Revenue growth rebounded to 23.9% YoY in 2026Q2, with gross margin swinging to 79.6% and operating margin improving to -5.9% from -26.9% a year earlier, indicating a potential turnaround.
Unity Software Inc. (U) annual income statement — 8-year revenue, gross profit & net income history
| Metric | TTM | Dec'25 | Dec'24 | Dec'23 | Dec'22 | Dec'21 | Dec'20 | Dec'19 | Dec'18 |
|---|
| Sales/Revenue | 2.03B | 1.85B | 1.81B | 2.19B | 1.39B | 1.11B | 772.45M | 541.78M | 380.75M |
| Revenue Growth % | 13.98% | 2.01% | -17.1% | 57.25% | 25.26% | 43.77% | 42.58% | 42.29% | - |
| Cost of Goods Sold | 778.87M | 477.74M | 480.85M | 733.72M | 442.5M | 253.63M | 172.35M | 118.6M | 81.27M |
| COGS % of Revenue | - | 25.83% | 26.52% | 33.54% | 31.81% | 22.84% | 22.31% | 21.89% | 21.34% |
| Gross Profit | 1.25B | 1.37B | 1.33B | 1.45B | 948.52M | 856.9M | 600.1M | 423.18M | 299.49M |
| Gross Margin % | 61.6% | 74.17% | 73.48% | 66.46% | 68.19% | 77.16% | 77.69% | 78.11% | 78.66% |
| Gross Profit Growth % | - | 2.97% | -8.34% | 53.25% | 10.69% | 42.79% | 41.81% | 41.3% | - |
| Operating Expenses | 1.86B | 1.79B | 2.09B | 2.29B | 1.83B | 1.39B | 874.91M | 573.85M | 429.79M |
| OpEx % of Revenue | - | 97.02% | 115.13% | 104.53% | 131.61% | 125.04% | 113.26% | 105.92% | 112.88% |
| Selling, General & Admin | 830.11M | 864.97M | 1.16B | 1.23B | 871.25M | 692.85M | 471.39M | 317.92M | 225.72M |
| SG&A % of Revenue | - | 46.76% | 64.12% | 56.36% | 62.63% | 62.39% | 61.03% | 58.68% | 59.28% |
| Research & Development | 1.03B | 929.52M | 924.83M | 1.05B | 959.49M | 695.71M | 403.51M | 255.93M | 204.07M |
| R&D % of Revenue | - | 50.25% | 51% | 48.17% | 68.98% | 62.65% | 52.24% | 47.24% | 53.6% |
| Other Operating Expenses | 0 | 0 | 0 | 0 | 0 | 0 | 0 | 0 | 0 |
| Operating Income | -607.36M | -422.57M | -755.15M | -832.79M | -882.21M | -531.66M | -274.81M | -150.67M | -130.3M |
| Operating Margin % | -29.94% | -22.85% | -41.65% | -38.07% | -63.42% | -47.88% | -35.58% | -27.81% | -34.22% |
| Operating Income Growth % | - | 44.04% | 9.32% | 5.6% | -65.93% | -93.47% | -82.39% | -15.63% | - |
| EBITDA | -126.83M | 38.37M | -346.17M | -268.88M | -670.64M | -467.1M | -231.84M | -119.56M | -109.78M |
| EBITDA Margin % | -6.25% | 2.07% | -19.09% | -12.29% | -48.21% | -42.06% | -30.01% | -22.07% | -28.83% |
| EBITDA Growth % | -28.65% | 111.08% | -28.75% | 59.91% | -43.58% | -101.48% | -93.92% | -8.9% | - |
| D&A (Non-Cash Add-back) | 480.53M | 460.94M | 408.98M | 563.92M | 211.58M | 64.57M | 42.97M | 31.11M | 20.52M |
| EBIT | -564.68M | -371.19M | -643.59M | -773.26M | -875.02M | -530.1M | -274.81M | -150.67M | -130.3M |
| Net Interest Income | -824K | -24.01M | 88.02M | 34.95M | -212K | 435K | -5.41M | -2.57M | -2.33M |
| Interest Income | 23.31M | 0 | 111.56M | 59.53M | 7.19M | 1.57M | 0 | 0 | 0 |
| Interest Expense | 24.14M | 24.01M | 23.54M | 24.58M | 7.4M | 1.13M | 5.41M | 2.57M | 2.33M |
| Other Income/Expense | 18.54M | 27.37M | 88.02M | 34.95M | -212K | 435K | -5.41M | -2.57M | -2.33M |
| Pretax Income | -588.82M | -395.2M | -667.13M | -797.85M | -882.42M | -531.23M | -280.22M | -153.24M | -132.63M |
| Pretax Margin % | -29.03% | -21.37% | -36.79% | -36.48% | -63.44% | -47.84% | -36.28% | -28.29% | -34.83% |
