Unity Software (NYSE:U) just pulled off a pleasant surprise for investors, reporting a narrower-than-expected Q3 2024 loss of $0.31 per share. That's a 20% beat against Wall Street's gloomy forecast of $0.39. But before you celebrate, there's a twist: revenue fell 18% year-over-year to $446.5 million. Unity's core subscription model is showing promiseespecially after scrapping that infamous Runtime Feebut challenges in its Grow Solutions segment and declining non-strategic revenue weigh heavy. Still, Adjusted EBITDA landed at $92 million, beating guidance, and the new Unity 6 update is gaining traction as the most stable and efficient version yet.

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CEO Matt Bromberg is steering the ship through choppy waters with bold moves: redefined pricing models, a leadership refresh (welcome, CTO Steve Collins and CFO Jarrod Yahes), and a tech overhaul that could supercharge developer ROI. Big-name adopters like KLM and Deutsche Bahn hint at Unity's potential beyond gaming, yet the stock's been battered this year, shedding nearly 43%. The question now: Can they regain momentum or will headwindsmacroeconomic pressures and tough competitionkeep dragging them down?

Unity's revised full-year outlook feels cautiously optimistic: revenue guidance bumped to $1.7 billion-$1.71 billion, with Adjusted EBITDA projected at $363-$368 million. Management is banking on sustained subscription growth and a stronger grip on the non-gaming market. But let's be realexecution is everything. As investors digest these numbers, all eyes will be on Unity's next earnings call for signs they can turn their strategic ambitions into tangible wins.

This article first appeared on GuruFocus.