Roblox user growth falls short amid safety overhaul

Roblox reported fewer daily active users than Wall Street expected in the second quarter, as stricter child-safety controls and changes to content recommendations disrupted engagement and spending across its gaming platform.

Average daily active users reached 123 million during the three months ended June, up 10% from a year earlier but down 7% from the first quarter. The sequential decline was sharper than investors had anticipated and marked a reversal from the rapid expansion recorded at the start of the year.

The weaker user figure accompanied a cautious third-quarter outlook that sent Roblox shares down about 14% in after-hours trading on Thursday. The company forecast bookings of between $1.58 billion and $1.65 billion, below market expectations of roughly $1.77 billion.

Bookings, which measure sales of the virtual currency Robux and other deferred revenue, are expected to fall between 14% and 18% from a year earlier during the third quarter. Revenue is projected at $1.41 billion to $1.49 billion, representing growth of between 4% and 10%.

Roblox said measures designed to protect younger users had created additional steps during registration and limited access to some social features. These changes have affected how quickly new accounts become active and how users communicate, discover games and remain engaged.

The company introduced mandatory age checks for access to chat in markets worldwide this year. Users may be required to verify their age through facial estimation or identification documents before gaining access to communication tools appropriate for their age group.

The measures followed sustained scrutiny from parents, regulators and child-safety campaigners over the risks young users face on gaming and social platforms. Roblox has also strengthened parental controls, restricted communication between adults and minors and introduced age-based limits for certain experiences.

Management said the safeguards were essential for the platform’s long-term development, even though they were causing short-term pressure on user acquisition and monetisation. The company is seeking to reassure families while preserving the social interaction that has helped make Roblox one of the world’s largest gaming platforms.

Changes to its recommendation algorithm also weighed on financial performance. Roblox adjusted its discovery system to give greater visibility to newer games and established titles that may have stronger long-term retention but generate less spending per hour than the viral experiences that dominated the platform last year.

The shift directed more younger users towards games with lower levels of monetisation. Management expects the weakness to persist while developers adapt and the recommendation system gathers more information about player behaviour.

Second-quarter bookings rose 8% from a year earlier to $1.56 billion, while revenue increased 36% to $1.47 billion. Both measures fell short of some market forecasts despite maintaining annual growth.

Hours engaged rose 5% to about 29 billion, indicating that users continued to spend substantial time on the platform even as the number of daily users declined from the previous quarter. Lower spending per hour, however, reinforced concerns that engagement growth was not translating into comparable gains in bookings.

The quarterly net loss narrowed to $183 million from $278 million a year earlier. Roblox continues to spend heavily on infrastructure, artificial intelligence, content discovery, developer tools and safety systems as it attempts to support a larger and more diverse audience.

The company is also accelerating efforts to attract adults, a group that typically generates higher revenue than children. Users aged 18 and above represented 27% of age-verified daily active users during the quarter. Adult users in the United States generate more than 50% higher average monetisation than those below 18.

Expanding among older players could reduce Roblox’s dependence on children and provide developers with opportunities to create more sophisticated genres, including competitive games, role-playing experiences, sports titles and virtual commerce services.

International growth remains another priority. Roblox has expanded language support, local payment options and regional partnerships to increase adoption outside North America. Growth in markets with lower average consumer spending, however, can dilute revenue per user even as overall participation rises.