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Unity Software Inc. (U)

CIK: 0001810806. SIC: 7372 Services-Prepackaged Software. Latest 10-K as of: 2026-02-11.

SIC breadcrumb: Services > Business Services > SIC 7372 Services-Prepackaged Software

SEC company page: https://www.sec.gov/edgar/browse/?CIK=1810806. Latest filing source: 0001810806-26-000011.

Selected Fundamentals

MetricValueUnitFYFiled
Revenue1,849,648,000USD20252026-02-11
Net income-402,765,000USD20252026-02-11
Assets6,837,606,000USD20252026-02-11

Financials

Annual standardized facts from SEC companyfacts as of latest extracted filing date 2026-02-11. Source: https://data.sec.gov/api/xbrl/companyfacts/CIK0001810806.json. Derived margins, ratios, and free cash flow are computed from the extracted annual SEC facts.

Flow metrics use full-year FY periods from 10-K/10-K/A filings; balance-sheet metrics use FY-end instants. Free cash flow = operating cash flow - capital expenditures. Missing metrics are omitted rather than fabricated.

Metric201720182019202020212022202320242025
Revenue380,755,000541,779,000772,445,0001,110,526,0001,391,024,0002,187,317,0001,813,255,0001,849,648,000
Net income-131,602,000-163,190,000-282,308,000-532,607,000-921,062,000-822,011,000-664,114,000-402,765,000
Operating income-130,301,000-150,669,000-274,812,000-531,665,000-882,213,000-832,794,000-755,149,000-479,053,000
Gross profit299,488,000423,182,000600,098,000856,896,000948,524,0001,453,595,0001,332,402,0001,371,909,000
Diluted EPS-2.39-1.66-1.89-2.96-2.16-1.68-0.96
Operating cash flow-81,059,000-67,936,00019,913,000-111,449,000-59,431,000234,700,000315,553,000422,955,000
Capital expenditures38,019,00027,035,00040,156,00041,938,00057,138,00055,921,00029,549,00019,024,000
Share buybacks0.00286,375,000110,0000.001,500,000,000250,000,0000.000.00
Assets762,860,0002,671,225,0004,841,346,0007,833,985,0007,243,441,0006,737,407,0006,837,606,000
Liabilities368,949,000634,082,0002,446,955,0004,079,856,0003,829,063,0003,310,259,0003,341,469,000
Stockholders' equity256,390,000316,127,000393,911,0002,037,143,0002,394,391,0003,528,268,0003,182,642,0003,190,671,0003,237,432,000
Cash and cash equivalents258,731,000129,959,0001,272,578,0001,055,776,0001,485,084,0001,590,325,0001,517,672,0002,055,840,000
Free cash flow-119,078,000-94,971,000-20,243,000-153,387,000-116,569,000178,779,000286,004,000403,931,000

Ratios

ROE and ROA use period-end equity/assets. Liabilities / equity uses total liabilities divided by stockholders' equity. Current ratio uses current assets divided by current liabilities when both are reported.

Metric201720182019202020212022202320242025
Net margin-34.56%-30.12%-36.55%-47.96%-66.21%-37.58%-36.63%-21.78%
Operating margin-34.22%-27.81%-35.58%-47.88%-63.42%-38.07%-41.65%-25.90%
Return on equity-41.63%-41.43%-13.86%-22.24%-26.11%-25.83%-20.81%-12.44%
Return on assets-21.39%-10.57%-11.00%-11.76%-11.35%-9.86%-5.89%
Liabilities / equity0.940.311.021.161.201.041.03
Current ratio1.094.133.442.342.602.501.84

Financial Charts

Quarterly

Quarterly standardized facts from SEC companyfacts as of latest extracted filing date 2026-05-07. Source: https://data.sec.gov/api/xbrl/companyfacts/CIK0001810806.json.

Flow metrics use discrete quarter-length periods from 10-Q/10-Q/A filings. Q4 revenue and net income are derived only when annual FY and nine-month YTD facts exist for the same fiscal year; derived Q4 values are labeled. EPS Q4 is not derived.

QuarterEnd DateRevenueNet IncomeDiluted EPSMethod
2022-Q22022-06-30-0.69reported discrete quarter
2022-Q32022-09-30-0.84reported discrete quarter
2023-Q12023-03-31-0.67reported discrete quarter
2023-Q22023-06-30533,478,000-192,160,000-0.51reported discrete quarter
2023-Q32023-09-30544,210,000-124,071,000-0.32reported discrete quarter
2023-Q42023-12-31609,268,000-252,749,000derived Q4 = FY annual - nine-month YTD
2024-Q12024-03-31460,380,000-291,074,000-0.75reported discrete quarter
2024-Q22024-06-30449,259,000-125,574,000-0.32reported discrete quarter
2024-Q32024-09-30446,517,000-124,739,000-0.31reported discrete quarter
2024-Q42024-12-31457,099,000-122,727,000derived Q4 = FY annual - nine-month YTD
2025-Q12025-03-31435,000,000-77,642,000-0.19reported discrete quarter
2025-Q22025-06-30440,944,000-108,798,000-0.26reported discrete quarter
2025-Q32025-09-30470,615,000-126,362,000-0.30reported discrete quarter
2025-Q42025-12-31503,089,000-89,963,000derived Q4 = FY annual - nine-month YTD
2026-Q12026-03-31508,238,000-347,610,000-0.80reported discrete quarter

Quarterly Charts

Macro Cross-References

Latest quarter (10-Q)

Latest 10-Q source: 0001810806-26-000032.

