Roblox shares plunged nearly 30% last week, marking their worst one-day decline on record, after the company projected slower revenue growth for the rest of 2026, citing algorithm changes and a shift away from viral games.
Q2 earnings show mixed results
In its Q2 2026 earnings report, Roblox reported revenue of $1.5 billion (£1.1 billion), up 36% year-on-year, and operating cash flow of $318 million, a 60% increase. Daily active users reached 123 million, up 10% and in line with expectations.
However, bookings, a key metric for deferred revenue, rose only 8% year-on-year, landing at the low end of the company's guidance. Roblox attributed the slowdown to a decline in per-hour monetisation among younger users in the US and Canada.
Algorithm changes and viral games shift
In a letter to shareholders, Roblox said the decline reflects a greater-than-expected shift in engagement from high-monetising, 2025-era viral games to new and evergreen games with lower hourly monetisation. The company also noted that changes to its 'Recommended For You' algorithm, which now prioritises highly retentive games over near-term monetisation, had a larger impact on younger cohorts than anticipated.
Roblox stated that internal testing suggests longer retention should eventually overcome the reduction in hourly monetisation, but for the current quarter, it projects bookings to decline by 14% to 18% year-on-year and revenue growth to slow to 4% to 10%.
CFO defends long-term strategy
Despite the downward projections, Roblox's chief financial officer, Naveen Chopra, expressed confidence in the company's direction. 'We have conviction that we're making the right trade-offs to continue our role as an industry disruptor,' Chopra said.
The stock drop comes amid ongoing lawsuits accusing Roblox of exploiting children and allowing illegal content, claims the company has denied.
