Latest news with #UnityVector
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
Yahoo
17-07-2025
- Business
- Yahoo
Unity Stock Has Ben Red Hot. Should You Buy, Sell, or Hold U Shares Here?
Unity (U) has been on an impressive run, with its stock surging 97% over the past three months. Much of the momentum comes from growing optimism around Unity's innovation in advertising technology. The company has introduced a new AI platform designed to enhance ad performance within games and apps, a key revenue stream for Unity. Adding to the positives is the strength in the broader macroeconomic environment. With the economy remaining relatively resilient, expectations for increased advertising spending are also helping lift the market's outlook for Unity stock. As more companies boost their ad budgets, Unity stands to benefit through its ad-tech ecosystem. More News from Barchart Dear Google Stock Fans, Mark Your Calendars for July 23 Dear UnitedHealth Stock Fans, Mark Your Calendars for July 29 Peter Thiel Is Betting Big on This Ethereum Treasury Stock. Should You Buy Shares Now? Our exclusive Barchart Brief newsletter is your FREE midday guide to what's moving stocks, sectors, and investor sentiment - delivered right when you need the info most. Subscribe today! However, with Unity stock gaining significantly in value and its business still in transition toward a sustainable growth platform, is now the right time to buy, or is it time to cash in? A New Engine for Ad Revenue: Enter Unity Vector Notably, Unity has swiftly rolled out its Unity Vector, the company's new AI-powered ad platform. Vector has already begun to show strong performance gains compared to Unity's legacy ad products. For a company that derives a large chunk of its revenue from ad-based Grow Solutions, largely structured on revenue or profit-sharing models, these improvements are important. Unity's advertising clients rely heavily on the company to generate their income, so higher performance means stronger incentives to keep spending on Unity's platform. Early results are promising. On Apple's iOS platform, Unity Vector is driving higher install rates and better in-app purchase values, a win-win for app developers and advertisers alike. Though the Android rollout is still in its early stages, performance indicators are trending in a similar direction. This has already translated to a stronger-than-expected result in Unity's first-quarter Grow segment revenue, which came in at $285 million, down 4% year-over-year, but still ahead of management's guidance, thanks to the accelerated Vector rollout. While the full impact of Vector won't be fully visible in the company's financials until future quarters, Unity is already setting expectations. In Q2, it projects the Grow segment's revenue to hold steady, as gains from Vector are likely to offset declines in older ad products. The bigger bet is that Vector's AI-driven adaptability will provide Unity's customers with better return on investment over time, anchoring long-term loyalty and spending. Strength in Create: A More Diversified Growth Story Unity's Create segment, which provides tools for game and interactive content development, has also been gaining traction. Subscription revenue is showing double-digit year-over-year growth, even as the company transitions away from its lower-margin professional services. Create segment's revenue in Q1 was $150 million, down 8% year-over-year. However, the quality of that revenue has improved, with the subscription business now comprising nearly 80% of the total. A significant part of that success is Unity 6. Since launch, Unity 6 has surpassed 4.4 million downloads, with 43% of active users already upgraded. What's especially compelling is Unity's growth beyond gaming. Its use case in industries such as healthcare, manufacturing, and architecture is now the fastest-growing segment of its subscription business. This diversification is opening new revenue streams and buffering the company against cyclicality in mobile gaming. Unity Transforming Into a Leaner, More Disciplined Company Despite some short-term revenue softness resulting from the strategic pivot, Unity's operational improvements are evident. Its adjusted EBITDA margins grew 200 basis points year-over-year in Q1, reflecting cost discipline. The company also reported adjusted EPS of $0.24 for the quarter, signaling a renewed focus on shareholder returns, including tighter management of stock-based compensation and dilution. Looking ahead, Unity expects second-quarter revenue to be between $415 million and $425 million, with adjusted EBITDA likely to be in the range of $70 million to $75 million. The company is confident that improved ad performance will help return the Grow segment to revenue growth, while Create continues to benefit from rising subscription momentum. Analysts Remain Cautious, But Unity's Long-Term Potential Is Solid While Unity is poised to deliver strong financial performance driven by Vector and broader