Extracted structurally from real Item 2 body heading to real Item 3/4 boundary. Confidence: high. Filing date: 2026-05-07. Report date: 2026-03-31.

Item 2. Management's Discussion and Analysis of Financial Condition and Results of Operations

Please read the following discussion and analysis of our financial condition and results of operations together with our condensed consolidated financial statements and related notes included under Part I, Item 1 of this Quarterly Report on Form 10-Q. The following discussion and analysis contains forward-looking statements that involve risks and uncertainties. Forward-looking statements are statements that attempt to forecast or anticipate future developments in our business, financial condition, or results of operations. When reviewing the discussion below, you should keep in mind the substantial risks and uncertainties that could impact our business. In particular, we encourage you to review the risks and uncertainties described in “Part I, Item 1A. Risk Factors” of our Annual Report on Form 10-K filed with the SEC on February 11, 2026 and "Part II, Item 1A. Risk Factors" included elsewhere in this report. These risks and uncertainties could cause actual results to differ materially from those projected in forward-looking statements contained in this report or implied by past results and trends. Forward-looking statements, like all statements in this report, speak only as of their date (unless another date is indicated), and we undertake no obligation to update or revise these statements in light of future developments. See the section titled "Note Regarding Forward-Looking Statements" in this report.

Overview

Unity offers a suite of tools to develop, deploy, and grow games and interactive experiences across all major platforms from mobile, PC, and console, to extended reality (XR).

Our platform consists of two complementary sets of solutions: Create Solutions and Grow Solutions.

Recent Developments in Our Business

In the first quarter of 2026, we announced we would sunset the ironSource Ads Network, one of our monetization networks, effective April 30, 2026, and engaged a financial advisor to assist with the planned divestiture of our Supersonic game publishing business. As a result, revenue from these businesses is now included in non-strategic revenue for all periods presented.

As a result of these decisions, we incurred impairments on related long-lived assets of $279 million, in the three months ended March 31, 2026, associated with these decisions. The impairment charges include $227 million within cost of revenue, and $47 million within sales and marketing expense.

For additional details, refer to the section titled "Risk Factors."

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Results of Operations

The following table summarizes our consolidated statements of operations data for the periods indicated (in thousands):

Three Months Ended March 31,

2026

2025

Revenue

$

508,238 

$

435,000 

Cost of revenue

351,637 

113,957 

Gross profit

156,601 

321,043 

Operating expenses

Research and development

254,425 

220,625 

Sales and marketing

195,377 

162,013 

General and administrative

58,212 

66,340 

Total operating expenses

508,014 

448,978 

Loss from operations

(351,413)

(127,935)

Interest expense

(6,020)

(5,891)

Interest income and other income (expense), net

3,464 

58,111 

Loss before income taxes

(353,969)

(75,715)

Provision for (benefit from) Income taxes

(7,042)

2,192 

Net loss

$

(346,927)

$

(77,907)

The following table sets forth the components of our condensed consolidated statements of operations data as a percentage of revenue for the periods indicated:

Three Months Ended March 31,

2026

2025

Revenue

100 

%

100 

%

Cost of revenue

69 

26 

Gross profit

31 

74 

Operating expenses

Research and development

50 

51 

Sales and marketing

38 

37 

General and administrative

12 

15 

Total operating expenses

100 

103 

Loss from operations

(69)

(29)

Interest expense

(1)

(1)

Interest income and other income (expense), net

— 

13 

Loss before income taxes

(70)

(17)

Provision for (benefit from) Income taxes

(2)

1 

Net loss

(68)

%

(18)

%

Revenue

Create Solutions

We generate Create Solutions revenue primarily through our suite of Create Solutions subscriptions inclusive of enterprise support, professional services, and consumption services. Our subscriptions provide customers access to technologies that allow them to edit, run, and iterate interactive, RT3D and

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2D experiences that can be created once and deployed to a variety of platforms. Enhanced support services are provided to our enterprise customers and are generally sold separately from the Create Solutions subscriptions. Professional services are provided to our customers which are primarily platform integrations, but also include consulting, training, and custom application and workflow development. Consumption services consist of cloud and hosting services provided to our customers to simplify and enhance the way our users access and harness our solutions.

Grow Solutions

We generate Grow Solutions revenue primarily through our monetization solutions and game publishing services. Our monetization solutions allow publishers, original equipment manufacturers, and mobile carriers to sell available advertising inventory on their mobile applications or hardware devices to advertisers for in-application or on-device placements. Our revenue represents the amount we retain from the transaction we are facilitating through our auction and mediation platform. Our game publishing services provide game developers with the infrastructure and expertise to launch their mobile games and manage their growth; this is achieved through marketability testing tools, live games management tools and game design support, and optimizing the implementation of the customer's commercial model. Through these publishing services, we generate revenue from in-app advertising and related purchases in published games.

As a result of the sunsetting of the ironSource Ads Network (one of our monetization networks), and planned divestiture of our Supersonic game publishing services, we expect Grow Solutions revenue to consist primarily of our "Unity Ad Network" (our principal monetization network), by the end of 2026.

