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$Unity Software(U.US) | Wedbush 𝐫𝐚𝐢𝐬𝐞𝐬 𝐏𝐓 on 𝐔𝐧𝐢𝐭𝐲 𝐒𝐨𝐟𝐭𝐰𝐚𝐫𝐞 to $𝟑𝟔 from $𝟑𝟐, maintains 𝐎𝐮𝐭𝐩𝐞𝐫𝐟𝐨𝐫𝐦

$Unity Software(U.US) | Raymond James 𝐢𝐧𝐢𝐭𝐢𝐚𝐭𝐞𝐬 𝐔𝐧𝐢𝐭𝐲 𝐒𝐨𝐟𝐭𝐰𝐚𝐫𝐞 with a 𝐌𝐚𝐫𝐤𝐞𝐭 𝐏𝐞𝐫𝐟𝐨𝐫𝐦 rating

Regarding Unity Software (U), based on the latest Q1 earnings report and market performance for the week (May 4 - May 8, 2026), we have summarized the following for you:

1. This Week's Core Market Performance

Closing Performance: As of Friday's (May 8) close, Unity's stock price settled at $28.16.

Weekly Volatility: The stock experienced significant volatility this week. It was relatively stable at the beginning of the week. After the earnings release on Thursday, the market showed divergence. On Friday, it rebounded strongly (with a single-day gain of approximately 3.8%) driven by the broader market and positive analyst rating upgrades.

Technical Pattern: Currently positioned in the lower-middle range of the 52-week fluctuation band ($16.78 - $52.15), but has stabilized above the support level near $26.

2. Key Q1 Earnings Data (Released May 7, 2026)

Unity's performance this quarter can be described as "initial success in strategic transformation":

Revenue: $508 million, slightly exceeding market expectations ($505 million). The "strategic core business" showed strong growth.

Profitability (EPS): Non-GAAP earnings per share were $0.23, higher than the analyst consensus of $0.20.

Gross Profit & Margin: Adjusted EBITDA reached $138 million, with a margin of 27%, representing a significant year-over-year improvement of 800 basis points.

Profit Outlook: CEO Matthew Bromberg clearly stated that the company is on track to achieve profitability under GAAP accounting standards in the fourth quarter of 2026.

3. Business Highlights & Growth Drivers

Unity Vector (Advertising Business): Grew approximately 80% year-over-year, achieving sequential quarter-over-quarter growth of about 15% for four consecutive quarters. This is currently the strongest cash cow, with its AI-driven advertising effectiveness significantly boosting customer returns.

AI Deployment: Unity AI entered public beta this week, receiving a positive market response.

Market Share: Maintains a 70% market share in the mobile game development sector.

New Moves: Plans to launch Unity Commerce (business platform) and has already secured partnerships with major clients like Voodoo.

4. Institutional Views & Market Outlook (Watch for Monday, May 11)

Institutional Ratings: Following the earnings report, Oppenheimer raised its price target. TipRanks noted that the average analyst price target has moved up to $40. Barclays also issued a positive forecast.

Downside/Risk Factors:

Business Contraction: The company is divesting non-strategic businesses (e.g., some peripheral operations of the former ironSource/Supersonic), which will pressure revenue scale in the short term.

Debt: Attention is needed on the $558 million convertible bond maturing in November 2026. Although current cash flow is sufficient ($2.15 billion cash reserve), it remains a point for financial monitoring.

Summary & Recommendation:

At Monday's market open, Unity is likely to continue the upward momentum from this Friday. If you are a medium-to-long-term investor, you can monitor the progress of its GAAP profitability turnaround. For short-term traders, it is advisable to watch the psychological resistance level at $30.00.

