Unity Shares Plunge 28% After Soft First-Quarter Guidance Overshadows Earnings Beat

Core Viewpoint - Unity Software Inc. experienced a significant drop in share price by over 28% intra-day following weaker-than-expected guidance for the first quarter of fiscal 2026, despite reporting stronger-than-anticipated fourth-quarter results [1] Group 1: Fourth Quarter Performance - The company reported fourth-quarter earnings per share of $0.24, surpassing analyst estimates of $0.21 [1] - Revenue for the fourth quarter increased to $503.1 million from $457 million a year earlier, exceeding the consensus estimate of $488.95 million [1] Group 2: Segment Performance - Create Solutions revenue rose to $165 million from $152 million in the fourth quarter of 2024 [2] - Grow Solutions revenue increased to $338 million from $305 million a year ago [2] - Adjusted EBITDA for the fourth quarter reached $125 million, reflecting a 25% margin [2] Group 3: First Quarter Guidance - For the first quarter of 2026, Unity projected revenue between $480 million and $490 million, which is below analyst expectations of $491.8 million [3] - The company indicated that Grow revenue would remain flat sequentially, while Create revenue is expected to deliver double-digit year-over-year growth, excluding non-strategic revenue [3] - Unity anticipates first-quarter adjusted EBITDA of $105 million to $110 million [3]