platform adoption, not all analysts are endorsing the stock due to the recent run. Unity currently has a 'Moderate Buy' consensus rating, reflecting a mix of enthusiasm and caution. Furthermore, the stock is already trading above its Street-high price target, implying that analysts see limited upside. That said, the long-term story remains compelling. The company is modernizing its core ad business, strengthening relationships with developers, and making real inroads into high-value industries outside of gaming. If Unity can maintain its execution and continue delivering on its AI and platform-driven vision, the company could evolve from a turnaround play into a sustainable growth story. Final Take: A Stock to Watch, If Not Chase With strong performance drivers, including Vector, improved financial metrics, and diversified growth avenues, Unity appears well-positioned for the future. While some caution is warranted after the recent price surge, investors may want to keep Unity on their radar, especially as a pullback offers a more attractive entry point. On the date of publication, Amit Singh did not have (either directly or indirectly) positions in any of the securities mentioned in this article. All information and data in this article is solely for informational purposes. This article was originally published on 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
11-06-2025
- Business
- Yahoo
U Q1 Earnings Call: Unity Highlights AI Ad Platform Progress Amid Lower Revenue Outlook
Game engine maker Unity (NYSE:U) beat Wall Street's revenue expectations in Q1 CY2025, but sales fell by 5.5% year on year to $435 million. On the other hand, next quarter's revenue guidance of $420 million was less impressive, coming in 1.9% below analysts' estimates. Its non-GAAP profit of $0.24 per share was significantly above analysts' consensus estimates. Is now the time to buy U? Find out in our full research report (it's free). Revenue: $435 million vs analyst estimates of $416.8 million (5.5% year-on-year decline, 4.4% beat) Adjusted EPS: $0.24 vs analyst estimates of $0.11 (significant beat) Revenue Guidance for Q2 CY2025 is $420 million at the midpoint, below analyst estimates of $428 million EBITDA guidance for Q2 CY2025 is $72.5 million at the midpoint, below analyst estimates of $79.05 million Market Capitalization: $10.33 billion Unity's first quarter performance reflected the early impact of its AI-driven advertising platform, Unity Vector, and strong adoption of Unity 6 in its Create segment. CEO Matthew Bromberg credited the company's 'accelerated rollout of Vector ahead of schedule,' which delivered a 15% to 20% increase in installs and in-app purchase value on iOS compared to previous models. Management pointed to double-digit subscription growth in Create, particularly from non-gaming industries, as another positive factor, and emphasized that transitioning away from low-margin professional services has improved the revenue mix. CFO Jarrod Yahes highlighted disciplined cost management—especially in general and administrative and sales and marketing expenses—as a key contributor to margin improvement. For the coming quarter, Unity's guidance reflects a cautious stance, shaped by a mix of internal transitions and ongoing industry challenges. Management noted that although Unity Vector has begun to yield higher advertiser returns, the financial benefits will take time to be fully visible as legacy ad products are phased out. Bromberg stated, 'Our confidence in the future of our Grow business has never been stronger,' but also cautioned that the company is 'being prudent about how we're guiding this business' given its early stage. Yahes explained that increased cloud costs from operating both legacy and new ad models will normalize in the second half, supporting better profitability. Management also acknowledged the broader macroeconomic environment but said gaming's resilience and the focus on performance-based advertising should buffer major impacts. Unity's leadership attributed Q1 results to rapid AI ad platform deployment, strong subscription momentum, and deliberate resource reallocation. Management also identified a multi-quarter transition period as a significant factor affecting near-term results. AI-powered ad platform rollout: The full migration of Unity's ad network to the new AI-driven Vector platform was completed ahead of schedule. Management reported that Vector delivered a 15% to 20% lift in installs and in-app purchase value for iOS advertisers compared to the legacy system. Initial Android results are tracking similarly. Shift toward high-margin subscriptions: The Create segment saw double-digit year-over-year subscription growth, offsetting declines in low-margin professional services. Subscription revenue now comprises nearly 80% of Create, with industry verticals outside gaming contributing meaningfully to growth. Resource reallocation to Vector: Unity aggressively shifted investment toward machine learning and