Our total revenue is summarized as follows (in thousands):

Three Months Ended

March 31,

2026

2025

Create Solutions

$

156,647 

$

150,378 

Grow Solutions

351,591 

284,622 

Total revenue

$

508,238 

$

435,000 

Total revenue increased in the three months ended March 31, 2026, compared to the comparable prior year period, primarily due to an increase in Grow Solutions revenue from growth in the Unity Ad Network, driven by “Unity Vector”, partially offset by decreases in the IronSource Ad Network.

The increase in total revenue was further driven by an increase in Create Solutions revenue, primarily due to increases in subscription revenue, partially offset by decreases in cloud and hosting services revenue, driven by our portfolio reset in 2025.

Included in revenue in the three months ended March 31, 2026 and 2025, are approximately $76 million and $115 million, respectively, of non-strategic revenue, primarily in Grow Solutions.

Cost of Revenue, Gross Profit, and Gross Margin

Cost of revenue consists primarily of the amortization and impairment of intangible assets, hosting expenses, personnel costs (including salaries, benefits, and stock-based compensation) for employees and subcontractors associated with our product support and professional services organizations, and direct costs associated with our advertising offerings.

Gross profit, or revenue less cost of revenue, has been and will continue to be affected by various factors, including our product mix, the costs associated with third-party hosting services and the extent to which we expand and drive efficiencies in our hosting costs, professional services, and customer support organizations. We expect our gross profit to increase in absolute dollars in the long term, but to fluctuate from period to period as a percentage of revenue.

Cost of revenue for the three months ended March 31, 2026 increased, compared to the comparable prior year period, due to an impairment of long-lived intangible assets in the first quarter of

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2026, associated with the sunsetting of the ironSource Ads Network, and planned divestiture of our Supersonic game publishing services.

Operating Expenses

Our operating expenses consist of research and development, sales and marketing, and general and administrative expenses. The most significant component of our operating expenses is personnel-related costs, including salaries and wages, sales commissions, bonuses, benefits, stock-based compensation, and payroll taxes.

During 2025 we had workforce reductions from our ongoing restructuring efforts. In the three months ended March 31, 2025, we incurred incremental employee separation costs related to these actions of approximately $14 million, primarily within research and development, and sales and marketing. In addition, we incurred approximately $6 million of non-employee charges associated with this restructuring in 2025.

In the first quarter of 2026, we announced we would sunset the ironSource Ads Network, effective April 30, 2026, and engaged a financial advisor to assist with the planned divestiture of our Supersonic game publishing business. Following these announcements, we incurred incremental impairment charges of $279 million, in the three months ended March 31, 2026, associated with these decisions. The impairment charges include $227 million within cost of revenue, and $47 million within sales and marketing expense. Furthermore, we incurred employee separation costs and other non-employee charges of approximately $7 million, in the three months ended March 31, 2026, from our ongoing restructuring efforts. These incremental charges are primary in research and development, and sales and marketing.

Research and Development

Research and development expenses primarily consist of personnel-related costs for the design and development of our platform, amortization expenses related to intangible assets and hosting expenses. We expect our research and development expenses to increase in absolute dollars in the long term, as we invest in new solutions, expand features and functionality with existing solutions, support our artificial intelligence ("AI") and machine learning ("ML") initiatives, and enter new markets. We expect research and development expenses to fluctuate as a percentage of revenue from period to period.

Research and development expense for the three months ended March 31, 2026 increased, compared to the comparable prior year period, due to an increase in amortization costs from the change in useful lives of certain intangible assets in 2025.

Sales and Marketing

Our sales and marketing expenses consist primarily of the amortization and impairment of intangible assets, personnel-related costs, and advertising and marketing programs, including user acquisition costs and digital account-based marketing, user events such as developer-centric conferences and our annual Unite user conferences. We expect that our sales and marketing expense will decrease as a result of the divestiture of the Supersonic business.

Sales and marketing expense for the three months ended March 31, 2026 increased, compared to the comparable prior year period, primarily due to an impairment of long-lived intangible assets in the first quarter of 2026, partially offset by a decrease in personnel costs.

General and Administrative

Our general and administrative expenses primarily consist of personnel-related costs for finance, legal, human resources, IT and administrative employees; allocated overhead, and professional fees for external legal, accounting, and other professional services.

General and administrative expense

[Excerpt truncated for page length; source filing is linked above.]

Latest 10-K MD&A

Extracted structurally from real Item 7 body heading to real Item 7A/8 boundary. Confidence: high. Filing date: 2026-02-11. Report date: 2025-12-31.

Item 7. Management’s Discussion and Analysis of Financial Condition and Results of Operations

Please read the following discussion and analysis of our financial condition and results of operations together with our consolidated financial statements and related notes included under Part II, Item 8 of this Annual Report on Form 10-K. The following discussion and analysis contains forward-looking statements that involve risks and uncertainties. Forward-looking statements are statements that attempt to forecast or anticipate future developments in our business, financial condition, or results of operations. When reviewing the discussion below, you should keep in mind the substantial risks and uncertainties that could impact our business. In particular, we encourage you to review the risks and uncertainties described in "Part I, Item 1A. Risk Factors" included elsewhere in this report. These risks and uncertainties could cause actual results to differ materially from those projected in forward-looking statements contained in this report or implied by past results and trends. Forward-looking statements, like all statements in this report, speak only as of their date (unless another date is indicated), and we undertake no obligation to update or revise these statements in light of future developments. See the section titled "Note Regarding Forward-Looking Statements" in this report.

