second quarter 2026
Filed Aug 6, 2026Unity Reports Second Quarter 2026 Financial Results
Revenue increased 24% year-over-year, Strategic Revenue increased 38%, adjusted EBITDA increased to $160 million from $90 million, and free cash flow increased to $202 million from $127 million. GAAP net loss narrowed to $23 million from $107 million.
Key metrics
as reported| Metric | Value | q/q | y/y |
|---|---|---|---|
| Total revenueGAAP | $546,468 (in thousands) | – | 24% |
| Strategic Revenueother | $486,411 (in thousands) | – | 38% |
| Non-Strategic Revenueother | $60,057 (in thousands) | – | (33)% |
| Cost of revenueGAAP | 111,709 (in thousands) | – | – |
| Gross profitGAAP | 434,759 (in thousands) | – | – |
| Research and development expenseGAAP | 278,275 (in thousands) | – | – |
| Sales and marketing expenseGAAP | 132,368 (in thousands) | – | – |
| General and administrative expenseGAAP | 56,335 (in thousands) | – | – |
| Total operating expensesGAAP | 466,978 (in thousands) | – | – |
| Loss from operationsGAAP | (32,219) (in thousands) | – | – |
| Loss before income taxesGAAP | (20,310) (in thousands) | – | – |
| Provision for (benefit from) income taxesGAAP | 2,362 (in thousands) | – | – |
| Net lossGAAP | $(22,672) (in thousands) | – | – |
| Net loss marginGAAP | (4)% | – | – |
| Net loss attributable to Unity Software Inc.GAAP | (23,606) (in thousands) | – | – |
| Basic and diluted net loss per share attributable to Unity Software Inc.GAAP | $(0.05) | – | – |
| Weighted-average shares used in computation of basic and diluted net loss per shareGAAP | 437,898 | – | – |
| Adjusted EBITDAnon-GAAP | $160 million | – | – |
| Adjusted EBITDA marginnon-GAAP | 29% | – | – |
| Adjusted EPSnon-GAAP | $0.28 | – | – |
| Net cash provided by operating activitiesGAAP | $205,622 (in thousands) | – | – |
| Free cash flownon-GAAP | $202 million | – | – |
| Six Months Ended June 30 revenueGAAP | $1,054,706 (in thousands) | – | – |
| Six Months Ended June 30 gross profitGAAP | 591,360 (in thousands) | – | – |
| Six Months Ended June 30 loss from operationsGAAP | (383,632) (in thousands) | – | – |
| Six Months Ended June 30 net lossGAAP | $(369,599) (in thousands) | – | – |
| Six Months Ended June 30 basic and diluted net loss per share attributable to Unity Software Inc.GAAP | $(0.85) | – | – |
| Six Months Ended June 30 net cash provided by operating activitiesGAAP | $276,908 (in thousands) | – | – |
Segments
| Segment | Revenue | q/q | y/y |
|---|---|---|---|
| Strategic Grow RevenueGrowth in the Unity Ads Network, driven by “Unity Vector”, partially offset by decreases in the ironSource Ads Network. | $328,955 (in thousands) | – | 63% |
| Strategic Create RevenueYoY Change was 14% when excluding the impact of a $12 million one-time revenue item in the second quarter of 2025. | $157,456 (in thousands) | – | 5% |
| Create Solutions revenueIncreases in subscription revenue, partially offset by decreases in cloud and hosting services revenue, driven by the portfolio reset in 2025. | $158 million | – | 2% |
| Grow Solutions revenueGrowth in the Unity Ads Network, driven by “Unity Vector”, partially offset by decreases in the ironSource Ads Network. | $389 million | – | 35% |
| Non-Strategic RevenueConsists primarily of revenue from the ironSource Ads network, which was sunset effective April 30, 2026, and the Supersonic publishing business which was sold on August 4, 2026. | $60,057 (in thousands) | – | (33)% |
Q3 2026 outlook
- RevenueStrategic Revenue of $540 million to $550 million, up 44% - 47% year-over-year; Non-Strategic Revenue of $20 million
- NoteStrategic Grow Revenue of $380 million to $385 million, up 68% - 70% year-over-year
- NoteStrategic Create Revenue of $159 million to $163 million up 7% - 10% year-over-year
- NoteAdjusted EBITDA of $185 million to $190 million, up 69% - 74% year-over-year
- NoteNon-Strategic Revenue incorporates approximately one month of revenue from the Supersonic business, which was sold on August 4, 2026.
What drove it
- Total revenue was $546 million, up 24% year-over-year.
- Strategic revenue was $486 million, up 38% year-over-year.
- Create Solutions growth reflected increases in subscription revenue.
- Grow Solutions growth reflected Unity Ads Network growth driven by “Unity Vector”.
- Adjusted EBITDA year-over-year improvement was driven by higher revenue and continued cost control.
- Cash and cash equivalents, and restricted cash increased primarily driven by operations.
Concerns
- Non-Strategic Revenue declined (33)% year-over-year to $60,057 (in thousands).
- Cloud and hosting services revenue declined, driven by the portfolio reset in 2025.
- Grow Solutions revenue was partially offset by decreases in the ironSource Ads Network.
- The ironSource Ads network was sunset effective April 30, 2026.
- Supersonic publishing business was sold on August 4, 2026.
- The six months ended June 30, 2026 included impairment of intangible assets of 270,506 (in thousands) and impairment of investments of 15,000 (in thousands).
