Roblox Corporation (RBLX.US) reported third-quarter user figures that fell short of analyst expectations, while questions linger over whether a new hit game can reverse a decline in user engagement tied to stricter child safety measures.
The company posted revenue of $1.572 billion, up 16% year over year; net loss narrowed to $230 million, or $0.32 per share, better than the $0.42 loss expected by the market; adjusted EBITDA came in at $138 million, far above $46 million in the same period last year.
User metrics were the main drag. Daily active users (DAU) totaled 138 million, down 9% year over year and below the 145.8 million analysts expected; engagement hours were about 34 billion, down 15% year over year. Bookings reached $1.697 billion, down 12% year over year, but above Wall Street's $1.63 billion estimate and the upper end of the company's own guidance.
Roblox shares plunged more than 17% after hours, down 17.50% at $43.28 as of press time.
The company attributed the decline to a tough 2025 comparison base聽鈥?when hits like "Steal A Brainrot" and "Grow A Garden" set industry records聽鈥?as well as the impact of child safety measures. For years, Roblox faced lawsuits from multiple state attorneys general over predators on its platform, and the company subsequently rolled out dozens of safety overhauls including age verification, which weighed on growth in the first two quarters of this year. The company is betting the changes will eventually bring a broader user base.
The new game "Steal An Egg," launched during the summer, briefly reignited market hopes. According to Freedom Capital Markets analyst Nick McKay, the game contributed half of the platform's concurrent users on some days; but he warned its pull could be "overstated"聽鈥?the popularity may partly come from cannibalizing older hits like "Steal A Brainrot."
CEO David Baszucki stressed in a shareholder letter that Q3 revenue, bookings and cash flow all exceeded company guidance, that AI is reshaping game content creation, and that Roblox's distribution, economy system and safety infrastructure form its core competitive advantages.
On guidance, the company expects Q4 bookings of $1.89 billion to $2 billion, down 10% to 15% year over year; Q4 adjusted EBITDA is expected to be negative $70 million to negative $10 million, and free cash flow is expected to be negative $190 million to negative $105 million (partly due to capital expenditures shifting from Q3 to Q4). The company said in July that AI investment would drive up infrastructure costs and suspended full-year guidance.
In Q3, the company repurchased 4.4 million shares (about $200 million), with roughly $2.4 billion remaining under its buyback authorization.
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