Unity Software (NYSE:U) reported second-quarter results that beat analyst expectations, though shares dropped roughly 10% intra-day Wednesday due to tempered guidance for the upcoming quarter.

The company posted adjusted EPS of $0.18 for the quarter ended June 30, 2025, significantly surpassing the expected loss of $0.28. Revenue came in at $440.9 million, ahead of the $426.7 million estimate, but marked a 2% decline year-over-year.

For the third quarter, Unity forecast revenue between $440 million and $450 million, with the midpoint of $445 million aligning with analyst projections.

The Grow Solutions segment is expected to post mid-single-digit sequential growth, while Create Solutions may see a slight decline following a major Q2 client win.

Create Solutions revenue rose 2% YoY to $154 million, helped by a $12 million term license deal and higher subscription revenue. Grow Solutions revenue declined 4% to $287 million, although the Unity Ad Network reported strong sequential growth of 15%, accounting for 49% of segment revenue.

Adjusted EBITDA was $90 million with a 21% margin, down from $113 million and a 25% margin in Q2 2024. Free cash flow improved to $127 million from $80 million in the prior-year period.