In short: Monetization trade-off. Q2 revenue +36% Y/Y to $1.47B and a GAAP loss per share of $(0.26), a $0.07 beat — but bookings grew only 8% to $1.56B, missing by $40M; DAUs +10% to 123 million yet sequentially down; hours engaged +5% to 29 billion; monthly unique payers +15% to 27 million. Shares fell about 14% after hours as the problem shifted from user acquisition to monetization. New-user sign-ups improved and retention stayed stable, but users — particularly those under 13 in the US and Canada — moved away from last year's highly monetized viral games toward newer and evergreen experiences that generate less spending per hour, and Roblox compounded the pressure by changing its discovery algorithm to prioritise 28-day retention over near-term monetization. Management argues better retention should eventually offset the spending reduction but declined to say when that crossover occurs. Age-check penetration reached 57% and DAUs are expected to return to sequential growth in Q3 on seasonality and reinstatement in Russia. The outlook was far worse: Q3 bookings guided to decline 14%–18% to $1.58–$1.65B with revenue growth slowing to 4%–10%, full-year guidance withdrawn, and Q3 free cash flow possibly between $(60)M and $5M as AI-infrastructure spending rises. (Recap, not a stance call.)
Roblox changed what its recommendation algorithm optimises for — from short-term spending to whether a player is still around 28 days later — and it worked exactly as designed, in both directions. Players, especially under-13s in the US and Canada, drifted from last year's heavily monetised viral hits toward newer, longer-lasting games that generate less spending per hour. So "bookings" (money actually spent, the number that matters more than reported revenue) grew only 8% and missed, daily users fell sequentially, and the stock dropped 14%. Management argues better retention eventually more than pays for the lost spending, but wouldn't say when that crossover arrives — and then withdrew full-year guidance entirely while guiding next quarter's bookings to decline 14–18%. Last quarter it was safety changes hurting new-user growth; this quarter the fix brought a different cost. A recap, not a call.
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