Saturday, 10 February 2024
by Rose White
Roblox (NYSE: RBLX) stock is gaining this week thanks to solid Q4 results. The company’s share price was up 8.2% from last week’s market close as of 10:45 a.m. ET this Friday, according to data from S&P Global Market Intelligence.
Roblox posted fourth-quarter earnings results on Feb. 7, reporting a smaller-than-expected loss and bookings that beat Wall Street’s estimate. The metaverse leader recorded a loss of $0.52 per share, beating the average analyst estimate by $0.03 per share. Meanwhile, bookings of $1.13 billion in the period beat the average Wall Street target’s call for bookings of $1.08 billion.
Roblox’s fourth-quarter revenue came in 30% higher year over year. Bookings were also up 25% compared to the prior-year’s quarter. The company’s operating income rose 20% year over year to hit $143.3 million, but the business still posted a net loss of $323.7 million. The company’s net loss rose roughly 11.7% year over year, but momentum for bookings, sales, and engagement on the platform is recasting the bottom-line performance in a different light.
Average daily active users jumped 22% to hit 71.5 million — another all-time best for the company. Average bookings per monthly unique paying user came in at $23.65 — up 6% compared to the prior-year period. The company closed out the quarter with 15.5 billion total engagement hours on its platform, representing growth of 21% compared to last year’s fourth quarter.
Despite the big net loss in Q4, encouraging engagement data is providing enough for investors to be excited about.
Roblox expects first-quarter bookings to come between $910 million and $940 million, significantly above Wall Street’s previous call for bookings of $902.6 million in the period. Meanwhile, revenue is projected to come in between $755 million and $780 million. On the other hand, the company still expects to post substantial losses in the period. Management is guiding for a net loss between $342 million and $347 million.
For the full-year period, Roblox is guiding for bookings to be between $4.14 billion and $4.28 billion. While this guidance range came in significantly above the average analyst estimate’s call for bookings of $4.06 billion, sales for the period are projected to be below Wall Street’s previous target.
Roblox management expects sales to be between $3.3 billion and $3.4 billion, which comes in below the previous analyst estimate’s call for revenue of $3.78 billion. The discrepancy could be partially attributable to shifts in the timing of bookings being recorded as sales, but the midpoint of the guidance range still calls for annual growth of 20.5%.
Large and widening losses mean that the stock might not be a great fit for risk-averse investors, but the engagement-growth story here is interesting. For risk-tolerant investors, Roblox is worth a closer look.
Should you invest $1,000 in Roblox right now?
Before you buy stock in Roblox, consider this:
The Motley Fool Stock Advisor analyst team just identified what they believe are the 10 best stocks for investors to buy now… and Roblox wasn’t one of them. The 10 stocks that made the cut could produce monster returns in the coming years.
Stock Advisor provides investors with an easy-to-follow blueprint for success, including guidance on building a portfolio, regular updates from analysts, and two new stock picks each month. The Stock Advisor service has more than tripled the return of S&P 500 since 2002*.
*Stock Advisor returns as of February 6, 2024
Keith Noonan 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.