roblox reports 23% year-on-year jump in bookings

The online gaming platform Roblox reported a 23% advance in bookings during the first quarter of the year and claimed that the metric is outpacing the growth of its platform development costs.

In its quarterly earnings report published yesterday, the California-based metaverse company announced that customers spent $773.8 million during the three months ended on 31 March.

Bookings Are Still Growing but at a Slower Pace

For Roblox, bookings are a non-GAAP operating metric that is recognized once a user purchased the company’s in-game currency – Robux. According to the firm’s disclosures, it takes customers an average of three days to spend their recently-purchased Robux by joining one of the platform’s experiences. One Robux is the equivalent of $1.

Even though Roblox’s bookings growth during this first quarter was positive, the pace at which the metric is expanding is slowing down. For example, Roblox’s bookings expanded by 39% in Q1 2022 on a year-on-year basis, by 140% in Q1 2021, and 46% in Q1 2020.

During this same period, Roblox (RBLX) generated revenues of $655.3 million resulting in a 22% year-on-year jump. The rate at which revenues are expanding also appears to be slowing down.

On a geographical basis, the United States and Canada (UCAN) continue to generate the majority of Roblox’s revenues. During this first quarter, this region accounted for 65% of the platform’s total top-line figure followed by Europe with 18%.

Same as other tech companies, Roblox is making adjustments to its organizational structure and operating budgets to better position the business at a time when the global economy is showing signs of an imminent slowdown.

In this regard, the Chief Executive Officer of Roblox, David Baszucki, commented: “With the momentum we see in bookings, we can now begin to slow our year-over-year increases in headcount and compensation expenses. As a result, we expect the bookings growth rate to exceed the growth rate in compensation starting in Q1 2024 and throughout 2024 and 2025, resulting in operating leverage”.

Moreover, Baszucki emphasized other initiatives including the ongoing construction of a Rlobox-owned Virginia-based data center and leveraging the power of artificial intelligence for moderation purposes in an effort to “reduce human cost”.

Roblox is Leveraging AI to Both Reduce Cost and Help Developers

Roblox plans to incorporate artificial intelligence not just to strengthen its back-end infrastructure and internal processes but also to make it easier for users to create their own experiences.

On 17 February, the company published a blog post regarding its vision for the future and the role of AI in its growth. In this document, the firm emphasized that it sees “an incredible opportunity” when it comes to building AI-centered solutions and tools to help developers.

“We are building a platform that will enable every user to be a creator – not just those comfortable with Roblox Studio and other 3D content creation tools”, the document highlights.

Roughly a month after, Roblox launched Code Assist and Material Generator – its two first AI-powered tools. Both of these are in beta version and are being tested by a handful of developers within the platform.

They function similarly to solutions like ChatGPT and Anthropic’s Claude. The user types a text prompt on the platform and the chatbot is designed to execute whatever is required. In the case of Material Generator, the solution helps developers create 3D objects via these prompts.

Meanwhile, Code Assist is a tool that can create pieces of code to give life to the objects and experiences created by users with the help of a large repository of Lua code the company has compiled.

“We are uniquely poised to accelerate our whole platform with AI-generative technology, and you’re seeing early signs of it now on material generation and code generation, but ultimately, it means 3D experience generation, it means avatar generation, it means the quality of real-time language translation, it means the quality of search and discovery”, Baszucki told analysts during the earnings call held right after the release of the firm’s Q1 2023 earnings report.

“…and because of the size of our user base and our 60 million to 70 million daily active users, we have an enormous opportunity to really reinforce, train, and accelerate the quality of our AI. So, keep an eye on that” the head of the metaverse company concluded.

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