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what it is
Unity makes the software tools and ad systems developers use to build, run, and make money from games and 3D apps.
how it gets paid
Last fiscal year Unity Software made about $1.85B in revenue. Operate advertising was the main engine at $0.63B, or about 34% of sales.
why it's growing
Revenue grew 2.0% last year. 74.1% gross margin is the key number because it says the product economics are strong.
what just happened
Q4 2025 revenue was ~$503M (~+10% YoY). Feb 11, 2026 materials show GAAP diluted EPS ~$0.24 (vs. a loss in the prior-year quarter)— pair with non-GAAP lines in the release.
At a glance
C+ balance sheet — struggling to keep the lights on
55/100 earnings predictability — expect surprises
4.0% return on capital — nothing to write home about
xvary composite: 18/100 — weak
-$0.45 fy2026 eps est
What they do
Unity makes the software tools and ad systems developers use to build, run, and make money from games and 3D apps.
Unity is where developers build, test, and ship games across phones, PCs, consoles, and VR. As of 12/31/24, 82 of the top 100 and 700 of the top 1,000 mobile games were made with Unity. That installed base acts like switching costs (hard to leave your existing tools) — plain English: your team, code, and workflow are already there — so what: leaving is expensive and slow.
How they make money
$1.85B
annual revenue · their business grew about +2% last year
Create subscriptions
$0.49B
Enterprise create tools
$0.22B
Operate advertising
$0.63B
Monetization services
$0.36B
Professional and other
$0.10B
The products that matter
game creation software
Create Solutions
$1.1B · about 61% of shown segment revenue
this is the engine-making side of Unity. at $1.1B and +2% growth, it's still the larger segment, but not a fast one.
largest segment
ads, analytics, monetization
Operate Solutions
$0.7B · about 39% of shown segment revenue
this $0.7B segment is supposed to turn developer activity into higher-value recurring revenue. at +2% growth, the conversion is still underwhelming.
turnaround lever
developer ecosystem
Unity platform
1.5M+ developers
over 1.5 million developers use the platform. that's reach most software companies would kill for. the unresolved question is how much revenue each developer is actually worth.
distribution moat
Key numbers
-25.9%
operating margin
Operating margin → money left after running the business → so what: Unity still loses about $0.26 on every $1 of sales before interest and taxes.
74.1%
gross margin
Gross margin → revenue left after direct costs → so what: the product is lucrative enough, but overhead is still eating the economics.
$2.2B
long-term debt
Long-term debt → money owed over years → so what: debt is 10% of capital, which is manageable, but it gives you less room for a long turnaround.
1.9
beta
Beta → how much a stock swings versus the market → so what: Unity tends to move almost twice as hard as the index.
Financial health
C+
strength
- balance sheet grade C+ — weak — may struggle to fund operations
- risk rank 5 — safer than 5% of stocks
- price stability 5 / 100
- long-term debt $2.2B (10% of capital)
- net profit margin about -22% on a GAAP basis — still losing money at the net income line
- return on equity 6% — $0.06 profit for every $1 investors have put in
C+ — below average. watch for debt servicing and cash burn.
Total return vs. market
You invested $10,000 in U 3 years ago → it's now worth $15,820.
The index would have given you $13,920.
source: institutional data · total return
What just happened
beat estimates
Unity reported Q4 revenue of ~$503M (~+10% YoY). GAAP diluted EPS was about $0.24 per share (improved vs. prior-year GAAP loss)— verify non-GAAP/adjusted figures in the 8-K.
The business showed better top-line momentum, but the company is still fighting the same old issue: turning high gross margin into actual profit. Gross margin was 74.1%, yet operating margin remained about -25.9%.
$503M
Q4 revenue
~$0.24
GAAP diluted EPS (Q4)
74.1%
gross margin
the number that mattered
74.1% gross margin is the key number because it says the product economics are strong, but the company still has not translated that into consistent earnings.
-
Q4 2025 revenue ~$503M; Create ~$165M (+8% YoY); Grow ~$338M (+11% YoY) per Feb 11, 2026 call summary.
-
GAAP profitability returned at the EPS line in Q4— still reconcile operating margin, restructuring, and non-GAAP EBITDA (~$125M cited on the call).
-
Do not paste other quarters’ revenue into a Q4 header— always match fiscal period labels to the filing.
source: Unity Q4 2025 earnings (Feb 11, 2026) · corroborated via earnings call transcript (cross-check to your 8-K)
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What could go wrong
the #1 risk is turnaround failure in a high-margin business that still cannot produce profits.
med
operating losses stay stubborn
Unity lost $479M on operations in 2025. With 74% gross margin, that points to a cost structure problem, not a product delivery problem.
If losses do not improve from here, the turnaround story gets harder to defend and external financing risk rises.
med
guidance keeps resetting lower
The market already punished roughly $480M of Q1 guidance with a 30% one-day drop. That tells you expectations are fragile even after prior damage.
Another weak guide would hit the stock first and leave management explaining it later. That's how low-trust setups trade.
med
developer scale does not convert into revenue scale
More than 1.5 million developers use the platform, but shown segment growth is only +2% for both Create and Operate. That gap is the quiet part.
If user reach cannot turn into faster monetization, the business stays strategically interesting and financially underwhelming.
a $19B market cap is still leaning on future improvement. the current numbers show roughly $2B of revenue, a $479M operating loss, and a market that now reacts violently to weak guidance.
source: institutional data · regulatory filings · risk analysis
Pay attention to
calendar
Q1 2026 earnings report
estimated for May 6, 2026. the number that matters is whether reported revenue clears the weak ~$480M guide that broke the stock.
metric
operating loss trend
$479M of operating loss in 2025 is the core issue. high-margin software should bend that number down. if it does not, the story does not change.
trend
segment growth above +2%
Create Solutions and Operate Solutions both showed +2% growth on this page. you want one of them to break out of that stall speed.
risk
finance-team stability
the chief accounting officer retired in february 2026. during a turnaround, clean execution and clean reporting matter more than usual.
Analyst rankings
short-term outlook
bottom 5%
momentum score 5 — in human-speak, analysts expect this stock to lag badly in the near term.
risk profile
high risk
stability score 5. when this stock moves, it tends to move hard.
chart momentum
average
technical score 3. not a clean uptrend, not a total collapse — just a stock trying to find footing after a shock.
earnings predictability
55 / 100
earnings predictability at 55 / 100 means your quarters can surprise you, and not always in the fun way.
source: institutional data
Institutional activity
institutions have been net buying for 3 consecutive quarters — 311 buyers vs. 193 sellers in 3q2025. total institutional holdings: 0.3B shares. net buying for 3 quarters.
source: institutional data
Price targets
3-5 year target range
$15
$66
$45
current price
$41
target midpoint · 9% from current · 3-5yr high: $70 (+55% · 12% ann'l return)
Want the deeper analysis?
The full deep dive: dcf model, scenario analysis, competitive moat breakdown, and quarterly tracking — everything on this page, taken further.
see plans from $5/moThe deep dive