Roblox Reported Weak Q2; Strong Underlying Metrics Offset by Increased Investments

Roblox posted a poor second quarter, as bookings declined year over year and users fell sequentially. The platform displayed decent underlying metrics, with global daily active users, or DAUs, at 52.2 million, down from 51.1 million last quarter but up from 43.2 million a year ago. Roblox continued to improve in reach among older gamers as 53.1% of users were over the age of 13 versus 49.5% a year ago. Engagement also improved to over 11.3 billion hours, up 16% versus a year ago. We slightly lower our fair value estimate to $75 from $80 to account for marginally lower bookings per DAU, and higher investment in infrastructure and security. Shares are trading at a significant discount to our updated fair value estimate, providing some margin of safety, but we expect the stock to remain highly volatile.