Episode Details

Roblox Corporation (RBLX) Q2 2026 — Revenue $1,469M, +36% YoY — but bookings, the cash users actually spent, were $1,557M, +8%, at the LOW end of guidance. GAAP EPS $(0.26) beat the $(0.34) estimate; Adj EBITDA $152M vs $18M. Then the guide: Q3 bookings $1,576-1,653M, DOWN 14-18%, the first decline ever guided, vs ~$1.87B consensus — with Q3 FCF of $(60)M-$5M and full-year guidance withdrawn. The stock closed $48.62, then fell ~13.8% after hours to ~$41.94. Roblox reports two top lines and only one is live: revenue releases Robux bought up to 27 months ago from a $6.9B deferral pool; bookings is this quarter. Three things nobody has connected. (1) The deferral wedge — Q2 2025's build was $365M vs $99M now, which is why Q3 revenue is guided UP 4-10% while bookings go DOWN 14-18%. (2) The cost table is published against both revenue and bookings and they disagree: DevEx FELL from 29% to 25% of revenue but ROSE from 22% to 23% of bookings; infrastructure and trust & safety went 11% to 15% of bookings (+450bps, +54% to $236M). (3) FY2025 free cash flow was $1,355M against $1,129M of stock comp — $226M of economic profit on $6.79B of bookings, a 3.3% margin in the best year ever. Q3 turns that negative. THE CALL: SELL (4/5, FREE CASH FLOW THAT STOCK COMP HAS ALREADY SPENT) — base-case value ~$30.0 vs ~$41.94 today. KEY METRICS: - Revenue $1,469M +36%; bookings $1,557M +8% (+7% cc), at the LOW end of guidance - GAAP EPS $(0.26) vs $(0.41), beat $(0.34) est; net loss $185M vs $280M - Adj EBITDA $152M vs $18M — but adds back $34M of youth-safety settlements ($91M 1H); ex that $118M - DAUs 123M +10%; Hours 29B +5%; monthly unique payers 27M +15% - Bookings/DAU $12.66 vs $12.86 (-1.5%); hours/DAU/day 2.59 vs 2.72 (-4.7%) - Japan DAUs +67%, India +64%; US & Canada DAUs +6%, Hours +1% - % of bookings: DevEx 23% (22%), SBC 18.1% ($282M), personnel ex-SBC 18% (17%), infra & trust/safety 15% (11%, +54% to $236M) - Q3 guide: revenue $1,413-1,490M (+4-10%) but bookings $1,576-1,653M (-14 to -18%) vs ~$1.87B consensus - Q3 FCF guided $(60)M-$5M on $170M capex (vs $22M in Q2); net loss $(348)M-$(307)M; FY guidance withdrawn - Q2 operating cash flow $318M (+60%), FCF $294M (+66%) — but stock comp was $282M - FY2025: FCF $1,355M less SBC $1,129M = $226M on $6.79B bookings — a 3.3% margin - Cash & investments $6.08B less $1.01B debt = ~$5.08B net cash; shareholders' equity just $129M (was $394M) - Buyback: Q2 bought 8.2M shares for ~$380M, more than the $294M FCF — yet diluted shares rose 2% to 752M What to watch: Watch Q1 2027 bookings — the first easy comp, a full year after the RFY algorithm change and once Kids/Select annualise. Reacceleration through 15% with stock comp flat moves fair value to the mid-40s. What breaks it: SBC outgrowing bookings, capex at $170M/quarter, or the safety settlements escalating. Also on YouTube: @ChargedAlpha DISCLAIMER: For informational and educational purposes only. Not financial advice. Do your own research before any investment decision.