FILE PHOTO: The Roblox logo is displayed on a banner on the front facade of the New York Stock Exchange in New York, U.S., March 10, 2021. REUTERS/Brendan McDermid/File Photo

By Zaheer Kachwala

(Reuters) -Roblox on Thursday raised its annual bookings forecast for the third time on the back of strong in-game spending on viral titles but flagged a margin decline next year due to higher investments, sending its shares down over 10%.

The gaming platform has spent heavily on infrastructure in recent years to keep up with its rapid user growth while also trying to improve safety features after lawsuits around child endangerment.

It said those investments and higher payouts to video-game developers would eat into its operating margin.

Still, the company's strong bookings growth and engagement have made it one of the biggest winners in the videogame industry, with its shares having more than doubled this year.

Roblox's 70% increase in average daily active users to more than 150 million — a key engagement metric — represents the company's biggest third-quarter jump in around five years.

"Steal a Brainrot", a game where players collect characters based on viral internet culture, surpassed 25 million concurrent players earlier this month, eclipsing "Grow a Garden."

CFO Naveen Chopra told Reuters the success of these games stemmed from investments in search and discovery algorithms, infrastructure capacity and incentives for developers.

"The ability to handle multiple games with more than 20 million concurrent users, like that's never been done before . .. and so these hits could not have gone that viral without that kind of infrastructure," he said.

Roblox now expects fiscal 2025 bookings worth between $6.57 billion and $6.62 billion, compared with its prior forecast of between $5.87 billion and $5.97 billion.

It forecast fourth-quarter bookings worth between $2 billion and $2.05 billion, compared with analysts' estimates of $1.80 billion, according to data compiled by LSEG.

Bookings for the third quarter came in at $1.92 billion, beating expectations of $1.65 billion.

(Reporting by Zaheer Kachwala in Bengaluru; Editing by Sahal Muhammed and Maju Samuel)