Roblox shares fall 70% following lower-than-expected monetisation during Q2

Roblox shares plummeted by 70% after the company's second quarter results revealed monetisation fell 2% short of the projected figures. This downturn was primarily attributed to a decline in average bookings per daily active user among users under the age of 13. The company's decision to prioritize long-term retention over short-term gains seemed to have backfired, as there was an unexpected shift in engagement from high-earning, viral games from 2025 to a mix of newer and more established experiences with lower hourly monetisation.

CFO Naveen Chopra explained this shift during an earnings call, attributing the shortfall to the algorithm's focus on retention, which generates more impressions for games that are highly engaging in the long run but yields less immediate monetisation. The impact of this trade-off was particularly pronounced in Q2 among younger users, exceeding expectations.

Chopra assured investors that the company intends to address the monetisation challenge by refining its algorithms to incorporate age-check data, but expects this monetisation weakness to persist. The company is forecasting third-quarter bookings to range between $1.58 billion and $1.65 billion, marking a year-over-year decline of 14% to 18%.

Chopra also highlighted that investments in AI-driven tools, such as the new Build platform, will likely increase infrastructure costs. For the fourth quarter, the wide range of potential outcomes due to ongoing platform updates leaves the company without a revised full-year guidance. Despite the significant change in expectations for the rest of the year, Roblox remains confident in its strategy as an industry disruptor, driven by investments in AI, content diversification, long-term retention, and safety, even if these measures create short-term challenges.