Unity Software (NYSE: U) lifts Q2 2026 revenue to $546M and trims loss
Unity Software generated Q2 2026 revenue of $546.5 million, up from $440.9 million a year earlier, led by strong growth in Grow Solutions while Create Solutions increased modestly. GAAP net loss attributable to Unity narrowed to $23.6 million, or $0.05 per share, versus $108.8 million, or $0.26 per share.
For the first six months of 2026, revenue reached $1.05 billion, but a $279 million impairment tied to sunsetting the ironSource Ads Network and exiting the Supersonic publishing business pushed net loss attributable to Unity to $371.2 million, compared with $186.4 million in the prior‑year period.
Operating cash flow strengthened to $276.9 million and free cash flow to $268.4 million for the half‑year. Cash, cash equivalents, and restricted cash totaled $2.36 billion against $2.24 billion of convertible notes principal. Adjusted EBITDA rose to $160.2 million in Q2 and adjusted EPS was $0.28, indicating improved underlying profitability despite restructuring and portfolio changes.
Positive
- Free cash flow $268.4 million in the first half of 2026, up from $133.9 million a year earlier, shows stronger cash generation despite GAAP losses and major portfolio restructuring.
- Adjusted EBITDA $160.2 million in Q2 2026, up from $90.5 million, together with adjusted EPS of $0.28 versus $0.18, highlights significantly improved non‑GAAP profitability.
Negative
- $279 million of impairment charges in 2026 related to sunsetting the ironSource Ads Network and exiting the Supersonic publishing business materially reduced intangible assets and widened year‑to‑date GAAP losses.
- Six‑month net loss attributable to Unity $371.2 million, roughly double the prior‑year period’s $186.4 million, underscores that the business remains significantly loss‑making on a GAAP basis.
Key Figures
Revenue Q2 2026: $546,468 thousand
Net loss attributable to Unity Q2 2026: 23,606 thousand
Net loss attributable to Unity H1 2026: 371,216 thousand
+5 more
8 metrics
Revenue Q2 2026
$546,468 thousand
Three months ended June 30, 2026 total revenue
Net loss attributable to Unity Q2 2026
23,606 thousand
Net loss attributable to Unity Software Inc., three months ended June 30, 2026
Net loss attributable to Unity H1 2026
371,216 thousand
Net loss attributable to Unity Software Inc., six months ended June 30, 2026
Operating cash flow H1 2026
$276,908 thousand
Net cash provided by operating activities, six months ended June 30, 2026
Free cash flow H1 2026
$268,416 thousand
Operating cash flow minus purchases of property and equipment, six months ended June 30, 2026
Impairment charges 2026
$279 million
Impairment of long-lived assets related to ironSource Ads Network and Supersonic exit in first half of 2026
Cash, cash equivalents and restricted cash
$2,357,121 thousand
Balance as of June 30, 2026
Convertible notes principal – 2027 Notes
$1,000,000 thousand
Principal amount of 2.0% convertible senior notes due 2027 outstanding as of June 30, 2026
Key Terms
held-for-sale, redeemable noncontrolling interests, capped call transactions, adjusted EBITDA, +2 more
6 terms
held-for-sale financial
"classified certain assets and liabilities associated with our Supersonic business as held-for-sale"
An asset classified as "held-for-sale" is one a company has decided to sell rather than keep using, and expects to complete the sale within a short time frame. Investors care because the asset is removed from normal operations and is reported at the lower of its book value or estimated sale value, which can change the balance sheet, signal a shift in strategy, and affect expected cash proceeds—think of it as marking an item in a garage for immediate sale rather than keeping it in the attic.
redeemable noncontrolling interests financial
"The redeemable noncontrolling interests in Unity China are recorded as temporary equity"
A redeemable noncontrolling interest is a minority ownership stake in a company that the holder can force the company to buy back at a set price or under certain conditions. For investors this matters because it creates a future cash obligation and can be treated more like a liability than permanent equity, affecting a company’s reported debt, net income and valuation — think of it as a part-owner who can cash out, forcing the business to pay them.
capped call transactions financial
"We entered into capped call transactions, to reduce the potential dilutive effect of the 2026 Notes"
Capped call transactions are agreements where investors buy options that give them the chance to benefit if a stock's price goes up, but with a limit on how much they can gain. This helps protect them from paying too much if the stock's price rises a lot, similar to having a maximum limit on a reward. They matter because they help investors manage risk while still allowing some upside potential.
adjusted EBITDA financial
"We define adjusted EBITDA as net income or loss excluding benefits or expenses associated with stock-based compensation"
Adjusted EBITDA is a way companies measure how much money they make from their core operations, like running a business, by removing certain costs or income that aren’t part of regular business activities. It helps investors see how well a company is doing without distractions from unusual expenses or gains, making it easier to compare companies or track performance over time.
price-vested options financial
"A summary of our stock option, including price-vested options ("PVO"), activity is as follows"
non-strategic revenue financial
"Included in revenue in the six months ended June 30, 2026 and 2025, are approximately $136 million and $204 million of non-strategic portfolio revenue"
AI-generated analysis. How Rhea-AI works. Not financial advice.
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FAQ
How did Unity Software (U) perform financially in Q2 2026?
Unity reported Q2 2026 revenue of $546.5M, up from $440.9M a year earlier. GAAP net loss attributable to Unity narrowed to $23.6M, or $0.05 per share, compared with $108.8M, or $0.26 per share, in Q2 2025.
What drove Unity Software (U) revenue growth in Q2 2026?
Q2 2026 revenue rose to $546.5M, mainly from higher Grow Solutions revenue of $388.9M versus $287.2M a year earlier. Create Solutions contributed $157.6M, modestly above $153.8M, helped by subscription growth but offset by lower cloud and hosting revenue.
What major impairments and restructuring costs did Unity Software (U) record in 2026?
Unity recorded $279M of impairment charges in the first half of 2026 related to sunsetting the ironSource Ads Network and exiting the Supersonic publishing business, plus about $38M of employee separation and other restructuring costs, largely tied to its global realignment and planned closure of Unity France.
What is Unity Software (U)'s liquidity and debt position as of June 30, 2026?
As of June 30, 2026, Unity held $2.36B in cash, cash equivalents, and restricted cash. It had unsecured convertible notes outstanding with principal of $2.24B across 2026, 2027, and 2030 maturities, plus significant purchase and hosting commitments disclosed in its contractual obligations.
How did Unity Software (U) perform on a non-GAAP basis in Q2 2026?
Q2 2026 adjusted gross margin was 83%, versus GAAP gross margin of 80%. Adjusted EBITDA reached $160.2M, up from $90.5M, and adjusted EPS was $0.28, an improvement from $0.18, after excluding stock-based compensation, amortization, impairments, and restructuring.
What strategic changes did Unity Software (U) make to Grow Solutions in 2026?
Unity decided to sunset the ironSource Ads Network effective April 30, 2026 and exit its Supersonic game publishing business, which was sold on August 4, 2026 for $40M in cash. Grow Solutions will increasingly center on the Unity Ads Network by the end of 2026.
What was Unity Software (U)'s operating cash flow in the first half of 2026?
For the six months ended June 30, 2026, Unity generated net cash from operating activities of $276.9M, compared with $146.1M a year earlier. After $8.5M of capital expenditures, free cash flow reached $268.4M, reflecting stronger cash generation.
UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 10-Q
(Mark One)
| QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 | |||||
For the quarterly period ended | |||||
| OR | |||||
| TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 | |||||
| For the transition period from _______ to _______ | ||||||||
Commission File Number: | ||||||||
| (Exact name of registrant as specified in its charter) | ||||||||
| (State or other jurisdiction of incorporation or organization) | (I.R.S. Employer Identification No.) | |||||||
| (Address, including zip code, of principal executive offices) | ||||||||
( | ||||||||
(Registrant's telephone number, including area code) | ||||||||
| Securities registered pursuant to Section 12(b) of the Act: | ||||||||||||||
| Title of each class | Trading Symbol(s) | Name of each exchange on which registered | ||||||||||||
Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days. | ||||||||||||||
Indicate by check mark whether the registrant has submitted electronically every Interactive Data File required to be submitted pursuant to Rule 405 of Regulation S‑T (§232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit such files). | ||||||||||||||
| Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non‑accelerated filer, a smaller reporting company, or an emerging growth company. See the definitions of “large accelerated filer,” “accelerated filer,” “smaller reporting company,” and “emerging growth company” in Rule 12b‑2 of the Exchange Act. | ||||||||||||||
| ☒ | Accelerated filer | ☐ | ||||||||||||
Non‑accelerated filer | ☐ | Smaller reporting company | ||||||||||||
| Emerging growth company | ||||||||||||||
| If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act. | ☐ | |||||||||||||
Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b‑2 of the Exchange Act). Yes | ||||||||||||||
As of July 29, 2026, there were 440,088,933 shares of the registrant's common stock outstanding.
UNITY SOFTWARE INC.
FORM 10‑Q
For the Quarter Ended June 30, 2026
TABLE OF CONTENTS
| Page | ||||||||
PART I—FINANCIAL INFORMATION | ||||||||
| Item 1. | Financial Statements (Unaudited) | 1 | ||||||
Condensed Consolidated Balance Sheets | 1 | |||||||
Condensed Consolidated Statements of Operations | 2 | |||||||
Condensed Consolidated Statements of Comprehensive Loss | 3 | |||||||
Condensed Consolidated Statements of Stockholders' Equity | 4 | |||||||
Condensed Consolidated Statements of Cash Flows | 6 | |||||||
Notes to Condensed Consolidated Financial Statements | 8 | |||||||
| Item 2. | Management's Discussion and Analysis of Financial Condition and Results of Operations | 20 | ||||||
| Item 3. | Quantitative and Qualitative Disclosures About Market Risk | 29 | ||||||
| Item 4. | Controls and Procedures | 30 | ||||||
PART II—OTHER INFORMATION | ||||||||
| Item 1. | Legal Proceedings | 31 | ||||||
| Item 1A. | Risk Factors | 31 | ||||||
| Item 2. | Unregistered Sales of Equity Securities and Use of Proceeds | 31 | ||||||
| Item 3. | Defaults Upon Senior Securities | 32 | ||||||
| Item 4. | Mine Safety Disclosures | 32 | ||||||
| Item 5. | Other Information | 32 | ||||||
| Item 6. | Exhibits | 33 | ||||||
SIGNATURES | 34 | |||||||
NOTE REGARDING FORWARD-LOOKING STATEMENTS
This Quarterly Report on Form 10‑Q contains forward-looking statements about us and our industry that involve substantial risks and uncertainties. All statements other than statements of historical fact, including statements regarding our future results of operations or financial condition, business strategy and plans, and objectives of management for future operations are forward-looking statements. In some cases, you can identify forward-looking statements because they contain words such as "aim," "anticipate," "believe," "contemplate," "continue," "could," "estimate," "expect," "intend," "may," "plan," "potential," "predict," "project," "should," "target," "toward," "will," "would," or the negative of these words or other similar terms or expressions.
