Unity Software Inc (NYSE:U) is pursuing strategic growth through a consolidation of its engine offerings and a shift in its data strategy, Wedbush analysts wrote, following a recent meeting with the company’s investor relations team.
The firm maintained an ‘Outperform’ rating on Unity, with a 12-month price target of $30, up from its current share price of about $19.
“Unity has conceded the mediation war to AppLovin’s MAX,” Wedbush’s analysts wrote. They described ironSource as a “cash cow” that will continue operating while cash-flow positive but will not receive new resources. Wedbush emphasized that the company’s data advantage is now centered on Runtime, which allows Unity to capture a distinct segment of the ad market.
Feeding this data back to developers supports real-time game optimization, creating a system that integrates the advertising and development sides of the business, they added.
Wedbush wrote that the Runtime fee is expected to affect the model in the second quarter, with management anticipating a gradual adoption curve. “The upside from Runtime data is not yet baked into the current guidance,” the analysts wrote.
They added that Weta-related write-downs, though larger year-over-year, “will be fully washed out by 2027,” and that Unity can trim costs without affecting top-line growth.
“Unity is exploring a consumption-based model for AI that combines a base subscription with token packs,” Wedbush wrote, and highlighted that the company is moving its engine to a lighter, browser-based environment.
Unity’s product updates, including Unity 6.7 and GDC announcements, streamline the engine and accelerate developer productivity, according to the analysts.
“Unity is deprecating HDRP and BIRP in favor of a unified Universal Render Pipeline, which reduces platform friction and makes the engine easier to leverage,” they wrote. “Unity is integrating Model Context Protocol, allowing studios to plug their own AI models directly into the Editor to automate backend setup and coding.”
Wedbush concluded that these initiatives represent a “highly strategic streamlining of the business” that supports Unity’s path to GAAP profitability while enhancing its developer-focused ecosystem.