Unity Software Inc. (NYSE: U) shares plummeted 5.07% in Wednesday's trading session, following the release of its second-quarter 2025 financial results. Despite beating analyst estimates, the company's year-over-year revenue decline and lower-than-expected third-quarter guidance appear to have rattled investors.

The game engine maker reported Q2 revenue of $440.94 million, surpassing analyst expectations of $426.77 million. However, this figure represented a 1.9% decrease from the same quarter last year. Unity's adjusted earnings per share came in at $0.18, beating the consensus estimate of $0.15. The company's adjusted EBITDA of $90.5 million also exceeded analyst projections of $77.49 million.

While Unity's Q2 performance beat expectations, its outlook for the third quarter fell short of market hopes. The company guided for Q3 revenue between $440 million and $450 million, with the midpoint slightly below analyst estimates of $447.6 million. This conservative guidance, coupled with the year-over-year revenue decline, likely contributed to the stock's significant drop as investors reassessed the company's growth prospects in the competitive tech landscape.