Roblox cut its annual bookings forecast on Thursday, fanning concerns about a slump in the videogame industry. Roblox shares closed down to 23% to mark their worst day in more than two years on Thursday. The move signaled that people were dialing back on spending within Roblox’s video-gaming platform amid an uncertain economic outlook and elevated inflation. Video game publisher Electronic Arts also gave a weak revenue forecast for Roblox earlier this week.
Roblox bookings forecast
The lowered forecast marks the latest downbeat report from the gaming industry, which has laid off hundreds of employees and shut studios this year to cope with declining demand.
Electronic Arts also gave a weak revenue forecast earlier this week.
Roblox expects full-year bookings an indicator of future revenue to be between $4 billion and $4.10 billion, down from its earlier view of $4.14 billion to $4.28 billion.
The Roblox Q2 forecast for bookings was also below LSEG estimates.
Roblox slower booking
Though Roblox was conservative with its quarterly view as the Easter holiday, a period of high engagement on its platform, was during the first quarter this year compared with the second quarter in 2023, as per Finance chief Michael Guthrie.
But even with the boost from Easter, its bookings grew 19% in the first quarter the slowest pace in more than a year.
Average daily active users increased 17% to 77.7 million the lowest growth rate since going public in 2021. The number of hours gamers aged 13 or more spent on Roblox’s platform grew 19%, the lowest growth rate in about two years.
“That’s not unusual,” Guthrie said. The company was adding a lot of older gamers who take a while to get settled and spend more time on the platform, he said.
The slowdown also mirrors broader weakness in engagement for videogames, which has forced companies including Sony Group and Microsoft to lay off hundreds of employees and shut studios this year.
Roblox high on advertising
Roblox has turned to digital advertising to diversify its revenue, .
Earlier this month, it started displaying virtual billboards featuring content from brands such as Walmart and Warner Bros Discovery to users on its platform.
Roblox revenue forecast
Roblox plans to start providing forecast for ad revenue in 2025 and expects the business to contribute to its growth in 2026 and 2027, company executives said on a post-earnings conference call on Thursday.
Wedbush Securities analyst Michael Pachter estimated Roblox could generate $3 billion annually in ad revenue once the ads have fully ramped.
“They have a huge opportunity with ads and could significantly grow revenue there. I don’t expect material contribution till late this year or early next year, so the guidance next year makes sense,” he said.
