(U) Unity Software - Overview
Sector: Technology | Industry: Software - Application | Exchange: NYSE (USA) | Market Cap: 13.301m USD | Total Return: 11.5% in 12m
Avg Turnover: 279M
Qual. Beats: 0
Rev. Trend: -49.9%
Qual. Beats: 0
Warnings
Interest Coverage Ratio -28.7 is critical
Altman Z'' -0.57 < 1.0 - financial distress zone
Tailwinds
Idiosyncratic Leader, Confidence
Unity Software Inc. (U) operates a comprehensive platform for creating and monetizing real-time 2D and 3D content across mobile, PC, console, and extended reality (XR) devices. The business model is divided into Create Solutions, which provides the engine and development tools, and Grow Solutions, which focuses on user acquisition and advertising revenue. The company integrates artificial intelligence to streamline the development lifecycle and offers professional services to enterprise and government clients.
The application software sector is increasingly characterized by a transition toward consumption-based pricing and integrated AI workflows to reduce development costs. Unity operates within a duopoly in the high-end mobile game engine market, benefiting from high switching costs associated with its proprietary development environment. Investors may find it useful to evaluate platform performance metrics on ValueRay to better understand long-term growth trends. Headquartered in San Francisco, the company maintains a global presence with significant operations across Asia, Europe, and the Americas.
- Ad monetization revenue recovers as Grow Solutions segment stabilizes after restructuring
- Subscription growth from updated runtime fees impacts Create Solutions segment margins
- Enterprise adoption of real-time 3D tools expands beyond core gaming market
- Operating expense reductions through workforce optimization drive path toward GAAP profitability
- AI-driven developer tools accelerate content creation cycle and platform stickiness
| Net Income: -672.0m TTM > 0 and > 6% of Revenue |
| FCF/TA: 0.07 > 0.02 and ΔFCF/TA 2.66 > 1.0 |
| NWC/Revenue: 73.96% < 20% (prev 79.48%; Δ -5.52% < -1%) |
| CFO/TA 0.07 > 3% & CFO 481.2m > Net Income -672.0m |
| Net Debt/EBITDA: error (EBITDA <= 0) |
| Current Ratio: 1.95 > 1.5 & < 3 |
| Outstanding Shares: last quarter (434.3m) vs 12m ago 5.44% < -2% |
| Gross Margin: 59.38% > 18% (prev 74.82%; Δ -15.44% > 0.5%) |
| Asset Turnover: 29.21% > 50% (prev 26.90%; Δ 2.30% > 0%) |
| Interest Coverage Ratio: -28.75 > 6 (EBIT TTM -693.9m / Interest Expense TTM 24.1m) |
| A: 0.22 (Total Current Assets 2.92b - Total Current Liabilities 1.50b) / Total Assets 6.52b |
| B: -0.69 (Retained Earnings -4.49b / Total Assets 6.52b) |
| C: -0.11 (EBIT TTM -693.9m / Avg Total Assets 6.58b) |
| D: 0.91 (Book Value of Equity 2.98b / Total Liabilities 3.28b) |
| Altman-Z'' = -0.57 = B |
| DSRI: 1.10 (Receivables 654.0m/553.0m, Revenue 1.92b/1.79b) |
| GMI: 1.26 (GM 74.82% / 59.38%) |
| AQI: 0.84 (AQ_t 0.54 / AQ_t-1 0.65) |
| SGI: 1.08 (Revenue 1.92b / 1.79b) |
| TATA: -0.18 (NI -672.0m - CFO 481.2m) / TA 6.52b) |
| Beneish M = -2.77 (Cap -4..+1) = A |
As of June 04, 2026, the stock is trading at USD 29.22 with a total of 5,709,647 shares traded.
Over the past week, the price has changed by +5.26%,
over one month by +5.41%,
over three months by +45.95% and
over the past year by +11.53%.
Unity Software has received a consensus analysts rating of 3.97. Therefore, it is recommended to buy U.
