Roblox Shares Drop 11% After Missing Analyst Forecast
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- Roblox’s shares drop after it missed analyst forecast regarding daily active users.
- Roblox’s Chief Financial Officer attributes the slowdown to the game’s slow growth in Eastern Europe.
- Despite this, the company is still showing growth
Roblox’s latest financial reports paint a mixed portrait as shares drop despite a revenue increase from the previous quarter.
The company’s financial results, published on February 6, provide insight into its performance. Roblox’s revenue grew by approximately 7% compared to the previous quarter. Bookings also rose from $1.12 billion in the third quarter to $1.36 billion in the fourth. In Roblox’s case, bookings represent secured future income, including subscriptions and in-game purchases.
However, despite positive news about the company’s revenue and bookings, Roblox’s shares dropped a staggering 11.06%. This is because Roblox failed to match analyst expectations of growing daily active users.
The third quarter saw Roblox having 88.9 million daily active users, but the fourth quarter saw this drop down to 85.3 million. A 4% drop compared to the previous quarter. Wall Street analysts expected Roblox to have around 88.4 million daily active users for the company’s fourth quarter.
According to Bloomberg, Roblox’s Chief Financial Officer, Mike Guthrie, attributed this to Roblox being banned in Turkey. Saying that this is the first full quarter that Turkey was out of the equation. Roblox continues to work with the Turkish government to get Roblox unbanned in the country.
While comparing quarter-on-quarter is a decent strategy, year-over-year is still a much better form of comparison. Year-over-year compares the quarter of the present year to the previous one and provides a clear picture of growth without the bias of seasonality. Roblox’s Full Year of 2024 financial report actually indicates growth. Revenue is up 29% compared to the previous year as well as bookings which are also up by 24%. Daily active users are also up by 21%.
Roblox was released in 2006 as a game creation system and an online game platform. Players can browse different games in a catalog and pick one they want to play. From simple games like paintball and haunted houses, Roblox has evolved to a platform that can house huge games like MMOs and multiplayer tactical shooters.
