Wednesday morning saw the shares of Roblox Corp. tumble after its earnings report fell short of analysts’ estimates for the fourth quarter, reflecting a fall from the boost the gaming platform received during the pandemic in the last two years.
Chief Executive Officer of Roblox, David Basuki, said that though the growth rates have declined, the absolute numbers grow continuously as parts of the world return to the usual way of life.
The share price fell by 24% to $55.55 in New York on Wednesday.
The earnings, which include revenue and deferred revenue apart from other adjustments, rose to $770.1 million with a growth of 20% compared to the previous year. Analysts were expecting $782. 2 million as per data compiled by Bloomberg.
The active users increased by 33% to 49.5 million, slightly lower than analysts’ expectations of 50.5 million. The growth was mainly from Asian, European, and Latin American countries. In a shift in the user profile, more than half of the user base is now over 13. This was the first full-year result of Roblox after it went public in March 2021.
2020 was the banner year for gaming industries, thanks to the pandemic lockdowns. Roblox allows players to create online games that capture the attention of two-thirds of U.S. kids aged between 9 and 12. The company was impacted when the kids went back to the classrooms and other sporting activities.
The coming of the end of the pandemic has Roblox looking towards the metaverse. Roblox has already started as is users can make their online games and virtual worlds using the metaverse technology. According to the company, in 2021, its users spent more than 1 million hours inside the 1900 experience that was created.
Meta platforms recently suffered a setback when it announced a full force push into the metaverse. According to Amine Bensaid, an analyst at Bloomberg intelligence said that Roblox and Meta have different business goals, and Roblox is better positioned on the vision they have on metaverse.
The Chief Business Officer of Roblox, Craig Donato, said that Roblox is consistent on where it wants to go in the digital space. The company has been working on it for the last 15 years and sees metaverse as a long-term trend.
The traditional definition of the metaverse is its ability to operate across all platforms, and Roblox is currently running only on PC, mobile devices, and Xbox Console. Donato told in an interview that Roblox is actively looking at all platforms but won’t announce it till they demo it live.
Last year, Roblox’s share grew by 130%, but it was down by 29% until Tuesday’s closing this year. VC firm Epyllion Co. Managing partner Matthew Ball said that Roblox’s up and downflow were in line with other metaverse companies like Unity Software Inc. Mathew Ball expects Roblox to grow. They appear to look like they are the platform for the virtual world in the West, though, in the future, they may get replaced by a new competitor.
Content moderation has been one of the hitches in 2021, where several inappropriate contents were reported on the platform. Roblox introduced a new spatial voice feature and asked users to provide government ID and photos with proof that they were above 13 years old.
