For the first quarter ending 3/31/23, Roblox Corporation (NYSE: RBLX) reported record revenue of $655 million, up 22% over the previous year quarter. Bookings for the first quarter were $774 million, up 23% over the previous year. Roblox reported a loss of $268 million for the first quarter 2023 versus $160 million for Q1 2022.
Analysis
Roblox bookings were a record $899 million in the fourth quarter of 2022. Because bookings include deferred revenue, Q1 was expected to be strong. However, the results definitely exceeded expectations.
Of course, the downside is increased net losses. However, this is the cost of international expansion and will hopefully pay off down the road. Revenue grew in all regions in the first quarter, however the major growth was outside the core U.S. market. Revenue in the U.S./Canada and Europe grew 19% YOY, while growth in APAC was 42%.
The U.S./Canada region still accounts for 65% of Roblox revenue so there is still plenty of room for revenue growth. The big challenge for Roblox will be getting spending under control. However, it is worth noting that Roblox is taking a cautious approach to international growth. The company is focusing on insuring its product is safe and trustworthy and that is a major expense.
Overall Roblox’s results are a sign that the game market is doing well despite concerns over the economy and a decline in consumer spending. Strong first quarter bookings are a great sign.
Roblox is not a stock in the DFC Intelligence Video Game Stock Portfolio, but in hindsight, it probably should have been. Roblox has been one of the best performers of 2023, increasing 44% so far this year. Our major concern is that investor expectations are too high.
