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- Roblox says recommendation algorithm now optimises for long-term retention, shifting impressions to highly retentive games and reducing near-term monetisation for younger users.
- Naveen Chopra says engagement shifted from high-monetising 2025 vintage viral games to new and evergreen experiences with lower hourly monetisation.
- Roblox expects monetisation weakness to continue, will improve recommendations using age-check data, invest in AI tools like Build, raising infrastructure costs.
Roblox shares have declined 70% after second quarter results showed monetisation was 2% below company guidance, which impacted overall bookings.
The share decline followed lower-than-expected average bookings per daily active user among the under-13 group, due to a focus on long-term retention over short-term monetisation.
“We attribute the unforeseen monetisation shortfall to a greater-than-expected shift of engagement from high monetising 2025 vintage viral games to a combination of new and evergreen experiences with lower hourly monetisation,” said chief financial officer Naveen Chopra during an earnings call.
“This underlying mix shift was compounded by changes in our recommendation algorithm, which optimises for long-term retention and is, therefore, providing more impressions for highly retentive games at the expense of near-term monetisation. And in Q2, the bookings impact of this trade-off on younger users was greater than we anticipated.”
Chopra told investors that while it expects to “mitigate the monetisation headwind” by improving its algorithms to serve better recommendations with age-check data, “monetisation weakness is likely to continue.”
Roblox forecasts third quarter bookings between $1.58 billion and $1.65 billion, representing a year-over-year decline of 14% to 18%.
Chopra also noted that investments in AI-powered tools, including the recently announced Build, “are expected to result in higher infrastructure costs.”
“For Q4, increasing variability and continued updates to our platform lead to a wide range of potential outcomes; and therefore, we are not providing revised full-year guidance at this time.”
“While our expectations for the remainder of the year have changed significantly, we have conviction that we’re making the right trade-offs to continue our role as an industry disruptor. Investments in AI, content diversification, long-term retention and safety, though creating near-term friction, position us to maximise our share of the global gaming market.”
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