• by Colin Kirkland , 5 hours ago

In its second-quarter earnings report, Roblox shows an increase in revenue and cash flow, while displaying advancements in creator engagement and generative AI capabilities. However, the company is struggling to capture the attention of its youngest cohort of players. 

Roblox revenue grew 36% year-over-year to $1.5 billion in Q2, with $294 million in free cash flow, a 66% year-over-year boost.

The company also saw a healthy increase in daily active users, which rose 10% year-over-year to 123 million, with major growth in Japan (67%) and India (64%).

Total hours played during the quarter rose 5% year-over-year to 29 billion, with the top 10 games on the platform contributing almost 20% of those hours, marking a 10% drop from three years ago. 

Year-over-year bookings hit 8%, which landed at the low end of the company’s expected results. According to Roblox’s letter to investors, the shortfall results from lower engagement with younger cohorts in North America and changes made to the platform’s recommendations algorithm. 

“We believe the decline reflects a greater than expected shift of engagement from high monetizing, 2025-vintage viral games, to both new and evergreen games with lower hourly monetization,” the letter notes.

The recommendation algorithm is designed to provide more impressions for “highly retentive games at the expense of near term monetization,” but the quarterly impact on younger players was more widespread than the company anticipated. 

As for Roblox’s advertising efforts, the company is planning to relocate its “Moments” feature -- a scrollable feed for short-form video clips linked to gameplay -- to the homepage tab in the app, which the company hopes will become an advertising surface for brand partners and content creators. 

In addition, Roblox is focused on expanding its AI-powered “Build” and “Studio” features, which invite players to build and edit their own AI-generated games. Creators are currently creating over 60,000 3D assets per day and almost 1,400 games utilize AI-generation daily. 

Over the next several months, Roblox plans to introduce a suite of professional AI agents across Build and Studio to help players test, track, and optimize their own games.