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U.S. Telecom Sector Analysis

UpdatedSep 27, 2022
DataAggregated Company Financials
  • 7D-6.1%
  • 3M-13.4%
  • 1Y-42.4%
  • YTD-40.9%

Over the last 7 days, the Telecom industry has dropped 7.1%, driven by Alphabet declining 3.6%. Overall the industry is down 44% in 12 months. Looking forward, earnings are forecast to grow by 17% annually.

Sector Valuation and Performance

Has the U.S. Telecom Sector valuation changed over the past few years?

DateMarket CapRevenueEarningsPEAbsolute PEPS
Wed, 28 Sep 2022US$3.3tUS$1.5tUS$187.6b14.7x17.4x2.2x
Fri, 26 Aug 2022US$3.8tUS$1.5tUS$186.9b17.1x20.6x2.6x
Sun, 24 Jul 2022US$3.8tUS$1.4tUS$212.3b16.5x17.7x2.6x
Tue, 21 Jun 2022US$4.2tUS$1.5tUS$214.0b16.9x19.7x2.9x
Thu, 19 May 2022US$4.0tUS$1.5tUS$217.9b17.8x18.2x2.7x
Sat, 16 Apr 2022US$4.5tUS$1.4tUS$224.7b20.4x20.1x3.1x
Mon, 14 Mar 2022US$4.4tUS$1.4tUS$225.8b16.7x19.4x3x
Wed, 09 Feb 2022US$4.9tUS$1.4tUS$218.3b20.1x22.3x3.4x
Fri, 07 Jan 2022US$5.3tUS$1.4tUS$194.6b19.3x27.4x3.8x
Sun, 05 Dec 2021US$5.4tUS$1.4tUS$194.5b19.2x27.6x3.8x
Tue, 02 Nov 2021US$5.8tUS$1.4tUS$197.1b25.6x29.4x4.2x
Thu, 30 Sep 2021US$5.7tUS$1.3tUS$179.1b24.3x31.7x4.2x
Sat, 28 Aug 2021US$6.0tUS$1.3tUS$179.8b24.6x33.2x4.4x
Sun, 04 Jul 2021US$5.7tUS$1.3tUS$174.1b26.3x32.9x4.3x
Wed, 07 Apr 2021US$5.1tUS$1.3tUS$130.4b27.1x39.4x4.1x
Sat, 09 Jan 2021US$4.7tUS$1.2tUS$98.7b24.4x48x3.9x
Fri, 02 Oct 2020US$4.1tUS$1.2tUS$108.9b18.8x37.2x3.4x
Mon, 06 Jul 2020US$3.7tUS$1.2tUS$102.7b17.9x36x3.1x
Thu, 09 Apr 2020US$3.0tUS$1.2tUS$128.5b14.4x23.4x2.5x
Wed, 01 Jan 2020US$3.6tUS$1.2tUS$133.7b20.6x27.3x3x
Sat, 05 Oct 2019US$3.4tUS$1.2tUS$131.9b19.8x25.4x2.8x
Price to Earnings Ratio


Total Market Cap: US$3.4tTotal Earnings: US$131.9bTotal Revenue: US$1.2tTotal Market Cap vs Earnings and Revenue0%0%0%
U.S. Telecom Sector Price to Earnings3Y Average 31.2x202020212022
Current Industry PE
  • Investors are pessimistic on the American Communication Services industry, indicating that they anticipate long term growth rates will be lower than they have historically.
  • The industry is trading at a PE ratio of 17.5x which is lower than its 3-year average PE of 31.2x.
  • The 3-year average PS ratio of 3.5x is higher than the industry's current PS ratio of 2.2x.
Past Earnings Growth
  • The earnings for companies in the Communication Services industry have grown 12% per year over the last three years.
  • Revenues for these companies have grown 7.5% per year.
  • This means that more sales are being generated by these companies overall, and subsequently their profits are increasing too.

Industry Trends

Which industries have driven the changes within the U.S. Telecom sector?

US Market-5.79%
Interactive Media and Services-4.68%
Wireless Telecom-4.99%
Telecom Services and Carriers-5.03%
Industry PE
  • Investors are most optimistic about the Entertainment industry even though it's trading below its 3-year average PE ratio of 676x.
    • Analysts are expecting annual earnings growth of 30.0%, which is higher than its past year's earnings decline of 12.2% per year.
  • Investors are most pessimistic about the Telecom Services and Carriers industry, which is trading below its 3-year average of 20.3x.
Forecasted Growth
  • Analysts are most optimistic on the Wireless Telecom industry, expecting annual earnings growth of 38% over the next 5 years.
  • This is better than its past earnings decline of 35% per year.
  • In contrast, the Telecom Services and Carriers industry is expected to see its earnings grow by 3.5% per year over the next few years.