You should not rely on forward-looking statements as predictions of future events. We have based the forward-looking statements contained in this Quarterly Report on Form 10‑Q primarily on our current expectations and projections about future events and trends that we believe may affect our business, financial condition, and operating results. Readers are cautioned that these forward‑looking statements are only predictions and are subject to risks, uncertainties, and assumptions that are difficult to predict, including those identified and discussed in greater detail in “Part I, Item 1A. Risk Factors” of our Annual Report on Form 10-K filed with the SEC on February 11, 2026, “Part II, Item 1A. Risk Factors” of our Form 10-Q filed with the SEC on May 7, 2026, and below, under "Part II, Item 1A. Risk Factors."
The results, events, and circumstances reflected in the forward-looking statements may not be achieved or occur, and actual results, events, or circumstances could differ materially from those described in the forward-looking statements.
In addition, statements that "we believe" and similar statements reflect our beliefs and opinions on the relevant subject. These statements are based on information available to us as of the date of this Quarterly Report on Form 10‑Q. While we believe such information provides a reasonable basis for these statements, such information may be limited or incomplete. Our statements should not be read to indicate that we have conducted an exhaustive inquiry into, or review of, all relevant information. These statements are inherently uncertain, and investors are cautioned not to unduly rely on these statements.
The forward-looking statements made in this Quarterly Report on Form 10‑Q relate only to events as of the date on which the statements are made. We undertake no obligation to update any forward-looking statements to reflect events or circumstances after the date of this Quarterly Report on Form 10‑Q or to reflect new information, actual results, revised expectations, or the occurrence of unanticipated events, except as required by law. We may not actually achieve the plans, intentions, or expectations disclosed in our forward-looking statements, and you should not place undue reliance on our forward-looking statements. Our forward-looking statements do not reflect the potential impact of any future acquisitions, mergers, dispositions, joint ventures, or investments.
Additional Information
Unless the context otherwise requires, all references in this Quarterly Report on Form 10-Q to "we," "us," "our," "our company," "Unity," and "Unity Technologies" refer to Unity Software Inc. and its consolidated subsidiaries. The Unity design logos, "Unity" and our other registered or common law trademarks, service marks, or trade names appearing in this Quarterly Report on Form 10-Q are the property of Unity Software Inc. or its affiliates.
Investors and others should note that we may announce material business and financial information using our investor relations website (www.investors.unity.com), social media, our filings with the Securities and Exchange Commission, press releases, public conference calls, and public webcasts as means of complying with our disclosure obligations under Regulation FD. We encourage investors and others interested in our company to review the information that we make available.
Table of Contents | Unity Software Inc. | |||||||
PART I—FINANCIAL INFORMATION
Item 1. Financial Statements
UNITY SOFTWARE INC. | |||||||||||
CONDENSED CONSOLIDATED BALANCE SHEETS | |||||||||||
(In thousands, except per share data) | |||||||||||
(Unaudited) | |||||||||||
| As of | |||||||||||
| June 30, 2026 | December 31, 2025 | ||||||||||
| Assets | |||||||||||
| Current assets: | |||||||||||
| Cash and cash equivalents | $ | $ | |||||||||
| Accounts receivable, net | |||||||||||
| Prepaid expenses and other | |||||||||||
| Assets held-for-sale | |||||||||||
| Total current assets | |||||||||||
| Property and equipment, net | |||||||||||
| Goodwill | |||||||||||
| Intangible assets, net | |||||||||||
| Other assets | |||||||||||
| Total assets | $ | $ | |||||||||
| Liabilities and stockholders' equity | |||||||||||
| Current liabilities: | |||||||||||
| Accounts payable | $ | $ | |||||||||
| Accrued expenses and other | |||||||||||
| Publisher payables | |||||||||||
| Deferred revenue | |||||||||||
| Current portion of convertible notes | |||||||||||
| Liabilities held-for-sale | |||||||||||
| Total current liabilities | |||||||||||
| Convertible notes | |||||||||||
| Long-term deferred revenue | |||||||||||
| Other long-term liabilities | |||||||||||
| Total liabilities | |||||||||||
| Commitments and Contingencies (Note 7) | |||||||||||
| Redeemable noncontrolling interests | |||||||||||
| Stockholders' equity: | |||||||||||
Common stock, $ | |||||||||||
Authorized shares - | |||||||||||
Issued and outstanding shares - | |||||||||||
| Additional paid-in capital | |||||||||||
| Accumulated other comprehensive income (loss) | ( | ||||||||||
| Accumulated deficit | ( | ( | |||||||||
| Total Unity Software Inc. stockholders' equity | |||||||||||
| Noncontrolling interest | |||||||||||
| Total stockholders' equity | |||||||||||
| Total liabilities and stockholders' equity | $ | $ | |||||||||
See accompanying Notes to Condensed Consolidated Financial Statements.
1
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UNITY SOFTWARE INC. | |||||||||||||||||||||||
CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS | |||||||||||||||||||||||
(In thousands, except per share data) | |||||||||||||||||||||||
(Unaudited) | |||||||||||||||||||||||
| Three Months Ended | Six Months Ended | ||||||||||||||||||||||
| June 30, | June 30, | ||||||||||||||||||||||
| 2026 | 2025 | 2026 | 2025 | ||||||||||||||||||||
| Revenue | $ | $ | $ | $ | |||||||||||||||||||
| Cost of revenue | |||||||||||||||||||||||
| Gross profit | |||||||||||||||||||||||
| Operating expenses | |||||||||||||||||||||||
| Research and development | |||||||||||||||||||||||
| Sales and marketing | |||||||||||||||||||||||
| General and administrative | |||||||||||||||||||||||
| Total operating expenses | |||||||||||||||||||||||
| Loss from operations | ( | ( | ( | ( | |||||||||||||||||||
| Interest expense | ( | ( | ( | ( | |||||||||||||||||||
| Interest income and other income (expense), net | |||||||||||||||||||||||
| Loss before income taxes | ( | ( | ( | ( | |||||||||||||||||||
| Provision for (benefit from) Income taxes | ( | ||||||||||||||||||||||
| Net loss | ( | ( | ( | ( | |||||||||||||||||||
| Net income attributable to noncontrolling interest and redeemable noncontrolling interests | |||||||||||||||||||||||
| Net loss attributable to Unity Software Inc. | $ | ( | $ | ( | $ | ( | $ | ( | |||||||||||||||
| Basic and diluted net loss per share attributable to Unity Software Inc. | $ | ( | $ | ( | $ | ( | $ | ( | |||||||||||||||
| Weighted-average shares used in computation of basic and diluted net loss per share | |||||||||||||||||||||||
See accompanying Notes to Condensed Consolidated Financial Statements.
2
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UNITY SOFTWARE INC. | |||||||||||||||||||||||
CONDENSED CONSOLIDATED STATEMENTS OF COMPREHENSIVE LOSS | |||||||||||||||||||||||
(In thousands) | |||||||||||||||||||||||
(Unaudited) | |||||||||||||||||||||||
| Three Months Ended | Six Months Ended | ||||||||||||||||||||||
| June 30, | June 30, | ||||||||||||||||||||||
| 2026 | 2025 | 2026 | 2025 | ||||||||||||||||||||
| Net loss | $ | ( | $ | ( | $ | ( | $ | ( | |||||||||||||||
| Other comprehensive income, net of taxes: | |||||||||||||||||||||||
| Change in foreign currency translation adjustment | |||||||||||||||||||||||
| Other comprehensive income | |||||||||||||||||||||||
| Comprehensive loss | ( | ( | ( | ( | |||||||||||||||||||
| Net income attributable to noncontrolling interest and redeemable noncontrolling interests | |||||||||||||||||||||||
| Foreign currency translation attributable to noncontrolling interest and redeemable noncontrolling interests | |||||||||||||||||||||||
| Comprehensive income attributable to noncontrolling interest and redeemable noncontrolling interests | |||||||||||||||||||||||
| Comprehensive loss attributable to Unity Software Inc. | $ | ( | $ | ( | $ | ( | $ | ( | |||||||||||||||
See accompanying Notes to Condensed Consolidated Financial Statements.
3
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UNITY SOFTWARE INC. | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
CONDENSED CONSOLIDATED STATEMENTS OF STOCKHOLDERS' EQUITY | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
(In thousands, except share data) | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
(Unaudited) | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| Three Months Ended June 30, 2026 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| Accumulated | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| Additional | Other | Unity Software Inc. | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| Common Stock | Paid-In | Comprehensive | Accumulated | Stockholders' | Noncontrolling | Total | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| Shares | Amount | Capital | Loss | Deficit | Equity | Interest (1) | Equity | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| Balance at March 31, 2026 | $ | $ | $ | $ | ( | $ | $ | $ | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| Issuance of common stock from employee equity plans | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| Issuance of common stock for settlement of RSUs | — | — | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| Stock‑based compensation expense | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| Net loss | ( | ( | ( | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| Adjustments to redeemable noncontrolling interest | ( | ( | ( | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| Other comprehensive income | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| Balance at June 30, 2026 | $ | $ | $ | $ | ( | $ | $ | $ | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| Three Months Ended June 30, 2025 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| Accumulated | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| Additional | Other | Unity Software Inc. | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| Common Stock | Paid-In | Comprehensive | Accumulated | Stockholders' | Noncontrolling | Total | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| Shares | Amount | Capital | Loss | Deficit | Equity | Interest (1) | Equity | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| Balance at March 31, 2025 | $ | $ | $ | ( | $ | ( | $ | $ | $ | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| Issuance of common stock from employee equity plans | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| Issuance of common stock for settlement of RSUs | — | — | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| Stock‑based compensation expense | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| Net loss | ( | ( | ( | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| Adjustments to redeemable noncontrolling interest | ( | ( | ( | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| Other comprehensive income | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| Balance at June 30, 2025 | $ | $ | $ | ( | $ | ( | $ | $ | $ | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||
(1) Excludes redeemable noncontrolling interests.
See accompanying Notes to Condensed Consolidated Financial Statements.
4
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UNITY SOFTWARE INC. | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
CONDENSED CONSOLIDATED STATEMENTS OF STOCKHOLDERS' EQUITY—CONTINUED | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
(In thousands, except share data) | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
(Unaudited) | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| Six Months Ended June 30, 2026 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| Accumulated | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| Additional | Other | Unity Software Inc. | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| Common Stock | Paid‑In | Comprehensive | Accumulated | Stockholders’ | Noncontrolling | Total | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| Shares | Amount | Capital | Loss | Deficit | Equity | Interest (1) | Equity | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| Balance at December 31, 2025 | $ | $ | $ | ( | $ | ( | $ | $ | $ | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| Issuance of common stock from employee equity plans | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| Issuance of common stock for settlement of RSUs | — | — | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| Stock‑based compensation expense | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| Net loss | ( | ( | ( | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| Adjustments to redeemable noncontrolling interest | ( | ( | ( | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| Other comprehensive income | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| Balance at June 30, 2026 | $ | $ | $ | $ | ( | $ | $ | $ | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| Six Months Ended June 30, 2025 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| Accumulated | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| Additional | Other | Unity Software Inc. | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| Common Stock | Paid-In | Comprehensive | Accumulated | Stockholders' | Noncontrolling | Total | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| Shares | Amount | Capital | Loss | Deficit | Equity | Interest (1) | Equity | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| Balance at December 31, 2024 | $ | $ | $ | ( | $ | ( | $ | $ | $ | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| Issuance of common stock from employee equity plans | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| Issuance of common stock for settlement of RSUs | — | — | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| Purchase of capped calls | ( | ( | ( | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| Stock‑based compensation expense | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| Net loss | ( | ( | ( | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| Adjustments to redeemable noncontrolling interest | ( | ( | ( | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| Other comprehensive income | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| Balance at June 30, 2025 | $ | $ | $ | ( | $ | ( | $ | $ | $ | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||
(1) Excludes redeemable noncontrolling interests.
