U · Forward model · Bull case
The Bull case, 20 quarters out
Each segment is projected from its own operating driver, rolled up into consolidated cash flow, and discounted back to a fair value per share. The assumptions below are editable — change them and every number on this page moves with them.
Basis quarter 2026 Q2, reported 6 August 2026. Consolidated revenue $546,468k reconciles exactly to Create Solutions $157,618k plus Grow Solutions $388,850k, and does so in all fourteen historical quarters. Disclosed and copied as reported: both vertical revenue lines in eleven of fourteen quarters, the 2026 Q3 guidance ($540-550m strategic revenue, $380-385m strategic Grow, $159-163m strategic Create, $20m non-strategic, $185-190m adjusted EBITDA), shares outstanding, cash, convertible-note carrying value and the CEO price-vesting hurdles. Derived and marked estimated: the 2023 Q4, 2024 Q4 and 2025 Q4 splits, each full year less the nine months in that year's third-quarter 10-Q. Assumed, and unavoidably so: the per-vertical EBITDA margins, because Unity reports one operating segment and publishes no segment profitability at all. Those assumed margins are constrained rather than free - Create 35.0% and Grow 32.0% blend to 32.97% on the 2026 Q2 strategic revenue base of $486.6m against the 32.93% Unity actually delivered ($160,191k of adjusted EBITDA on $486,411k of strategic revenue), and the model's 2026 Q3 output of $187.6m of EBITDA on $563.5m of revenue sits inside the guided $185-190m on revenue inside the $560-570m the guidance implies. Two things this model deliberately does not do: it does not build a Unity Vector vertical, because Vector revenue is anchored in only three of the last eight quarters, and it does not build a Strategic / Non-Strategic vertical split, because 2025 Q3 and 2025 Q4 were never published on that basis. Free cash flow here is EBITDA less capex less tax, with no working-capital swing, so it will read below Unity's reported free cash flow in quarters when the $440.7m of publisher payables builds.
Vector keeps beating its own plan. It grew 23% sequentially in the basis quarter against a 12-13% internal expectation, reached a $1bn annual run rate two quarters early, and the growth was demonstrably new advertiser spend rather than recaptured ironSource spend - only $3m of the quarter's Vector growth came from ironSource customers. If the 19-21% sequential guide for 2026 Q3 is beaten the way 12-13% was, Grow compounds through 2027 and the margin expansion Unity has delivered for six straight quarters continues past the 33% guided for 2026 Q3. The lift is deliberately smaller than the 23%-against-13% beat that inspired it - 1.5 points a quarter of extra growth and 3 points of margin, with the exit multiple at 24x, still below the 26.9x the shares carry today - because a case built on repeating the largest beat in the company's history is not a case.
Latest: $1.43B (2031Q2E)
| Period | Value |
|---|---|
| 2023Q1 | $500M |
| 2023Q2 | $533M |
| 2023Q3 | $544M |
| 2023Q4 | $609M |
| 2024Q1 | $460M |
| 2024Q2 | $449M |
| 2024Q3 | $447M |
| 2024Q4 | $457M |
| 2025Q1 | $435M |
| 2025Q2 | $441M |
| 2025Q3 | $471M |
| 2025Q4 | $503M |
| 2026Q1 | $508M |
| 2026Q2 | $546M |
| 2026Q3E | $572M |
| 2026Q4E | $604M |
| 2027Q1E | $624M |
| 2027Q2E | $672M |
| 2027Q3E | $737M |
| 2027Q4E | $787M |
| 2028Q1E | $794M |
| 2028Q2E | $842M |
| 2028Q3E | $912M |
| 2028Q4E | $963M |
| 2029Q1E | $964M |
| 2029Q2E | $1.02B |
| 2029Q3E | $1.09B |
| 2029Q4E | $1.15B |
| 2030Q1E | $1.15B |
| 2030Q2E | $1.21B |
| 2030Q3E | $1.30B |
| 2030Q4E | $1.36B |
| 2031Q1E | $1.36B |
| 2031Q2E | $1.43B |
What drives each segment
Create Solutions
Growth pathThe Unity engine and everything sold around it: Unity Pro and Enterprise subscription seats, enterprise support and strategic partnerships, cloud and hosting consumption, and non-gaming RT3D licences. Unity spent 2024 and 2025 deliberately shrinking this line by cutting professional services and non-core consumption, and it has stabilised near $155m a quarter with subscription growth offsetting the runoff. It is not the growth story; it is why the growth story has a moat, because the engine generates the runtime behavioural data the Vector bidding model trades on.
