Roblox, a popular video-gaming platform, recently announced that it has cut its annual bookings forecast due to decreased spending within the platform. The company’s shares fell more than 20% in trading on Thursday as a result.
This news comes amidst challenges faced by the gaming industry, including layoffs and studio closures. Electronic Arts also recently gave a weak revenue forecast, indicating a broader trend in the industry.
Roblox now expects full-year bookings to be between $4 billion and $4.10 billion, down from previous forecasts. The second-quarter bookings forecast was also below estimates. The company attributed the lower forecast to a shift in the timing of the Easter holiday.
The gaming industry as a whole is facing lower engagement, impacting growth in the PC and console market. Roblox’s platform saw a 19% growth in the number of hours gamers spent, the lowest rate in about two years. Roblox Chief Financial Officer Michael Guthrie mentioned that the company was adding older gamers who take more time to settle and spend more time on the platform.
In an effort to diversify revenue, Roblox is partnering with brands like Walmart and Warner Bros Discovery for digital ads on its platform. The company plans to build infrastructure for the ad platform by 2024 and start providing forecasts for ad revenue in 2025.
Overall, Roblox’s decision to cut its bookings forecast reflects the broader challenges faced by the gaming industry. As the company looks to diversify its revenue streams, it remains to be seen how these changes will impact its future growth and performance.
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