Unity Software Inc. 10-K

Item 8. Financial Statements and Supplementary Data UNITY SOFTWARE INC. INDEX TO CONSOLIDATED FINANCIAL STATEMENTS Page Report of Independent Registered Public Accounting Firm (PCAOB ID: 42 ) 54 Consolidated Balance Sheets 56 Consolidated Statements of Operations 57 Consolidated Statements of Comprehensive Loss 58 Consolidated Statements of Stockholders' Equity 59 Consolidated Statements of Cash Flows 61 Notes to Consolidated Financial Statements 63 Table of Contents Unity Software Inc. Report of Independent Registered Public Accounting Firm To the Stockholders and the Board of Directors of Unity Software Inc. Opinion on the Financial Statements We have audited the accompanying consolidated balance sheets of Unity Software Inc. (the Company) as of December 31, 2025 and 2024, the related consolidated statements of operations, comprehensive loss, stockholders' equity and cash flows for each of the three years in the period ended December 31, 2025, and the related notes (collectively referred to as the “consolidated financial statements”). In our opinion, the consolidated financial statements present fairly, in all material respects, the financial position of the Company at December 31, 2025 and 2024, and the results of its operations and its cash flows for each of the three years in the period ended December 31, 2025, in conformity with U.S. generally accepted accounting principles. We also have audited, in accordance with the standards of the Public Company Accounting Oversight Board (United States) (PCAOB), the Company's internal control over financial reporting as of December 31, 2025, based on criteria established in Internal Control—Integrated Framework issued by the Committee of Sponsoring Organizations of the Treadway Commission (2013 framework), and our report dated February 11, 2026 expressed an unqualified opinion thereon. Basis for Opinion These financial statements are the responsibility of the Company's management. Our responsibility is to express an opinion on the Company’s financial statements based on our audits. We are a public accounting firm registered with the PCAOB and are required to be independent with respect to the Company in accordance with the U.S. federal securities laws and the applicable rules and regulations of the Securities and Exchange Commission and the PCAOB. We conducted our audits in accordance with the standards of the PCAOB. Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the financial statements are free of material misstatement, whether due to error or fraud. Our audits included performing procedures to assess the risks of material misstatement of the financial statements, whether due to error or fraud, and performing procedures that respond to those risks. Such procedures included examining, on a test basis, evidence regarding the amounts and disclosures in the financial statements. Our audits also included evaluating the accounting principles used and significant estimates made by management, as well as evaluating the overall presentation of the financial statements. We believe that our audits provide a reasonable basis for our opinion. Critical Audit Matter The critical audit matter communicated below is a matter arising from the current period audit of the financial statements that was communicated or required to be communicated to the audit committee and that: (1) relates to accounts or disclosures that are material to the financial statements and (2) involved our especially challenging, subjective or complex judgments. The communication of the critical audit matter does not alter in any way our opinion on the consolidated financial statements, taken as a whole, and we are not, by communicating the critical audit matter below, providing a separate opinion on the critical audit matter or on the accounts or disclosures to which it relates. Table of Contents Unity Software Inc. Revenue Recognition Description of the Matter As described in Note 1 to the consolidated financial statements, revenue is recognized when the Company's contractual performance obligations are satisfied, in an amount that reflects the consideration expected. Significant judgment is required to determine the level of integration and interdependencies among the individual promises included in the Company’s Create Solutions subscriptions. This determination influences whether the software is a distinct and separate performance obligation that should be recognized at a point in time or whether the software should be combined with other promises and recognized over time. Management has concluded that the Company’s Create Solutions subscription is a single performance obligation because the software and software updates are highly interdependent and interrelated. As such, the single performance obligation is recognized over the contract term as the subscription is delivered. Auditing the Company's determination whether the promises included in the Company’s Create Solutions subscriptions should be accounted for as a single performance obligation required a significant level of auditor judgment. How We Addressed the Matter in Our Audit We evaluated the design and tested the operating effectiveness of internal controls over the Company's determination that the Company’s Create Solutions subscriptions represent a single performance obligation. Our audit procedures also included, among others, assessing the nature and frequency of the software updates and the level of integration and interdependency between the software and software updates by performing inquiries with the Company’s product specialists and further reviewing communication to the Company’s customers on its Create Solutions subscriptions. We have also evaluated the Company’s revenue disclosures in relation to these matters. /s/ Ernst & Young LLP We have served as the Company's auditor since 2019. San Francisco, California February 11, 2026 Table of Contents Unity Software Inc. UNITY SOFTWARE INC. CONSOLIDATED BALANCE SHEETS (In thousands, except per share data) As of December 31, 2025 December 31, 2024 Assets Current assets: Cash and cash equivalents $ 2,055,840 $ 1,517,672 Accounts receivable, net 643,611 573,884 Prepaid expenses and other 113,012 133,795 Total current assets 2,812,463 2,225,351 Property and equipment, net 68,289 98,819 Goodwill 3,166,304 3,166,304 Intangible assets, net 650,544 1,066,235 Other assets 140,006 180,698 Total assets $ 6,837,606 $ 6,737,407 Liabilities and stockholders' equity Current liabilities: Accounts payable $ 13,981 $ 13,948 Accrued expenses and other 299,541 294,951 Publisher payables 431,494 394,284 Deferred revenue 224,405 186,304 Current portion of convertible notes 556,451 — Total current liabilities 1,525,872 889,487 Convertible notes 1,678,899 2,238,922 Long-term deferred revenue 14,038 16,846 Other long-term liabilities 122,660 165,004 Total liabilities 3,341,469 3,310,259 Commitments and Contingencies (Note 10) Redeemable noncontrolling interests 252,637 230,627 Stockholders' equity: Common stock, $ 0.000005 par value: Authorized shares - 1,000,000 and 1,000,000 Issued and outstanding shares - 432,860 and 409,393 2 2 Additional paid-in capital 7,378,295 6,936,038 Accumulated other comprehensive loss ( 2,156 ) ( 9,425 ) Accumulated deficit ( 4,138,709 ) ( 3,735,944 ) Total Unity Software Inc. stockholders' equity 3,237,432 3,190,671 Noncontrolling interest 6,068 5,850 Total stockholders' equity 3,243,500 3,196,521 Total liabilities and stockholders' equity $ 6,837,606 $ 6,737,407 See accompanying Notes to Consolidated Financial Statements. 56 Table of Contents Unity Software Inc. UNITY SOFTWARE INC. CONSOLIDATED STATEMENTS OF OPERATIONS (In thousands, except per share data) Year Ended December 31, 2025 2024 2023 Revenue $ 1,849,648 $ 1,813,255 $ 2,187,317 Cost of revenue 477,739 480,853 733,722 Gross profit 1,371,909 1,332,402 1,453,595 Operating expenses Research and development 929,516 924,830 1,053,588 Sales and marketing 652,907 752,649 834,625 General and administrative 268,539 410,072 398,176 Total operating expenses 1,850,962 2,087,551 2,286,389 Loss from operations ( 479,053 ) ( 755,149 ) ( 832,794 ) Interest expense ( 24,007 ) ( 23,542 ) ( 24,580 ) Interest income and other expense, net 107,862 111,558 59,529 Loss before income taxes ( 395,198 ) ( 667,133 ) ( 797,845 ) Provision for (benefit from) Income taxes 6,295 ( 2,846 ) 28,477 Net loss ( 401,493 ) ( 664,287 ) ( 826,322 ) Net income (loss) attributable to noncontrolling interest and redeemable noncontrolling interests 1,272 ( 173 ) ( 4,311 ) Net loss attributable to Unity Software Inc. $ ( 402,765 ) $ ( 664,114 ) $ ( 822,011 ) Basic and diluted net loss per share attributable to Unity Software Inc. $ ( 0.96 ) $ ( 1.68 ) $ ( 2.16 ) Weighted-average shares used in computation of basic and diluted net loss per share 420,914 395,951 380,457 See accompanying Notes to Consolidated Financial Statements. 57 Table of Contents Unity Software Inc. UNITY SOFTWARE INC. CONSOLIDATED STATEMENTS OF COMPREHENSIVE LOSS (In thousands) Year Ended December 31, 2025 2024 2023 Net loss $ ( 401,493 ) $ ( 664,287 ) $ ( 826,322 ) Other comprehensive income (loss), net of taxes: Change in foreign currency translation adjustment 9,201 ( 5,544 ) ( 4,556 ) Change in unrealized gains on derivative instruments — — 289 Other comprehensive income (loss) 9,201 ( 5,544 ) ( 4,267 ) Comprehensive loss $ ( 392,292 ) $ ( 669,831 ) $ ( 830,589 ) Net income (loss) attributable to noncontrolling interest and redeemable noncontrolling interests 1,272 ( 173 ) ( 4,311 ) Foreign currency translation attributable to noncontrolling interest and redeemable noncontrolling interests 1,932 ( 1,128 ) ( 949 ) Comprehensive loss attributable to noncontrolling interest and redeemable noncontrolling interests 3,204 ( 1,301 ) ( 5,260 ) Comprehensive loss attributable to Unity Software Inc. $ ( 395,496 ) $ ( 668,530 ) $ ( 825,329 ) See accompanying Notes to Consolidated Financial Statements. 