Beta (1Y)2.37
Revenue Growth13.98%
EPS Growth-27.86%
CountryUS
Employees4,412
SectorTechnology
Sector Strength88
IndustrySoftware - Application
Share Statistics
EPS (TTM)-1.36
Shares Outstanding440,088,930
10 Day Avg. Volume6,662,398
30 Day Avg. Volume6,581,361
Financial Highlights & Ratios
PEG Ratio1.07
Price to Book (P/B)5.74
Price to Sales (P/S)10.05
P/FCF Ratio46.03
Enterprise Value/Market Cap<0.01
Enterprise Value/Revenue<0.01
Enterprise Value/Gross Profit<0.01
Enterprise Value/Ebitda>-0.01
Forecast
1Y Price Target
$48.69Price Target Upside70.14% Upside
Rating ConsensusStrong Buy
Number of Analyst Covering19
EPS Forecast (FY)-0.75
Revenue Forecast (FY)$2.21B
Unity Software Business Overview & Revenue Model
Company Description
Unity Software Inc. provides a foundational platform for developing and operating interactive, real-time 3D content. This comprehensive platform offers robust software solutions that empower users to create, deploy, and monetize dynamic 2D and 3D ...
How the Company Makes Money
Unity primarily makes money through two broad revenue streams: (1) subscriptions and services tied to its Create (engine/tools) offerings and (2) advertising/monetization services for customer applications. On the Create side, Unity charges subscr...
Unity Software Earnings Call Summary
Earnings Call Date:Aug 06, 2026
(Q2-2026)
| % Change Since: |
Next Earnings Date:Nov 11, 2026
Earnings Call Sentiment Positive
The call conveyed strong positive operational and financial momentum: rapid Vector-led revenue growth, significant margin expansion, record cash generation, and accelerated path to GAAP profitability. Several strategic product launches (Unity 7, Unity AI, Commerce) and the incorporation of runtime data underpin the growth thesis. Lowlights are mainly execution and timing risks — Create’s more modest growth rate, early-stage nature of runtime/AI contributions, and reduced nonstrategic revenue following portfolio simplification. Overall, the positives (high growth, profitability, cash flow, and product catalysts) substantially outweigh the limited near-term risks.Positive Updates
Outstanding Vector Momentum and Adoption
Unity Vector delivered 23% quarter-over-quarter growth (vs. an expected 12-13%), achieved over $1 billion in annual run rate two quarters earlier than expected, and contributed to Strategic Grow revenue up 63% year-over-year. Vector executed 20+ major updates in Q2 and is guiding 19-21% sequential growth for Q3 with Strategic Grow expected to grow 68-70% year-over-year.
Negative Updates
Create Segment Growth Is More Modest
Strategic Create revenue was $157 million, up 14% year-over-year when excluding a one-time prior-year item — noticeably slower growth versus Strategic Grow, and Create guidance for Q3 is a more modest 7%–10% year-over-year growth.
Read all updates
Q2-2026 Updates
Positive
Negative
Outstanding Vector Momentum and Adoption
Unity Vector delivered 23% quarter-over-quarter growth (vs. an expected 12-13%), achieved over $1 billion in annual run rate two quarters earlier than expected, and contributed to Strategic Grow revenue up 63% year-over-year. Vector executed 20+ major updates in Q2 and is guiding 19-21% sequential growth for Q3 with Strategic Grow expected to grow 68-70% year-over-year.
Read all positive updates
Company Guidance
Unity guided third-quarter strategic revenue of $540–$550 million (up 44%–47% year‑over‑year), with Strategic Grow expected to grow 68%–70% YoY (Vector projected to rise 19%–21% sequentially) and Strategic Create up 7%–10% YoY, plus $20 million of nonstrategic revenue; adjusted EBITDA is guided to $185–$190 million (about 33% margins), implying adjusted EBITDA growth of 69%–74% and roughly 400 basis points of sequential margin expansion (1,000 bps YoY). Management also pulled forward GAAP net income profitability from Q4 2026 to Q3 2026, expects to repay the 2026 convertible in November, and is basing the outlook on strong underlying metrics (Q2: strategic revenue growth 38%, adjusted EBITDA $160M and 29% margins, $202M free cash flow, >$1B Vector ARR and ~82%–83% adjusted gross margins).Unity Software Financial Statement Overview
Summary
Income Statement
38
Negative
Balance Sheet
55
Neutral
Cash Flow
72
Positive
| Breakdown | TTM | Dec 2025 | Dec 2024 | Dec 2023 | Dec 2022 | Dec 2021 |
|---|---|---|---|---|---|---|
Income Statement | ||||||
| Total Revenue | 2.03B | 1.85B | 1.81B | 2.19B | 1.39B | 1.11B |
| Gross Profit | 1.25B | 1.37B | 1.33B | 1.45B | 948.52M | 856.90M |
| EBITDA | -84.15M | 89.75M | -234.61M | -209.35M | -663.45M | -465.53M |
| Net Income | -586.86M | -402.76M | -664.11M | -822.01M | -919.49M | -532.61M |
Balance Sheet | ||||||
| Total Assets | 6.66B | 6.84B | 6.74B | 7.24B | 7.83B | 4.84B |
| Cash, Cash Equivalents and Short-Term Investments | 2.35B | 2.06B | 1.52B | 1.59B | 1.59B | 1.74B |
| Total Debt | 2.32B | 2.39B | 2.35B | 2.71B | 2.71B | 1.82B |
| Total Liabilities | 3.35B | 3.34B | 3.31B | 3.83B | 4.08B | 2.45B |
| Stockholders Equity | 3.03B | 3.24B | 3.19B | 3.18B | 3.53B | 2.39B |
Cash Flow | ||||||
| Free Cash Flow | 538.39M | 403.93M | 273.14M | 178.78M | -116.57M | -153.39M |
| Operating Cash Flow | 553.74M | 422.95M | 315.55M | 234.70M | -59.43M | -111.45M |
| Investing Cash Flow | -18.35M | -24.02M | -42.41M | 44.04M | 723.23M | -1.84B |
| Financing Cash Flow | 104.25M | 110.09M | -338.31M | -174.01M | -226.63M | 1.72B |
Unity Software Technical Analysis
Positive
28.62
Price Trends
31.63
Positive
28.44
Positive
31.64
Positive
Market Momentum
4.20
Negative
84.83
Negative
99.42
Negative
Evaluating momentum and price trends is crucial in stock analysis to make informed investment decisions. For U, the sentiment is Positive. The current price of 28.62 is below the 20-day moving average (MA) of 35.86, below the 50-day MA of 31.63, and below the 200-day MA of 31.64, indicating a bullish trend. The MACD of 4.20 indicates Negative momentum. The RSI at 84.83 is Negative, neither overbought nor oversold. The STOCH value of 99.42 is Negative, not indicating any strong overbought or oversold conditions. Overall, these indicators collectively point to a Positive sentiment for U.