Latest: $330M (2031Q2E)
| Period | Value |
|---|---|
| 2023Q1 | $187M |
| 2023Q2 | $193M |
| 2023Q3 | $189M |
| 2023Q4 | $290M |
| 2024Q1 | $164M |
| 2024Q2 | $151M |
| 2024Q3 | $147M |
| 2024Q4 | $152M |
| 2025Q1 | $150M |
| 2025Q2 | $154M |
| 2025Q3 | $152M |
| 2025Q4 | $165M |
| 2026Q1 | $157M |
| 2026Q2 | $158M |
| 2026Q3E | $163M |
| 2026Q4E | $169M |
| 2027Q1E | $176M |
| 2027Q2E | $182M |
| 2027Q3E | $189M |
| 2027Q4E | $196M |
| 2028Q1E | $204M |
| 2028Q2E | $211M |
| 2028Q3E | $219M |
| 2028Q4E | $228M |
| 2029Q1E | $236M |
| 2029Q2E | $245M |
| 2029Q3E | $254M |
| 2029Q4E | $264M |
| 2030Q1E | $274M |
| 2030Q2E | $284M |
| 2030Q3E | $295M |
| 2030Q4E | $306M |
| 2031Q1E | $318M |
| 2031Q2E | $330M |
Assumptions & reasoning
- Unity on the basis quarter: 'Create Solutions revenue was $158 million, up 2% year-over-year. The increase was driven by increases in subscription revenue, partially offset by decreases in cloud and hosting services revenue, driven by our portfolio reset in 2025.' The growth is subscription; the drag is a consumption tail that is nearly exhausted.
- The 2025 Q2 comparative carries roughly $12m of one-time term-licence revenue. Unity said Strategic Create grew 14% year over year excluding it, against the 5% headline, so reading the basis quarter's 2% year-over-year print as the run rate understates the underlying line.
- Three quarters in this history are derived, not reported: 2023 Q4, 2024 Q4 and 2025 Q4 are each the full year less the nine months reported in that year's third-quarter 10-Q. They are marked estimated. 2023 Q4 also contains roughly $99m of Weta FX contract-termination revenue, which is why it is nearly twice the surrounding quarters and why it is excluded from the seasonality work.
- Remaining performance obligations were $494m at 31 December 2025, relating primarily to Create Solutions subscriptions, Enterprise Support and Strategic Partnerships, of which roughly $225m was expected to be recognised within a year. That is the closest thing Unity publishes to a Create backlog, and it is an annual disclosure, not a quarterly one.
- No seasonality is applied. On a ratio-to-centred-moving-average decomposition the window-to-window spread exceeds the signal in three of four quarters and the two clean windows disagree in sign on both Q1 (1.066 in 2024 against 0.968 in 2025) and Q4 (0.991 against 1.061). What looks like a Q4 lift is the 2023-to-2024 portfolio-reset decline, a trend rather than a season. Rateably recognised subscription revenue should not carry a quarterly shape, and it does not.
