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Roblox’s stock tumbled by over 20% since it announced its Q2 2023 financial results. While the company did increase bookings by 1% compared to Q1 to $780.7 million, this was not enough to offset missing analyst expectations for playtime and daily active users (DAUs).
Last quarter, Roblox users spent 14 billion hours on the platform. This fell short of analysts’ expectations of 14.4 billion hours of playtime. Similarly, DAUs fell about 1% to 65.5 million from last quarter. Analysts expected the company to achieve 65.8 million DAUs.
Notably, Roblox users over 13 make up a slightly larger share of its player base (56%) than it did in Q2 2022 (53%). Year-on-year, users under 13 grew by 17% while users over 13 grew by 33%. This is somewhat beneficial as older users played for longer on average.
While bookings and revenue (up 4% QoQ) did grow slightly, this was offset by increased costs. Roblox’s costs increased by 31%, or $233.3 million, compared to Q2 2022. Of course, these rising costs eat into Roblox’s margins. Average bookings per DAU fell 3% to $11.92 compared to the same quarter last year, though it was up from Q1’s $11.70.
Some of this increase is due to a higher headcount. Roblox has about 2,400 employees today, about 500 more than it did in Q2 last year. As a result, its personnel costs (excluding stock-based compensation) are equivalent to 30% of revenue or 26% of bookings. This a much higher share compared to Q2 2022, where this category of spending was equivalent to 24% of revenue or 22% of bookings.
Stock-based compensation is also a growing cost for Roblox, increasing 45% to $212.4 million compared to the same quarter last year. The biggest increases were seen in Infrastructure and trust & safety (up 66%) and Research and development (58%).
With its commitments to safety and an increasing focus on AI, Roblox likely hired top talent with lucrative stock packages. Of course, the falling stock price will impact how valuable this is to employees with stock-based compensation.
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