Roblox highlights strong bookings in first quarterly result since short-seller face off
10/31/2024 19:16
Roblox bookings rose 34% last quarter and raised the upper end of its full-year guidance as the online gaming platform improved discovery tools for users.
Roblox reported bookings that grew more than analysts forecast last quarter, as the online gaming company tweaked its platform to increase user engagement and continued to benefit from being added to Sony PlayStation consoles last year.
The stock rose 12% in the premarket immediately following the results.
Bookings, a closely-watched measure of sales, rose by 34% in the third quarter to $1.13 billion, compared with the $1.01 billion consensus estimate as compiled by Bloomberg. Roblox (RBLX) raised its fourth-quarter bookings forecast to a range of $1.34 billion to $1.36 billion, and boosted the upper end of its full-year prediction to a range of $4.34 billion to $4.37 billion.
In the third quarter, adjusted EBITDA, including the effect of deferred revenue, was $223.4 million, versus the $141 million predicted by analysts.
Daily active users rose 27% over the prior year period to 88.9 million, spending a total of 20.7 billion hours on the Roblox platform.
The DAU metric recently came under fire from short-seller Hindenburg Research in early October, which asserted in a report that Roblox inflates user numbers by counting multiple accounts tied to single users.
“Over the last 6 months, we’ve made a number of really significant improvements to the platform. First and foremost is our search and discovery algorithms,” Chief Financial Officer Mike Guthrie said in a Zoom interview with Yahoo Finance.
Also contributing to the boost in bookings, he said, were more games added and more updates to existing games: “We’re seeing more new experiences breaking into the top 100 and potentially becoming viral. And we’ve really noticed that some of our more established developers are doing more significant updates more frequently.”
Excluding the effect of the PlayStation console, which Guthrie said peaked in the third quarter, bookings rose 28%.
Both in the quarterly release and interview with Yahoo Finance, Guthrie said the company is clear that DAUs can include multiple accounts from single players, and pushed back against Hindenburg’s claims: “DAUs are a measurement of the accounts, and we’re clear on this,” he said. “We can have a user that has an avatar that is a baseball player and one that’s a fashion model. It’s totally normal and natural on the platform.”
Investors seemed relatively unfazed by Hindenburg’s allegations. Roblox shares fell 2% on Oct. 8, the day the report was released; since then, they’ve risen by more than 3% through Wednesday’s close. That said, they’ve fallen nearly 6% this year, in part because of weak bookings forecasts in past quarters.
The Hindenburg report also attacked Roblox’s safety measures, alleging that it doesn't do enough to prevent targeting of children by bad actors, a charge the company has also rejected. Bloomberg reported earlier this year on Roblox’s struggles to police its millions of users. Last month, the company told parents it was introducing new child safety features.
Some analysts have defended the company, including Michael Pachter of Wedbush, who recently added the stock to his “Best Ideas List.”
Hindenburg’s “suggestion that the platform is rife with child predators is a vast overstatement, with reported incidents averaging fewer than 40 per day on an active user base of over 68 million in 2023,” Pachter wrote following the short-seller’s report.
Roblox spending on infrastructure, trust and safety rose 4% year-over-year last quarter after declining for the prior four quarters. CFO Guthrie said the company is aiming for “very intelligent investing. If we can use AI to solve a lot of problems, we can use human moderation for the more complex deeper dives.”
Guthrie announced last quarter that he’ll be stepping down as CFO, which at the time sent the shares tumbling. He made it clear in an interview that the company is taking its time finding the right replacement.
“We chose to announce my impending departure in order to get more candidates who would raise their hand and express interest, so it could be a more open process,” he said, adding that he’s not in a rush to leave.
Julie Hyman is the co-host of Market Domination on Yahoo Finance. You can find her on social media @juleshyman.
Click here for in-depth analysis of the latest stock market news and events moving stock prices
Read the latest financial and business news from Yahoo Finance