Roblox (RBLX) stock plunges as it cuts annual bookings forecast, Q2 bookings outlook misses consensus

(Updated - May 9, 2024 8:17 AM EDT)

Roblox (NYSE: RBLX) reported first-quarter financial results that surpassed analyst expectations for earnings and revenue, but a weaker-than-expected bookings outlook for the second quarter sent shares plummeting by as much as 28%.

The company announced a Q1 loss per share of -$0.43, which was $0.10 better than the analyst estimate of a -$0.53 loss per share. Revenue for the quarter reached $801.3 million, exceeding the consensus estimate of $769 million and marking a 22% increase YoY. Q1 ​bookings grew 19.4% YoY to $923.8 million, within the company's guidance range of $910 million to $940 million.

Despite the positive earnings surprise, the company's guidance for second-quarter bookings between $870 million and $900 million fell short of the analyst consensus of $902.5 million, driving a significant stock price decline.

Roblox's revenue guidance for the same period is set between $855 million and $880 million, notably above the consensus of $805.2 million. The company's adjusted EBITDA is expected to be between $36 million and $38 million.

Roblox's first-quarter performance showed strong growth in net cash and cash equivalents from operating activities, which rose by 37% YoY to $238.9 million, and a record increase in free cash flow, up by 133% YoY to $191.1 million. The platform's average daily active users (DAUs) grew by 17% YoY to 77.7 million, and the average bookings per DAU increased by 2% YoY to $11.89.

In response to the financial results and future outlook, CEO David Baszucki stated, "Our teams have been hard at work identifying opportunities to drive DAUs, Hours, and bookings growth rates back to 20% YoY."

He also highlighted the company's efforts in experimenting with AI-driven discovery algorithms and reintroducing platform-wide events to stimulate growth.

Chief Financial Officer Michael Guthrie emphasized operational efficiency, noting reductions in infrastructure and safety expenditures, as well as a nearly 50% decrease in capital expenditures compared to last year.

Looking ahead to the full year of 2024, Roblox expects revenue to be between $3.45 billion and $3.525 billion, with bookings anticipated to range from $4 billion to $4.1 billion.

Investors reacted negatively to the second-quarter bookings guidance, overshadowing the first-quarter revenue and earnings beat, as reflected in the significant drop in Roblox's stock price.

Following the report, analysts at Stifel noted the shape price plunge. They believe the stock decline is due to a reduction in 2024 bookings guidance.

"With that said, we would be buyers on weakness," declared the firm.

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