58 Table of Contents Unity Software Inc. UNITY SOFTWARE INC. CONSOLIDATED STATEMENTS OF STOCKHOLDERS' EQUITY (In thousands, except share data) Year Ended December 31, 2023 Accumulated Additional Other Unity Software Inc. Common Stock Paid‑In Comprehensive Accumulated Stockholders’ Noncontrolling Total Shares Amount Capital Loss Deficit Equity Interest (1) Equity Balance at December 31, 2022 374,243,196 $ 2 $ 5,779,776 $ ( 1,691 ) $ ( 2,249,819 ) $ 3,528,268 $ 6,298 $ 3,534,566 Issuance of common stock from employee equity plans 6,242,222 — 75,985 — — 75,985 — 75,985 Issuance of common stock for settlement of RSUs 11,944,558 — — — — — — — Purchase and retirement of common stock ( 7,558,415 ) — ( 250,000 ) — — ( 250,000 ) — ( 250,000 ) Stock‑based compensation expense — — 664,853 — — 664,853 — 664,853 Net loss — — — — ( 822,011 ) ( 822,011 ) ( 294 ) ( 822,305 ) Adjustments to redeemable noncontrolling interest — — ( 11,135 ) — — ( 11,135 ) — ( 11,135 ) Other comprehensive loss — — — ( 3,318 ) — ( 3,318 ) ( 65 ) ( 3,383 ) Balance at December 31, 2023 384,871,561 $ 2 $ 6,259,479 $ ( 5,009 ) $ ( 3,071,830 ) $ 3,182,642 $ 5,939 $ 3,188,581 Year Ended December 31, 2024 Accumulated Additional Other Unity Software Inc. Common Stock Paid-In Comprehensive Accumulated Stockholders' Noncontrolling Total Shares Amount Capital Loss Deficit Equity Interest (1) Equity Balance at December 31, 2023 384,871,561 $ 2 $ 6,259,479 $ ( 5,009 ) $ ( 3,071,830 ) $ 3,182,642 $ 5,939 $ 3,188,581 Issuance of common stock from employee equity plans 9,952,298 — 76,692 — — 76,692 — 76,692 Issuance of common stock for settlement of RSUs 14,568,665 — — — — — — — Stock‑based compensation expense — — 605,909 — — 605,909 — 605,909 Net loss — — — — ( 664,114 ) ( 664,114 ) ( 12 ) ( 664,126 ) Adjustments to redeemable noncontrolling interest — — ( 6,042 ) — — ( 6,042 ) — ( 6,042 ) Other comprehensive loss — — — ( 4,416 ) — ( 4,416 ) ( 77 ) ( 4,493 ) Balance at December 31, 2024 409,392,524 $ 2 $ 6,936,038 $ ( 9,425 ) $ ( 3,735,944 ) $ 3,190,671 $ 5,850 $ 3,196,521 59 Table of Contents Unity Software Inc. UNITY SOFTWARE INC. CONSOLIDATED STATEMENTS OF STOCKHOLDERS' EQUITY—CONTINUED (In thousands, except share data) Year Ended December 31, 2025 Accumulated Total Additional Other Unity Common Stock Paid‑In Comprehensive Accumulated Stockholders’ Noncontrolling Total Shares Amount Capital Loss Deficit Equity Interest (1) Equity Balance at December 31, 2024 409,392,524 $ 2 $ 6,936,038 $ ( 9,425 ) $ ( 3,735,944 ) $ 3,190,671 $ 5,850 $ 3,196,521 Issuance of common stock from employee equity plans 10,378,326 119,454 119,454 119,454 Issuance of common stock for settlement of RSUs 13,089,091 — — Purchase of capped calls ( 44,436 ) ( 44,436 ) ( 44,436 ) Stock‑based compensation expense 386,263 386,263 386,263 Net loss ( 402,765 ) ( 402,765 ) 86 ( 402,679 ) Adjustments to redeemable noncontrolling interest ( 19,024 ) ( 19,024 ) ( 19,024 ) Other comprehensive income 7,269 7,269 132 7,401 Balance at December 31, 2025 432,859,941 $ 2 $ 7,378,295 $ ( 2,156 ) $ ( 4,138,709 ) $ 3,237,432 $ 6,068 $ 3,243,500 (1) Excludes redeemable noncontrolling interests. See accompanying Notes to Consolidated Financial Statements. 60 Table of Contents Unity Software Inc. UNITY SOFTWARE INC. CONSOLIDATED STATEMENTS OF CASH FLOWS (In thousands) Year Ended December 31, 2025 2024 2023 Operating activities Net loss $ ( 401,493 ) $ ( 664,287 ) $ ( 826,322 ) Adjustments to reconcile net loss to net cash provided by operating activities: Depreciation and amortization 460,944 408,980 563,916 Stock-based compensation expense 385,214 596,249 648,696 Gain on repayment of convertible note ( 42,744 ) ( 61,371 ) — Impairment of property and equipment 5,882 22,791 — Other ( 3,683 ) 23,309 24,613 Changes in assets and liabilities, net of effects of acquisitions: Accounts receivable, net ( 69,078 ) 37,359 21,791 Prepaid expenses and other 24,071 ( 11,203 ) 20,314 Other assets 33,819 ( 2,746 ) 45,047 Accounts payable ( 545 ) 742 ( 6,313 ) Accrued expenses and other 4,361 ( 6,671 ) ( 21,069 ) Publisher payables 37,210 9,170 ( 60,509 ) Other long-term liabilities ( 44,825 ) ( 47,963 ) ( 47,245 ) Deferred revenue 33,822 11,194 ( 128,219 ) Net cash provided by operating activities 422,955 315,553 234,700 Investing activities Purchases of short-term investments — — ( 212 ) Proceeds from principal repayments and maturities of short-term investments — — 102,673 Purchases of non-marketable investments ( 2,000 ) — ( 2,500 ) Purchases of intangible assets ( 3,000 ) ( 12,860 ) — Purchases of property and equipment ( 19,024 ) ( 29,549 ) ( 55,921 ) Net cash provided by (used in) investing activities ( 24,024 ) ( 42,409 ) 44,040 Financing activities Proceeds from issuance of convertible notes 690,000 — — Purchase of capped calls ( 44,436 ) — — Payment of debt issuance costs ( 13,236 ) — — Repayments of convertible note ( 641,691 ) ( 414,999 ) — Repurchase and retirement of common stock — — ( 250,000 ) Proceeds from issuance of common stock upon exercise of stock options and purchase of ESPP shares 119,454 76,692 75,985 Net cash provided by (used in) financing activities 110,091 ( 338,307 ) ( 174,015 ) Effect of foreign exchange rate changes on cash, cash equivalents, and restricted cash 27,398 ( 11,223 ) ( 6,146 ) Increase (decrease) in cash, cash equivalents, and restricted cash 536,420 ( 76,386 ) 98,579 Cash, cash equivalents, and restricted cash, beginning of period 1,527,881 1,604,267 1,505,688 Cash, cash equivalents, and restricted cash, end of period $ 2,064,301 $ 1,527,881 $ 1,604,267 61 Table of Contents Unity Software Inc. UNITY SOFTWARE INC. CONSOLIDATED STATEMENTS OF CASH FLOWS—CONTINUED (In thousands) Year Ended December 31, 2025 2024 2023 Supplemental disclosure of cash flow information: Cash paid for interest $ 20,000 $ 20,000 $ 20,389 Cash paid for income taxes, net of refunds $ 10,589 $ 26,363 $ 22,471 Cash paid for operating leases $ 46,328 $ 49,974 $ 42,905 Supplemental disclosures of non‑cash investing and financing activities: Assets acquired under operating lease $ 18,555 $ 24,459 $ 43,831 See accompanying Notes to Consolidated Financial Statements. 62 Table of Contents Unity Software Inc. UNITY SOFTWARE INC. NOTES TO CONSOLIDATED FINANCIAL STATEMENTS 1. Accounting Policies Description of Business We offer a suite of tools across all major platforms from mobile, PC, and console, to extended reality (XR). We are headquartered in San Francisco, California and have operations in the United States and various other international locations. We market our solutions directly through our online store and field sales operations in North America, China, France, the U.K., Israel, Japan, and South Korea, and indirectly through independent distributors and resellers worldwide. Basis of Presentation and Consolidation We prepared the accompanying consolidated financial statements in accordance with U.S. generally accepted accounting principles ("GAAP") and applicable rules and regulations of the Securities and Exchange Commission ("SEC"). The consolidated financial statements include the accounts of Unity Software Inc., its wholly owned subsidiaries, and entities consolidated under the voting interest model. We have eliminated all intercompany balances and transactions. In our opinion, all adjustments, which include normal recurring adjustments necessary for a fair presentation, have been included. Use of Estimates The preparation of consolidated financial statements in conformity with GAAP requires management to make certain estimates, judgments, and assumptions that affect the reported amounts of assets and liabilities and disclosure of contingent assets and liabilities at the date of the financial statements, as well as the reported amounts of revenue and expenses during the reporting period. For us, these estimates are used for, but not limited to, revenue recognition, the measurement of liabilities for uncertain tax positions and deferred tax assets and liabilities, the fair value of stock-based compensation, the fair value of redeemable noncontrolling interests, and the useful lives of long lived assets. Actual results could differ from those estimates, and such differences could be material to our financial position and results of operations. We review the useful lives of assets with a finite life on a recurring basis. Effective July 1, 2025, we revised our estimate of the remaining useful life for certain intangible assets from four to seven years , down to one to three years . These assets are included in “Intangible assets, net” on our consolidated balance sheets, are primarily “developed technology” within intangible assets, and primarily relate to assets arising from our acquisition of Wētā FX Limited in 2021. The shortened useful lives are due to certain assets no longer being actively developed and the absence of currently established plans for incorporation into future Unity offerings. The effect of this change in estimate for the year ended December 31, 2025, was an increase in amortization expense and decrease in operating income of approximately $ 77 million, an increase in net loss of approximately $ 61 million, and an increase in our basic and diluted net loss per share of approximately $ 0.15 per share. Employee Separation and Restructuring Costs In the year ended December 31, 2025, we incurred incremental employee separation costs of approximately $ 33 million, primarily within sales and marketing and research and development. In the year ended December 31, 2024, we incurred incremental employee separation costs of approximately $ 214 million, which included $ 127 million of incremental stock-based compensation. Of the incremental employee separation costs we incurred in the year ended December 31, 2024, $ 15 million are within cost of revenue, $ 48 million are within research and development, $ 58 million are within sales and marketing, and $ 93 million are within general and administrative. Additionally, for the year ended December 31, 2025 63 Table of Contents Unity Software Inc. and 2024, we incurred $ 14 million and $ 53 million, respectively, of other restructuring costs, primarily related to office closures. Revenue Recognition Revenue is measured based on the amount of consideration that we expect to receive from our customers. Revenue excludes sales and indirect taxes. In arrangements where we have multiple performance obligations, the transaction price is allocated to each performance obligation using the relative stand-alone selling price ("SSP"). We generally determine SSP based on observable pricing. When observable pricing is not available, we use cost plus margin analysis to determine SSP. Our business focuses on two complementary sets of solutions: (1) Create Solutions and (2) Grow Solutions. Create Solutions Create Solutions are a combination of software and services that enable customers to edit, run, and iterate interactive, real-time 2D and 3D experiences. Revenue is primarily derived from Create Solution Subscriptions, Enterprise Support, Professional services, and Consumption services. Create Solutions subscriptions provide customers with software, embedded cloud functionality, and software updates. As the software and software updates are highly interdependent and interrelated and these services have the same pattern of performance as the embedded cloud functionality, we combine these promises and account for them as a single performance obligation that is recognized over time. Enterprise customers may purchase an enhanced support offering ("Enterprise Support") that is generally sold separately and is considered its own performance obligation. Create Solutions subscriptions and Enterprise Support typically have a term of one to five years and are billed in monthly, quarterly and annual installments, and recognized ratably over the service period. Professional services revenue is primarily composed of consulting, platform integration, training, and custom application and workflow development. Revenue is recognized as services are rendered. We typically invoice our customers on a milestone basis or when promised services are delivered. Our Consumption service arrangements are based on a fixed fee or usage-based model. For fixed fee arrangements revenue is recognized ratably over the contractual service term as our obligations are generally fulfilled evenly throughout the contractual period. For usage-based arrangements, we recognize revenue as services are provided. Grow Solutions Grow Solutions revenue primarily consists of advertising services provided through our monetization solutions that allow publishers, which include mobile application developers, original equipment manufacturers ("OEM") and mobile carriers to sell available advertising inventory on their mobile applications or hardware devices to advertisers for in-app or on-device placements. We present revenue on a net basis for sales where we are facilitating the transaction between advertisers and publishers and do not have control over in-app or on-device placement. In these cases the publisher is our customer. We present revenue on a gross basis for advertising sales where we are the publisher and have control of the in-app or on-device placement. Advertising revenue is recognized at a point in time when the agreed upon action is completed or when the advertisement is displayed to users. Cost of Revenue Cost of revenue for the delivery of software services, professional services, and advertising consists primarily of hosting expenses, personnel costs (including salaries, stock-based compensation, and benefits) for employees associated with our product support and professional services organizations, fees paid to mediation platforms, credit card fees, third-party license fees, payments to developers where we are the publisher, and allocated shared costs, including facilities, IT, and security costs, as well as amortization of related capitalized software costs and depreciation of related property and equipment and amortization of acquired intangible assets. 