TLDR
- Unity Software posted Q3 earnings per share of $0.20, crushing expectations of a 23-cent loss
- Revenue hit $471 million, beating the $453 million consensus estimate with 5% year-over-year growth
- The company’s Unity Vector AI ad platform drove strong performance in the Grow Solutions segment
- Q4 revenue guidance of $480-$490 million tops analyst expectations of $475 million
- Adjusted EBITDA reached $109 million with a 23% margin, up 18% from last year
Unity Software shares jumped over 17% in premarket trading Wednesday after delivering third-quarter results that blew past Wall Street expectations. The video game software development company reported earnings that turned a predicted loss into a profit.
The company posted earnings per share of $0.20. Analysts had expected a loss of 23 cents per share. Revenue came in at $471 million, up from $447 million a year earlier and above the $453 million estimate.
Create Solutions brought in $152 million in revenue, up from $147 million last year. Grow Solutions revenue increased to $318 million from $299 million. The growth came from strong performance in Unity’s advertising network.
Unity Vector AI Powers Revenue Growth
Unity’s AI-powered advertising platform played a key role in the quarter’s performance. Unity Vector uses data from the entire Unity network to help game developers grow their titles.
The platform relies on self-learning algorithms to improve ad campaigns. It identifies valuable users and adjusts in real-time to player activity and game updates. This technology helped drive the 6% year-over-year growth in Grow Solutions revenue.
Adjusted EBITDA reached $109 million, representing a 23% margin. This marked an 18% increase from the same period last year. The company attributed the strong results to Unity Vector AI and continued strength in its Create segment.
Unity released guidance for the fourth quarter that exceeded analyst projections. The company expects revenue between $480 million and $490 million. Wall Street had been looking for $475 million.
Q4 Outlook Points to Continued Momentum
The company anticipates mid-single-digit sequential growth in the Grow segment. Create is expected to see high-single-digit year-over-year growth, excluding non-strategic revenue impacts.
Unity’s stock has performed well throughout the year. Shares have gained over 59% year-to-date. The stock is up more than 65% over the past 12 months.
The Create Solutions segment provides tools that help developers build games and interactive experiences. These tools work across mobile devices, PCs, and consoles. The segment saw 3% year-over-year growth in the third quarter.
The Grow Solutions segment focuses on helping developers monetize and expand their games. Unity’s advertising network sits at the core of this business. The 6% growth in this segment reflected the strong performance of the Unity Ad Network.
Unity Vector uses machine learning to optimize advertising campaigns across the Unity network. The platform analyzes player behavior and game performance data. It then makes real-time adjustments to improve campaign effectiveness.
The company’s third-quarter results exceeded expectations on both revenue and adjusted EBITDA. Unity credited Unity Vector AI as a key driver. The Create segment also maintained its strength throughout the quarter.
For Q4, Unity expects both segments to continue growing. The Grow segment should see sequential improvement. The Create segment is projected to maintain its year-over-year growth trajectory when excluding non-strategic revenue.
Get 3 Free Stock Ebooks
Discover top-performing stocks in AI, Crypto, and Technology with expert analysis.
- Top 10 AI Stocks - Leading AI companies
- Top 10 Crypto Stocks - Blockchain leaders
- Top 10 Tech Stocks - Tech giants
