"Grow a Garden" Springs Roblox Skyward
Key Points
Roblox reported revenue and earnings growth that fell short of what many analysts had expected to see.
However, huge gains in bookings and engagement metrics pointed to the success of the platform's offerings.
Increased guidance for 2025 bodes well for the company's future.
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Here's our initial take on Roblox's (NYSE: RBLX) fiscal 2025 second-quarter financial report.
Key Metrics
| Metric | Q2 2024 | Q2 2025 | Change | vs. Expectations |
|---|---|---|---|---|
| Revenue | $893.5 million | $1.08 billion | +21% | Missed |
| Adjusted earnings per share | ($0.32) | ($0.41) | N/A | Missed |
| Bookings | $955.2 million | $1.44 billion | +51% | n/a |
| Daily active users (DAUs) | 79.5 million | 111.8 million | +41% | n/a |
Viral Experiences Lift Roblox
At first glance, some might have been disappointed with Roblox's second-quarter financial results. Revenue growth of 21% year over year was below what many had hoped to see, and a slightly wider loss than expected could also have proven to be a downer for investor sentiment.
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However, Roblox shareholders instead largely concentrated on measures of user engagement. Bookings soared by more than half year over year, as the number of monthly unique payers climbed 42%. Bookings per daily active user were up 7%, adding to the positive impact of a 41% jump in average daily active users. Hours of engagement skyrocketed 58% to 27.4 billion, further showing the popularity of Roblox's platform.
Founder/CEO David Baszucki pointed to the strategic investments that Roblox has made to make its platform work more effectively. The rise of Roblox's virtual economy has taken hold, and creators on the platform are thriving. One teen has gained notoriety by creating a game called "Grow a Garden" that allows users to grow a virtual garden, and that game has broken records for having the most players engaged at the same time. After having had to wait a long time for the full promise of the metaverse to take hold, Roblox investors are now seeing the rise in engagement that they've hoped would come.
Immediate Market Reaction
Shareholders were ecstatic about the game platform's performance, and Roblox shares jumped 20% in premarket trading in the first half-hour after the release of its quarterly report. The move came in part as Roblox management boosted its expectations for the remainder of 2025.
The stock now trades at all-time highs, finally surpassing its previous late-2021 peak. Having almost tripled just since April, Roblox shares are seeing huge momentum, and it's entirely possible that the stock could continue to climb.
What to Watch
To be clear, investors shouldn't expect Roblox's success to translate to profitability anytime soon. The company's new 2025 guidance calls for losses of between $1.20 billion and $1.26 billion for the year. However, new bookings projections of between $5.87 billion and $5.97 billion are quite a bit higher than previous guidance for between $5.285 billion and $5.36 billion. And with free cash flow now likely to top the $1 billion mark, Roblox should have plenty of capital to keep following its strategic vision to foster further growth.
Helpful Resources
- Full earnings report
- Investor relations page
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Dan Caplinger has no position in any of the stocks mentioned. The Motley Fool has positions in and recommends Roblox. The Motley Fool has a disclosure policy.
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