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Revenue jumps 17% as Unity (NYSE: U) grows margins but books Q1 impairments

Filing Impact
(High)
Filing Sentiment
(Neutral)
Form Type
8-K

Rhea-AI Filing Summary

Unity Software Inc. reported first-quarter 2026 results with solid growth and stronger profitability on a non-GAAP basis. Revenue reached $508 million, up 17% year-over-year, with strategic revenue of $432 million, up 35%. Grow Solutions revenue rose to $352 million from $285 million, while Create Solutions revenue increased to $157 million from $150 million.

Unity posted a GAAP net loss of $347 million, or $(0.80) per share, largely driven by $279 million of impairment charges tied to sunsetting the ironSource Ads Network and a planned Supersonic divestiture. Despite this, adjusted EBITDA improved to $138 million with a 27% margin, and free cash flow rose to $66 million.

Guidance for Q2 2026 calls for total revenue of $505–$515 million, strategic revenue of $455–$465 million, and adjusted EBITDA of $130–$135 million, implying continued double-digit growth and further margin expansion.

Positive

  • Strong top-line and strategic growth: Q1 2026 revenue rose to $508 million (17% year-over-year), with total strategic revenue up 35% and Grow Solutions revenue increasing to $352 million from $285 million.
  • Improving profitability and cash flow: Adjusted EBITDA reached $138 million with a 27% margin (up from 19%), while free cash flow increased to $66 million and operating cash flow to $71 million.

Negative

  • Large GAAP loss driven by impairments: GAAP net loss widened to $347 million with a (68)% margin, including $279 million of impairment charges tied to sunsetting the ironSource Ads Network and the planned Supersonic divestiture.

Insights

Unity shows strong strategic growth and cash generation, offset by large non-cash impairments.

Unity grew Q1 2026 revenue to $508M, up 17% year-over-year, with total strategic revenue up 35% to $432M. Grow Solutions revenue increased to $352M, while Create Solutions reached $157M, indicating healthy demand across the core platform.

Profitability metrics improved materially on an adjusted basis. Adjusted EBITDA rose to $138M with a 27% margin versus 19% a year earlier, and free cash flow increased to $66M. At the same time, GAAP net loss widened to $347M due to $279M of impairment charges related to the ironSource Ads Network sunset and planned Supersonic divestiture.

Guidance for Q2 2026 targets revenue of $505–$515M and adjusted EBITDA of $130–$135M, suggesting continued double-digit strategic revenue growth and margin expansion. Management also reiterates in its forward-looking statements an expectation to become GAAP profitable by Q4 2026, contingent on execution of its strategic initiatives and cost structure plans.

