Roblox Stock Soars on Strong First Quarter Results

Creative gaming platform Roblox (NYSE: RBLX) announced first-quarter results on Tuesday, its first earnings release as a public company following its direct listing in March. The stock has gained as much as 18% and was up by 14% as of 1 p.m. EST.

Here’s how Roblox fared in the first quarter of 2021.

Roblox Smashes Bookings Estimates

Total revenue skyrocketed by 140% to reach $387 million, while bookings jumped 161% to $652.3 million. Bookings are a crucial metric that measures how much money users are spending on the platform, and Wall Street analysts were modeling for just $573 million in bookings. 

Other core operating metrics were also strong. Average daily active users (DAUs) increased 79% to 42.1 million, thanks to international growth and Roblox expanding beyond its core demographic of users under the age of 13. DAUs outside of North America increased by 87%, while DAUs over the age of 13 increased 111%. Hours engaged nearly doubled to 9.7 billion, driven by many of the same dynamics. Average bookings per DAU (ABPDAU) gained 46% to $15.48.

The business is also starting to scale in terms of cash flow, with free cash flow skyrocketing over fourfold to $142.1 million. Roblox continues to hire aggressively to invest in product development and engineering that will drive future growth.

“A fundamental part of being human is connecting with others, and we’re inspired by the way in which the Roblox community creates and shares experiences to play, work and even learn together,” CEO David Baszucki said in a statement. “The opportunity of what we’re building at Roblox is massive, and we will continue to make long-term investments as we build a human co-experience platform that enables shared experiences among billions of users.” 

How Roblox Will Keep Growing

In a letter to shareholders, the company said that it will not provide quarterly or annual guidance, but instead will release metrics on a monthly basis for greater transparency. Roblox believes that disclosing monthly metrics will provide investors with “a better window” into how the business is performing.

In line with that methodology, Roblox said that momentum has continued into April. DAUs were 43.3 million last month, with 3.2 billion hours engaged. Bookings in April were in the range of $242 million to $245 million, which resulted in revenue of $143 million to $145 million.

On the conference call with analysts, Roblox discussed its two primary growth drivers: geographic expansion and broadening the appeal of the platform to older age groups. North America still has the most Roblox users, with 12.6 million DAUs. The company is focusing on growing in Asia as well as Europe. Users under 13 still represent about half of total users. Management feels like the company is “nowhere close to being done on those two growth factors,” suggesting that it has plenty of upside to continue executing on its growth plans.

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Evan Niu, CFA has no position in any of the stocks mentioned. The Motley Fool has no position in any of the stocks mentioned. Millennial Money is part of The Motley Fool network. Millennial Money has a disclosure policy.

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