Gaming metaverse operator Roblox (NYSE:RBLX) beat Wall Street’s revenue expectations in Q1 CY2025, with sales up 29.2% year on year to $1.04 billion. On the other hand, next quarter’s revenue guidance of $1.03 billion was less impressive, coming in 3% below analysts’ estimates. Its GAAP loss of $0.32 per share was 20.4% above analysts’ consensus estimates.
Revenue: $1.04 billion vs analyst estimates of $1.00 billion (29.2% year-on-year growth, 3.3% beat)
EPS (GAAP): -$0.32 vs analyst estimates of -$0.40 (20.4% beat)
Adjusted EBITDA: $57.96 million (5.6% margin)
The company slightly lifted its revenue guidance for the full year to $4.33 billion at the midpoint from $4.30 billion
EBITDA guidance for the full year is $235 million at the midpoint
Operating Margin: -24.6%, up from -37.7% in the same quarter last year
Free Cash Flow Margin: 41.2%, up from 12.2% in the previous quarter
Daily Active Users: 97.8 million, up 20.1 million year on year
Market Capitalization: $45.48 billion
“In Q1 2025, all of our results were above the guidance we provided on our Q4 2024 earnings call as we continue to deliver on several key growth initiatives. In addition to our focus on raw performance and quality, investments in the virtual economy and search and discovery are driving growth in platform monetization, bookings, and creator earnings. During the quarter, Roblox creators earned a record $281.6 million and over the past 12 months, more than 100 Roblox developers earned over $1 million. As a whole, the community is on pace to exceed $1 billion of earnings for the full year,” said David Baszucki, founder and CEO of Roblox.
Company Overview
Best known for its wide assortment of user-generated content, Roblox (NYSE:RBLX) is an online gaming platform and game creation system.
Sales Growth
A company’s long-term performance is an indicator of its overall quality. Any business can experience short-term success, but top-performing ones enjoy sustained growth for years. Thankfully, Roblox’s 22.8% annualized revenue growth over the last three years was excellent. Its growth beat the average consumer internet company and shows its offerings resonate with customers, a helpful starting point for our analysis.
Roblox Quarterly Revenue
This quarter, Roblox reported robust year-on-year revenue growth of 29.2%, and its $1.04 billion of revenue topped Wall Street estimates by 3.3%. Company management is currently guiding for a 15.6% year-on-year increase in sales next quarter.
Looking further ahead, sell-side analysts expect revenue to grow 18.8% over the next 12 months, a deceleration versus the last three years. Despite the slowdown, this projection is healthy and implies the market is forecasting success for its products and services.
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Daily Active Users
User Growth
As a video gaming company, Roblox generates revenue growth by expanding both the number of people playing its games as well as how much each of those players spends on (or in) their games.
Over the last two years, Roblox’s daily active users, a key performance metric for the company, increased by 22.1% annually to 97.8 million in the latest quarter. This growth rate is among the fastest of any consumer internet business and indicates its offerings have significant traction.
Roblox Daily Active Users
In Q1, Roblox added 20.1 million daily active users, leading to 25.9% year-on-year growth. The quarterly print was higher than its two-year result, suggesting its new initiatives are accelerating user growth.
Revenue Per User
Average revenue per user (ARPU) is a critical metric to track because it measures how much revenue each user generates, which is a function of how much paying users spend on its games.
Roblox’s ARPU growth has been decent over the last two years, averaging 5.1%. Its ability to increase monetization while effectively growing its daily active users demonstrates the value of its platform.
Roblox ARPU
This quarter, Roblox’s ARPU clocked in at $10.58. It grew by 2.6% year on year, slower than its user growth.
Key Takeaways from Roblox’s Q1 Results
We enjoyed seeing Roblox increase its number of daily active users and outperform Wall Street’s revenue, EPS, and EBITDA estimates. We were also glad it raised its full-year revenue guidance. Overall, this was a good quarter. The stock traded up 3.6% to $69.39 immediately after reporting.
