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Roblox Corp.'s slowing growth is starting to worry investors

Roblox Corp.'s bookings growth is decelerating even though overall revenue is up.

Investors aren't feeling bullish about Roblox Corp.'s stock after its fourth-quarter earnings report this week. Shares tumbled after the makers of Roblox reported some fairly strong growth in revenue, but some much weaker growth in net bookings across 2021. It doesn't help that company losses increased year-over-year as well.

In  the three-month period ending December 31st, 2021 Roblox Corp. earned $568.8 million in revenue, up 83 percent from the same quarter in 2020. Bookings did rise 20 percent year-over-year, but the folks at The Motley Fool noticed that growth slowed across all of 2021, and grew much slower in January 2022. (Roblox Corp. shared some 2022 numbers for investors even though those numbers will be counted in its first-quarter 2022 report).

In January, bookings only rose 2-3 percent year-over-year, for a total of $220 million. Daily average users did increase 32 percent to 54.7 million last month, but Roblox's inability to monetize those extra users is ruffling Wall Street's feathers. 

In the same quarter, Roblox Corp. lost about $140 million, a notable increase from the $69 million it lost in the fourth quarter of 2020. 

The same trends dogged the company for its full-year results too. In 2021, revenue rose 108 percent to $1.9 billion, bookings increased 45 percent to $2.7 billion, and losses increased 86 percent to $495 million. There's more money flowing into Roblox Corp.'s coffers, but it's not going to be turning a profit any time soon.

What's driving the slowdown in bookings growth? Roblox's target audience (kids and teenagers) is getting out of the house and back in school. Or camp, or just outdoors with their friends. CEO David Baszucki went on CNBC to defend the company's performance, saying that it has untapped revenue streams it hasn't opened  up yet.

"We’re not touching advertising, we’re not touching 3D immersive shopping," he explained. "We’re being very gentle on monetization relative to quality user growth, creating a safe and civil platform and driving our DAU numbers."

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