It appears that the metaverse is doing well, as seen by the increasing number of children using the Roblox platform.
Apparently, the gaming platform Roblox is still where children spend their money. As a result of the company’s better-than-anticipated fourth-quarter profits, Roblox’s share price increased by 25% on Wednesday.
Popularized by games such as MeepCity, Jailbreak, Adopt Me!, Royale High, and Murder Mystery, Roblox appeals to a younger demographic that uses the Internet not just to play games but also to talk and socialize with other players.
Fearing it might miss the next wave in online socializing, Facebook rebranded itself Meta and began investing billions in its metaverse project in response to the rise of the platform, along with other games like Fortnite in which users also attend concerts and hang out with pals.
Young gamers or “metaverse” participants, if you want to call them that, are still mostly active on Roblox for the time being. (Technically speaking, the metaverse does not yet exist. This is merely a buzzword.)
As of the fourth quarter, the gaming platform company recorded 58.8 million average daily active users (DAUs), increasing 19% year-over-year. The average number of DAUs for the entire year of 2022 was 56 million, an increase of 23% year-over-year. In addition, the company offered more recent numbers, indicating that January’s average DAUs increased by 19% year-over-year to 65 million.
Investors on Wall Street were especially pleased with Roblox’s bookings data, which indicate in-game transactions made with the company’s virtual currency Robux. In the fourth quarter, bookings increased 17% year-over-year to $899.4 million (or 21% on a constant currency basis), exceeding investors’ consensus forecast of $884.71 million. For the entire year, bookings increased by 5% to $2.9 billion (or 9% when measured in constant currency).
In today’s earnings report, the business anticipated that its January bookings were between $267 million and $271 million, representing a 19% year-over-year increase.
“Bookings accelerated meaningfully in December and January, with year-over-year growth exceeding 20% in both months. Growth was strong across all geographies and age groups with particular strength among users above 17 years old,” Michael Guthrie, CFO of Roblox, stated in the company’s quarterly press release that Roblox is expanding its user base among teens and young adults in addition to children. If so, the demographic will have more money to spend on Robux, which is good news for the company.
Roblox highlighted at its developer conference last autumn that fifty percent of its user base was 13 or older, indicating that it was keeping at least a portion of the users that many believed would leave the platform as they aged.
In addition, Roblox revealed today that its players engaged with the platform’s games for longer durations in the fourth quarter and throughout 2022. Engaged hours increased 18% year-over-year in the fourth quarter to 12.8 billion, and increased 19% year-over-year to 49.3 billion in 2017.
Despite the fact that investors are more concerned about bookings, Roblox’s revenue increased 2% year-over-year to $579.0 million in Q4 and is projected to increase 16% year-over-year to $2.2 billion in 2022.
The fact that Roblox posted a loss of 48 cents per share, as opposed to the 52 cents per share loss that investors had anticipated, also helped raise the stock price.
There has been some speculation regarding Roblox’s post-Covid trajectory.
During the Covid-19 pandemic, when schools were stopped and children were quarantined at home, the company had phenomenal growth, but its profitability suffered last year as the pandemic’s trends normalized. Roblox CEO David Baszucki admitted to investors in the company’s first full-year report after going public a year ago that while the company’s absolute numbers were still growing, its growth rates had slowed because it was forced to compare its numbers to double or even triple growth during the pandemic.
The company has also weathered a few storms, such as those involving moderation issues, improper content, and worries regarding the exploitation of young game developers that create games on its platform. The latter relates to the bigger issues surrounding software and game markets and the type of revenue split that should be implemented if any. Currently, Apple and Google’s app stores are the focus of this discussion, but ultimately, laws might affect any platform where game developers must pay commissions.
Roblox staged a free virtual Super Bowl concert with Saweetie and revealed that the NFL had created a new experience on its platform that allowed football fans to pick their own NFL team and construct a stadium; nevertheless, neither event was a role in this revenue period. According to recent rumors, Roblox may launch on Meta’s Quest platform to compete more directly with Horizon Worlds.