Top Stock Gainers and Losers

Which companies have driven the market over the last 7 days?

CompanyLast Price7D1YValuation
TWTR TwitterUS$42.091.0%
RBLX RobloxUS$36.590.5%
ZH ZhihuUS$1.186.3%
WWE World Wrestling EntertainmentUS$68.200.8%
SGA Saga CommunicationsUS$28.9111.0%
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Latest News














Sep 26

It's Premature To Call Zhihu A Buy

Summary Zhihu currently trades at 1.1 times forward price-to-sales, and the company's vocational training business has the potential to be a significant revenue contributor for ZH in the long term. But a positive valuation re-rating for ZH in the near term is unlikely, as the company's topline growth slows and it continues to be loss-making. My rating for Zhihu is a Hold, as I am of the view that it's premature to be bullish about ZH's shares now. Elevator Pitch I assign a Hold investment rating to Zhihu Inc.'s (ZH) [2390:HK] stock. Zhihu still delivered positive revenue growth in the recent quarter, and its forward price-to-sales metric has fallen to as low as 1.1 times. But this still isn't the time to have a Bullish view of ZH. Investors need to consider that Zhihu remains loss-making, with more modest topline expansion prospects in the second half of the year. As such, it is more appropriate to rate ZH as a Hold instead of a Buy. Company Description Zhihu describes itself as "the largest Q&A-inspired online content community in China" in the company's press releases, while Bloomberg refers to ZH as "China's answer to online Q&A service Quora." The company derived 39%, 33%, and 23% of its fiscal 2021 topline from advertising services, content-commerce solutions, and paid membership services, respectively, as disclosed in its FY 2021 20-F filing. It is easy to understand what advertising and paid membership revenues refer to, as these are the usual means by which online platform operators make their money. With respect to content-commerce solutions, Zhihu defines this revenue stream as "offering merchants and brands with online marketing solutions that are seamlessly integrated into our online content community" in its fiscal 2021 20-F filing. The remaining 5% of Zhihu's FY 2021 revenue comes from other services, including but not limited to, e-commerce and vocational training. Diversification Helped To Offset The Revenue Contraction For Advertising Revenue for Zhihu's advertising business declined by -4.3% YoY from RMB248.3 million in the second quarter of 2021 to RMB237.6 million for the most recent quarter, as highlighted in its Q2 2022 earnings media release. The advertising business was the weak spot for ZH in Q2 2022, as Zhihu's paid membership services and content-commerce solutions business lines both generated positive revenue growth during the same period. As a result of the topline contraction for the advertising service line, ZH's overall revenue growth on a YoY basis moderated from +55.4% in Q1 2022 to +31.0% for Q2 2022. ZH indicated at its Q2 2022 investor briefing that "advertisers and business partners (in China) became more cautious in online marketing spending", in view of the fact that "many industries were heavily impacted by the ongoing COVID-19 outbreaks and softer macro environment" in the country. Lackluster advertising demand in China explains why the sell-side analysts are expecting Zhihu's topline expansion to be even slower in the second half of the year. According to the market's consensus financial forecasts obtained from S&P Capital IQ, ZH's projected YoY revenue growth rates for Q3 2022 and Q4 2022 are +9.3% and +12.5%, respectively. In the absence of indicators that Mainland China is ready to abandon its zero-COVID policy, the sell-side's consensus financial estimates for Zhihu appear to be realistic. Zhihu's financial performance for the second quarter of 2022 could have been even worse, if not for the company's efforts in revenue diversification. As per its FY 2021 20-F filing, ZH used to earn as much as 86% of its total revenue from advertising services in FY 2019. I mentioned earlier in this article that the revenue contribution of advertising services as a proportion of Zhihu's topline has fallen to 39% last year. In the next section, I touch on a significant growth driver for ZH in the intermediate term, as the company continues to diversify its revenue base. Vocational Training Is Expected To Be A Key Medium-Term Growth Driver ZH tweaked its financial reporting format with its Q2 2022 results announcement. Specifically, revenue earned from vocational training is now disclosed as a separate line item in Zhihu's financial statements; vocational training used to be categorized under the other revenue line. This small but meaningful change sends a clear signal to investors that Zhihu thinks that vocational training will become a substantial revenue contributor similar to advertising services, paid membership services and content-commerce solutions in time to come. In the most recent quarter, vocational training revenue for Zhihu was RMB46.1 million, which represented a +599% jump on a YoY basis as compared to the company's Q2 2021 vocational training revenue of just RMB6.6 million. In its fiscal 2021 20-F filing, Zhihu highlights that it offers "self-developed vocational training products and services, in addition to third-party vocational training courses" as part of its vocational training business. At its second-quarter earnings call, Zhihu revealed that it "launched an online learning portal on our website to further promote our vocational training related content portfolio" in June 2022, and indicated that "the learning portal has been well received." With vocational training representing a mere 5.5% of the company's overall Q2 2022 topline, there is lots of potential for this business to generate higher revenue for ZH in the future with other new initiatives similar to the new online learning portal. Valuation De-rating Justified Zhihu's consensus forward next twelve months' price-to-sales valuation multiple has compressed from its late-June 2021 peak of 14.1 times to 1.1 times now based on S&P Capital IQ data. Vocational training does seem to be a decent growth driver for ZH in the mid-to-long term, but investors are now much more concerned with the company's revenue growth deceleration for 2H 2022 as discussed above. As such, the market has chosen to "penalize" Zhihu for its expected topline growth moderation in Q3 2022 and Q4 2022 by valuing the stock at a much lower valuation multiple.