Grow Solutions
Growth pathMobile advertising monetisation: Unity takes a share of advertiser spend routed through its networks. The line is being rebuilt in public. The Unity Ads Network, powered by the Unity Vector AI bidding model, went from 49% of Grow in 2025 Q2 to 56% in 2025 Q4 and passed a $1bn annual run rate in 2026 Q2, two quarters early, while the legacy ironSource Ads network was switched off on 30 April 2026 and the Supersonic publishing business was sold to Tripledot Studios on 4 August 2026. The constraint is auction-model quality against a pool of advertiser spend, not capacity: Unity discloses no impressions, installs, eCPM or advertiser count, so revenue growth is the only driver the disclosure supports.
Latest: $1.10B (2031Q2E)
| Period | Value |
|---|---|
| 2023Q1 | $313M |
| 2023Q2 | $340M |
| 2023Q3 | $355M |
| 2023Q4 | $319M |
| 2024Q1 | $297M |
| 2024Q2 | $298M |
| 2024Q3 | $299M |
| 2024Q4 | $305M |
| 2025Q1 | $285M |
| 2025Q2 | $287M |
| 2025Q3 | $318M |
| 2025Q4 | $338M |
| 2026Q1 | $352M |
| 2026Q2 | $389M |
| 2026Q3E | $409M |
| 2026Q4E | $435M |
| 2027Q1E | $448M |
| 2027Q2E | $490M |
| 2027Q3E | $548M |
| 2027Q4E | $591M |
| 2028Q1E | $591M |
| 2028Q2E | $631M |
| 2028Q3E | $693M |
| 2028Q4E | $736M |
| 2029Q1E | $728M |
| 2029Q2E | $771M |
| 2029Q3E | $840M |
| 2029Q4E | $887M |
| 2030Q1E | $874M |
| 2030Q2E | $923M |
| 2030Q3E | $1.00B |
| 2030Q4E | $1.06B |
| 2031Q1E | $1.04B |
| 2031Q2E | $1.10B |
Assumptions & reasoning
- The wind-down is a staircase, not a decay, and it is carried as two dated level steps rather than as a growth rate. Non-strategic revenue ran $114.8m in 2025 Q1, $89.0m in 2025 Q2, $75.8m in 2026 Q1 and $60.1m in 2026 Q2, is guided to $20m in 2026 Q3 including about one month of Supersonic, and goes to approximately nil after that. At 2026 Q2 essentially all of it sat in this line: Grow Solutions $388.85m less Strategic Grow $328.955m is $59.9m of the $60.1m total.
- The single most important read-through from the 6 August 2026 call is that Vector's growth is new spend rather than recaptured ironSource spend. Jarrod Yahes: 'The sunsetting of the ironSource Ad Network had a negligible positive impact on Vector growth in the quarter with only $3 million in Q2 Vector revenue growth from ironSource customers.' That is what makes extrapolating the strategic-Grow sequential rate through the wind-down defensible rather than circular.
- Vector is carried as evidence inside this line, not as its own vertical. Its revenue is anchored in only three periods - 49% of Grow in 2025 Q2, 56% of Grow in 2025 Q4, and a 'substantially over $1 billion' annual run rate in 2026 Q2 - so 2025 Q3, 2026 Q1 and everything before 2025 Q2 would have to be invented to build a contiguous history.
- The seasonal factors are small and deliberately damped. Ratio-to-centred-moving-average on 2023 Q1 to 2026 Q2, excluding the two 2023 observations that straddle the runtime-fee crisis, gives [0.970, 0.981, 1.018, 1.031]; the spec rounds to [0.97, 0.98, 1.02, 1.03]. The naive 2025 year-mean shape of [0.93, 0.94, 1.04, 1.10] is rejected: that is the Vector ramp wearing a season's clothes. Unity has named seasonality as a Grow driver exactly once, on the 2024 Q4 print: 'The change was driven by strong seasonal demand.'
- Publisher payables were $440.7m against $388.9m of quarterly Grow revenue, which is why operating cash flow of $205.6m ran well ahead of adjusted EBITDA of $160.2m in the basis quarter. The model's free cash flow is EBITDA less capex less tax and carries no working-capital swing, so it will read below Unity's reported free cash flow in quarters when payables build.
