My investing muse - Roblox fell 15% after earnings report (16Feb2022)

‌$Roblox Corporation(RBLX)$  ‌closed at $73.30 at 4pm (EST) but fell ‌15% during after-hours after the earnings disappoint.

Roblox creates a game platform where players can create their own worlds, allowing interaction, play in the metaverse.  Roblox sells virtual currency to players to purchase digital items in the game. Roblox has deals with several big brands like Nike and NFL.

From the latest earnings, EPS came at a loss of 0.25 whereas the forecast is 0.1369.  For the revenue, the forecast was $763.29M but the actual was $568.77M, a significant miss for both EPS and revenue.

The following highlights are extracted from their website:

Fourth Quarter 2021 Financial Highlights

Revenue increased 83% over Q4 2020 to $568.8 million

Net cash provided by operating activities of $122.2 million; Free cash flow was $77.3 million

Bookings increased 20% over Q4 2020 to $770.1 million

Average Daily Active Users (DAUs) were 49.5 million, an increase of 33% year over year

Hours Engaged were 10.8 billion, an increase of 28% year over year

Average Bookings per DAU (ABPDAU) was $15.57

Full Fiscal Year 2021 Financial Highlights

Revenue increased 108% over fiscal year 2020 to $1.9 billion

Net cash provided by operating activities of $659.1 million; Free cash flow was $558.0 million

Bookings increased 45% over 2020 to $2.7 billion

DAUs were 45.5 million, an increase of 40% year over year

Hours Engaged were 41.4 billion, an increase of 35% year over year

ABPDAU was $59.85

January 2022 Key Metric Estimates

Revenue was between $203 million - $206 million, up 64% - 66% year over year

DAUs were 54.7 million, up 32% from January 2021

Hours engaged were 4.2 billion, up 26% year over year

Bookings were between $220 million and $223 million, up 2% - 3% year over year

ABPDAU were between $4.02 - $4.08, down 22% - 23% year over year

While there was some good news on increased hours of engagement, revenue and bookings increase.  It remains of concern that the company continued to suffer losses.  In fact, they have never met their EPS target and met/exceed revenue target twice since Q2 2021.

What to do with Roblox?

As the 1H chart above, there was a big drop following the disappointing news.  It would take a few days to bottom-up from this drop and it is best to wait for a few days/weeks before considering taking up a LONG position in this company.  Personally, I would prefer to observe the company from the side till they are able to demonstrate profitability in the coming earnings.  The company will need to improve both sales and manage their costs better to get into the black.