- StrongBuy: 12
- Buy: 4
- Hold: 13
- Sell: 0
- StrongSell: 0
| Analysts Target Price | 34.8 | 19.2% |
P/E Forward = 32.3625
P/S = 6.9173
P/B = 4.4698
Revenue TTM = 1.92b USD
EBIT TTM = -693.9m USD
EBITDA TTM = -201.9m USD
Long Term Debt = 1.68b USD (from longTermDebt, last quarter)
Short Term Debt = 556.8m USD (from shortTermDebt, last quarter)
Debt = 2.50b USD (from shortLongTermDebtTotal, last quarter) + Leases 263.3m
Net Debt = 358.8m USD (calculated: Debt 2.50b - CCE 2.14b)
Enterprise Value = 13.7b USD (13.3b + Debt 2.50b - CCE 2.14b)
Interest Coverage Ratio = -28.75 (Ebit TTM -693.9m / Interest Expense TTM 24.1m)
EV/FCF = 29.50x (Enterprise Value 13.7b / FCF TTM 463.1m)
FCF Yield = 3.39% (FCF TTM 463.1m / Enterprise Value 13.7b)
FCF Margin = 24.08% (FCF TTM 463.1m / Revenue TTM 1.92b)
Net Margin = -34.95% (Net Income TTM -672.0m / Revenue TTM 1.92b)
Gross Margin = 59.38% ((Revenue TTM 1.92b - Cost of Revenue TTM 781.1m) / Revenue TTM)
Gross Margin QoQ = 30.81% (prev 61.20%)
Tobins Q-Ratio = 2.09 (Enterprise Value 13.7b / Total Assets 6.52b)
Interest Expense / Debt = 0.97% (Interest Expense 24.1m / Debt 2.50b)
Taxrate = 21.0% (US federal default 21%)
NOPAT = -548.2m (EBIT -693.9m * (1 - 21.00%)) [loss with tax shield]
Current Ratio = 1.95 (Total Current Assets 2.92b / Total Current Liabilities 1.50b)
Debt / Equity = 0.84 (Debt 2.50b / totalStockholderEquity, last quarter 2.98b)
Debt / EBITDA = -1.78 (negative EBITDA) (Net Debt 358.8m / EBITDA -201.9m)
Debt / FCF = 0.77 (Net Debt 358.8m / FCF TTM 463.1m)
Total Stockholder Equity = 3.15b (last 4 quarters mean from totalStockholderEquity)
RoA = -10.21% (Net Income -672.0m / Total Assets 6.52b)
RoE = -21.33% (Net Income TTM -672.0m / Total Stockholder Equity 3.15b)
RoCE = -14.36% (EBIT -693.9m / Capital Employed (Equity 3.15b + L.T.Debt 1.68b))
RoIC = -10.00% (negative operating profit) (NOPAT -548.2m / Invested Capital 5.48b)
WACC = 10.76% (E(13.3b)/V(15.8b) * Re(12.64%) + D(2.50b)/V(15.8b) * Rd(0.97%) * (1-Tc(0.21)))
Discount Rate = 12.64% (= CAPM, Blume Beta Adj.)
Shares (quarterly) Correlation: 100.00 | Cagr: 5.51%
[DCF] Terminal Value 70.58% ; FCFF base≈395.9m ; Y1≈453.8m ; Y5≈667.8m
[DCF] Fair Price = 15.31 (EV 7.04b - Net Debt 358.8m = Equity 6.68b / Shares 436.5m; r=10.76% [WACC]; 5y FCF grow 15.0% → 2.50% )
EPS Correlation: N/A | EPS CAGR: N/A | SUE: -0.03 | # QB: 0
Revenue Correlation: -49.88 | Revenue CAGR: -4.05% | SUE: 0.32 | # QB: 0
EPS current Quarter (2026-06-30): EPS=0.25 | Chg30d=+4.23% | Revisions=+0% | Analysts=10
EPS next Quarter (2026-09-30): EPS=0.28 | Chg30d=+7.12% | Revisions=+27% | Analysts=10
EPS current Year (2026-12-31): EPS=1.03 | Chg30d=+1.16% | Revisions=+20% | GrowthEPS=+19.9% | GrowthRev=+15.2%
EPS next Year (2027-12-31): EPS=1.34 | Chg30d=+5.67% | Revisions=+43% | GrowthEPS=+29.5% | GrowthRev=+14.2%
[Analyst] Revisions Ratio: +43%