Roblox 1Q'26: Age Check Hangover, But Aiming to Go Beyond the Blocks

Programming Note: In case you missed it yesterday, I have released "MBI" Skill for Claude and Codex.

Back in 4Q’25 call, Roblox management announced that they will not provide any annual guidance from 2027 onwards:

we've learned that it's difficult to predict exactly where this business will land 12 months out. I mean if you look back at 2025, when Roblox set guidance, Steal a Brainrot and Grow a Garden had not even launched. And that's created a situation where the company has had to provide relatively conservative guidance. I don't think that's helpful to investors, and it's certainly not helpful to day-to-day operation of our business. So we're going to get out of that cycle. We're going to give everyone a long runway. We're providing detailed guidance for 2026. But as we get into 2027, you'll see us starting to guide one quarter at a time.

What happened in 1Q’26 call not only made their decision to move away from annual guide more justified in retrospect, they probably should have stopped providing guidance for 2026 as well. While their initial booking guide for 2026 implied 22-26% growth in 2026, their updated booking guide now assumes only 8-12% growth this year. The fact that Roblox management guided only 8-12% growth despite booking growth of 43% in Q1 hints at their not-so-rosy outlook for the rest of the year.

Then again, if a company can be so wrong about their own annual guide just 90 days earlier, why would you not think they may have to change it again (who knows in which direction) 90 days later? Public market investors tend not to be charitable towards such uncertainties. As a result, Roblox not only went from almost $100 Billion Enterprise Value (EV) in September 2025 to below $30 Billion now, it is also comfortably below its valuation at IPO back in 2021.

But what did management get so wrong about their initial 2026 guide that they needed to materially downgrade just a quarter later? From the call (emphasis mine):

we launched age check in January. And as we said, we expected to see some headwind both in terms of hours and DAUs. I think what we did not fully understand until we have now the benefit of 3, 4 months of experience is how that impacts the platform more generally with respect to comms engagement and the knock-on impacts from that. Now I want to point out a couple of really important things. Number one, when we look at what has happened over the last few months, as I noted, engagement has actually remained quite strong. Monetization has remained strong and retention has remained strong. What we have seen is challenges at the top of the funnel, i.e., new users coming in. And the reality is when we think about the rest of the year, we’re not going to see the bookings impact of that right away, hence, the performance in Q1.

But we do know that the fact that we had more sign-up headwind over the last few months is going to put pressure on bookings over the remainder of the year. However, when we start to get back to DAU -- sequential DAU growth in Q3, given the strength of monetization and engagement, we feel confident that we will be able to drive the bookings growth that we’re guiding to, which given the comps in the back half of the year, equates to something like relatively low single digits. So we’re not trying to do something heroic in the back half of the year, and it is largely driven by return to DAU growth.

As a reminder, following the age check, Roblox started implementing the below rigid framework in terms of who can chat with others and if someone didn’t go through the age check requirement, they were simply not allowed to chat with others which apparently hurt communication engagement on the platform. As of Q1, only 51% of Roblox Global DAU have age checked which they hope to increase to above 90% “long term”. In the US, the number is already 65% and in Australia where age check was rolled out the earliest, it is at 70%.

While the guidance cut got all the attention during the call, there are some interesting developments at Roblox that got overshadowed a bit which I will highlight behind the paywall.

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