Roblox Stock Is Surging Following Earnings. Its Been Building the Metaverse for a Long Time, CFO Says. – Barrons

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A selection of “Roblox” toys

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shares surged in extended trading Monday after company reported strong year-over-growth during the third quarter. Roblox also said it plans to credit developer accounts on its platform $6.8 million for payouts it estimates were lost during a Halloween weekend outage.

Roblox (ticker: RBLX), which is a platform that offers tools for users to design and interact in virtual worlds that went public in March, reported bookings rose 28% year-over-year to $637.8 million during the third quarter. Its net loss hit $74 million.

Consensus analyst estimates for Roblox are difficult to compare, because some analysts prefer bookings—a form of adjusted revenue that factors in sales of durable online goods—while others provide forecasts in GAAP earnings and revenue.

Average daily active users during the quarter were 47.3 million, up 31% year-over-year, while average bookings per daily active user was $13.49.

Roblox stock was up 30% to $99.99 in extended trading Monday. Its closing high in 2021 was $99.86 on June 2.

Roblox said in a letter to shareholders that a widespread outage that lasted roughly 70 hours between Oct. 28 and Oct. 31, led to lost bookings of about $25 million. Another $6 million in bookings received during the period, primarily through prepaid cards, brings the company’s estimated uncompensated bookings to $31 million.

Because of this, Roblox plans to pay a total of $6.8 million—applying a 22% payout ratio—to developers who lost a source of income during the outage. Chief Financial Officer Michael Guthrie told Barron’s that decision speaks to the company’s core values.

“Once you have a great developer base, like we do, you cannot take that for granted, number one, and number two, you have to you have to respect that,” he said. “There are quite a lot of developers who are making a full time living on on Roblox. So when we have an outage that’s on us.”

Through the first 27 days of October, Roblox hit average daily active users of 50.5 million, up 43% year-over-year. Cumulative hours of engagement hit 3.2 billion in that period, up 41% year-over-year. Bookings were between $177 million and $179 million, up 30% to 34% from the same period in 2020.

Guthrie added that user numbers appeared to jump right back following the outage.

“We just have a very dedicated user and developer base,” he said. “And Roblox is a part of their life. And so when it was down, they were frustrated. We certainly understand the developers were frustrated, and we take that very seriously.”

After Facebook’s parent

Meta Platforms

kicked off Wall Street’s latest obsession with the metaverse, Guthrie told Barron’s Roblox has been a pure-play company focused on connected virtual worlds for 17 years. He noted the company’s founders were science fiction fans who were familiar with the notion of the metaverse.

“We like hearing about the category more,” Guthrie said. “I think there’s a possibility that ‘Metaverse’ gets a little bit overused, but it’s something that we’ve been working on for a very, very, very long time. And we like our approach quite a bit.”

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