Unity Software (U) Q2 FY26 earnings call: guidance and Q&A

How do Vector and Create businesses drive each other, especially with Unity AI? What was the material contribution of runtime data to Vector's Q2 strength, and what's its future potential?

Matt Bromberg explained the "flywheel" where more games (Create) drive more platform usage and discovery (Vector). He noted runtime data's initial incorporation into Vector models towards the end of Q2 was very encouraging, but its impact is part of overall product enhancements, not a single isolatable factor. He emphasized the long-term strategic advantage of runtime data.

“We began implementing signals from the run time into Vector towards the end of the second quarter. We're super pleased with what we're seeing. We are having continued success around customers continuing to opt into our data development framework, which sits underneath all these efforts in run time.”

asked by Matthew Cost · answered by Matthew Bromberg

How does Unity balance margin preservation with credit inclusion in Unity AI subscriptions? How have customer needs evolved for Unity Commerce since its announcement?

Matt Bromberg stated Unity AI is in open beta, designed to be more effective and efficient than frontier models for game development, with a strategy to maximize authoring platform usage. Unity Commerce, now generally available, is free to developers, simplifies payment processing, provides purchase behavior data for ad models, and offers a small economic benefit. Early feedback is positive, with active onboarding of new partners like Hutch.

“Our primary goal is to maximize the usage of the authoring platform that I was just describing to Matt. So we're not looking to restrict our customers, and which is why we opened up both our CLI and our API in Unity 7.”

asked by Alec Brondolo · answered by Matthew Bromberg

Is the "step function model improvements" a historical driver for Vector, or a future opportunity? Can you share more details on the scope and economics of the Netflix partnership?

Matt Bromberg confirmed that AI drives product velocity, enabling over 20 major updates to Vector in Q2. He explained Vector's progress comes from continuous product enhancement, higher-quality data (like runtime), and improved model efficiency. The Netflix partnership is a multi-year deal to support their gaming initiatives, emblematic of Unity's platform relationships, and aims to expand opportunities for developers and access for consumers.

“The short answer is yes. So we -- in my prepared remarks when I noted that AI is a real driver of product velocity and quality, this is one of the areas that I was thinking. As I noted, we delivered more than 20 product enhancements to Vector during the second quarter.”

asked by William Lampen · answered by Matthew Bromberg

How is Unity 7 different from previous generations, and how will it support growth in both segments?

Matt Bromberg described Unity 7 as a re-architecture for collaborative development between creators and coding agents, enabling real-time changes and accelerating the development process. It will not require traditional upgrades and aims to open Unity to a broader range of users beyond engineers, ultimately driving growth by making game creation easier and fostering deeper, more beautiful games.

“It's a complete change in how developers are going to interact with our technology and how they're going to utilize coding agents in concert with Unity and how they're going to collaborate with their teams.”

asked by Vasily Karasyov · answered by Matthew Bromberg

How do you think about long-term incremental margins given current momentum and completed corporate actions, balancing growth investments with profitability?

Matt Bromberg highlighted the transformation from 2 years ago (Vector non-existent, Create declining, low EBITDA margins) to current state (Vector >$1B run rate, Create healthy growth, 29% EBITDA margins, GAAP profitable soon). Jarrod Yahes added that Unity has structurally high contribution margins (82-83% adjusted gross margin) and a virtuous cycle of investment, revenue realization, and operating leverage, expecting further margin expansion while investing in the product roadmap.

“We expect to have our cake and eat it too. There are continued efficiencies we can refine our business. We will have continued rapid revenue growth, and we continue to look for ways to structure our business so that we continue to invest in high-growth activities by making choices and prioritizing the things that we do.”

asked by Eric Sheridan · answered by Matthew Bromberg