64 Table of Contents Unity Software Inc. Stock-Based Compensation Stock-based compensation expense related to our employees and non-employee directors is calculated based on the fair value on the grant date. For restricted stock units ("RSUs"), fair value is based on the closing price of our common stock on the grant date. For performance-based restricted stock units ("PSUs"), fair value is based on the closing price of our common stock on the day the performance goals are set for each tranche of the award. The fair value of stock options and purchases made under the 2020 Employee Stock Purchase Plan ("2020 ESPP") is estimated using the Black-Scholes pricing model. This model requires certain assumptions be used as inputs, such as the fair value of the underlying common stock, expected term of the option before exercise, expected volatility of our common stock, expected dividend yield, and a risk-free interest rate. Options granted during the year have a maximum contractual term of ten years . We have limited historical stock option activity and therefore estimate the expected term of stock options granted using the simplified method, which represents the average of the contractual term of the stock option and its weighted-average vesting period. The expected volatility of stock options and employee stock purchase plan ("ESPP") purchases are based upon our historical volatility and the historical volatility of a number of publicly traded companies in similar industries over similar durations. We have historically not declared or paid any dividends and do not currently expect to do so in the foreseeable future. The risk-free interest rates used are based on the U.S. Department of Treasury ("U.S. Treasury") yield in effect at the time of grant for zero-coupon U.S. Treasury notes with maturities approximately equal to the expected term of the stock options and ESPP purchases. The fair value of price-vested options ("PVOs") and price-vested units ("PVUs"), which are options and RSUs respectively, that contain both service-based and market-based vesting conditions are estimated using the Monte Carlo simulation model and use inputs such as the fair value of the underlying common stock, expected term before exercise, expected volatility of our common stock, expected dividend yield, and a risk-free interest rate, modified to reflect the impact of market-based vesting conditions, including the estimated payout level based on that condition. We do not adjust compensation cost for subsequent changes in the expected outcome of the market-based vesting conditions. We recognize stock-based compensation expense for RSUs, stock options, PVOs, PVUs, and PSUs on a straight-line basis, typically over the requisite service period of the entire award, generally, a vesting period of one to four years . We recognize stock-based compensation expense related to the 2020 ESPP on a straight-line basis over the offering period. We do not estimate forfeitures but instead account for them as they occur. Cash, Cash Equivalents, and Restricted Cash We consider all highly liquid investments with original maturities of three months or less at date of purchase to be cash equivalents. Our cash equivalents include money market funds and time deposits. As of December 31, 2025 and 2024, restricted cash was $ 8.5 million and $ 10.2 million, respectively. Restricted cash consists of secured letters of credit issued in connection with our operating leases and other amounts held in escrow. Restrictions typically lapse at the end of the lease term, and restricted cash is classified as current or non-current based on the remaining term of the restriction. A ccounts Receivable Accounts receivable are recorded at the original invoiced amount, net of allowances for uncollectible amounts. We estimate losses on uncollectible amounts based on expected losses, including our historical experience of actual losses. The estimated losses on uncollectible amounts are recorded in general and administrative expense on our consolidated statements of operations. As of December 31, 2025 and 2024, the allowance for uncollectible amounts was $ 10.9 million and $ 17.3 million, respectively. For the years ended December 31, 2025 and 2024, the provision for uncollectible amounts was $ 2.7 million and $ 7.7 million, respectively. 65 Table of Contents Unity Software Inc. Credit Risk and Concentrations Financial instruments that potentially subject us to a concentration of credit risk consist primarily of cash and cash equivalents, and accounts receivable. We place our domestic and foreign cash and cash equivalents, with large, creditworthy financial institutions. Balances in these accounts may exceed federally insured limits at times. In general, we do not require our customers to provide collateral or other security to support accounts receivable. To reduce credit risk, management performs credit evaluations of our customers’ financial condition, as warranted, and continually analyzes the allowance for doubtful accounts, which we maintain based upon the expected collectability of accounts receivable. As of December 31, 2025 and 2024, no individual customer represented 10% or more of the aggregate receivables. For the years ended December 31, 2025, 2024, and 2023, no individual customer represented 10% or more of total revenue. Fair Value of Financial Instruments We define fair value as the price that would be received from selling an asset or paid to transfer a liability in an orderly transaction between market participants at the measurement date. When determining the fair value measurements for assets and liabilities, which are required to be recorded at fair value, we consider the principal or most advantageous market in which to transact and the market-based risk. The carrying amounts reported in the consolidated financial statements approximate the fair value for cash and cash equivalents, accounts receivable, accounts payable, and accrued liabilities, due to their short-term nature. Comprehensive Loss Comprehensive loss is comprised of net loss and other comprehensive loss. Our other comprehensive loss includes unrealized gains and losses on derivative instruments, and foreign currency translation adjustment. Property and Equipment, Net Property and equipment are stated at cost less accumulated depreciation and amortization, computed using the straight-line method based on the estimated useful lives of the assets, which is generally three years for computer and other hardware and five years for furniture. Leasehold improvements are amortized over the shorter of their estimated useful life or the remaining term of the lease. Software licenses are amortized over the shorter of their estimated useful life or license term, which is generally three to five years . The costs of repairs and maintenance are expensed when incurred, while expenditures for refurbishments and improvements that significantly add to the productive capacity or extend the useful life of an asset are capitalized. Upon retirement or sale, the cost of assets disposed of and the related accumulated depreciation are removed from the accounts, and any resulting gain or loss is credited or charged to the consolidated statement of operations. Leases Primarily all of our leases have been categorized as operating leases at inception. On certain of our lease agreements, we may receive rent holidays and other incentives provided by the landlord. We recognize lease costs on a straight-line basis without regard to deferred payment terms, such as rent holidays, that defer the commencement date of required payments. Additionally, incentives we receive are treated as a reduction of our costs over the term of the agreement. We establish assets and liabilities for the present value of estimated future costs to retire long-lived assets at the termination or expiration of a lease. Such assets are depreciated over the lease period into operating expense, and the recorded liabilities are accreted to the future value of the estimated retirement costs. 66 Table of Contents Unity Software Inc. Convertible Senior Notes and Capped Call Transactions We account for each issuance of the Notes as single liabilities measured at their amortized cost. Debt issuance costs are amortized to interest expense using the straight-line method (which approximates the effective interest method) and are recorded in other income and expense. We record the cost of capped call transactions as a reduction of our additional paid-in capital on our consolidated balance sheets. Capped call transactions will not be remeasured as long as they continue to meet the conditions for equity classification. Segments We operate as a single operating segment. The chief operating decision maker is our Chief Executive Officer, who makes resource allocation decisions and assesses performance based on financial information presented on a consolidated basis, accompanied by disaggregated information of our revenue. Accordingly, we have determined that we have a single reportable segment and operating segment structure. See Note 15, "Segment Information" for additional information about our reportable segment. Capitalized Software Costs and Software Implementation Costs We capitalize implementation costs incurred in our cloud computing service arrangements related to enterprise software solutions ("capitalized implementation costs") and costs associated with customized internal‑use software systems that have reached the application development stage. Such capitalized costs include external direct costs utilized in developing or obtaining the applications and payroll and payroll‑related expenses for employees, who are directly associated with the development of the applications. We capitalize such costs during the application development stage, which begins when the preliminary project stage is complete and ceases at the point in which the project is substantially complete and is ready for its intended purpose. Capitalized software costs are amortized on a straight-line basis over their estimated useful life, which is generally three years . Management evaluates the useful lives of these assets on an annual basis and tests for impairment whenever events or changes in circumstances occur that could impact the recoverability of these assets. Capitalized implementation costs are expensed over the term of the hosting arrangement, which is the fixed, non-cancellable term of the arrangement, plus