This section of this Form 10-K generally discusses 2025 and 2024 items and year-to-year comparisons between 2025 and 2024. Discussion of 2023 and year-over-year comparisons between

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fiscal 2024 and 2023 that are not included in this Form 10-K can be found under the heading "Management's Discussion and Analysis of Financial Condition and Results of Operation" in Part II, Item 7 of our Annual Report on Form 10-K for the fiscal year ended December 31, 2024, that was filed with the SEC on February 21, 2025, and are incorporated by reference herein.

Overview

Unity offers a suite of tools to develop, deploy, and grow games and interactive experiences across all major platforms from mobile, PC, and console, to extended reality (XR).

Our platform consists of two complementary sets of solutions: Create Solutions and Grow Solutions. Starting in the fourth quarter of 2023, we began to reset our product and service offerings to focus on our core businesses, which we refer to as our "Strategic Portfolio": primarily, the Unity Engine and related consumption services, and monetization solutions.

Recent Developments in Our Business

In the year ended December 31, 2025, we had reductions to our workforce and our office footprint, that resulted in approximately $33 million in employee separation costs, and $14 million of non-employee charges associated with these reductions. We will continue to evaluate our facility needs.

For additional details, refer to the section titled "Risk Factors."

Results of Operations

The following table summarizes our consolidated statements of operations data for the periods indicated (in thousands):

Year Ended December 31,

2025

2024

2023

Revenue

$

1,849,648 

$

1,813,255 

$

2,187,317 

Cost of revenue

477,739 

480,853 

733,722 

Gross profit

1,371,909 

1,332,402 

1,453,595 

Operating expenses

Research and development

929,516 

924,830 

1,053,588 

Sales and marketing

652,907 

752,649 

834,625 

General and administrative

268,539 

410,072 

398,176 

Total operating expenses

1,850,962 

2,087,551 

2,286,389 

Loss from operations

(479,053)

(755,149)

(832,794)

Interest expense

(24,007)

(23,542)

(24,580)

Interest income and other income (expense), net

107,862 

111,558 

59,529 

Loss before income taxes

(395,198)

(667,133)

(797,845)

Provision for (benefit from) Income taxes

6,295 

(2,846)

28,477 

Net loss

$

(401,493)

$

(664,287)

$

(826,322)

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The following table sets forth the components of our consolidated statements of operations data as a percentage of revenue for the periods indicated:

Year Ended December 31,

2025

2024

2023

Revenue

100 

%

100 

%

100 

%

Cost of revenue

26 

27 

34 

Gross profit

74 

73 

66 

Operating expenses

Research and development

50 

51 

48 

Sales and marketing

35 

41 

38 

General and administrative

15 

23 

18 

Total operating expenses

100 

115 

104 

Loss from operations

(26)

(42)

(38)

Interest expense

(1)

(1)

(1)

Interest income and other income (expense), net

6 

6 

2 

Loss before income taxes

(21)

(37)

(37)

Provision for (benefit from) Income taxes

1 

0 

1 

Net loss

(22)

%

(37)

%

(38)

%

Revenue

Create Solutions

We generate Create Solutions revenue primarily through our suite of Create Solutions subscriptions inclusive of enterprise support, professional services, and consumption services. Our subscriptions provide customers access to technologies that allow them to edit, run, and iterate interactive, RT3D and 2D experiences that can be created once and deployed to a variety of platforms. Enhanced support services are provided to our enterprise customers and are generally sold separately from the Create Solutions subscriptions. Professional services are provided to our customers which are primarily platform integrations, but also include consulting, training, and custom application and workflow development. Consumption services consist of cloud and hosting services provided to our customers to simplify and enhance the way our users access and harness our solutions.

Grow Solutions

We generate Grow Solutions revenue primarily through our monetization solutions and game publishing services. Our monetization solutions allow publishers, original equipment manufacturers, and mobile carriers to sell available advertising inventory on their mobile applications or hardware devices to advertisers for in-application or on-device placements. Our revenue represents the amount we retain from the transaction we are facilitating through our auction and mediation platform. Our game publishing services provide game developers with the infrastructure and expertise to launch their mobile games and manage their growth; this is achieved through marketability testing tools, live games management tools and game design support, and optimizing the implementation of the customer's commercial model. Through these publishing services, we generate revenue from in-app advertising and related purchases in published games.

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Our total revenue is summarized as follows (in thousands):

Year Ended

December 31,

2025

2024

2023

Create Solutions

$

621,409 

$

613,966 

$

859,174 

Grow Solutions

1,228,239 

1,199,289 

1,328,143 

Total revenue

$

1,849,648 

$

1,813,255 

$

2,187,317 

Total revenue increased in the year ended December 31, 2025, compared to the comparable prior year period, primarily due to an increase in Grow Solutions revenue driven by migrating one of our advertising networks, which we call the "Unity Ad Network", to our new AI Platform, which we call “Unity Vector”, partially offset by decreases in our other advertising network, which we call the "IronSource Ad Network". As a result of these changes the Unity Ad Network and IronSource Ad Network represent 56% and 11%, respectively, of total Grow Solutions revenue for the fourth quarter of 2025.

