Roblox China Unit Faces Layoffs as Operational Challenges Mount

Roblox Corp RBLX China, also called LuoBu, prompted a round of layoffs in October. 

The layoffs affected 15 roles, including a "small number" of Roblox China's teams in the U.S. and its headquarters in Shenzhen.

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An evaluation of the operational structure in support of LuoBu prompted the downsizing, TechCrunch cites the company spokesperson.

These actions are specific to LuoBu and its business and operational needs. Roblox China's headcount ranges between 100-499, according to its listing on Boss Zhipin.

The new layoffs followed Roblox's significant reduction in its talent acquisition team, which marked the company's focus shift from expansion to its bottom line.

In 2019, Tencent Holding Ltd TCEHY and Roblox established a joint venture in China in which Roblox would hold a 51% controlling stake. 

Roblox's move reflects the challenge of running any platform that thrives on user-generated content in China. 

Beijing's censorship rules and cross-border data regulations can be nebulous and cumbersome. Therefore, it hardly shocked users when LuoBuLeSi, the Chinese version of Roblox, suddenly paused service in December 2021.

Even Microsoft Corp MSFT Activision Blizzard gave in to Chinese regulations in January after its 14-year license with its local partner NetEase Inc NTES expired. 

In August, Roblox reported second-quarter FY23 Bookings growth of 22% year-on-year to $780.7 million.

The revenue grew by 15% Y/Y to $680.8 million, missing the consensus of $784.9 million. EPS loss of $(0.46) missed the consensus loss of $(0.45).

Average Daily Active Users (DAUs) were 65.5 million, up 25% Y/Y. Hours Engaged were 14 billion, up 24% Y/Y.

Price Action: RBLX shares traded higher by 1.01% at $30.88 in the premarket on the last check Tuesday.