Roblox Earnings: Bookings Growth Continues to Accelerate Around the World

Key Morningstar Metrics for Roblox

• Fair Value Estimate: $60.00
• Morningstar Rating: 4 stars
• Morningstar Economic Moat Rating: Narrow
• Morningstar Uncertainty Rating: Very High

What We Thought of Roblox’s Earnings

Roblox RBLX posted a strong jump in active players during the fourth quarter, with growth across all regions. Average spending per player also increased nicely, driving accelerated bookings growth, operating leverage, and growth in cash flow. The acceleration in player monetization we’d been expecting appears to be happening sooner than projected, but we aren’t changing our long-term assumptions around the ultimate size of Roblox’s player base. We are maintaining our $60 fair value estimate and believe the shares still look attractive.

Bookings increased 25% year over year to $1.1 billion, the fastest growth in more than two years. Global daily active users, or DAU, expanded by nearly 22%, including an impressive 17% jump in the mature U.S. and Canada segment, where Roblox saw almost no falloff in users versus the seasonally strong summer months. Revenue per DAU increased 3% versus the prior year. Europe remains particularly impressive, with a nearly 14% increase in revenue per DAU.

Europe is now the largest of Roblox’s four geographic segments, with 20 million daily users, but revenue per DAU remains less than one-quarter of that in the United States and Canada. In our view, Europe and other developed markets like Japan (where DAUs increased 45% year over year during the quarter) present compelling growth opportunities as these player bases mature. Overall usage continues to shift toward older cohorts, with those over 13 years old accounting for 60% of hours of engagement during the quarter, up from 53% two years ago.

The adjusted EBITDA margin expanded nearly 3 percentage points versus a year ago, hitting 23% in the quarter. Infrastructure and safety spending, excluding personnel costs, again declined sharply, dropping to 11% of bookings from 14%. On the negative side, stock-based compensation continues to grow rapidly. Including stock-based compensation—as we do in our valuation—profitability deteriorated modestly year over year.