$Unity Software(U.US) | 𝐔𝐧𝐢𝐭𝐲: Oppenheimer maintains 𝐎𝐮𝐭𝐩𝐞𝐫𝐟𝐨𝐫𝐦, raises 𝐏𝐓 𝐭𝐨 $𝟑𝟖

Unity Software ($Unity Software(U.US)) has indeed been causing distress for many investors with its recent performance. From over $40 at the beginning of the year to around $27 now (even dipping below $20 at one point), this "ankle-deep" decline is mainly due to the company undergoing a major, transformative restructuring. Here is an in-depth summary of the reasons behind the price drop and future trends for $Unity Software(U.US): Revenue Gap Period: Proactively Cutting BusinessUnity is undergoing strategic restructuring, actively shutting down or divesting non-core businesses like the advertising network and game publishing. While this is for long-term profitability, it has caused total revenue figures to appear severely "shrunk" in the short term, triggering market sell-offs. AI Competition Panic: Google's ImpactIn early 2026, Google released Project Genie, claiming it can directly generate 3D game worlds using AI. The market once worried that traditional game engines like Unity would be completely replaced by AI, shaking its valuation logic. Conservative Financial Guidance: In previous earnings reports, Unity was very cautious in its performance forecast for the first half of 2026. In the current market environment of "focusing on cash flow, not dreams," even the slightest downward revision in performance expectations is magnified by leveraged funds. The "Plot Twist" After the May 7th Earnings ReportAlthough you've seen it fall for a long time, the just-released Q1 earnings report actually released strong signals of counterattack: Revenue Exceeds Expectations: Actual revenue was $508 million, exceeding market expectations. Vector Platform Explosion: Revenue from the company's AI-driven advertising platform, Vector, surged 80% year-on-year, proving that Unity not only survived but found a new growth point in the AI era. Profitability Timeline Accelerated: The company announced it expects to achieve GAAP profitability in Q4 2026, earlier than analysts expected. Future Trend Summary: Reshaping After the Pain1. Short-term (Consolidating the Bottom): The stock price is currently in a consolidation period after rebounding from the low (around $18). The $26-$28 range is a key area for turnover. If it can stabilize here, it indicates the market has digested the negative news of "business shutdowns." Medium-to-Long-Term Bullish Logic: More Than Just Games: Unity's dominant position in industrial digital twins, automotive HMI systems, and as a core partner for spatial computing (Apple Vision Pro) remains solid. Cost Reduction and Efficiency Improvement: After large-scale layoffs and structural simplification, Unity's profit margins are recovering rapidly. Valuation Reversion: The average target price given by institutions is around $37, representing over 30% potential upside from the current price.💡 Investment Advice Trapped Investors: If you bought above $40, selling now might be "cutting meat before dawn." The Q1 report shows fundamentals have bottomed out and are recovering. Consider averaging down with small purchases below $25 to dilute your cost. Onlookers: This is a high-volatility, high-beta stock, suitable for aggressive positions. If it can break through the $32 resistance level later, the reversal trend will be officially confirmed. In a nutshell: $Unity Software(U.US) fell earlier because "cutting off an arm to survive" was too painful. Now the wound is healing, and the AI engine Vector is its nuclear weapon for the second half of the year. As long as it becomes profitable in Q4 as scheduled, this stock will likely return above $40.

Unity 1Q26 First Take: Unity pre-announced 1Q results in late Mar and disclosed plans to separate IronSource and Supersonic; background in our prior note (Unity Q1 业绩预告点评). Revenue came in slightly above the pre-announced range.Excluding scope changes, EBITDA beat as tighter cost control following portfolio refocus drove operating efficiency.

Also supportive for sentiment: management guided Q2 ads revenue above Street. Engine revenue is in line as the early-year price hike underpins organic growth.

Note BBG consensus has a lag: several models were submitted before Mar, so the Strategic segment in some estimates still includes IronSource and Supersonic. That makes the Q2 Strategic Grow revenue guide of $300mn look below the $340mn consensus.

Adjusting consensus to exclude IronSource and Supersonic, the market was at Approx. $290mn for Q2 Strategic Grow; the $300mn guide is slightly above, implying Unity Ads ~50% YoY.We expect Q2 to benefit from the D28 algorithm driving deeper client penetration and data integration with the Runtime engine. With competition intensifying at the margin, management’s view on the longer-term vector trend is key; watch for more detailed KPIs on the call. $Unity Software(U.US)

$Unity Software(U.US) rallied after hours on a Q1 pre-announcement, with revenue and profit both topping prior guidance. It also said it will divest IronSource and Supersonic by end-Apr, effectively shedding the overpaid M&A overhang from the prior leadership team.