Item 2.02 Results of Operations and Financial Condition Financial
Disclosure of earnings results, typically an earnings press release or preliminary financials.
Item 9.01 Financial Statements and Exhibits Exhibits
Financial statements, pro forma financial information, and exhibit attachments filed with this report.
Q1 2026 revenue $508,238 thousand Three months ended March 31, 2026; up 17% year-over-year
Strategic revenue $432,415 thousand Q1 2026; up 35% year-over-year
GAAP net loss $346,927 thousand Q1 2026; net loss margin (68)%
Impairment charges $279 million Related to ironSource Ads Network sunset and planned Supersonic divestiture in Q1 2026
Adjusted EBITDA $138,280 thousand Q1 2026; adjusted EBITDA margin 27%
Free cash flow $66,457 thousand Q1 2026; up from $7,308 thousand in Q1 2025
Cash and equivalents $2,146,089 thousand As of March 31, 2026; up from $2,064,301 thousand at December 31, 2025
Q2 2026 revenue guidance $505–$515 million Company’s outlook for total revenue for Q2 2026
Adjusted EBITDA financial
"Adjusted EBITDA was $138 million, with a margin of 27%; adjusted EPS was $0.23."
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.
free cash flow financial
"Free cash flow for the quarter was $66 million, compared to $7 million in the first quarter of 2025."
Free cash flow is the amount of money a company has left over after paying all its expenses and investing in its business, like buying equipment or updating facilities. It shows how much cash is available to reward shareholders, pay down debt, or save for future growth. This helps investors understand if a company is financially healthy and able to grow.
strategic revenue financial
"Strategic revenue was $432 million, up 35% year-over-year."
impairment of intangible assets financial
"Impairment of intangible assets | | | 270,506 | | — |"
When a company decides an intangible asset—like a patent, trademark, or software—won't generate as much future benefit as it was originally recorded for, it writes down that asset’s recorded value. Think of it like discovering a collectible is damaged and lowering its resale estimate; the write-down shows up as a loss in the accounts, reducing reported profit and equity and signaling to investors that expected future cash flows from that asset have weakened.
non-GAAP financial measures financial
"To supplement our consolidated financial statements... we use certain non-GAAP financial measures, as described below, to evaluate our ongoing operations"
Non-GAAP financial measures are numbers companies use to show their financial performance that exclude certain expenses or income. They help investors see how the company might perform without one-time costs or other unusual items, giving a different perspective from official reports. However, since they can be adjusted, they don’t always tell the full story and should be looked at alongside standard financial figures.
forward-looking statements regulatory
"This press release and the earnings call referencing this press release contain “forward-looking statements,” as that term is defined under federal securities laws"
Forward-looking statements are predictions or plans that companies share about what they expect to happen in the future, like estimating sales or profits. They matter because they help investors understand a company's outlook, but since they are based on guesses and assumptions, they can sometimes be wrong.
Revenue $508,238 thousand +17% year-over-year
GAAP net loss $346,927 thousand worse than $77,907 thousand loss in Q1 2025
Adjusted EBITDA $138,280 thousand up from $83,943 thousand; margin 27% vs 19%
Adjusted EPS $0.23 slightly down from $0.24
Free cash flow $66,457 thousand up from $7,308 thousand
Guidance

For Q2 2026, Unity expects total revenue of $505–$515 million, strategic revenue of $455–$465 million, and adjusted EBITDA of $130–$135 million.

Understanding 8-K Material Events →
FALSE000181080600018108062026-05-072026-05-07

UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 8-K
CURRENT REPORT
Pursuant to Section 13 or 15(d)
of the Securities Exchange Act of 1934
Date of Report (Date of earliest event reported): May 7, 2026
UNITY SOFTWARE INC.
(Exact name of registrant as specified in its charter)
Delaware001-3949727-0334803
(State or other jurisdiction
of incorporation)		(Commission File Number)(I.R.S. Employer
Identification No.)
116 New Montgomery Street
San Francisco, California 94105-3607
(Address, including zip code, of principal executive offices)
(415) 638-9950
(Registrant's telephone number, including area code)
Not applicable
(Former name or former address, if changed since last report)
Check the appropriate box below if the Form 8-K filing is intended to simultaneously satisfy the filing obligation of the registrant under any of the following provisions (see General Instruction A.2. below):
☐
Written communications pursuant to Rule 425 under the Securities Act (17 CFR 230.425)
☐
Soliciting material pursuant to Rule 14a-12 under the Exchange Act (17 CFR 240.14a-12)
☐
Pre-commencement communications pursuant to Rule 14d-2(b) under the Exchange Act (17 CFR 240.14d-2(b))
☐
Pre-commencement communications pursuant to Rule 13e-4(c) under the Exchange Act (17 CFR 240.13e-4(c))
Securities registered pursuant to Section 12(b) of the Act:
Title of each classTrading Symbol(s)Name of each exchange on which registered
Common stock, $0.000005 par valueUThe New York Stock Exchange
Indicate by check mark whether the registrant is an emerging growth company as defined in Rule 405 of the Securities Act of 1933 (§230.405 of this chapter) or Rule 12b-2 of the Securities Exchange Act of 1934 (§240.12b-2 of this chapter).
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. ☐


