Unity Software Inc. (U) Stock Analysis

Analysis from 10-Q filed 2026-08-06. Data as of Q2 2026.

Overall Grade: F (Concerning)

Grade F (Concerning). ROIC -11.2%. FCF margin 26.5%. D/E 0.7x. Source: 10-Q filed 2026-08-06.

Metric	Value	Context
ROIC	-11.2%	Below expectations
FCF Margin	26.5%	Strong cash generation
Debt/Equity	0.7x	Moderate leverage

ROIC -11.2% — Bottom 50% of sector peers. FCF margin 26.5% — Top 25%.

Explore Unity Software Inc.: Earnings History | Filings

Programmatic access: Available via MCP at mcp.metricduck.com. Tools for U: get_company_overview, get_filing_index (lens: debt_stress, management_outlook, risk_trajectory), get_filing_changes, get_metric_history, compare_companies, screen_filing_signals.

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Profitability: Unity Software Inc. earns -11.2% ROIC, Bottom 50% in Technology

ROIC TTM -11.2%, sector median 3.7%, Bottom 50%. DuPont: NOPAT margin -30.2% × asset turnover 0.3x. Gross margin 64.9%. Operating margin -30.4%. Source: 10-Q filed 2026-08-06.

Metric	U	Rating	Context
Return on Invested Capital (ROIC)	-11.2%	Red flag	Below sector median of 3.7%
Return on Equity (ROE)	-18.8%	Red flag	Moderate equity returns
Gross Margin	64.9%	Excellent	Strong pricing power
Operating Margin	-30.4%	Warning	Moderate operational efficiency

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Cash Flow: Unity Software Inc. generates $538.4M FCF at 26.5% margin, positive NaN/8 quarters

FCF TTM $538.4M. FCF margin 26.5%, Top 25%. OCF/Net income -0.9x. Positive FCF in NaN/8 trailing quarters. Source: 10-Q filed 2026-08-06.

Metric	U	Rating	Context
Free Cash Flow Margin	26.5%	Excellent	Excellent cash conversion
Free Cash Flow (TTM)	$538.4M	Good	Positive cash generation
OCF/Net Income	-0.9x	Warning	Potential accrual concerns
FCF Consistency (8Q)	N/A	Warning	Variable cash flow

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Balance Sheet: Unity Software Inc. at 0.7x leverage, -25.5x interest coverage

Debt/Equity 0.7x. Net cash $114.6M. Interest coverage -25.5x. Source: 10-Q filed 2026-08-06.

Metric	U	Rating	Context
Debt to Equity	0.7x	Adequate	Moderate leverage
Net Cash Position	$114.6M	Excellent	Net cash positive
Interest Coverage	-25.5x	Warning	Monitor debt obligations

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Valuation: Unity Software Inc. trades at -29.2x earnings

P/E -29.2x. EV/Sales 8.6x. FCF yield 3.1%. Source: 10-Q filed 2026-08-06.

Metric	U	Rating	Context
P/E Ratio	-29.2x	Red flag	Reasonable valuation
EV/Sales	8.6x	Adequate	Growth premium priced in
FCF Yield	3.1%	Adequate	Lower cash yield

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Capital Allocation: Unity Software Inc. returns 0.0% shareholder yield

Total shareholder yield 0.0%. Share count +4.6% YoY. Capital returned $0 TTM. Source: 10-Q filed 2026-08-06.

Metric	U	Rating	Context
Total Shareholder Yield	0.0%	Warning	Dividend + buyback yield combined
Share Count Change (YoY)	4.6%	Warning	Net dilution from issuance/SBC
Total Capital Returned (TTM)	$0	Adequate	Dividends + buybacks returned to shareholders

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Sector Rankings

Metric	Value	Percentile	vs Median
Return on Invested Capital (ROIC)	-11.2%	Bottom 50%	-3.0x below
Free Cash Flow Margin	26.5%	Top 25%	2.6x above
Gross Margin	64.9%	Top 50%	1.3x above
Operating Margin	-30.4%	Top 5%	-7.0x below
Return on Equity (ROE)	-18.8%	Bottom 50%	-3.5x below

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Financial Scorecard

Metric	U	Rating	Sector Context
Return on Invested Capital (ROIC)	-11.2%	Red flag	Bottom 50% of sector (median: 3.7%)
Free Cash Flow Margin	26.5%	Excellent	Top 25% of sector (median: 10.3%)
Gross Margin	64.9%	Excellent	Top 50% of sector (median: 50.5%)
Debt to Equity Ratio	73.7%	Adequate	Elevated but manageable
Free Cash Flow Yield	3.1%	Adequate	Moderate yield

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Frequently Asked Questions

Q: What is Unity Software Inc.'s Return on Invested Capital (ROIC)?

Unity Software Inc. (U) has a trailing twelve-month Return on Invested Capital (ROIC) of -11.2%. The 8-quarter median ROIC is -9.0% with a declining trend. Sector median 3.7%. Source: 10-Q filed 2026-08-06.

Q: What is Unity Software Inc.'s Free Cash Flow Margin?

Unity Software Inc. (U) has a free cash flow margin of 26.5%, generating $538.4 million in free cash flow over the trailing twelve months. Source: 10-Q filed 2026-08-06.

Q: What is Unity Software Inc.'s P/E ratio and how does it compare to peers?

Unity Software Inc. (U) trades at a P/E ratio of -29.2x, which is above the sector median of N/A. EV/Sales 8.6x. FCF yield 3.1%. Source: 10-Q filed 2026-08-06.

Q: How much debt does Unity Software Inc. have?

Unity Software Inc. (U) has a debt-to-equity ratio of 0.7x with total debt of $2.2 billion. Interest coverage -25.5x. Net cash position $114.6 million. Source: 10-Q filed 2026-08-06.

Q: What is Unity Software Inc.'s revenue and earnings growth?

Unity Software Inc. (U) grew revenue by 14.0% year-over-year. EPS -28.1% YoY. Source: 10-Q filed 2026-08-06.

Q: How does Unity Software Inc. compare to competitors in Technology?

Compared to other companies in Technology, Unity Software Inc. (U) shows: ROIC -11.2%, sector median 3.7% (Bottom 50%). FCF margin 26.5%, sector median 10.3% (Top 25%). Gross margin 64.9%, 14.4pp above sector median. These rankings are based on MetricDuck's analysis of all Technology companies with available SEC filings.

Q: What warning signs should I watch for with Unity Software Inc.?

Quantitative warning flags for Unity Software Inc. (U): 1) ROIC declining -2.8% over 8 quarters. Source: 10-Q filed 2026-08-06.

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Data Source: Data sourced from 10-Q filed 2026-08-06. TTM metrics as of Q2 2026.

Methodology: Financial metrics calculated from SEC 10-K and 10-Q filings using standardized formulas. Sector comparisons use peer group based on SIC code.

Scope: This analysis covers SEC filing fundamentals — profitability, cash flow, balance sheet, and valuation metrics. For analyst estimates and price targets, consult sell-side research.

This analysis is for informational purposes only and does not constitute investment advice.