This will reduce revenue scale and narrow the footprint, diluting the once-aspirational end-to-end moat. For Unity, where operating efficiency has been middling, that may not be a bad trade-off. The carve-outs should sharpen focus, lower execution burden on mgmt, and preserve core strengths.

1、广告：轻装上阵、Vector 超预期

Grow rose 24% YoY; ex-IronSource and Supersonic, it was up 48% YoY. IronSource has been a drag for more than a quarter, so the key marginal driver here is Vector, which is guided to grow 15% QoQ vs. prior 10%.

IronSource is expected to contribute only 6% of Q1 Grow, so the divestiture’s impact should be limited, with core ad tech absorbed over the past three years. Integration between the two teams had frictions, and LevelPlay (the mediation platform), once separate from Unity, can partner more openly with Unity’s competitors.

2、引擎：核心业务稳定增长，继续关注 AI 侵蚀影响

Create grew 3% YoY; ex-Weta and professional services, the core engine was up 14% YoY (vs. 16% last quarter, with quarterly growth around 15% over the past year), in line with guidance. Divestiture effects continue to fade and the core engine is growing steadily, with no visible AI erosion yet.While Dolphin Research believes LLMs are unlikely to disrupt the Unity engine in the near to medium term (see《血洗游戏股，谷歌打出 ‘灭霸’ 响指》), there could be partial impact. Given the rapid pace of AI, we will keep watching developments.

3、利润：经营效率整体提升

Adj. EBITDA modestly beat in Q1, and margins should improve after the IronSource & Supersonic carve-outs. The goodwill and other amortization tied to the premium IronSource deal will be taken at disposal, and Supersonic’s lower margin vs. ads means post-spin profitability should converge toward ad-like levels.

Although investors mainly track adj. EBITDA, some funds will also watch GAAP margins. Intangible amortization expense is nearly 24% of total revenue, accounting for about half of total adjustments.

4、估值：当下仍定价了更多 AI 侵蚀的悲观预期

With the business reset, we update valuation accordingly. We assume a neutral case.

(1) Grow: neutral to slightly constructive. About 20% of Grow will be carved out in Q1; the remaining strategic core, primarily Unity Ads, is roughly $280mn. Vector was $190mn last quarter; +15% QoQ implies ~$220mn in Q1, already ~80% of the core.

Assuming Vector sustains ~10% QoQ growth through the year, FY revenue would be ~$1.01bn. Adding ~$240mn from other Grow (held flat at ~$60mn in Q1, annualized) and ~$73mn from IronSource & Supersonic yields total Grow of ~$1.32bn.

(2) Create: neutral stance with cautious valuation. At a 5% growth rate (with carve-out effects), FY revenue is ~$650mn.

(3) Grow at 6–7x P/S (raised from 5x to reflect segment adj. EBITDA margin moving from ~25% to 30%+) is worth ~$7.9–9.2bn. Create at 3–4x (cut from 7x to align with pressured top-tier SaaS and to price in some AI erosion) is worth ~$2.0–2.6bn.

Sum-of-the-parts is ~$9.9–11.8bn. Versus the current after-hours market cap of ~$8.4bn, there is still room, suggesting the market continues to price in heavier future AI erosion.

Unity 4Q25 First Take: The battered stock sold off again post-earnings. The quarter beat, but Q1 guidance for Grow missed, triggering another plunge amid fragile sentiment.

The company guided Q1 Grow to be flat QoQ, vs. the Street at +5% QoQ and some bullish buyside at +10% QoQ. Expectations for acceleration were anchored to improving Vector performance and a broader rollout across IronSource and Tapjoy, with D28 optimization expected by some to land in Q1.

These views largely overlooked Q1 seasonality and the fact that there are fewer ad-serving days than in Q4.

Flat growth guidance poured cold water on the bull case, implying those Q1 assumptions will likely be pushed out. Given management’s typically conservative guides, Dolphin Research believes the reality may not be that 'bad'.

That said, based on channel checks, Vector-driven improvement in Unity’s ads revenue still looks intact; the debate is the cadence.

Create performed well, despite recent hits from Genie aimed squarely at the engine business. Management guided double-digit YoY growth for Create in Q1, well above expectations, and the trend points to stronger momentum. $Unity Software(U.US)

$Unity Software(U.US) I'll be the first to express my opinion