See accompanying Notes to Condensed Consolidated Financial Statements.
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UNITY SOFTWARE INC. | |||||||||||
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS | |||||||||||
(In thousands) | |||||||||||
(Unaudited) | |||||||||||
| Six Months Ended June 30, | |||||||||||
| 2026 | 2025 | ||||||||||
| Operating activities | |||||||||||
| Net loss | $ | ( | $ | ( | |||||||
| Adjustments to reconcile net loss to net cash provided by operating activities: | |||||||||||
| Depreciation and amortization | |||||||||||
| Stock-based compensation expense | |||||||||||
| Gain on repayment of convertible note | ( | ||||||||||
| Impairment of intangible assets | |||||||||||
| Impairment of property and equipment | |||||||||||
| Impairment of investments | |||||||||||
| Other | ( | ||||||||||
| Changes in assets and liabilities, net of effects of acquisitions: | |||||||||||
| Accounts receivable, net | ( | ( | |||||||||
| Prepaid expenses and other | |||||||||||
| Other assets | |||||||||||
| Accounts payable | ( | ( | |||||||||
| Accrued expenses and other | ( | ||||||||||
| Publisher payables | ( | ||||||||||
| Other long-term liabilities | ( | ( | |||||||||
| Deferred revenue | |||||||||||
| Net cash provided by operating activities | |||||||||||
| Investing activities | |||||||||||
| Purchases of non-marketable investments | ( | ||||||||||
| Purchases of property and equipment | ( | ( | |||||||||
| Net cash used in investing activities | ( | ( | |||||||||
| Financing activities | |||||||||||
| Proceeds from issuance of convertible notes | |||||||||||
| Purchase of capped calls | ( | ||||||||||
| Payment of debt issuance costs | ( | ||||||||||
| Repayments of convertible note | ( | ||||||||||
| Proceeds from issuance of common stock upon exercise of stock options and purchase of ESPP shares | |||||||||||
| Net cash provided by financing activities | |||||||||||
| Effect of foreign exchange rate changes on cash, cash equivalents, and restricted cash | |||||||||||
| Increase in cash, cash equivalents, and restricted cash | |||||||||||
| Cash, cash equivalents, and restricted cash, beginning of period | |||||||||||
| Cash, cash equivalents, and restricted cash, end of period | $ | $ | |||||||||
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UNITY SOFTWARE INC. | |||||||||||
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS | |||||||||||
(In thousands) | |||||||||||
(Unaudited) | |||||||||||
| Six Months Ended June 30, | |||||||||||
| 2026 | 2025 | ||||||||||
| Supplemental disclosure of cash flow information: | |||||||||||
| Cash paid for interest | $ | $ | |||||||||
| Cash paid for (refunded from) income taxes, net | $ | $ | ( | ||||||||
| Cash paid for operating leases | $ | $ | |||||||||
| Supplemental disclosures of non‑cash investing and financing activities: | |||||||||||
| Assets acquired under operating lease | $ | $ | |||||||||
See accompanying Notes to Condensed Consolidated Financial Statements.
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UNITY SOFTWARE INC.
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
(Unaudited)
1. Accounting Policies
Basis of Presentation and Consolidation
Use of Estimates
The preparation of condensed consolidated financial statements in conformity with GAAP requires management to make certain estimates, judgments, and assumptions that affect the reported amounts of assets and liabilities and disclosure of contingent assets and liabilities at the date of the financial statements, as well as the reported amounts of revenue and expenses during the reporting period. For us, these estimates are used for, but not limited to, revenue recognition, the measurement of liabilities for uncertain tax positions and deferred tax assets and liabilities, the measurement of liabilities for future payments related to employee separation, the fair value of stock-based compensation, the fair value of redeemable noncontrolling interests, the fair value and useful lives of long-lived assets, the fair value of equity investments where we use the measurement alternative, and the fair value of assets and liabilities held for sale. Actual results could differ from those estimates, and such differences could be material to our financial position and results of operations.
We evaluate intangible assets and other long-lived assets for possible impairment whenever events or changes in circumstances indicate that the carrying amount of such assets may not be recoverable. In March 2026, we announced we would sunset the ironSource Ads Network, one of our monetization networks, effective April 30, 2026, and we began the process of exiting our Supersonic game publishing business. Due to this event, we evaluated the long-lived assets associated with those businesses and determined that the undiscounted cash flows were less than the carrying value of the asset group.
As a result, during the first quarter of 2026 we recorded $279 million of impairment charges, including $227 million within cost of revenue, and $47 million within sales and marketing expense. These impairment charges reduced our Intangible assets, net by $271 million, including $225 million in "Developed technology" and $46 million in "Customer relationships". The fair values of these assets were determined using a combined discounted cash flow analysis and market approach.
Furthermore as a result of this evaluation, we revised our estimates of the remaining useful lives for certain assets within the asset group, from two to three years down to one to two years , effective April 1, 2026. These assets are primarily included in “Intangible assets, net” on our consolidated balance sheets, and are “developed technology” within intangible assets. The shortened useful lives are due to the shortened remaining time that Unity intends to operate these related businesses, as discussed in the above announcement. The effect of this change in estimate for both the three and six months ended June 30, 2026, was an increase in amortization expense and decrease in operating income of approximately
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$3 2 0.01
Assets and Liabilities Held-for-Sale
As of June 30, 2026, we classified certain assets and liabilities associated with our Supersonic business as held-for-sale in connection with our strategic decision to exit the Supersonic business. The sale of our Supersonic business was subsequently completed on August 4, 2026 (see Note 12, "Subsequent Event" below for further discussion).
The assets held-for-sale consist primarily of accounts receivable, developed technology and customer relationship intangible assets, and an allocated portion of goodwill associated with the Supersonic business. Upon classification as held-for-sale, the related long-lived assets ceased being depreciated or amortized. The liabilities held-for-sale primarily include publisher payables, accrued expenses, and other operating liabilities directly associated with Supersonic.
In connection with the held-for-sale classification, we evaluated the recoverability of long-lived assets within the Supersonic disposal group and subsequently measured the disposal group at the lower of its carrying amount and fair value less cost to sell. As a result of this evaluation, we recognized no impairment charges during the three and six months ended June 30, 2026.
The following table summarizes the major classes of assets and liabilities classified as held-for-sale (in thousands):
| As of | |||||
| June 30, 2026 | |||||
| Accounts receivable, net | $ | ||||
| Prepaid expenses and other | |||||
| Property and equipment, net | |||||
| Goodwill | |||||
| Intangible assets, net | |||||
| Assets held-for-sale | $ | ||||
| Accounts payable | $ | ||||
| Accrued expenses and other | |||||
| Publisher payables | |||||
| Other long-term liabilities | |||||
| Liabilities held-for-sale | $ | ||||
Employee Separation and Restructuring Costs
In connection with our ongoing restructuring efforts, we incurred incremental employee separation costs and other non-employee charges of approximately $38 million in the six months ended June 30, 2026, primarily related to the planned closure of Unity France. These incremental charges are primarily within research and development. As of June 30, 2026, we have accrued $25 million of these incremental employee separation costs, primarily in "Accrued expenses and other" on our condensed consolidated balance sheets.
In the six months ended June 30, 2025, we incurred incremental employee separation costs of approximately $20 million, primarily within sales and marketing and research and development. Additionally, for the six months ended June 30, 2025 we incurred $11 million of other restructuring costs, primarily related to office closures.
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Recent Accounting Pronouncements Not Yet Adopted
In November 2024, the FASB issued a new Accounting Standards Update ("ASU 2024-03") amending the existing disclosure requirement for expenses within Statement of Operations, primarily requiring more disaggregated disclosure for certain costs and expenses on an annual and interim basis. ASU 2024-03 is effective for annual reporting periods beginning after December 15, 2026, and interim reporting periods beginning after December 15, 2027, with early adoption permitted, and can be applied on either a prospective or retroactive basis. We are currently evaluating ASU 2024-03 to determine its impact on our expense disclosures.
In September 2025, the FASB issued a new Accounting Standards Update ("ASU 2025-06") amending existing internal-use software guidance, changing the timing and thresholds for capitalizing these software costs. ASU 2025-06 is effective for annual and interim reporting periods beginning after December 15, 2027, with early adoption permitted and can be applied on either a prospective, modified, or retrospective basis. We are currently evaluating ASU 2025-06 to determine its impact on our financial statements.
2. Revenue
The following table presents our revenue disaggregated by source, which also have similar economic characteristics (in thousands):
| Three Months Ended June 30, | Six Months Ended June 30, | ||||||||||||||||||||||
| 2026 | 2025 | 2026 | 2025 | ||||||||||||||||||||
| Create Solutions | $ | $ | $ | $ | |||||||||||||||||||
| Grow Solutions | |||||||||||||||||||||||
| Total revenue | $ | $ | $ | $ | |||||||||||||||||||
The following table presents our revenue disaggregated by geography, based on the invoice address of our customers (in thousands):
| Three Months Ended June 30, | Six Months Ended June 30, | ||||||||||||||||||||||
| 2026 | 2025 | 2026 | 2025 | ||||||||||||||||||||
| United States | $ | $ | $ | $ | |||||||||||||||||||
Greater China (1) | |||||||||||||||||||||||
EMEA (2) | |||||||||||||||||||||||
APAC (3) | |||||||||||||||||||||||
Other Americas (4) | |||||||||||||||||||||||
| Total revenue | $ | $ | $ | $ | |||||||||||||||||||
(1) Greater China includes China, Hong Kong, and Taiwan.
(2) Europe, the Middle East, and Africa ("EMEA")
(3) Asia-Pacific, excluding Greater China ("APAC")
(4) Canada and Latin America ("Other Americas")
Accounts Receivable, Net
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Sales Commissions
During the three and six months ended June 30, 2026, we recorded amortization costs of $1.6 million and $3.2 million, respectively, in sales and marketing expenses, as compared to $1.9 million and $3.8 million during the three and six months ended June 30, 2025, respectively. We did not
Contract Balances and Remaining Performance Obligations
3. Financial Instruments
Cash, Cash Equivalents, and Restricted Cash
Cash, cash equivalents, and restricted cash are recorded at fair value. Fair value is defined as the price that would be received to sell an asset or paid to transfer a liability in an orderly transaction between market participants at the measurement date. To increase the comparability of fair value measures, the following hierarchy prioritizes the inputs to valuation methodologies used to measure fair value:
•Level 1—Valuations based on quoted prices in active markets for identical assets or liabilities.
•Level 2—Valuations based on quoted prices for similar assets and liabilities in active markets or inputs that are observable for the assets or liabilities, either directly or indirectly through market corroboration.
•Level 3—Valuations based on unobservable inputs reflecting our own assumptions used to measure assets and liabilities at fair value. These valuations require significant judgment.
