With tech stocks out of favor, the gaming-platform operator probably needs to notably exceed Wall Street’s expectations to keep the stock from sinking further.
Key Points
- Wall Street is expecting fourth-quarter revenue to soar 148% year over year.
- Analysts also project that Q4 adjusted loss per share will widen 27%.
- Along with the headline numbers, cash flows and user engagement metrics will be important.
Roblox (NYSE:RBLX), a gaming-platform operator, is slated to report its fourth-quarter and full-year 2021 results after the market close on Tuesday, Feb. 15. An analyst conference call is scheduled for the following day at 8:30 a.m. ET.
Investors will probably be approaching the report with cautious optimism. The reasons for optimism? Roblox has been posting strong revenue growth since it became publicly traded in March 2021 via a direct listing (rather than a traditional initial public offering) on the New York Stock Exchange. Moreover, the company has the potential of being a major participant in the burgeoning metaverse.
The reasons for caution? Last quarter, Roblox slightly beat Wall Street’s earnings expectation, but it has significantly missed analysts’ bottom-line estimate in the previous quarters it’s reported since going public. At this early stage in its journey as a public entity, investors have been more concerned with revenue growth than with earnings. However, in 2022, investors will likely be placing more importance on the bottom line for all companies than they did in 2021. Stocks in general and especially those in the technology realm have been under pressure this year because Federal Reserve interest rate hikes are on the near-term horizon.
As for Roblox stock, it closed at $68.93 on Friday, Jan. 21. That’s up slightly from its $64.50 opening price on its first day of trading, though down 49% from its closing peak of $134.72, reached on Nov. 19, 2021.
With this context in mind, here’s what to watch in Roblox’s upcoming fourth-quarter report.
Image source: Getty Images.
Roblox’s key quarterly numbers
| Metric | Q4 2020 Result | Wall Street’s Q4 2021 Consensus Estimate | Wall Street’s Projected Change |
|---|---|---|---|
|
Revenue |
$310.0 million |
$767.6 million |
147% |
|
Adjusted earnings (loss) per share |
($0.11) |
($0.14) | N/A. Loss expected to widen 27%. |
Data sources: Roblox and Yahoo! Finance.
For additional context, in the third quarter, revenue soared 102% year over year to $509.3 million. This growth is particularly impressive when you consider the company faced tough year-over-year comparables because of the pandemic. In the third quarter of 2020 — which was before vaccines started rolling out — people were still staying home much more than usual. This dynamic drove a surge in video gaming, among other activities.
In the third quarter, Roblox posted a net loss of $74 million, or $0.13 per share, compared to a net loss of $48.6 million, or $0.26 per share, in the year-ago period. That said, the company is profitable from a cash standpoint. Operating cash flow slipped 2% year over year to $181.2 million and free cash flow rose 7% to $170.6 million.
Key metrics
Investors should also focus on user engagement metrics. Last quarter, revenue bookings increased 28% to $637.8 million, average daily active users (DAUs) jumped 31% to 47.3 million, and hours engaged rose 28% to 11.2 billion.
Average bookings per DAU, however, edged down 2% to $13.49. The company attributed this slight decline to a shift in the geographic mix of its user base. Last quarter, user growth was highest in the Asia Pacific region, with users in this region reaching 20% of Roblox’s total DAUs.
This article represents the opinion of the writer, who may disagree with the “official” recommendation position of a Motley Fool premium advisory service. We’re motley! Questioning an investing thesis — even one of our own — helps us all think critically about investing and make decisions that help us become smarter, happier, and richer.
Beth McKenna has no position in any of the stocks mentioned. The Motley Fool owns and recommends Roblox Corporation. The Motley Fool has a disclosure policy.
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