Walt Disney




Sep 22

Disney In-Depth: Could This Be Your Own Warren Buffett Moment?

Summary Warren Buffett famously bought and sold Disney in a 12-month period back in 1969. His eagerness to exit proved a costly mistake in the long run. Disney's earnings have been depressed by a number of factors in recent years and its dividend has been paused, which has made the company look expensive and unattractive to investors. Should the broader economy hold up, there's reason to believe that FY23 could be the year Disney returns to its full glory. With Disney currently down almost 50% from its recent high in March 2021, it is possible that this could be the moment that investors look back on as their own Warren Buffett moment. At the current price, I will be continuing to "hold," but see reason for this to be upgraded to a "buy" should the price fall even a little from its current level. My view The Walt Disney Company (DIS) (“Disney”) is reportedly considered by Warren Buffett as one of his biggest mistakes. Not for losing money on it, but for missing out on massive potential returns. In 1969, Buffett acquired a 5% stake in Disney for $4 million. Around a year later, he sold the entire stake for $6 million. It is difficult for anyone, even Warren Buffet, to consider a total return of 50% in a year a big mistake. However, when you consider that same 5% share in Disney is now valued at almost $10 billion - equivalent to an annual compound return of 16% excluding dividends - you can see how he could come to regret selling so quickly. Disney investors have not had a smooth ride recently, with the share price down almost 50% from its recent all-time-high in March 2021. As of 21 September 2022, Disney is valued at around $195 billion. At 37 times FY21 owner earnings, it doesn’t exactly stand out as a bargain. However, since 2019 the company’s true profitability has been depressed by various factors. The first and most obvious is the Covid-19 pandemic, which, among other things, disrupted its tv/movie production and release schedule and completely wiped out the profits from its parks and experiences business. On top of that, the pandemic came just 12 months after the company acquired Twenty-First Century Fox Inc. (“TFCF”) in a deal worth $70 billion and launched its Disney+ streaming service. As a result, any synergies from the deal have been completely obscured by the pandemic, while Disney+ has been popular but ultimately remains loss-making. Looking at pre-acquisition net income as a proxy for earnings under ”normal” conditions, Disney's valuation multiple reduces to a much more attractive 14 times. At this valuation, our analysis implies that investors can expect to achieve annual compound returns of 9% - 15% (including dividends) over the next decade under modest growth assumptions. There are reasons to believe that the true underlying earnings power of Disney could be higher, not least because of the TFCF acquisition. I am a long-term holder of Disney. At the current price, I rate it as a "hold." However, if the valuation was to decline even a little from its current level, I see reason to upgrade my rating to a "buy" and would be tempted to add to my holdings. I wonder if investors will look back on today and consider that not investing at the current price was their very own Warren Buffett moment. Business review Prepared by author. Data from company reports. Note: Disney recently changed its segmental reporting 2020. We have re-presented historical results using the most recent reporting segments, though the results are not directly comparable. In recent years, Disney has been through a period of disruption and change. Some of this has been a result of external factors such as Covid-19, but there has also been the acquisition of TFCF and the launch of the Disney+ streaming platform in 2019. The company has also changed its reporting segments a number of times in recent years. All of these can make it difficult for an investor to get a true view of the company’s profitability under “normal” operating conditions. Since FY21, the company reports its performance across two major segments: Disney Media and Entertainment Distribution which is the company’s famous content creation and distribution; and Parks, Products and Experiences which offers physical experiences and products including its theme parks and cruise line. Disney Media and Entertainment Distribution Content production Content is at the heart of everything Disney does. Disney’s content is created by three production / content licensing groups: Studios which includes Walt Disney Pictures, Twentieth Century Studios, Marvel, Lucasfilm, Pixar and Searchlight Pictures. General Entertainment which acquires and produces episodic television programs and news content across its studios: ABC Signature; 20th Television; Disney Television Animation, FX Productions and various others. Sports which acquires professional and college sports programming rights