any reasonably certain renewal periods. Capitalized software costs are included in property and equipment, net, on the consolidated balance sheets. The amount of capitalized software costs was $ 13.3 million and $ 33.2 million, respectively, during the years ended December 31, 2025 and 2024. The closing amount of capitalized software costs on the balance sheet was $ 40.1 million and $ 56.2 million, respectively, as of December 31, 2025 and 2024. The current portion of capitalized implementation costs are included in prepaid expenses on the consolidated balance sheets, and the non-current portion of capitalized implementation costs are included in other assets on the consolidated balance sheets. The amount of capitalized implementation costs was not material for the years ended December 31, 2025 and 2024. The costs to develop software that is marketed externally consist of payroll and payroll related costs for employees, who are directly associated with the development of the software. We capitalize such costs when technological feasibility is established and a working model is complete through the point of general release. All costs outside of this window are charged to research and development expense. The amount of costs capitalized for software developed for external use was not material for the years ended December 31, 2025 and 2024. Impairment Analysis We evaluate intangible assets and other long-lived assets for possible impairment whenever events or changes in circumstances indicate that the carrying amount of such assets may not be recoverable. This includes but is not limited to significant adverse changes in business climate, market conditions, or other events that indicate an asset’s carrying amount may not be recoverable. Recoverability of these 67 Table of Contents Unity Software Inc. assets is measured by comparing the carrying amount of each asset to the future undiscounted cash flows the asset is expected to generate. If the undiscounted cash flows used in the test for recoverability are less than the carrying amount of these assets, the carrying amount of such assets is reduced to fair value. We evaluate and test the recoverability of our goodwill for impairment at least annually during our fourth quarter of each calendar year or more often if and when circumstances indicate that goodwill may not be recoverable. During the years ended December 31, 2025 and 2024, we recorded $ 3.8 million and $ 16.2 million of impairment charges on operating lease assets, respectively, and during the years ended December 31, 2025 and 2024 we recorded $ 5.9 million and $ 22.8 million of impairment charges on property and equipment, respectively. These charges were primarily within general and administrative, and related to closures of corporate offices. The fair values of these assets were determined using active market prices. Apart from those operating lease asset, and property and equipment impairments, there were no material impairments of capitalized software costs, capitalized implementation costs, intangible assets, goodwill, or other long-lived assets during the years ended December 31, 2025, 2024, and 2023. Income Taxes We are subject to income taxes in the United States and numerous foreign jurisdictions. Significant judgment is required in determining our provision for income taxes and income tax assets and liabilities, including evaluating uncertainties in the application of accounting principles and complex tax laws. We record an income tax expense (or benefit) for the anticipated tax consequences of the reported results of operations using the asset and liability method. Under this method, we recognize deferred income tax assets and liabilities for the expected future tax consequences of temporary differences between the financial reporting and tax bases of assets and liabilities, as well as for NOL and tax credit carryforwards. Deferred tax assets and liabilities are measured using the tax rates that are expected to apply to taxable income for the years in which those tax assets and liabilities are expected to be realized or settled. We recognize the deferred income tax effects of a change in tax rates in the period of the enactment. We record a valuation allowance to reduce our deferred tax assets to the net amount that we believe is more likely than not to be realized. We consider all available evidence, both positive and negative, including historical levels of income, expectations and risks associated with estimates of future taxable income, and ongoing tax planning strategies in assessing the need for a valuation allowance. We recognize tax benefits from uncertain tax positions only if we believe that the position is more likely than not to be sustained on examination by the taxing authorities based on the technical merits of the position. Although we believe that we have adequately reserved for our uncertain tax positions (including net interest and penalties), we can provide no assurance that the final tax outcome of these matters will not be materially different. We make adjustments to these reserves in accordance with the income tax accounting guidance when facts and circumstances change, such as the closing of a tax audit or the refinement of an estimate. To the extent that the final tax outcome of these matters is different from the amounts recorded, such differences will affect our income tax expense (or benefit) in the period in which such determination is made and could have a material impact on our financial condition and operating results. We recognize interest and penalties related to unrecognized tax benefits within income tax expense in the accompanying consolidated statement of operations. Accrued interest and penalties are included in income and other taxes payable on the consolidated balance sheets. Translation of Foreign Currencies The functional currency of the majority of our foreign subsidiaries is the U.S. dollar. Foreign currency transaction gains and losses are included in interest and other income (expense), net, on the consolidated statements of operations for the period. For U.S. dollar functional currency subsidiaries, all assets and liabilities denominated in a foreign currency are translated into U.S. dollars at the exchange 68 Table of Contents Unity Software Inc. rate on the balance sheet date. Revenue and expenses denominated in a foreign currency are translated at the relevant daily exchange rates. Equity transactions denominated in a foreign currency are translated using historical exchange rates. For a foreign subsidiary where the local currency is the functional currency, adjustments to translate those statements into U.S. dollars are recorded in accumulated other comprehensive loss in stockholders’ equity. Goodwill and Intangible Assets We allocate the fair value of purchase consideration to the tangible assets acquired, liabilities assumed, and intangible assets acquired based on their estimated fair values as of the acquisition date. The excess of the fair value of purchase consideration over the fair values of these identifiable assets and liabilities is recorded as goodwill. Intangible assets, with the exception of certain contractual relationships, which have a finite life are amortized on a straight-line basis over their estimated useful lives, which typically range from two to six years . Certain contractual relationships are amortized using an accelerated method of amortization, which reflects the pattern in which the economic benefits from the intangible assets are expected to be recognized. On an annual basis, we evaluate the estimated remaining useful life of acquired intangible assets and whether events or changes in circumstances warrant a revision to the remaining amortization period. During the year ended December 31, 2025, we revised our estimate of the remaining useful life for certain intangible assets from four to seven years , down to one to three years . See "Use of Estimates" section earlier in this note for more details. No material changes to the useful lives of our intangible assets were deemed necessary during the years ended December 31, 2024, and 2023 based on management's evaluation. Warranties and Indemnifications In the ordinary course of business, we may provide indemnifications of varying scope and terms to customers, vendors, lessors, investors, directors, officers, employees and other parties with respect to certain matters. Indemnification may include losses from our breach of such agreements, services we provide, or third-party intellectual property infringement claims. These indemnifications may survive termination of the underlying agreement, and the maximum potential amount of future indemnification payments may not be subject to a cap. As of December 31, 2025 and 2024, there were no known events or circumstances that have resulted in a material indemnification liability to us, and we did not incur material costs to defend lawsuits or settle claims related to these indemnifications. We generally do not offer warranties for our software products. With certain customers, we will warrant that our software products will operate without material error and/or substantially in conformity with product documentation. We have not experienced any warranty claims to date, and no liabilities have been recorded as of December 31, 2025 and 2024. Advertising Costs Advertising costs are expensed as incurred as a component of sales and marketing expense in the consolidated statements of operations. Advertising expense was approximately $ 8.2 million, $ 10.1 million, and $ 12.6 million for the years ended December 31, 2025, 2024, and 2023, respectively. Accounting Pronouncements Recently Adopted In December 2023, the FASB issued a new Accounting Standards Update ("ASU 2023-09") amending existing income tax disclosure guidance, primarily requiring more detailed disclosure for income taxes paid and the effective tax rate reconciliation. ASU 2023-09 is effective for annual reporting periods beginning after December 15, 2024, with early adoption permitted and can be applied on either a prospective or retroactive basis. We adopted ASU 2023-09 for the year ended December 31, 2025 on a prospective basis. See Note 13 "Income Taxes" for additional information. Recent Accounting Pronouncements Not Yet Adopted In November 2024, the FASB issued a new Accounting Standards Update ("ASU 2024-03") amending the existing disclosure requirement for expenses within Statement of Operations, primarily 69 Table of Contents Unity Software Inc. requiring more disaggregated disclosure for certain costs and expenses on an annual and interim basis. ASU 2024-03 is effective for annual reporting periods beginning after December 15, 2026, with early adoption permitted and can be applied on either a prospective or retroactive basis. We are currently evaluating ASU 2024-03 to determine its impact on our expense disclosures. In July 2025, the FASB issued a new Accounting Standards Update ("ASU 2025-05") amending the guidance around estimation of credit losses on current accounts receivable and current contract assets to allow entities to elect a practical expedient to assume that the current conditions as of the balance sheet date will remain unchanged for the remaining life of the asset when developing a reasonable and supportable forecast. ASU 2025-05 is effective for annual reporting periods beginning after December 15, 2025, with early adoption permitted and should be applied on a prospective basis. We are currently evaluating ASU 2025-05 to determine its impact on our financial statements. In September 2025, the FASB issued a new Accounting Standards Update ("ASU 2025-06") amending existing internal-use software guidance, changing the timing and thresholds for capitalizing these software costs. ASU 2025-06 is effective for annual reporting periods beginning after December 15, 2027, with early adoption permitted and can be applied on either a prospective, modified, or retrospective basis. We are currently evaluating ASU 2025-06 to determine its impact on our financial statements. 