Unity Software Q2 2026 earnings: big beat as AI ad tool drives growth
Unity topped Wall Street's profit and sales targets, powered by strong growth in its AI-driven advertising business, and issued upbeat guidance for next quarter.
| Q2 2026 | Reported | Expected | Surprise |
|---|---|---|---|
| EPS | $0.28 | -$0.09 | +420.0% |
| Revenue | $546.5M | $525.2M | +4.0% |
Key takeaways
- Unity’s results beat expectations on both lines: analysts had modeled a per-share loss, but the company posted a solid per-share profit instead, and revenue also came in well above forecasts.
- The main engine behind the beat was Unity’s ‘Grow’ segment — tools that help game and app developers buy and target advertising — which the company says was lifted by its AI-powered ad-matching system, Unity Vector. That AI product grew far faster than the company itself had predicted just a quarter earlier.
- Total revenue grew roughly 24% from a year earlier — a notably faster pace than the ~7-8% average growth rate the company has posted over the past twelve months, suggesting the AI-driven ad business is accelerating the overall top line.
- Unity’s gross margin remains high (around three-quarters of revenue), which is typical for software businesses and means each additional dollar of sales is cheap to deliver — but on a trailing-twelve-month basis the company is still posting an operating and net loss, meaning total company-wide costs (R&D, sales, overhead) still exceed revenue over that longer stretch even as the latest quarter improved.
- Management pointed to record adjusted profitability for the quarter and generated notably higher free cash flow (cash left over after running the business and capital spending) compared with a year ago, a sign the business is converting more of its growth into actual cash.
- CEO Matt Bromberg called it one of the strongest quarters in Unity’s history as a public company, crediting the AI ad tool and a broader product roadmap for driving value for developers and shareholders.
- For the current quarter, Unity guided to continued strong growth in its core ‘Strategic’ revenue, with the AI-driven Grow business expected to keep expanding faster than the company’s more traditional game-development tools (‘Create’) business.
- Coverage framed the quarter as a turning point where Unity’s newer AI advertising technology is now the primary growth driver, overtaking the slower-growing legacy game-engine tools business in importance to overall results.
Q2 2026 in context
| Metric | Jun 2026 | Jun 2025 | Change |
|---|---|---|---|
| Revenue | $546M | $441M | +23.9% |
| Net income | -$24M | -$109M | +78.3% |
| Free cash flow | $202M | $127M | +59.5% |
| Diluted EPS | -$0.05 | -$0.26 | +80.8% |
| Gross margin | 79.6% | 74.1% | +5.5 pts |
| Operating margin | -5.9% | -26.9% | +21.0 pts |
| Net margin | -4.3% | -24.7% | +20.4 pts |
Figures for the quarter ended Jun 2026 and the quarter ended Jun 2025, as reported to the SEC.
How the stock took it
Unity Software Inc closed at $35.47 on Aug 5, 2026, the last session before the report, and at $43.00 on Aug 7, 2026, the first session after it — +21.2% across the report.
| Earlier report | Close before | Close after | Change |
|---|---|---|---|
| May 7, 2026 | $27.28 | $28.16 | +3.2% |
| Nov 5, 2025 | $35.87 | $39.93 | +11.3% |
Closes from the market's daily record. Each figure spans the report date — from the last session that closed before it to the first that closed after — because a company may report before the open or after the close.
Fundamentals
| Metric | Value | Period |
|---|---|---|
| Gross margin | 74.7% | Trailing 12 months |
| Operating margin | -34.3% | Trailing 12 months |
| Net profit margin | -35.0% | Trailing 12 months |
| Pretax margin | -35.0% | Trailing 12 months |
| EPS | -$1.57 | Trailing 12 months |
| Revenue growth (YoY) | 7.5% | Trailing 12 months |
| Return on equity | -21.3% | Trailing 12 months |
Sources: company report · earnings call · trade press