Roblox Earnings: Operational Spending Remains Elevated Despite Growth Reacceleration

Roblox again reported mixed results as the second quarter, like the first, featured strong revenue growth along with expanding operating losses due to elevated spending. Despite strong underlying metrics, the stock fell over 20% in midday trading Aug. 9 as we suspect investors expected larger cost cuts. Management continues to project operating leverage improvement over the next few years as growth continues. We are lowering our fair value estimate to $60 from $65 due to slightly slower margin expansion from higher investment in infrastructure/safety and R&D, including spending on incorporating AI into development tools.