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The following table summarizes, by major security type, our cash, cash equivalents, and restricted cash that are measured at fair value on a recurring basis and are categorized using the fair value hierarchy (in thousands):
| June 30, 2026 | December 31, 2025 | ||||||||||||||||||||||||||||
Fair Value (1) | |||||||||||||||||||||||||||||
| Cash | $ | $ | |||||||||||||||||||||||||||
| Level 1: | |||||||||||||||||||||||||||||
| Restricted cash and cash equivalents: | |||||||||||||||||||||||||||||
| Restricted cash | $ | $ | |||||||||||||||||||||||||||
| Money market funds | |||||||||||||||||||||||||||||
| Time deposits | |||||||||||||||||||||||||||||
| Total restricted cash and cash equivalents | $ | $ | |||||||||||||||||||||||||||
| Total cash, cash equivalents, and restricted cash | $ | $ | |||||||||||||||||||||||||||
(1) Due to the highly liquid nature of our investments, amortized cost approximates fair value.
Nonrecurring Fair Value Measurements
We hold equity investments in certain unconsolidated entities without a readily determinable fair value. These investments represent less than a 20 % ownership interest in each of the entities, and we do not have significant influence over or control of the entities. We use the measurement alternative to account for adjustments to these investments for observable transactions for the same or similar investments of the same issuer in any given quarter. If we determine an impairment has occurred, the investment is written down to the estimated fair value. As of June 30, 2026 and December 31, 2025, such equity investments totaled $20.0 million and $35.0 million, respectively. We recorded a $15.0 million impairment charge related to the wind down of a single investment, during the six months ended June 30, 2026. No other adjustments to the carrying value of these equity investments were recorded during the three and six months ended June 30, 2026, and 2025.
4. Investment in Unity China
The results of Unity China, of which third-party investors hold a 20.5 % ownership interest, are included in our condensed consolidated financial statements. Under certain conditions we may be required to repurchase the third-party interest in Unity China. The redeemable noncontrolling interests in Unity China are recorded as temporary equity on our condensed consolidated balance sheet.
The following table presents the changes in redeemable noncontrolling interests (in thousands):
| Three Months Ended June 30, | Six Months Ended June 30, | ||||||||||||||||||||||
| 2026 | 2025 | 2026 | 2025 | ||||||||||||||||||||
| Balance at beginning of period | $ | $ | $ | $ | |||||||||||||||||||
| Net gain/(loss) attributable to redeemable noncontrolling interests | |||||||||||||||||||||||
| Accretion for redeemable noncontrolling interests | |||||||||||||||||||||||
| Foreign currency translation and foreign exchange adjustments for redeemable noncontrolling interests | |||||||||||||||||||||||
| Balance at end of period | $ | $ | $ | $ | |||||||||||||||||||
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5. Leases
We have operating leases for offices, which have remaining lease terms of up to seven years .
Components of lease expense were as follows (in thousands):
| Three Months Ended June 30, | Six Months Ended June 30, | ||||||||||||||||||||||
| 2026 | 2025 | 2026 | 2025 | ||||||||||||||||||||
| Operating lease expense | $ | $ | $ | $ | |||||||||||||||||||
| Variable lease expense | |||||||||||||||||||||||
| Sublease income | ( | ( | ( | ( | |||||||||||||||||||
| Total lease expense | $ | $ | $ | $ | |||||||||||||||||||
Supplemental balance sheet information related to leases was as follows (in thousands, except weighted-average figures):
| As of | |||||||||||||||||
| Classification | June 30, 2026 | December 31, 2025 | |||||||||||||||
| Operating lease assets | Other assets | $ | $ | ||||||||||||||
| Current operating lease liabilities | Accrued expenses and other | $ | $ | ||||||||||||||
| Long-term operating lease liabilities | Other long-term liabilities | ||||||||||||||||
| Total operating lease liabilities | $ | $ | |||||||||||||||
As of June 30, 2026 and December 31, 2025, our operating leases had a weighted-average remaining lease term of 3.7 years and 3.8 years, respectively, and a weighted-average discount rate of 5.3 % and 5.0 %, respectively.
As of June 30, 2026, our lease liabilities were as follows (in thousands):
| Operating Leases | |||||||||||
| Gross lease liabilities | $ | ||||||||||
| Less: imputed interest | |||||||||||
| Present value of lease liabilities | $ | ||||||||||
6. Borrowings
Convertible Notes
In February 2025, we issued an aggregate of $690 million principal amount of 0 % convertible senior notes due 2030 (the "2030 Notes"). Proceeds from the issuance of the 2030 Notes were $677 million, net of debt issuance costs and the cash was used to purchase capped call transactions, and repurchase convertible notes as discussed below. The debt issuance costs are amortized to interest expense using the straight-line method, which approximates the effective interest method.
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As of June 30, 2026, we had $2.2 billion of unsecured convertible notes outstanding including $690 million of the 2030 Notes, $1.0 billion issued in November 2022 (the "2027 Notes"), $558 million issued in November 2021 (the "2026 Notes", together with the 2027 Notes and 2030 Notes, the "Notes"), in “Current portion of convertible notes” and "Convertible notes" on our consolidated balance sheets. The table below summarizes the principal and unamortized debt issuance costs and other material features of the Notes (in thousands):
Carrying Amount as of | |||||||||||||||||||||||||||||||||||
| Conversion Rate per $1,000 Principal | Initial Conversion Price | Maturities | Stated Interest Rates | June 30, 2026 | December 31, 2025 | ||||||||||||||||||||||||||||||
| Convertible notes: | |||||||||||||||||||||||||||||||||||
Principal – 2026 Notes | 3.2392 | $ | 2026 | $ | $ | ||||||||||||||||||||||||||||||
Principal – 2027 Notes | 20.4526 | $ | 2027 | ||||||||||||||||||||||||||||||||
Principal – 2030 Notes | 27.6656 | $ | 2030 | ||||||||||||||||||||||||||||||||
| Unamortized debt issuance costs, net | ( | ( | |||||||||||||||||||||||||||||||||
| Net carrying amount | $ | $ | |||||||||||||||||||||||||||||||||
1) We entered into capped call transactions in connection with the 2026 and 2030 Notes. The cap price of the capped call transactions relating to the Notes was initially $343.02 and $47.74 , respectively, subject to certain adjustments under the terms of the capped call transactions. See below "--Capped Call Transactions."
Interest on the Notes is payable semi-annually in arrears. The combined interest expense on the Notes related to regular interest and the amortization of debt issuance cost was $6.1 million and $12.1 million for the three and six months ended June 30, 2026, respectively, and $6.0 million and $11.9 million for the three and six months ended June 30, 2025, respectively.
As of June 30, 2026 and December 31, 2025, the estimated fair value of the 2030 Notes was approximately $782 million and $1.0 billion, respectively, the estimated fair value of the 2027 Notes was approximately $1.1 billion and $1.2 billion, respectively, and the estimated fair value of the 2026 Notes was approximately $549 million and $540 million, respectively. The fair value of the 2027 Notes was based on a combination of a discounted cash flow and Black-Scholes option-pricing model. The fair value of the 2030 Notes and 2026 Notes was based on quoted prices as of that date.
The 2027 Notes may be converted at the election of the holders thereof at any time prior to maturity. The 2026 Notes and 2030 Notes are convertible at the option of the respective holders thereof if a conversion condition applicable to such series of Notes is triggered. During the three and six months ended June 30, 2026, none of the conversion conditions of the 2026 Notes or the 2030 Notes were triggered, and neither the 2026 Notes nor the 2030 Notes were convertible as of June 30, 2026.
Any such conversion of the Notes described above, may be satisfied at our election with either cash, shares of our common stock, or a combination of cash and shares of our common stock. The conversion rates for the Notes are subject to customary adjustments for certain events as described in the relevant indenture governing the Notes.
The Notes are subject to additional terms. In connection with certain corporate events, as described in the indentures governing the Notes, we will increase the conversion rate for a holder of the applicable series of Notes who elects to convert those Notes in connection with the event. Additionally, upon the occurrence of certain corporate events and subject to certain exceptions, as described in the indenture governing the applicable series of Notes, holders of those Notes may require us to repurchase all or a portion of those Notes at a price equal to 100 % of the principal amount to be repurchased, plus any accrued and unpaid interest to date. The 2026 Notes and 2030 Notes are also redeemable at our option if certain conditions are met, as described in the indentures governing the 2026 Notes and 2030 Notes respectively.
As of June 30, 2026, no holders of the Notes have exercised the conversion rights, and the if-converted value of the Notes did not exceed the principal amount.
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Convertible Note Repurchase
During the first quarter of 2025, and the first quarter of 2024, the Company repurchased in privately negotiated transactions and extinguished a portion of the 2026 Notes, with a total principal balance of $688 million and $480 million, respectively. The aggregate repurchase price for these notes was $642 million and $415 million, respectively, resulting in pre-tax gains of $42.7 million and $61.4 million, respectively, net of the write-off of unamortized issuance costs. These gains were included in Interest income and other income (expense), net, in the condensed consolidated statement of operations.
Capped Call Transactions
We entered into capped call transactions, to reduce the potential dilutive effect of the 2026 Notes (the "2026 Capped Call Transactions"), and 2030 Notes (the "2030 Capped Call Transactions", together with the 2026 Capped Call Transactions, the "Capped Call Transactions"), in connection with their pricing. The 2026 Capped Call Transactions, and the 2030 Capped Call Transactions, had net costs of $48.1 million and $44.4 million, respectively, with call options totaling approximately 5.6 million and 19.1 million shares of our common stock, and with expiration dates ranging from September 18, 2026 to November 12, 2026, and January 15, 2030 to March 13, 2030, respectively. The strike price of the 2026 Capped Call Transactions and the 2030 Capped Call Transactions are $308.72 and $36.15 , respectively, and the cap prices are initially $343.02 and $47.74 per share, respectively, subject to adjustments in certain circumstances. The Capped Call Transactions are freestanding, are considered separately exercisable from the 2026 Notes and 2030 Notes, and meet the conditions for equity classification.
7. Commitments and Contingencies
The following table summarizes our non-cancelable contractual commitments as of June 30, 2026 (in thousands):
| Total | Remainder of 2026 | 2027‑2028 | 2029‑2030 | Thereafter | |||||||||||||||||||||||||
Operating leases (1) | $ | $ | $ | $ | $ | ||||||||||||||||||||||||
Purchase commitments (2) | |||||||||||||||||||||||||||||
Convertible note principal and interest (3) | |||||||||||||||||||||||||||||
Equity investments (4) | |||||||||||||||||||||||||||||
| Total | $ | $ | $ | $ | $ | ||||||||||||||||||||||||
(1) Operating leases consist of obligations for real estate, including leases that are not yet commenced or reflected on our consolidated balance sheet with future minimum lease payments of $0.2 million. These leases will commence in 2026 with lease terms of approximately one year .
(2) Consists of purchase commitments with original terms greater than one year. The substantial majority of these commitments are related to agreements with our data center hosting providers.
(3) Convertible notes due 2026, 2027, and 2030. See Note 6, "Borrowings," above for further discussion.
(4) Consists of a binding obligation to acquire $100 million of shares in Appsflyer, subject to certain closing conditions and adjustments. We expect to complete this purchase by the end of 2027.
We expect to meet our remaining commitments.
