Unity Software (U) Q4 2025 earnings summary

Executive summary

• Fourth quarter 2025 revenue reached $503 million, up 10% year-over-year, surpassing guidance, driven by exceptional Vector and Create Solutions performance, with Vector achieving three consecutive quarters of mid-teen sequential revenue growth and January marking its best month ever.

• Net loss narrowed to $89 million from $123 million year-over-year, with net loss margin improving to (18)% from (27)%.

• Adjusted EBITDA rose to $125 million (25% margin), up from $106 million (23% margin) year-over-year.

• Vector revenue grew 53% in its first three quarters since launch and is expected to surpass a $1 billion annual run rate by end of 2026.

• The decline of the ironSource ad network is nearly complete, shifting revenue mix toward higher-margin, differentiated AI platform revenue.

Financial highlights

• Grow segment Q4 revenue: $338M, up 6% sequentially and 11% year-over-year, led by Vector, which represented 56% of Grow revenue in Q4.

• Create segment Q4 revenue: $165M, up 8% year-over-year, led by subscription growth; excluding non-strategic revenue, Create grew 16%.

• Adjusted EPS was $0.24, up from $0.20 year-over-year.

• Free cash flow grew 41% to $400M for 2025; Q4 free cash flow was $119M, with cash provided by operating activities at $121M.

• Stock-based compensation expense reduced by 19%, now 21% of revenue (down from 33%).

Outlook and guidance

• Q1 2026 revenue guidance: $480M–$490M; Adjusted EBITDA: $105M–$110M.

• Vector expected to grow 10% sequentially in Q1; Grow segment to return to sequential growth in Q2.

• Create segment forecasted for double-digit year-over-year growth in Q1, excluding non-strategic revenue.

• Adjusted EBITDA margins expected to expand 300 basis points year-over-year in Q1 and improve throughout 2026.