2. Revenue The following table presents our revenue disaggregated by source, which also have similar economic characteristics (in thousands): Year Ended December 31, 2025 2024 2023 Create Solutions $ 621,409 $ 613,966 $ 859,174 Grow Solutions 1,228,239 1,199,289 1,328,143 Total revenue $ 1,849,648 $ 1,813,255 $ 2,187,317 The following table presents our revenue disaggregated by geography, based on the invoice address of our customers (in thousands): Year Ended December 31, 2025 2024 2023 United States $ 518,319 $ 530,387 $ 564,358 Greater China (1) 333,571 258,872 254,551 EMEA (2) 601,430 643,872 756,214 APAC (3) 349,018 329,907 558,810 Other Americas (4) 47,310 50,217 53,384 Total revenue $ 1,849,648 $ 1,813,255 $ 2,187,317 (1) Greater China includes China, Hong Kong, and Taiwan. (2) Europe, the Middle East, and Africa ("EMEA"). (3) Asia- Pacific , excluding Greater China ("APAC"). (4) Canada and Latin America ("Other Americas"). Sales Commissions Sales commissions that have a benefit beyond one year are capitalized and amortized on a straight-line method over the expected period of benefit, which is generally three years . As of December 31, 2025, capitalized commissions, net of amortization, included in prepaid expenses and other and other assets were $ 5.4 million and $ 2.8 million, respectively. As of December 31, 2024, capitalized commissions, net of amortization, included in prepaid expenses and other and other assets were $ 6.5 million and $ 5.4 million, respectively. 70 Table of Contents Unity Software Inc. During the years ended December 31, 2025 and 2024, we recorded amortization costs of $ 7.2 million and $ 8.9 million, respectively, in sales and marketing expenses. We did not incur any impairment losses for the years ended December 31, 2025 and 2024. Contract Balances and Remaining Performance Obligations Contract assets (unbilled receivables), primarily included in accounts receivable, net, are recorded when revenue is earned in advance of customer billing schedules. Unbilled receivables totaled $ 15.8 million and $ 20.5 million as of December 31, 2025 and 2024, respectively. The long term portion of those unbilled receivables was included in other long-term assets on our consolidated balance sheets, and was not material as of December 31, 2025 and 2024. Contract liabilities (deferred revenue) relate to payments received in advance of performance under the contract. Revenue recognized during the year ended December 31, 2025 that was included in the deferred revenue balances at January 1, 2025 was $ 176 million. Additionally, we have performance obligations associated with commitments in customer contracts to perform in the future that had not yet been recognized in our consolidated financial statements. For contracts with original terms that exceed one year, those commitments not yet recognized as of December 31, 2025 were $ 494 million and relate primarily to Create Solutions subscriptions, Enterprise Support, and Strategic Partnerships. These commitments generally extend over the next one to five years and we expect to recognize approximately $ 225 million or 46 % of this revenue during the next 12 months. 3. Financial Instruments Cash, Cash Equivalents, and Restricted Cash Cash, cash equivalents, and restricted cash are recorded at fair value. Fair value is defined as the price that would be received to sell an asset or paid to transfer a liability in an orderly transaction between market participants at the measurement date. To increase the comparability of fair value measures, the following hierarchy prioritizes the inputs to valuation methodologies used to measure fair value: • Level 1—Valuations based on quoted prices in active markets for identical assets or liabilities. • Level 2—Valuations based on quoted prices for similar assets and liabilities in active markets or inputs that are observable for the assets or liabilities, either directly or indirectly through market corroboration. • Level 3—Valuations based on unobservable inputs reflecting our own assumptions used to measure assets and liabilities at fair value. These valuations require significant judgment. 71 Table of Contents Unity Software Inc. The following table summarizes, by major security type, our cash, cash equivalents, and restricted cash that are measured at fair value on a recurring basis and are categorized using the fair value hierarchy (in thousands): December 31, 2025 December 31, 2024 Fair Value (1) Cash $ 708,788 $ 995,802 Level 1: Restricted cash and cash equivalents: Restricted cash $ 8,461 $ 10,209 Money market funds 469,017 327,333 Time deposits 878,035 194,537 Total restricted cash and cash equivalents $ 1,355,513 $ 532,079 Total cash, cash equivalents, and restricted cash $ 2,064,301 $ 1,527,881 (1) Due to the highly liquid nature of our investments, amortized cost approximates fair value. There were no material realized or unrealized gains or losses, either individually or in the aggregate, during the years ended December 31, 2025 and 2024. During the year ended December 31, 2023, we sold the remainder of our short-term investments. Nonrecurring Fair Value Measurements We hold equity investments in certain unconsolidated entities without a readily determinable fair value. These strategic investments represent less than a 20 % ownership interest in each of the entities, and we do not have significant influence over or control of the entities. We use the measurement alternative to account for adjustments to these investments for observable transactions for the same or similar investments of the same issuer in any given quarter. If we determine an impairment has occurred, the investment is written down to the estimated fair value. As of December 31, 2025 and December 31, 2024, such equity investments totaled $ 35.0 million and $ 33.0 million, respectively. No material adjustments to the carrying value of these equity investments were recorded for the years ended December 31, 2025 and 2024. 4. Investment in Unity China In August 2022, we formed a company in China ("Unity China") to perform research and development activities and to facilitate commercialization in the Greater China region. Upon formation, we agreed to sell to third-party investors an ownership interest of approximately 20.5 % in Unity China for cash consideration of $ 197 million. Under the agreement and pursuant to certain conditions that include successfully completing an initial public offering of Unity China at a valuation greater than ¥ 25.0 billion CNY, the investors have the option to require us to repurchase their interest at a redemption value based on the greater of Unity China's then current equity fair value or a guaranteed floor value in the aggregate amount of ¥ 1.9 billion CNY. The redeemable noncontrolling interests are initially measured at its issuance date fair value and then adjusted for its proportionate net income or loss and accreted to its estimated redemption value through the applicable redemption date, which is August 2027. We valued the combination of the investors' equity interest in Unity China and their redemption right at approximately $ 217.9 million, on the issuance date. The investors' equity interest was valued using a discounted cash flow analysis and market approach. The redemption right was valued using the Black-Scholes option-pricing model adjusted for probabilities of successfully completing an initial public offering. The difference between the fair value of the redeemable noncontrolling interests and cash consideration received was recognized as a customer incentive, as the equity interest holders are also customers. The customer incentive will be amortized against revenue over the five-year term of the redemption right. Subsequent and contingent to the initial investment from third-party investors, a management investor contributed $ 14.4 million for an ownership interest of 1.5 % with no redemption rights. 72 Table of Contents Unity Software Inc. The results of Unity China are included in our consolidated financial statements. The redeemable noncontrolling interests in Unity China are recorded as temporary equity on our consolidated balance sheet. The following table presents the changes in redeemable noncontrolling interests (in thousands): Year Ended December 31, 2025 2024 2023 Balance at beginning of period $ 230,627 $ 225,797 $ 219,563 Net gain/(loss) attributable to redeemable noncontrolling interests 1,186 ( 161 ) ( 4,017 ) Accretion for redeemable noncontrolling interests 10,535 11,250 15,543 Foreign currency translation and foreign exchange adjustments for redeemable noncontrolling interests 10,289 ( 6,259 ) ( 5,292 ) Balance at end of period $ 252,637 $ 230,627 $ 225,797 5. Acquisitions The revenue and earnings of the acquired businesses have been included in our results from the respective dates of the acquisitions. The total purchase price allocated to the net assets acquired is assigned based on the fair values as of the date of acquisition. The fair value assigned to identifiable intangible assets acquired was determined using the income approach and the cost approach. The identifiable intangible assets are subject to amortization on a straight-line basis over their estimated useful lives, as this best approximates the benefit period related to these assets. The excess of the purchase price over the identified tangible and intangible assets, less liabilities assumed, is recorded as goodwill. Goodwill is not subject to amortization and it typically is not deductible for U.S. income tax purposes. During the years ended December 31, 2025, 2024, and 2023, we completed no acquisitions. 6. Goodwill and Intangible Assets Goodwill Goodwill represents the excess of purchase price and related costs over the value assigned to net tangible and identifiable intangible assets acquired in business combinations. The carrying amount of goodwill as of December 31, 2025, 2024, and 2023 was $ 3.2 billion . 