Company Reports

Roblox delivered 19% year-over-year bookings growth during the first quarter, meeting the midpoint of management’s guidance. However, player engagement tailed off during the quarter. While management believes it has made changes to address the underlying causes of this shift, it provided a tepid outlook for second-quarter bookings growth (about 13% at the midpoint) and cut its full-year growth outlook to about 15% from 20%. Ups and downs are expected, and we’ve trimmed our growth expectations, cutting our fair value estimate to $50 from $60. We still believe that the market is overly discounting Roblox’s long-term potential and that the shares are attractive.

Roblox operates an online video game platform that lets gamers create, develop, and monetize games for other players. The firm offers developers a hybrid of a game engine, publishing platform, online hosting and services, marketplace with payment processing, and social network. There is no entry cost to try out Roblox or the vast majority of user-developed games. Thus, to drive booking growth and keep the Roblox model churning along, the new user must purchase and spend Robux, the platform’s tender.

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

Roblox operates an online video game platform that lets gamers create, develop, and monetize games for other players. The firm offers developers a hybrid of a game engine, publishing platform, online hosting and services, marketplace with payment processing, and social network. There is no entry cost to try out Roblox or the vast majority of user-developed games. Thus, to drive booking growth and keep the Roblox model churning along, the new user must purchase and spend Robux, the platform’s tender.

Roblox reported strong third-quarter results, with promised operating leverage starting to materialize while underlying growth remained solid. Management withheld some details before its planned analyst day next week, but the firm appears set to reap the benefits from several of its recent investments. We are maintaining our $60 fair value estimate and believe the shares still look attractive after a nice jump on the earnings release.

Roblox operates an online video game platform that lets gamers create, develop, and monetize games for other players. The firm offers developers a hybrid of a game engine, publishing platform, online hosting and services, marketplace with payment processing, and social network. There is no entry cost to try out Roblox or the vast majority of user-developed games. Thus, to drive booking growth and keep the Roblox model churning along, the new user must purchase and spend Robux, the platform’s tender.

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.

Roblox operates an online video game platform that lets gamers create, develop, and monetize games for other players. The firm offers its developers a hybrid of a game engine, publishing platform, online hosting and services, marketplace with payment processing, and social network. Unlike a full-priced AAA title, there is no entry cost to try out Roblox or the vast majority of user-developed games. Thus, to drive booking growth and keep the Roblox model churning along, the new user must purchase and spend Robux, the platform’s tender.

Roblox posted a mixed first quarter with strong revenue growth but expanding operating losses. Underlying metrics remained strong with improvement across the board—global daily active users, or DAUs, reached 61.1 million, up from 58.8 million last quarter and 54.1 million a year ago. Roblox’s reach with older gamers continues to expand, as 55.8% of users were over the age of 13 versus 52.3% a year ago. The firm also rebounded to positive free cash flow in the quarter after three straight quarters of losses. We maintain our $65 fair value estimate.

In its March 2023 key metric release, Roblox announced that daily active users, or DAUs, increased 26% year over year to 66.2 million, bookings grew 25%-29% on a constant currency basis, and bookings per daily active user changed by a range of negative 1% to 3% after adjusting for the strong dollar. Roblox shares were down about 12% in early trading on April 17 as we believe that the market overreacted to the user base slightly declining sequentially from 67.3 million DAUs in February. The long-term picture for the firm remains impressive as Roblox had only 23.6 million DAUs in the first quarter of 2020. We are maintaining our $65 fair value estimate.

Roblox operates an online video game platform that lets gamers create, develop, and monetize games for other players. The firm offers its developers a hybrid of a game engine, publishing platform, online hosting and services, marketplace with payment processing, and social network. Unlike a full-priced AAA title, there is no entry cost to try out Roblox or the vast majority of user-developed games. Thus, to drive booking growth and keep the Roblox model churning along, the new user must purchase and spend Robux, the platform’s tender.

Roblox ended a challenging 2022 on a strong note as the firm once again posted strong underlying metrics. Global daily active users came in at 58.8 million, flat versus last quarter and up from 49.5 million a year ago. Roblox continued to improve its reach with older gamers, as 55.1% of users were over the age of 13 versus 51.7% a year ago. On the negative side, the firm posted a slight free cash flow loss for 2022, its first full-year loss since the firm started to disclose financial. The loss was largely due to much higher capital spending on infrastructure to support the platform’s user growth both in the U.S. and aboard. While management projects a significant 25%-35% drop in infrastructure spending in 2023, we still project that capital spending will remain elevated versus pre-2022 levels. We are maintaining our $65 fair value estimate.

In its December 2022 key metric release, Roblox announced that daily active users increased 18% year over year to 61.5 million, bookings grew 20%-22% on a constant currency basis, and average bookings per daily active user, or ABPDAU, improved 1%-3% after adjusting for the strong dollar. Roblox shares were up over 20% in morning trading as we believe that the market reacted to the strong user and bookings growth. Despite the gain in ABPDAU, investors should expect the metric to decrease, even in constant currency, as the platform continues to add users outside the U.S. We are maintaining our $65 fair value estimate.

In its November 2022 key metric release, Roblox announced that daily active users, or DAU, increased 15% year over year to 56.7 million, bookings grew 10%-12% on a constant currency basis, and bookings per daily active user, or ABPDAU, fell 3%-5% after adjusting for the strong dollar. Roblox shares were down over 17% in morning trading as we believe that the market overreacted to the non-adjusted ABPDAU decline of 7%-9%. As the platform continues to add users outside the U.S., investors should expect ABPDAU to decrease even in constant currency, with the strong dollar exacerbating the decline. We are maintaining our $65 fair value estimate.

Roblox reported mixed third-quarter results as users grew sequentially and bookings improved year over year, but the operating loss widened significantly versus a year ago. Underlying metrics were relatively strong with global daily active users coming in at 58.8 million, up from 52.2 million last quarter and 47.3 million a year ago. The reach with older gamers continued to improve as 54.2% of users were over the age of 13 versus 50.3% a year ago. On the negative side management disclosed that the investments in development and infrastructure and safety will continue into 2023 with adjusted EBITDA expected to remain below 10% of bookings.

Roblox operates an online video game platform that lets gamers create, develop, and monetize games for other players. The firm offers its developers a hybrid of a game engine, publishing platform, online hosting and services, marketplace with payment processing, and social network. Unlike a full-priced AAA title, there is no entry cost to try out Roblox or the vast majority of user-developed games. Thus, to drive booking growth and keep the Roblox model churning along, the new user must purchase and spend Robux, the platform’s tender.

Roblox presented a comprehensive plan to expand engagement and monetization via improved innovation and execution at its 2022 investor day. While management did not disclose anything groundbreaking, we did find the presentation compelling. However, the strategy still depends on not only execution, but also the firm’s ability to increase the age demographic of its users while also still growing the user base. We are maintaining our $75 fair value estimate and view the current stock price as an attractive entry point.

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.

Roblox operates an online video game platform that lets young gamers create, develop, and monetize games for other players. The firm offers its developers a hybrid of a game engine, publishing platform, online hosting and services, marketplace with payment processing, and social network. Unlike a full-priced AAA title, there is no entry cost to try out Roblox or the vast majority of the user-developed games. Thus, to drive booking growth and keep the Roblox model churning along, the new user must purchase and spend Robux, the platform’s tender.

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.