cloud infrastructure to support Vector, while reducing costs in general and administrative and sales and marketing. R&D spending increased, but management expects these costs to normalize as legacy ad models are retired. Non-strategic revenue runoff: CFO Jarrod Yahes clarified that sequential declines in Create are primarily due to planned reductions in non-core revenue streams, which now account for under 2% of total revenue, providing a clearer focus on core growth areas. Platform expansion beyond gaming: Management highlighted new customers in healthcare, industrial training, and digital twins, citing consistent revenue growth from non-gaming verticals for nine consecutive quarters. These emerging use cases are now the fastest-growing part of Unity's subscription business. Unity's near-term outlook is shaped by ongoing migration to its AI ad platform, normalization of costs, and continued uptake of core subscription products. AI-driven ad business ramp: Management expects Unity Vector to drive long-term revenue growth as advertisers see higher returns and shift budgets to the platform. However, in the immediate term, overall Grow segment revenue is tempered by declines in legacy ad products as customer spending transitions to Vector. Normalization of cloud and R&D costs: With the completion of the Vector migration, Unity anticipates cloud and R&D expenses will decrease in the second half of the year, supporting margin improvement. CFO Jarrod Yahes noted that operating leverage from high gross margins should enable profitability as ad business scales. Industry diversification and new pricing: The company is seeing early success from expanding Create into new industry verticals and implementing price improvements. Management expects these trends, along with continued seat growth, to support double-digit subscription revenue growth through 2025. Looking ahead, the StockStory team will monitor (1) the pace at which advertisers increase spend on Unity Vector and whether it sustains its reported performance gains, (2) the impact of normalizing cloud and R&D costs on margins as legacy ad models are fully retired, and (3) the continued expansion and retention of non-gaming industry customers in the Create segment. Developments in product pricing and successful delivery of new platform features will also be critical for validating Unity's growth strategy. Unity currently trades at a forward price-to-sales ratio of 5.7×. Should you double down or take your chips? Find out in our full research report (it's free). Donald Trump's victory in the 2024 U.S. Presidential Election sent major indices to all-time highs, but stocks have retraced as investors debate the health of the economy and the potential impact of tariffs. While this leaves much uncertainty around 2025, a few companies are poised for long-term gains regardless of the political or macroeconomic climate, like our Top 6 Stocks for this week. 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-small-cap company Comfort Systems (+782% five-year return). Find your next big winner with StockStory today. 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Business Wire
07-05-2025
- Business
- Business Wire
Unity Reports First Quarter 2025 Financial Results
SAN FRANCISCO--(BUSINESS WIRE)--Unity (NYSE: U), the leading platform to create and grow games and interactive experiences, today announced financial results for the first quarter ended March 31, 2025. "The Company's first quarter results once again meaningfully exceeded expectations on both revenue and Adjusted EBITDA, highlighting our progress as we continue to build a culture of execution and discipline,' said Matt Bromberg, President and CEO of Unity. 'The early success of Unity Vector and continued strong demand for Unity 6 underscore our positioning as the leading integrated platform supporting developers across the full lifecycle of game development,' Bromberg continued. First Quarter 2025 Results: Revenue was $435 million, compared to $460 million in the first quarter 2024. Create Solutions revenue was $150 million, compared to $164 million in the first quarter 2024. Grow Solutions revenue was $285 million, compared to $297 million in the first quarter 2024. GAAP net loss was $78 million, with a margin of (18)%. GAAP basic and diluted net loss per share was $0.19. Adjusted EBITDA was $84 million, with a margin of 19%. Adjusted EPS was $0.24. Net cash provided by operating activities was $13 million. Free cash flow was $7 million. Revenue Revenue was $435 million, down 6% year-over-year driven by our portfolio reset. Create Solutions revenue was $150 million, down 8% year-over-year, primarily due to a decrease in professional services revenue and consumption services revenue, both caused by the portfolio reset. The year-over-year decrease was partially offset by strong growth in subscription revenue. Grow Solutions revenue was $285 million, down 4% year-over-year. The change was driven by declines in select Grow products, partially