News
Roblox reduces annual booking forecast due to muted player spending
By Zaheer Kachwala
(Reuters) – Roblox lowered its annual booking forecast on Thursday, in a sign that people were reducing spending on its video game platform amid an uncertain economic outlook and elevated levels of inflation.
The company’s shares fell more than 25% in premarket trading.
The lowered forecast marks the latest downbeat report from the gaming industry, which has laid off hundreds of employees and closed studios this year to deal with falling demand.
Electronic Arts also gave a weak revenue forecast earlier this week.
Roblox now expects full-year bookings to be between $4 billion and $4.10 billion, down from its previous forecast of $4.14 billion to $4.28 billion. Its second-quarter bookings forecast of $870 million to $900 million also came in below estimates.
The company said it was conservative with its forecast for the second quarter as the Easter holiday, a period of high engagement on its platform, occurred during the first quarter of this year, compared to the second quarter of the previous year.
The gaming industry is struggling with lower engagement, which is expected to keep growth in the PC and console market below pre-pandemic levels until 2026, according to research firm Newzoo.
The number of hours that players aged 13 and over spent on the Roblox platform grew 19% in the first quarter, the company’s lowest growth rate in about two years.
“This is not unusual,” said Roblox Chief Financial Officer Michael Guthrie, adding that the company is adding a lot of older players who are taking a while to settle in and spend time on the platform.
Roblox has also turned to digital advertising to diversify its revenue. Earlier this month, it began displaying virtual billboards featuring content from brands like Walmart and Warner Bros Discovery to users of its platform.
Roblox will build the infrastructure for the ad platform in 2024 and will begin providing advertising revenue forecasts in 2025, Guthrie added.
(Reporting by Zaheer Kachwala and Harshita Mary Varghese in Bengaluru; Editing by Shounak Dasgupta)