Financial Data and Key Metrics Changes - The company exceeded the top end of guidance for revenue by $16 million and adjusted EBITDA by $15 million in Q2 [18] - Grow revenue was $287 million, down 4% year over year but up 1% sequentially, with strong performance from the Unity ad network [18][19] - Create revenue was $154 million, reflecting a 2% increase both year over year and sequentially, with a 16% growth when adjusting for non-strategic revenue [19][20] - Adjusted EBITDA for the quarter was $90 million, representing a 21% margin [20] - Free cash flow reached a record $127 million, an increase of $47 million year over year [21] Business Line Data and Key Metrics Changes - The growth segment saw a 15% sequential revenue growth driven by Unity Vector, which is expected to continue into Q3 [6][9] - The Create segment experienced double-digit subscription growth, with Unity 6.2 showing strong adoption [13][19] - The Unity ad network now comprises approximately half of total grow revenue, with expectations for this percentage to increase [8][22] Market Data and Key Metrics Changes - The company reported significant growth in China, with a $20 million sequential increase in revenue, driven by improvements in both Create and Grow segments [57] - The advertising business is seeing broad-based growth, with 85 of the top 100 mobile games in the world using Unity [10][11] Company Strategy and Development Direction - The company is focusing on accelerated product innovation and enhancing customer value, particularly through Unity Vector [5][12] - Major partnerships were announced with Tencent and Scopely, aimed at strengthening Unity's position in the gaming ecosystem [14][15] - The company is also expanding its presence in non-gaming sectors, with automotive and healthcare applications showing strong growth [16][17] Management's Comments on Operating Environment and Future Outlook - Management expressed confidence in the future growth potential, particularly with the integration of AI and data-driven insights into their products [11][12] - The company anticipates that the full impact of its competitive advantages will be realized starting in 2026 [11] - Management highlighted the importance of maintaining operational efficiency while investing in high-impact initiatives [21][22] Other Important Information - The company is implementing a developer data framework to enhance transparency and control over data usage [12] - Adjusted gross margins are at 83%, with expectations for further margin expansion as the business scales [23] Q&A Session Summary Question: Potential to expand Unity ad strength to other products - Management confirmed that Unity Vector is modular and can be applied to improve other ad products [28] Question: Rate of improvement with Vector - Management indicated that Vector is a significant upgrade, with ongoing improvements expected over time [31] Question: Next steps in product evolution for Grow - Management emphasized that improvements will be gradual and ongoing, leveraging AI capabilities [35] Question: Clarification on a $12 million perpetual deal in Create - Management explained that this was a small component of a larger contract and does not represent recurring revenue [38] Question: Guidance on Grow revenue - Management expects mid-single-digit growth in Grow, with strong performance anticipated from the Unity ad network [46] Question: Growth in China - Management noted that the growth in China is primarily due to improvements in the Create business [56] Question: Incrementality vs. cannibalization in ad spend - Management stated that cannibalization is minimal, with growth driven by increased value provided to customers [64] Question: Scalability of ad spend on Vector - Management acknowledged that while there are strong performance improvements, there is still work to be done to optimize scalability [96]

Financial Data and Key Metrics Changes - Unity exceeded the top end of guidance for revenue by $16 million and adjusted EBITDA by $15 million in Q2 2025 [18][20] - Total revenue for Q2 was $441 million, with adjusted EBITDA at $90 million, representing a 21% margin [19][20] - Free cash flow reached a record $127 million, up $47 million year-over-year [20] Business Line Data and Key Metrics Changes - In the Grow segment, revenue was $287 million, down 4% year-over-year but up 1% sequentially, driven by strong performance from the Unity ad network [18][19] - The Create segment reported revenue of $154 million, up 2% year-over-year and sequentially, with strategic revenue growth at 16% when adjusted for non-strategic revenue [19][20] Market Data and Key Metrics Changes - The Unity ad network now comprises approximately half of total Grow revenue, with expectations for this percentage to continue increasing [6][22] - The company reported significant growth in China, with a $20 million sequential increase in revenue, driven by improvements in both Create and Grow segments [56][57] Company Strategy and Development Direction - Unity is focusing on the full emergence of Unity Vector, which has exceeded expectations and is expected to drive sustainable growth [4][5] - The company is investing in AI capabilities to enhance both the advertising and content creation experiences, with a long-term vision for growth in these areas [10][13] - Partnerships with major companies like Tencent and Scopely are aimed at leveraging Unity's platform for mutual growth [14][15] Management's Comments on Operating Environment and Future Outlook - Management expressed confidence in the future, citing the unique consumer insights gained from Unity's position as the leading game development platform [10][11] - The company anticipates continued improvements in performance and growth driven by AI advancements and the integration of new data capabilities [10][12] Other Important Information - Unity's adjusted gross margins are at 83%, with expectations for further margin expansion as the company scales its operations [23][80] - The Developer Data Framework is set to enhance transparency and control for developers regarding data usage [11][45] Q&A Session Summary Question: Potential to expand Unity ad strength to other products - Management confirmed that Unity Vector is modular and can be applied to improve other ad products [28] Question: Rate of improvement with Vector - Management indicated that Vector is a significant upgrade and will continue to provide performance lifts over time [32] Question: Next steps in the evolution of the product - Management emphasized ongoing improvements and investments in AI to enhance existing capabilities [35] Question: Guidance on Grow revenue - Management clarified that mid-single-digit growth implies strong performance in the Unity ad network, with stabilization in non-Vector parts [46] Question: Growth in China - Management noted that the increase in China revenue is primarily due to improvements in the Create business [56][57] Question: Strategic importance of mediation in ad pricing - Management highlighted the unique position of Unity in the marketplace and the importance of mediation in optimizing ad performance [111]