offset by the earlier than expected rollout of Unity Vector. Basic and Diluted Net Loss per share Basic and diluted net loss per share was $0.19, as compared to $0.75 for the same period in 2024. Net Loss and Net Cash Provided by or Used in Operating Activities Net loss for the quarter was $78 million, compared to $291 million in the first quarter of 2024. Net loss margin was (18)%, compared to (63)% in the first quarter of 2024. Net cash provided by operating activities for the quarter was $13 million, compared to net cash used in operating activities of $7 million in the first quarter of 2024. Adjusted EBITDA, Free Cash Flow, and Adjusted EPS Adjusted EBITDA for the quarter was $84 million, with a margin of 19%, compared to $79 million in the first quarter of 2024, with a margin of 17%. The better than expected adjusted EBITDA margin in the first quarter of 2025 was due to better cost control and higher than expected revenue. Free cash flow for the quarter was $7 million, compared to negative $15 million in the first quarter of 2024. Adjusted EPS for the quarter was $0.24, compared to $0.28 in the first quarter of 2024. Liquidity As of March 31, 2025, our cash and cash equivalents, and restricted cash was $1,552 million, and increased by $24 million, as compared with $1,528 million as of December 31, 2024. This increase was primarily driven by proceeds from issuance of common stock from employee equity plans, and from our operations, offset by the net cash outflows from our debt refinancing. Q2 2025 Guidance 1 Revenue of $415 to $425 million. Adjusted EBITDA of $70 to $75 million. About Unity Unity [NYSE: U] offers a suite of tools to create, market and grow games and interactive experiences across all major platforms from mobile, PC, and console, to extended reality (XR). For more information, visit UNITY SOFTWARE INC. CONDENSED CONSOLIDATED BALANCE SHEETS (In thousands, except par share data) (Unaudited) As of March 31, 2025 December 31, 2024 Assets Current assets: Cash and cash equivalents $ 1,541,170 $ 1,517,672 Accounts receivable, net 552,958 573,884 Prepaid expenses and other 144,514 133,795 Total current assets 2,238,642 2,225,351 Property and equipment, net 89,972 98,819 Goodwill 3,166,304 3,166,304 Intangible assets, net 980,584 1,066,235 Other assets 170,453 180,698 Total assets $ 6,645,955 $ 6,737,407 Liabilities and stockholders' equity Current liabilities: Accounts payable $ 16,538 $ 13,948 Accrued expenses and other 273,444 294,951 Publisher payables 339,129 394,284 Deferred revenue 188,490 186,304 Total current liabilities 817,601 889,487 Convertible notes 2,232,143 2,238,922 Long-term deferred revenue 14,710 16,846 Other long-term liabilities 154,863 165,004 Total liabilities 3,219,317 3,310,259 Commitments and contingencies Redeemable noncontrolling interests 234,740 230,627 Stockholders' equity: Common stock, $0.000005 par value: Authorized shares - 1,000,000 and 1,000,000 Issued and outstanding shares - 415,406 and 409,393 2 2 Additional paid-in capital 7,008,134 6,936,038 Accumulated other comprehensive loss (8,501 ) (9,425 ) Accumulated deficit (3,813,586 ) (3,735,944 ) Total Unity Software Inc. stockholders' equity 3,186,049 3,190,671 Noncontrolling interest 5,849 5,850 Total stockholders' equity 3,191,898 3,196,521 Total liabilities and stockholders' equity $ 6,645,955 $ 6,737,407 Expand UNITY SOFTWARE INC. (In thousands, except per share amounts) (Unaudited) Three Months Ended March 31, 2025 2024 Revenue $ 435,000 $ 460,380 Cost of revenue 113,957 144,387 Gross profit 321,043 315,993 Operating expenses Research and development 220,625 282,728 Sales and marketing 162,013 230,625 General and administrative 66,340 177,569 Total operating expenses 448,978 690,922 Loss from operations (127,935 ) (374,929 ) Interest expense (5,891 ) (6,035 ) Interest income and other income (expense), net 58,111 76,643 Loss before income taxes (75,715 ) (304,321 ) Provision for (benefit from) Income taxes 2,192 (12,843 ) Net loss (77,907 ) (291,478 ) Net loss attributable to noncontrolling interest and redeemable noncontrolling interests (265 ) (404 ) Net loss attributable to Unity Software Inc. (77,642 ) (291,074 ) Basic and diluted net loss per share attributable to Unity Software Inc. $ (0.19 ) $ (0.75 ) Weighted-average shares used in computation of basic and diluted net loss per share 411,852 387,151 Net loss (77,907 ) (291,478 ) Change in foreign currency translation adjustment 1,178 (3,461 ) Comprehensive loss $ (76,729 ) $ (294,939 ) Net loss attributable to noncontrolling interest and redeemable noncontrolling interests (265 ) (404 ) Foreign currency translation attributable to noncontrolling interest and redeemable noncontrolling interests 254 (710 ) Comprehensive loss attributable to noncontrolling interest and redeemable noncontrolling interests (11 ) (1,114 ) Comprehensive loss attributable to Unity Software Inc. $ (76,718 ) $ (293,825 ) Expand UNITY SOFTWARE INC. (In thousands) (Unaudited) Three Months