The gaming platform Roblox, which is a big player in the “metaverse” space, saw its stock drop by more than 15% in pre-market trading on Wednesday after it reported a bigger loss than expected for the third quarter. The company reported a loss of $297.8 million, or 50 cents per share, even though analysts had predicted a loss of 32 cents per share. The company’s virtual world gaming platform is aimed at younger people.
Roblox’s revenue for the quarter grew by 2% from the same time last year to $517.7 million, but Wall Street tends to focus on a different number called “bookings,” which includes both the revenue and the change in deferred revenue during the period, as well as other non-cash adjustments. As the company has said before, bookings are equal to the amount of “Robux,” Roblox’s virtual currency, that its users buy during a certain time period. Roblox says this gives a more accurate picture of trends.
Bookings on Roblox went up 10% from the same time last year to $701.7 million in Q3, which was more than the $686 million analysts expected. Daily active users were also up 24% from the same time last year, reaching 58.8 million, but average bookings per daily active user fell 11% to $11.94.
Even though Roblox did better than expected on a number of important metrics, its stock fell because Wall Street didn’t like that its loss was bigger than expected.
Even with this setback, many people still think Roblox will be a key player in the metaverse in the long run, maybe even more than Meta, which is spending billions to catch up. There are signs that Roblox is getting more users and keeping them, even though many of its users are getting older. For example, in Q3, the company said that the number of daily active users among people ages 17 to 24 grew by 41%, which was the most of any age group. Even though this group doesn’t have as many users, they make more money than Roblox’s younger players and now make up 22% of the Roblox’s daily active users.
The company said that Roblox’s daily active users over the age of 13 grew by 34% from one year to the next and made up 54% of all daily active users. This is a rise from Q3 2019’s 38.7%.
The gaming company also said that core markets like the U.S. and Canada are above their peak-Covid levels. This was a time when Roblox and many other gaming and entertainment companies grew a lot because people were stuck at home with nothing to do because of a pandemic. At the same time, Roblox’s fastest-growing markets are now Western Europe and East Asia. These markets also make more money than some others outside the U.S., like Latin America, Eastern Europe, and Southeast Asia.
Even though it might be hard for Roblox to reach pandemic levels of engagement after Covid, the company said that engagement in September 2022 was almost 20% higher than in September 2019, which was before Covid. This number is down 6% from September 2020, when Covid was in effect, but it shows that growth has returned to normal. Monetization (bookings divided by engagement hours) was the same as peak Covid times and 12% higher than in September 2019.
Roblox also talked about the success of its developers. As of September 2022, there were 1520 developers building for Roblox, and their games had been played for over 100,000 hours, which was 54% more than the same time last year. And 532 developers had created more than a million hours of engagement, which is a 47% increase. At the end of the quarter, 85% of all Robux earnings and engagement hours came from the top 1,000 experiences. This is down from 90% a year ago.
“We are delivering strong growth across our core operating metrics, powered by a growing developer community creating high- quality experiences that appeal to a broad, global audience,” said David Baszucki, Chief Executive Officer of Roblox, in a statement. “We are creating innovative technologies to enable deeper forms of immersion, communication and expression to further enhance the value of the platform.”
The company said it will continue to invest in its growth, including by hiring new people, making the platform bigger, building new tools and experiences, growing internationally, and taking care of its older users.
At the time of this writing, Roblox stock is trading at $34.98, which is down by 10.83%.