Item 2.02    Results of Operations and Financial Condition.
On May 7, 2026, Unity Software Inc. (“Unity” or the “Company”) issued a press release announcing its financial results for the quarter ended March 31, 2026. A copy of the press release is attached as Exhibit 99.1 to this Current Report on Form 8-K and is incorporated herein by reference. The Company also posted supplemental material dated May 7, 2026, on the Investor Relations page of its website at investors.unity.com.
The information in this Item 2.02 of this Current Report on Form 8-K and the exhibit attached hereto as 99.1 shall not be deemed “filed” for purposes of Section 18 of the Securities Exchange Act of 1934, as amended (the "Exchange Act"), or otherwise subject to the liabilities of that section, nor shall it be deemed incorporated by reference into any filing under the Securities Act of 1933, as amended, or the Exchange Act, regardless of any general incorporation language in such filing, except as shall be expressly set forth by specific reference in such filing.
Item 9.01    Financial Statements and Exhibits.
(d) Exhibits.
Exhibit Number
Description of Exhibit
99.1
Press Release dated May 7, 2026 of Unity Software Inc.
104Cover Page Interactive Data File (embedded within the Inline XBRL document)


SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934, as amended, the registrant has duly caused this report to be signed on its behalf by the undersigned hereunto duly authorized.
UNITY SOFTWARE INC.
Date: May 7, 2026
By:/s/ Jarrod Yahes
Jarrod Yahes
Senior Vice President, Chief Financial Officer
(Principal Financial Officer)


Exhibit 99.1
unitylogo.jpg
Unity Reports First Quarter 2026 Financial Results
SAN FRANCISCO, May 7, 2026 -- Unity (NYSE: U), the world’s leading game engine, today announced financial results for the first quarter ended March 31, 2026.
“We are delivering exceptional revenue growth and margin expansion while executing on the most exciting product roadmap in Unity’s history,” said Matt Bromberg, President & CEO of Unity. “More games, more creators, and more game discovery are all fueling the growth in our business”.
Select revenue highlights for Q1 2026 are as follows:
Three Months Ended March 31,
20262025
YoY Change
Total Revenue$508,238$435,00017%
Strategic Grow Revenue$278,681$186,93449%
Strategic Create Revenue$153,734$133,30915%
Total Strategic Revenue$432,415$320,24335%
Non-Strategic Revenue1$75,823$114,757(34)%
Q2 2026 Guidance2
•Total Revenue of $505 million to $515 million.
•Strategic Revenue of $455 million to $465 million, up 29% - 32% year-over-year
◦Strategic Grow Revenue of $302 million to $306 million, up 50% - 52% year-over-year
◦Strategic Create Revenue of $154 million to $158 million up 11% - 14% year-over-year, when excluding the impact of a $12 million one-time revenue item in the second quarter of 2025.
•Adjusted EBITDA of $130 million to $135 million, up 44% - 49% year-over-year
1 Consists primarily of revenue from (i) our ironSource Ad network, which was sunsetted effective April 30, 2026, and (ii) our Supersonic publishing business which we intend to divest.

2 These statements are forward-looking and actual results may differ materially. Refer to the “Forward-Looking Statements” safe harbor section below for information on the factors that could cause our actual results to differ materially from these forward-looking statements.
We have not reconciled our estimates for non-GAAP financial measures in this press release and in the earnings call referencing this press release to GAAP due to the uncertainty and potential variability of expenses that may be incurred in the future. As a result, a reconciliation is not available without unreasonable effort and we are unable to address the probable significance of the unavailable information. We have provided a reconciliation of other GAAP to non-GAAP financial measures in the financial statement tables for our first quarter non-GAAP results included in this press release.
© 2026 Unity Technologies
U N I T Y . C O M|
1