Unity Software Risk Analysis
Unity Software disclosed 63 risk factors in its most recent earnings report. Unity Software reported the most risks in the "Finance & Corporate" category.
Finance & Corporate - Financial and accounting risks. Risks related to the execution of corporate activity and strategy
Latest Risks Added 0 New Risks
Unity Software Peers Comparison
UnderperformOutperform
Sector (61)
Name | Overall Rating | Market Cap | P/E Ratio | ROE | Dividend Yield | Revenue Growth | EPS Growth |
|---|---|---|---|---|---|---|---|
75 Outperform | $54.43B | 36.47 | 49.42% | ― | 18.88% | 46.42% | |
68 Neutral | $20.15B | -34.01 | -18.85% | ― | 13.98% | -27.86% | |
68 Neutral | $7.32B | -282.44 | -2.66% | ― | 24.90% | -233.01% | |
61 Neutral | $37.18B | 12.37 | -10.20% | 1.83% | 8.50% | -7.62% | |
54 Neutral | $27.11B | -26.75 | -288.77% | ― | 41.33% | 0.75% |
* Technology Sector Average
U
Unity Software
46.25
7.91
20.63%
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Unity Software Corporate Events
Business Operations and StrategyExecutive/Board ChangesRegulatory Filings and Compliance
Unity Software Names Michael Lieb Principal Accounting Officer
Positive
Jul 27, 2026
Effective July 27, 2026, Unity Software’s board appointed Chief Accounting Officer Michael Lieb as the company’s principal accounting officer, formalizing his leadership role over financial reporting and accounting functions. Lieb brin...
Executive/Board Changes
Unity Software Announces Upcoming Board Member Resignation
Neutral
Jul 17, 2026
On July 13, 2026, Unity Software Inc. disclosed that board member Shlomo Dovrat had informed the company’s Board of Directors of his intention to step down from his role. His resignation as a director is scheduled to take effect on July 24, ...
Executive/Board ChangesShareholder Meetings
Unity Software Shareholders Back Board, Pay and Auditor
Positive
May 14, 2026
On May 13, 2026, Unity Software Inc. held its Annual Meeting of Stockholders, where investors elected three Class III directors — Matthew Bromberg, Keisha Smith, and James M. Whitehurst — to serve until the 2029 annual meeting. Stockho...
Glossary
BuyA stock rated as a "Buy" is expected to perform better than the overall market or a specific benchmark over the near-to-medium term. This rating suggests the stock is likely to deliver higher returns compared to other stocks in the same sector or market index. Note: This is not investment advice; please consult a financial advisor before making investment decisions.
HoldA stock rated as a "Hold" is expected to perform in line with the overall market or a specific benchmark. This rating indicates that the stock is neither particularly compelling nor unfavorable for investment. Note: This is not investment advice; please consult a financial advisor before making investment decisions.
SellA stock rated as a "Sell" is expected to perform worse than the overall market or a specific benchmark over the near-to-medium term. This rating suggests the stock may deliver lower returns compared to other stocks in the same sector or market index. Note: This is not investment advice; please consult a financial advisor before making investment decisions.
Disclaimer
This AI Analyst Stock Report is automatically generated by our AI systems using advanced algorithms and publicly available financial, technical, and market data. While the information provided aims to be accurate and insightful, it is intended for informational purposes only and should not be considered financial advice. Any content created by an AI (Artificial Intelligence) system may contain inaccuracies and/or contain errors. Investing in stocks carries inherent risks, and past performance is not indicative of future results. This report does not account for your personal financial circumstances, objectives, or risk tolerance. Always conduct your own research or consult with a qualified financial advisor before making investment decisions. The analysis and recommendations provided are based on historical and current data and may not fully reflect future market conditions or unexpected developments. Neither the creators of this report nor its affiliated entities guarantee the accuracy, completeness, or reliability of the information presented. Use this report at your own discretion and risk.