Latest news with #UnityAdNetwork
Yahoo
2 days ago
- Business
- Yahoo
The Top 5 Analyst Questions From Unity's Q2 Earnings Call
Unity's second quarter results reflected a balance of progress and ongoing challenges, as management attributed performance to strong adoption of its AI-powered Vector ad platform and continued growth in its Create subscription business. CEO Matthew Bromberg highlighted that the Unity Ad Network saw 15% sequential revenue growth due to Vector, while Create segment momentum was supported by double-digit subscription increases and high-profile partnerships. However, Bromberg also acknowledged that softness in other ad products, resulting from resource redeployment toward Vector's rollout, tempered overall segment gains. Is now the time to buy U? Find out in our full research report (it's free). Unity (U) Q2 CY2025 Highlights: Revenue: $440.9 million vs analyst estimates of $427.5 million (1.9% year-on-year decline, 3.1% beat) Adjusted EPS: $0.18 vs analyst estimates of $0.15 (22% beat) Adjusted Operating Income: $90.5 million vs analyst estimates of $66.38 million (20.5% margin, 36.3% beat) Revenue Guidance for Q3 CY2025 is $445 million at the midpoint, below analyst estimates of $447.6 million EBITDA guidance for Q3 CY2025 is $92.5 million at the midpoint, below analyst estimates of $93.25 million Operating Margin: -26.9%, up from -28.8% in the same quarter last year Billings: $472.7 million at quarter end, up 3.6% year on year Market Capitalization: $15.76 billion While we enjoy listening to the management's commentary, our favorite part of earnings calls are the analyst questions. Those are unscripted and can often highlight topics that management teams would rather avoid or topics where the answer is complicated. Here is what has caught our attention. Our Top 5 Analyst Questions From Unity's Q2 Earnings Call Matthew Cost (Morgan Stanley) asked if the Vector AI technology could be deployed across other ad products. CEO Matthew Bromberg explained Vector is modular and there are no technical barriers, with plans for gradual expansion. Brent Thill (Jefferies) inquired about the next steps for Grow and areas for improvement. Bromberg highlighted ongoing investment in AI and leveraging Unity's position in the gaming ecosystem for future performance. Andrew Boone (Citizens JMP Securities) questioned guidance implications for Grow, asking if Vector gains are slowing. CFO Jarrod Yahes clarified that while non-Vector ad products are stabilizing, Unity Ad Network is set for double-digit sequential growth. Alec Brondolo (Wells Fargo) sought insight into whether Unity Ad Network growth was cannibalizing other ad products. Bromberg stated that cannibalization is 'less than 10%' and most growth is incremental from the broader ad market. Dylan Becker (William Blair) asked about the impact of AI on Create and the potential for margin improvements. Bromberg and Yahes pointed to content creation efficiencies and higher contribution margins as key benefits from ongoing investments. Catalysts in Upcoming Quarters Looking forward, our analysts will be monitoring (1) the rate at which Vector's AI capabilities are implemented across additional ad products, (2) the impact of new partnerships with gaming giants like Tencent and Nintendo on Create adoption and international growth, and (3) the initial feedback and adoption trends following the launch of Unity 6.2 and its developer data framework. Updates on non-gaming verticals and continued operating margin progress will also be important signposts. Unity currently trades at $37.99, up from $33.96 just before the earnings. At this price, is it a buy or sell? The answer lies in our full research report (it's free). The Best Stocks for High-Quality Investors Trump's April 2025 tariff bombshell triggered a massive market selloff, but stocks have since staged an impressive recovery, leaving those who panic sold on the sidelines. Take advantage of the rebound by checking out our Top 5 Growth Stocks for this month. This is a curated list of our High Quality stocks that have generated a market-beating return of 183% over the last five years (as of March 31st 2025). Stocks that made our list in 2020 include now familiar names such as Nvidia (+1,545% between March 2020 and March 2025) as well as under-the-radar businesses like the once-micro-cap company Kadant (+351% five-year return). Find your next big winner with StockStory today. StockStory is growing and hiring equity analyst and marketing roles. Are you a 0 to 1 builder passionate about the markets and AI? See the open roles here. Error in retrieving data Sign in to access your portfolio Error in retrieving data Error in retrieving data Error in retrieving data Error in retrieving data
Yahoo
3 days ago
- Business
- Yahoo
Unity's AI Platform Vector Shows Early Wins: Can Growth Accelerate?
