ROBLOX CORP. reported bookings that missed analysts’ estimates in the fourth quarter, reflecting a retreat from the pandemic-inspired boost over the last two years as Chief Executive Officer David Baszucki urged investors to “take the long view” on the game platform company. The shares tumbled 14% in extended trading.
Bookings, which include revenue and deferred revenue and other adjustments, rose 20% from a year earlier to $770.1 million, the company said in a statement on Tuesday. Analysts were estimating $786.2 million, according to data compiled by Bloomberg.
Average daily active users increased 33% to 49.5 million, slightly less than the 50.5 million analysts were expecting. Much of that growth comes from countries in Asia, Latin America and Europe. And, in a shift, more than half of Roblox’s user base is now over age 13.
The results mark Roblox’s first full-year report since it went public in March 2021. Mr. Baszucki acknowledged that over the course of two years of the pandemic, “our numbers have been affected in several ways.”
The gaming industry had a banner year in 2020 at the height of the pandemic. Roblox, a social platform that enables players to create their own online games and worlds, captured the undivided attention of as much as two-thirds of US kids ages 9 to12. That success also made the company vulnerable when tweens were called back to classrooms, sports and other activities.
“As parts of the world began to return to a more normal way of life, our absolute numbers have continued to grow,” Mr. Baszucki said, but “growth rates have declined as we are comparing, in some cases, to quarters last year in which certain key metrics doubled or even nearly tripled.”
As the pandemic fades, Roblox is looking to the future in the metaverse, envisioned as an immersive version of the Internet where people will be able to interact, play games or work using a digital avatar. While many companies are touting the benefits and growth potential of the metaverse, Roblox has a head start because its users are already able to make their own video games and virtual worlds using its technology. In 2021, users spent more than 1 million hours inside 1,900 of its “experiences,” the company said.
At the same time, Meta Platforms, Inc. recently experienced a harsh reality check after announcing a full-force push into the metaverse. Bloomberg Intelligence analyst Amine Bensaid said the two companies “have completely different business goals. I don’t think any company is better-positioned than Roblox on the vision many have on the metaverse.”
Roblox Chief Business Officer Craig Donato said that the fallout of Meta’s metaverse push has given Roblox “no second thoughts. We’re very, very consistent on where we want to go. I think more and more time will be spent in these digital spaces.” Mr. Donato said the company sees the metaverse as a “long-term trend we need to work on and we’ve been working on it for 15 years.” He added that it’s a matter of “if, not when” the company integrates blockchain technology.
The ability to operate across platforms is key to traditional definitions for the metaverse, and right now, Roblox is accessible only on PC, mobile devices and Microsoft Corp.’s Xbox One console. In an interview, Mr. Donato said the company is “actively looking at all platforms but we wouldn’t announce anything we’re working on until we’re demoing it live.”
Roblox’s shares surged 130% last year, but are down 29% so far this year. Matthew Ball, managing partner of venture capital firm Epyllion Co., said Roblox’s ebb and flow is in line with other metaverse-themed equities, like game-tech company Unity Software, Inc. Ball expects Roblox to continue to grow.
“It has the most powerful flywheel in gaming today, and there are billions yet to join socially focused virtual worlds,” he said. “There are likely to be hitches along the way, and Roblox may end up replaced by a newer competitor, but right now Roblox looks like the virtual world platform of the West.”
One of those hitches bas been content moderation. Over 2021, several investigations by news outlets described an epidemic of inappropriate content on the platform, including sex clubs and fascist or white supremacist role-play. In November, when Roblox introduced a new spatial voice feature, The Washington Post reported that users made lewd noises and said slurs. To participate, users were asked to prove they were over 13 with a photo and government ID.
Roblox employs human moderators, about 80% of whom are outsourced, and sophisticated artificial intelligence and machine learning technology to review content. Mr. Baszucki implied that some headlines around inappropriate content in Roblox were exaggerated, telling Bloomberg that “we’re constantly improving AI and filtering and we’re optimistic about the direction we’re going in.” He added that Roblox has a “zero tolerance policy” on content that violates the platform’s guidelines. — Bloomberg
