RBLX--The Metaverse Will Have to Wait

Roblox announced earnings yesterday and basically missed on all fronts.

Revenue was $568MM, which was up 83% YoY and 12% QoQ
Unfortunately, expectations were significantly higher

Without rehashing everything you can read from the standard release, basically they disappointed on all levels.

Some of this is clearly a deceleration from the huge platform growth during the pandemic.

2021 YoY and QoQ revenue growth
       Q1   Q2     Q3    Q4
YoY  139%  127%  102%   83%
QoQ   25%   17%   12%   12%

Definitely not the trend you want to see, but I think the larger question is whether or not this is a permanent deceleration from a one-time surge (i.e. Peloton/Zoom). On that front, I think Roblox is in a much better position.

Roblox is not a video game, but a development platform where users can interact. It’s not a “pie in the sky” vision like Meta’s metaverse that lost $10 billion last year. It grew from a pretty simple design (similar to Minecraft) and they are now in a phase of developing much more compelling (and hopefully profitable) content. As an example, in December, Roblox announced a deal with the NFL for users to virtually build a stadium and manage their own team.

One item in the report was positive. DAU (daily active users) fell short in Q4, but the reported number for January appears user growth has picked up. Last Q1 also showed a significant growth in QoQ DAUs. All the same, strong user growth does suggest the platform remains compelling.

2021/2 DAU (millions) and QoQ growth
       Q1    Q2    Q3    Q4  Jan22
DAU  42.1  42.3  47.3  49.5   54.7
QoQ   13%    3%    9%    5%    11%

In the end, a disappointing quarter, but I don’t think the story is over.

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