Ended March 31, 2025 2024 Operating activities Net loss $ (77,907 ) $ (291,478 ) Adjustments to reconcile net loss to net cash provided by (used in) operating activities: Depreciation and amortization 96,217 101,810 Stock-based compensation expense 98,790 265,877 Gain on repayment of convertible note (42,744 ) (61,371 ) Impairment of property and equipment 3,470 13,598 Other (218 ) 2,918 Changes in assets and liabilities, net of effects of acquisitions: Accounts receivable, net 21,022 (9,740 ) Prepaid expenses and other (10,602 ) (16,779 ) Other assets 10,023 (2,399 ) Accounts payable 2,198 5,273 Accrued expenses and other (21,029 ) (4,269 ) Publisher payables (55,155 ) 25,558 Other long-term liabilities (10,919 ) (23,584 ) Deferred revenue (120 ) (12,787 ) Net cash provided by (used in) operating activities 13,026 (7,373 ) Investing activities Purchases of property and equipment (5,718 ) (7,190 ) Net cash used in investing activities (5,718 ) (7,190 ) Financing activities Proceeds from issuance of convertible notes 690,000 — Purchase of capped calls (44,436 ) — Payment of debt issuance costs (13,236 ) — Repayments of convertible note (641,691 ) (414,999 ) Proceeds from issuance of common stock from employee equity plans 21,611 25,998 Net cash provided by (used in) financing activities 12,248 (389,001 ) Effect of foreign exchange rate changes on cash, cash equivalents, and restricted cash 4,197 (6,202 ) Increase (decrease) in cash, cash equivalents, and restricted cash 23,753 (409,766 ) Cash, cash equivalents, and restricted cash, beginning of period 1,527,881 1,604,267 Cash, cash equivalents, and restricted cash, end of period $ 1,551,634 $ Expand About Non-GAAP Financial Measures To supplement our consolidated financial statements prepared and presented in accordance with generally accepted accounting principles in the United States (GAAP) we use certain non-GAAP financial measures, as described below, to evaluate our ongoing operations and for internal planning and forecasting purposes. We believe the following non-GAAP measures are useful in evaluating our operating performance. We are presenting these non-GAAP financial measures because we believe, when taken collectively, they may be helpful to investors because they provide consistency and comparability with past financial performance. However, non-GAAP financial measures have limitations in their usefulness to investors because they have no standardized meaning prescribed by GAAP and are not prepared under any comprehensive set of accounting rules or principles. In addition, other companies, including companies in our industry, may calculate similarly-titled non-GAAP financial measures differently or may use other measures to evaluate their performance, all of which could reduce the usefulness of our non-GAAP financial measures as tools for comparison. As a result, our non-GAAP financial measures are presented for supplemental informational purposes only and should not be considered in isolation or as a substitute for our consolidated financial statements presented in accordance with GAAP. We define adjusted EBITDA as GAAP net income or loss excluding benefits or expenses associated with stock-based compensation, amortization of acquired intangible assets, depreciation, restructurings and reorganizations, interest, income tax, and other non-operating activities, which primarily consist of foreign exchange rate gains or losses. We define adjusted EBITDA margin as adjusted EBITDA as a percentage of revenue. We define adjusted gross profit as GAAP gross profit excluding expenses associated with stock-based compensation, amortization of acquired intangible assets, depreciation, and restructurings and reorganizations. We define adjusted gross margin as adjusted gross profit as a percentage of revenue. We define adjusted cost of revenue as GAAP cost of revenue, excluding expenses associated with stock-based compensation, amortization of acquired intangible assets, depreciation, and restructurings and reorganizations. We define adjusted research and development expense as research and development expense, excluding expenses associated with stock-based compensation, amortization of acquired intangible assets, depreciation, and restructurings and reorganizations. We define adjusted sales and marketing expense as GAAP sales and marketing expense, excluding expenses associated with stock-based compensation, amortization of acquired intangible assets, depreciation, and restructurings and reorganizations. We define adjusted general and administrative expense as general and administrative expense excluding expenses associated with stock-based compensation, depreciation, and restructurings and reorganizations. We define free cash flow as net cash provided by (used in) operating activities less cash used for purchases of property and equipment. We define adjusted EPS as net income or loss excluding benefits or expenses associated with stock-based compensation, amortization of acquired intangible