The increase in total revenue was further driven by an increase in Create Solutions revenue, driven by increases in subscription revenue, offset by decreases in consumption services revenue, driven by our portfolio reset.

Included in revenue in the years ended December 31, 2025 and 2024, are approximately $28 million and $90 million, respectively, of revenue associated with the non-strategic portfolio, primarily in Create Solutions, generated mainly in North America and Europe.

Cost of Revenue, Gross Profit, and Gross Margin

Cost of revenue consists primarily of personnel costs (including salaries, benefits, and stock-based compensation) for employees and subcontractors associated with our product support and professional services organizations, hosting expenses, the amortization of intangible assets, and direct costs associated with our advertising offerings.

Gross profit, or revenue less cost of revenue, has been and will continue to be affected by various factors, including our product mix, the costs associated with third-party hosting services and the extent to which we expand and drive efficiencies in our hosting costs, professional services, and customer support organizations. We expect our gross profit to increase in absolute dollars in the long term, but to fluctuate from period to period as a percentage of revenue.

Cost of revenue for the year ended December 31, 2025 was roughly flat, compared to the comparable prior year period, due to a decrease in personnel costs, driven by our reductions in headcount, offset by an increase in hosting and other direct costs to support the revenue growth in our advertising networks.

Operating Expenses

Our operating expenses consist of research and development, sales and marketing, and general and administrative expenses. The most significant component of our operating expenses is personnel-related costs, including salaries and wages, sales commissions, bonuses, benefits, stock-based compensation, and payroll taxes.

In January 2024, we commenced a plan to reduce our workforce, and we mutually agreed to the departure of the founders of ironSource Ltd. Following these announcements and substantially in the first quarter of 2024, we incurred incremental employee separation costs of approximately $214 million in the year ended December 31, 2024, largely driven by the acceleration and modification of equity awards, including $15 million within cost of revenue, $48 million within research and development expense, $58 million within sales and marketing expense, and $93 million within general and administrative expense. In addition, we incurred approximately $53 million of non-employee charges associated with this restructuring in 2024, largely within research and development expense.

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Further, during 2025 we had additional workforce reductions. In the year ended December 31, 2025, we incurred incremental employee separation costs related to these actions of approximately $33 million, primarily within research and development, and sales and marketing. In addition, we incurred approximately $14 million of non-employee charges associated with this restructuring in 2025.

Additionally, starting in the third quarter of 2025 we revised down our estimate of the remaining useful life of certain intangible assets, due to those assets no longer being actively developed or planned for incorporation into future Unity offerings. These intangible assets primarily arose from our acquisition of Wētā FX Limited, and their useful lives were reduced from four to seven years, down to one to three years. This change in estimate increased the amortization expense in our consolidated financial statements by $77 million for the year ended December 31, 2025, primarily in research and development expense.

Research and Development

Research and development expenses primarily consist of personnel-related costs for the design and development of our platform, hosting expenses, and amortization expenses related to intangible assets. We expect our research and development expenses to increase in absolute dollars in the long term, as we invest in new solutions, expand features and functionality with existing solutions, and enter new markets. We expect research and development expenses to fluctuate as a percentage of revenue from period to period.

Research and development expense for the year ended December 31, 2025 was roughly flat, compared to the comparable prior year period, due to a decrease in personnel costs driven by our reductions in headcount, offset by an increase in amortization costs from the change in useful lives of certain intangible assets.

Sales and Marketing

Our sales and marketing expenses consist primarily of personnel-related costs, amortization expenses related to intangible assets, and advertising and marketing programs, including user acquisition costs and digital account-based marketing, user events such as developer-centric conferences and our annual Unite user conferences. We expect that our sales and marketing expense will increase in absolute dollars in the long term, as we increase our user acquisition spend, direct marketing and community outreach activities, and invest in additional tools and technologies. We expect sales and marketing expenses to fluctuate as a percentage of revenue from period to period.

Sales and marketing expense for the year ended December 31, 2025 decreased, compared to the comparable prior year period, primarily due to a decrease in personnel costs, driven by our reductions in headcount.

General and Administrative

Our general and administrative expenses primarily consist of personnel-related costs for finance, legal, human resources, IT and administrative employees; allocated overhead, and professional fees for external legal, accounting, and other professional services. We expect that our general and administrative expenses will increase in absolute dollars in the long term, as we scale to support the growth of our business. We expect general and administrative expenses to fluctuate as a percentage of revenue from period to period.

General and administrative expense for the year ended December 31, 2025 decreased, compared to the comparable prior year period, primarily due to decreases in personnel-related costs and in impairments of operating lease assets, both driven by lower employee separation costs and reductions in our real estate footprint due to restructuring in 2025.

Interest Expense

Interest expense consists primarily of interest expense associated with our convertible debt and amortization of debt issuance costs.

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Interest expense for the year ended December 31, 2025 increased, compared to the comparable prior year period, due to the amortization of new debt issuance costs from the issuance of the 2030 Notes, partially offset by a reduction in the amortization of debt issuance costs, driven by the repurchase of a portion of the 2026 Notes.

