Despite player growth across all core markets, Roblox Corporation reports quarterly losses in excess of $300 million.
Roblox lost $302 million during the third quarter of the year, despite the company’s daily active users increasing by 24% to 58.8 million. Roblox Corporation released its most recent quarterly earnings report on Wednesday, revealing a revenue of $517.7 million for the quarter ending September 30. This figure is two percentage points higher than the company’s Q3 2021 revenue.
Roblox has been thriving for over 16 years, but the virtual sandbox began to hit its stride in terms of revenue only after its iOS and Android ports were released in 2012 and 2014, respectively. Roblox Corporation reported a 75% gross profit margin (the difference between revenue and production costs) last year, a figure that even surpassed Wall Street darlings Apple and Google.
Roblox Corporation has recently modified its reporting method by redefining its paying users as players who have made a purchase on Roblox within the last 28 months, whereas the previous definition had a cutoff of 25 months. As a result, its most recent revenue report is over $100 million less than its historical revenue reports, as the difference is being deferred. As a result of its long-term investments being based on non-GAAP targets, internal metrics not defined by accounting standards, the company expects to continue incurring net losses in the upcoming quarters.
The fact that at this time last year, Roblox Corporation surpassed Activision Blizzard by market cap to become the most valuable gaming company in the United States with a $62 billion market cap further illustrates the newly disclosed financial slump. In contrast, Activision Blizzard’s valuation increased by an additional $10 billion over the subsequent year, while Roblox Corporation’s decreased by two-thirds. As of Thursday afternoon EDT, the company’s share price was just over $33, resulting in a market capitalization of $20 billion.
Aside from accounting tricks, these interim net losses are not the only issue currently plaguing the San Mateo, California gaming giant. Recent research indicates that frequent server outages and phishing issues have unexpectedly made Roblox the most-searched online game in the world.
Roblox’s challenges in moderating user-generated content are exacerbated by the fact that it is both a game and a creation portal. Nonetheless, the sheer size of its loyal player base remains formidable. Kim Kardashian recently threatened to sue the Roblox Corporation after her 6-year-old son showed her inappropriate content he discovered while playing the game.