73 Table of Contents Unity Software Inc. Intangible Assets, Net The following tables present details of our intangible assets, excluding goodwill (in thousands, except for weighted-average useful life): As of December 31, 2025 Weighted-Average Useful Life (1) (In Years) Gross Carrying Amount Accumulated Amortization Net Carrying Amount Developed technology 2.2 $ 1,170,736 $ ( 655,282 ) $ 515,454 Customer relationships 0.9 570,000 ( 449,055 ) 120,945 Trademark 0.9 54,400 ( 40,255 ) 14,145 Total intangible assets 1.9 $ 1,795,136 $ ( 1,144,592 ) $ 650,544 As of December 31, 2024 Weighted-Average Useful Life (1) (In Years) Gross Carrying Amount Accumulated Amortization Net Carrying Amount Developed technology 5.1 $ 1,233,046 $ ( 473,303 ) $ 759,743 Customer relationships 1.9 593,240 ( 327,320 ) 265,920 Trademark 2.3 106,100 ( 65,528 ) 40,572 Total intangible assets 4.2 $ 1,932,386 $ ( 866,151 ) $ 1,066,235 (1) Based on weighted-average useful life remaining. The following table presents the amortization of finite-lived intangible assets included on our consolidated statements of operations (in thousands): Year Ended December 31, 2025 2024 2023 Amortization expense $ 418,691 $ 353,371 $ 515,489 As of December 31, 2025, the estimated future amortization of finite-lived intangible assets was as follows (in thousands): 2026 $ 435,109 2027 122,543 2028 92,892 2029 — 2030 — Thereafter — Total $ 650,544 74 Table of Contents 7. Balance Sheet Components The following tables provide details of selected balance sheet items (in thousands): As of December 31, 2025 December 31, 2024 Property and equipment, net: Gross property and equipment Leasehold improvements $ 49,657 $ 76,862 Software, computers, and other hardware 166,209 149,182 Furniture 22,396 28,652 Capital projects in progress 2,886 14,073 Total gross property and equipment 241,148 268,769 Accumulated depreciation and amortization ( 172,859 ) ( 169,950 ) Property and equipment, net $ 68,289 $ 98,819 The following table presents the depreciation and amortization of property and equipment included on our consolidated statements of operations (in thousands): Year Ended December 31, 2025 2024 2023 Depreciation and amortization expense $ 42,253 $ 55,609 $ 48,427 Long-lived Assets, Net, by Geographic Area The following table presents our long-lived assets, net, disaggregated by geography, which consists of our property and equipment, net, but excludes internally developed software and purchased software (in thousands): As of December 31, 2025 December 31, 2024 United States $ 4,353 $ 7,522 Canada 8,836 13,505 United Kingdom 4,671 5,413 EMEA, excluding United Kingdom (1) 6,065 9,513 Other (1) 4,142 7,748 Total long-lived assets, net $ 28,067 $ 43,701 (1) No individual country, other than those disclosed above, exceeded 10% of our total long-lived assets, net, for any period presented. As of December 31, 2025 December 31, 2024 Accrued expenses and other: Accrued expenses $ 123,120 $ 124,414 Accrued compensation 75,788 74,040 Income and other taxes payable 100,633 96,497 Accrued expenses and other $ 299,541 $ 294,951 75 Table of Contents 8. Leases We have operating leases for offices which have remaining lease terms of up to seven years , some of which include options to extend the lease with renewal terms from one to five years . Some leases include an option to terminate the lease for up to five years from the lease commencement date. Components of lease expense were as follows (in thousands): Year Ended December 31, 2025 December 31, 2024 Operating lease expense $ 31,375 $ 41,691 Variable lease expense 4,700 6,011 Sublease income ( 4,219 ) ( 2,162 ) Total lease expense $ 31,856 $ 45,540 Supplemental balance sheet information related to leases was as follows (in thousands, except weighted-average figures): As of Classification December 31, 2025 December 31, 2024 Operating lease assets Other assets $ 62,207 $ 78,562 Current operating lease liabilities Accrued expenses and other $ 28,421 $ 33,703 Long-term operating lease liabilities Other long-term liabilities 60,961 81,093 Total operating lease liabilities $ 89,382 $ 114,796 As of December 31, 2025 and December 31, 2024, our operating leases had a weighted-average remaining lease term of 3.8 years and 4.3 years, respectively, and a weighted-average discount rate of 5.0 % and 5.4 %, respectively. As of December 31, 2025, our lease liabilities were as follows (in thousands): Operating Leases Gross lease liabilities $ 97,951 Less: imputed interest 8,569 Present value of lease liabilities $ 89,382 76 Table of Contents 9. Borrowings Convertible Notes In February 2025, we issued an aggregate of $ 690 million principal amount of 0 % convertible senior notes due 2030 (the "2030 Notes"). Proceeds from the issuance of the 2030 Notes were $ 677 millions, net of debt issuance costs and the cash was used to purchase capped call transactions, and repurchase convertible notes as discussed below. The debt issuance costs are amortized to interest expense using the straight-line method, which approximates the effective interest method. As of December 31, 2025, we had $ 2.2 billion of unsecured convertible notes outstanding including $ 690 million of the 2030 Notes, $ 1.0 billion issued in November 2022 (the "2027 Notes"), $ 558 million issued in November 2021 (the "2026 Notes", together with the 2027 Notes and 2030 Notes, the "Notes"). The table below summarizes the principal and unamortized debt issuance costs and other material features of the Notes (in thousands): Carrying Amount as of, Conversion Rate per $1,000 Principal Initial Conversion Price Maturities Stated Interest Rates December 31, 2025 December 31, 2024 Convertible notes: Principal - 2026 Notes 3.2392 $ 308.72 2026 0.0 % $ 557,724 $ 1,245,232 Principal - 2027 Notes 20.4526 $ 48.89 2027 2.0 % 1,000,000 1,000,000 Principal – 2030 Notes 27.6656 $ 36.15 2030 0.0 % 690,000 — Unamortized debt issuance costs, net ( 12,374 ) ( 6,310 ) Net carrying amount $ 2,235,350 $ 2,238,922 1) We entered into capped call transactions in connection with the 2026 and 2030 Notes. The cap price of the capped call transactions relating to the Notes was initially $ 343.02 and $ 47.74 , respectively, subject to certain adjustments under the terms of the capped call transactions. See below "--Capped Call Transactions." Interest on the Notes is payable semi-annually in arrears. The combined interest expense on the Notes related to regular interest and the amortization of debt issuance cost was $ 24.0 million and $ 23.5 million for the years ended December 31, 2025 and December 31, 2024, respectively. As of December 31, 2025, the estimated fair value of the 2030 Notes was approximately $ 1.0 billion. As of December 31, 2025 and December 31, 2024, the estimated fair value of the 2027 Notes was approximately $ 1.2 billion and $ 1.0 billion, respectively, and the estimated fair value of the 2026 Notes was approximately $ 540 million and $ 1.1 billion, respectively. The fair value of the 2027 Notes was based on a combination of a discounted cash flow and Black-Scholes option-pricing model. The fair value of the 2030 Notes and 2026 Notes was based on quoted prices as of that date. The 2027 Notes may be converted at the election of the holders thereof at any time prior to maturity. The 2026 Notes and 2030 Notes are convertible at the option of the respective holders thereof if a conversion condition applicable to such series of Notes is triggered. During the year ended December 31, 2025, none of the conversion conditions of the 2026 Notes or the 2030 Notes were triggered, and neither the 2026 Notes nor the 2030 Notes were convertible as of December 31, 2025. Any such conversion of the Notes described above, may be satisfied at our election with either cash, shares of our common stock, or a combination of cash and shares of our common stock. The conversion rates for the Notes are subject to customary adjustments for certain events as described in the relevant indenture governing the Notes. The Notes are subject to additional terms. In connection with certain corporate events, as described in the indentures governing the Notes, we will increase the conversion rate for a holder of the applicable series of Notes who elects to convert those Notes in connection with the event. Additionally, upon the occurrence of certain corporate events and subject to certain exceptions, as described in the indenture governing the applicable series of Notes, holders of those Notes may require us to repurchase all or a 77 Table of Contents portion of those Notes at a price equal to 100 % of the principal amount to be repurchased, plus any accrued and unpaid interest to date. The 2026 Notes and 2030 Notes are also redeemable at our option if certain conditions are met, as described in the indentures governing the 2026 Notes and 2030 Notes respectively. As of December 31, 2025, no holders of the Notes have exercised the conversion rights, and the if-converted value of the Notes did not exceed the principal amount. Convertible Note Repurchase During the first quarter of 2025, and the first quarter of 2024, the Company repurchased in privately negotiated transactions and extinguished a portion of the 2026 Notes, with a total principal balance of $ 688 million and $ 480 million, respectively. The aggregate repurchase price for these notes was $ 642 million and $ 415 million, respectively, resulting in pre-tax gains of $ 42.7 million and $ 61.4 million, respectively, net of the write-off of unamortized issuance costs. These gains were included in Interest income and other income (expense), net, in the consolidated statement of operations. Capped Call Transactions We entered into capped call transactions to reduce the potential dilutive effect of the 2026 Notes (the "2026 Capped Call Transactions"), and 2030 Notes (the "2030 Capped Call Transactions," together with the 2026 Capped Call Transactions, the "Capped Call Transactions"), in connection with their pricing. The 2026 Capped Call Transactions, and the 2030 Capped Call Transactions, had net costs of $ 48.1 million and $ 44.4 million, respectively, with call options totaling approximately $ 5.6 million and $ 19.1 million of our common stock, and with expiration dates ranging from September 18, 2026 to November 12, 2026, and January 15, 2030 to March 13, 2030, respectively. The strike price of the 2026 Capped Call Transactions, and the 2030 Capped Call Transactions are $ 308.72 and $ 36.15 , respectively, and the cap prices are initially $ 343.02 and $ 47.74 per share, respectively, subject to adjustments in certain circumstances. The Capped Call Transactions are freestanding, are considered separately exercisable from the 2026 Notes and 2030 Notes, and meet the conditions for equity classification. 10. Commitments and Contingencies The following table summarizes our non-cancelable contractual commitments as of December 31, 2025 (in thousands): Total 2026 2027-2028 2029-2030 Thereafter Operating leases (1) $ 105,313 $ 32,542 $ 47,953 $ 17,190 $ 7,628 Purchase commitments (2) 753,459 251,886 378,285 123,288 — Convertible note principal and interest (3) 2,287,724 577,724 1,020,000 690,000 — Total $ 3,146,496 $ 862,152 $ 1,446,238 $ 830,478 $ 7,628 (1) Operating leases consist of obligations for real estate, including leases that are not yet commenced or reflected on our consolidated balance sheet with future minimum lease payments of $ 7.4 million. These leases will commence in 2026 with lease terms of approximately seven years . (2) The substantial majority of our purchase commitments are related to agreements with our data center hosting providers. (3) Convertible notes due 2026, 2027, and 2030. See Note 9, "Borrowings," above for further discussion. We expect to meet our remaining commitments. Legal Matters In the normal course of business, we are subject to various legal matters. We accrue a liability when management believes that it is both probable that a liability has been incurred and the amount of loss can be reasonably estimated. We also disclose material contingencies when we believe a loss is not probable but reasonably possible. Legal costs related to such potential losses are expensed as incurred. In addition, recoveries are shown as a reduction in legal costs in the period in which they are realized. 