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Roblox losses swell in Q1, Electronic Arts posts earnings beat

Yahoo Finance Live anchors Julie Hyman and Brad Smith discuss stock performance for Roblox and Electronic Arts following quarterly earnings.

Video Transcript

JULIE HYMAN: But let's turn our attention now to the gaming space, two companies going now in the same direction. They had been trading in opposite directions in the video gaming space. Roblox shares are rising right now, but the company did see losses accelerate in the latest quarter, the company citing that they will slow down their increase in headcount, so slow hiring, while Electronic Arts shares getting a boost after the company beat estimates on the top and bottom line and said its latest FIFA game has outperformed since its release.

So let's just take these quickly one by one here. If you look at those Roblox numbers, it looks like users did improve here. First quarter daily active users, 66.1 million. That is ahead of estimates here. And that was even though the company had said earlier in the year that users fell in March from February.

But if you look at the first quarter overall, you saw some improvement there. EBITDA down 22%. That came in below estimates. So initially, again, we did see a decline there. But now the shares have turned around.

BRAD SMITH: Yeah, I'm going to paint a broad stroke with this one here as we think about all of the companies that have reported, at least in the gaming sector, their earnings, whether that's Roblox, whether that's Electronic Arts-- EA Sports, it's in the game, or at least here today in the game for the time being. We'll see if they hold on to these slim gains, Activision Blizzard, who had already reported as well.

One thing that stuck out to me was the commentary from EA Sports CEO Andrew Wilson saying that "interactive entertainment right now is at an inflection point here." And you think about a couple of the themes that we've heard about over the course of the past year that are certainly changing the course for these companies at large, and you can even weave, of course, Take-Two Interactive into this conversation, but things like the metaverse and where immersive technology are going to change the gaming structure, where cloud has already really disrupted where the access to that game takes place. And that even changes the type of device or console that you're using. And console was the last thing that I had written down as well within this.

And so with the disruption, with the inflection that-- inflection point that the industry is at as a whole, there's going to be so much more focus on not just how quickly a lot of these companies can create titles and perhaps where they can leverage artificial intelligence to write more quickly some of that code for the experience, but also where that experience takes place and how much each of these companies have to buy into developing specifically for where gamers are most apt to have that console experience or cloud-based experience based on the device that they want to use as well.

JULIE HYMAN: Right. And then, I mean, obviously the blockbuster games help as well. That's what helped EA during the quarter.


JULIE HYMAN: Yeah, the FIFA release was a big one for them. So content is king, I guess, still. And also as you're talking about distribution is prince maybe? I don't know.

BRAD SMITH: Yeah, yeah.

JULIE HYMAN: We're using that analogy.

BRAD SMITH: It's in the castle.


BRAD SMITH: For sure.