Earnings Webcast
Unity will hold a public webcast at 8:30 a.m. ET today to discuss the results for its first quarter 2026. The live public webcast can be accessed on Unity’s Investor Relations website at https://investors.unity.com. The webcast replay will also be available on the site.
First Quarter 2026 Results:
Total Revenue Highlights:
•Revenue was $508 million, compared to $435 million in the first quarter 2025.
•Create Solutions revenue was $157 million, compared to $150 million in the first quarter 2025.
•Grow Solutions revenue was $352 million, compared to $285 million in the first quarter 2025.
Profitability Highlights:
•GAAP net loss was $347 million, with a margin of (68)%; GAAP basic and diluted net loss per share was $0.80.
•Adjusted EBITDA was $138 million, with a margin of 27%; adjusted EPS was $0.23.
•Net cash provided by operating activities was $71 million; free cash flow was $66 million.
Revenue
Revenue was $508 million, up 17% year-over-year. Strategic revenue was $432 million, up 35% year-over-year.
Create Solutions revenue was $157 million, up 4% year-over-year. The increase was driven by increases in subscription revenue, partially offset by decreases in cloud and hosting services revenue, driven by our portfolio reset in 2025.
Grow Solutions revenue was $352 million, up 24% year-over-year. The change was due to growth in the Unity Ad Network, driven by “Unity Vector”, partially offset by decreases in the IronSource Ad Network.
Basic and Diluted Net Loss per share
Basic and diluted net loss per share was $0.80, as compared to $0.19 for the same period in 2025.
Net Loss and Net Cash Provided by Operating Activities
Net Loss for the quarter was $347 million, which includes $279 million of impairment charges, related to the sunset of the ironSource Ads Network, and planned divestiture of our Supersonic game publishing business. This compares to a net loss of $78 million in the first quarter of 2025.
Net Loss margin was (68)%, compared to (18)% in the first quarter of 2025.
Net cash provided by operating activities for the quarter was $71 million, compared to $13 million in the first quarter of 2025.
Adjusted EBITDA, Free Cash Flow, and Adjusted EPS
Adjusted EBITDA for the quarter was $138 million, with a margin of 27%, compared to $84 million in the first quarter of 2025, with a margin of 19%. The year-over-year improvement was driven by higher revenue and continued cost control.
Free cash flow for the quarter was $66 million, compared to $7 million in the first quarter of 2025.
Adjusted EPS for the quarter was $0.23, compared to $0.24 in the first quarter of 2025.
© 2026 Unity Technologies
U N I T Y . C O M|
2

Liquidity
As of March 31, 2026, our cash and cash equivalents, and restricted cash was $2,146 million, and increased by $82 million, as compared with $2,064 million as of December 31, 2025. This increase was primarily driven by our operations.
About Unity
Unity [NYSE: U] 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. For more information, visit Unity.com.
© 2026 Unity Technologies
U N I T Y . C O M|
3

UNITY SOFTWARE INC.
CONDENSED CONSOLIDATED BALANCE SHEETS
(In thousands, except per share data)
(Unaudited)
As of
March 31, 2026December 31, 2025
Assets
Current assets:
Cash and cash equivalents$2,140,861 $2,055,840 
Accounts receivable, net654,003 643,611 
Prepaid expenses and other128,467 113,012 
Total current assets2,923,331 2,812,463 
Property and equipment, net54,314 68,289 
Goodwill3,166,304 3,166,304 
Intangible assets, net262,624 650,544 
Other assets115,168 140,006 
Total assets$6,521,741 $6,837,606 
Liabilities and stockholders' equity
Current liabilities:
Accounts payable$8,648 $13,981 
Accrued expenses and other313,155 299,541 
Publisher payables393,016 431,494 
Deferred revenue229,506 224,405 
Current portion of convertible notes556,810 556,451 
Total current liabilities1,501,135 1,525,872 
Convertible notes1,679,560 1,678,899 
Long-term deferred revenue16,831 14,038 
Other long-term liabilities83,091 122,660 
Total liabilities3,280,617 3,341,469 
Commitments and contingencies
Redeemable noncontrolling interests259,168 252,637 
Stockholders' equity:
Common stock, $0.000005 par value:
Authorized shares - 1,000,000 and 1,000,000
Issued and outstanding shares - 436,401 and 432,860
2 2 
Additional paid-in capital7,461,858 7,378,295 
Accumulated other comprehensive loss257 (2,156)
Accumulated deficit(4,486,319)(4,138,709)
Total Unity Software Inc. stockholders' equity2,975,798 3,237,432 
Noncontrolling interest6,158 6,068 
Total stockholders' equity2,981,956 3,243,500 
Total liabilities and stockholders' equity$6,521,741 $6,837,606 
© 2026 Unity Technologies
U N I T Y . C O M|
4

