April 30 (Reuters) - Roblox cut its annual bookings forecast on Thursday, signaling that new safety initiatives may impact user growth and spending on its popular videogame platform, sending its shares down over 18% in extended trading.
The company expects fiscal 2026 bookings of $7.33 billion to $7.6 billion, lower than its earlier forecast of $8.28 billion to $8.55 billion.
Investments in recommendation algorithms and higher developer rewards have helped Roblox draw in millions of users looking to play free games and socialize with friends. But multiple cases of child exploitation and grooming on the platformhave resulted in national bans, lawsuits and investigations into Roblox's safety framework.
To ease concerns, the platform unveiled age-based accounts and age verification early this year to limit communication and interaction between younger and older users, while also rolling out broader content monitoring.
"What we have observed since we started rolling out age-gating of communications features in January is less communication engagement on the platform," CFO Naveen Chopra told Reuters in an interview.
"That does tend to have some knock-on effects in terms of content virality, which can then impact things like App Store ratings and the like."
Roblox now sees a sequential decline in daily active users (DAU) in the second quarter. Average DAU for the first quarter stood at 132 million, up 35% from a year ago.
Second-quarter bookings are forecast between $1.55 billion and $1.61 billion, below estimates of $1.83 billion, according to data compiled by LSEG.
Meanwhile, Roblox also announced a new project code-named "Roblox Reality,"which will allow developers to build photorealistic games by blending videogame engines and AI world models.
The use of AI in videogame development - a divisive topic within the industry - has increased significantly in recent times as publishers look for ways to curb costs and speed up game creation.
(Reporting by Zaheer Kachwala in Bengaluru; Editing by Jonathan Ananda)
