Quarterly earnings results are a good time to check in on a company’s progress, especially compared to its peers in the same sector. Today we are looking at Roblox (NYSE:RBLX) and the best and worst performers in the video gaming industry.
Since videogames were invented in the 1970s, they have gradually taken more share of entertainment time. Ubiquitous mobile devices have powered a surge in “snackable” games that can be played on the go. Over time, games have developed more social engagement features where friends can play games together over the internet. The business models of games publishers have become less volatile due to digitization of distribution, in game monetization, and like Hollywood, an increasing dependence on surefire hit franchises. Covid driven lockdowns accelerated adoption and usage of videogames – a trend that has not slowed.
The 4 video gaming stocks we track reported a weak Q2. As a group, revenues beat analysts’ consensus estimates by 0.9% while next quarter’s revenue guidance was 2.2% below.
Valuation multiples for many growth stocks have not yet reverted to their early 2021 highs, but the market was optimistic at the end of 2023 due to cooling inflation. This year has been a different story as mixed inflation signals have led to market volatility. However, video gaming stocks have held steady amidst all this with average share prices relatively unchanged since the latest earnings results.
Best Q2: Roblox (NYSE:RBLX)
Best known for its wide assortment of user-generated content, Roblox (NYSE:RBLX) is an online gaming platform and game creation system.
Roblox reported revenues of $893.5 million, up 31.3% year on year. This print exceeded analysts’ expectations by 1.2%. Overall, it was a good quarter for the company with strong growth in its users and a decent beat of analysts’ user estimates.
“Our strong Q2 growth across all core metrics is driven by diverse and high quality content. As a UGC platform, we support a large and motivated creator community that continues to thrive. The dynamic Roblox content ecosystem is unique and our platform continues to attract users of all ages from across the globe. Going forward, we will continue to invest in our core platform to help our creator community build better and safer experiences and reach more people,” said David Baszucki, founder and CEO of Roblox.
Roblox achieved the fastest revenue growth of the whole group. The company reported 79.5 million daily active users, up 21.4% year on year. Investor expectations, however, were likely higher than Wall Street’s published projections, leaving some wishing for even better results (analysts’ consensus estimates are those published by big banks and advisory firms, not the investors who make buy and sell decisions). The stock is down 2.5% since reporting and currently trades at $40.50.
Is now the time to buy Roblox? Access our full analysis of the earnings results here, it’s free.
Electronic Arts (NASDAQ:EA)
Best known for its Madden NFL and FIFA sports franchises, Electronic Arts (NASDAQ:EA) is one of the world’s largest video game publishers.
Electronic Arts reported revenues of $1.66 billion, down 13.7% year on year, outperforming analysts’ expectations by 5.3%. It performed better than its peers, but it was unfortunately a weak quarter for the company with full-year revenue guidance missing analysts’ expectations and slow revenue growth.
Electronic Arts scored the biggest analyst estimates beat among its peers. Although it had a fine quarter compared its peers, the market seems unhappy with the results as the stock is down 1.2% since reporting. It currently trades at $147.30.
Is now the time to buy Electronic Arts? Access our full analysis of the earnings results here, it’s free.
Weakest Q2: Skillz (NYSE:SKLZ)
Taking a new twist at video gaming, Skillz (NYSE:SKLZ) offers developers a platform to create and distribute mobile games where players can pay fees to compete for cash prizes.
Skillz reported revenues of $25.3 million, down 37% year on year, falling short of analysts’ expectations by 4.3%. It was a weak quarter for the company with a decline in its users and a miss of analysts’ user estimates.
Skillz posted the weakest performance against analyst estimates and slowest revenue growth in the group. The company reported 122,000 monthly active users, down 37.8% year on year. As expected, the stock is down 2.5% since the results and currently trades at $6.17.
Read our full analysis of Skillz’s results here.
Take-Two (NASDAQ:TTWO)
Best known for its Grand Theft Auto and NBA 2K franchises, Take Two (NASDAQ:TTWO) is one of the world’s largest video game publishers.
Take-Two reported revenues of $1.34 billion, up 4.2% year on year, surpassing analysts’ expectations by 1.5%. Zooming out, it was a weak quarter for the company with slow revenue growth and full-year revenue guidance missing analysts’ expectations.
Take-Two pulled off the highest full-year guidance raise among its peers. The stock is up 5.7% since reporting and currently trades at $146.64.
Read our full, actionable report on Take-Two here, it’s free.
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