UNITY SOFTWARE INC.
CONSOLIDATED STATEMENTS OF OPERATIONS AND COMPREHENSIVE LOSS
(In thousands, except per share amounts)
(Unaudited)
Three Months Ended
March 31,
20262025
Revenue$508,238 $435,000 
Cost of revenue351,637 113,957 
Gross profit156,601 321,043 
Operating expenses
Research and development254,425 220,625 
Sales and marketing195,377 162,013 
General and administrative58,212 66,340 
Total operating expenses508,014 448,978 
Loss from operations(351,413)(127,935)
Interest expense(6,020)(5,891)
Interest income and other income (expense), net3,464 58,111 
Loss before income taxes(353,969)(75,715)
Provision for (benefit from) Income taxes(7,042)2,192 
Net loss(346,927)(77,907)
Net income (loss) attributable to noncontrolling interest and redeemable noncontrolling interests683 (265)
Net loss attributable to Unity Software Inc.(347,610)(77,642)
Basic and diluted net loss per share attributable to Unity Software Inc.$(0.80)$(0.19)
Weighted-average shares used in computation of basic and diluted net loss per share434,255 411,852 
Net loss(346,927)(77,907)
Change in foreign currency translation adjustment3,048 1,178 
Comprehensive loss$(343,879)$(76,729)
Net income (loss) attributable to noncontrolling interest and redeemable noncontrolling interests683 (265)
Foreign currency translation attributable to noncontrolling interest and redeemable noncontrolling interests635 254 
Comprehensive income (loss) attributable to noncontrolling interest and redeemable noncontrolling interests1,318 (11)
Comprehensive loss attributable to Unity Software Inc.$(345,197)$(76,718)
© 2026 Unity Technologies
U N I T Y . C O M|
5

UNITY SOFTWARE INC.
CONSOLIDATED STATEMENTS OF CASH FLOWS
(In thousands)
(Unaudited)
Three Months Ended
March 31,
20262025
Operating activities
Net loss$(346,927)$(77,907)
Adjustments to reconcile net loss to net cash provided by operating activities:
Depreciation and amortization127,255 96,217 
Stock-based compensation expense77,165 98,790 
Gain on repayment of convertible note— (42,744)
Impairment of intangible assets270,506 — 
Impairment of property and equipment8,422 3,470 
Impairment of investments15,000 — 
Other1,469 (218)
Changes in assets and liabilities, net of effects of acquisitions:
Accounts receivable, net(10,196)21,022 
Prepaid expenses and other(18,398)(10,602)
Other assets9,334 10,023 
Accounts payable(5,238)2,198 
Accrued expenses and other13,960 (21,029)
Publisher payables(38,478)(55,155)
Other long-term liabilities(39,947)(10,919)
Deferred revenue7,359 (120)
Net cash provided by operating activities71,286 13,026 
Investing activities
Purchases of non-marketable investments— — 
Purchases of intangible assets— — 
Purchases of property and equipment(4,829)(5,718)
Net cash used in investing activities(4,829)(5,718)
Financing activities
Proceeds from issuance of convertible notes— 690,000 
Purchase of capped calls— (44,436)
Payment of debt issuance costs— (13,236)
Repayments of convertible note— (641,691)
Proceeds from issuance of common stock upon exercise of stock options and purchase of ESPP shares11,643 21,611 
Net cash provided by financing activities11,643 12,248 
Effect of foreign exchange rate changes on cash, cash equivalents, and restricted cash3,688 4,197 
Increase in cash, cash equivalents, and restricted cash81,788 23,753 
Cash, cash equivalents, and restricted cash, beginning of period2,064,301 1,527,881 
Cash, cash equivalents, and restricted cash, end of period$2,146,089 $1,551,634 
© 2026 Unity Technologies
U N I T Y . C O M|
6

