Roblox, the community-focused gaming platform popular amongst kids, has downsized a substantial portion of its talent acquisition team, signaling a shift in the company’s focus from expansion to the bottom line.
In a statement to TechCrunch, Roblox confirmed that about 30 employees in its talent acquisition organization were let go on Monday. No other teams are impacted.
“The aggressive growth targets Roblox was operating against in the past few years required a heavier investment in our TA organization,” said a Roblox spokesperson.
“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.”
There were hints that the hiring slowdown was on the cards as part of its ongoing effort to cut costs. As Roblox’s chief financial officer, Michael Guthrie shared on the firm’s recent Q2 earnings call:
We will see leverage against pretty much all of the cost areas over the next 12 months. We think we’ll see a little bit of leverage in cost of goods sold because we’ve slowed down hiring, leverage against our compensation expenses because infra, trust and safety, we slowed down a little bit there. We’ve already closed the gap pretty meaningfully on both of those two.
The company has undergone a period of rosy growth in the last few years, nearly tripling its daily active users from Q1 2020 to 66 million early this year. As its business balloons, it’s spending more on compensating developers. Developer exchange fees, which comprise the sum Roblox pays to creators who cash out the in-game currencies earned, amounted to $348 million in the first six months ended June 2023, compared to $290 million a year before.
Despite growth in user numbers and hours spent on the platform, users aren’t spending more. Average bookings per DAU from the second quarter was $11.92, down 3% year-over-year. Roblox remains unprofitable, posting a net loss of $282.8 million in Q2 2023, up from $176.4 million the previous year.
Roblox’s operation in China, a joint venture it set up with Tencent in 2019, appears unaffected by this round of layoffs.