"The first stock of the Metaverse" Roblox rises strongly? Q2 revenue surges 31% and annual bookings forecast raised

According to the financial news app Zhitong Finance, Roblox (RBLX.US), known as the "number one stock in the metaverse," announced better-than-expected second-quarter results before the US stock market opened on Thursday. The company also unexpectedly raised its annual forecast for Roblox bookings, mainly due to a significant increase in engagement of teenage users on the Roblox gaming platform during the global summer vacation. Additionally, the more mature game content has helped attract adult users with higher spending power. Stimulated by strong financial reports, the company's stock price surged in pre-market trading but quickly weakened after the market opened, dropping more than 7% at one point under selling pressure, before quickly narrowing the decline.

The financial data shows that Roblox's revenue for the second quarter of 2024, ending in June, was approximately $8.935 billion, significantly higher than the $681 million in the same period last year, representing a 31% year-on-year growth and surpassing the market's expectation of $8.9 billion. In terms of outlook, Roblox expects third-quarter revenue to be around $8.6 billion to $8.85 billion, while the market expectation is near $8.7 billion.

However, the company still remains in a loss-making position, with an operating loss of approximately $238 million in Q2, significantly narrower compared to $314 million in the same period last year. The net loss attributable to common stockholders in Q2 was about $206 million, but it has narrowed compared to $283 million in the same period last year, resulting in a loss per share of $0.32, which is significantly narrower than the loss per share of $0.46 in the same period last year and better than the market's expected loss per share of $0.39.

Roblox's bookings in the second quarter grew by 22% year-on-year to $955 million, far exceeding market expectations. This was mainly driven by the American teenage summer vacation, allowing gamers to spend more time on its platform. The increased participation of adult users in the gaming platform and game development ecosystem were also key factors. Roblox's average daily active users ("DAU") were approximately 79.5 million, a year-on-year increase of about 21%.

Previously, in May, the company released a disappointing performance report and lowered its annual forecast, leading to the most severe single-day plunge in the company's stock price. Due to prolonged low bookings and continued weak performance, Roblox's stock price has been hovering at the bottom since the Fed's rate hike cycle in 2022. The stock price remains very weak this year, with a decline of up to 15% year-to-date, significantly underperforming the S&P 500 index.

Roblox, focusing on the "metaverse worldview," begins to attract adult users

Focusing on the unique "metaverse worldview," the electronic gaming platform Roblox, well-known globally for its popularity among around 16-year-old young gamers, has been encouraging developers to create more mature game content such as horror games and adventure games to attract adult users with stronger purchasing power.

Roblox's so-called "metaverse gaming platform" allows users to create, share, and play games generated by other users. It is not just a gaming platform but also a social platform where players can interact and participate in community activities. Currently, Roblox is attracting more and more adult users, whose purchasing power far exceeds that of teenagers Roblox not only provides games but also offers a content creation toolset called Roblox Studio, allowing developers and users to create their own virtual worlds and games. This user-generated content (UGC) makes Roblox an ever-expanding "virtual metaverse ecosystem".

In a general sense, the metaverse is a virtual shared space that integrates various cutting-edge technologies such as virtual reality (VR), augmented reality (AR), social media, and online games. Analogous to the metaverse, Roblox as a "metaverse gaming platform" provides users with an immersive virtual world experience where they can create, explore virtual environments, and participate in various activities, aligning well with the concept of the metaverse.

In March 2021, Roblox became a publicly traded company through a direct listing. At the time of its listing, Roblox was seen as a pioneer in the metaverse concept, which is a key reason why it is referred to as the "first stock of the metaverse".

Roblox Unexpectedly Raises Performance Expectations

Financial data shows that in the second quarter from April to June, the hours played by Roblox players aged 13 and above increased significantly by 30%. In terms of bookings, the company unexpectedly raised its booking expectations, with the annual bookings now expected to be between $41.8 billion and $42.3 billion, higher than the previously estimated $40 billion to $41 billion by the company's management.

Regarding third-quarter booking expectations, the company anticipates bookings (mainly from the sale of Roblox virtual currency) to be between $1 billion and $1.025 billion, higher than the market's general expectation of $971.2 million compiled by LSEG.

Chief Financial Officer Michael Guthrie stated, "Our developer community's content creation has attracted some higher-spending adult users and has established a worldview worth spending money on. When users spend a lot of time on the platform, they are often very willing to spend money."

Unlike traditional video game companies, Roblox relies on user-generated content and earns most of its revenue from selling its in-game currency "Robux". This is also the core source of Roblox's so-called "bookings" – the transaction volume of Roblox virtual digital currency purchased by users on its platform.

Therefore, Roblox's model is similar to Epic Games' popular game "Fortnite", where this model has greatly helped Roblox when customers reduce their purchases and stick to verified titles.

Revenue sharing with developers is also an important source of revenue for Roblox. Many games and virtual items on the Roblox metaverse platform are created by users (developers), and Roblox provides these developers with a profit mechanism to generate revenue through in-game purchases and advertising, from which Roblox takes a certain percentage.

Additionally, Roblox generates revenue through advertising and brand partnerships. Some brands focusing on the needs of teenagers advertise on the Roblox platform or collaborate to launch brand-specific metaverse virtual items and similar activities