RBLX Q1 Earnings Call: Revenue, User Growth, and AI-Driven Monetization Take Center Stage
Gaming metaverse operator Roblox (NYSE:RBLX) reported revenue ahead of Wall Street's expectations in Q1 CY2025, with sales up 29.2% year on year to $1.04 billion. On the other hand, next quarter's revenue guidance of $1.03 billion was less impressive, coming in 0.8% below analysts' estimates. Its non-GAAP profit of $0.21 per share was significantly above analysts' consensus estimates.
Is now the time to buy RBLX? Find out in our full research report (it's free).
Revenue: $1.04 billion vs analyst estimates of $1 billion (29.2% year-on-year growth, 3.3% beat)
Adjusted EPS: $0.21 vs analyst estimates of -$0.39 (significant beat)
Adjusted EBITDA: $205.1 million vs analyst estimates of $158.2 million (19.8% margin, 29.6% beat)
The company slightly lifted its revenue guidance for the full year to $4.33 billion at the midpoint from $4.3 billion
EBITDA guidance for the full year is $235 million at the midpoint, below analyst estimates of $1.08 billion
Operating Margin: -24.6%, up from -37.7% in the same quarter last year
Free Cash Flow Margin: 41.2%, up from 12.2% in the previous quarter
Daily Active Users: 97.8 million, up 20.1 million year on year
Market Capitalization: $50.25 billion
Roblox delivered revenue growth above Wall Street's expectations in Q1, which management attributed to expanded daily active user numbers and significant engagement growth across key regions and age groups. CEO David Baszucki noted the platform's progress with genre diversification, tools for creators, and advancements in AI-driven moderation and recommendation systems. These operational enhancements supported higher developer earnings and improved cost efficiencies.
For the coming quarters, management pointed to ongoing investment in platform technology, regional pricing strategies, and new monetization avenues such as advertising and e-commerce. CFO Mike Guthrie indicated that while margin improvement has been substantial, the pace is expected to moderate, with additional gains coming from operational efficiencies and AI adoption. Management also highlighted the early-stage nature of several initiatives, particularly around differential pricing and advertising partnerships.
Revenue and user growth in Q1 were driven by broader engagement and platform improvements, while management emphasized the impact of new monetization strategies and technology investments.
Global DAU Expansion: Roblox saw strong daily active user (DAU) growth in markets such as APAC and India, with over-13 age demographics increasing engagement, signaling successful international and older user expansion.
Creator Earnings Acceleration: Initiatives like differential and regional pricing, alongside price optimization tools, led to higher median earnings for participating creators and contributed to over $1 billion in projected annual creator payouts for the first time.
AI-Powered Efficiency: Management highlighted operational cost improvements driven by AI, particularly in trust and safety systems, content moderation, and AI-powered development tools for creators, resulting in slower growth in personnel costs relative to revenue.
Genre and Content Diversification: Strategic focus on expanding into genres such as RPGs, sports racing, and battle games contributed to a 69% year-over-year growth in these areas, broadening the appeal and monetization potential of the platform.
Advertising and Brand Activations: New ad formats and brand partnerships, including a collaboration with Google and high-profile activations like Chipotle and NASCAR, were cited as early contributors to platform monetization, with further scale-up expected as these initiatives mature.
Roblox's outlook is shaped by its focus on expanding monetization options, driving operational efficiency, and pursuing international growth, while balancing investments in technology and content diversity.
Broader Monetization Tools: Expansion of advertising partnerships, regional pricing, and direct payment methods are expected to unlock new revenue streams and improve profitability as adoption widens.
Operational Leverage from AI: Continued integration of AI across moderation, development, and platform infrastructure should yield further cost efficiencies and support margin stability.
International and Demographic Growth: Management sees significant runway in growing the user base among over-13 demographics and in international markets, which could help offset potential macroeconomic headwinds or saturation in core regions.
Matthew Cost (Morgan Stanley): Asked about sustaining genre growth and platform diversity; management pointed to ongoing investment in technology, economics, and creator incentives as key levers.
Matthew Cost (Morgan Stanley): Inquired about the impact of differential pricing and direct payments on margins; CFO Mike Guthrie described these efforts as early-stage but showing signs of positive margin contribution.
