Roblox shares soar 31% on Q3 earnings

Yahoo Finance's Brian Sozzi discusses Roblox earnings as the company doubled its revenue and has zeroed in on the metaverse.

Video transcript

JULIE HYMAN: Another company, you know, I always like to do market research on this one in my own household. Roblox is the one we're talking about. And my nine-year-old told me this morning, yes, there was an outage for a little while, because they were working on making the site better. That's what his take was on what happened. I think Roblox itself is still figuring out what caused an outage last month. Brian Sozzi, you had the chance to talk to the founder of the company about it.

BRIAN SOZZI: Yeah, it's very tough to follow an AMC silverback mention, Julie, but, nonetheless, I will do my best. And I think why you're seeing the stock up 31% here coming into the quarter, there was a lot of concern the street on how Roblox would monetize all the users on its platform. Well, this quarter, they finally showed that they're not only monetizing, they're monetizing, or making more money, off of those users perhaps a lot quicker than those bears on the street thought here.

The street really liked to see some of the metrics in this quarter here. And a couple that stood out to me, revenue up 102%, bookings up 28%, free cash flow up 7%, and I spent about a good 15 minutes late last night with Roblox's founder David Baszucki. And he sounded pretty upbeat to me. I have to be honest with you Julie, I think the path forward for him is he will continue to focus on ways to make more money from this platform, continue to improve monetization, that should alleviate some of the street concerns.

But, of course, any conversation with Baszucki is not really a conversation if you don't talk about the Metaverse. Roblox is seen as one of the early adopters of the Metaverse. And he told me, quote, long term, I think it's really early to understand interoperability, all of these things that are going to happen as this, the Metaverse, gets to be bigger and a bigger concept. And my question to him was, Julie, can you have multiple Metaverses existing side by side? Does Facebook have a Metaverse? Does Roblox have a Metaverse?

My takeaway just talking to David is it doesn't really matter. The Metaverse could be so big. You can have multiple ones, and everybody makes bank.

- Right, Brian, and, of course, there is already a considerable user base here on Roblox in terms of the Metaverse here. But just taking a look at average daily active users, those up 31% year on year to over 47 million. And I think a couple of things that stood out to me from the analyst call yesterday was about their demographics actually shifting a little bit. Now, of course, Roblox has typically been known as this company that targeted the younger generation, that had this young user base using their gaming platform.

But one of the things that Chief Business Officer Greg Donato noted yesterday was that they now have more users over the age of 13 than under, which I think is a really interesting demographic shift here. And Roblox is, of course, a company that was founded back in 2004. A number of its users have actually grown up using the platform and are, of course, moving into this older age group. And Roblox has said that it's going to try to offer different gaming platforms, abilities to engage with players of their same older age range.

So really trying to broaden out their user base even further, both in the US and internationally, and now with this little bit of an older user base as well, guys.

JULIE HYMAN: Yeah. And just a reminder for folks who are not as familiar with Roblox, Roblox itself is not a game, right. It is a platform on which developers design games. So we showed a little bit of video earlier that showed some of the many thousands of games, if not more, I don't even know how many games are on Roblox. It's a lot.