Legal Matters
In the normal course of business, we are subject to various legal matters. We accrue a liability when management believes that it is both probable that a liability has been incurred and the amount of loss can be reasonably estimated. We also disclose material contingencies when we believe a loss is not probable but reasonably possible. Legal costs related to such potential losses are expensed as incurred. In addition, recoveries are shown as a reduction in legal costs in the period in which they are realized. With respect to our outstanding matters, based on current knowledge, we believe that the resolution of such matters will not, either individually or in the aggregate, have a material adverse effect on our
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business or our condensed consolidated financial statements. However, litigation is inherently uncertain, and the outcome of these matters cannot be predicted with certainty. Accordingly, cash flows or results of operations could be materially affected in any particular period by the resolution of one or more of these matters.
Indemnifications
In the ordinary course of business, we may provide indemnifications of varying scope and terms to customers, vendors, lessors, investors, directors, officers, employees, and other parties with respect to certain matters. Indemnification may include losses from our breach of such agreements, services we provide, or third-party intellectual property infringement claims. These indemnifications may survive termination of the underlying agreement, and the maximum potential amount of future indemnification payments may not be subject to a cap. As of June 30, 2026, we have not incurred any material costs as a result of such obligations and we have not accrued any material liabilities related to such obligations in the accompanying condensed consolidated financial statements.
Letters of Credit
We had $5.1 million and $8.5 million of secured letters of credit outstanding as of June 30, 2026 and December 31, 2025, respectively. These primarily relate to our office space leases and are fully collateralized by certificates of deposit which we record in restricted cash as "Other assets" and "Prepaid expenses and other" on our condensed consolidated balance sheets.
8. Stock‑Based Compensation
Stock-based compensation expense is as follows (in thousands):
| Three Months Ended June 30, | Six Months Ended June 30, | ||||||||||||||||||||||
| 2026 | 2025 | 2026 | 2025 | ||||||||||||||||||||
| Cost of revenue | $ | $ | $ | $ | |||||||||||||||||||
| Research and development | |||||||||||||||||||||||
| Sales and marketing | |||||||||||||||||||||||
| General and administrative | |||||||||||||||||||||||
| Total stock-based compensation expense | $ | $ | $ | $ | |||||||||||||||||||
Stock Options
A summary of our stock option, including price-vested options ("PVO"), activity is as follows:
| Options Outstanding | |||||||||||||||||
| Stock Options Outstanding | Weighted-Average Exercise Price | Weighted-Average Remaining Contractual Term (In Years) | |||||||||||||||
| Balance as of December 31, 2025 | $ | ||||||||||||||||
| Exercised | ( | $ | |||||||||||||||
| Forfeited, cancelled, or expired | ( | $ | |||||||||||||||
| Balance as of June 30, 2026 | $ | ||||||||||||||||
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Restricted Stock Units
A summary of our restricted stock units ("RSU"), including price-vested units ("PVU"), and performance-based restricted stock units ("PSU"), activity is as follows:
| Unvested RSUs | |||||||||||
| Number of Shares | Weighted-Average Grant-Date Fair Value | ||||||||||
| Unvested as of December 31, 2025 | $ | ||||||||||
| Granted | $ | ||||||||||
| Vested | ( | $ | |||||||||
| Forfeited | ( | $ | |||||||||
| Unvested as of June 30, 2026 | $ | ||||||||||
Price-Vested Options and Price-Vested Units
The vesting for each of the PVOs and PVUs is subject to the fulfillment of both a service period that extends up to four years seven years , respectively. The fair value of each PVO and PVU award is estimated using a Monte Carlo simulation that uses assumptions determined on the date of grant. No outstanding options or units, which had not already met their price hurdle in a prior period, attained their price hurdle in 2026.
Performance-Based Restricted Stock Units
Starting in the first quarter of 2025, we have periodically issued PSUs to certain executives as part of their compensation. The vesting for each PSU is subject to the fulfillment of both a service period of three years , and the level of achievement of certain performance goals (revenue and EBITDA metrics), over three annual performance periods ("tranche"). These goals are set as a range of target outcomes, in the first quarter of each year, and can be attained at a rate between 0 % and 200 %, based on where in the range the final results fall. The fair value of each PSU is estimated separately for each tranche of the award, using the closing price of Unity's common stock on the grant date. The grant date is the later of the day the performance goals are set for that tranche, or the date the units were issued. The expense is the fair value of the award multiplied by the expected attainment of the related performance goals as of the balance sheet date, recognized ratably for each tranche over the period between the grant date, and the end of the service period. The expense is adjusted each period for any changes in the expected attainment of the performance goals.
Fair Value Assumptions
The calculated grant-date fair value of stock options, PVUs, and PVOs granted, were estimated using the Black-Scholes option-pricing model for stock options, and a Monte Carlo simulation for the PVUs and PVOs, with the following assumptions:
| Six Months Ended June 30, | ||||||||||||||||||||||||||||||||||||||
| 2025 | ||||||||||||||||||||||||||||||||||||||
| Expected dividend yield | ||||||||||||||||||||||||||||||||||||||
| Risk-free interest rate | ||||||||||||||||||||||||||||||||||||||
| Expected volatility | ||||||||||||||||||||||||||||||||||||||
| Expected term (in years) | ||||||||||||||||||||||||||||||||||||||
| Fair value of underlying common stock | $ | |||||||||||||||||||||||||||||||||||||
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Employee Stock Purchase Plan
The fair value of shares offered under our Employee Stock Purchase Plan ("ESPP") was determined on the grant date using the Black-Scholes option pricing model. The following table summarizes the assumptions used and the resulting grant-date fair values of our ESPP:
| Six Months Ended June 30, | |||||||||||||||||||||||||||||||||||
| 2025 | |||||||||||||||||||||||||||||||||||
| Expected dividend yield | |||||||||||||||||||||||||||||||||||
| Risk-free interest rate | |||||||||||||||||||||||||||||||||||
| Expected volatility | |||||||||||||||||||||||||||||||||||
| Expected term (in years) | |||||||||||||||||||||||||||||||||||
| Grant-date fair value per share | $ | ||||||||||||||||||||||||||||||||||
Additional information related to the ESPP is provided below (in thousands, except per share amounts):
| Six Months Ended June 30, | |||||||||||||||||||||||
| 2026 | 2025 | ||||||||||||||||||||||
| Shares issued under the ESPP | |||||||||||||||||||||||
| Weighted-average price per share issued | $ | $ | |||||||||||||||||||||
During 2025, we suspended the ESPP program, effective in the first quarter of 2026. As a result of the suspension, no new offering periods have commenced after March 2, 2026.
9. Income Taxes
Our tax provision for interim periods is determined using an estimated annual effective tax rate, adjusted for discrete items arising in that quarter. In each quarter, we update the estimated annual effective tax rate and make a year-to-date adjustment to the provision. The estimated annual effective tax rate is subject to volatility due to several factors, including variability in accurately predicting our pre-tax income or loss and the mix of jurisdictions to which they relate, intercompany transactions, changes in how we do business, and tax law developments.
Our effective tax rate for the three and six months ended June 30, 2026 and 2025 differs from the U.S. federal statutory tax rate of 21% primarily due to the need to record a valuation allowance on U.S. losses and to a lesser extent foreign losses taxed at different rates.
The realization of deferred tax assets is dependent upon the generation of sufficient taxable income of the appropriate character in future periods. We regularly assess the ability to realize our deferred tax assets and establish a valuation allowance if it is more-likely-than-not that some portion of the deferred tax assets will not be realized. In performing this assessment with respect to each jurisdiction, we review all available positive and negative evidence. Primarily due to our history of losses, we believe that it is more likely than not that the deferred tax assets of our U.S. federal, U.S. state, and certain foreign jurisdictions will not be realized and we have maintained a full valuation allowance against such deferred tax assets.
As of June 30, 2026, we had $184.6 million of gross unrecognized tax benefits, of which $34.1 million would impact the effective tax rate, if recognized. It is reasonably possible that the amount of unrecognized tax benefits as of June 30, 2026 could increase or decrease significantly as the timing of the resolution, settlement, and closure of audits is highly uncertain. We believe that we have adequately provided for any reasonably foreseeable outcome related to our tax audits and that any settlement will not have a material impact on our financial condition and operating results at this time.
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10. Net Loss per Share of Common Stock
Basic and diluted net loss per share is the same for all periods presented because the effects of potentially dilutive items were antidilutive given our net loss in each period.
The following table presents potentially dilutive common stock excluded from the computation of diluted net loss per share (in thousands) because the impact of including them would have been antidilutive:
| As of June 30, | |||||||||||||||||||||||
| 2026 | 2025 | ||||||||||||||||||||||
| Convertible notes | |||||||||||||||||||||||
| Stock options and PVOs | |||||||||||||||||||||||
| Unvested RSUs, PVUs, and PSUs | |||||||||||||||||||||||
11. Segment Information
We have one reportable segment, software solutions. See "Revenue Recognition" in Note 1 of our 2025 Annual Report on Form 10-K, for detailed information regarding our products and services.
Our chief operating decision maker is the chief executive officer, who on a consolidated basis, assesses the performance of, drives improvements in, and decides how to allocate resources in the reportable segment, based on multiple measures of performance including consolidated net income, adjusted EBITDA, adjusted gross margin, and adjusted EPS. As such, consolidated net income, which is reported and reconciled with all significant segment expenses on our consolidated statement of operations, is the measure that is most consistent with GAAP, while adjusted EBITDA, adjusted gross margin, and adjusted EPS are additional measures of our segment profitability.
The measure of segment assets is reported on the balance sheet as total consolidated assets. We do not have material intra-entity sales or transfers.
12. Subsequent Event
On August 4, 2026, we completed the sale of our Supersonic game publishing business to Tripledot Group Holdings Limited for cash consideration of $40 million, subject to certain post-close adjustments. The assets and liabilities of the Supersonic business were classified as held-for-sale as of June 30, 2026, as described in Note 1 "Accounting Policies".
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Item 2. Management's Discussion and Analysis of Financial Condition and Results of Operations
Please read the following discussion and analysis of our financial condition and results of operations together with our condensed consolidated financial statements and related notes included under Part I, Item 1 of this Quarterly Report on Form 10-Q. The following discussion and analysis contains forward-looking statements that involve risks and uncertainties. Forward-looking statements are statements that attempt to forecast or anticipate future developments in our business, financial condition, or results of operations. When reviewing the discussion below, you should keep in mind the substantial risks and uncertainties that could impact our business. In particular, we encourage you to review the risks and uncertainties described in “Part I, Item 1A. Risk Factors” of our Annual Report on Form 10-K filed with the SEC on February 11, 2026, “Part II, Item 1A. Risk Factors” of our Form 10-Q filed with the SEC on May 7, 2026, and "Part II, Item 1A. Risk Factors" included elsewhere in this report. These risks and uncertainties could cause actual results to differ materially from those projected in forward-looking statements contained in this report or implied by past results and trends. Forward-looking statements, like all statements in this report, speak only as of their date (unless another date is indicated), and we undertake no obligation to update or revise these statements in light of future developments. See the section titled "Note Regarding Forward-Looking Statements" in this report.
Overview
Unity offers a suite of tools to develop, deploy, and grow games and interactive experiences across all major platforms from mobile, PC, and console, to extended reality (XR).
Our platform consists of two complementary sets of solutions: Create Solutions and Grow Solutions.
