Unity Posts First GAAP Profit Since Its IPO

The Tip Desk · November 5, 2026 · 3 min read

Third-quarter revenue reached $622 million as Vector grew 126% year over year and the company guided fourth-quarter strategic revenue to $683 million to $691 million.

Unity Software (U), the game-engine company, reported net income of $122 million for the third quarter ended September 30, 2026, a 20% margin, versus a $127 million net loss a year earlier. Basic earnings were $0.27 a share and diluted earnings $0.25 a share, compared with a $0.30 loss a share a year earlier. President and CEO Matt Bromberg said the quarter was the company’s first GAAP profitable period since its IPO.

Revenue was $622 million, up 32% from $471 million in the third quarter of 2025. That year-over-year pace accelerated from 24% growth in the second quarter and 17% in the first quarter of 2026. Strategic revenue was $597 million, up 59% year over year.

Strategic Grow revenue was $431.5 million, up 90% year over year, after 63% growth in the second quarter and 49% in the first quarter. Grow Solutions revenue was $457 million, up 44% year over year. The company said the change was due to growth in the Unity Ads Network, driven by Unity Vector, partially offset by decreases in the ironSource Ads Network. Bromberg said Vector grew 126% year over year and 40% quarter over quarter.

Strategic Create revenue was $165.1 million, up 11% year over year. Create Solutions revenue was $165 million, up 8% year over year. The company said the increase was driven by subscription revenue, partially offset by decreases in cloud and hosting services tied to a 2025 portfolio reset.

Non-Strategic revenue fell to $25.5 million, down 73% year over year, after 33% and 34% declines in the second and first quarters. That line consists primarily of the ironSource Ads network, which was sunset in the second quarter of 2026, and the Supersonic publishing business, which was sold on August 4, 2026.

Adjusted EBITDA was $257 million, with a 41% margin, versus $109 million and a 23% margin a year earlier. The margin had been 29% in the second quarter and 27% in the first quarter. The company said the year-over-year improvement was driven by higher revenue and continued cost control. Adjusted EPS was $0.44, versus $0.20 a year earlier. GAAP gross margin was 82%, versus 74% a year earlier; adjusted gross margin was 85%. Operating income was $101 million, versus an operating loss of $126 million a year earlier.

Sales and marketing expense was $103.5 million, or 17% of revenue, down from $165.9 million, or 35% of revenue, a year earlier. Adjusted sales and marketing was $72.0 million, or 12% of revenue. Research and development expense was $251.1 million. General and administrative expense was $54.3 million.

Net cash provided by operating activities was $224 million, versus $155 million a year earlier. Free cash flow was $220 million, versus $151 million a year earlier. Cash, cash equivalents, and restricted cash was $2,651 million as of September 30, 2026, up $587 million from $2,064 million at December 31, 2025. The company said the increase was primarily driven by operations.

For the fourth quarter of 2026, Unity guided strategic revenue of $683 million to $691 million, up 65% to 67% year over year. Strategic Grow is expected at $515 million to $520 million, up 105% to 107% year over year. Strategic Create is expected at $168 million to $171 million, up 4% to 6% year over year. Non-Strategic revenue is expected at $5 million. Adjusted EBITDA is expected at $290 million to $295 million, up 132% to 136% year over year.