About Non-GAAP Financial Measures
To supplement our consolidated financial statements prepared and presented in accordance with generally accepted accounting principles in the United States (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.
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.
We define adjusted EBITDA as GAAP 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 EBITDA margin as adjusted EBITDA as a percentage of revenue. 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 cost of revenue as GAAP cost of revenue, excluding expenses associated with stock-based compensation, amortization and impairment of acquired intangible assets, depreciation, and restructurings and reorganizations. We define adjusted research and development expense as research and development expense, excluding expenses associated with stock-based compensation, amortization and impairment of acquired intangible assets, depreciation, and restructurings and reorganizations. We define adjusted sales and marketing expense as GAAP sales and marketing expense, excluding expenses associated with stock-based compensation, amortization and impairment of acquired intangible assets, depreciation, and restructurings and reorganizations. We define adjusted general and administrative expense as general and administrative expense excluding expenses associated with stock-based compensation, depreciation, and restructurings and reorganizations. We define free cash flow as net cash provided by operating activities less cash used for purchases of property and equipment.
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.
© 2026 Unity Technologies
U N I T Y . C O M|
7

UNITY SOFTWARE, INC.
Non-GAAP Reconciliation
(In thousands)
Three Months Ended
March 31,
20262025
Adjusted EBITDA reconciliation
Revenue$508,238 $435,000 
GAAP net loss$(346,927)$(77,907)
Add:
Stock-based compensation expense$76,869 $95,316 
Amortization of intangible assets expense$117,414 $85,650 
Depreciation expense$9,841 $10,567 
Impairment of intangible assets$278,666 $— 
Restructuring and reorganization costs$6,903 $20,345 
Interest expense$6,020 $5,891 
Interest income and other income (expense), net$(3,464)$(58,111)
Provision for (benefit from) income taxes$(7,042)$2,192 
Adjusted EBITDA$138,280 $83,943 
GAAP net loss margin(68)%(18)%
Adjusted EBITDA margin27 %19 %
Adjusted gross profit reconciliation
GAAP gross profit$156,601 $321,043 
Add:
Stock-based compensation expense7,382 9,112 
Amortization of intangible assets expense27,069 26,700 
Depreciation expense1,631 1,714 
Impairment of intangible assets226,516 — 
Restructuring and reorganization costs(53)534 
Adjusted gross profit$419,146 $359,103 
GAAP gross margin31%74%
Adjusted gross margin82%82%
Operating expenses reconciliation
Cost of revenue
GAAP cost of revenue$351,637 $113,957 
Stock-based compensation expense(7,382)(9,112)
Amortization of intangible assets expense(27,069)(26,700)
Depreciation expense(1,631)(1,714)
Impairment of intangible assets(226,516)— 
Restructuring and reorganization costs53 (534)
Adjusted cost of revenue$89,092 $75,897 
GAAP cost of revenue as a percentage of revenue69%26%
Adjusted cost of revenue as a percentage of revenue18%18%
© 2026 Unity Technologies
U N I T Y . C O M|
8

UNITY SOFTWARE, INC.
Non-GAAP Reconciliation
(In thousands)
Three Months Ended
March 31,
20262025
Research and development
GAAP research and development expense$254,425 $220,625 
Stock-based compensation expense(38,628)(50,595)
Amortization of intangible assets expense(51,378)(16,530)
Depreciation expense(4,792)(5,266)
Impairment of intangible assets(3,998)— 
Restructuring and reorganization costs(3,576)(8,346)
Adjusted research and development expense$152,053 $139,888 
GAAP research and development expense as a percentage of revenue50%51%
Adjusted research and development expense as a percentage of revenue30%32%
Sales and marketing
GAAP sales and marketing expense$195,377 $162,013 
Stock-based compensation expense(14,172)(16,486)
Amortization of intangible assets expense(38,967)(42,420)
Depreciation expense(2,013)(2,154)
Impairment of intangible assets(46,969)— 
Restructuring and reorganization costs(2,314)(7,900)
Adjusted sales and marketing expense$90,942 $93,053 
GAAP sales and marketing expense as a percentage of revenue38%37%
Adjusted sales and marketing expense as a percentage of revenue18%21%
General and administrative
GAAP general and administrative expense$58,212 $66,340 
Stock-based compensation expense(16,687)(19,123)
Depreciation expense(1,405)(1,433)
Impairment of intangible assets(1,183)— 
Restructuring and reorganization costs(1,066)(3,565)
Adjusted general and administrative expense$37,871 $42,219 
GAAP general and administrative expense as a percentage of revenue12%15%
Adjusted general and administrative expense as a percentage of revenue7%10%
© 2026 Unity Technologies
U N I T Y . C O M|
9

