Roblox Stock (NYSE: RBLX) Pulls Back From Highs as Earnings Disappoint

Roblox stock (NYSE: RBLX) was a notable laggard on the NYSE yesterday, falling 11.06%, fresh from hitting 52 week highs in the previous session. The about turn in sentiment can be explained in part by a run up in the lead up to earnings, which subsequently missed on revenue.

Including yesterday's pullback, Roblox's stock price continues to be in a longer term upward trend, with a gain of 50% over the past 12 months an outperformer on the index. Whether this can be maintained in light of some disappointing numbers is now the next unanswered question.

The Q4 results for 2024 was mixed, with EPS coming in at -$0.33, a significant outperformance on the -$0.44 expected by the street. Revenue of $1.36 billion was slightly short of the $1.37 billion expected.

Despite revenue falling short of expectations, bookings have still demonstrated an increase of 21% year-over-year. Additionally, operating cash flow rose by 29% and free cash flow saw an impressive rise of 54%, indicating positive underlying performance in these areas.

The company also reported strong user growth with daily active users reaching 85.3 million, up 19% from the previous year. The average monthly unique payers followed this positive trend, also increasing by 19%. Notably, the average expenditure per user experienced a slight uptick of 1%.

Looking ahead to 2025, Roblox expects bookings to be between $5.2 billion and $5.3 billion with $800 million to $860 million in free cash flow.

The first quarter of 2025 guidance projects bookings to reach $1.138 billion, which is below what analysts had expected and has contributed to markets' reaction to the print.

Management attributed the disappointment in growth comparisons to the absence of new product launches and a high prepaid card purchase experienced in Q4 2023. The company is now undertaking initiatives to potentially accelerate bookings growth in the latter half of 2025. Roblox anticipates higher growth in the first half of 2025 compared to the second half as these initiatives take effect.