Jason Bazinet (Citigroup): Questioned Roblox's resilience in a macroeconomic downturn; CEO David Baszucki stated that the platform's low-cost entertainment model and past performance suggest some defensiveness, but innovation is not the sole factor determining resilience.
Clark Lampen (BTIG): Sought insight into passive monetization opportunities, especially through ads; management said advertising is growing but not yet a major contributor, and highlighted upcoming ad products and partnerships.
Shweta Khajuria (Wolfe Research): Asked about the rate of margin improvement and AI tools' benefits; CFO Mike Guthrie noted margins have improved rapidly but will moderate, while AI is expected to boost both efficiency and creative output.
Looking ahead, the StockStory team will be monitoring (1) the progress of advertising and e-commerce integrations and their impact on revenue, (2) the effectiveness of regional pricing and differential payment initiatives in boosting creator and platform earnings, and (3) sustained international and over-13 user growth. We will also watch for updates on AI-driven tools, both for operational efficiency and creator productivity.
Roblox currently trades at a forward EV/EBITDA ratio of 42.4×. At this valuation, is it a buy or sell post earnings? The answer lies in our free research report.
Market indices reached historic highs following Donald Trump's presidential victory in November 2024, but the outlook for 2025 is clouded by new trade policies that could impact business confidence and growth.
While this has caused many investors to adopt a "fearful" wait-and-see approach, we're leaning into our best ideas that can grow regardless of the political or macroeconomic climate. Take advantage of Mr. Market by checking out our Top 6 Stocks for this week. This is a curated list of our High Quality stocks that have generated a market-beating return of 175% over the last five years.
Stocks that made our list in 2019 include now familiar names such as Nvidia (+2,183% between December 2019 and December 2024) as well as under-the-radar businesses like Comfort Systems (+751% five-year return). Find your next big winner with StockStory today.
Try Our AI Features
Explore what Daily8 AI can do for you:
Comments
No comments yet...
Related Articles
Yahoo
23 minutes ago
- Yahoo
Graham Corporation (GHM) Reports Q1: Everything You Need To Know Ahead Of Earnings
Industrial fluid and energy systems manufacturer Graham Corporation (NYSE: GHM) will be reporting results tomorrow before market open. Here's what to look for. Graham Corporation missed analysts' revenue expectations by 5% last quarter, reporting revenues of $47.04 million, up 7.3% year on year. It was a mixed quarter for the company, with a solid beat of analysts' EPS estimates but full-year revenue guidance slightly missing analysts' expectations. Is Graham Corporation a buy or sell going into earnings? Read our full analysis here, it's free. This quarter, analysts are expecting Graham Corporation's revenue to grow 13.4% year on year to $55.67 million, in line with the 14% increase it recorded in the same quarter last year. Adjusted earnings are expected to come in at $0.19 per share. Analysts covering the company have generally reconfirmed their estimates over the last 30 days, suggesting they anticipate the business to stay the course heading into earnings. Graham Corporation has missed Wall Street's revenue estimates twice over the last two years. Looking at Graham Corporation's peers in the engineered components and systems segment, some have already reported their Q1 results, giving us a hint as to what we can expect. Regal Rexnord's revenues decreased 8.4% year on year, beating analysts' expectations by 3%, and Arrow Electronics reported a revenue decline of 1.6%, topping estimates by 7.2%. Regal Rexnord traded up 13.6% following the results while Arrow Electronics was also up 3.6%. Read our full analysis of Regal Rexnord's results here and Arrow Electronics's results here. Investors in the engineered components and systems segment have had steady hands going into earnings, with share prices up 1.5% on average over the last month. Graham Corporation is up 16.5% during the same time and is heading into earnings with an average analyst price target of $52.67 (compared to the current share price of $42). Unless you've been living under a rock, it should be obvious by now that generative AI is going to have a huge impact on how large corporations do business. While Nvidia and AMD are trading close to all-time highs, we prefer a lesser-known (but still profitable) semiconductor stock benefiting from the rise of AI. Click here to access our free report on our favorite semiconductor growth story.
Business Insider
an hour ago
- Business Insider
TGT, CSCO, or DAL: Which Value Stock Could Offer the Highest Return?
