(Reuters) -Roblox Corp reported a larger-than-expected quarterly loss on Wednesday, as the gaming platform spent more on hiring and its infrastructure, overshadowing solid user growth and sending its shares down 17%.
Growth has been slowing in the videogame sector this year as more people step outdoors and reserve spending for essential items in the face of the highest inflation in decades.
The company's loss ballooned to 50 cents per share in the three months ended Sept. 30, from 13 cents a year earlier. Analysts were expecting a loss of 35 cents, according to Refinitiv data.
That was mostly due to a 40% surge in total costs at Roblox that is among the key metaverse players and has a much younger audience than most major gaming companies.
The company will continue to hire but "not quite at the same rate of hiring next year," said Chief Financial Officer Michael Guthrie on a call with analysts. Earlier in the day, social media giant Meta Platforms Inc announced a 13% cut to its workforce, following similar moves by Snap Inc (NYSE:SNAP), Microsoft Corp (NASDAQ:MSFT) and Netflix Inc (NASDAQ:NFLX).
Revenue grew 2% to $517.7 million in the reported quarter, and bookings were up 10% to $701.7 million.
Bookings refer to Roblox's virtual currency Robux that players buy that can be used upgrade players' avatars by buying in-game items such as clothing, pet, collectibles or accessories.
The gaming company said it changed the period of estimated paying user life to 28 months from 25 months, which resulted in a $111 million drop in revenue during the reporting quarter. It also resulted in lower costs by $25.5 million.
Average daily active users (DAUs) were 58.8 million at end of the Sept. quarter, up 24% from last year.