- Q2 revenue of $441M and adjusted EPS of $0.18 beat consensus; GAAP net loss was $107M.
- Unity Ad Network rose 15% quarter over quarter and is now 49% of Grow segment revenue.
- Q3 outlook: $440M–$450M revenue and $90M–$95M adjusted EBITDA; Grow up sequentially, Create slightly down.
- Shares whipsawed after results, surging early before sliding as investors parsed guidance.
Unity reported a second quarter that topped expectations, aided by improving ad performance and disciplined costs, while signaling a steady but measured path for the months ahead.
Investors saw a mixed picture: headline metrics outpaced forecasts, the ads business accelerated, and cash generation strengthened, yet near-term guidance pointed to only modest sequential progress.
Q2 2025 highlights at a glance
Revenue landed at $441 million, down about 2% year over year, but ahead of what many on the Street had penciled in. For a deeper understanding of how Unity is innovating its platform, visit RGB tech innovations in 2025.
Adjusted earnings came in at $0.18 per share, topping consensus near $0.15, while the company reported a GAAP net loss of $107 million, a margin of roughly negative 24%.
Operating cash flow was a bright spot at $133 million, with free cash flow of $127 million, underscoring improving cash conversion despite ongoing investments.
Segment performance: Create and Grow move on different tracks
Create Solutions generated $154 million, up about 2% year over year, helped by a roughly $12 million term license and firmer subscription trends. For tips on optimizing Unity for your projects, see resetting devices, games, and apps.
Management also pointed to headwinds from lower non-strategic professional services and softer consumption services, which tempered Create’s overall momentum.
Grow Solutions delivered $287 million, down about 4% from last year, but the mix is shifting toward higher-performing components.
The Unity Ad Network expanded 15% quarter over quarter and now represents about 49% of Grow revenue, offsetting declines across select other ads products.
AI Vector’s role in ads acceleration
Unity’s new AI platform, Vector, featured prominently in the quarter’s narrative, with leadership framing it as a key driver behind the ad network’s uptick and a catalyst for future product velocity.
The early signal is improved yield and relevance across the ads stack, which, if sustained and broadened, could support healthier growth and margin mix over time.
Profitability and margins
Adjusted EBITDA reached $90 million for a 21% margin, better than guidance on higher revenue and continued cost discipline.
On a GAAP basis, the company narrowed losses year over year, reflecting the ongoing reset to operations and sharper spend controls.
Liquidity and capital
Cash, cash equivalents and restricted cash stood at $1.70 billion as of June 30, 2025, up $174 million from year‑end, supported by operating inflows and equity plan proceeds, partly offset by debt refinancing outflows.
The balance sheet provides flexibility to keep investing in AI, core engine capabilities, and monetization tools while navigating a competitive ads market.
Guidance: steady progress into Q3
For the third quarter, Unity guides revenue to $440–$450 million, implying roughly flat performance at the midpoint compared with last year.
Adjusted EBITDA is expected at $90–$95 million, with segment color calling for mid‑single‑digit sequential growth in Grow and a slight sequential dip in Create after a large Q2 customer win.
The market reaction was highly volatile after the results, with shares jumping as much as about 14.6% in early trading before sliding roughly 11% by midday as the market refocused on the guide and the pace of the turnaround.
Consensus had expected $426.7 million in revenue and $0.15 in adjusted EPS, so the beat was clear; the debate turned to sustainability of ads outperformance and the near‑term Create cadence.
Webcast and where to follow
Unity is hosting a public webcast at 8:30 a.m. ET to discuss results, with a replay available on its investor relations site at investors.unity.com.
About the metrics
Management continues to supplement GAAP with non-GAAP measures such as adjusted EBITDA, adjusted EPS, adjusted gross profit and free cash flow, which they view as helpful for comparability, though these metrics have known limitations.
As with any forward-looking statements, outcomes depend on competitive dynamics in ads, macro conditions, platform policy shifts, geopolitical factors, and execution on AI-driven product initiatives.
Unity delivered a cleaner quarter with beats on the top and bottom line, healthier cash flow, and tangible traction in ads tied to AI, while setting expectations for a measured Q3 as Create normalizes and Grow continues to grind higher.
