What happened
Shares of Roblox (RBLX 1.35%) are down 20.4% this week, according to data provided by S&P Global Market Intelligence, after the video game developer announced disappointing quarterly results relative to expectations.
To be sure, shares fell more than 23% on Wednesday alone after Roblox announced its second-quarter revenue rose 15% year over year, to $680.8 million, while bookings -- a key metric to help gauge future revenue growth -- grew 22% to $780.8 million. On the bottom line, that translated to a net loss of $282.8 million, or $0.46 per share. Analysts, on average, were expecting a narrower net loss of $0.44 per share, with higher bookings of $785 million.
So what
Digging deeper into Roblox's results, average daily active users (DAUs) grew 25% year over year to 65.5 million, while average monthly unique payers were up 19% year over year to 13.5 million. Those players were collectively engaged for an incredible 14 billion hours -- up 24% from the same year-ago period. However, average bookings per DAU and monthly unique payer each declined 3% year over year to $11.92 and $19.32, respectively.
"We continue to drive high rates of organic growth in DAUs, hours, and bookings [and] are growing among users of all ages and across all geographies," stated Roblox founder David Baszucki. "We remain focused on extending our product leadership to drive value for creators and brands, and even more innovative and immersive avatars and experiences for our users."
Now what
Roblox didn't issue specific forward financial guidance. But CFO Michael Guthrie added that the company believes the foundations are in place for Roblox "to generate operating leverage against infrastructure and trust & safety spend starting next quarter and against compensation expense starting in the first quarter of 2024."
To be sure, this wildly popular video game maker has spent heavily on expanding headcounts and infrastructure to support its growth in recent years, and the business could eventually be wildly profitable if it's able to sustain its growth at scale while tempering the level of those investments. But in the meantime, it seems the bar for bookings growth and current profitability was simply set too high, and the market is bidding down Roblox stock in response.