UNITY SOFTWARE, INC.
Non-GAAP Reconciliation
(In thousands)
Three Months Ended
March 31,
20262025
Adjusted EPS reconciliation
GAAP net loss$(346,927)$(77,907)
Stock-based compensation expense76,869 95,316 
Amortization of intangible assets expense117,414 85,650 
Depreciation expense9,841 10,567 
Impairment of intangible assets278,666 — 
Restructuring and reorganization costs6,903 20,345 
Income tax impact of adjusting items(37,534)(27,764)
Adjusted net income used for calculation of adjusted EPS, before impact of dilutive instruments$105,232 $106,207 
Increase from forgone financing costs on dilutive convertible notes, net of tax4,668 4,597 
Adjusted net income used for calculation of adjusted EPS, including impact of dilutive instruments$109,900 $110,804 
Weighted-average common shares used in GAAP diluted net loss per share attributable to Unity Software Inc.434,255 411,852 
Convertible notes41,348 30,494 
Stock options and PVOs2,941 6,863 
Unvested RSUs, PVUs, and PSUs6,805 5,166 
ESPP127 650 
Non-GAAP weighted-average common shares used in adjusted EPS485,476 455,025 
GAAP diluted net loss per share attributable to Unity Software Inc.(0.80)(0.19)
Total impact on diluted net loss per share attributable to Unity Software Inc. from non-GAAP adjustments1.04 0.45 
Total impact on diluted net loss per share attributable to Unity Software Inc. from antidilutive common stock now included(0.01)(0.02)
Adjusted EPS0.23 0.24 
Free cash flow reconciliation
Net cash provided by operating activities$71,286 $13,026 
Less:
Purchases of property and equipment(4,829)(5,718)
Free cash flow66,457 7,308 
Net cash used in investing activities(4,829)(5,718)
Net cash provided by financing activities11,643 12,248 
© 2026 Unity Technologies
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Cautionary Statement Regarding Forward-Looking Statements
This press release and the earnings call referencing this press release contain “forward-looking statements,” as that term is defined under federal securities laws, including statements regarding Unity’s outlook and future financial performance, including, but not limited to: (i) Unity’s ability to further enhance its platform, accelerate product innovation and enhance financial performance; (ii) expectations regarding Vector, including expectations regarding Vector’s improvements and performance and the expansion of Vector across both Create and Grow solutions; (iii) our strategic initiatives, including our continued investment and focus on artificial intelligence tools; (iv) expectations regarding Vector leveraging behavioral data available through Unity Runtime, including expectations of multi-year growth of the product portfolio and its impact on financial results; (v) statements regarding our product roadmap, products, projects, technology and ongoing product development; (vi) expectations regarding growth of Vector and its impact on Unity’s overall growth prospects, as well as revenue mix; (vii) statements regarding industry trends and business model evolution; (viii) statements regarding our market opportunity; (ix) expectations regarding our competitive position and growth prospects; (x) expectations regarding improvements in operating margins; (xi) expectations regarding future profitability, including our expectation to become GAAP profitable by the fourth quarter of 2026; (xii) plans to pay off future obligations; and (xiii) Unity’s financial guidance for future periods. The words “aim,” “believe,” “may,” “will,” “estimate,” “continue,” “intend,” “expect,” “plan,” “project,” and similar expressions are intended to identify forward-looking statements. These forward-looking statements are subject to risks, uncertainties, and assumptions. If the risks materialize or assumptions prove incorrect, actual results could differ materially from the results implied by these forward-looking statements. Risks include, but are not limited to, those related to: (i) the impact of macroeconomic conditions, such as inflation, high interest rates, tariffs, sanctions and trade barriers, and limited credit availability which could further cause economic uncertainty and volatility; (ii) Unity’s ability to compete effectively; (iii) adverse changes in the geopolitical relationship between the U.S. and China; (iv) Unity’s ability to develop, deploy, maintain, manage, or commercialize artificial intelligence-enabled products; (v) Unity’s ability to address issues raised by the development or use of artificial intelligence in its offerings, or the use of artificial intelligence by its customers, personnel, vendors and competitors; (vii) Unity’s ability to execute its plans to realign its business and to right-size its investments, including the sunset of the ironSource Ads Network and the planned divestiture of its Supersonic game publishing business; (vii) the impact of any decisions to change how Unity prices its products and services; (viii) Unity’s ability to achieve and sustain profitability; (ix) Unity’s ability to retain existing customers and expand the use of its platform, or attract new customers; (x) Unity’s ability to further expand into adjacent business areas or new industries; (xi) the impact of any changes of terms of service, policies or technical requirements from operating system platform providers or application stores which may result in changes to Unity or its customers’ business practices; (xii) Unity’s ability to maintain favorable relationships with hardware, operating system, device, game console and other technology providers; (xiii) breaches in its security measures, unauthorized access to its platform, data, or its customers’ or other users’ personal data; (xiv) Unity’s ability to manage growth effectively and manage costs effectively; (xv) the rapidly changing and increasingly stringent laws, regulations, contractual obligations and industry standards that relate to privacy, data security and the protection of children; (xvi) Unity’s ability to attract, manage and retain its talent; (xvii) Unity’s ability to adapt effectively to rapidly changing technology, evolving industry standards, changing regulations, or changing customer needs, requirements, or preferences; and (xviii) the effectiveness of Vector. Further information on these and additional risks that could affect our results is included in our filings with the Securities and Exchange Commission (SEC), including our Annual Report on Form 10-K filed with the SEC on February 11, 2026 and our future reports that we may file with the SEC from time to time, which could cause actual results to vary from expectations. Copies of reports filed with the SEC are available on the Unity Investor Relations website. Statements herein speak only as of the date of this release, and Unity assumes no obligation to, and does not currently intend to, update any such forward looking statements after the date of this release except as required by law.
© 2026 Unity Technologies
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Contacts:
Investor Relations:
Alex Giaimo, Head of Investor Relations
alex.giaimo@unity3d.com