- Three quarters here are derived rather than reported: 2023 Q4, 2024 Q4 and 2025 Q4 are the full year less the nine months in that year's third-quarter 10-Q. They are marked estimated. 2023 Q4 also carries roughly $21m of returned ironSource customer credits.
Where each case comes from
Bear case — primary sources
The primary sources this case is built from — filings, calls and posts. Where they are claims by an interested party rather than disclosures, every number in the Bear column is what happens if they are taken at face value.
The last time Grow went sideways, and the cost still running through it
Bull case — primary sources
The primary sources this case is built from — filings, calls and posts. Where they are claims by an interested party rather than disclosures, every number in the Bull column is what happens if they are taken at face value.
Vector beat its own plan and the growth was new spend
- Aug 13, 2026 Our expectations for growth in Vector in Q2 were a robust 12% to 13% growth quarter-over-quarter. Instead, our team delivered nearly double that, racking up 23% quarter-over-quarter growth.
- Aug 13, 2026 The sunsetting of the ironSource Ad Network had a negligible positive impact on Vector growth in the quarter with only $3 million in Q2 Vector revenue growth from ironSource customers.
- Aug 6, 2026 Adjusted EBITDA of $185 million to $190 million, up 69% - 74% year-over-year.
Price hurdles case — primary sources
The primary sources this case is built from — filings, calls and posts. Where they are claims by an interested party rather than disclosures, every number in the Price hurdles column is what happens if they are taken at face value.
The board's priced view of the upside
- Aug 19, 2026 The stock price hurdles are as follows: (i) $50.00 with respect to the first vesting tranche, (ii) $60.00 with respect to the second vesting tranche, and (iii) $75.00 with respect to the third vesting tranche.
- Aug 7, 2026 Unity Software surges on wave of analyst upgrades following blockbuster Q2
From cash flow to fair value
| Present value of free cash flow, 20 quarters | $4.74B |
| Terminal-year revenue | $5.44B |
| Terminal-year EBITDA | $2.19B |
| Exit multiple, on ebitda | 24.0x |
| Terminal value | $52.64B |
| Discounted at 10.0% a year, terminal value becomes | $32.69B |
| Enterprise value | $37.43B |
| Net cash | $115M |
| Equity value | $37.54B |
| Shares | 0.44B |
| Fair value per share | $85.32 |
| Against the current price of $43.49 | +96% |
At $46.16 on 24 August 2026 and 439,987,000 shares outstanding the equity is $20.31bn; cash of $2,352.0m against $2,237.4m of convertible notes leaves net cash of $114.6m, positive for the first time in Unity's public life, so enterprise value is $20.19bn. Against the 2026 Q3 adjusted EBITDA guide annualised ($187.5m x 4 = $750m) that is 26.9x forward EV/EBITDA, and 9.2x annualised 2026 Q2 revenue. The 20.0x exit sits about seven turns below the current forward multiple, on the view that mid-teens sequential growth does not survive five years; against the model's own terminal four quarters it is equivalent to 7.5x exit EV/revenue. The converts are treated as debt throughout - netted against cash, and excluded from the share count - rather than as the 489,491,000 non-GAAP diluted shares Unity uses for adjusted EPS. This multiple, not any operating assumption, is the largest single unexamined input: the research brief could not verify a comparable ad-tech multiple, so treat it as a sensitivity.
Read the other way round: at $43.49 the market is paying 10.5x terminal-year revenue, holding every other assumption on this page fixed. That is the number to argue about.
Capex outside the verticals
Each vertical's capex is a share of its own revenue, which is the right shape for capacity that scales with sales. These are not that: fixed-size programmes with their own schedule that spend whether or not any segment grows. They are added on top, and they are why free cash flow dips in the years below.
