Roblox Earnings: Nicely Exceed Low Expectations, but Guidance Again Looks Terrible

• Fair Value Estimate
  : $45.00
• Morningstar Rating
  : ★★★
• Morningstar Economic Moat Rating
  : Narrow
• Morningstar Uncertainty Rating
  : Very High

Roblox’s RBLX third-quarter bookings (cash sales) and EBITDA both easily exceeded the high end of the firm’s guidance. However, bookings were still down 12% year over year against a very tough comparison, and the fourth-quarter outlook calls for a similar drop.

Why it matters: Roblox’s momentum has been crushed after the astonishing growth and engagement it saw through most of 2025. We’re not surprised the firm couldn’t maintain engagement at the levels it experienced surrounding viral hits, but there are no tangible signs that growth will materially reaccelerate after 2026.

• A focus on youth safety and age verification on the Roblox platform has led to a major rise in trust and safety costs, and we believe it is also a factor in the sharp decline in daily active users, or DAUs. DAU’s rose in every region during the third quarter but were still down by 13.5 million globally versus last year.
• The firm is also investing in its platform to better support AI-created games and allow mobile gameplay off of the Roblox platform in stand-alone games. All told, management expects both adjusted EBITDA and free cash flow to be negative in the fourth quarter.

The bottom line: We maintain our $45 per share fair value estimate. We believe the stock is fairly valued after its after-hours decline, but we don’t think the Roblox story is in danger of crumbling, as huge declines in earnings over the past few quarters might imply.

• We expect near-term results to remain choppy and depend on the unpredictability of newly released games. However, we believe Roblox has a narrow moat and is in a very good position to take advantage of AI game creation that will make its platform the home for the biggest hits.
• We expect that AI will allow for major improvement in how much and how efficiently user-generated content can be created. With its business model built on UGC and a global user base of about 140 million DAUs, we expect Roblox to be a beneficiary.

Editor’s Note: This analysis was originally published as a stock note by Morningstar Equity Research.

The author or authors do not own shares in any securities mentioned in this article.

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