By Zaheer Kachwala
(Reuters) -Roblox forecast annual bookings below estimates on Thursday, sparking fears that growth at the videogame platform was slowing after years of breakneck progress, sending its shares down 17%.
The company expects bookings for 2025 to be between $5.20 billion and $5.30 billion, the midpoint of which was below estimates of $5.27 billion, according to data compiled by LSEG.
Roblox's forecast adds to worries about the videogame industry, after a lackluster outlook from Electronic Arts (NASDAQ:EA), which blamed weak bookings - a key measure of in-game spending - on its struggling soccer franchise.
However, Roblox's projection points to a third consecutive year of roughly 20% growth in bookings, even as rivals grapple with weak spending stemming from high inflation.
"We're growing at a substantial premium to the overall gaming market. Right now, gaming is barely growing as a category," outgoing CFO Michael Guthrie told Reuters.
The overall video game industry, in comparison, likely grew by 2.1% in 2024, according to research firm Newzoo.
A push into new game genres, including those for older players, has fueled rapid growth at Roblox over the past two years and unlocked new revenue streams in ads and e-commerce.
Its free-to-play model paired with a surge in user-generated content has also helped Roblox buck the broader gaming slowdown.
Wedbush Securities analyst Michael Pachter called the stock reaction "unwarranted" and said it was "irrational" to expect Roblox to guide to a bigger number because of the company's long-term booking targets.
Pachter has an "outperform" rating on the stock with a PT of $83 - the highest on the street, according to LSEG data.
Daily active users, a measure of engagement, fell to 85.3 million in the fourth quarter, from 88.9 million in the prior quarter. Bookings of $1.36 billion missed estimates of $1.37 billion.
Guthrie blamed the weaker growth on tough comparisons with the year-ago quarter, when Roblox launched on Sony (NYSE:SONY)'s PlayStation consoles, driving a wave of new sign-ups and higher spending.
He also cited the platform's suspension in Turkey, where it was banned over safety and child abuse concerns — an issue that has long dogged Roblox.