Roblox Corporation (RBLX) shares plummeted 13.81% in after-hours trading on Thursday, following the release of the company’s second-quarter financial results and a significantly weaker-than-expected third-quarter outlook. The gaming platform reported Q2 revenue of $1.47 billion, missing the consensus estimate of $1.6 billion, while earnings per share came in at a loss of $0.26, beating the expected loss of $0.37. However, the top-line miss and the disappointing forward guidance overshadowed the bottom-line beat.
For the third quarter, Roblox expects revenue to increase by just 4% to 10% year-over-year, to a range of $1.41 billion to $1.49 billion, while bookings are projected to decline 14% to 18% to between $1.58 billion and $1.65 billion. Both figures fell well short of Wall Street’s estimates, with analysts polled by FactSet expecting revenue and bookings of around $1.87 billion. The company also withheld its full-year outlook, transitioning to a quarterly-only guidance earlier than scheduled, citing the variability of its business and the timing of its investments. Chief Financial Officer Naveen Chopra said the near-term pressure stems from platform changes, including tougher age-verification measures that have weighed on user onboarding and engagement, and an algorithm shift that prioritizes game retention over near-term monetization.
Roblox’s management acknowledged that the monetization weakness is likely to continue, but expressed conviction that the long-term strategy of investing in AI, safety, and retention will help maximize its share of the global gaming market. Additional headwinds came from regulatory concerns, as the European Commission indicated that Roblox could be designated as a very large online platform under the Digital Services Act, potentially increasing compliance costs and operational challenges in the region.
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