Roblox User Numbers Boom, Potentially Supercharging Ad Revenue

Roblox Corp's user numbers have reached a record high, driven by hit games like "Grow a Garden". Wedbush is bullish on the company, expecting 20% annual growth for the next few years. Roblox is only now monetizing 80% of player time through new advertising formats and giving developers a bigger share of in-app purchase income. This has led Wedbush to raise its price target to $142 and view Roblox as a global platform with significant growth potential.

Roblox Corp (NYSE: RBLX) has seen a significant surge in user numbers, with the company reporting a record quarter for concurrent players. This growth is attributed to hit games like "Grow a Garden," which has driven user engagement to new heights. Wedbush, a prominent financial analyst firm, is bullish on Roblox, expecting the company to achieve 20% annual growth over the next few years. This optimism is rooted in Roblox's strategy to monetize 80% of player time through new advertising formats and by increasing the share of in-app purchase income for developers. As a result, Wedbush has raised its price target to $142, indicating substantial growth potential for the company [1].

Roblox's recent financial performance has been impressive. The company reported a 29% year-on-year increase in revenue and a 31% increase in bookings during Q1 2025. Daily Active Users (DAUs) reached 97.8 million, up 26% year-on-year. Free cash flow also saw a significant increase, rising by 123% year-on-year. Despite these positive indicators, Roblox is still in the early stages of monetizing its user base, with advertising revenue not yet being a significant contributor to overall bookings [2].

The company's focus on enhancing user engagement and safety has been a key driver of growth. Roblox has introduced new safety tools aimed at teenagers, including an age verification feature called "Trusted Connections," which allows verified users to chat without filters. Additionally, the company has launched a licensing platform in collaboration with major franchises like Netflix, Lionsgate, Sega, and Kodansha to create gaming experiences based on popular franchises. These initiatives reflect Roblox's ongoing efforts to broaden its platform's appeal and enhance user engagement [3].

While Roblox has shown strong growth, it still faces challenges. The company has not yet reached 100 million DAUs, and the European market is experiencing slower growth in hours compared to other regions. Furthermore, the company is still in the early stages of its differential pricing initiative, with results being neutral to slightly accretive to margins. Despite these challenges, Roblox's robust user growth and innovative strategies position it as a strong contender in the global gaming market.

References:
[1] https://www.proactiveinvestors.co.uk/companies/news/1075467/roblox-user-numbers-are-booming-and-that-s-good-news-for-investors-1075467.html
[2] https://www.gurufocus.com/news/3005367/oppenheimer-ups-price-target-for-roblox-rblx-amid-positive-growth-outlook-rblx-stock-news
[3] https://www.morningstar.com/stocks/xnys/rblx/quote