78 Table of Contents Unity Software Inc. With respect to our outstanding matters, based on current knowledge, we believe that the resolution of such matters will not, either individually or in the aggregate, have a material adverse effect on our business or our consolidated financial statements. However, litigation is inherently uncertain, and the outcome of these matters cannot be predicted with certainty. Accordingly, cash flows or results of operations could be materially affected in any particular period by the resolution of one or more of these matters. Letters of Credit We had $ 8.5 million and $ 10.2 million of secured letters of credit outstanding as of December 31, 2025 and 2024, respectively. These primarily relate to our office space leases and are fully collateralized by certificates of deposit which we record in restricted cash as other assets and prepaid expenses and other on our consolidated balance sheets. 11. Stockholders' Equity and Employee Compensation Plans Stockholders' Equity Employee Compensation Plans Stock Award Plans Our stock compensation plans allow us to grant or assume through acquisition stock options and RSUs, including PVOs, PVUs, and PSUs, to employees and non-employee directors. As of December 31, 2025, we had reserved a total of 91.4 million shares of common stock under our collective compensation plans, of which 53.8 million were available for future grant. Employee Stock Purchase Plan We offer an Employee Stock Purchase Plan ("ESPP") that permits employees to purchase shares of our common stock through payroll deductions of up to 15 % of their earnings. Unless otherwise determined by the administrator, the purchase price of the shares will be 85 % of the lower of the fair market value of our common stock on (i) the first day of an offering or (ii) on the date of purchase. No participant may purchase more than 1,000 shares of common stock in any one offering period. Participants may end their participation at any time during an offering and will be paid their accrued contributions that have not yet been used to purchase shares. Participation ends automatically upon termination of employment with us. The maximum number of shares of our common stock that may be issued under our 2020 ESPP is 22.6 million shares, of which 18.7 million were available for issuance as of December 31, 2025. During 2025, we suspended the ESPP program, effective in the first quarter of 2026. As a result of the suspension, no new offering periods will commence after March 2, 2026. Employee 401(k) Plan We have a qualified defined contribution plan under Section 401(k) of the Internal Revenue Code. U.S. full-time employees qualify for participation in the plan. Contribution to the plan is under our discretion. For the years ended December 31, 2025, 2024, and 2023, we contributed and expensed $ 10.1 million, $ 11.5 million, and $ 15.0 million, respectively, to the plan. Defined Contribution Pension Plan For other operations outside the United States, we have a defined contribution pension plan in some countries. We contribute up to 18 % of total salary into the plan annually when employees contribute to the plan. For the years ended December 31, 2025, 2024, and 2023, we contributed and expensed $ 15.9 million, $ 19.5 million, and $ 25.8 million, respectively, to the plan. 79 Table of Contents Unity Software Inc. 12. Stock‑Based Compensation Stock-based compensation expense is as follows (in thousands): Year Ended December 31, 2025 2024 2023 Cost of revenue $ 39,103 $ 44,736 $ 80,213 Research and development 189,676 261,458 290,160 Sales and marketing 71,639 129,037 143,461 General and administrative 84,796 161,018 134,862 Total stock-based compensation expense $ 385,214 $ 596,249 $ 648,696 Included in the above expenses for the year ended December 31, 2025 and 2024, are $ 13.0 million and $ 93.8 million respectively, of incremental stock-based compensation expense from modifications, primarily within general and administrative. These amounts predominately relate to modifications of awards held by departing executives in the fourth quarter of 2025, and the founders of ironSource Ltd. that departed in the first quarter of 2024, respectively. Unrecognized compensation expense is as follows (in thousands, except for weighted-average remaining vesting period): December 31, 2025 Unrecognized Compensation Expense Weighted-Average Remaining Vesting Period (In Years) Outstanding stock options and PVOs $ 22,469 2.14 Unvested RSUs and PVUs $ 572,033 2.63 ESPP $ 1,327 0.17 In future periods, stock-based compensation expense may increase as we issue additional equity-based awards to continue to attract and retain employees. Stock Options A summary of our stock option, including price-vested options ("PVO"), activity is as follows: Options Outstanding Stock Options Outstanding Weighted-Average Exercise Price Weighted-Average Remaining Contractual Term (In Years) Balance as of December 31, 2023 31,541,466 $ 19.35 4.79 Granted 3,187,067 $ 21.65 Exercised ( 8,790,694 ) $ 6.20 Forfeited, cancelled, or expired ( 2,779,627 ) $ 48.96 Balance as of December 31, 2024 23,158,212 $ 21.10 4.24 Granted 206,244 $ 24.72 Exercised ( 9,245,255 ) $ 10.90 Forfeited, cancelled, or expired ( 1,644,854 ) $ 46.34 Balance as of December 31, 2025 12,474,347 $ 25.39 4.40 Exercisable as of December 31, 2025 9,915,246 $ 26.17 3.35 (1) The intrinsic value is the difference between the estimated fair value of our common stock on December 31, 2025 and the exercise price for in-the-money options. 80 Table of Contents Unity Software Inc. A summary of intrinsic and fair values of our stock options is as follows (in thousands, except fair value amounts): Year Ended December 31, 2025 December 31, 2024 December 31, 2023 Aggregate pretax intrinsic value of stock options exercised (1) $ 210,329 $ 155,558 $ 127,722 Weighted-average grant-date fair value of stock options granted $ 16.38 $ 13.34 $ 18.64 Fair value of stock options vested $ 19,696 $ 46,933 $ 68,008 (1) The intrinsic value is the difference between the estimated fair value of our common stock on the date of exercise and the exercise price for in-the-money options. Restricted Stock Units A summary of our restricted stock units ("RSU"), including price-vested units ("PVU"), and performance-based restricted stock units ("PSU"), activity is as follows: Unvested RSUs Number of Shares Weighted-Average Grant-Date Fair Value Unvested as of December 31, 2023 37,332,551 $ 38.31 Granted 20,546,590 $ 19.32 Vested ( 14,666,692 ) $ 38.88 Forfeited ( 13,199,174 ) $ 36.05 Unvested as of December 31, 2024 30,013,275 $ 26.03 Granted 15,922,107 $ 25.81 Vested ( 13,002,226 ) $ 28.73 Forfeited ( 8,005,434 ) $ 23.85 Unvested as of December 31, 2025 24,927,722 $ 25.18 The total fair value of RSUs vested as of the vesting dates during the years ended December 31, 2025, 2024, and 2023 was $ 414 million, $ 330 million, and $ 448 million, respectively. Price-Vested Options and Price-Vested Units The vesting for each of the PVOs and PVUs is subject to the fulfillment of both a service period that extends up to four years and the achievement of a stock price hurdle during the relevant performance period that extends up to six and seven years , respectively. The fair value of each PVO and PVU award is estimated using a Monte Carlo simulation that uses assumptions determined on the date of grant. During the year ended December 31, 2025, the price hurdle on 420,000 outstanding PVOs was met, resulting in those units vesting. No other outstanding options or units, which had not already met their price hurdle in a prior period, attained their price hurdle in this period. Performance-Based Restricted Stock Units Starting in the first quarter of 2025, we have issued PSUs to certain executives as part of their compensation. The vesting for each PSU is subject to the fulfillment of both a service period of three years , and the level of achievement of certain performance goals (revenue and EBITDA metrics), over three annual performance periods ("tranche"). These goals are set as a range of target outcomes, in the first quarter of each year, and can be attained at a rate between 0 % and 150 %, based on where in the range the final results fall. The fair value of each PSU is estimated separately for each tranche of the award, using the closing price of Unity's common stock on the day the performance goals are set for that 81 Table of Contents Unity Software Inc. tranche. The expense is the fair value of the award multiplied by the expected attainment of the related performance goals as of the balance sheet date, recognized ratably for each tranche over the period between the day the performance goal is set, and the end of the service period. The expense is adjusted each period for any changes in the expected attainment of the performance goals. Fair Value Assumptions The calculated grant-date fair value of stock options, PVUs, and PVOs granted, were estimated using the Black-Scholes option-pricing model for stock options, and a Monte Carlo stimulation for the PVUs and PVOs, with the following assumptions: Year Ended December 31, 2025 December 31, 2024 December 31, 2023 Expected dividend yield — — — Risk-free interest rate 4.1 % 3.5 % - 4.4 % 3.8 % - 4.9 % Expected volatility 69.5 % 60.0 % - 68.0 % 54.7 % - 65.8 % Expected term (in years) 6.25 6.25 - 10.00 6.25 Fair value of underlying common stock $ 24.72 $ 15.60 - $ 26.89 $ 28.13 - $ 39.29 Employee Stock Purchase Plan The fair value of shares offered under our ESPP was determined on the grant date using the Black-Scholes option pricing model. The following table summarizes the assumptions used and the resulting grant-date fair values of our ESPP: Year Ended December 31, 2025 2024 2023 Expected dividend yield — — — Risk-free interest rate 4.0 % - 4.3 % 4.9 % - 5.3 % 5.2 % - 5.5 % Expected volatility 72.4 % - 73.4 % 49.3 % - 56.0 % 65.9 % - 94.5 % Expected term (in years) 0.50 0.50 0.50 Grant-date fair value per share $ 9.26 - $ 14.03 $ 4.82 - $ 9.11 $ 12.44 - $ 12.65 Additional information related to the ESPP is provided below (in thousands, except per share amounts): Year Ended December 31, 2025 2024 2023 Shares issued under the ESPP 1,133,071 1,161,604 1,064,463 Weighted-average price per share issued $ 16.50 $ 19.13 $ 25.56 13. Income Taxes Loss before provision for (benefit from) income taxes consisted of the following for the years ended December 31, 2025, 2024, and 2023 (in thousands): Year Ended December 31, 2025 2024 2023 United States $ ( 420,193 ) $ ( 517,547 ) $ ( 900,325 ) Foreign 24,995 ( 149,586 ) 102,480 Total $ ( 395,198 ) $ ( 667,133 ) $ ( 797,845 ) 82 Table of Contents Unity Software Inc. The components of the provision for income taxes consists of the following for the years ended December 31, 2025, 2024, and 2023 (in thousands): Year Ended December 31, 2025 2024 2023 Current: Federal $ 1,504 $ 4,063 $ 3,393 State ( 308 ) 1,022 584 Foreign 27,249 17,748 29,502 Total current tax expense 28,445 22,833 33,479 Deferred: Federal 3,406 ( 421 ) 5,184 State — 861 ( 3,749 ) Foreign ( 25,556 ) ( 26,119 ) ( 6,437 ) Total deferred tax benefit ( 22,150 ) ( 25,679 ) ( 5,002 ) Total tax provision (benefit) $ 6,295 $ ( 2,846 ) $ 28,477 83 Table of Contents Unity Software Inc. Reconciliations of the income tax provision at the U.S. federal statutory tax rate to the provision for (benefit from) income taxes for the year ended December 31, 2025, is as follows (in thousands, except percentages): Year Ended December 31, 2025 $ % U.S. federal statutory tax rate $ ( 82,992 ) 21.00 % Changes in income taxes resulting from: State and local income taxes, net of federal benefit (1) ( 308 ) 0.08 % Foreign tax effects Israel Incentive tax rate 15,089 ( 3.82 ) % Other ( 4,905 ) 1.24 % Denmark Changes in valuation allowance ( 16,142 ) 4.08 % Other ( 2,357 ) 0.60 % United Kingdom Foreign currency exchange 5,695 ( 1.44 ) % Other ( 11,093 ) 2.81 % Other foreign jurisdictions 13,430 ( 3.41 ) % Effect of changes in tax laws or rates enacted in the current period — — % Effect of cross-border tax laws 1,323 ( 0.33 ) % Tax Credits Research & Development Credits ( 7,146 ) 1.81 % Changes in valuation allowances 104,386 ( 26.41 ) % Nontaxable or nondeductible items Stock-based compensation ( 17,819 ) 4.51 % Non-deductible compensation 14,365 ( 3.64 ) % Other ( 3,462 ) 0.88 % Changes in unrecognized tax benefits ( 1,769 ) 0.45 % Total tax provision (benefit) $ 6,295 ( 1.59 ) % (1) State taxes in New York and New York City made up the majority (greater than 50%) of the tax effect in this category. 