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Gaming metaverse operator Roblox (NYSE:RBLX) announced better-than-expected results in Q2 CY2024, with revenue up 31.3% year on year to $893.5 million. It made a GAAP loss of $0.32 per share, improving from its loss of $0.46 per share in the same quarter last year.
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Roblox (RBLX) Q2 CY2024 Highlights:
- Revenue: $893.5 million vs analyst estimates of $883.1 million (1.2% beat)
- EPS: -$0.32 vs analyst estimates of -$0.38 (16.8% beat)
- Gross Margin (GAAP): 29.7%, up from 18.8% in the same quarter last year
- Free Cash Flow of $111.6 million, down 41.6% from the previous quarter
- Daily Active Users: 79.5 million, up 14 million year on year
- Market Capitalization: $26.57 billion
Best known for its wide assortment of user-generated content, Roblox (NYSE:RBLX) is an online gaming platform and game creation system.
Video GamingSince videogames were invented in the 1970s, they have gradually taken more share of entertainment time. Ubiquitous mobile devices have powered a surge in “snackable” games that can be played on the go. Over time, games have developed more social engagement features where friends can play games together over the internet. The business models of games publishers have become less volatile due to digitization of distribution, in game monetization, and like Hollywood, an increasing dependence on surefire hit franchises. Covid driven lockdowns accelerated adoption and usage of videogames – a trend that has not slowed.
Sales GrowthRoblox's revenue growth over the last three years has been very strong, averaging 34.7% annually. This quarter, Roblox beat analysts' estimates and reported solid 31.3% year-on-year revenue growth.
Ahead of the earnings results, analysts were projecting sales to grow 18.2% over the next 12 months.
Usage Growth As a video gaming company, Roblox generates revenue growth by expanding both the number of people playing its games as well as how much each of those players spends on (or in) their games.
Over the last two years, Roblox's daily active users, a key performance metric for the company, grew 21.3% annually to 79.5 million. This is strong growth for a consumer internet company.
In Q2, Roblox added 14 million daily active users, translating into 21.4% year-on-year growth.
Revenue Per User Average revenue per user (ARPU) is a critical metric to track for consumer internet businesses like Roblox because it measures how much revenue each user generates, which is a function of how much paying users spend on its games.
Roblox's ARPU has declined over the last two years. Although it's unfortunate to see the company lose its pricing power, it was still able to achieve strong user growth. This quarter, ARPU grew 8.1% year on year to $11.24 per user.
Key Takeaways from Roblox's Q2 Results It was great to see Roblox increase its number of users, beat analysts' EPS expectations, and post 30%+ revenue growth this quarter. The 30%+ growth was the best news of the day since the market was questioning the company's ability to sustain high growth rates after last quarter's print. Overall, we think this was a strong quarter that should satisfy shareholders. The stock traded up 3.3% to $42.90 immediately after reporting.