Prepared by author. Data from company reports. Spending on content has been increasing gradually since 2015, but has been accelerated since 2019 due to the combination with TFCF as well as the launch of Disney+. Total spending on content in 2021 was $25 billion, almost double the amount spent in 2018. At FY21 levels, Disney is the king of overall content spending. In 2021, Netflix spent $17.5 billion on content making it the largest streaming-only content producer, while Amazon spent around $13 billion on its music and video content for its Prime subscription service. The content which is acquired or created by these groups is then monetized across three broad distribution channels: Linear Networks; Direct to Consumer; and Content Sales / Licensing. Linear Networks The Linear Networks segment includes the company’s traditional domestic and international television channels which include ABC, Disney, ESPN (80% interest) as well as FX and National Geographic channels acquired as part of the TFCF acquisition. The company also has a 50% stake in A+E Television Networks which includes a variety of cable channels such as A&E, HISTORY and Lifestyle. The vast majority of income that Disney generates from its Linear Networks is from the fees it charges to affiliates (e.g. cable network operators) for the right to broadcast its programming, with the remaining income coming from the sale of advertising time/space on its own cable networks and tv channels. Domestic channels Prepared by author. Data from company reports. Note: Disney reports subscribers for each of its major channels. As the company does not report unique subscribers, individual subscribers may be counted under more than one channel. For this reason, we have looked at the average number of subscribers under each channel grouping. While subscribers don't directly pay Disney for access to its linear channels, subscriber numbers are an indicator of the demand and popularity of its channels which ultimately drives the affiliate and advertising fees that Disney can generate. Overall, there has been a general downtrend in average subscribers across its main channels in recent years. Disney channel subscriptions had been in decline even prior to the launch of Disney+ in 2019. All other channels are also generally experiencing subscriber decline, including the FX and National Geographic acquired in the TFCF deal. Only ESPN has bucked this trend. Prior to 2019, ESPN had been in decline but has seen its popularity return in recent years. Average subscriber numbers returned to growth in both 2020 and 2021. (The decline shown in 2021 on the chart is due to a change in how the company reports its subscriber numbers as it now shows an additional channel in its reporting which has the effect of reduced the overall average subscribers, but total subscribers have actually increased). It is not surprising that ESPN has fared better than other linear channels, with the nature of live sports means that the linear live-broadcasting format remains the most appropriate. International channels Prepared by author. Data from company reports. Note: Disney reports unique subscribers for each major channel grouping for international channels. On an international basis, the overall trend of subscriber decline continues, though there are some notable differences. International subscriptions to Disney channels had actually been growing prior to the release of Disney+, but have moved into decline following the platform’s release. The popularity of ESPN has been affected to an even greater extent, with subscriptions more than halving during 2019. The channels acquired through the TFCF acquisition haven’t fared much better, with only National Geographic seeing any positive progress on subscriber numbers since it was purchased. Trading performance Prepared by author. Data from company reports. Given the overall downward trend on subscriber numbers and transition by consumers to streaming services, it is surprising that revenues from Linear Networks have not only been robust but have been growing, albeit much of the growth from 2019 onward likely being a result of the TFCF acquisition. Operating profit margins have also been consistent at around 30%, with the segment contributing over $8 billion of operating profit in FY21. These results suggest that linear television is not dead, or at least not as dead as one would initially assume. However, with the exception of live sports, the overall trend will likely be downward with the only question being how low and how quickly the decline will be. Direct-to-Consumer (“DTC”) The DTC segment includes the company’s streaming services Disney+, ESPN+ and Hulu. The company currently owns a 67% interest in Hulu, but has full operational control. From January 2024, Disney has the option to require NBC Universal (“NBC U”) to sell its remaining stake, while NBC U have an option to require Disney to purchase its interest. Prepared by author. Data from