| Income Tax | -3.46M | 6.29M | -2.85M | 28.48M | 37.06M | 1.38M | 2.09M | 9.95M | -1.03M |
| Effective Tax Rate % | 0.59% | -1.59% | 0.43% | -3.57% | -4.2% | -0.26% | -0.75% | -6.49% | 0.77% |
| Net Income | -586.86M | -402.76M | -664.11M | -822.01M | -919.49M | -532.61M | -282.31M | -163.19M | -131.6M |
| Net Margin % | -28.93% | -21.78% | -36.63% | -37.58% | -66.1% | -47.96% | -36.55% | -30.12% | -34.56% |
| Net Income Growth % | -35.25% | 39.35% | 19.21% | 10.6% | -72.64% | -88.66% | -72.99% | -24% | - |
| Net Income (Continuing) | -585.35M | -401.49M | -664.29M | -826.32M | -919.49M | -532.61M | -282.31M | -163.19M | -131.6M |
| Discontinued Operations | 0 | 0 | 0 | 0 | 0 | 0 | 0 | 0 | 0 |
| Minority Interest | 266.73M | 252.64M | 236.48M | 231.74M | 225.86M | 0 | 0 | 0 | 0 |
| EPS (Diluted) | -1.34 | -0.96 | -1.68 | -2.16 | -2.96 | -1.89 | -1.66 | -0.72 | -0.58 |
| EPS Growth % | -28.3% | 42.86% | 22.22% | 27.03% | -56.61% | -13.86% | -130.56% | -24.14% | - |
| EPS (Basic) | - | -0.96 | -1.68 | -2.16 | -2.96 | -1.89 | -1.66 | -0.72 | -0.58 |
| Diluted Shares Outstanding | 437.9M | 420.91M | 395.95M | 380.46M | 310.5M | 282.19M | 169.97M | 228.21M | 228.21M |
| Basic Shares Outstanding | 437.9M | 420.91M | 395.95M | 380.46M | 310.5M | 282.19M | 169.97M | 228.21M | 228.21M |
| Dividend Payout Ratio | - | - | - | - | - | - | - | - | - |
Quick answers to the most common questions about buying U stock.
For fiscal year 2025, Unity Software Inc. (U) reported total revenue of $1.85B. This represents a 385.8% increase compared to $380.8M in 2018.
Unity Software Inc. (U) reported a net loss of $402.8M for the fiscal year ending 2025.
Unity Software Inc. (U) reported an operating income of $-422.6M, resulting in an operating profit margin of -22.8%. This margin reflects the operational efficiency of the business before interest and taxes.
Unity Software Inc. (U) generated $1.37B in gross profit for the year, representing a gross profit margin of 74.2%. This demonstrates the company's core pricing power and production efficiency.
Key Metrics
Top Statement Risk
SBC dilution and ad volatility
Metrics are mathematically derived from official filings.
Revenue Rebound After Prolonged Slump
Unity's revenue growth accelerated to 23.9% YoY in 2026Q2, up from -1.9% in 2025Q2, according to recent financial statements, signaling a potential inflection after two years of contraction.
The sequential acceleration from 16.8% in 2026Q1 to 23.9% in 2026Q2 suggests the company may be emerging from the post-IDFA advertising headwinds that suppressed growth through 2024 and early 2025. However, the sustainability of this rebound is uncertain given the lack of explicit guidance in the latest report, and investors should monitor whether this reflects durable market share gains or a temporary recovery in mobile ad spend. The growth appears broad-based, but the absence of segment-level detail in the provided data limits the ability to attribute it to either Create or Grow solutions.
Gross Margin Volatility Masks Structural Efficiency
Unity's gross margin swung from 30.8% in 2026Q1 to 79.6% in 2026Q2, based on reported figures, highlighting the impact of one-time charges and the underlying ~74% software-like margin profile.
