Roblox Beats Q3 Estimates but Shares Sink 17% on Weak Bookings Guidance and User Metrics

RBLX reported a third-quarter loss of $0.32 per share, $0.11 better than the $0.43 loss analysts expected. Revenue rose about 16% to $1.57 billion, the net loss narrowed to $230 million from $258 million, and bookings of $1.70 billion beat the $1.63 billion estimate and the top of the company's own guidance range. CEO David Baszucki said results came in ahead of guidance for revenue, bookings and cash flow.

The problem was the user base and the outlook. Daily active users fell 9% year over year to 138 million, short of the 145.8 million Wall Street expected, and hours engaged dropped 15% to nearly 34 billion, even though both grew sequentially. Bookings were down 12% from a year earlier. For the fourth quarter, Roblox guided bookings to $1.89 billion to $2.00 billion, a 10% to 15% decline, against a $2.01 billion consensus, and revenue to $1.47 billion to $1.58 billion against a $1.56 billion estimate.

The stock fell $8.91, or about 17%, to $43.55 in after-hours trading from a $52.46 close, and was down more than 17% in Friday premarket trading. The beat on the bottom line did little to offset evidence that engagement is shrinking year over year, which is the metric investors use to judge whether the platform can keep growing bookings.

What to watch: whether daily users stabilize on a year-over-year basis in the next report, whether the older-user cohort the company is courting monetizes as management expects, and whether Q4 bookings land near the top or bottom of the guided range.