RBLX is likely to miss considerably on earnings after market close today
Roblox have already published estimates for April and May, meaning we already have two thirds of the puzzle:
April revenue: $189 million - $192 million May revenue: $194 million - $197 million
Q2 earnings will be published after market close today with a consensus estimate of 639.2 million in revenue and -0.25 EPS.
To meet the consensus estimate, the revenue for June would have to be 250m-256m, roughly a 30% increase over May. This seems highly unlikely.
Earlier in the year RBLX signaled that they expected the summer to be an opportunity for growth. There are indications that the opposite happened.
There are websites that track user activity across Roblox. This data is far from perfect, but it has previously served as an indication of change in user activity. This data suggests June having lower activity than May and July having even lower activity. ( Estimates for July will be published together with the Q2 earnings, helping with future guidance )
My simple thesis was that this was the first summer without social distancing since Covid, meaning less time (and money) has been spent on video games.
Microsoft, Sony, Nintendo and Nvidia have all reported reduced consumer spending on gaming in the second quarter. According to NPD, Americans spent 13% less on gaming in the second quarter.
Additionally, RBLX cited the strong dollar as one of the reasons for a “weak” May. The dollar was also strong in June, and even stronger in July.
Put all this together and an earnings miss seems highly likely.
I found very little data as to expenses, but what I did find (mostly hiring data) suggests increased expenses in Q2 vs Q1.
Based on available data and conjecture, I predict revenue to come in at 550-570 million for the quarter vs 639.2 million estimate, EPS of -0.28 vs -0.25 estimate, and revenue for July to be disappointing, suggesting a weak guidance.
RBLX shares are currently trading at 48.92, up 14% over the last week and up 23.91% over the last month.
Some sources:
https://www.cnbc.com/2022/08/08/nvidia-warns-on-second-quarter-revenue-shares-dip.html https://www.cnbc.com/2022/08/08/microsoft-xbox-sony-playstation-nintendo-video-game-earnings-round-up.html https://activeplayer.io/roblox/ https://ir.roblox.com/news/news-details/2022/Roblox-Reports-May-2022-Key-Metrics/default.aspx https://ir.roblox.com/news/news-details/2022/Roblox-Reports-First-Quarter-2022-Financial-Results/default.aspx
TLDR:
Based on available data and conjecture, I predict revenue to come in at 550-570 million for the quarter vs 639.2 million estimate, EPS of -0.28 vs -0.25 estimate, and revenue for July to be disappointing, suggesting a weak guidance.