Unity Stock Tanks 30% on Weak Outlook Despite Q4 Beat

SelfRugger · 2026-02-26T11:34:47+00:00

Unity Software's stock dropped over 30% after reporting mixed quarterly results, despite earnings and revenue beats. Cautious guidance for Q1 contributed to investor concerns about future growth.

SelfRugger

2026-02-26 11:34:47

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Unity Stock Tanks 30% on Weak Outlook Despite Q4 Beat

Nauman Khan

Thu, February 12, 2026 at 3:27 AM GMT+9 1 min read

In this article:

-27.91%

This article first appeared on GuruFocus.

Unity Software Inc. (NYSE:U) shares dropped sharply on Wednesday, falling more than 30% as investors digested mixed quarterly results and cautious first-quarter guidance.

The company reported fourth-quarter adjusted earnings of $0.24 per share, above the consensus estimate of $0.20. Revenue came in at $503.1 million, beating the expected $491.4 million.

Warning! GuruFocus has detected 6 Warning Signs with U.

Is U fairly valued? Test your thesis with our free DCF calculator.

Create Solutions revenue rose 8% year-over-year to $165 million, driven by subscription growth. Grow Solutions revenue increased 11% to $338 million, supported by mid-teen sequential gains from Unity Vector, partially offset by declines in the IronSource Ad Network.

GAAP net loss narrowed to $89 million, or $0.21 per share, from a year-ago loss of $123 million. Adjusted EBITDA reached $125 million with a 25% margin. Free cash flow totaled $119 million, while cash and equivalents stood at $2.06 billion at year-end.

Looking ahead, Unity projects first-quarter revenue of $480 million to $490 million, slightly below the $493.9 million consensus. Create is expected to show double-digit growth, while Grow remains flat sequentially.

Technically, U is trading below key moving averages, with bearish momentum suggesting investors approach with caution.

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