Roblox Posts Mixed Q1; International and Engagement Efforts Driving Improved Underlying Metrics

Roblox reported a mixed start to 2022 as user growth reaccelerated but bookings declined year over year. However, the platform posted decent underlying metrics with growth in global daily active users to 53.1 million from 49.5 million last quarter and an improvement in reach among older gamers as 52.3% of users were over the age of 13 versus 48.6% a year ago. Engagement also expanded to over 11.8 billion hours, up 28% versus a year ago. We're lowering our fair value estimate to $80 from $100 to account for lower bookings per DAU, partially offset by higher DAU growth, over the next few years. With shares trading at a significant discount to our updated fair value estimate, we believe investors can gain exposure to the firm’s unique model with a large margin of safety, but we expect shares to remain highly volatile.