Roblox, which has built a strong presence in the music industry, registered a drop in bookings in the second quarter, missing analysts’ projections.
The online gaming platform that is popular among kids and teens posted a net loss attributable to shareholders of $176.4 million in Q2, wider than the $140.1 million net loss in the year-ago quarter.
It came as the company’s costs and expenses ballooned to $143.2 million from $116.9 million. That offset a 30% year-over-year jump in revenue to $591.2 million.
Roblox CFO Mike Guthrie told analysts during an earnings call that the company is consistently “investing for the long run”.
“We will… continue to invest in infrastructure next year. So free cash flow margins will be down,” Guthrie added.
Meanwhile, bookings, a key earnings metric for gaming companies that covers the money spent by users via virtual currencies, fell 4% YOY to $639.9 million, missing analysts’ consensus forecast of $657.2 million compiled by Bloomberg.
The number of daily active users (DAUs) on Roblox rose 21% to 52.2 million, although the average bookings per DAUs plummeted 21% to just $12.25. Analysts polled by Bloomberg had anticipated 54 million in DAUs in Q2.
Hours engaged by DAUs in Q2 also slipped 16% to 11.3 billion.
In the first quarter, bookings reported by the user-generated game platform also fell 3% to $631.2 million.
The slowdown in bookings in recent quarters comes as Roblox, whose audience is centered on children and teens, continues to face the challenge of maturing users.
However, co-founder and CEO David Baszucki told analysts on Wednesday (August 11) that instead of losing users as they age, Roblox will likely see an expanded user base to include players beyond 24 years old.
“I want to highlight that we are getting to the point where our 17 through 24 cohort is going to pass our nine through 12 cohort in size. Now, the 17 to 24 cohort is larger. But once again, this is a great signal of the potential size of our market across all ages,” Baszucki said.
The executive added that of the top 1,000 experiences on Roblox, 481 now have more 13 and up players than under 13 players. Baszucki attributed this to the quality of content that its developer community is creating.
“Over time, we would say that the older users who have more direct control over their spend become more prominent in the market.”
Mike Guthrie, Roblox
Guthrie, meanwhile, noted that in July alone, bookings made by users between the ages of 17 and 24 exceeded those made by the company’s core 9 to 12 demographic, which has been the group’s peak monetizing age demo.
“Over time, we would say that the older users who have more direct control over their spend become more prominent in the market. They would monetize better, and we certainly saw that in July,” Guthrie added.
Roblox is also confident of the platform’s new offerings including the launch of ‘Spotify Island’ in May.
This interactive world allows players to come together in a virtual ‘audio oasis’ where they can watch virtual concerts, buy exclusive merch by artists, go on quests and enjoy immersive audio experience by creating music through Spotify’s Soundtrap music and podcast creation studio.
“All of our brand partners including our music partners are using Roblox as a way for people to go to concerts together. So the vision of this category is bigger than play.”
David Baszucki, Roblox
In February, Roblox thew a ‘First of its Kind DJ Party’ featuring a virtual performance by an avatar of superstar producer and DJ David Guetta, and in March, Roblox and Sony Music hosted a virtual concert by American rapper 24kGoldn on the Roblox platform.
“All of our brand partners including our music partners are using Roblox as a way for people to go to concerts together. So the vision of this category is bigger than play,” Baszucki said during the call on Wednesday.
Roblox counts Warner Music Group among its backers. In January, the music rights company took part in the gaming platform’s series H funding round, giving Roblox a valuation of $29.5 billion.
Despite the optimism of its management team, investor appetite for Roblox’s shares on the capital markets turned tepid following the release of its earnings results. Roblox’s NYSE-listed shares closed down 3.2% on Tuesday before rebounding 1.6% on Wednesday.Music Business Worldwide