Recent Developments in Our Business
In the first quarter of 2026, we announced we would sunset the ironSource Ads Network, one of our monetization networks, effective April 30, 2026, and we began the process of exiting our Supersonic game publishing business. As a result, revenue from these businesses is now included in non-strategic revenue for all periods presented. The sunset of the ironSource Ads Network was substantially completed in the second quarter of 2026, and the sale of our Supersonic business was completed on August 4, 2026.
As a result of these decisions, we incurred impairments on related long-lived assets of $279 million, in the six months ended June 30, 2026. The impairment charges include $227 million within cost of revenue, and $47 million within sales and marketing expense.
For additional details, refer to the section titled "Risk Factors."
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Results of Operations
The following table summarizes our condensed consolidated statements of operations data for the periods indicated (in thousands):
| Three Months Ended June 30, | Six Months Ended June 30, | ||||||||||||||||||||||
| 2026 | 2025 | 2026 | 2025 | ||||||||||||||||||||
| Revenue | $ | 546,468 | $ | 440,944 | $ | 1,054,706 | $ | 875,944 | |||||||||||||||
| Cost of revenue | 111,709 | 114,211 | 463,346 | 228,168 | |||||||||||||||||||
| Gross profit | 434,759 | 326,733 | 591,360 | 647,776 | |||||||||||||||||||
| Operating expenses | |||||||||||||||||||||||
| Research and development | 278,275 | 214,807 | 532,700 | 435,432 | |||||||||||||||||||
| Sales and marketing | 132,368 | 161,513 | 327,745 | 323,526 | |||||||||||||||||||
| General and administrative | 56,335 | 69,165 | 114,547 | 135,505 | |||||||||||||||||||
| Total operating expenses | 466,978 | 445,485 | 974,992 | 894,463 | |||||||||||||||||||
| Loss from operations | (32,219) | (118,752) | (383,632) | (246,687) | |||||||||||||||||||
| Interest expense | (6,032) | (6,030) | (12,052) | (11,921) | |||||||||||||||||||
| Interest income and other income (expense), net | 17,941 | 19,837 | 21,405 | 77,948 | |||||||||||||||||||
| Loss before income taxes | (20,310) | (104,945) | (374,279) | (180,660) | |||||||||||||||||||
| Provision for (benefit from) Income taxes | 2,362 | 2,420 | (4,680) | 4,612 | |||||||||||||||||||
| Net loss | $ | (22,672) | $ | (107,365) | $ | (369,599) | $ | (185,272) | |||||||||||||||
The following table sets forth the components of our condensed consolidated statements of operations data as a percentage of revenue for the periods indicated:
| Three Months Ended June 30, | Six Months Ended June 30, | ||||||||||||||||||||||
| 2026 | 2025 | 2026 | 2025 | ||||||||||||||||||||
| Revenue | 100 | % | 100 | % | 100 | % | 100 | % | |||||||||||||||
| Cost of revenue | 20 | 26 | 44 | 26 | |||||||||||||||||||
| Gross profit | 80 | 74 | 56 | 74 | |||||||||||||||||||
| Operating expenses | |||||||||||||||||||||||
| Research and development | 51 | 48 | 50 | 50 | |||||||||||||||||||
| Sales and marketing | 24 | 37 | 31 | 37 | |||||||||||||||||||
| General and administrative | 11 | 16 | 11 | 15 | |||||||||||||||||||
| Total operating expenses | 86 | 101 | 92 | 102 | |||||||||||||||||||
| Loss from operations | (6) | (27) | (36) | (28) | |||||||||||||||||||
| Interest expense | (1) | (1) | (1) | (1) | |||||||||||||||||||
| Interest income and other income (expense), net | 3 | 4 | 2 | 8 | |||||||||||||||||||
| Loss before income taxes | (4) | (24) | (35) | (21) | |||||||||||||||||||
| Provision for (benefit from) Income taxes | — | — | — | — | |||||||||||||||||||
| Net loss | (4) | % | (24) | % | (35) | % | (21) | % | |||||||||||||||
Revenue
Create Solutions
We generate Create Solutions revenue primarily through our suite of Create Solutions subscriptions inclusive of enterprise support, professional services, and consumption services. Our subscriptions provide customers access to technologies that allow them to edit, run, and iterate interactive, RT3D and 2D experiences that can be created once and deployed to a variety of platforms. Enhanced support services are provided to our enterprise customers and are generally sold separately from the Create
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Solutions subscriptions. Professional services are provided to our customers which are primarily platform integrations, but also include consulting, training, and custom application and workflow development. Consumption services consist of cloud and hosting services provided to our customers to simplify and enhance the way our users access and harness our solutions.
Grow Solutions
We generate Grow Solutions revenue primarily through our monetization solutions and game publishing services. Our monetization solutions allow publishers, original equipment manufacturers, and mobile carriers to sell available advertising inventory on their mobile applications or hardware devices to advertisers for in-application or on-device placements. Our revenue represents the amount we retain from the transaction we are facilitating through our auction and mediation platform. Our game publishing services provide game developers with the infrastructure and expertise to launch their mobile games and manage their growth; this is achieved through marketability testing tools, live games management tools and game design support, and optimizing the implementation of the customer's commercial model. Through these publishing services, we generate revenue from in-app advertising and related purchases in published games.
As a result of the sunsetting of the ironSource Ads Network (one of our monetization networks), and divestiture of our Supersonic game publishing services, we expect Grow Solutions revenue to consist primarily of our "Unity Ads Network" (our principal monetization network), by the end of 2026.
Our total revenue is summarized as follows (in thousands):
| Three Months Ended | Six Months Ended | ||||||||||||||||||||||
| June 30, | June 30, | ||||||||||||||||||||||
| 2026 | 2025 | 2026 | 2025 | ||||||||||||||||||||
| Create Solutions | $ | 157,618 | $ | 153,782 | 314,265 | 304,160 | |||||||||||||||||
| Grow Solutions | 388,850 | 287,162 | 740,441 | 571,784 | |||||||||||||||||||
| Total revenue | $ | 546,468 | $ | 440,944 | $ | 1,054,706 | $ | 875,944 | |||||||||||||||
Total revenue increased in the three and six months ended June 30, 2026, compared to the comparable prior year periods, primarily due to an increase in Grow Solutions revenue from growth in the Unity Ads Network, driven by “Unity Vector”, partially offset by decreases in revenue from the ironSource Ads Network.
The increase in total revenue was further driven by a slight increase in Create Solutions revenue, primarily due to increases in subscription revenue, partially offset by decreases in cloud and hosting services revenue, driven by our portfolio reset in 2025. Create Solutions subscription revenue in 2025 also benefited from the sale of a term license for approximately $12 million in the second quarter of that year.
Included in revenue in the six months ended June 30, 2026 and 2025, are approximately $136 million and $204 million, respectively, of non-strategic portfolio revenue, primarily in Grow Solutions.
Cost of Revenue, Gross Profit, and Gross Margin
Cost of revenue consists primarily of the amortization and impairment of intangible assets, hosting expenses, personnel costs (including salaries, benefits, and stock-based compensation) for employees and subcontractors associated with our product support and professional services organizations, and direct costs associated with our advertising offerings.
Gross profit, or revenue less cost of revenue, has been and will continue to be affected by various factors, including our product mix, the costs associated with third-party hosting services and the extent to which we expand and drive efficiencies in our hosting costs, professional services, and customer support organizations. We expect our gross profit to increase in absolute dollars in the long term, but to fluctuate from period to period as a percentage of revenue.
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Cost of revenue for the three months ended June 30, 2026 was approximately flat, compared to the comparable prior year period, primarily due to decreases in amortization of intangible assets, driven by the impairment we recognized in the first quarter of 2026, offset by increases in hosting expenses, and in direct costs associated with our advertising offerings.
Cost of revenue for the six months ended June 30, 2026 increased, compared to the comparable prior year period, primarily due to an impairment of long-lived intangible assets in the first quarter of 2026.
Operating Expenses
Our operating expenses consist of research and development, sales and marketing, and general and administrative expenses. The most significant component of our operating expenses is personnel-related costs, including salaries and wages, sales commissions, bonuses, benefits, stock-based compensation, and payroll taxes.
During 2025 we had workforce reductions from our ongoing restructuring efforts. In the six months ended June 30, 2025, we incurred incremental employee separation costs related to these actions of approximately $20 million, primarily within research and development, and sales and marketing. In addition, we incurred approximately $11 million of non-employee charges associated with this restructuring in 2025.
In the first quarter of 2026, we announced we would sunset the ironSource Ads Network, effective April 30, 2026, and we began the process of exiting our Supersonic game publishing business. Following these announcements, we incurred incremental impairment charges of $279 million, in the six months ended June 30, 2026, associated with these decisions. The impairment charges include $227 million within cost of revenue, and $47 million within sales and marketing expense. Furthermore, in the six months ended June 30, 2026, we incurred employee separation costs and other non-employee charges of approximately $38 million from our ongoing global restructuring efforts, primarily related to the planned closure of Unity France. These incremental charges are primarily in research and development.
Research and Development
Research and development expenses primarily consist of personnel-related costs for the design and development of our platform, amortization expenses related to intangible assets, and hosting expenses. We expect our research and development expenses to increase in absolute dollars in the long term, as we invest in new solutions, expand features and functionality with existing solutions, support our artificial intelligence ("AI") and machine learning ("ML") initiatives, and enter new markets. We expect research and development expenses to fluctuate as a percentage of revenue from period to period.
Research and development expense for the three and six months ended June 30, 2026 increased, compared to the comparable prior year periods, primarily due to an increase in amortization costs from the change in useful lives of certain intangible assets in 2025, and an increase in hosting expenses.
Sales and Marketing
Our sales and marketing expenses consist primarily of personnel-related costs, the amortization and impairment of intangible assets, and advertising and marketing programs, including user acquisition costs and digital account-based marketing, user events such as developer-centric conferences and our Unite user conferences. We expect that our sales and marketing expense will decrease as a result of the divestiture of the Supersonic business.
Sales and marketing expense for the three months ended June 30, 2026 decreased, compared to the comparable prior year period, primarily due to decreases in amortization of intangible assets, driven by the impairment we recognized in the first quarter of 2026.
Sales and marketing expense for the six months ended June 30, 2026 was approximately flat, compared to the comparable prior year period, primarily due to an impairment of long-lived intangible assets recognized in the first quarter of 2026, offset by decreases in amortization of intangible assets, driven by the same impairment, and personnel costs.
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General and Administrative
Our general and administrative expenses primarily consist of personnel-related costs for finance, legal, human resources, IT and administrative employees; allocated overhead; and professional fees for external legal, accounting, and other professional services.
General and administrative expense for the three and six months ended June 30, 2026 decreased, compared to the comparable prior year periods, primarily due to decreases in allocated overhead and personnel-related costs, both driven by reductions in our real estate footprint and in headcount, due to restructuring in 2025.
Interest Expense
Interest expense consists primarily of interest expense associated with our convertible debt and amortization of debt issuance costs.
Interest expense for the three and six months ended June 30, 2026 was approximately flat, compared to the comparable prior year periods.
Interest Income and Other Income (Expense), Net
Interest income and other income (expense), net, consists primarily of interest income earned on our cash and cash equivalents, impairments of equity investments, and foreign currency gains and losses. Our exposure to fluctuations in foreign currencies results primarily from our global operations, and related personnel expense.
