What's Up With Roblox? Benchmark Analyst Weighs In

Roblox Corp (NYSE: RBLX) on Wednesday issued its fourth-quarter results for the fiscal year 2022, stirring up positive analyst chatter at Benchmark by showing impressive growth in key areas.

By The Numbers: The online gaming platform reported a 17% year-on-year increase in Bookings, reaching $899.4 million, exceeding consensus estimates of $881.4 million. Revenue grew by 2% year-on-year to $579 million.

The company's EPS loss of $48 cents also exceeded the consensus loss of 52 cents, indicating its ability to navigate a challenging financial climate.

Further, Roblox reported an increase in its Average Daily Active Users (DAUs), which grew to 58.8 million, representing a 19% year-on-year increase.

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The Benchmark Takeaways: The Benchmark Company analyst Mike Hickey upgraded Roblox from a Sell rating to a Hold rating based on profits exceeding Benchmark’s estimates.

Hickey said Roblox weathered the COVID-19 pandemic well and was showing signs of stabilizing in the mobile gaming market. The company's recent January KPIs indicated a continued increase in platform engagement, with sequential growth in daily active users and hours engaged, and year-over-year growth in average bookings per daily active user.

The analyst noted Roblox’s executive team focused on improving profitability by keeping headcount flat and reducing investment spending in FY23, which should drive operating leverage.

Though, Benchmark was cautious about Roblox's ambitious growth initiatives, including advertising schemes targeting children beyond core gameplay, which could lead to increased regulations.

The analyst also believed Roblox primarily appeals to young children, and many will age out as they become teenagers. Benchmark said it was concerned some children may misrepresent their age, which could skew the average age of users.

The investment bank noted it was not convinced Roblox offered a safe play environment and worried about forms of child abuse.

RBLX Price action: Shares of Roblox are trading 1.38% on Thursday to $44.46, according to data from Benzinga Pro.

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Photo: Courtesy Roblox