Roblox Q3 Earnings Preview: Analyst Estimates, Key Items To Watch For Gaming Giant

Online gaming platform company Roblox Corporation RBLX will report second quarter financial earnings before market open Wednesday.

Here are the key earnings estimates, what analysts are saying and items for investors to watch.

Earnings Estimates: Analysts expect Roblox to report third quarter revenue of $829.91 million according to data from Benzinga Pro.

The company reported revenue of $701.72 million in the third quarter of the last fiscal year and has beaten revenue estimates in four of the last seven quarters.

Analysts expect Roblox to report a loss of 50 cents per share in the third quarter, in-line with the previous year. The company has missed earnings per share estimates in six of the last seven quarters.

What Analysts Are Saying: Roblox could have a positive setup into the third quarter, and Oppenheimer analyst Martin Yang suggests that the fourth quarter could see an uptick in bookings due to encouraging factors.

The analyst, who has a Perform rating and no price target, said that the company has pricing power for live service games.

"As a self-contained economy, Roblox has major control over a player's purchase model expansion for its in-game economy," Yang said.

The analyst also sees a positive impact from the launch of Roblox on Playstation, a console owned by Sony Group Corp SONY.

"Generally speaking, expansion and addition of business models to live services games will have a net positive impact on player spending. Turning on in-experience subscription is effectively allowing creators to add ‘battle passes' to their experiences."

Investors may have sold off Roblox shares unfairly after second quarter financial results, Bank of America analyst Omar Dessouky said.

The analyst, who has a Buy rating and price target of $54, said the fundamentals for Roblox are "excellent."

"Assuming growth does not disappoint, we expect RBLX to demonstrate that Bookings grew slightly faster than Infrastructure, Trust & Safety Opex," Dessouky said.

According to Raymond James analyst Andrew Marok, Roblox’s long-term expansion could be driven by a strategic pivot towards capturing more of the video game entertainment market and by aiming to attract an older demographic, which could serve as key growth catalysts.

The analyst, who initiated a Strong Buy rating and price target of $41 in October, said advertising growth is still early for the company and expansion into non-gaming areas like education could be coming to add to further growth.

Here's a look at other Roblox analyst ratings in the month of October:

• Truist: Upgrades from Hold to Buy, raises price target from $35 to $37
• Roth MKM: Buy rating, $48 price target
• Jefferies: Buy rating, lowers price target from $38 to $34
• BTIG: Buy rating, lowers price target from $54 to $52

Related Link: Warner, Roblox, Rivian And AMD CEOs Share Vision At The Code Conference 2023 – AI, Metaverse, And EVs Take Center Stage

Key Items to Watch: One area to watch in the quarter could be the China region, which comes after the company announced a small round of layoffs in October.

Another key item to watch is the company's launch on the PlayStation console platform, which experienced early success. At its launch, the game trailed only "Call of Duty: Modern Warfare 2" and "Fortnite" for player engagement, according to gaming data.

Success by Roblox on other gaming platforms could create a growth catalyst for the company and also a way to reach an older gaming audience, one of the company's key future growth priorities.

RBLX Price Action: Roblox shares are up 3.8% to $35.15 on Tuesday, versus a 52-week trading range of $24.88 to $47.65. Shares of Roblox are up 26% year-to-date in 2023.

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Photo: Roblox