Core Insights - Unity Software reported Q4 2025 non-GAAP EPS of 24 cents, a significant improvement from a loss of 30 cents in the same quarter last year, exceeding the Zacks Consensus Estimate by 20% [1] - The company's net revenues reached $503.09 million, reflecting a 10% year-over-year increase and surpassing the consensus mark by 2.21% [1] Revenue Breakdown - Create Solutions generated revenues of $165 million, an 8% increase year over year; excluding $10 million in non-strategic revenue from Q4 2024, the growth was 16% driven by strong subscription revenue [2] - Grow Solutions revenues were $338 million, up 11% year over year; Unity Vector accounted for 56% of total Grow Solutions revenues and achieved mid-teens sequential revenue growth for the third consecutive quarter [3] Operating Performance - Non-GAAP gross profit increased by 8.9% year over year to $415 million, with an adjusted gross margin of 82%, down 100 basis points year over year [4] - Research & development expenses rose 7.9% year over year to $143.8 million, while as a percentage of revenues, it contracted 100 basis points to 28% [4] - Sales and marketing expenses increased by 0.7% year over year to $103.8 million, with a percentage of revenues contracting 200 basis points to 21% [5] - General & administrative expenses grew 10.2% year over year to $42.6 million, remaining flat at 8% as a percentage of revenues [5] - Adjusted EBITDA was reported at $125 million, a 17.7% increase year over year, with an adjusted EBITDA margin of 25%, improving by 200 basis points compared to the prior year [6] Balance Sheet & Cash Flow - As of December 31, 2025, Unity had cash and cash equivalents of $2.06 billion, up from $1.91 billion as of September 30, 2025 [7] - Operating cash flow for the quarter was $121 million, an increase from $112 million in the year-ago quarter; free cash flow was $119 million compared to $106 million in the prior year, with a free cash flow margin of 24% [8] - For the full year 2025, Unity generated $404 million in free cash flow, representing a 41% year-over-year growth and converting 99% of adjusted EBITDA to free cash flow [8] - The company successfully refinanced $690 million of its 2026 convertible notes, extending maturities to 2030 [9] Guidance - For Q1 2026, Unity anticipates revenues between $480 million and $490 million; expects flat sequential revenue in Grow, with Vector projected to grow 10% sequentially, and double-digit year-over-year growth in Create, excluding non-strategic revenues [12] - Non-GAAP adjusted EBITDA is expected to be in the range of $105 million to $110 million, indicating an adjusted EBITDA margin expansion of 300 basis points year over year [12]