What to watch
- Q3 2026 Strategic Revenue guidance of $540 million to $550 million.
- Q3 2026 Strategic Grow Revenue guidance of $380 million to $385 million.
- Q3 2026 Strategic Create Revenue guidance of $159 million to $163 million.
- Q3 2026 Non-Strategic Revenue guidance of $20 million, which incorporates approximately one month of Supersonic revenue.
- Q3 2026 adjusted EBITDA guidance of $185 million to $190 million.
- Subscription revenue growth and cloud and hosting services revenue following the portfolio reset in 2025.
- Unity Ads Network growth driven by “Unity Vector” following the sunset of the ironSource Ads network.
Balance sheet and cash flow
- Cash and cash equivalents were $2,351,987 (in thousands) as of June 30, 2026, compared with $2,055,840 (in thousands) as of December 31, 2025.
- Cash and cash equivalents, and restricted cash was $2,357 million as of June 30, 2026, and increased by $293 million as compared with $2,064 million as of December 31, 2025.
- Cash, cash equivalents, and restricted cash, end of period was $2,357,121 (in thousands), compared with $1,701,507 (in thousands).
- Current portion of convertible notes was $557,173 (in thousands) as of June 30, 2026, compared with $556,451 (in thousands) as of December 31, 2025.
- Convertible notes were $1,680,229 (in thousands) as of June 30, 2026, compared with $1,678,899 (in thousands) as of December 31, 2025.
- Total assets were $6,661,262 (in thousands) as of June 30, 2026, compared with $6,837,606 (in thousands) as of December 31, 2025.
- Total liabilities were $3,354,369 (in thousands) as of June 30, 2026, compared with $3,341,469 (in thousands) as of December 31, 2025.
- Net cash provided by operating activities was $205,622 (in thousands), compared with $133,096 (in thousands).
- Purchases of property and equipment were $(3,663) (in thousands), compared with $(6,446) (in thousands).
- Net cash used in investing activities was $(3,663) (in thousands), compared with $(8,446) (in thousands).
- Net cash provided by financing activities was $4,551 (in thousands), compared with $9,783 (in thousands).
- Increase in cash, cash equivalents, and restricted cash was $211,032 (in thousands), compared with $149,873 (in thousands).
Analysis
Unity reported Q2 2026 revenue of $546 million, up 24% year-over-year. Strategic Revenue was $486,411 (in thousands), up 38%, while Non-Strategic Revenue declined (33)% to $60,057 (in thousands). The strategic mix was led by Strategic Grow Revenue of $328,955 (in thousands), up 63%, and Strategic Create Revenue of $157,456 (in thousands), up 5%. The company separately reported Create Solutions revenue of $158 million, up 2%, and Grow Solutions revenue of $389 million, up 35%.
Create growth came from subscription revenue, partly offset by lower cloud and hosting services revenue resulting from the 2025 portfolio reset. Grow growth came from the Unity Ads Network, driven by “Unity Vector”, partly offset by lower ironSource Ads Network revenue. The difference in growth rates between the strategic revenue table and the Create and Grow Solutions highlights is reported in the release and should be monitored alongside the continuing runoff in Non-Strategic Revenue.
Profitability improved substantially in the quarter. GAAP net loss narrowed to $23 million from $107 million and net loss margin improved to (4)% from (24)%. Loss from operations was (32,219) (in thousands), compared with (118,752) (in thousands). Adjusted EBITDA increased to $160 million from $90 million, with margin expanding to 29% from 21%, which Unity attributed to higher revenue and continued cost control. Operating cash flow increased to $206 million from $133 million and free cash flow increased to $202 million from $127 million.
Liquidity increased, with cash and cash equivalents, and restricted cash of $2,357 million as of June 30, 2026, up by $293 million from December 31, 2025, primarily driven by operations. The balance sheet reported a current portion of convertible notes of $557,173 (in thousands) and convertible notes of $1,680,229 (in thousands). No capital return activity was reported in the provided filing text.
For Q3 2026, Unity guided to Strategic Revenue of $540 million to $550 million, including Strategic Grow Revenue of $380 million to $385 million and Strategic Create Revenue of $159 million to $163 million. It also guided to Non-Strategic Revenue of $20 million and adjusted EBITDA of $185 million to $190 million. The Non-Strategic outlook incorporates approximately one month of Supersonic revenue following the sale of that business on August 4, 2026, while the ironSource Ads network was sunset effective April 30, 2026.
Management, verbatim
This was arguably the best quarter in Unity’s history as a public company.
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.
Matt Bromberg, President & CEO of Unity
Not in the filing
stated, not guessed- Prior-quarter comparisons for revenue, segments, profitability, EPS, operating cash flow, free cash flow, and other reported metrics were not provided.
- GAAP gross margin was not provided.
- GAAP operating margin was not provided.
- A GAAP-to-non-GAAP reconciliation for Q2 adjusted EBITDA, adjusted EPS, and free cash flow was not included in the provided filing text.
- Q3 2026 gross margin guidance, operating expense guidance, and tax-rate guidance were not provided.
- Prior-period outlook was not provided, so no comparison of actual results with prior guidance is available.
- Capital return activity, including share repurchases and dividends, was not reported in the provided filing text.
AlphAI analysis generated from the company’s SEC earnings filing (Form 8-K Item 2.02, or Form 6-K for a foreign private issuer). Every figure was cross-checked against the filing text; consensus estimates, price targets and share-price reactions are not shown because they are not in the filing. AI-generated research, not investment advice.