Unity Software Inc. (NYSE:U) shares are trading lower Wednesday after the company reported fourth-quarter financial results and issued first-quarter revenue guidance below estimates.
- Unity stock is feeling bearish pressure. Why is U stock dropping?
Q4 Results And Q1 Guidance
Unity reported adjusted earnings per share of 24 cents, beating the consensus estimate of 20 cents. In addition, the company reported revenue of $503.08 million, beating the consensus estimate of $491.42 million.
Create Solutions revenue rose 8% year over year to $165 million, driven by strong growth in subscription revenue. Grow Solutions revenue increased 11% to $338 million, supported by mid-teen sequential quarterly growth from Unity Vector, partially offset by declines in the IronSource Ad Network.
GAAP net loss was $89 million, or 21 cents per share, compared with a net loss of $123 million, or 30 cents per share, in the prior-year quarter. Adjusted EBITDA totaled $125 million, with a margin of 25%, compared with $106 million and a 23% margin a year earlier. Free cash flow was $119 million.
Net cash provided by operating activities was $121 million. As of Dec. 31, 2025, cash, cash equivalents and restricted cash totaled $2.06 billion.
Looking ahead, the company sees first-quarter revenue of $480.00 million to $490.00 million, versus the consensus estimate of $493.93 million. In Grow, revenue is expected to be flat sequentially, while Create is expected to deliver double-digit year-over-year growth, excluding non-strategic revenue.
Technical Analysis: Trading Below Key Averages With Bearish Pressure
Unity is currently trading 37.9% below its 20-day simple moving average (SMA) and 44.9% below its 100-day SMA, indicating significant weakness in the short to medium term. Over the past 12 months, shares have decreased by 49.03%, and they are positioned closer to their 52-week lows than highs, reflecting ongoing challenges.
The RSI is at 35.17, which is considered neutral territory, while the MACD is below its signal line, indicating bearish pressure on the stock. The combination of neutral RSI and bearish MACD suggests mixed momentum, indicating that traders should remain cautious.
- Key Resistance: $23.00
- Key Support: $20.00
Benzinga Edge Rankings
Below is the Benzinga Edge scorecard for Unity Software, highlighting its strengths and weaknesses compared to the broader market:
- Momentum: 60.87 — Stock is showing moderate performance indicators.
The Verdict: Unity Software’s Benzinga Edge signal reveals a moderate momentum score, suggesting that while the stock is not performing poorly, it is not capitalizing on current market strength. Investors should watch for potential improvements in performance as the company approaches its earnings report.
Unity Shares Fall Lower
U Price Action: At the time of writing, Unity shares ar trading 26.50% lower at $19.62, according to data from Benzinga Pro.
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