Interest income and other income (expense), net, for the three months ended June 30, 2026 decreased, compared to the comparable prior year period, primarily due to losses from foreign exchange, offset by increases in interest income.
Interest income and other income (expense), net, for the six months ended June 30, 2026 decreased, compared to the comparable prior year period, primarily due to gains on the repurchase of convertible debt of $42.7 million in the first quarter of 2025, and an impairment of an equity investment of $15.0 million in the first quarter of 2026.
Provision for (benefit from) Income taxes
Provision for (benefit from) income taxes consists primarily of income taxes in certain foreign jurisdictions where we conduct business. We have a valuation allowance against certain of our deferred tax assets, including net operating loss ("NOL") carryforwards and tax credits related primarily to research and development. Our overall effective income tax rate in future periods may be affected by the geographic mix of earnings in the countries in which we operate. Our future effective tax rate may also be affected by changes in the valuation of our deferred tax assets or liabilities, or changes in tax laws, regulations, or accounting principles in the jurisdictions in which we conduct business. See Note 9, "Income Taxes," of the Notes to Condensed Consolidated Financial Statements.
Benefit from income taxes for the six months ended June 30, 2026 changed, compared to the provision for income taxes in the comparable prior year period, primarily due to a larger current-year tax benefit in foreign jurisdictions resulting from restructuring activities initiated in the first quarter of 2026. For the three months ended June 30, 2026, the provision for income taxes was approximately flat compared to the prior year period.
Non-GAAP Financial Measures
To supplement our consolidated financial statements prepared and presented in accordance with GAAP, we use certain non-GAAP financial measures, as described below, to evaluate our ongoing operations and for internal planning and forecasting purposes. We believe the following non-GAAP measures are useful in evaluating our operating performance. We are presenting these non-GAAP financial measures because we believe, when taken collectively, they may be helpful to investors because they provide consistency and comparability with past financial performance.
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However, non-GAAP financial measures have limitations in their usefulness to investors because they have no standardized meaning prescribed by GAAP and are not prepared under any comprehensive set of accounting rules or principles. In addition, other companies, including companies in our industry, may calculate similarly-titled non-GAAP financial measures differently or may use other measures to evaluate their performance, all of which could reduce the usefulness of our non-GAAP financial measures as tools for comparison. As a result, our non-GAAP financial measures are presented for supplemental informational purposes only and should not be considered in isolation or as a substitute for our consolidated financial statements presented in accordance with GAAP.
Adjusted Gross Profit, Adjusted EBITDA, and Adjusted EPS
We define adjusted gross profit as GAAP gross profit excluding expenses associated with stock-based compensation, amortization and impairment of acquired intangible assets, depreciation, and restructurings and reorganizations. We define adjusted gross margin as adjusted gross profit as a percentage of revenue. We define adjusted EBITDA as net income or loss excluding benefits or expenses associated with stock-based compensation, amortization and impairment of acquired intangible assets, depreciation, restructurings and reorganizations, interest, income tax, and other non-operating activities, which primarily consist of foreign exchange rate gains or losses.
We define adjusted EPS as net income or loss excluding benefits or expenses associated with stock-based compensation, amortization and impairment of acquired intangible assets, depreciation, restructurings and reorganizations, and the income tax impact of the preceding adjustments (cumulatively "adjusted net income"), increased by the tax effected impacts from any relevant dilutive securities, divided by the diluted weighted-average outstanding shares. The effective tax rate used in calculating adjusted EPS is estimated for each period, based on the net income or loss adjusted for the items noted above, and may differ from the effective rate used in our financial statements. Shares of common stock that are excluded in our calculation of GAAP diluted net loss per share due to their antidilutive impact on such calculations, are included in the diluted weighted average outstanding shares used in our calculation of adjusted EPS, to the extent they have a dilutive impact on adjusted EPS given the adjusted net income in each period.
We use adjusted gross profit, adjusted EBITDA, and adjusted EPS, in conjunction with traditional GAAP measures to evaluate our financial performance. We believe that adjusted gross profit, adjusted EBITDA, and adjusted EPS provide our management and investors consistency and comparability with our past financial performance and facilitates period-to-period comparisons of operations, as these metrics exclude expenses that we do not consider to be indicative of our overall operating performance.
The following table presents a reconciliation of our adjusted gross profit to our GAAP gross profit, the most directly comparable measure as determined in accordance with GAAP, for the periods presented (in thousands):
| Three Months Ended | |||||||||||||||||||||||
| June 30, | |||||||||||||||||||||||
| 2026 | 2025 | ||||||||||||||||||||||
| GAAP gross profit | $ | 434,759 | $ | 326,733 | |||||||||||||||||||
| Add: | |||||||||||||||||||||||
| Stock-based compensation expense | 6,712 | 9,861 | |||||||||||||||||||||
| Amortization of intangible assets expense | 6,550 | 26,997 | |||||||||||||||||||||
| Depreciation expense | 1,309 | 1,766 | |||||||||||||||||||||
| Restructuring and reorganization costs | 3,915 | 275 | |||||||||||||||||||||
| Adjusted gross profit | $ | 453,245 | $ | 365,632 | |||||||||||||||||||
| GAAP gross margin | 80 | % | 74 | % | |||||||||||||||||||
| Adjusted gross margin | 83 | % | 83 | % | |||||||||||||||||||
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The following table presents a reconciliation of our adjusted EBITDA to net loss, the most directly comparable measure as determined in accordance with GAAP, for the periods presented (in thousands):
| Three Months Ended | |||||||||||
| June 30, | |||||||||||
| 2026 | 2025 | ||||||||||
| GAAP net loss | $ | (22,672) | $ | (107,365) | |||||||
| Stock-based compensation expense | 75,576 | 101,435 | |||||||||
| Amortization of intangible assets expense | 77,490 | 86,218 | |||||||||
| Depreciation expense | 7,985 | 10,710 | |||||||||
| Restructuring and reorganization costs | 31,359 | 10,886 | |||||||||
| Interest expense | 6,032 | 6,030 | |||||||||
| Interest income and other income (expense), net | (17,941) | (19,837) | |||||||||
| Provision for Income taxes | 2,362 | 2,420 | |||||||||
| Adjusted EBITDA | $ | 160,191 | $ | 90,497 | |||||||
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The following table presents a reconciliation of adjusted EPS to diluted net loss per share attributable to Unity Software Inc., the most directly comparable measures as determined in accordance with GAAP, for the periods presented (in thousands):
| Three Months Ended | |||||||||||
| June 30, | |||||||||||
| 2026 | 2025 | ||||||||||
| GAAP net loss | $ | (22,672) | $ | (107,365) | |||||||
| Stock-based compensation expense | 75,576 | 101,435 | |||||||||
| Amortization of intangible assets expense | 77,490 | 86,218 | |||||||||
| Depreciation expense | 7,985 | 10,710 | |||||||||
| Restructuring and reorganization costs | 31,359 | 10,886 | |||||||||
| Income tax impact of adjusting items | (36,302) | (20,527) | |||||||||
| Adjusted net income used for calculation of adjusted EPS, before impact of dilutive instruments | $ | 133,436 | $ | 81,357 | |||||||
| Increase from forgone financing costs on dilutive convertible notes, net of tax | 4,676 | 789 | |||||||||
| Adjusted net income used for calculation of adjusted EPS, including impact of dilutive instruments | $ | 138,112 | $ | 82,146 | |||||||
| Weighted-average common shares used in GAAP diluted net loss per share attributable to Unity Software Inc. | 437,898 | 417,566 | |||||||||
| Convertible notes | 41,348 | 20,896 | |||||||||
| Stock options and PVOs | 2,660 | 5,385 | |||||||||
| Unvested RSUs, PVUs, and PSUs | 7,585 | 4,572 | |||||||||
| ESPP | — | 4 | |||||||||
| Non-GAAP weighted-average common shares used in adjusted EPS | 489,491 | 448,423 | |||||||||
| GAAP diluted net loss per share attributable to Unity Software Inc. | $ | (0.05) | $ | (0.26) | |||||||
| Total impact on diluted net loss per share attributable to Unity Software Inc. from non-GAAP adjustments | $ | 0.36 | $ | 0.45 | |||||||
| Total impact on diluted net loss per share attributable to Unity Software Inc. from antidilutive common stock now included | $ | (0.03) | $ | (0.01) | |||||||
| Adjusted EPS | $ | 0.28 | $ | 0.18 | |||||||
Free Cash Flow
We define free cash flow as net cash provided by operating activities less cash used for purchases of property and equipment. We believe that free cash flow is a useful indicator of liquidity as it measures our ability to generate cash, or our need to access additional sources of cash, to fund operations and investments.
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The following table presents a reconciliation of free cash flow to net cash provided by operating activities, the most directly comparable measure as determined in accordance with GAAP, for the periods presented (in thousands):
| Six Months Ended June 30, | |||||||||||
| 2026 | 2025 | ||||||||||
| Net cash provided by operating activities | $ | 276,908 | $ | 146,122 | |||||||
| Less: | |||||||||||
| Purchases of property and equipment | (8,492) | (12,164) | |||||||||
| Free cash flow | $ | 268,416 | $ | 133,958 | |||||||
| Net cash used in investing activities | $ | (8,492) | $ | (14,164) | |||||||
| Net cash provided by financing activities | $ | 16,194 | $ | 22,031 | |||||||
Liquidity and Capital Resources
As of June 30, 2026, our principal sources of liquidity were cash and cash equivalents totaling $2.4 billion, which were primarily held for working capital purposes. Our cash equivalents are invested primarily in time deposits and in government money market funds.
Our material cash requirements from known contractual and other obligations consist of our convertible notes, obligations under operating leases for office space, contractual obligations for hosting services to support our business operations, and our commitment to acquire shares of AppsFlyer. See Part I, Item I, Note 7 — "Commitments and Contingencies" for additional discussion of our principal contractual commitments.
In the first quarter of 2025 we issued $690 million in aggregate principal amount of the 2030 Notes, the proceeds of which were used to fund repurchases of outstanding 2026 Notes. We previously issued $1.7 billion in aggregate principal amount of the 2026 Notes in November 2021, of which $688 million in aggregate principal amount was repurchased in first quarter 2025 for $642 million, and $480 million in aggregate principal amount was repurchased in March 2024 for $415 million. We also previously issued $1.0 billion in aggregate principal amount of the 2027 Notes. See Part I, Item I, Note 6, "Borrowings" for additional discussion of the Notes.
Since our inception, we have generated losses from our operations as reflected in our accumulated deficit of $4.5 billion as of June 30, 2026. As a result, we may require additional capital to execute our strategic initiatives to grow our business.
