Unity Software Inc. Q4 FY2025 earnings call

• Vector has had three consecutive quarters of mid-teen sequential revenue growth, with revenue growing 53% in the first three quarters since launch, and January 2026 being Vector's best revenue month ever.
• IronSource ad network will represent less than 6% of total Unity Software Inc. revenue in Q1 2026 and will become an even smaller component over time, displacing commoditized lower-margin ad network revenue with AI platform revenue.
• Create business saw fastest year-over-year growth in more than two years, with 50% growth in China, and Unity 6 being adopted faster than any previous version.
• In 2026, Create business will focus on collaboration (authoring work accessible by web browser with shareable project and gameplay views) and AI authoring (unveiling a beta of upgraded Unity AI for natural language-driven game creation).

Grow segment: In Q4, Grow revenue was $338 million, up 6% sequentially and 11% year over year. Vector represented 56% of Grow revenue, experiencing mid-teen sequential growth for the third consecutive quarter. The IronSource ad network had a $7 million sequential revenue decline, representing 11% of Grow revenue for the quarter. Create segment: Q4 revenue was $165 million, up 8% year over year. Excluding non-strategic revenue, Create grew 16% year over year, with strong growth in China driven by interoperability with local platforms and compatibility with consumer channels.

• Total first quarter revenues expected to be $480 million to $490 million and adjusted EBITDA $105 million to $110 million.
• Grow revenue forecasted to be flat sequentially in Q1 due to seasonality, but Vector expected to grow 10% sequentially; Grow to return to sequential growth in Q2.
• Create expected to have double-digit year-over-year revenue growth in Q1 excluding non-strategic revenue, with similar growth cadence in 2026 excluding non-strategic revenue and one-time items.
• Adjusted EBITDA margins expected to expand 300 basis points year over year in Q1 and improve throughout 2026 despite investment in product roadmap.

Q: Matthew Cost asked about the progress of harvesting low-hanging fruit for Vector and the drag of IronSource.

A: Matthew Bromberg stated Vector continues to grow strongly, with no natural ceiling, and IronSource will become less material to revenue.

Q: Matthew Cost inquired about commerce demand.

A: Matthew Bromberg said customer reaction to commerce product is positive, moving to early access next week, GA in Q2, with strong interest due to accelerating regulatory changes and integration benefits.

Q: Alec Brondolo asked about Meta's impact on iOS inventory and CloudX.

A: Matthew Bromberg said Meta's impact on Vector was minimal, and CloudX partnership is positive for industry transparency, but mediation is not material to Unity's strategy.

Q: Brent Thill asked about Google Genie.

A: Matthew Bromberg said AI is a tailwind for video game industry, Genie's world models are complementary, integrated into Unity engine for refinement.

Q: Vasily Karasyov asked about commerce economics and benefits.

A: Matthew Bromberg said Unity participates in e-commerce economics, with benefits to Vector and overall value to customers.

Q: Eric Sheridan asked about January growth vs Q1 and Create business.

A: Jarrod Yahes said Vector had mid-teen seq growth in Q4, January was record, and Create has strong growth with improved customer feedback.

Q: William Lampen asked about Genie pricing and IronSource's derivative costs.

A: Matthew Bromberg said AI accessibility opens monetization opportunities, and Jarrod Yahes said IronSource transition leads to higher-margin, scalable business.

Q: Andrew Boone asked about developer data framework and collaboration monetization.

A: Matthew Bromberg said developer data framework testing is going well, with plans to monetize collaboration through seat licenses and AI token consumption.

Q: Dylan Becker asked about Vector growth and non-Vector components.

A: Matthew Bromberg confirmed Vector's growth and IronSource's decline, with non-IronSource Grow components showing sequential growth.

Q: Martin Yang asked about China mini apps growth.

A: Matthew Bromberg said Unity benefits from China's growth through compatibility with local platforms and deep developer relationships, both in Create and Grow segments