Roblox's Earnings Surprise - Analyst Says Adjusted EBITDA Margins Can Comfortably Increase More Than 10%

Benchmark analyst Mike Hickey reiterated a Buy rating on Roblox Corp RBLX with a price target of $46, up from $35.

Roblox's Q3 2023 performance demonstrated a remarkable 20% net bookings increase and a strategic reduction in expenses, positioning the company for sustained growth and profitability with significant user base expansion across key global markets. 

Growth is poised to accelerate through expanding its player base, tapping emerging international markets, monetizing an advertising platform, innovating with AI, and expense growth controls for improved operating leverage.

The analyst projects Q4 revenue of $1.07 billion (consensus $1.06 billion).

Roth MKM analyst Eric Handler maintained a Buy and a price target of $50.

Roblox has the potential to expand from one to three bookings segment drivers in the next couple of years. Advertising should gain momentum in 2024, and real-world e-commerce hopefully get layered in by 2025. 

Given these opportunities and mid- to high-teens DAU growth, the analyst sees higher bookings and adjusted EBITDA margin expansion due to operating leverage.

The analyst projects Q4 revenue of $1.07 billion.

Piper Sandler analyst Thomas Champion reiterated an Overweight with a price target of $50, up from $45.

Champion continues to view RBLX as a unique asset investing in a large market and opportunity. Bookings in 3Q were strong and accelerated versus FY22 and FY21. 

The analyst noted a more substantial commitment to operating leverage that was lacking at the 2Q23 call. Champion is constructive on the advertising opportunity and views it as a catalyst into FY24. 

The growth in older cohorts is also impressive, and the analyst boosts FY24 bookings and EBITDA.

The analyst projects Q4 revenue of $758.1 million.

Wedbush analyst Nick McKay maintained an Outperform with a price target of $49, up from $37.

The analyst expects Roblox to continue growing its bookings at a 10% or higher rate for the foreseeable future, suggesting that adjusted EBITDA margins can comfortably increase by more than 10%. 

McKay's bookings expectations may prove conservative, particularly given that Roblox grew by nearly double that figure in Q3:23 and that the company intends to begin monetizing brands more aggressively next year, which should be highly accretive.

The analyst projects Q4 revenue of $1.08 billion.

Stifel analyst reiterated a Buy rating with a price target of $44, up from $41.

Roblox reported better-than-expected 3Q results, propelling the shares higher during Wednesday trading. Following a 2Q update that disappointed the market, the company took notice and responded. 

As per the analyst, the strong booking growth, adjusted EBITDA margin improvement, and the introduction of quarterly and annual guidance drove the stock.

The analyst projects Q4 revenue of $1.07 billion.

Price Action: RBLX shares traded lower by 3.54% at $37.92 on the last check Thursday.