Roblox is undoubtedly one of the biggest game platforms in the world, and is set to become bigger with the news that it is coming to the PlayStation 4 next month. However, like every other company, its developer is not immune to market forces. The company hasn’t been profitable for a long time and it is now taking measures, including dismissing staff members, to change that.
On Monday, Roblox Corporation let go of 30 employees within its talent acquisition department – a move that implies it intends to focus less on expansion and more on profitability. The downsizing only affected the talent acquisition team while staff across other departments remained unaffected.
In a statement to TechCrunch, the gaming platform explained the rationale behind this downsizing effort. The company’s spokesperson said, “The aggressive growth targets Roblox was operating against in the past few years required a heavier investment in our TA organization.
The spokesperson continued, “With our commitment to getting our cash compensation growth in line with our bookings growth by the end of Q1 2024, we now need a smaller Talent Acquisition organization to meet our adjusted hiring needs. This action is the result of the reduction in our hiring targets to better align with our growth goals.”
Roblox’s decision makes financial sense and we can’t claim to find fault with it. The company has experienced remarkable growth in the last few years – its daily active users nearly tripled between early 2020 and early 2023. But, as we said, it has been operating in the red for some time.
In Q1 2022, the company posted a net loss of $160 million. Fast forward by one year and it posted a loss of $268 million in Q1 2023. The same thing happened in the second quarter of both years with a net loss of $176.4 million in Q2 2022 compared to one of $282.8 million in Q2 2023.
Given this reality, the company was always going to trim costs at one point or the other. In fact, the writing was on the wall that this would happen. During Roblox’s recent Q2 earnings call in August, its Chief Financial Officer, Michael Guthrie, said they will leverage against cost in all areas over the next 12 months.
With that statement, we expect the company to take even more cost-cutting measures. We just can’t tell whether that will take the form of more dismissals or something else. Regardless of what happens, there is no denying that these decisions will shape the future of the company whether for better or for worse.
We hope it is for the better, though. The company is certainly making all the right moves for growth, including expanding its gaming categories to cater for a more diverse audience and the recent news that ex-WarnerMedia CEO Jason Kilar has joined its board of directors.
