Published - February 16, 2023 @ 12:48 PM (EET)

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Shares of video game platform Roblox (NYSE:RBLX) climbed a staggering 26% on Wednesday, the most in nine months after the company reported bookings that topped estimates, fueled by a boom in playtime over the holiday season and a climb in active users.

Alleviating fears that the California-based company would begin running into inflation-related headwinds, Roblox reported fourth-quarter net bookings of $899.4 million, up 17% and above the forecasts of $876.2 million. 

Roblox reported $770.1 million in bookings in the year-ago quarter, a revenue figure which includes sales recognized during the quarter and deferred revenue.

Daily average users were 58.8 million, up 19% from a year earlier, while users spent over 12.8 billion hours engaged in Roblox during the fourth quarter. In January, the number of active users reached 65 million.

Traditionally a platform aimed at teens and preteens, Roblox has been steadily increasing its user base, drawing in more players who pay for extra services and perks. A record 13.4 million people paid for in-game content in the fourth quarter.

Compared with a net loss of $147.3 million, or 25 cents a share, Roblox reported a wider fourth-quarter net loss of $291.5 million, which amounts to 48 cents a share. However, the adjusted loss was still better than analysts' consensus estimate of 52 cents a share.

WHY IT MATTERS

Roblox's figures not only easily beat expectations, but the strong bookings also indicate that the video game developer might be suffering less than its peers.

On Wednesday's earnings call, CEO Dave Baszucki spoke about the company's progress. He said that while Roblox had to increase infrastructure spending in 2022, up by $400 million, it was still "able to run the company effectively cash-flow neutral for the year."

Finance chief Michael Guthrie said the company plans to cut spending by 25% to 30% in 2023 and to pull back its costs on new hiring.

Management said engagement on Roblox increased in all geographies in the fourth quarter, notably 28% in Europe, or about the same as its US and Canada markets.

PRICE ACTION:  Based on 14 analyst ratings from TipRanks over the last three months, the stock is a Hold (6 Buys, 4 Holds, and 4 Sells). The average price target of $37.38 implies a downside of -17.08%).