During earnings season, each company tells a tale, reflected in metrics like revenues, earnings, cash flow — and, for platform firms, subscriber trends.
Roblox, the online gaming platform, shows the impact of a change in consumer behavior, especially as economies continue to reopen.
On Wednesday, the company’s shares fell more than 25%. Broadly speaking, investors seem to be concerned, at least at present, with subscriber momentum and what might lie ahead for growth rates.
Overall, Roblox said that it had 49.5 million daily active users on its site, up 33% year over year as measured in the fourth quarter. That’s a growth rate that slowed meaningfully from the 79% seen at the beginning of the year, and the high 90% growth rates seen as the pandemic hit in 2020.
Some Impact in the States
Drilling down into the metrics contained in supplemental materials, the company reported that in several markets, perhaps most critically in North America, daily user counts and the hours spent on the platform are declining. In North America, the subscriber count stood at 11.2 million, down from 12.2 million in the third quarter, and from 12.6 million in the first quarter.
Hours engaged were 10.8 billion, down from 11.1 billion in the previous quarter, and hours engaged in the U.S. and Canada were down 11% year over year.
Additionally, average monthly new and unique players were 11.9 million, up only slightly from the third quarter at 11.2 million. Average bookings — where the Robux virtual currency is used — per monthly unique player was $21.63, up from the third quarter’s $18.91, but down from the $22.49 seen in 2020’s fourth quarter, which seems a high point over the last few years.
Wall Street, generally speaking, gets skittish when growth (depending on where you look) starts to slow. That’s especially true for the firms that have benefited from the “stay at home” trend that has been a hallmark of the last few years, including Roblox.
Management said on the earnings call with analysts that, as CEO David Baszucki noted, “If we just look at the United States and the United Kingdom, in particular, when COVID started, every day, Monday through Friday, we had super-high growth because people weren’t at work or at school versus our normally high rates of growth, mostly focused on the weekend.”
He added, “Now we’re kind of unwinding that trend, that people are going back to work, our growth rate necessarily is going down on the weekdays.” However, weekend growth is still significant.
The pandemic also offered up some fairly difficult comps to lap, and management noted that higher rates should resume in April, May and June.
That all, of course, remains to be seen. But the headwinds that we see here — online leisure activities are delegated to weekends, as we return to classrooms or offices or to the great outdoors — point to some turbulence for platform firms.
We may not have enough detail to see how churn may be part of the mix — after all, net adds are still net adds — but it becomes clear that companies like Roblox (and the Metas of the world and the Pelotons of the world) will have to find a way to offset the outdoors, so to speak.
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