What happened
Historically, tech stocks have tended to be more volatile than those in other sectors. One case in point is the performance of Roblox (NYSE: RBLX) on Wednesday; the stock initially dipped after the company reported quarterly earnings, before sprinting to close well into positive territory at 7.5%. By contrast, the S&P 500 index inched up less than 0.5% today.
So what
For the first quarter, revenue clocked in at just over $655 million, representing 22% growth over the same period of 2022. That was on the back of total bookings that climbed 23% higher to nearly $774 million.
On the other hand, the company's net loss under generally accepted accounting principles (GAAP) deepened. It was $268 million ($0.44 per share), against the $160 million shortfall in the year-ago quarter.
This meant a mixed quarter for the online gaming platform. On average, analysts tracking Roblox stock were modeling barely over $768 million for revenue, but $0.35 per share for a net loss.
The initial post-earnings sell-off was likely due to that earnings miss. It's also likely that investors then took a harder look at that booking figure, which Roblox touts as "a timelier indication of trends in our operating results that are not necessarily reflected in our revenue."
By that yardstick, the specialty tech company is doing very well. It didn't hesitate to point out that growth has improved considerably over the past five quarters. Prior to the first quarter's 23% year-over-year rise, these increases were 17% and 10%. The two quarters before that, bookings actually declined by 4% and 3%, respectively.
Now what
Roblox believes that momentum will continue, and at the same time it will be able to reduce its growth in personnel expenses and salaries. That should give it scope to reduce those bottom-line losses and, at some point, hopefully flip into the black.
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Eric Volkman has no position in any of the stocks mentioned. The Motley Fool has positions in and recommends Roblox. The Motley Fool has a disclosure policy.
The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of Nasdaq, Inc.
