Unity Software shares plummet on weak first quarter guidance

Core Viewpoint - Unity Software Inc reported fourth quarter 2025 earnings that exceeded Wall Street forecasts, but shares fell over 28% due to a cautious outlook for Q1 2026 [1] Financial Performance - For Q1 2026, Unity projected revenue between $480 million and $490 million, below Wall Street's consensus of $491.8 million, with adjusted EBITDA expected to be between $105 million and $110 million [1] - Fourth quarter revenue was $503.1 million, a 10% increase from $457 million a year earlier, surpassing analysts' estimate of $492.8 million [2] - Create Solutions revenue rose 8% year-over-year to $165 million, driven by subscription growth, while Grow Solutions revenue increased 11% to $338 million, primarily led by Unity Vector [3] Segment Performance - Unity Vector accounted for 56% of the Grow Solutions segment's revenue, contributing to its growth, although this was partially offset by a decline in the IronSource Ad Network [3] - CEO Matt Bromberg highlighted that the fourth quarter results exceeded guidance, driven by strong performance from Vector and the best growth in Create Solutions in over two years [4] Strategic Outlook - Unity aims to become the essential infrastructure for the next generation of interactive entertainment, with rapid growth in Vector and Unity 6 adoption at unprecedented rates [5]