Interest Income and Other Income (Expense), Net

Interest income and other income (expense), net, consists primarily of interest income earned on our cash and cash equivalents, gains on the repurchase of convertible debt, and foreign currency gains and losses. As we have expanded our global operations, our exposure to fluctuations in foreign currencies has increased, and we expect this to continue.

Interest income and other income (expense), net, for the year ended December 31, 2025 decreased, compared to the comparable prior year period, primarily due to changes in the amount of gain recognized from the repurchase of convertible debt. In the first quarter of 2024, we recognized $61.4 million of gain on repurchase of convertible debt, compared to $42.7 million in the first quarter of 2025. This decrease was partially offset by gains from foreign exchange.

Provision for (benefit from) Income taxes

Provision for (benefit from) income taxes consists primarily of income taxes in certain foreign jurisdictions where we conduct business. We have a valuation allowance against certain of our deferred tax assets, including NOL carryforwards and tax credits related primarily to research and development. Our overall effective income tax rate in future periods may be affected by the geographic mix of earnings in the countries in which we operate. Our future effective tax rate may also be affected by changes in the valuation of our deferred tax assets or liabilities, or changes in tax laws, regulations, or accounting principles in the jurisdictions in which we conduct business. See Note 13, "Income Taxes," of the Notes to Consolidated Financial Statements.

The provision for income taxes for the year ended December 31, 2025 changed as compared to the benefit from income taxes in the comparable prior year period, primarily due to higher earnings in foreign jurisdictions and the absence of a tax benefit recognized in the first quarter of 2024 in connection with our restructuring activities.

Non-GAAP Financial Measures

To supplement our consolidated financial statements prepared and presented in accordance with 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.

Adjusted Gross Profit , Adjusted EBITDA, and Adjusted EPS

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 EBITDA as net income or loss excluding benefits or expenses associated with stock-based compensation, amortization of acquired intangible assets, depreciation, restructurings and

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reorganizations, interest, income tax, and other non-operating activities, which primarily consist of foreign exchange rate gains or losses.

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.

We use adjusted gross profit, adjusted EBITDA, and adjusted EPS, in conjunction with traditional GAAP measures to evaluate our financial performance. We believe that adjusted gross profit, adjusted EBITDA, and adjusted EPS provide our management and investors consistency and comparability with our past financial performance and facilitates period-to-period comparisons of operations, as these metrics exclude expenses that we do not consider to be indicative of our overall operating performance.

Adjusted gross profit, adjusted EBITDA, and adjusted EPS have limitations as analytical tools, and you should not consider them in isolation or as a substitute for analysis of our results as reported under GAAP. Some of these limitations are:

•they exclude expense associated with our equity compensation plans, although equity compensation has been, and will continue to be, an important part of our compensation strategy;

•adjusted gross profit, adjusted EBITDA, and adjusted EPS excludes the expense of amortization of acquired intangible assets and depreciation of property and equipment, and although these are non-cash expenses, the assets being amortized may have to be replaced in the future and adjusted gross profit, adjusted EBITDA, and adjusted EPS does not reflect cash expenditure for such replacements;

•adjusted EBITDA, and adjusted EPS exclude costs incurred from our acquisitions;

•adjusted gross profit, adjusted EBITDA, and adjusted EPS exclude costs incurred from restructuring activities;

•adjusted EBITDA, and adjusted EPS exclude costs incurred from legal settlements that we anticipate recovering through insurance, and subsequent recoveries of those amounts;

•the expenses and other items that we exclude in our calculation of adjusted gross profit, adjusted EBITDA, and adjusted EPS may differ from the expenses and other items, if any, that other companies may exclude from this measure or similarly titled measures, which reduces their usefulness as comparative measures.

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The following table presents a reconciliation of our adjusted gross profit to our GAAP gross profit, the most directly comparable measure as determined in accordance with GAAP, for the periods presented (in thousands):

Year Ended

December 31,

2025

2024

GAAP gross profit

$

1,371,909 

$

1,332,402 

Add:

Stock-based compensation expense

39,103 

43,566 

Amortization of intangible assets expense

108,399 

108,580 

Depreciation expense

6,941 

9,613 

Restructuring and reorganization costs

1,787 

15,154 

Adjusted gross profit

$

1,528,139 

$

1,509,315 

GAAP gross margin

74 

%

73 

%

Adjusted gross margin

83 

%

83 

%

The following table presents a reconciliation of our adjusted EBITDA to net loss, the most directly comparable measure as determined in accordance with GAAP, for the periods presented (in thousands):

Year Ended

December 31,

2025

2024

GAAP net loss

$

(401,493)

$

(664,287)

Stock-based compensation expense

380,159 

469,128 

Amortization of intangible assets expense

418,691 

353,371 

Depreciation expense

42,253 

55,609 

Restructuring and reorganization costs

46,781 

266,855 

Interest expense

24,007 

23,542 

Interest income and other income (expense), net

(107,862)

(111,558)

Provision for (benefit from) income taxes

6,295 

(2,846)

Adjusted EBITDA

$

408,831 

$

389,814 

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The following table presents a reconciliation of adjusted EPS to diluted net loss per share attributable to Unity Software Inc., the most directly comparable measures as determined in accordance with GAAP, for the periods presented (in thousands):

