10-Q · May 7, 2026
Unity reported Q1 2026 earnings with revenue of $508.2 million, marking a 17% increase from $435 million a year earlier. Adjusted EPS was $0.23, down from $0.24 in the prior year, with a significant net loss of $347…
U earnings analysis
10-Q · Filed November 5, 2026 · Our reading of the company's report
The latest report
Unity reported a substantial improvement in operating performance, with revenue up 32.2% year over year to $622.092 million, gross margin rising to 82%, and GAAP operating income of $100.647 million. Grow Solutions,…
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Unity reported a substantial improvement in operating performance, with revenue up 32.2% year over year to $622.092 million, gross margin rising to 82%, and GAAP operating income of $100.647 million. Grow Solutions, particularly the Unity Ads Network and Unity Vector, drove growth, while cost reductions and lower amortization supported the first quarterly GAAP profit of $121.590 million. Cash generation and liquidity were strong, although the portfolio reset, dependence on MAX and AppLovin, restructuring costs, and execution of new AI products remain significant risks.
Gross and operating margin
How much of each revenue dollar the business keeps.
One point per quarterly or annual filing. Both margins are shares of that report's revenue.
From revenue to operating profit
Where each $100 of revenue went in this report.
Cost of sales, operating expenses, and what remained. Figures are rounded to whole dollars.
Where revenue came from
The business segments reported by the company.
Shares of the segments disclosed in this filing, largest first.
How we read each report
Our analysis across the last few reports.
Our model's reading of each filing, not the share price or the market's reaction. Annual and quarterly reports each occupy one position.
Reported figures
- Earnings per share
- $0.25
What stood out
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Revenue accelerated on Grow Solutions growth
Revenue was $622.092 million, up 32.2% from $470.615 million in the prior-year quarter and 13.9% from $546 million in Q2 2026. Grow Solutions increased to $457.022 million from $318.256 million, driven by Unity Vector and growth in the Unity Ads Network.
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Gross margin expanded sharply
GAAP gross margin expanded to 82% from 74% year over year and from 79.6% in Q2 2026. Gross profit increased to $509.587 million from $350.283 million.
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Unity delivered GAAP operating profit
GAAP operating income was $100.647 million versus a $125.856 million operating loss in the prior-year quarter; operating margin improved to 16% from negative 27%. The improvement reflected lower amortization, sales and marketing expense, and general and administrative costs.
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First quarterly GAAP profit
GAAP net income was $121.590 million, or $0.25 per diluted share, versus a $126.828 million net loss, or $(0.30) per share, in the prior-year quarter. Adjusted EPS was $0.44 versus $0.20 year over year.
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Cash generation remained strong
Nine-month operating cash flow rose to $500.869 million from $301.520 million, while nine-month free cash flow increased to $488.123 million from $285.249 million. Purchases of property and equipment were $12.746 million, indicating low capex intensity relative to revenue.
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Liquidity covers near-term debt needs
Cash and cash equivalents totaled $2.6 billion at September 30, 2026. Management stated that liquidity should cover at least the next 12 months, including repayment of the 2026 Notes at maturity in November 2026.
What to watch
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Portfolio reset caused major impairments
The portfolio reset and strategic exits remain material: nine-month non-strategic portfolio revenue declined to approximately $161 million from $299 million, while the company incurred $279 million of impairment charges, including $227 million in cost of revenue and $47 million in sales and marketing.
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Dependence on Unity Ads and MAX
Grow Solutions is increasingly concentrated in the Unity Ads Network; management expects it to comprise primarily Grow Solutions revenue by the end of 2026. The company also states that the majority of Grow Solutions revenue is mediated through MAX, creating reliance on AppLovin and its header bidding agreement.
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AppLovin dispute threatens ad distribution
AppLovin filed an arbitration claim on September 27, 2026, and the court denied its provisional injunction request on October 1, 2026. An adverse ruling or deterioration in the relationship could restrict access to MAX and materially affect revenue and results of operations.
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AI product execution risk
Unity identified rapid technological change and AI as competitive risks. The company announced Unity Spark in October 2026 and expects a closed beta later in 2026, but states that the product may not launch as anticipated or at all and may not generate significant revenue or become profitable.
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Long-term funding requirements remain
Despite $2.6 billion of cash, Unity had an accumulated deficit of $4.4 billion as of September 30, 2026. Management states it may need additional equity or debt financing sooner than anticipated depending on growth, investment needs, and capital-market conditions.
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Restructuring execution costs
Restructuring and strategic changes generated approximately $51 million of employee separation and other non-employee charges during the first nine months of 2026, primarily related to the planned closure of Unity France.
Management's outlook
The 10-Q does not provide quantitative revenue or EPS guidance. Management states that Grow Solutions revenue is expected to consist primarily of the Unity Ads Network by the end of 2026 and that existing liquidity is expected to fund working capital, capital expenditures, and repayment of the 2026 Notes for at least the next 12 months.
Earlier filings 4
10-K · February 11, 2026
Unity positions itself as a two-pronged platform (Create Solutions and Grow Solutions) focused on real‑time 2D/3D creation, AI-enabled tooling, and ad/monetization products (including Unity Vector). Q4 FY2025 showed…
10-Q · November 5, 2025
Unity reported Q3 revenue of $470,615,000, up $24,098,000 (+5.4%) versus Q3 2024, with gross profit of $350,283,000 (≈74.4% margin). Operating loss narrowed slightly to $(125,856,000) (operating margin -26.7%) while…
10-Q · August 6, 2025
Unity reported Q2 revenue of $440,944,000 and maintained a gross margin of 74.1%, while operating loss narrowed to $(118,752,000) and GAAP net loss attributable to Unity was $(108,798,000) (loss per share $(0.26)).…
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