- RBLX
-19.81%
Roblox Corp (NYSE:RBLX) shares fell more than 16% after the gaming platform operator reported better-than-expected third-quarter bookings and user growth, but warned of a double-digit decline in bookings in the current quarter as it ramps up investment in infrastructure and new content initiatives.
Bookings for the three months ended September 30 totaled $1.70 billion, down 12% year over year but ahead of Wall Street expectations of $1.62 billion. Revenue increased 16% to $1.57 billion, while adjusted earnings per share came in at a loss of $0.32, narrower than the expected loss of $0.44.
Daily active users reached 138 million, ahead of the 131 million analyst consensus, while engagement totaled 34 billion hours. Both figures exceeded expectations, although hours were down 15% year over year.
Adjusted EBITDA was $138 million, below the $190 million expected, while net income showed a loss of $230 million. Free cash flow was $364 million, compared with expectations of $146 million.
The focus for investors was the company’s fourth-quarter outlook. Roblox forecast bookings of between $1.89 billion and $2 billion, implying a year-over-year decline of 10% to 15%. Revenue is expected to range from $1.47 billion to $1.58 billion, representing growth of 4% to 12%.
The company also expects adjusted EBITDA to range from a loss of $70 million to a loss of $10 million, with free cash flow projected at negative $190 million to negative $105 million.
Analysts at Jefferies said the outlook was weaker than expected, pointing to higher infrastructure and marketing costs as Roblox invests in artificial intelligence and efforts to expand its adult user base.
The broker lowered its price target to $35 from an unspecified previous level and reiterated its Underperform rating, arguing that the returns from new initiatives could take several quarters or years to materialize.
Wedbush took a more constructive view, describing the quarterly results as better than expected and the fourth-quarter outlook as potentially beatable. It lowered its price target to $52 from $55 but maintained a Neutral rating.
Wedbush highlighted 18% year-over-year growth in Roblox’s US adult user base, noting that users aged 18 and over generate at least 50% more monetization than younger players.
Roblox is expanding its developer tools through Build, which has attracted more than 500,000 users and supported the publication of more than 70,000 games. A broader US launch is planned for December.
The company is also preparing to launch Roblox Everywhere and Roblox Reality initiatives in the first half of 2027, while testing pre-roll video advertising.
Roblox repurchased 4.4 million shares for approximately $200 million during the quarter, leaving about $2.4 billion under its remaining buyback authorization.
