Shares of Unity Software (NYSE:U) rose about 13% in after-hours trading following a preliminary results release in which the company said first-quarter revenue and adjusted EBITDA both came in ahead of its guidance.
Unity projected first-quarter revenue of $505 million to $508 million, above the company guidance range of $480 million to $490 million and topping the consensus estimate of $488.7 million. The company said this revenue range represents 17% growth compared with the same quarter a year earlier. Adjusted EBITDA was forecast at $130 million to $135 million, well above the guidance range of $105 million to $110 million and representing 58% year-over-year growth.
The company attributed the outperformance primarily to Unity Vector, which it expects to grow 15% sequentially in the first quarter, and to Create performing better than anticipated. Unity provided a breakdown indicating Grow revenue of approximately $352 million and Create revenue of approximately $155 million for the quarter.
Strategic business moves and segmentation
In parallel with reporting the stronger preliminary results, Unity said it will sunset the ironSource Ads Network effective April 30 and has engaged a financial advisor to pursue the divestiture of its Supersonic game publishing business. The company said management expects these actions to lead to faster revenue growth, higher Adjusted EBITDA, and improved Adjusted EBITDA margins.
Unity also quantified growth on a strategic basis: Strategic Grow revenue - which excludes contributions from the ironSource Ads Network and Supersonic - is expected to rise 48% year over year in the first quarter. That compares with the 24% year-over-year growth the company expects for total Grow. Strategic Create revenue is expected to increase 14% year over year in the quarter.
"Unity Vector continues to deliver robust growth each quarter, driving results meaningfully above our guidance. Today’s actions will accelerate Vector’s impact on our business, enhancing both revenue growth and profitability," said Matt Bromberg, President and CEO of Unity.
The company noted it expects minimal revenue contribution from the ironSource Ads Network after the first quarter of 2026.
Implications for investors and markets
Investors reacted positively to the preliminary results and the move to exit non-strategic advertising operations, sending the stock higher in after-hours trading. The reported beat on both top-line and adjusted EBITDA targets, coupled with management’s strategic carve-outs, underpinned the market response.
Unity’s disclosure included explicit segmentation of Grow and Create revenue and highlighted the outsized contribution expected from Unity Vector, reflecting the company’s emphasis on areas it views as strategic to future growth.
What remains unclear
The company released preliminary estimates and strategic intentions; final reported results and details of any transaction around Supersonic will depend on subsequent filings and the outcome of the sale process. Management’s expectation of minimal revenue from the ironSource Ads Network after the first quarter of 2026 is a forward-looking statement tied to the sunsetting plan.