Roblox Corp. shares logged their second-worst day ever, shedding more than a fifth of their value Wednesday after the youth-centric virtual-world platform posted a greater loss than analysts expected, as currency headwinds affected international growth and personnel costs rose.
Roblox RBLX, -21.00% shares dropped to an intraday low of $30.68 and closed near that for a 21% fall to close at $30.68, following a 1.7% decline to close the regular session at $39.14 Tuesday. Wednesday marked the worst performance since Feb. 16, when shares dropped 26.5%, the stock’s worst one-day performance day since Roblox began trading as a public company in March 2021.
The San Mateo, Calif.-based company reported a third-quarter loss of $297.8 million, or 50 cents a share, compared with a loss of $74.0 million, or 13 cents a share, in the same period last year. Revenue rose slightly to $517.7 million from $509.3 million in the year-ago quarter, while bookings increased 10% to $701.7 million from $637.8 million in the year-ago period.
Analysts had forecast, on average, a loss of 32 cents a share on revenue of $593.4 million and bookings of $692.2 million. Analysts focus on bookings for Roblox and other video-game companies, because the metric reflects virtual currency sold that may be considered deferred revenue.
On the call with analysts following the report, Roblox Chief Financial Officer Michael Guthrie said one of the biggest headwinds for the company is a strong dollar, with the U.S. dollar index DXY, -0.04% up nearly 18% from a year ago and non-U.S. growth in average daily active users, or DAUs, outpacing domestic growth. While an estimated 63% of revenue comes from the U.S., about 17% comes from Canada, Germany, U.K., France, Italy, China and Japan, according to FactSet data.
“Pure monetization around the world looks quite good when adjusted for those currencies,” Guthrie said on the call. “We all know the macro environment is a little bit challenging. Where it is most pronounced for us is translation of currencies back into dollars. But overall, the behavior of the user base seems fairly healthy.”
While other tech companies like Facebook parent Meta Platforms Inc. META, +5.18% and Elon Musk’s Twitter are laying off employees, Roblox is still hiring, although “not quite at the same rate” as it had been, Guthrie said while noting, “but we’re adding quite a few people into the company.”
Personnel costs excluding stock-based compensation ranked as one of the “big cost items,” according to Guthrie, with costs up 56% to $160.3 million from a year ago. Roblox reported it had about 2,100 employees costing 23% of bookings, compared with about 1,500 employees costing 16% of bookings a year ago.
DAUs for the third quarter were 58.8 million, up 24% from the year-ago period, and the company played up its “aged-up cohorts,” or users over the age of 13, with growth there up 34% year over year and accounting for 54% of all DAUs. Average bookings for each DAU fell 11% to $11.94.
Roblox also released October figures, which last year included a weekend Halloween loss of service. Given that, through the first 27 days of October 2022, bookings were estimated to be $202.3 million, an increase of 13% over the same period in 2021. Roblox shares logged their best day ever — a 42.2% gain — a year ago, when the company said that even with the outage, October performance had still improved.
Roblox shares were savaged in August after second-quarter bookings came in lower than expected, and again in mid-September, when the company’s investor day and August figures disappointed investors and sent shares down more than 10%.
In mid-October, Roblox reported September figures that suggested a better-than-expected trajectory for the quarter, sending shares up 20%.
Roblox shares are down 70% for the year, compared with a 21% fall in the S&P 500 index SPX, -2.08% and a 34% drop in the tech-heavy Nasdaq Composite Index COMP, -9.31%.