Roblox drops more than 20% as it lowers annual booking forecast due to lower player spending

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Roblox The company cut its annual booking forecast on Thursday, a sign that people are spending less on its video game platforms amid an uncertain economic outlook and rising inflation levels.

Roblox shares fell more than 20% in early trading Thursday.

The downgraded forecast marks the latest bleak report from the games industry, which has laid off hundreds of employees and closed studios this year in response to falling demand.

electronic arts It also gave a weak revenue forecast earlier this week.

Roblox now expects full-year bookings to be between $4 billion and $4.1 billion, down from its previous forecast of $4.14 billion to $4.28 billion. Its second-quarter bookings forecast of $870 million to $900 million was also lower than expected.

The company said its forecast for the second quarter is conservative because the first quarter of this year, which coincides with the Easter holiday, saw higher engagement on the platform compared to last year’s second quarter.

Research firm Newzoo said the gaming industry is grappling with declining participation and expects PC and console market growth to be lower than pre-pandemic levels by 2026.

Gamers aged 13 or older spent 19% more time on the Roblox platform in the first quarter, the company’s lowest growth rate in about two years.

“This is not unusual,” Roblox Chief Financial Officer Michael Guthrie said, adding that the company is adding many older gamers who will take a while to adapt and spend more time on the platform.

Roblox has also turned to digital advertising to diversify its revenue.Earlier this month, it began displaying virtual billboards featuring content from brands like Walmart and Warner Bros. Discovery to users on its platform.