Roblox (NYSE: RBLX), one of the pioneers of the metaverse, reported its fourth-quarter and fiscal year 2021 results on Tuesday, Feb. 15. The platform popular with the younger generation is experiencing headwinds from economic reopening.
Still, Roblox gave shareholders a few things to like about Q4 results and one significant cause for concern. Let's look closer at the figures.
Image source: Getty Images.
1. Daily active user growth
In its most recent quarter, which ended Dec. 31, Roblox boasted 49.5 million daily active users (DAUs). That was up by 33% from 37.1 million in the same period last year. More impressively, it's up from 47.3 million in the previous quarter.
In addition to Q4 results, Roblox updated investors on developments so far in January. In that month, user growth accelerated, increasing by 5.2 million to reach 54.7 million. Players are the lifeblood of Roblox's business, so it's a good sign to see growth continue.
2. Overall increase in booking
Roblox is free to join and to use, but that shouldn't take away from the accomplishment of attracting over 50 million DAUs. In this day and age, folks have plenty of free-to-use options, and a company has to offer an enticing product to get users to join.
Roblox makes money by selling an in-game currency called Robux. When a player deposits money, Roblox counts that as bookings, which turn into revenue as users spend that currency over time. Players can use Robux to experience premium items and games unavailable to free players.
In another encouraging sign, overall bookings increased by 20% year over year to reach $770 million in Q4. That's coming on top of last year's Q4 when Roblox experienced a 172% increase in bookings.
Understandably, growth would slow down from the astronomical rates shown during the more acute pandemic stages when kids had limited entertainment options away from home.
3. Attracting older users
One argument critics pose against Roblox is that it's mainly for kids, predicting that they will cease to use the platform as they get older. That's a bad sign because it means customer relationships would be short-lived.
To that end, shareholders can be encouraged that Roblox is attracting older users at a faster rate. User growth in the 13-and-older group in Q4 was 49%. Meanwhile, growth in the under-13 groups was just 21%. These are both year-over-year figures. This trend has now persisted over eight consecutive quarters. The user mix is now 25.6 million over 13 to 23.6 million under 13.
A cause for concern
As economies are reopening and schools are bringing students back to classrooms in the U.S. and Canada, engagement is decreasing on Roblox. That's a cause for concern because the region accounts for a significant part of spending.
DAUs fell by one million from the previous quarter and 1.4 million since the first quarter of 2021. Similarly, hours engaged fell by 17% quarter over quarter in Q4. The trend worries investors because there is no telling how far down it will go.
Overall, the elevated risk from decreasing usage in the U.S. and Canada far outweighed the benefits mentioned above. The stock was down 26% on the day following the report and 48% on the year in 2022.
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Parkev Tatevosian has no position in any of the stocks mentioned. The Motley Fool owns and recommends Roblox Corporation. The Motley Fool has a disclosure policy.
The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of Nasdaq, Inc.
