Unity Software Inc. (U): A Bull Case Theory

We came across a bullish thesis on Unity Software Inc.  on Darius Dark Investing’s Substack. In this article, we will summarize the bulls’ thesis on U. Unity Software Inc. ‘s share was trading at $43.82 as of September 5^th. U’s forward P/E was 144.93 according to Yahoo Finance.

Unity Software (U) is undergoing a pivotal transformation under new President and CEO Matthew Bromberg, who identifies Q2 2025 as an “inflection point” in the company’s long history of losses, including a $921 million net loss in 2022. The quarter’s $441 million revenue was slightly down year-over-year, but the real shift lies in profitability, with free cash flow surging 59% to $127 million, reflecting a disciplined pivot from growth-at-all-costs toward operational efficiency and a focus on sustainable returns.

Unity operates through two interlinked segments: Create Solutions, its game engine platform powering a wide spectrum of 2D and 3D content for developers, and Grow Solutions, a monetisation network largely enhanced by the $4.4 billion ironSource acquisition. Historically, the intended Create-Grow “flywheel” failed due to integration challenges and execution issues. Bromberg’s strategy emphasizes core gaming customers, leveraging AI to optimize both development and monetisation, with the launch of Unity Vector in early 2025 providing a tangible catalyst by increasing ad network revenue by 15% sequentially and validating prior acquisitions.

The company also completed a painful but necessary reset, including layoffs, the exit of non-core business units, and the discontinuation of Wētā Digital tools, allowing the profitable core to emerge. Compared with rival Unreal Engine, Unity dominates mobile and indie game development with a subscription-based model, offering predictable recurring revenue insulated from blockbuster volatility.

Financially, GAAP net losses have shrunk to $107 million, and a $1.7 billion cash position provides stability. Unity’s turnaround, bolstered by a focused strategy, operational discipline, and AI-driven monetisation, positions the company as a credible recovery story with a clear path to sustainable, profitable growth, though execution risks remain.

Previously we covered a bullish thesis on Unity Software Inc. (U) by AlphaSenseInc. on Twitter in May 2025, which highlighted Unity’s dominant position in mobile gaming with over 70% market share, its strategic refocus under new leadership, and expansion into industries like automotive and architecture. The stock has appreciated approximately 100.91% since then. Darius Dark Investing shares a similar bullish view but emphasizes Q2 2025 as an inflection point, operational discipline, and the AI-driven Vector platform as a catalyst for monetisation growth.

READ NEXT: 8 Best Wide Moat Stocks to Buy Now and 30 Most Important AI Stocks According to BlackRock.

Disclosure: None.