Unity Software Inc (NYSE:U) reported second-quarter earnings on Wednesday that surpassed analyst expectations, but shares fell 2.9% following the release as investors focused on the company’s mixed guidance for the third quarter.
The gaming software platform posted adjusted earnings per share of $0.18 for the quarter ended June 30, 2025, significantly beating the analyst estimate of -$0.28.
Revenue came in at $440.9 million, exceeding the consensus estimate of $426.7 million, though it represented a 2% YoY decline from $449 million in the same quarter last year.
For the third quarter, Unity provided revenue guidance of $440-450 million, which at the midpoint of $445 million aligns with analyst expectations of $445.1 million.
The company’s Grow Solutions segment is expected to see mid-single digit sequential growth, while Create Solutions is projected to decline slightly following a large customer win in Q2.
"We believe the second quarter of 2025 will be remembered as an inflection point in the Unity story, where our commitment to accelerating product innovation and delivering for our customers translated to markedly better performance," said Matt Bromberg, President and CEO of Unity.
The company’s Create Solutions revenue grew 2% YoY to $154 million, driven by a $12 million term license sale and increased subscription revenue.
Meanwhile, Grow Solutions revenue declined 4% YoY to $287 million, though the Unity Ad Network showed strong performance with 15% sequential growth, now representing 49% of total Grow Solutions revenue.
Adjusted EBITDA for the quarter was $90 million with a margin of 21%, compared to $113 million and a 25% margin in the second quarter of 2024. Free cash flow improved to $127 million from $80 million in the year-ago period.
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