84 Table of Contents Unity Software Inc. Reconciliations of the income tax provision at the U.S. federal statutory tax rate to the provision for (benefit from) income taxes for the years ended December 31, 2024 and 2023 are as follows (in thousands): Year Ended December 31, 2024 2023 U.S. federal statutory tax rate $ ( 167,584 ) $ ( 138,742 ) Changes in income taxes resulting from: State tax expense, net of federal benefit 1,529 ( 1,980 ) Foreign income taxed at different rates 10,606 1,543 Federal research and development credits ( 3,358 ) ( 10,172 ) Stock-based compensation 50,954 50,640 Tax effects of restructuring 3,253 ( 293,435 ) Base-erosion and anti-abuse tax — — Change in valuation allowance 90,598 420,846 Other 11,156 ( 223 ) Total tax provision (benefit) $ ( 2,846 ) $ 28,477 Our income tax provision for the year ended December 31, 2025 was primarily driven by losses that cannot be benefited due to the U.S. valuation allowance and taxable income in certain foreign jurisdictions. Our income tax provision for the year ended December 31, 2024 was primarily driven by losses that cannot be benefited due to the valuation allowance on U.S., Denmark, U.K., China, and Canada entities, and to a lesser extent, foreign earnings taxed at different tax rates. In addition, we undertook certain tax restructuring efforts during the first quarter of 2024 that enhanced our ability to offset deferred tax liabilities in the U.S. in future periods, thereby partially reducing the need for a valuation allowance. 85 Table of Contents Unity Software Inc. The types of temporary differences that give rise to significant portions of our deferred tax assets and liabilities as of December 31, 2025 and 2024 are set forth below (in thousands): As of December 31, 2025 2024 Deferred tax assets: Net operating losses $ 440,347 $ 401,330 Tax credits 129,428 119,681 Stock-based compensation 51,376 68,178 Capitalized R&D expenditures 651,267 672,828 Operating lease liabilities 29,601 39,615 Other 68,026 62,340 Gross deferred tax assets 1,370,045 1,363,972 Valuation allowance ( 1,264,670 ) ( 1,167,316 ) Total deferred tax assets 105,375 196,656 Deferred tax liabilities: Intangible Asset ( 123,225 ) ( 221,869 ) Depreciation and Amortization ( 11,972 ) ( 21,694 ) Operating lease ROU assets ( 20,978 ) ( 25,762 ) Total deferred tax liabilities ( 156,175 ) ( 269,325 ) Net deferred tax assets (liabilities), net of valuation allowances $ ( 50,800 ) $ ( 72,669 ) 1) Certain prior year amounts have been reclassified to conform to current year presentation. In the tax years ended December 31, 2025 and 2024, we capitalized certain research and development costs incurred by our U.S. and foreign subsidiaries, which resulted in deferred tax assets of $ 651 million and $ 673 million respectively. These deferred tax assets associated with capitalized research and development costs are offset by valuation allowances and future taxable temporary differences. The realization of deferred tax assets is dependent upon the generation of sufficient taxable income of the appropriate character in future periods. We regularly assess the ability to realize our deferred tax assets and establish a valuation allowance if it is more-likely-than-not that some portion of the deferred tax assets will not be realized. We weigh all available positive and negative evidence, including our earnings history and results of recent operations, scheduled reversals of deferred tax liabilities, projected future taxable income, and tax planning strategies. Due to the weight of objectively verifiable negative evidence, including our history of losses, we believe that it is more likely than not that our U.S. federal, state, and certain foreign deferred tax assets will not be realized as of December 31, 2025 and 2024, and as such, we have maintained a valuation allowance against such deferred tax assets. In the event we determine that we will be able to realize all or part of our net deferred tax assets in the future, the valuation allowance against deferred tax assets will be reversed in the period in which we make such determination. The release of a valuation allowance against deferred tax assets may cause greater volatility in the effective tax rate in the periods in which the valuation allowance is released. The valuation allowance against our U.S. federal, state and foreign deferred tax assets increased by $ 97 million and $ 79 million in the years ended December 31, 2025 and 2024, respectively. The increase in the valuation allowance in the years ended December 31, 2025 and 2024 was primarily related to deferred tax assets for which insufficient positive evidence exists to support their realizability, including NOL carryforwards, capitalized research and development expenses, and credits for research and development. Our NOL carryforwards for U.S. federal, state, and foreign purposes were $ 685 million, $ 477 million, and $ 1.1 billion, respectively, with most of our foreign NOL carryforward balances arising from Denmark and the U.K. jurisdictions. Portions of the U.S. federal and state NOL carryforwards, if not utilized, will begin to expire in 2032 and 2026, respectively. The foreign NOL carryforwards, if not utilized, 86 Table of Contents Unity Software Inc. will not expire. Our U.S. federal and state research and development credit carryforwards were $ 115 million and $ 43.9 million, respectively. The U.S. federal credit carryforwards, if not utilized, will begin to expire in 2033, while the California credit carryforwards have no expiration. The foreign credit carryforwards, if not utilized, will begin to expire in 2045. Federal and state tax laws impose restrictions on the utilization of NOL and research and development credit carryforwards in the event of a change in ownership of our business as defined by the Internal Revenue Code, Sections 382 and 383. Under Section 382 and 383 of the Code, substantial changes in our ownership may limit the amount of NOL and research and development credit carryforwards that are available to offset taxable income. The annual limitation would not automatically result in the loss of NOL or research and development credit carryforwards but may limit the amount available in any given future period. We maintain our reinvestment assertion with respect to foreign earnings for the period ended December 31, 2025, which is that all earnings are permanently reinvested for all jurisdictions. Based on our reinvestment assertion and losses from our foreign entities, we have not recorded a liability for the period ended December 31, 2025. A reconciliation of the beginning and ending amount of total gross unrecognized tax benefits, excluding accrued net interest and penalties, is as follows (in thousands): As of December 31, 2025 2024 2023 Unrecognized tax benefits, beginning balance $ 179,780 $ 182,515 $ 176,584 Gross increases for tax positions taken in prior years 379 454 4,215 Gross decreases for tax positions taken in prior years ( 3,049 ) ( 11,338 ) ( 8,361 ) Gross increases for tax positions taken in current year 5,254 9,001 10,573 Reductions resulting from lapses of statues of limitations — ( 668 ) ( 660 ) Foreign exchange gains and losses 377 ( 184 ) 164 Unrecognized tax benefits, ending balance $ 182,741 $ 179,780 $ 182,515 As of December 31, 2025 and 2024, we had $ 183 million and $ 180 million, respectively, of gross unrecognized tax benefits, of which $ 32.4 million and $ 31.8 million, respectively, would impact the effective tax rate, if recognized. We recognize interest and penalties related to our unrecognized tax benefits within our provision for income taxes. The amount of interest and penalties accrued as of December 31, 2025 and 2024 were $ 10.9 million and $ 7.7 million, respectively. We are subject to taxation in the United States and various other state and foreign jurisdictions. The material jurisdictions in which we are subject to potential examination include the United States, Denmark, and Israel. Our 2012 and subsequent tax years remain open to examination by the Internal Revenue Service. Our 2019 and subsequent tax years remain open to examination in Denmark, Finland, France, and Israel. The components of the cash paid for (refunded from) income taxes, net, consists of the following for the year ended December 31, 2025 (in thousands): Year Ended December 31, 2025 Federal $ 580 State ( 543 ) Foreign 10,552 Total cash paid for income taxes, net of refunds: $ 10,589 87 Table of Contents Unity Software Inc. Individual jurisdictions equaling 5% or more of the total cash paid for (refunded from) income taxes, net, for the year ended December 31, 2025 include: Israel $( 9.5 ) million, Denmark $ 4.1 million, Canada $ 3.0 million, China $ 2.6 million, Finland $ 1.5 million, France $ 1.4 million, UK $ 1.3 million, Spain $ 1.0 million, Japan $ 1.0 million, India $ 0.8 million, Korea $ 0.7 million, U.S. Federal $ 0.6 million. 14. Net Loss per Share of Common Stock Basic and diluted net loss per share is the same for all periods presented because the effects of potentially dilutive items were antidilutive given our net loss in each period. The following table presents potentially dilutive common stock excluded from the computation of diluted net loss per share (in thousands) because the impact of including them would have been antidilutive: As of December 31, 2025 2024 2023 Convertible notes 41,348 24,488 26,042 Stock options and PVOs 12,474 23,158 31,541 Unvested RSUs, PVUs, and PSUs 24,928 30,013 37,333 15. Segment Information We have one reportable segment, software solutions. See "Revenue Recognition" in Note 1 for detailed information regarding our products and services. Our chief operating decision maker is the chief executive officer, who on a consolidated basis, assess the performance of, drives improvements in, and decides how to allocate resources in the reportable segment, based on multiple measures of performance including consolidated net income, adjusted EBITDA, adjusted gross margin, and adjusted EPS. As such, consolidated net income, which is reported and reconciled with all significant segment expenses on our consolidated statement of operations, is the measure that is most consistent with GAAP, while adjusted EBITDA, adjusted gross margin, and adjusted EPS are additional measures of our segment profitability. The measure of segment assets is reported on the balance sheet as total consolidated assets. We do not have material intra-entity sales or transfers. Item 9. Changes in and Disagreements with Accountants on Accounting and Financial Disclosure None.