Roblox reduced its yearly bookings prediction on Thursday, indicating a decrease in spending due to uncertain economic conditions and high prices.
Roblox shares closed 22% down on Thursday.
The revised projection is the latest negative report from the game industry, which has laid off hundreds of staff and closed studios this year to deal with dwindling demand.
Electronic Arts reported a dismal revenue projection earlier this week.
Roblox now expects full-year bookings to range between $4 billion and $4.10 billion, down from its previous estimate of $4.14 billion to $4.28 billion. Its second-quarter bookings projection of $870 million to $900 million was also below expectations.
The company said it was conservative with its second-quarter prediction since the Easter holiday, which is a strong engagement period on its platform, fell in the first quarter this year rather than the second quarter the previous year.
The gaming industry is dealing with weaker engagement, which is anticipated to maintain PC and console market growth below pre-pandemic levels until 2026, according to research firm Newzoo.
The number of hours gamers aged 13 and up spent on Roblox’s platform increased by 19% in the first quarter, the company’s slowest growth pace in almost two years.
“That’s not unusual,” Roblox Chief Financial Officer Michael Guthrie said, adding that the firm was adding a lot of older gamers who take longer to settle in and spend more time on the site.
Roblox has also used digital adverts to diversify its revenue. This month, the site began displaying virtual billboards with material from Walmart and Warner Bros Discovery to users.
Roblox will create the ad platform’s infrastructure in 2024 and begin presenting ad revenue forecasts in 2025, Guthrie said.
Roblox shares drop 22% as company cuts annual bookings forecast on muted player spending
