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Roblox cut its annual bookings forecast on Thursday, in a sign that people were dialing back on spending within its video-gaming platform amid an uncertain economic outlook and elevated levels of inflation.
Roblox shares fell more than 20% in early trading Thursday.
The lowered forecast marks the latest downbeat report from the gaming industry, which has laid off hundreds of employees and shut studios this year to cope with declining demand.
Electronic Arts also gave a weak revenue forecast earlier this week.
Roblox now expects full-year bookings to be between $4 billion and $4.10 billion, down from its earlier forecast of $4.14 billion to $4.28 billion. Its second-quarter bookings forecast of $870 million to $900 million was also below estimates.
The company said it was conservative with its second-quarter forecast as the Easter holiday, a period of high engagement on its platform, was during the first quarter this year compared with the second quarter a year earlier.
The gaming industry is grappling with lower engagement, which is expected to keep growth in the PC and console market below pre-pandemic levels through 2026, according to research firm Newzoo.
The number of hours gamers aged 13 or more spent on Roblox’s platform grew by 19% in the first quarter, the lowest growth rate for the company in about two years.
“That’s not unusual,” Roblox Chief Financial Officer Michael Guthrie said, adding that the company was adding a lot of older gamers who take a while to get settled and spend more time on the platform.
Roblox has also turned to digital ads to diversify its revenue. Earlier this month, it started displaying virtual billboards featuring content from brands such as Walmart and Warner Bros Discovery to users on its platform.
Roblox will build the infrastructure for the ad platform in 2024 and start providing forecast for ad revenue in 2025, Guthrie added.