Media Relations:
UnityComms@unity3d.com

Source: Unity Software Inc.
© 2026 Unity Technologies
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Source: View Original Filing on SEC EDGAR

FAQ

How did Unity (U) perform financially in Q1 2026?

Unity reported Q1 2026 revenue of $508 million, up 17% year-over-year. GAAP net loss was $347 million, mainly due to impairment charges, while adjusted EBITDA improved to $138 million with a 27% margin, reflecting stronger underlying profitability.

What were Unity’s key revenue drivers in Q1 2026?

Unity’s Grow Solutions revenue increased to $352 million from $285 million, and Create Solutions revenue rose to $157 million from $150 million. Total strategic revenue reached $432 million, up 35% year-over-year, highlighting momentum in the company’s core growth areas.

Why was Unity’s GAAP net loss so high in Q1 2026?

Unity’s GAAP net loss of $347 million included $279 million of impairment charges. These were related to sunsetting the ironSource Ads Network and the planned divestiture of the Supersonic publishing business, significantly impacting reported profitability despite stronger operating performance.

What guidance did Unity provide for Q2 2026?

For Q2 2026, Unity guided to total revenue of $505–$515 million and strategic revenue of $455–$465 million. The company also expects adjusted EBITDA of $130–$135 million, implying continued revenue growth and further expansion of adjusted profitability versus the prior year period.

How is Unity’s cash position and liquidity as of March 31, 2026?

As of March 31, 2026, Unity had $2,146 million in cash, cash equivalents, and restricted cash, up from $2,064 million at December 31, 2025. The increase was primarily driven by operations, supported by $71 million of net cash provided by operating activities in the quarter.

What non-GAAP metrics does Unity highlight for Q1 2026?

Unity emphasized adjusted EBITDA of $138 million with a 27% margin, adjusted gross margin of 82%, free cash flow of $66 million, and adjusted EPS of $0.23. These non-GAAP metrics exclude stock-based compensation, amortization, impairments, restructuring costs, and certain tax effects.

What strategic changes affected Unity’s Q1 2026 results?

Unity’s results reflect strategic actions including sunsetting the ironSource Ads Network effective April 30, 2026, and planning to divest the Supersonic publishing business. These shifts contributed to significant impairment charges but are part of the company’s broader portfolio realignment.

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