Roblox Q3 earnings increased with 34%, Roblox (RBLX) Stock Surges 20%

Roblox reported a 34% increase in Q3 earnings, reaching $1.13 billion, surpassing analyst expectations. Daily active users rose by 27% to 88.9 million. The company has raised its full-year bookings forecast to between $4.34 billion and $4.37 billion. Following these results, the stock jumped 12% in premarket trading. The CFO also dismissed recent allegations from Hindenburg Research regarding inflated user metrics.

Roblox Reports Strong Q3 Results: Bookings Surge 34%, Shares Up 12%

Roblox Corporation (RBLX) announced stronger-than-expected third-quarter results today, with bookings rising 34% to $1.13 billion, exceeding analyst estimates of $1.01 billion. The positive performance drove the company’s shares up 12% in premarket trading.

The gaming platform reported 88.9 million daily active users in the third quarter, a 27% increase from the prior year. Users engaged extensively, spending a total of 20.7 billion hours on the platform.

Adjusted EBITDA, factoring in deferred revenue effects, reached $223.4 million, significantly surpassing the $141 million anticipated by analysts. This strong showing led Roblox to raise its fourth-quarter bookings forecast to between $1.34 billion and $1.36 billion.

For the full year 2024, Roblox has also increased its bookings forecast range to $4.34 billion to $4.37 billion, up from the previous estimate of $4.18 billion to $4.23 billion, indicating growing confidence in the platform’s outlook.

Roblox CFO Highlights Platform Improvements Driving Strong Q3 Results

Chief Financial Officer Mike Guthrie attributed Roblox's strong results to several platform enhancements made over the past six months, particularly in search and discovery algorithms, which have helped users find more relevant content.

Growth was also fueled by an expansion of game offerings and more frequent updates to existing titles. Guthrie noted that a greater number of new experiences are now breaking into the top 100 games, with established developers delivering regular content updates.

The integration of Roblox on Sony PlayStation consoles has been successful, though Guthrie pointed out that this impact peaked in the third quarter. Even without the PlayStation boost, bookings still experienced a solid 28% increase.

Despite these positive results, Roblox reported a net loss of $239.3 million, or 37 cents per share, for the third quarter, which was slightly better than Wall Street's expectation of a 38-cent loss.

The company has recently faced allegations from short-seller Hindenburg Research regarding its user metrics and safety measures. Guthrie addressed these claims directly, emphasizing the company's transparency in counting daily active users, including accounts from individual players.

Roblox’s investment in infrastructure, trust, and safety rose by 4% year-over-year, reversing a trend of decline over the previous four quarters. The company is focusing on "intelligent investing," leveraging AI for problem-solving and employing human moderation for more complex issues.

Efforts to attract older users appear to be paying off, with enhancements in content discovery and the addition of more mature games. This strategy aims to broaden Roblox's user base beyond its traditional younger audience.

Guthrie, who has announced his intention to step down as CFO, noted that the company is carefully considering candidates for his replacement. He encouraged more individuals to express interest in the position.

Roblox’s free-to-play model continues to drive significant in-game spending, even amid broader slowdowns in the gaming industry. The company remains committed to user-generated content while expanding its appeal to a wider range of age groups.

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