Roblox stock plunged nearly 14% in after-hours trading Thursday, falling toward $41.80 following disappointing quarterly results. The gaming platform missed revenue expectations and issued weak guidance for Q3, overshadowing a 36% year-over-year revenue rise.
The company reported 123 million average daily active users, up just 10% year-over-year, below analysts’ 128 million forecast. Monthly unique payers climbed 15% to 27 million, but this growth rate is a sharp slowdown from 94% just two quarters ago. Roblox tied this deceleration to new child safety rules, including mandatory age verification and enhanced parental controls.
Age verification now covers 57% of users globally, hitting 70% in the US and UK, and nearly 80% in Australia. Alongside these measures, a change in Roblox’s discovery algorithm now prioritizes long-term retention over immediate spending, particularly impacting users under 13. Average bookings per payer stayed steady near $19.25, indicating the slowdown stems from fewer new payers rather than reduced spending by existing ones.
Weak Bookings Forecast Dampens Optimism
Bookings, which measure player spending, grew only 8% to $1.6 billion year-over-year a steep decline from 63% growth two quarters prior. This placed bookings at the low end of guidance, with Q3 forecasts between $1.58 billion and $1.65 billion, trailing analyst estimates around $1.87 billion. Despite this, adjusted losses were 26 cents per share, better than expected, and free cash flow surged 66% to $294 million.
CEO David Baszucki described the results as part of a transition phase for the company. This slowdown at a major platform like Roblox adds to the broader tech sector struggles, mirroring effects seen in other areas where regulation and changing user dynamics shift the space.
This material is for informational purposes and not financial advice.
