Shares of Roblox (NYSE: RBLX) plummeted more than 16% in premarket trading Wednesday after the company reported worse-than-expected Q4 2021 financial results.

The video game developer reported $770.1 million in bookings in the fourth quarter, up 20% YOY, and missing the consensus estimates of $786.2 million.

The number of daily active users stood at 49.5 million in the period, up 33% from the year-ago period but short of the analyst consensus of 50 million.

Revenue came in at $568.8 million, up 83% YOY, and falling short of the estimated $604 million. As of January, Roblox reported 54.7 million DAUs and 4.2 billion hours engaged.

“Bookings, for now, are driven primarily by the United States and the United Kingdom which are both opening up from COVID restrictions and returning to school and work. While engagement and payer conversion are higher than they were going into the pandemic in these countries, this is where year over year comparisons are currently toughest,” the company said in a statement.

Moreover, Roblox sees YoY bookings improving, starting from May/June.

“Bookings growth in Q3 and Q4 of this year should be much closer to user growth rates than they were in January, and our exit growth rates this year are expected to be good indicators of 2023 growth.”

Benchmark analyst Mike Hickey took note of “disappointing results”, fueled by declining user engagement trends.

“We are cautious the pandemic pulled forward growth, and normalized behavior may dampen outlier engagement trends. The metaverse platform was a social utility during the pandemic, in our view, which could unwind as social restrictions are now removed, schools stay open, and parental spend reallocates. We are cautious over ambitious growth initiatives that extend beyond core game play. We think RBLX appeals to young children. Most will age out and some may embellish on their age, which can skew the average,” Hickey said in a client note.

Stifel analyst Drew Crum echoed similar thoughts.

“January '22 bookings experienced a deceleration relative to past months, up just 2%-3% y/y as compared to October/November/December '21 at +15%/+23%/+21%, respectively, for example. Furthermore, the company indicated y/y bookings comps, "should improve starting in the May-June timeframe", leaving us to ponder what this suggests for February-April. Why the anticipated slowdown? Tough comps in countries such as the U.S. and the U.K. which generate the majority of the monetization for Roblox, along with reopening headwinds,” Crum wrote in a memo.

By Senad Karaahmetovic | [email protected]