Unity Software Inc. U delivered a strong second-quarter 2025, with its newly launched AI-powered ad platform, Unity Vector, emerging as a clear growth catalyst. Vector, a neural network-based upgrade to Unity's advertising engine, drove 15% sequential growth in the Unity Ad Network during the second quarter of 2025, with management guiding for double-digit sequential gains in the third quarter. This performance comes on top of stabilization in other ad products, setting the stage for mid-single-digit growth across the broader Grow makes Vector's early success notable is its scalability and potential longevity. The platform processes more data types in real time, delivering higher-quality installs and stronger return on ad spend for clients. Unity's reach, powering 70% of top mobile games, gives Vector unique behavioral data advantages, with the company planning to integrate runtime gameplay insights starting in Unity posted $440.9 million in the second-quarter revenue, down 1.9% year over year but ahead of estimates, while adjusted EBITDA of $90 million reflected 21% margins. Management emphasized that efficiency gains are enabling aggressive reinvestment into Vector and AI content creation without sacrificing key question for investors is sustainability. While Unity's early Vector adoption is broad-based and cannibalization is minimal (less than 10%), scaling returns across genres, geographies, and advertisers remains a multi-year effort. With high contribution margins and expanding partnerships in gaming, automotive, and healthcare, Unity has the runway to extend Vector's momentum — but execution in AI-driven ad optimization will determine if these early wins turn into a durable growth engine. Unity's Competitive Landscape Unity's rapid progress with Vector places it in direct competition with AppLovin Corporation APP and Digital Turbine, Inc. APPS — two established players in the mobile ad tech arena. AppLovin has built its reputation on advanced machine learning algorithms for ad targeting and monetization, with its AXON engine delivering strong advertiser ROI. While AppLovin enjoys scale and a broad advertiser base, Unity's deep integration into the game development pipeline offers a unique data edge that AppLovin Turbine focuses on mobile content discovery and app distribution, working closely with carriers and OEMs to deliver targeted user acquisition campaigns. Like AppLovin, Digital Turbine aims to maximize install quality and advertiser returns, but Unity's Vector benefits from first-party game runtime data that could give it a stronger long-term advantage. Outpacing AppLovin and Digital Turbine will require Unity to scale Vector's early performance gains across its entire ad ecosystem. U Stock's Price Performance & Valuation Trend Shares of this California-based software development company have gained 57.8% in the past three months, significantly outperforming the Zacks Internet - Software industry, the Zacks Computer and Technology sector. Unity Stock's Price Performance Image Source: Zacks Investment Research U stock is currently trading at a premium compared with the industry peers, with a forward 12-month price-to-sales (P/S) ratio of 7.33, as evidenced by the chart below. Unity's P/S Ratio (Forward 12-Month) vs. Industry Image Source: Zacks Investment Research EPS Trend of Unity Software Unity's loss estimates for 2025 and 2026 have narrowed over the past seven days to a loss per share of 79 cents and 64 cents, respectively. Despite indicating losses, the estimated figures for 2025 imply a year-over-year improvement from a loss of $1.68 per share. Image Source: Zacks Investment Research U stock currently carries a Zacks Rank #2 (Buy). You can see the complete list of today's Zacks #1 Rank (Strong Buy) stocks here. Want the latest recommendations from Zacks Investment Research? Today, you can download 7 Best Stocks for the Next 30 Days. Click to get this free report AppLovin Corporation (APP) : Free Stock Analysis Report Digital Turbine, Inc. (APPS) : Free Stock Analysis Report Unity Software Inc. (U) : Free Stock Analysis Report This article originally published on Zacks Investment Research ( Zacks Investment Research
Yahoo
07-08-2025
- Business
- Yahoo
Can Unity Software's AI Engine Vector Fuel Long-Term Growth?