Amid the ongoing macro uncertainty, value stocks could be an attractive addition to investors' portfolios. Value stocks trade below their intrinsic value, thus having the potential to outperform the market over the long term. These stocks are often undervalued relative to their fundamentals and growth potential. Using TipRanks' Stock Comparison Tool, we placed Target (TGT), Cisco (CSCO), and Delta Air Lines (DAL) against each other to find the value stock that could offer the highest return. Confident Investing Starts Here: Target (NYSE:TGT) Big-box retailer Target has been struggling to thrive due to intense competition, company-specific issues, and macro pressures. The company delivered disappointing results for the first quarter of Fiscal 2025 and lowered its full-year sales guidance, blaming tariff uncertainty, weak discretionary spending, and consumer backlash to the rollback of key DEI (diversity, equity, and inclusion) policies. Target has been losing market share to other retailers. It has greater exposure to discretionary items than groceries or essentials compared to rivals like Walmart (WMT). This is disadvantageous for Target, as consumers are cautious about their discretionary spending in a challenging macro backdrop. Currently, TGT stock trades at a forward P/E or price-to-earnings (adjusted) multiple of 13.2x, which is about 19.6% below the sector average. Is TGT Stock a Buy, Hold, or Sell? Recently, Guggenheim analyst John Heinbockel cut the price target for Target stock to $115 from $155, while maintaining a Buy rating, saying 'challenging fundamentals have prevailed over a modest valuation during the past year,' with the stock underperforming the S&P 500 (SPX) amid a 20% reset in 2026 EPS expectations. The 5-star analyst noted that the operating outlook for Target is uncertain due to the sequential pressure on comparable sales. That said, Heinbockel remains bullish on TGT stock due to its valuation, with the P/E multiple based on 2025 earnings appearing 'undemanding' at 13.2x, compared to nearly 16x a year ago. The analyst also highlighted TGT's dividend and potential buyback efforts, which together represent an 8% total shareholder return. Overall, Wall Street has a Moderate Buy consensus rating on Target stock based on 10 Buys, 20 Holds, and one Sell recommendation. The average TGT stock price target of $103.04 indicates about 6% upside potential from current levels. TGT stock is down 28% year-to-date. Target stock's dividend yield stands at 4.6%. Cisco Systems (NASDAQ:CSCO) Cisco stock has risen about 12% so far in 2025, as the networking and security solutions provider is expected to gain from artificial intelligence (AI)-led demand. The company recently delivered better-than-projected earnings and revenue for the third quarter of Fiscal 2025. Notably, Cisco reported more than $600 million in AI infrastructure orders from web companies, bringing the total for Fiscal 2025 to more than $1.25 billion. In fact, the company said that the figure surpassed the $1 billion mark a quarter ahead of its schedule. Also, Cisco's security products business is gaining from the $28 billion Splunk acquisition. In Q3 FY25, CSCO reported a 54% rise in its security products revenue to $2.01 billion. That said, the company lagged analysts' expectations for this business. Looking ahead, Cisco is focused on capturing further AI opportunities through continued innovation and strategic partnerships. The company is one of the U.S. tech giants that have partnered with Saudi Arabia's AI startup HUMAIN to offer AI tech. CSCO stock currently trades at a forward P/E (adjusted) multiple of 17.4x, which is about 23% below the sector average. Is Cisco a Buy or Sell Stock? Following the Q3 FY25 print, UBS analyst David Vogt reiterated a Hold rating on Cisco stock with a price target of $70. The 4-star analyst noted that the company modestly exceeded Wall Street's Q3 FY25 estimates, with stronger Networking growth driving the revenue beat while margin and EPS gained from a more favorable tariff backdrop than accounted for in the guidance and a lower tax rate. Vogt highlighted management's commentary about the strength in webscale demand being broad-based, with three of the top six webscale customers growing triple-digits. The company also mentioned its recent deals with Saudi Arabia and the UAE, indicating that the sovereign opportunity is an additional driver of its accelerating AI business. Despite the favorable AI trends and the acceleration in the core business, Vogt prefers to be on the sidelines, as he thinks that the improved performance is already priced into CSCO stock, which is trading at a P/E multiple of about 16x his FY26 EPS estimate of $4.00. With nine Buys and seven Holds, Cisco stock earns a Moderate Buy consensus rating on TipRanks. The average