In yesterday’s earnings preview, I concluded that whilst Roblox (RBLX) earnings could have gone both ways, the downside risk appeared more likely on the grounds of simmering bookings – Roblox’s key revenue metric. It seems that the metaverse figurehead is still struggling with enticing spending on the platform, with bookings declining by 3% over the quarter.
Earnings came in at a loss of $0.27 against a predicted loss of $0.21. Revenue also failed to hit the Street mark, coming in at $631.2M versus the $645M analyst consensus. RBLX shares sold off as much as 12% in after hours, currently sitting at a slightly retraced premarket loss of 6.5%.
It’s clear that Roblix is still struggling at clawing back users after the unprecedented growth bred by the pandemic. Revenue still falls shy of the target, but looking at the bigger picture, there is one alluring fact that shouldn’t be ignored – engagement is increasing. The company reported 54.1M average daily active users in Q1, up 28% year over year but still just shy of analyst predictions, who were looking for 55M.
Still, Roblox is growing. It’s not unsurprising to see a high-growth company in an emerging market still finding its feet, and any growth in users bodes well for the growth of the metaverse. Despite some aspect of positivity, average bookings per daily user slid 25% to $11.67, just above the expected $11.65.
In a comment from Roblox management:
“While Covid and the subsequent re-opening have contributed to slowing growth in several of our metrics, based on third party data we believe we are gaining share on both users and hours relative to certain other companies in gaming and social media that compete for our users’ attention”
As mentioned beforehand, Roblox’s vision for the metaverse is intact, it just needs to gain real traction for spending to increase, and profits to return to the company. This could be a long and arduous journey, but has all the potential to be a big winner in the long-term.
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Oliver is a financial writer and analyst specialising in the US stock market, with years of personal experience in understanding micro/macroeconomic structures, market trends and fundamental analysis.