Unity Software Inc. U enhanced and expanded its digital platform capabilities by launching Unity Vector in early 2025. Vector is a new AI-powered advertising platform that utilizes self learning AI models to optimize user acquisition through real-time machine learning, better data utilization and higher campaign the launch of the new AI platform, the company witnessed about 15-20% growth in the number of app installations and in-app purchase value, without all components of Vector being fully integrated. This new digital platform, alongside other digital tools including Unity Ad Network and Unity Mediation, is boosting Unity Software's revenue visibility and profitability structure, despite the ongoing economic challenges. The demand for AI-based solutions is expected to continue growing in the upcoming period, and meeting at an inflection point with the company's digital tools is expected to foster long-term near-term prospects surrounding Unity Vector might be unstable due to the phased rollout of the platform and the system adapting to the new tool, in the long term, this AI platform is expected to contribute to revenue scale while generating higher margins. The company is still undergoing investments related to Vector, ensuring the platform advocates efficiency and real-time apart from the entire company, Vector is expected to boost the contributions of the Grow Solution segment in the long term, which is currently being pulled back by adverse impacts from soft customer demand, competition and resource allocation decisions. On the back of its enhanced AI-driven capabilities across its broader product portfolio, Unity Software expects to witness mid-single-digit sequential revenue growth in its Grow Solution segment in the third quarter of 2025. Does Unity Software Face Competition in the Market? Being involved in developing advertising platforms and gaming, Unity Software faces substantial competition from some renowned market players, including Microsoft Corporation MSFT and AppLovin Corporation owns studios and proprietary engines alongside offering development toolkits for AR and VR through its HoloLens and Mixed Reality platforms. Moreover, its Azure cloud platform is often used by game developers for the basic infrastructure. Microsoft's share over major distribution platforms like Xbox and Game Pass makes it a probable competitor for Unity Software in the gaming the other hand, AppLovin offers direct competition to Unity Software by engaging in mobile advertising and monetization. Through its AI engine AXON and extensive mobile ad network, AppLovin positions itself in the market as one of the renowned product suppliers similar to U. U Stock's Price Performance & Valuation Trend Shares of this California-based software development company have gained 50% so far this year, significantly outperforming the Zacks Internet - Software industry, the Zacks Computer and Technology sector and the S&P 500 index. Image Source: Zacks Investment Research U stock is currently trading at a premium compared with the industry peers, with a forward 12-month price-to-sales (P/S) ratio of 7.04, as evidenced by the chart below. The overvaluation of the stock compared with its industry peers indicates its strong potential in the market, given the favorable trends backing it up. Image Source: Zacks Investment Research EPS Trend of Unity Software Unity Software's bottom-line estimates for 2025 and 2026 have contracted over the past 30 days to a loss per share of 80 cents and 65 cents, respectively. Despite indicating losses, the estimated figures for 2025 and 2026 imply year-over-year growth of 52.4% and 18.1%, respectively. Image Source: Zacks Investment Research U stock currently carries a Zacks Rank #2 (Buy). You can see the complete list of today's Zacks #1 Rank (Strong Buy) stocks here. Want the latest recommendations from Zacks Investment Research? Today, you can download 7 Best Stocks for the Next 30 Days. Click to get this free report Microsoft Corporation (MSFT) : Free Stock Analysis Report AppLovin Corporation (APP) : Free Stock Analysis Report Unity Software Inc. (U) : Free Stock Analysis Report This article originally published on Zacks Investment Research ( Zacks Investment Research Sign in to access your portfolio