AppsFlyer equity purchase
2026 Q4 → 2027 Q4Unity's 2026 Q2 10-Q commitments note: 'Consists of a binding obligation to acquire $100 million of shares in Appsflyer, subject to certain closing conditions and adjustments. We expect to complete this purchase by the end of 2027.' It is a company-level investment that belongs to neither vertical, so it is carried here and spread evenly across the five quarters from 2026 Q4 to 2027 Q4. The convertible repayments disclosed in the same note are deliberately absent: they are financing, and the notes are already netted against cash in the model's net cash figure.
The projected path
| Quarter | Create Solutions | Grow Solutions | Revenue | YoY | EBITDA | Capex | FCF | R40 | PV of FCF |
|---|---|---|---|---|---|---|---|---|---|
| 2026 Q3E | $163M | $409M | $572M | +22% | $208M | $4M | $173M | +52 | $169M |
| 2026 Q4E | $169M | $435M | $604M | +20% | $222M | $24M | $168M | +48 | $160M |
| 2027 Q1E | $176M | $448M | $624M | +23% | $231M | $24M | $176M | +51 | $164M |
| 2027 Q2E | $182M | $490M | $672M | +23% | $251M | $25M | $193M | +52 | $175M |
| 2027 Q3E | $189M | $548M | $737M | +29% | $278M | $25M | $215M | +58 | $191M |
| 2027 Q4E | $196M | $591M | $787M | +30% | $299M | $25M | $232M | +60 | $201M |
| 2028 Q1E | $204M | $591M | $794M | +27% | $304M | $5M | $254M | +59 | $215M |
| 2028 Q2E | $211M | $631M | $842M | +25% | $324M | $6M | $271M | +57 | $224M |
| 2028 Q3E | $219M | $693M | $912M | +24% | $353M | $6M | $295M | +56 | $238M |
| 2028 Q4E | $228M | $736M | $963M | +22% | $375M | $6M | $313M | +55 | $247M |
| 2029 Q1E | $236M | $728M | $964M | +21% | $377M | $6M | $315M | +54 | $243M |
| 2029 Q2E | $245M | $771M | $1.02B | +21% | $400M | $7M | $334M | +53 | $251M |
| 2029 Q3E | $254M | $840M | $1.09B | +20% | $432M | $7M | $361M | +53 | $265M |
| 2029 Q4E | $264M | $887M | $1.15B | +20% | $457M | $8M | $382M | +53 | $273M |
| 2030 Q1E | $274M | $874M | $1.15B | +19% | $457M | $8M | $382M | +52 | $267M |
| 2030 Q2E | $284M | $923M | $1.21B | +19% | $483M | $8M | $403M | +52 | $275M |
| 2030 Q3E | $295M | $1.00B | $1.30B | +19% | $520M | $9M | $435M | +52 | $290M |
| 2030 Q4E | $306M | $1.06B | $1.36B | +18% | $548M | $9M | $458M | +52 | $298M |
| 2031 Q1E | $318M | $1.04B | $1.36B | +18% | $548M | $9M | $458M | +52 | $291M |
| 2031 Q2E | $330M | $1.10B | $1.43B | +18% | $577M | $10M | $482M | +52 | $299M |
Every row is projected. A year-over-year change is shown only where the quarter it compares against exists — an em dash means there is no comparable quarter, not a flat year.
Model revisions
Assumptions are marked to reality as each quarter prints. Every change is appended here, with the fair value the model produced at the time, so the model's own history stays visible.
| Date | Changed | Fair value then | Note |
|---|---|---|---|
| 2026-08-27 | verticals, corporate, valuation, scenarios, notes | $45.56 | First published model, built from the verified 2026 Q2 research brief. Two verticals on the Create Solutions and Grow Solutions disaggregation, which Unity has reported for fourteen consecutive quarters and which reconciles to consolidated revenue in every one of them. The Strategic / Non-Strategic cut is used only as guidance and as a cross-check, because it exists for just four quarters and a contiguous history on that basis would require inventing 2025 Q3 and 2025 Q4. The ironSource sunset and the Supersonic sale are carried as two dated level steps inside Grow, not as a growth-rate fudge. |