Thanks to the pandemic keeping most children at home over the last year, Roblox (NYSE: RBLX) enjoyed a huge jump in user engagement in Q1. Roblox’s players put a collective 9.7 billion hours into the game during the quarter.
Roblox really used its advantages in Q1 to generate revenue and attract users. Unlike Activision Blizzard’s (NASDAQ: ATVI) and Take-Two Interactive (NASDAQ: TTWO) who spend millions on game development and publishing, Roblox has an army of 7 million users who create their own games using the platform’s design features. Much of the content on Roblox is free, which means that investors need to pay attention to how much the company is monetizing its users. The more Roblox can grow its average bookings per daily user, the higher the company’s profits will be.
Roblox CFO, Michael Guthrie, explained that Roblox is focused on innovating and building great technology so the company can expand internationally, stating in the report that:
“We believe we must continue to innovate and so remain focused on building great technology to make progress on our key growth vectors, primarily international expansion and expanding the age demographic of our users.”
The game creation system has a very unique business model that has interested investors. By combining the communication element of social networks, like Snap Inc (NYSE: SNAP) or TikTok, and the monetization and engagement components of Activision Blizzard’s Call of Duty, with the ability to allow its users to create content on the platform like Google’s (NASDAQ: GOOGL) YouTube. Therefore, Roblox possesses all the characteristics of modern entertainment technology that keeps users hooked to its platform, which, of course, is great news for investors.
The digital game platform posted the following highlights in its first-quarter report:
Earnings: an adjusted loss of $0.46 per share.
Revenue: $387 million, up 140% year-over-year (YoY).
Net loss: stood at $134.2 million.
Daily active users (DAUs): 42.1 million, up 79% from last year.
Playing hours: 9.7 billion hours, up 98% from March 2021.
Roblox’s earnings guidance for the second-quarter
Roblox also gave an early peak into April’s financial results on the call. The company said that revenue for the month was between $143 million and $145 million, up roughly 138% from April last year. In addition, DAUs jumped 37% to 43.3 million from April last year while bookings of $245 million were up around 60%.
Before the report, Roblox shares were down almost 1% since the start of 2021, compared with the S&P’s gain of almost 12% over the same period.
Read more about Roblox below:
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Nicole's favorite stock is Etsy because she loves its original and handmade items. She believes people are going to stop buying mass-produced items and start purchasing ‘one of a kind’ fashions and furnishings. In a world of sameness, Etsy has the advantage.