Roblox Sees All-Time High in Daily Active Users. Time To Buy?

Roblox (RBLX 1.57%) is making efforts to remedy its lackluster monetization per user. In this clip from "3 Minute Stocks Updates" on Motley Fool Live, recorded on May 11, Motley Fool contributor Toby Bordelon discusses the pros and cons of Roblox's financials and performance, and the issues it needs to address.

Toby Bordelon: We will start with Roblox. This is when they reported earnings last night. We looked at this a little bit on BackstagePass. I want to bring it to viewers here. Overall, I'm going to tell a story in charts. We saw revenue up 39% year-over-year, but down sequentially. Now you might say, well, hey, last quarter was the holiday quarter, shouldn't you expect more revenue there? Maybe, but we've never seen that drop before from the fourth quarter to Q1, so it's a little bit of a concern to me. We have not seen that seasonality. It's the first time we're seeing that. Is that just steady-state seasonality or is there more to be concerned about? Something that we won't know for, I guess, at least another year. More concerning: bookings. Bookings are down 3% year-over-year, but way down from last quarter. Again, maybe that same seasonality issue that we're seeing. But, we haven't typically seen that before from Q4-Q1. The bigger issue: this is the lowest level of bookings since Q3 of 2020. Bookings lead revenue. If bookings are dropping, you get concerned that revenue is going to drop further in the future. Something to watch. Now, not everything is down. What's up? Well, costs are up, particularly compensation, stock-based expense. That's something we're dealing with. They said personnel costs actually year-over-year were up 42%, not including stock-based comp. This doesn't even show you the stock-based comp going there. What we're seeing with daily active users is not all bad news. Daily active users are going up. The growth rate has slowed, but we're still seeing an increase in daily active users. That is a good thing. Hours engaged, we saw a dip last quarter. That's back up, now back to an all-time high. That's a good thing to see. If you see users going up though, but bookings dropping, this is what you get. A drop in average bookings per daily active user down 25% year-over-year. Not awesome there. A mixed bag in terms of the financials. The revenue in the bookings is coming down. We don't like to see. We are still seeing engagement and daily active users going up though, so not all bad. It's just a matter of whether they can increase that monetization, which they are trying to do. They're working on improving the monetization per hour with advertising, potentially with better search and discovery. They are making efforts to address the issue we're seeing which is less monetization per user and per engagement. We'll see what they can continue to do and if that pays off the next couple of quarters.