The order amount of the US game platform company Roblox in the fourth quarter fell short of analysts’ expectations, indicating that the rapid growth in performance in the past two years due to the epidemic has become a thing of the past.
Shares tumbled 14% in after-hours trading, even as CEO David Baszucki called on investors to take a “long-term view” on the company. Orders, which include revenue, deferred revenue and other adjusted items, rose 20% year-over-year to $770.1 million in the fourth quarter, Roblox reported Tuesday. Analysts on average had estimated the figure at $786.2 million.
Daily active users rose 33% to 49.5 million, slightly below analysts’ expectations of 50.5 million. Much of the company’s growth has come from Asia, Latin America and Europe, and roughly half of its users are children under 13.
This is also Roblox’s first annual report since it went public in March 2021. Baszuzi acknowledged that “our data has been affected in many ways” during the two years of the outbreak.
The worst year of the epidemic in 2020 is precisely the “big year” for the game industry. As a platform that lets players create their own games and worlds online, Roblox has captured the attention of as many as two-thirds of U.S. children ages 9 to 12.
But because of this, the company’s performance took a major hit when students returned to school and re-engaged in sports and other activities.
As the world starts to get back to normal, our absolute numbers continue to grow, Baszuzzi said, but “if you compare to the quarters last year when some key metrics doubled or tripled, the rate of growth has really declined.
As the pandemic eases, Roblox is also exploring the future of the metaverse, envisioning creating an immersive internet where people can interact, play, and work using their digital avatars.
While many companies are touting the benefits and growth potential of the metaverse, Roblox has gotten a head start as its users can already use their technology to create their own video games and virtual worlds. In 2021, users will spend more than 1 million hours in the company’s 1,900 “experiences.”
At the same time, Meta Platform recently announced that it is fully developing the metaverse, but it is facing a serious situation due to its poor performance.
According to Bloomberg Intelligence analyst Amine Bensaid, the two companies “have very different goals. From the vision of the metaverse that many people have, I don’t think either company is in a better position than Roblox. ”
Craig Donato, Roblox’s chief commercial officer, said that Meta’s push into the metaverse gives Roblox “a lot of confidence. Our goals are very strong, and we’re going to be devoting more and more time to these digital spaces.”
More Neto said the company sees the metaverse as a “long-term trend that we need to put our energy into, and we’ve been working on it for 15 years.” He added that the company is still considering whether to integrate blockchain technology.
Cross-platform capability is key in the traditional definition of the Metaverse, and Roblox currently only supports PC, mobile devices, and Microsoft’s Xbox One console. Doneto said in the interview that the company is “actively exploring more platforms, but will not announce anything until it officially moves in.”
Roblox shares rose 130% last year, but have fallen 29% this year. Matthew Ball, managing director of venture capital firm Epyllion, said the rise and fall of Roblox are in line with other metaverse stocks, such as game tech company Unity Software. Ball expects Roblox to continue growing.
“It has the most powerful flywheel in the game industry today, and billions of people are not part of a socially-focused virtual world,” he said. Competitors take over, but it’s now like a Western virtual world platform.”
Content moderation is one such difficulty. In 2021, multiple investigative reports from news outlets revealed a number of inappropriate content on the platform, including sex clubs, fascist or white supremacist role-playing.
In November, when Roblox launched a new spatial voice feature, some media revealed that users would use it to make obscene sounds and foul language. To use these features, users must upload photos and profiles that prove they are at least 13 years old.
Roblox employs moderators, about 80 percent of whom are outsourced and uses sophisticated artificial intelligence and machine learning techniques to moderate content.
Baszuzzi said some of the news about Roblox’s inappropriate content was exaggerated. “We’ve been improving the AI and filtering capabilities, and we’re optimistic about where we’re going,” he said.
He also added that Roblox has a “zero-tolerance approach” to violations of the platform’s norms.