The 2026Q1 gross margin of 30.8% appears anomalous, likely reflecting a significant write-down or restructuring charge, as the trailing four quarters averaged approximately 74%. This suggests the core software delivery model remains structurally efficient, but the volatility warrants scrutiny of the cost of revenue line, which spiked to $351.6M in 2026Q1 versus a typical $110-120M. The recovery to 79.6% in 2026Q2 indicates the anomaly was non-recurring, yet the lack of disclosure on the cause leaves room for interpretation.
Operating Leverage Emerging as Losses Narrow
Unity's operating margin improved to -5.9% in 2026Q2 from -26.9% a year earlier, per financial statements, as revenue growth outpaced expense growth, suggesting early signs of operating leverage.
The dramatic improvement in operating margin from -26.9% in 2025Q2 to -5.9% in 2026Q2 appears driven by both revenue acceleration and disciplined cost control, with SG&A declining from $230.7M to $188.7M over the same period. R&D spending rose only 29.6% despite a 23.9% revenue increase, indicating that the company may be scaling its engineering investment more efficiently. However, the path to breakeven remains dependent on sustaining this growth rate, as the absolute operating loss of $32.2M is still substantial relative to the company's market cap.
SBC Distorts Reported Losses
Stock-based compensation averaged $98.5M per quarter over the last five quarters, according to SEC filings, representing roughly 20% of revenue and materially understating GAAP profitability.
The reported net losses, which narrowed to -$23.6M in 2026Q2, appear flattered by the exclusion of SBC from non-GAAP metrics, but the GAAP figures still include this significant non-cash expense. The 2026Q1 SBC of $0 is clearly a data anomaly, as the surrounding quarters show consistent $80-115M levels, and investors should treat that quarter's earnings quality as unreliable. The high SBC intensity suggests that reported EPS improvements may not translate to cash generation, and the dilution from equity compensation remains a persistent overhang on shareholder value.
R&D and SG&A Show Divergent Trends
R&D spending rose to $278.3M in 2026Q2, up 29.6% YoY, while SG&A fell to $188.7M, down 18.2%, based on reported figures, indicating a strategic shift toward product investment over sales spend.
The divergence between rising R&D and falling SG&A suggests management may be prioritizing product innovation, likely in AI-driven advertising tools like Vector, over aggressive sales expansion. This could indicate a bet on product-led growth, but it also raises the risk that the company is underinvesting in go-to-market capabilities needed to sustain the recent growth acceleration. The absolute R&D spend of $278.3M represents over 50% of revenue, a level that appears unsustainable without continued growth, and investors should monitor whether this investment yields tangible revenue diversification beyond gaming.
2026Q2 Marks Potential Turnaround Point
Unity's 2026Q2 results, with revenue up 23.9% YoY and operating loss narrowing to -$32.2M, represent the strongest quarter in the provided data, according to financial statements, suggesting a possible operational inflection.
The quarter stands out not only for its revenue acceleration but also for the dramatic improvement in operating margin from -69.1% in 2026Q1 to -5.9%, indicating that the company may have finally reached a scale where fixed costs are being absorbed. The gross margin recovery to 79.6% from the anomalous 30.8% in the prior quarter further supports the view that 2026Q1 was a one-off disruption. However, the lack of forward guidance in the latest report tempers confidence, and investors should require at least one more quarter of similar performance to confirm this inflection is durable rather than a seasonal or one-time benefit.
Skeptics Question Growth Sustainability
Despite the 23.9% YoY revenue growth in 2026Q2, Unity's reliance on volatile ad revenue and heavy SBC dilution, per reported figures, leaves the bull case vulnerable to a demand pullback.
Short-sellers would likely argue that the growth acceleration is a rebound from depressed levels rather than a new trend, given that revenue in 2026Q2 of $546.5M is only 19% above the 2024Q2 level of $449.3M, implying a compound annual growth rate of just 9% over two years. The persistent operating losses, even after the improvement, suggest that the company has not demonstrated a clear path to profitability without significant cost cuts that could impair growth. Furthermore, the high SBC levels, which exceeded the operating loss in most quarters, indicate that reported losses understate the true economic cost of the business, and any slowdown in ad spending could quickly reverse the recent margin gains.