Interactive software platform Unity (NYSE:U) reported Q2 CY2026 results beating Wall Street’s revenue expectations, with sales up 23.9% year on year to $546.5 million. Its non-GAAP profit of $0.28 per share was 12.4% above analysts’ consensus estimates.
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Unity (U) Q2 CY2026 Highlights:
- Revenue: $546.5 million vs analyst estimates of $515.1 million (23.9% year-on-year growth, 6.1% beat)
- Adjusted EPS: $0.28 vs analyst estimates of $0.25 (12.4% beat)
- Adjusted EBITDA: $160.2 million vs analyst estimates of $136.6 million (29.3% margin, 17.2% beat)
- EBITDA guidance for Q3 CY2026 is $187.5 million at the midpoint, above analyst estimates of $152.2 million
- Operating Margin: -5.9%, up from -26.9% in the same quarter last year
- Free Cash Flow Margin: 37%, up from 13.1% in the previous quarter
- Billings: $557 million at quarter end, up 17.8% year on year
- Market Capitalization: $15.48 billion
Company Overview
Powering over half of the world's mobile games and expanding into industries from automotive to architecture, Unity (NYSE:U) provides software tools and services that allow developers to create, run, and monetize interactive 2D and 3D content across multiple platforms.
Revenue Growth
Reviewing a company’s long-term sales performance reveals insights into its quality. Any business can have short-term success, but a top-tier one grows for years. Over the last five years, Unity grew its sales at a 16.9% annual rate. Though this growth is acceptable on an absolute basis, we need to see more than just topline growth for the software sector, which can display significant earnings volatility. This means our bar for the sector is particularly high, reflecting the non-essential and hit-driven nature of the products and services offered. Additionally, five-year CAGR starts around Covid, when revenue was depressed then rebounded.
We at StockStory place the most emphasis on long-term growth, but within software, a half-decade historical view may miss recent innovations or disruptive industry trends. Unity’s recent performance shows its demand has slowed as its revenue was flat over the last two years. 
This quarter, Unity reported robust year-on-year revenue growth of 23.9%, and its $546.5 million of revenue topped Wall Street estimates by 6.1%.
Looking ahead, sell-side analysts expect revenue to grow 12.4% over the next 12 months. While this projection suggests its newer products and services will spur better top-line performance, it is still below the sector average.
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Billings
Billings is a non-GAAP metric that is often called “cash revenue” because it shows how much money the company has collected from customers in a certain period. This is different from revenue, which must be recognized in pieces over the length of a contract.
Unity’s billings came in at $557 million in Q2, and over the last four quarters, its growth was underwhelming as it averaged 12.2% year-on-year increases. This performance mirrored its total sales and suggests that increasing competition is causing challenges in acquiring/retaining customers. 
Customer Acquisition Efficiency
The customer acquisition cost (CAC) payback period measures the months a company needs to recoup the money spent on acquiring a new customer. This metric helps assess how quickly a business can break even on its sales and marketing investments.
Unity does a decent job acquiring new customers, and its CAC payback period checked in at 45.8 months this quarter. The company’s relatively fast recovery of its customer acquisition costs gives it the option to accelerate growth by increasing its sales and marketing investments.
Key Takeaways from Unity’s Q2 Results
We were impressed by how significantly Unity blew past analysts’ billings expectations this quarter. We were also glad its EBITDA guidance for next quarter trumped Wall Street’s estimates. Zooming out, we think this was a solid print. The stock traded up 18.3% to $41.81 immediately following the results.
Unity put up rock-solid earnings, but one quarter doesn’t necessarily make the stock a buy. Let’s see if this is a good investment. If you’re making that decision, you should consider the bigger picture of valuation, business qualities, as well as the latest earnings. We cover that in our actionable full research report which you can read here (it’s free).