Year Ended

December 31,

2025

2024

GAAP net loss

$

(401,493)

$

(664,287)

Stock-based compensation expense

380,159 

469,128 

Amortization of intangible assets expense

418,691 

353,371 

Depreciation expense

42,253 

55,609 

Restructuring and reorganization costs

46,781 

266,855 

Income tax impact of adjusting items

(94,907)

(111,073)

Adjusted net income used for calculation of adjusted EPS, before impact of dilutive instruments

$

391,484 

$

369,603 

Increase from forgone financing costs on dilutive convertible notes, net of tax

18,729 

18,226 

Adjusted net income used for calculation of adjusted EPS, including impact of dilutive instruments

$

410,213 

$

387,829 

Weighted-average common shares used in GAAP diluted net loss per share attributable to Unity Software Inc.

420,914 

395,951 

Convertible notes

38,672 

24,766 

Stock options and PVOs

6,136 

11,197 

Unvested RSUs, PVUs, and PSUs

8,945 

4,820 

ESPP

138 

214 

Non-GAAP weighted-average common shares used in adjusted EPS

474,805 

436,948 

GAAP diluted net loss per share attributable to Unity Software Inc.

$

(0.96)

$

(1.68)

Total impact on diluted net loss per share attributable to Unity Software Inc. from non-GAAP adjustments

$

1.89 

$

2.61 

Total impact on diluted net loss per share attributable to Unity Software Inc. from antidilutive common stock now included

$

(0.07)

$

(0.04)

Adjusted EPS

$

0.86 

$

0.89 

Free Cash Flow

We define free cash flow as net cash provided by operating activities less cash used for purchases of property and equipment. We believe that free cash flow is a useful indicator of liquidity as it measures our ability to generate cash, or our need to access additional sources of cash, to fund operations and investments.

Free cash flow has limitations as an analytical tool, and you should not consider it in isolation or as a substitute for analysis of our results as reported under GAAP. Some of these limitations are:

•it is not a substitute for net cash provided by operating activities;

•other companies may calculate free cash flow or similarly titled non-GAAP measures differently or may use other measures to evaluate their performance, all of which could reduce the usefulness of free cash flow as a tool for comparison; and

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•the utility of free cash flow is further limited as it does not reflect our future contractual commitments and does not represent the total increase or decrease in our cash balance for any given period.

The following table presents a reconciliation of free cash flow to net cash provided by operating activities, the most directly comparable measure as determined in accordance with GAAP, for the periods presented (in thousands):

Year Ended

December 31,

2025

2024

Net cash provided by operating activities

$

422,955 

$

315,553 

Less:

Purchases of property and equipment

(19,024)

(29,549)

Free cash flow

$

403,931 

$

286,004 

Net cash used in investing activities

$

(24,024)

$

(42,409)

Net cash provided by (used in) financing activities

$

110,091 

$

(338,307)

Liquidity and Capital Resources

As of December 31, 2025, our principal sources of liquidity were cash and cash equivalents totaling $2.1 billion, which were primarily held for working capital purposes. Our cash equivalents are invested primarily in time deposits and in government money market funds.

Our material cash requirements from known contractual and other obligations consist of our convertible notes, obligations under operating leases for office space, and contractual obligations for hosting services to support our business operations. See Item 8 of Part II, "Financial Statements and Supplementary Data — Note 10 — Commitments and Contingencies" for additional discussion of our principal contractual commitments.

In the first quarter of 2025 we issued $690 million in aggregate principal amount of the 2030 Notes, the proceeds of which were used to fund repurchases of outstanding 2026 Notes. We previously issued $1.7 billion in aggregate principal amount of the 2026 Notes in November 2021, of which $688 million in aggregate principal amount was repurchased in first quarter 2025 for $642 million, and $480 million in aggregate principal amount was repurchased in March 2024 for $415 million. We also previously issued $1.0 billion in aggregate principal amount of the 2027 Notes. See Note 9, "Borrowings," for additional discussion of the Notes.

Since our inception, we have generated losses from our operations as reflected in our accumulated deficit of $4.1 billion as of December 31, 2025. We expect to continue to incur operating losses on a GAAP basis for the foreseeable future due to the investments we will continue to make in research and development, sales and marketing, and general and administrative. As a result, we may require additional capital to execute our strategic initiatives to grow our business.

We believe our existing sources of liquidity will be sufficient to meet our working capital and capital expenditures for at least the next 12 months, including our current intent to settle the principal amount of the 2026 Notes with cash upon maturity in November 2026. We believe we will meet longer-term expected future cash requirements and obligations through a combination of cash flows from operating activities, available cash balances, and potential future equity or debt transactions. Our future capital requirements, however, will depend on many factors, including our growth rate; the timing and extent of spending to support our research and development efforts; capital expenditures to build out new facilities and purchase hardware and software; the expansion of sales and marketing activities; and our continued need to invest in our IT infrastructure to support our growth. In addition, we may enter into additional strategic partnerships as well as agreements to acquire or invest in complementary offerings, teams and

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technologies, including intellectual property rights, which could increase our cash requirements. As a result of these and other factors, we may choose or be required to seek additional equity or debt financing sooner than we currently anticipate. In addition, depending on prevailing market conditions, our liquidity requirements, contractual restrictions, and other factors, we may also from time to time seek to retire or purchase our outstanding debt, including the Notes, through cash purchases and/or exchanges for equity securities, in open market purchases, privately negotiated transactions or otherwise. If additional financing is required from outside sources, we may not be able to raise it on terms acceptable to us, or at all, including as a result of macroeconomic conditions such as high interest rates, volatility in the capital markets and liquidity concerns at, or failures of, banks and other financial institutions. If we are unable to raise additional capital when required, or if we cannot expand our operations or otherwise capitalize on our business opportunities because we lack sufficient capital, our business, results of operations, and financial condition would be adversely affected.