CSCO stock price target of $70.77 implies about 7.1% upside potential from current levels. CSCO stock offers a dividend yield of 2.4%. Delta Air Lines (NYSE:DAL) Delta Air Lines is one of the major carriers in the U.S. Despite rising about 14% over the past month due to easing tariff pressures, DAL stock is still down nearly 16% year-to-date on concerns of a slowdown in travel demand due to macro uncertainty. Back in April, Delta announced better-than-anticipated earnings for the first quarter of 2025, but pulled back its full-year outlook, saying that the tariffs under the Trump administration were weighing on bookings. At that time, Delta Air Lines said that international and premium travel, which have been growing faster than the coach cabin business, have been relatively resilient. At a forward P/E (adjusted) multiple of 9.41x, DAL stock trades at a 52% discount to the sector average. Is DAL Stock a Buy or Sell? Recently, UBS upgraded Delta Air Lines stock and rival United Airlines (UAL) to Buy from Hold, citing an improved international and premium travel demand, increased revenue expectations, and a stabilizing economic outlook. Analyst Thomas Wadewitz increased the price target for DAL stock to $66 from $46. The 4-star analyst stated that the upgrade follows the relief due to the 90-day agreement between the U.S. and China and framework with the U.K., which has shifted his base case from a potential downturn to 'stability / slow growth.' Also, based on recent commentary of the airlines, including a May 6 meeting with Delta, Wadewitz noted 'stability in demand in April and May.' He added that fare data indicates a 410 basis points year-over-year improvement for Delta and 180 basis points for United Airlines in April. UBS raised its 2025 earnings estimates for Delta from $5.05 to $5.64 per share. On TipRanks, DAL stock scores a Strong Buy consensus rating based on 13 Buys and two Hold recommendations. The average DAL stock price target of $60.93 implies about 20% upside potential. DAL stock offers a dividend yield of 1.2%. Conclusion Among the three value stocks discussed here, Wall Street is highly bullish on Delta Air Lines stock and cautiously optimistic on Target and Cisco. Analysts see higher upside potential in DAL stock compared to the other two value stocks. Wall Street is bullish on Delta Air Lines due to its solid execution, diversified revenue streams, and strong fundamentals.
Yahoo
3 hours ago
- Yahoo
Hims & Hers Stock Is Soaring Again. But Should You Buy the Stock?
Hims & Hers stock is on the upswing after the company secured a weight-loss drug partnership. Hims & Hers is acquiring its way into Europe and wants to build more personalized drugs for its telehealth customers. Shares have soared, but still have a ton of potential for patient long-term shareholders. 10 stocks we like better than Hims & Hers Health › Many companies have failed to disrupt the complicated U.S. healthcare market. Hims & Hers (NYSE: HIMS) may finally be succeeding in cracking the code. The online telehealth platform focuses on circumventing the insurance market; its business of selling affordable medications directly to individuals is growing like a weed, and expects to generate $6.5 billion in revenue by 2030. It has had a tumultuous start to 2025, as Hims & Hers waged a battle to sell new weight loss medications on its online marketplace. Now, with momentum back on its side, the stock is up 118% year to date and 446% in the last five years. Let's take a deeper look at this company, and see whether you might want to buy Hims & Hers stock for your portfolio now. Hims & Hers' model is simple. It has two separate web platforms -- Hims for men and Hers for women -- that sell medications and deliver to customers' front doors. It began with sexual health, but has moved into dermatology, hair loss, mental health, and now weight loss medications. A key to its success has been avoiding the insurance market with products that don't break the bank. Customers loathe dealing with health insurers in the United States, and sometimes would rather not use insurance at all. Plus, some of these products aren't covered by insurance. This strategy has helped the company close in on over $2 billion in projected revenue in 2025. To keep up this impressive growth, Hims & Hers wants to offer weight loss medications, which have been a blockbuster set of drugs for the pharmaceutical market. For a while the popularity of these drugs, such as Novo Nordisk's Wegovy, left them in short supply; that allowed third parties such as Hims & Hers to produce them as a compounding pharmacy and sell them at much cheaper prices. This ended up generating $200 million of Hims & Hers' $1.4 billion in 2024 revenue. But with the shortage of Wegovy over and the compounding pharmacy exception