We believe our existing sources of liquidity will be sufficient to meet our working capital and capital expenditures for at least the next 12 months, including the repayment of the 2026 Notes in cash upon their maturity in November 2026. We believe we will meet longer-term expected future cash requirements and obligations through a combination of cash flows from operating activities, available cash balances, and potential future equity or debt transactions. Our future capital requirements, however, will depend on many factors, including our growth rate; the timing and extent of spending to support our research and development efforts; capital expenditures to build out new facilities and purchase hardware and software; the expansion of sales and marketing activities; and our continued need to invest in our IT infrastructure to support our growth. In addition, we have in the past entered into, and may in the future enter into, additional strategic partnerships as well as agreements to acquire or invest in complementary offerings, teams and technologies, including intellectual property rights, which could increase our cash requirements. As a result of these and other factors, we may choose or be required to seek additional equity or debt financing sooner than we currently anticipate. In addition, depending on prevailing market conditions, our liquidity requirements, contractual restrictions, and other factors, we may also from time to time seek to retire or purchase our outstanding debt, including the Notes, through cash purchases and/or exchanges for equity securities, in open market purchases, privately negotiated transactions or otherwise. If additional financing is required from outside sources, we may not be able to raise it on terms acceptable
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to us, or at all, including as a result of macroeconomic conditions such as high interest rates, volatility in the capital markets and liquidity concerns at, or failures of, banks and other financial institutions. If we are unable to raise additional capital when required, or if we cannot expand our operations or otherwise capitalize on our business opportunities because we lack sufficient capital, our business, results of operations, and financial condition would be adversely affected.
Our changes in cash flows were as follows (in thousands):
| Six Months Ended June 30, | |||||||||||
| 2026 | 2025 | ||||||||||
| Net cash provided by operating activities | $ | 276,908 | $ | 146,122 | |||||||
| Net cash used in investing activities | (8,492) | (14,164) | |||||||||
| Net cash provided by financing activities | 16,194 | 22,031 | |||||||||
| Effect of foreign exchange rate changes on cash, cash equivalents, and restricted cash | 8,210 | 19,637 | |||||||||
| Net change in cash, cash equivalents, and restricted cash | $ | 292,820 | $ | 173,626 | |||||||
Cash Provided by Operating Activities
During the six months ended June 30, 2026, net cash provided by operating activities was primarily due to our net loss, adjusted for certain non-cash items, which include impairments, depreciation and amortization, stock-based compensation, and other, and to a lesser extent, an increase in operating assets and liabilities. Our cash flows can fluctuate from period to period due to revenue seasonality, timing of billings, collections, and publisher payments, and historical cash flows are not necessarily indicative of our results in any future period.
Cash Used in Investing Activities
During the six months ended June 30, 2026, net cash used in investing activities consisted primarily of purchases of property and equipment.
Cash Provided by Financing Activities
During the six months ended June 30, 2026, net cash provided by financing activities consisted of proceeds from the issuance of common stock under our employee equity plans.
Critical Accounting Policies and Estimates
Management's discussion and analysis of our financial condition and results of operations is based on our condensed consolidated financial statements, which have been prepared in accordance with U.S. GAAP. These principles require us to make estimates and assumptions that affect the reported amounts of assets, liabilities, revenue, expenses, and related disclosures. Our estimates are based on our historical experience and on various other assumptions that we believe are reasonable under the circumstances. To the extent that there are material differences between these estimates and our actual results, our future financial statements will be affected.
There have been no material changes to our critical accounting policies and estimates from those disclosed in Part II, Item 7, "Management's Discussion and Analysis of Financial Condition and Results of Operations" in our Annual Report on Form 10-K for the year ended December 31, 2025, filed with the SEC on February 11, 2026.
Item 3. Quantitative and Qualitative Disclosures About Market Risk
Our assessment of our exposures to market risk has not changed materially since the presentation set forth in Part II, Item 7A of our Annual Report on Form 10-K for the year ended December 31, 2025, filed with the SEC on February 11, 2026.
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Item 4. Controls and Procedures
Under the supervision and with the participation of our management, including our principal executive officer and principal financial officer, we conducted an evaluation of the effectiveness of the design and operation of our disclosure controls and procedures, as defined in Rules 13a-15(e) and 15d-15(e) under the Securities Exchange Act of 1934, as amended (the "Exchange Act"), as of the end of the period covered by this report.
(a) Evaluation of Disclosure Controls and Procedures
Based on management's evaluation, our principal executive officer and principal financial officer concluded that, as of the end of the period covered by this report, our disclosure controls and procedures were designed to, and were effective to, provide assurance at a reasonable level that the information we are required to disclose in reports that we file or submit under the Exchange Act is recorded, processed, summarized, and reported within the time periods specified in SEC rules and forms, and that such information is accumulated and communicated to our management, including our principal executive officer and principal financial officer, as appropriate, to allow timely decisions regarding required disclosures.
(b) Changes in Internal Control Over Financial Reporting
Based on management's evaluation, our principal executive officer and principal financial officer concluded that there has not been any material change in our internal control over financial reporting during the quarter ended June 30, 2026 that has materially affected, or is reasonably likely to materially affect, our internal control over financial reporting.
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PART II—OTHER INFORMATION
Item 1. Legal Proceedings
We are not party to any material legal proceedings at this time. From time to time, we may be subject to other legal proceedings and claims arising in the ordinary course of business.
Item 1A. Risk Factors
Other than the risk factors listed below, there have been no material changes from the risk factors previously described under Part I, Item 1A of our Annual Report on Form 10-K for the year ended December 31, 2025 and Part II, Item 1A of our Quarterly Report on Form 10-Q for the quarter ended March 31, 2026.
Purchasing or owning Unity common stock involves investment risks including, but not limited to, the risks described in Part I, Item 1A of our Annual Report on Form 10-K for the year ended December 31, 2025, and Part II, Item 1A of our Quarterly Report on Form 10-Q for the quarter ended March 31, 2026. Any one of those risks could harm our business, financial condition and results of operations or reputation, which could cause our stock price to decline. Additional risks, trends and uncertainties not presently known to us or that we currently believe are immaterial may also harm our business, financial condition, results of operations or reputation.
If we fail to successfully execute our plans to realign our business and to right-size our investments, our business will be harmed.
We have realigned our business to focus on the Unity Engine and related consumption services, and monetization solutions, and are continuing to exit other businesses and right-size our investments, including through workforce reductions. These actions may not be effective or sufficient to offset our expenses, and may themselves have adverse impacts, including loss of accumulated knowledge, limited technological support on legacy products, inefficiency, and other challenges to operating our business. If we fail to efficiently execute on these plans, or if the expected benefits are not achieved on the timeline or to the extent we expect, our business may be harmed and we may fail to achieve or maintain profitability.
In the first quarter of 2026, we announced we would sunset the ironSource Ads Network, one of our monetization networks, effective April 30, 2026, and we began the process of exiting our Supersonic game publishing business. The sunset of the ironSource Ads Network was substantially completed in the second quarter of 2026, and the sale of our Supersonic business was completed on August 4, 2026. These actions have caused and may continue to cause disruption and uncertainty for our employees, customers, publishers, advertisers, and strategic partners, and have resulted and may continue to result in employee attrition and difficulties in maintaining business relationships. Customers or partners have delayed, reduced, or terminated and may continue to delay, reduce, or terminate their use of our offerings as a result.
The sunset of the ironSource Ads Network has resulted and may continue to result in higher-than-expected customer and revenue attrition.
Any failure to successfully manage these changes could disrupt our operations, damage customer relationships, fail to deliver the anticipated financial benefits, lead to additional costs and materially harm our business and results of operations.
Item 2. Unregistered Sales of Equity Securities and Use of Proceeds
Unregistered Sales of Equity Securities
None.
Issuer Purchases of Equity Securities
None.
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Item 3. Defaults Upon Senior Securities
None.
Item 4. Mine Safety Disclosures
Not applicable.
Item 5. Other Information
Rule 10b5-1 Trading Plans
The adoption or termination
| Name | Title | Action | Adoption/Termination Date | Expiration Date (1) | Aggregate # of Securities to be Purchased/Sold | |||||||||||||||||||||||||||
(1) Each of the plans expire (or, with respect to terminated plans, were originally set to expire) on the respective dates shown, or upon the earlier completion of all authorized transactions under the plans.
(2) Represents the maximum number of shares subject to the trading plan, only a portion of which may be sold as the trading plan was designed to sell the net shares following the sell to cover taxes for each vesting event for all awards under his plan until August 27, 2027.
(3) Mr. Dovrat resigned as a director of the Company, effective July 24, 2026.
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Item 6. Exhibits
EXHIBIT INDEX
| Incorporated by Reference | ||||||||||||||||||||||||||||||||||||||
| Exhibit Number | Description of Exhibit | Form | File Number | Exhibit | Filing Date | |||||||||||||||||||||||||||||||||
| 3.1 | Amended and Restated Certificate of Incorporation of the Registrant | 8-K | 001-39497 | 3.1 | September 22, 2020 | |||||||||||||||||||||||||||||||||
| 3.2 | Amended and Restated Bylaws of the Registrant | 8-K | 001-39497 | 3.2 | September 8, 2023 | |||||||||||||||||||||||||||||||||
| 31.1* | Section 302 Certification of Principal Executive Officer | |||||||||||||||||||||||||||||||||||||
| 31.2* | Section 302 Certification of Principal Financial Officer | |||||||||||||||||||||||||||||||||||||
| 32.1*# | Section 906 Certification of Principal Executive Officer and Principal Financial Officer | |||||||||||||||||||||||||||||||||||||
| 101.INS | Inline XBRL Instance Document—the instance document does not appear in the Interactive Data File because its XBRL tags are embedded within the Inline XBRL document. | |||||||||||||||||||||||||||||||||||||
| 101.SCH* | Inline XBRL Taxonomy Extension Schema Document | |||||||||||||||||||||||||||||||||||||
| 101.CAL* | Inline XBRL Taxonomy Extension Calculation Linkbase Document | |||||||||||||||||||||||||||||||||||||
| 101.DEF* | Inline XBRL Taxonomy Extension Definition Linkbase Document | |||||||||||||||||||||||||||||||||||||
| 101.LAB* | Inline XBRL Taxonomy Extension Label Linkbase Document | |||||||||||||||||||||||||||||||||||||
| 101.PRE* | Inline XBRL Taxonomy Extension Presentation Linkbase Document | |||||||||||||||||||||||||||||||||||||
| 104 | Cover Page Interactive Data File (formatted as inline XBRL and contained in Exhibit 101) | |||||||||||||||||||||||||||||||||||||
| * | Filed herewith. | |||||||||||||||||||||||||||||||||||||
| # | The certifications attached as Exhibit 32.1 accompany this Quarterly Report on Form 10-Q pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002, and shall not be deemed “filed” by the Registrant for purposes of Section 18 of the Securities Exchange Act of 1934, as amended, and are not to be incorporated by reference into any of the Registrant's filings under the Securities Act of 1933, as amended, irrespective of any general incorporation language contained in any such filing. | |||||||||||||||||||||||||||||||||||||
| The agreements and other documents filed as exhibits to this Quarterly Report on Form 10-Q are not intended to provide factual information or other disclosure other than with respect to the terms of the agreements or other documents themselves, and you should not rely on them for that purpose. In particular, any representations and warranties made by us in these agreements or other documents were made solely within the specific context of the relevant agreement or document and may not describe the actual state of affairs as of the date they were made or at any other time. | ||||||||||||||||||||||||||||||||||||||
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SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned thereunto duly authorized.
| UNITY SOFTWARE INC. | |||||||||||
| Date: August 6, 2026 | By: | /s/ Michael Lieb | |||||||||
| Michael Lieb | |||||||||||
| Chief Accounting Officer | |||||||||||
| (Principal Accounting Officer) | |||||||||||
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