Roblox CEO Defends Margin Drop Amid Stock Sell-Off, Cites AI And Infrastructure Spending: Report

• Roblox’s stock dipped more than 13% after the company’s Q3 earnings beat expectations, but revenue fell short of expectations.
• The company also cited that operating margins could decline in the coming year.
• Roblox CEO David Baszucki defended the outlook, citing growth in users which required infrastructure and AI investment.

Roblox Corp. (RBLX) stock fell sharply on Thursday after the company beat earnings expectations for its most recent quarter, but came in lower than expected on revenue.

Investors reacted to guidance suggesting operating margins could decline in the coming year. CEO David Baszucki told CNBC that the dip in margins is a strategic trade-off to support the platform’s rapid expansion and technological innovation.

We did give a hint that we've cumulatively grown on average over the last two years, 37%. We are going to spend and invest in our infrastructure to keep up with that growth. 

– David Baszucki, CEO, Roblox

Roblox Q3 Results And Stock Reaction

RBLX’s stock plummeted more than 13% in afternoon trade on Thursday, down to levels last seen in August after its third-quarter (Q3) results underwhelmed investors. However, on Stocktwits, retail sentiment around the company improved to ‘extremely bullish’ from ‘bullish’ over the past day, as chatter surged to ‘extremely high’ from ‘low’ levels.

Roblox reported a loss per share of $0.37, less than the estimated loss of $0.51, according to Koyfin data. Its revenue came in at $1.36 billion, a 48% growth year-over-year, but missed the $1.7 billion expected by Wall Street.

Temporary Margin Compression, Long-Term Payoff

Baszucki framed the margin decline as a deliberate, short-term sacrifice to fuel growth. “It’s this spending that’s going to weigh down margins, sort of preparing for the future,” he said. 

The company reported 150 million daily active users, up from 100 million a year ago, alongside a 70% year-over-year rise in bookings to $1.9 billion. Baszucki emphasized that infrastructure and AI investments are essential to accommodate unprecedented peak usage, which recently surged to over 45 million concurrent users.

AI and Compute Drive Short-Term Costs

Roblox is expanding both its core and edge data centers while leveraging cloud partnerships to manage spikes in platform activity. Baszucki also highlighted the rollout of “4D creation,” an AI-driven system that allows users to generate interactive objects and worlds simply by talking or drawing. 

He said that the investments aim to enhance content creation, improve monetization, and sustain long-term engagement, but they are expected to weigh on near-term profitability.

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