Our changes in cash flows were as follows (in thousands):

Year Ended December 31,

2025

2024

2023

Net cash provided by operating activities

$

422,955 

$

315,553 

$

234,700 

Net cash provided by (used in) investing activities

(24,024)

(42,409)

44,040 

Net cash provided by (used in) financing activities

110,091 

(338,307)

(174,015)

Effect of foreign exchange rate changes on cash, cash equivalents, and restricted cash

27,398 

(11,223)

(6,146)

Net change in cash, cash equivalents, and restricted cash

$

536,420 

$

(76,386)

$

98,579 

Cash Provided by Operating Activities

During the year ended December 31, 2025, net cash provided by operating activities was primarily due to a decrease in our net loss, adjusted for certain non-cash items, which include depreciation and amortization, stock-based compensation, gain on convertible notes, impairments, and other, and to a lesser extent, an increase in operating assets and liabilities. Our cash flows can fluctuate from period to period due to revenue seasonality, timing of billings, collections, and publisher payments, and historical cash flows are not necessarily indicative of our results in any future period.

Cash Used in Investing Activities

During the year ended December 31, 2025, net cash used in investing activities consisted primarily of purchases of property and equipment.

Cash Provided by Financing Activities

During the year ended December 31, 2025, net cash provided by financing activities consisted of proceeds from issuance of convertible notes, and the issuance of common stock upon exercise of stock options and purchase of ESPP shares, offset by repayments of convertible notes and the purchase of capped calls.

Critical Accounting Policies and Estimates

Management's discussion and analysis of our financial condition and results of operations is based on our consolidated financial statements, which have been prepared in accordance with U.S. GAAP. These principles require us to make estimates and assumptions that affect the reported amounts of assets, liabilities, revenue, expenses, and related disclosures. Our estimates are based on our historical experience and on various other assumptions that we believe are reasonable under the circumstances. To the extent that there are material differences between these estimates and our actual results, our future financial statements will be affected.

The critical accounting estimates, assumptions and judgments that we believe have the most significant impact on our consolidated financial statements are described below.

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Revenue Recognition

Subscriptions to our Create Solutions provide customers with software, embedded cloud functionality, and software updates. Significant judgment is required to determine the level of integration and interdependencies among the individual promises included in our Create Solutions subscriptions. This determination influences whether the software is a distinct and separate performance obligation that should be recognized at a point in time or whether the software should be combined with other promises and recognized over time. Given that the software and software updates are highly interdependent and interrelated, we have concluded that the two promises would be combined as a single performance obligation and recognized over time. We consider the embedded cloud functionality to be a separate performance obligation, however, its pattern of performance aligns with the software and software updates, which enables us to treat the subscription agreements as one performance obligation that is recognized ratably over the term of the agreement.

Income Taxes

We are subject to income taxes in the United States and numerous foreign jurisdictions. Significant judgment is required in determining the provision for income taxes and income tax assets and liabilities, including evaluating uncertainties in the application of accounting principles and complex tax laws.

We use the asset and liability method under Financial Accounting Standards Board ("FASB") Accounting Standards Codification ("ASC") Topic 740, Income Taxes, when accounting for income taxes. Deferred tax assets and liabilities are recognized for the estimated future tax consequences attributable to differences between the financial statement carrying amounts of existing assets and liabilities and their respective tax bases. Deferred tax assets and liabilities are measured using enacted tax rates expected to apply to taxable income in the years in which those temporary differences are expected to be recovered or settled. Deferred tax expense or benefit is the result of changes in the deferred tax asset and liability.

We record a valuation allowance to reduce our deferred tax assets to the net amount that we believe is more likely than not to be realized. We consider all available evidence, both positive and negative, including historical levels of income, expectations and risks associated with estimates of future taxable income, and ongoing tax planning strategies in assessing the need for a valuation allowance.

We recognize tax benefits from uncertain tax positions only if we believe that it is more likely than not that the tax position will be sustained on examination by the taxing authorities based on the technical merits of the position. Although we believe that we have adequately reserved for our uncertain tax positions (including net interest and penalties), we can provide no assurance that the final tax outcome of these matters will not be materially different. We make adjustments to these reserves in accordance with the income tax accounting guidance when facts and circumstances change, such as the closing of a tax audit or the refinement of an estimate. To the extent that the final tax outcome of these matters is different from the amounts recorded, such differences will affect the provision for income taxes in the period in which such determination is made and could have a material impact on our financial condition and operating results. We recognize interest and penalties related to unrecognized tax benefits within income tax expense in the accompanying consolidated statement of operations.