Roblox misses revenue estimates on slowing post-pandemic growth
ROBLOX, a video game platform aimed at preteens and teenagers, reported bookings that declined from a year ago and missed analysts' estimates, continuing a trend that saw the time players spent on the platform growing slower than during the pandemic.
Bookings, which include revenue and deferred revenue and other adjustments, fell 3 per cent to US$631.2 million, in the period ended Mar 31, the company said Tuesday (May 10) in a statement. Analysts, on average, estimated US$633.3 million, according to data compiled by Bloomberg.
Roblox said daily active users hit a record 54.1 million in the quarter, but that 28 per cent year-over-year increase was less that the previous period and short of the doubling of growth the game company experienced during the pandemic. And the amount of time game players engaged with the platform also grew at a slower rate than before and during the pandemic - a trend that continued in April, the company said in the statement.
"In the US & Canada during Q1 and April 2022 we saw fewer hours per (daily active user) relative to the relevant period in 2021 when most users were subject to Covid lockdowns," Roblox said in a letter to shareholders. "Generally our bookings are highly correlated with engagement hours."
Chief executive officer David Baszucki said it's difficult to compare the environment in the first part of this year with early 2021 "when we were completely locked down". A year ago, 3 million players ages 9 to 12 were spending 10 million hours a week on Roblox. The company is hanging onto those users, "and going forward we expect to grow them, but now they're spending 8 million hours a week", he said. "Our bookings are very correlated to time on the platform."
Investors also question how Roblox will make money from its young, dedicated users. Right now, games are free-to-play, but the company generated revenue through sales of in-game currency, Robux, and the 73 US cents it skims from every dollar spent in-game on user-generated content. Roblox also participates in licencing and advertising deals, including with Marvel, Gucci and Chipotle.
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Roblox on Wednesday announced it would expand initiatives to generate revenue, including through advertising. The platform will offer more sponsored search results for their digital games and experiences as well as more integrated ad units in-game.
Ads in Roblox are controversial because most of its users are younger than 18. In April, advertising watchdog Truth In Advertising sent a complaint to the US Federal Trade Commission complaining that "Roblox has failed to establish any meaningful guardrails to ensure compliance with truth in advertising laws."
Baszucki said the company's views on advertising are "typically more stringent than laws or regulations", and are "thoughtful of what's appropriate" for kids younger than 13 on the platform. "What content is advertising, what content is fun brands kids want to interact with?" he said. "It's a bit of a grayscale."
First-quarter sales increased 39 per cent to US$537.1 million, compared with analysts average estimate of US$563 million. The company reported its net loss widened to US$160 million, or a loss of 27 US cents a share, from US$134.2 million, or 46 US cents. Adjusted earnings before interest, taxes, depreciation and amortisation was US$67.9 million. Analysts estimated US$100.1 million.
Roblox shares swung widely from negative to positive in extended trading and were down about 5 per cent at 4.12 pm, after closing at US$23.18 in New York. The stock has plunged 77 per cent this year, including 27 per cent in a single day after the company reported disappointing results in February.
The company seems to be pivoting back to focus on its younger audience as part of its plan to improve its net bookings. Roblox said a year ago that it hoped to expand its players older than 16. The company said Tuesday its 9- to 12-year-old user base is not "fully penetrated", and wants to increase their numbers. BLOOMBERG
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