Gaming metaverse operator Roblox (NYSE:RBLX) missed analysts' expectations in Q1 CY2024, with revenue up 22.3% year on year to $801.3 million. Next quarter's revenue guidance of $867.5 million also underwhelmed, coming in 7.6% below analysts' estimates. It made a GAAP loss of $0.43 per share, improving from its loss of $0.44 per share in the same quarter last year.
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Roblox (RBLX) Q1 CY2024 Highlights:
- Revenue: $801.3 million vs analyst estimates of $929.1 million (13.8% miss)
- EPS: -$0.43 vs analyst estimates of -$0.53 (19.1% beat)
- Revenue Guidance for Q2 CY2024 is $867.5 million at the midpoint, below analyst estimates of $938.6 million
- Gross Margin (GAAP): 24.1%, up from 16.8% in the same quarter last year
- Free Cash Flow of $191.1 million, up 145% from the previous quarter
- Daily Active Users: 77.7 million
- Market Capitalization: $24.97 billion
Best known for its wide assortment of user-generated content, Roblox (NYSE:RBLX) is an online gaming platform and game creation system.
Video GamingSince videogames were invented in the 1970s, they have gradually taken more share of entertainment time. Ubiquitous mobile devices have powered a surge in “snackable” games that can be played on the go. Over time, games have developed more social engagement features where friends can play games together over the internet. The business models of games publishers have become less volatile due to digitization of distribution, in game monetization, and like Hollywood, an increasing dependence on surefire hit franchises. Covid driven lockdowns accelerated adoption and usage of videogames – a trend that has not slowed.
Sales GrowthRoblox's revenue growth over the last three years has been mediocre, averaging 15.2% annually. This quarter, Roblox reported decent 22.3% year-on-year revenue growth, falling short of analysts' expectations.
Guidance for the next quarter indicates Roblox is expecting revenue to grow 27.4% year on year to $867.5 million, improving from the 15.1% year-on-year increase it recorded in the comparable quarter last year. Ahead of the earnings results, analysts were projecting sales to grow 49.5% over the next 12 months.
Revenue Per UserAverage revenue per user (ARPU) is a critical metric to track for consumer internet businesses like Roblox because it measures how much revenue each user generates, which is a function of how much paying users spend on its games.
Roblox's ARPU has declined over the last two years, averaging 4.6%. Although it's unfortunate to see the company lose its pricing power, it was still able to achieve strong user growth. This quarter, ARPU declined NaN% year on year to $10.31 per user.
Key Takeaways from Roblox's Q1 Results We struggled to find many strong positives in these results. Its full-year bookings guidance missed analysts' expectations. On top of that, the company announced it would start calculating adjusted EBITDA differently, raising some questions. Overall, the results could have been better. The company is down 29.3% on the results and currently trades at $27.6 per share.
