Unity’s Q3 2025 Performance Signals Strength in AI-Powered Growth and Cash Generation

Adjusted Margins and Free Cash Flow Set New Highs in Q3 2025

Unity (NYSE:U), the leading platform for game and interactive content creation, delivered a quarter that outpaced expectations on both top-line growth and profitability. For the third quarter ending September 30, 2025, Unity reported $471 million in revenue, a 5% year-over-year increase, fueled largely by the adoption of its Unity Vector AI solutions and resilient performance in its Create and Grow segments. Importantly, the company posted a record $151 million in free cash flow for the quarter, highlighting strong operational execution and disciplined capital allocation.

AI Innovations Drive Revenue Gains Across Business Lines

Unity’s segment breakdown shows that its AI-enabled platforms are gaining meaningful traction:

The Create Solutions segment saw growth driven by increased subscriptions, while the Grow segment benefited from a robust Unity Ad Network powered by Vector AI, even as some other growth areas lagged. Unity's executive team noted that AI is not only elevating their core technology but also positioning the platform for broader engagement as interactive content continues to capture consumer interest.

Profitability Metrics Show Improvement Amid Ongoing Investments

While GAAP net loss remained elevated at $127 million for the quarter, Unity made visible strides on an adjusted basis. Adjusted EBITDA rose to $109 million, a 23% margin—improving two percentage points over the prior year. Adjusted EPS reached $0.20 per share, up slightly from $0.19 last year. Unity attributed this progress to effective cost controls and ongoing investments in product innovation, particularly within its AI and data infrastructure.

Balance Sheet Remains Robust as Unity Heads Into Q4

Unity ended the quarter with $1.91 billion in cash and cash equivalents, up from $1.53 billion at year-end 2024. This improvement stemmed primarily from positive operating cash flow and equity issuances, offset by refinancing-related outflows. With $2.62 billion in current assets and just under $942 million in current liabilities, Unity's liquidity position looks solid heading into year-end.

Outlook: Revenue Acceleration and Margin Expansion Projected in Q4 2025

For the fourth quarter, Unity projects revenue between $480 million and $490 million, representing another quarter of sequential and year-over-year growth. The company expects the Grow segment to deliver mid-single-digit sequential gains, while the Create segment is forecast to see high-single-digit year-over-year growth, excluding non-strategic revenues. Adjusted EBITDA is targeted in the $110 million to $115 million range, signaling further improvement in operational leverage.

Takeaway: Unity Leans Into AI and Platform Scale to Fuel Sustainable Growth

Unity’s third quarter 2025 results underscore the effectiveness of its AI-powered strategies and tight financial management. Record free cash flow and improving margins set the company up for continued investment in innovation and platform expansion. While macroeconomic and industry-specific uncertainties remain, Unity’s cash-rich balance sheet and focused execution position it well to benefit from growing demand in interactive entertainment and digital content creation.

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