Unity Software Inc (NYSE:U) reported fourth quarter 2025 earnings that topped Wall Street forecasts, but its shares fell more than 28% as the company issued a cautious outlook for the first quarter of 2026.
For Q1, the game-making platform projected revenue of $480 million to $490 million, below Wall Street’s $491.8 million consensus, and adjusted EBITDA of $105 million to $110 million.
Unity expects flat sequential revenue in Grow Solutions and double-digit year-over-year growth in Create Solutions, excluding non-strategic revenue.
This drew focus from better-than-expected fourth quarter results, with revenue of $503.1 million, up 10% from $457 million a year earlier, surpassing analysts’ estimate of $492.8 million.
By segment, Create Solutions revenue rose 8% year-over-year to $165 million, driven by subscription growth. Grow Solutions revenue increased 11% to $338 million, led by Unity Vector, which accounted for 56% of the segment’s revenue, partially offset by a decline in the IronSource Ad Network.
“Fourth quarter results once again comfortably exceeded the high-end of our guidance, led by exceptional performance from Vector, which experienced its third consecutive quarter of mid-teen sequential revenue growth, and the best growth we’ve seen in Create in over two years,” Unity CEO Matt Bromberg said.
“With Vector demonstrating rapid growth and Unity 6 adoption at the fastest rate we’ve ever experienced, our goal of becoming the essential infrastructure for the next generation of interactive entertainment is coming into clear focus.”