Game fever subsides, Roblox financial report continues to “cool down” the Metaverse

It is difficult for the US and Canadian markets to return to high growth in daily activities

The Metaverse seems to be facing an earnings test of late, with Roblox (RBLX) being questioned by the market just like Meta. After Roblox announced its Q4 earnings report after the bell on Tuesday, the company plunged more than 15% in after-hours trading.

The frenzy for video games caused by the epidemic has gradually subsided, causing the gaming platform Roblox to not only widen its losses, but also miss its revenue expectations and miss the quarterly bookings expected by Wall Street.

The increase in outdoor activities has impacted Roblox’s user spending since reopening, and the slowdown doesn’t look surprising.

Roblox is seen as the only company in the market with a full-fledged Metaverse product due to its gaming environment that allows for the creation of worlds where players can interact online, but with key subscriptions disappointing in Q4, the worry is that Roblox appears to be hitting a growth barrier .

Difficult to realize, booking volume growth is lower than expected

Roblox’s fourth-quarter earnings report showed bookings of $770.1 million, up 20% year over year, but below Wall Street estimates of $772 million.

Pre-orders refer to the Roblox virtual currency “Robux” purchased by players to upgrade their avatars by purchasing in-game items such as clothing, pets, collectibles or accessories.

In the fourth quarter, Roblox’s daily active (DAU) reached 49.5 million, a year-on-year increase of 33%; total user online time increased by 28% to 10.8 billion hours.

Game fever subsides, Roblox financial report continues to "cool down" the Metaverse

For Roblox, the current issue is monetization, with average daily active users (DAU) up 33% from a year earlier, but bookings up just 20%.

According to NPD analyst Mat Piscatella, total spending in the U.S. gaming market has declined year-over-year for three consecutive months, and Roblox’s user spending has also suffered. But with the number of users on the rise, Roblox may be able to try to close the gap with the growth in bookings.

Brandon Ross, an analyst at LightShed Partners, explained: “Recent monetization results have disappointed investors. However, with strong growth in user numbers and engagement, we expect more monetization tools to have an impact going forward.”

Fourth-quarter revenue rose 83% from a year earlier to $568.8 million. Corresponding to bookings, revenue is the amount of “Robux” that the company realizes over an extended period of time spent by users.

Costs from the growth, however, soared even more, so the operating loss more than doubled to $139.7 million from $68.6 million in the fourth quarter of 2020.

Including the interest expense that Roblox did not have a year ago, the net loss attributable to common stockholders in the fourth quarter widened to $143.3 million from $58.7 million in the same period last year, an increase of nearly 144%, or a total loss of 25 cents per share. However, it was an improvement from the same period in 2020, when the company lost 30 cents per share.

While the net loss per share was better than the year-ago period, that was only because the company’s IPO boosted the diluted share count from 195 million to more than 581 million, worse than the 13 cents per share loss expected by Wall Street consensus much more.

Hit the wall, the US and Canada market is difficult to return to high growth

Roblox has experienced tremendous user, booking and revenue growth since COVID. But now, Roblox’s fourth-quarter average bookings per DAU (ABPDAU) was $15.57, down 13.2% year over year.

Game fever subsides, Roblox financial report continues to "cool down" the Metaverse

While user growth and engagement times currently look relatively healthy, the issue remains bookings, which means bookings per user are declining at an accelerating rate, and sequential year-over-year declines in engagement may indicate that Roblox’s core geography has peaked.

Game fever subsides, Roblox financial report continues to "cool down" the Metaverse

Roblox’s growth in users and engagement in the fourth quarter was primarily driven by international expansion and growth in users aged 13 and over, while daily active growth in the U.S. and Canada markets turned negative for the first time.

If the current trend continues, the growth momentum may be further lost in the next few quarters, and how to achieve the inflection point of bookings may be a hurdle for Roblox.

Roblox said in its shareholder letter: “Starting in the May or June time frame, year-over-year bookings comparisons should improve and booking growth in Q3 and Q4 should be closer to subscriber growth than in January. “

With enough cash, when will the brand effect be exerted?

For 2021, Roblox revenue is up 108% over fiscal 2020 to $1.9 billion; bookings are up 45% year over year to $2.7 billion; DAU is 45.5 million, up 40% year over year.

One advantage Roblox has right now is its balance sheet, which is still relatively plentiful in free cash flow despite large quarterly losses, reaching $558 million for all of 2021.

Game fever subsides, Roblox financial report continues to "cool down" the Metaverse

The hope is that Roblox has enough financial flexibility to invest in future growth. Michael Guthrie, chief financial officer of Roblox, also said: “The foundation we have laid allows us to invest in our business, which is one of the most unique aspects of our business, while continuing to generate strong cash flow.”

Roblox does not provide formal financial forecasts to investors, but publishes key metrics on a monthly basis.

Game fever subsides, Roblox financial report continues to "cool down" the Metaverse

Roblox CEO David Baszuck said: “Looking ahead to 2022, we will continue to develop our technology to enable deeper forms of communication, immersion and expression on our platform.”

On February 9, Roblox announced a partnership with the National Football League to expand the influence of the Metaverse through NFL TYCOON EXPERIENCE. Previously, Roblox had collaborated with Sony Music and Warner Music to increase platform awareness.

In its shareholder letter, Roblox pointed out three key goals, namely expanding the international market, attracting older users, and expanding the application breadth of the platform, and expressed a greater focus on long-term value creation.


As the “first stock of the Metaverse” Roblox, the first annual report results were indeed disappointing. Benchmark analyst Mike Hickey said that not only the performance of bookings and profits, but also the KPIs of users and engagement were lower than expected.

But the current “Metaverse” is still young, and proper cooling is not a bad thing. And how Roblox, which has nearly 50 million users, converts the number of users into revenue is also the most important question for the current “Metaverse”.

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