Shares of Unity Software Inc (NYSE:U) rose about 17% at the open on Friday after the videogame software company reported preliminary first-quarter results that topped its own forecasts and signaled further strategic changes to streamline its business.
Unity said it expects first-quarter revenue of $505 million to $508 million, above its prior guidance of $480 million to $490 million. Adjusted EBITDA is projected at $130 million to $135 million, exceeding the company’s outlook of $105 million to $110 million.
The stronger-than-expected performance was driven in part by growth in its Unity Vector offering, which expanded 15% sequentially during the quarter, alongside continued momentum in its Create segment.
The company also announced plans to shut down its ironSource Ads Network by the end of April and is exploring a divestiture of Supersonic, its mobile game publishing unit, as part of efforts to sharpen its focus on higher-growth businesses.
Analysts at Jefferies said the results and portfolio changes support their “Vector thesis,” highlighting accelerating growth in Unity’s core operations. Revenue from Strategic Grow, excluding ironSource and Supersonic, is expected to rise 48% year-over-year to $279 million, outpacing overall Grow segment expansion.
Unity’s Strategic Create segment also grew 14% from a year earlier, suggesting continued adoption of its Unity 6 platform and stable subscription trends.
Jefferies said the company’s decision to wind down ironSource and pursue a sale of Supersonic reflects a move to shed lower-margin legacy assets tied to its ironSource acquisition, allowing it to concentrate resources on its core engine and improve profitability.
The brokerage cited improved growth prospects and margin expansion, though it noted uncertainty around the timing and terms of a potential Supersonic sale.
Unity said the strategic actions are expected to materially improve revenue growth and profitability over time.