Unity shares rally 36% after earnings beat and new AI-powered ads platform
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Shares in Unity have surged by 36.2% to $29.24 after the company posted higher than expected earnings and unveiled its new ads platform Vector to take on rival AppLovin.
At close yesterday, shares had risen by 30.4% compared to before it published its financials, rising further today at the time of writing.
Revenue at the game engine and ads firm was down 25% year-over-year to $457 million in Q4. Meanwhile, Unity cut its losses from $254m to $123m last quarter.
The company noted it had gone through a “portfolio reset”, a restructure that saw it make a series of layoffs. It also cancelled the controversial Runtime Fee and increased subscription prices for the Unity engine.
Despite the sales decline and losses, CEO Matt Bromberg said the fourth quarter results “meaningfully exceeded expectations on both revenue and profit, underscoring our progress in building a new Unity”.
New Vector platform
During the investor call, Bromberg also revealed that it would be migrating the Unity Ad Network to its new AI platform Unity Vector towards the end of Q1. He noted that the first phase of work on the project would be completed by the end of Q2.
“Vector is designed to leverage data from across the Unity ecosystem, integrating self-learning artificial intelligence models that will provide deeper insights, optimise performance and deliver better results for customers,” said Bromberg
“Vector enhances targeting precision and increases audience scale through a sharper analysis of richer data sets, and it’s also able to adapt in real time, helping customers navigate an increasingly competitive mobile marketing landscape.”
He cautioned however that Unity would not see any benefits from the move to Vector immediately, but hoped the platform would establish Unity as a “fundamentally stronger competitor” in the years ahead.
Rivals rise
Unity’s announcement comes after rival AppLovin saw a 43% boost in revenue Y/Y in 2024 to $4.7 billion. Ad business revenue at the company rose 75% Y/Y to $3.2bn. Meanwhile, AppLovin announced it was set to sell its games division for $900m to an undisclosed buyer.
Like Unity, AppLovin’s earnings also saw shares in the firm surge 24% from $380.32 on February 12th to $471.67 on February 13th.
At the time of writing, Unity’s market cap is currently valued at $11.68bn, while AppLovin has a market cap of $146.42bn
