Unity Software Inc

Strong Q2 performance + accelerating Vector growth (core driver) - Unity delivered record Q2 results: Strategic revenue +38% YoY and adjusted EBITDA +77% YoY with adjusted EBITDA margins ~29% (+800 bps YoY). - Unity Vector / Strategic Grow: $329M revenue, +63% YoY; +23% QoQ, which *outperformed* the company’s 12–13% expected QoQ range. - CEO cited 4 straight quarters of ~15% growth before stepping up to the near-23% level—implying a momentum step-up rather than a linear trend.

Guidance: another acceleration in Q3 with margins expanding - Q3 Strategic revenue guidance: $540M–$550M (+44% to +47% YoY). - Q3 Strategic Grow (Vector): +68% to +70% YoY, assuming Vector +19% to +21% sequential QoQ growth. - Q3 Strategic Create: +7% to +10% YoY, driven by ARPU growth and strength in China. - Q3 adjusted EBITDA: $185M–$190M with ~33% margins (+69% to +74% YoY), and management expects 6th consecutive quarter of margin expansion (+400 bps vs Q2).

AI “flywheel” + runtime data are positioned as a compounding moat—but impact is early - Management claims the strategy is a flywheel across segments: more games → more platform usage → harder discovery → higher ad demand → better ad outcomes → more value to creators/Unity ecosystem. - Vector AI updates (20+ major updates in Q2) and improved prediction/data quality are cited as the primary reason for performance. - Surprising / key milestone: Unity began for the first time to incorporate runtime player signals into Vector AI models late in Q2. - Management says it’s very early and avoids quantifying runtime’s isolated effect; they instead stress the results are from the sum of improvements and should self-perpetuate as the models learn.