assets, depreciation, restructurings and reorganizations, and the income tax impact of the preceding adjustments (cumulatively "adjusted net income"), increased by the tax effected impacts from any relevant dilutive securities, divided by the diluted weighted-average outstanding shares. The effective tax rate used in calculating adjusted EPS is estimated for each period, based on the net income or loss adjusted for the items noted above, and may differ from the effective rate used in our financial statements. Shares of common stock that are excluded in our calculation of GAAP diluted net loss per share due to their antidilutive impact on such calculations, are included in the diluted weighted average outstanding shares used in our calculation of adjusted EPS, to the extent they have a dilutive impact on adjusted EPS given the adjusted net income in each period. Cautionary Statement Regarding Forward-Looking Statements This press release and the earnings call referencing this press release contain 'forward-looking statements,' as that term is defined under federal securities laws, including, but not limited to, statements regarding Unity's outlook and future financial performance, including: (i) Unity's ability to further enhance its platform, accelerate product innovation and enhance financial performance; (ii) expectations regarding Vector, including the impact on financial results, as well as expectations regarding Vector's improvements over time and Unity's ability to mature the product and operate it at scale; (iii) Unity's opportunities in the AR and VR gaming and entertainment market; (iv) expectations regarding revenue from non-strategic portfolio; and (v) Unity's financial guidance for the second quarter 2025. The words 'aim,' 'believe,' 'may,' 'will,' 'estimate,' 'continue,' 'intend,' 'expect,' 'plan,' 'project,' and similar expressions are intended to identify forward-looking statements. These forward-looking statements are subject to risks, uncertainties, and assumptions. If the risks materialize or assumptions prove incorrect, actual results could differ materially from the results implied by these forward-looking statements. Risks include, but are not limited to, those related to: (i) the impact of macroeconomic conditions, such as inflation, high interest rates, tariffs, sanctions and trade barriers, and limited credit availability which could further cause economic uncertainty and volatility; (ii) competition in the advertising market and Unity's ability to compete effectively; (iii) ongoing restrictions related to the gaming industry in China; (iv) ongoing geopolitical instability, particularly in Israel, where a significant portion of the Grow operations is located; (v) Unity's ability to recover or reengage its customers, or attract new customers; (vi) the impact of any decisions to change how Unity prices its products and services; (vii) Unity's ability to achieve and sustain profitability; (viii) Unity's ability to retain existing customers and expand the use of its platform; (ix) Unity's ability to further expand into new industries and attract new customers; (x) the impact of any changes of terms of service, policies or technical requirements from operating system platform providers or application stores which may result in changes to Unity or its customers' business practices; (xi) Unity's ability to maintain favorable relationships with hardware, operating system, device, game console and other technology providers; (xii) breaches in its security measures, unauthorized access to its platform, data, or its customers' or other users' personal data; (xiii) Unity's ability to manage growth effectively and manage costs effectively; (xiv) the rapidly changing and increasingly stringent laws, regulations, contractual obligations and industry standards that relate to privacy, data security and the protection of children; (xv) the effectiveness of the company reset; (xvi) Unity's ability to successfully transition executive leadership; (xvii) Unity's ability to adapt effectively to rapidly changing technology, evolving industry standards, changing regulations, or changing customer needs, requirements, or preferences; and (xviii) the effectiveness of Vector. Further information on these and additional risks that could affect our results is included in our filings with the Securities and Exchange Commission (SEC), including our Annual Report on Form 10-K, filed with the SEC on February 20, 2025 and our Quarterly Report on Form 10-Q, filed with the SEC on May 7, 2025, and our future reports that we may file with the SEC from time to time, which could cause actual results to vary from expectations. Copies of reports filed with the SEC are available on the Unity Investor Relations website. Statements herein speak only as of the date of this release, and Unity assumes no obligation to, and does not currently intend to, update any such forward-looking statements after the date of this release except as required by law.
