Unity Stock On Track To Hit 11-Month High After Its First GAAP Profit Since Going Public: CEO Says ‘Flywheel’ Is Kicking In

• Unity’s third-quarter revenue increased 32% to $622 million.
• Advertising was the main driver of growth with Vector, the company’s AI-powered advertising system, growing 126% year over year.
• The company forecast fourth-quarter revenue growth of 65% to 67% from continuing operations and expects advertising revenue to more than double.

Unity Software (U) shares jumped in premarket trading on Thursday after the gaming software company reported its first quarterly GAAP profit since going public in 2020, with a sharp increase in advertising revenue helping lift sales and earnings.

“Third-quarter performance was our strongest ever, with Vector growing 126% year-over-year and 40% quarter-over-quarter, and the first GAAP profitable quarter since our IPO,” CEO Matt Bromberg said. 

Read Next

Core Scientific's AI Business Now Accounts For 92% Of Its Total Revenue: CEO Says First Colocation Deal ‘Nearing Full Delivery’

Anushka Basu

Unity reported net income of $122 million for the third quarter (Q3), compared with a loss of $127 million in the prior year. Earnings per share (EPS) under generally accepted accounting principles (GAAP) came in at $0.25, five times the $0.05 expected by analysts, according to Koyfin data. Adjusted EPS was $0.44, above the $0.34 consensus estimate.

The results reflect what Bromberg described as the compounding effect of Unity’s business strategy, which connects game development tools with advertising and player discovery. 

“We are seeing the compounding impact of our flywheel strategy: more creators make more games on our platform, and more games fuel the need for more discovery through advertising.”

Matt Bromberg, Unity, CEO

U stock jumped over 17% in pre-market trade, rocketing to highs last seen in December 2026. 

Unity’s Advertising Business Drives Revenue Growth

Unity generates revenue through two main businesses. Its Create segment sells software tools that developers use to build games and other interactive experiences. Its Grow segment helps developers reach players through advertising and monetization services.

Advertising was the main driver of growth in Q3. Vector, Unity’s AI-powered advertising system, increased revenue 126% year over year and 40% from the previous quarter. Revenue from the broader Grow business rose 90% to $432 million, while Create revenue increased 11% to $165 million.

Total revenue climbed 32% to $622 million, exceeding analysts’ expectations of roughly $567 million. Growth would have been higher excluding businesses Unity has exited. The company shut down its ironSource ad network in the second quarter and sold its Supersonic game-publishing business in August. On a continuing-business basis, revenue increased 59%.

Adjusted earnings before interest, taxes, depreciation and amortization (EBITDA), a measure of operating profit, rose to $257 million from $109 million. Analysts had expected about $189 million. 

Lower operating expenses also contributed. Sales and marketing costs fell 38% from a year earlier, while free cash flow increased to $220 million from $151 million.

Unity Forecasts Faster Growth In Q4

Unity expects revenue from continuing operations to reach $683 million to $691 million in the fourth quarter (Q4), representing growth of 65% to 67% from a year earlier. That would mark an acceleration from the third quarter’s 59% growth on a same-basis.

The company expects advertising revenue to more than double, increasing 105% to 107% year over year. It forecast adjusted EBITDA of $290 million to $295 million.

Despite its return to quarterly GAAP profitability, Unity remains in the red for the year to date. The company reported a net loss of $248 million for the first nine months, largely reflecting a $271 million impairment charge related to intangible assets earlier in the year.

Unity also cut costs. Sales and marketing spending fell 38% from a year earlier. Free cash flow, the cash left after running the business and investing in it, rose to $220 million from $151 million.

Retail Reaction To Unity’s Q3 Earnings

On Stocktwits, retail sentiment around Unity shares flipped to ‘bullish’ from ‘bearish’ territory over the past day, while chatter rose to ‘high’ from ‘normal’ levels. Platform data showed an almost 70% increase in message volume in the last 24 hours.

Retail traders on the platform welcomed the company’s return to profitability and the acceleration in advertising revenue.

Unity shares remained down about 4% year to date, but were up roughly 18% over the past 12 months.

Read also: AMD Faces Nvidia Software Hurdle, While Intel Could Reclaim PC Market Share, Morningstar Says

For updates and corrections, email newsroom[at]stocktwits[dot]com.