roblox lowered its full-year booking forecast on Thursday, indicating that people are holding back on spending on its video game platform amid an uncertain economic outlook and rising inflation levels.
Roblox stock fell more than 20% in early trading Thursday.
The downward revision to the forecast marks the latest gloomy report for the games industry, which has laid off hundreds of employees and shuttered studios this year in response to declining demand.
electronic arts also gave a weak earnings outlook earlier this week.
Roblox now expects full-year bookings to be between $4 billion and $4.1 billion, a downward revision from its previous forecast of $4.14 billion to $4.28 billion. Bookings forecast for the second quarter of $870 million to $900 million also fell short of expectations.
The company said its outlook for the second quarter was conservative because the first quarter of this year was during the Easter holidays, when engagement on the platform was high compared to the second quarter of the same period last year.
The gaming industry is suffering from a decline in engagement, which will cause growth in the PC and console markets to remain below pre-pandemic levels through 2026, according to research firm Newzoo.
The number of hours spent on Roblox’s platform by gamers ages 13 and older increased by 19% in the first quarter. This was the company’s slowest growth rate in nearly two years.
“This is not unusual,” Roblox Chief Financial Officer Michael Guthrie said, adding that the company is adding a large number of older gamers who take longer to get used to and spend more time on the platform. added.
Roblox is also turning to digital advertising to diversify its revenue. Earlier this month, we began displaying virtual billboards featuring branded content, including: walmart and warner bros discovery to users on that platform.
Guthrie added that Roblox will build out its ad platform infrastructure in 2024 and begin providing ad revenue forecasts in 2025.