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U: Ad Network Exit And Publishing Divestiture Will Support Future Upside Potential

U: Upskilling Initiatives And Expanded Device Support Will Shape Future Prospects

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AnalystConsensusTarget
Not Invested
Published 20 Mar 2025
7 viewsusers have viewed this narrative update

Update shared on 24 May 2026

Fair value Increased 7.35%
Previous
24 May
US$25.57
AnalystConsensusTarget's Fair Value
US$34.39
25.7% undervalued intrinsic discount
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1Y
23.2%
7D
-4.6%

Analysts have raised their fair value estimate for Unity Software from about $32.04 to roughly $34.39, reflecting updated assumptions around revenue growth, profit margins near 24.8%, a future P/E closer to 30.2x, and a slightly lower discount rate.

What's in the News

  • Unity issued earnings guidance for the second quarter of 2026, targeting total revenue of US$505 million to US$515 million. (Corporate guidance)
  • For the first quarter of 2026, Unity announced preliminary revenue of US$505 million to US$508 million, above prior guidance of US$480 million to US$490 million, with expected Grow revenue of about US$352 million and Create revenue of about US$155 million. (Corporate guidance)
  • Unity reported unaudited impairments for the first quarter of 2026, including impairment of property and equipment of US$8,422,000 compared with US$3,470,000 a year earlier, and impairment of intangible assets of US$270,506,000. (Impairments)
  • Unity plans to sunset the ironSource Ads Network effective April 30 and has hired a financial advisor to support a potential divestiture of its Supersonic game publishing business. (Discontinued operations)
  • Nexxen announced a partnership with Unity that connects Unity’s in-app mobile supply, including access to mobile gaming inventory, into Nexxen’s demand-side platform and selected third party DSPs. Unity and Meta also extended a multi year VR platform support and enterprise agreement. (Client announcements)

Valuation Changes

  • Fair Value: updated from about $32.04 to roughly $34.39, a modest upward adjustment in the estimate.
  • Discount Rate: revised from about 9.16% to roughly 9.05%, a small reduction in the assumed risk level.
  • Revenue Growth: updated from about 13.98% to roughly 14.24%, indicating slightly higher expected top line expansion in the model.
  • Net Profit Margin: adjusted from about 1.90% to around 24.81%, a very large shift in the assumed long term profitability.
  • Future P/E: moved from about 391.08x to roughly 30.17x, reflecting a much lower multiple applied in the updated assumptions.

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Disclaimer

AnalystConsensusTarget is a tool utilizing a Large Language Model (LLM) that ingests data on consensus price targets, forecasted revenue and earnings figures, as well as the transcripts of earnings calls to produce qualitative analysis. The narratives produced by AnalystConsensusTarget are general in nature and are based solely on analyst data and publicly-available material published by the respective companies. These scenarios are not indicative of the company's future performance and are exploratory in nature. Simply Wall St has no position in the company(s) mentioned. Simply Wall St may provide the securities issuer or related entities with website advertising services for a fee, on an arm's length basis. These relationships have no impact on the way we conduct our business, the content we host, or how our content is served to users. The price targets and estimates used are consensus data, and do not constitute a recommendation to buy or sell any stock, and they do not take account of your objectives, or your financial situation. Note that AnalystConsensusTarget's analysis may not factor in the latest price-sensitive company announcements or qualitative material.