Unity Software Inc. (NYSE: U) shares dropped more than 28% intra-day on Wednesday after the company issued weaker-than-expected first-quarter fiscal 2026 guidance, despite posting stronger-than-anticipated fourth-quarter results.
The video game software developer reported fourth-quarter earnings per share of $0.24, exceeding analyst estimates of $0.21. Revenue rose to $503.1 million from $457 million a year earlier, topping the $488.95 million consensus.
Create Solutions revenue increased to $165 million from $152 million in the fourth quarter of 2024, while Grow Solutions revenue climbed to $338 million from $305 million a year ago. Adjusted EBITDA reached $125 million, reflecting a 25% margin.
For the first quarter of 2026, Unity projected revenue between $480 million and $490 million, below analyst expectations of $491.8 million. The company indicated that Grow revenue would be flat sequentially, while Create revenue would deliver double-digit year-over-year growth excluding non-strategic revenue.
Unity expects first-quarter adjusted EBITDA of $105 million to $110 million.
