Roblox shares fell 70% after the second-quarter results released by the company showed monetization 2% below the company's guidance, which affected the period's bookings.
The decline came after the average daily active user bookings (ABPDAU) among the audience under 13 years old fell short of expectations, due to the company's focus on long-term retention rather than short-term monetization.
"We attribute the unexpected monetization shortfall to a greater-than-expected shift in engagement, from high-monetization viral games of 2025 to a mix of new and established experiences with lower monetization per hour," said Naveen Chopra, Roblox's chief financial officer (CFO), on an earnings call.
"That mix shift was compounded by changes to our recommendation algorithm, which optimizes long-term retention and therefore gives more impressions to high-retention games at the expense of short-term monetization. In the second quarter, the impact of that trade-off on younger users was greater than we anticipated."
Chopra told investors he expects to "mitigate the monetization headwind" by improving algorithms to offer better recommendations with age-verification data, but that "the monetization weakness should continue."
Forecast for the third quarter
Roblox forecasts bookings between US$ 1.58 billion and US$ 1.65 billion in the third quarter, a year-over-year decline of 14% to 18%.
The executive also said that investments in artificial intelligence tools, including the recently announced Build, should raise infrastructure costs.
No revised annual guidance
"For the fourth quarter, increasing variability and ongoing updates to our platform lead to a wide range of possible outcomes; therefore, we are not providing revised guidance for the full year at this time," Chopra said.
"While our expectations for the remainder of the year have changed significantly, we are confident that we are making the right choices to continue our role as an industry disruptor. Investments in AI, content diversification, long-term retention and safety, while creating short-term friction, position us to maximize our share of the global gaming market," the CFO said.
