Unity Software(US:U) Zhi Tong Cai Jing·2025-08-06 23:22Core Insights - Unity's advertising segment, Unity Ads, has shown strong growth, with a sequential increase of over 10% for two consecutive quarters, totaling a cumulative growth of over 25% [1][5][10] - The company is optimistic about the potential for profit margin improvement in the Grow segment, even with significant investments in future growth [1][11] - The Vector initiative is still in its early stages, with expected noticeable results starting in 2026, which will continue to enhance performance over the years [1][3][12] Financial Performance - Unity Ads has achieved a sequential growth of 15% in the previous quarter, contributing to a total growth of over 25% in the last two quarters [1][5] - The company anticipates a mid-single-digit sequential revenue growth of approximately 5% from Q2 to Q3, with the non-Vector portion of the advertising business remaining stable [1][5][10] - Create business subscription revenue has seen a year-over-year increase of double digits, with strategic revenue growing by 16% [4][5] Vector Initiative - The Vector system is a modular platform that has been successfully deployed, with expectations for ongoing enhancements in AI model performance and data processing capabilities [2][3][12] - The company believes that the integration of Vector will significantly transform its business model and enhance overall growth [3][12] - The introduction of Vector has already led to an increase in installation rates and user value, exceeding previous quarterly growth rates of 15% to 20% [3][12] Market Dynamics - Unity's advertising network growth has not significantly cannibalized other advertising expenditures, such as those from ironSource, indicating a strong value proposition for clients [1][10] - The company is optimistic about the growth potential in the Chinese market, with a revenue increase of approximately $20 million, driven by both Create and Grow business segments [8][10] - Unity's strategy focuses on enhancing user acquisition capabilities and overall platform value, rather than solely relying on mediation market gains [15][16] Future Outlook - The company is confident in the continued growth of Unity Ads, with expectations for sustained performance improvements into the third quarter [1][16] - Future enhancements in AI capabilities and data quality are seen as critical to maintaining growth momentum [10][11] - The company is committed to ongoing investments in both the Grow and Create segments to drive long-term profitability and market leadership [11][12]