ended, the company's weight-loss business was at a major turning point. Luckily, at the end of April Hims & Hers announced a partnership with Novo Nordisk that seems to resolve this issue: It gives Hims & Hers the ability to sell Wegovy directly on its platform. Hims & Hers is not an exclusive supplier of the drug -- or any drugs on its marketplaces, to be fair -- but it hopes to use its subscription business model, marketing expertise, and simplified user proposition to drive sales for Novo Nordisk in the huge obesity-care market. Besides weight loss drugs, Hims & Hers has more ambitions to reach its goal of $6.5 billion in revenue by 2030. Just recently, the company announced its intent to acquire European competitor Zava so it could expand its telehealth service to Europe. The acquisition will add a platform with 1.3 million active customers in the U.K., Germany, France, and Ireland. It makes sense that Hims & Hers can supercharge growth for the platform with its plethora of medications offered to customers, keen marketing skills, and subscription-based selling model. Over the long run, Hims & Hers aims to make healthcare for its customers more personalized. This includes unique drug combinations, its own outsourcing facility, and at-home testing capabilities. Details remain sparse, but the vision is clear: disrupting more and more of the trillions of dollars spent on healthcare by building a business that people actually enjoy interacting with. This is why 2.4 million active customers use Hims & Hers today. A revenue goal of $6.5 billion seems well within reach by 2030. Hims & Hers is only at 2.4 million active customers, and there are tens of millions of people in the United States alone who could start using or switch to one of its telehealth platforms. Add on the Zava acquisition in Europe, and the runway for growth gets even larger. The company has an impressive gross profit margin of 77%, which should lead to high levels of profitability at scale. On $6.5 billion in future revenue, it could very well post a net profit margin of over 20%, and achieve $1.5 billion in bottom-line profits and free cash flow. A 20% profit margin is easily achievable because of its high gross margins and the fact it currently spends 40% of revenue on marketing today, a figure that has come down over time and should come down even more as Hims & Hers keeps scaling. However, Hims & Hers has played fast and loose with laws and regulations in the past. It sold weight loss drugs when the legality of doing so was unclear, and although that dispute seems to have been resolved, management could easily start playing with fire again and burn its reputation as a trusted provider of medications. Otherwise, this looks like a fantastic growth stock that just doubled its addressable market with the Zava acquisition. Today, Hims & Hers has a market cap of $12.3 billion. You might think it's overvalued because of the stock's recent run-up in price, but the numbers show that patient investors could be rewarded by holding for the long term. A $12.3 billion market cap is only around 8 times my 2030 earnings estimate of $1.5 billion, which would be a dirt cheap price-to-earnings (P/E) ratio for a fast-growing company compared to the current market cap. Most likely, the stock will be valued at a higher multiple than 8, meaning that the stock will be higher in five years. It doesn't come without risks, but if you're a growth investor, you might love Hims & Hers stock for its long-term potential. Before you buy stock in Hims & Hers Health, consider this: The Motley Fool Stock Advisor analyst team just identified what they believe are the for investors to buy now… and Hims & Hers Health wasn't one of them. The 10 stocks that made the cut could produce monster returns in the coming years. Consider when Netflix made this list on December 17, 2004... if you invested $1,000 at the time of our recommendation, you'd have $669,517!* Or when Nvidia made this list on April 15, 2005... if you invested $1,000 at the time of our recommendation, you'd have $868,615!* Now, it's worth noting Stock Advisor's total average return is 792% — a market-crushing outperformance compared to 173% for the S&P 500. Don't miss out on the latest top 10 list, available when you join . See the 10 stocks » *Stock Advisor returns as of June 2, 2025 Brett Schafer has no position in any of the stocks mentioned. The Motley Fool has positions in and recommends Hims & Hers Health. The Motley Fool recommends Novo Nordisk. The Motley Fool has a disclosure policy. Hims & Hers Stock Is Soaring Again. But Should You Buy the Stock? was originally published by The Motley Fool Error in retrieving data Sign in to access your portfolio Error in retrieving data Error in retrieving data Error in retrieving data Error in retrieving data
