Shares of Unity Software Inc. (NYSE: U) climbed sharply, rising about 17% after the companies second-quarter results exceeded Wall Street forecasts and management provided an upbeat outlook for the coming quarter.
The game engine developer posted an adjusted loss of $0.05 per share for Q2, outperforming the analyst consensus loss of $0.11 per share. Reported revenue was $546 million, a 24% increase from $441 million in the year-ago period and above the consensus revenue estimate of $514.62 million. The company also highlighted strategic revenue - a figure that excludes its ironSource Ads network and Supersonic publishing business - which rose 38% year-over-year to $486 million.
"This was arguably the best quarter in Unity’s history as a public company," said Matt Bromberg, President & CEO of Unity. "The ongoing success of Unity Vector AI, combined with the most exciting product roadmap in Unity’s history, is helping drive substantial value for creators, players, and shareholders."
For the third quarter, Unity provided revenue guidance in a range of $540 million to $550 million, with a midpoint of $545 million, which sits higher than the analyst consensus of $539.3 million. The company also projected adjusted EBITDA of $185 million to $190 million for Q3, reflecting year-over-year growth of roughly 69% to 74%.
Revenue performance by segment showed divergence. Grow Solutions revenue rose 35% year-over-year to $389 million, driven by the Unity Ads Network and Unity Vector AI. Create Solutions revenue increased 2% year-over-year to $158 million; that gain was led by subscription revenue increases but was partially offset by declines in cloud and hosting services.
Profitability and cash generation metrics improved meaningfully. Adjusted EBITDA for the quarter reached $160 million, representing a 29% margin, up from $90 million and a 21% margin in the second quarter of 2025. Free cash flow also expanded to $202 million, up from $127 million in the prior-year period.
Investors reacted positively to the combination of top-line outperformance, margin expansion and stronger cash flow, alongside managements confident near-term revenue and adjusted EBITDA guidance. The company emphasized product-driven growth from Unity Vector AI as a key contributor to the quarter's results.