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- **Revenue Surge**: Q3 Grow up 11% sequentially, Create (excl. nonstrategic) +13% YoY, driven by Vector AI and China expansion.
- **AI-Driven Innovations**: Developer Data Framework adoption 90%, Unity IAP targets $120B mobile commerce market.
- **Financial Strength**: EBITDA margins 23%, free cash flow $151M, with Q4 guidance for $480M-$490M revenue.
- **China Growth**: China now 20% of Create revenue, with Vector powering global user acquisition for Chinese games.
- **Long-Term Vision**: Runtime data to enhance monetization in 2026, AR/VR expansion targeting 39% headset growth.

**【CEO Summary Section】**
- **Revenue Growth**: Q3 revenue exceeded expectations, with the Grow segment up 11% sequentially and 6% YoY, driven by Vector AI. Create segment grew 13% YoY (excluding nonstrategic revenue), supported by subscription growth and China momentum.
- **AI and Product Innovations**: Launched the Developer Data Framework (90% adoption in new projects) and Unity IAP, enabling cross-platform commerce. Expanded into AR/VR with Android XR support, targeting 39% headset shipment growth in 2025.
- **Market Leadership**: Unity Engine 6.2 downloads surged 42% QoQ, with high-quality games like PEAK and Schedule I achieving viral success. Runtime data integration expected to enhance user acquisition in 2026.

**【CFO Financial Commentary】**
- **Financial Highlights**: Adjusted EBITDA reached $109M (23% margins), up 200bps YoY. Free cash flow hit $151M, a $36M YoY increase. Total revenue guidance for Q4: $480M-$490M, with Grow forecasting mid-single-digit growth and Create steady expansion.
- **Cost Efficiency**: Operating expenses declined as a percentage of revenue, with automation and AI driving margin improvements. Free cash flow conversion remains strong, supported by restructuring efforts.

**【Q&A Key Highlights】**
- **Vector Scalability**: CEO emphasized Vector's broad-based performance across geographies and genres, with no structural barriers to growth. Runtime data adoption will provide long-term moat, though impact is multiyear.
- **China Momentum**: Create revenue in China grew to 20% of total, driven by compatibility with Open Harmony and IP enforcement. Grow benefits from Chinese game publishers using Vector globally.
- **Capital Allocation**: CFO highlighted $1.9B cash and $2.2B convertible debt, prioritizing organic growth and disciplined M&A. No immediate need for capital raises despite refinancing needs.
- **AI and Compute**: CEO noted compute costs as a key growth enabler, with efficiency improvements offsetting scale. Long-term margin expansion expected via operating leverage and high contribution margins.

Unity Software Inc. (U) Q3 2025 Earnings Call Transcript

Revenue

Sales and Services Revenue

Financing Services Revenue

Other Revenue

Cost of Revenue

Cost of Goods and Services

Cost of Financing Services

Other Cost

Gross Profit

Other Operating Income

Operating Expenses

Selling, General and Administrative Expenses

Selling and Marketing Expenses

General and Administrative Expenses

Research and Development Expenses

Loss on Bad Debts

Loss on Impairment of Other Assets

Loss on Disposal of Assets

Other Operating Expenses

Operating Income

Non-Operating Income (Loss)

Income (Loss) from Affiliates

Income (Loss) from Associates

Income (Loss) from Joint ventures

Gain (Loss) on Other Investment

Gain (Loss) on Change in Fair Value

Gain (Loss) on Foreign Currency Exchange

Other Non-Operating Income (Loss)

Net Interest Expense

Interest Expense

Interest Income

Pretax Income From Continuing Operations

Income Tax Expense

Current Income Tax

Deferred Income Tax

Income Tax Adjustments

Net Income from Continuing Operations

Income from Discontinued Operations

Other Items Before Net Income

Net Income

Net Income Attributable to Minority Interests

Net Income Attributable to Owners of the Company

Preferred Stock Dividends

Other Adjustments

Net Income Attributable to Common Stockholders

Other Comprehensive Income

Total Comprehensive Income

Total Comprehensive Income Attributable to Minority Interests

Total Comprehensive Income Attributable to Owners of the Company

Basic EPS

Basic EPS from Continuing Operations

Basic EPS from Discontinued Operations

Diluted EPS

Diluted EPS from Continuing Operations

Diluted EPS from Discontinued Operations

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