(Ad Age) – US video game developer Roblox Corporation reported fourth-quarter earnings that missed analyst estimates, reflecting a reversal of the momentum it had during the pandemic over the past two years, while CEO David Baszucki urged investors to “take the long view” on the company. Shares plunged 12% in extended trading.
Reserves, which include revenue and deferred revenue and other adjustments, increased 20% from the prior year to $770.1 million. Analysts estimated that value to be $786.2 million, according to data compiled by Bloomberg.
Average daily active users rose 33% to 49.5 million, slightly less than the 50.5 million that analysts had expected. Much of that growth comes from countries in Asia, Latin America and Europe.
The results mark the first full-year reports for Roblox since going public in March 2021.
The gaming industry had a boom year in 2020, at the height of the pandemic. Roblox, a social platform that allows gamers to create their own games and worlds online, has captured the attention of up to two-thirds of US children between the ages of 9 and 12. That success also made the company vulnerable when tweens had to return to classrooms, sports and other activities.
“Although some parts of the world have begun to return to a more normal way of life, our absolute numbers have continued to grow,” Baszucki said. But growth rates have slowed when compared, in some cases, to quarters last year in which certain key metrics doubled or even nearly tripled.”
As the pandemic fades, Roblox looks to the future with the so-called metaverse, conceived as an immersive version of the internet where people can interact, play or work using a digital avatar. Although many companies are touting the benefits and growth potential of the metaverse, Roblox potentially has an advantage because its users are already able to create their own video games and virtual worlds using its technology. In 2021, users spent more than a million hours within 1,900 of their “experiences,” the company said.
At the same time, Meta recently experienced a harsh reality check after announcing an all-out push into the metaverse. Bloomberg Intelligence analyst Amine Bensaid said the two companies “have completely different business objectives. I don’t think any company is better positioned than Roblox in the vision that many have of the metaverse.”