ZACKS·2025-11-28 16:31Core Insights - The competition between Roblox Corporation (RBLX) and Unity Software Inc. (U) highlights their respective strengths in the metaverse and digital interaction space, with Roblox focusing on user-generated gaming and Unity on development tools for various immersive experiences [1][2] Summary of Roblox (RBLX) - Roblox has seen a significant increase in daily active users, reaching 151.5 million, a 70% year-over-year growth, with total engagement hours at 39.6 billion [3] - The company reported $1.92 billion in bookings, also up 70% year over year, driven by increased payer penetration and strong performance in emerging markets like India and Indonesia [4] - Developer earnings reached a record $427.9 million in Q3 2025, surpassing $1 billion in the first nine months of 2025, supported by major tech upgrades and expansion into competitive gaming genres [5] - Despite strong bookings, Roblox faces near-term margin compression due to rising costs in infrastructure and safety initiatives, which may delay profitability [6][7] Summary of Unity (U) - Unity's Q3 2025 revenues were $470.6 million, reflecting a 5% year-over-year increase, with a notable 11% sequential growth in its Grow segment driven by Vector AI adoption [8] - The company achieved $109 million in adjusted EBITDA with 23% margins, marking a significant turnaround from previous restructuring phases [8] - Unity's Vector AI platform is scalable and enhances return on ad spend (ROAS) for developers, positioning it as a long-term growth engine [9] - Unity is diversifying its offerings beyond game engine software into areas like cross-platform commerce and AR/XR technologies, with Unity 6 adoption accelerating to 9.4 million downloads, a 42% increase quarter over quarter [10][11] - However, Unity's total revenue growth remains low compared to high-growth peers, with guidance for mid-single-digit growth in the Grow segment for Q4 2025 [12] Financial Estimates - The Zacks Consensus Estimate for RBLX's 2026 sales indicates a year-over-year growth of 21.8%, but the loss per share is expected to widen to $1.94 [13] - For Unity, the fiscal 2026 sales and EPS estimates imply year-over-year growth of 12.1% and 13.4%, respectively, with earnings estimates having increased recently [14] Price Performance & Valuation - RBLX stock has gained 9.4% over the past six months, while U's shares have surged 78.7% in the same period [15] - RBLX is trading at a forward price-to-sales ratio of 7.63X, below its median of 8.69X, while U's forward sales multiple is at 8.92X, above its median of 5.59X [17] Conclusion - Unity appears better positioned than Roblox, benefiting from improved profitability and cash flow, while Roblox's heavy spending is impacting margins and delaying profitability gains [19][21]