Roblox Will Have More Challenging Comps In Upcoming Quarters, Analysts Offer Cautious View

Roblox Will Have More Challenging Comps In Upcoming Quarters, Analysts Offer Cautious View

Roblox Corp RBLX reported second-quarter revenue of $591.2 million, up 30% year-over-year, missing the consensus of $645 million. The company reported a loss of 30 cents per share in the quarter, missing the consensus loss of 21 cents per share.

Bookings in the second quarter of $639.9 million were down 4% Y/Y, while average bookings per DAU was $12.25, down 21% Y/Y.

Roblox saw revenue for the month of July within $205 million - $208 million, up 25% to 27% Y/Y. 

July bookings were between $243 million - $247 million, up 8% to 10% Y/Y. July saw hours engaged of 4.7 billion, up 25% Y/Y. Average bookings per DAU were between $4.15 - $4.22 in July, down 12% - 14%.

Morgan Stanley analyst Brian Nowak maintained Equal Weight on Roblox with a $32 price target. He remained cautious on RBLX's scale, and profitability runway from here as margin compression continued in 1Q despite reaccelerating bookings. 

Nowak expected investments in the developer base/new hiring to stay elevated next year as he cut '23 EBITDA by 11%.  

KeyBanc analyst Tyler Parker reiterated Sector Weight on Roblox and a $40 price target as he assessed the durability of growth into moderately more challenging comps in August and September and the return to school. 

The report seems a step in the right direction, with growth returning to double digits in constant currency and engagement metrics reaching record highs in July, Parker noted. The results were partly attributable to easing comps but also essentially better execution, he added.

In Parker's view, the adverse stock reaction after-hours is likely some combination of elevated investor expectations into the print where we think growth disappointed before FX and the margin compression despite growth returning. 

Roblox has stuck to its stated intentions to invest heavily in support of growing the business, which effectively delays the point where we reach some valuation support on profitability metrics, he added.

Price Action: RBLX shares closed higher by 1.48% at $48.05 on Wednesday.

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