company reports. Since its launch in 2019, the Disney+ service has proved popular attracting over 150 million subscribers as of Q3 2022. Netflix remains significantly larger than Disney+ based on subscriber numbers with over 200 million subscribers, but Disney+ has attracted an impressive number of subscribers in its short existence and continues to grow at a faster rate than Netflix which is seeing subscriber growth plateau. Both ESPN+ and Hulu also continue to grow their subscriber base, but attract only a fraction of the subscribers of Disney+. Prepared by author. Data from company reports. On 8 December 2022, the company will introduce its first ad-supported subscription tier on Disney+. The introduction of an ad-supported subscription should result in additional subscribers and generate supplementary revenue from advertising. Ad-supported streaming is not new to Disney, with Hulu offering an ad-supported streaming plan and advertising already accounting for around 20% of the DTC segment’s total revenue. The ad-supported plan is being offered at around 30% less than the ad-free plan, but may actually be more profitable when advertising revenue is included. Hulu’s streaming service currently generates average revenue per user more than 3x more than Disney+, suggesting the introduction of ad-supported service could have a net positive impact on revenues and profitability of the platform. Prepared by author. Data from company reports. The popularity of the company’s Disney+ streaming service has driven robust revenue growth in the company’s DTC segment, which has grown by around 200% since the service was introduced (albeit the results in FY21 are not directly comparable to FY19 due to changes in the reporting segments). Despite the growth in subscribers of Disney+ and other platforms, they have yet to reach the critical volume / pricing needed to break-even, with the segment reporting a loss of almost $2 billion in FY21. However, the company continues to make progress in FY23 with revenues up a further 25% year to date and the operating loss for the first 9 months more than halving from $2.5 billion to less than $1 billion. At current cost and subscription prices, the company only needs to increase its subscribers and/or average revenues per subscriber by a further 7% to break even (assuming no additional content or operating costs). It is reasonable to expect the segment to achieve profitability in the coming financial year. Content Sales & Licensing (“CSL”) The rights to content which is not exclusively broadcast on Disney’s own linear channels or streaming services is sold or licensed to third party distributors including TV networks, streaming providers and movie theaters. Prepared by author. Data from company reports. Prior to the pandemic, revenues had been growing and margins were consistently around 30%. Results in 2020 were relatively resilient despite the pandemic, with the disruption to theatrical movie release schedules being felt. However, revenues in FY21 fell by 50% from an already reduced level in the prior period. Results for the first 9 months of FY23 suggests the segment is on the road to recovery, with revenues up over 20% and operating profits of $0.6 billion compared with a loss in the prior period. Parks, Experiences & Products (“PEP”) The PEP segment includes the company’s theme parks and resorts, Disney Cruise Line, and Disney Vacation Club, as well as consumer products which it sells directly or licenses to third parties. Prepared by author. Data from company reports. Note: Disney does not report absolute figures for attendances or spending. Revenue from theme park admissions and related sales (merchandise, food, beverage and resort stays) represent the vast majority of revenue of the PEP segment, meaning park attendances and visitor spending are a key performance indicators. Attendance at the company’s theme parks had been growing since 2015, albeit this had tailed off slightly in 2019 before the parks were impacted by closures and/or restrictions in FY20 and FY21. Average per capita guest spending continues to grow strongly with average growth in the region of mid-to-high single digits annually. The company reports higher guest attendance in spending in its results for the first 9 months of FY22 compared to FY21, though no figures are available. Prepared by author. Data from company reports. Pre-pandemic revenues and profits of the PEP segment had been growing consistently, with profit margins consistently at or above 20%. In 2020 and 2021, revenues were relatively robust given the significant disruption caused by pandemic. However, due to the large overheads of these businesses, profits were completely wiped out. The Parks business has recovered strongly in the first 9 months of FY23, with revenues up over 90% compared to the same period last year, while operating income was over $6 billion compared to a small loss in the prior period. Overall profitability Prepared by author. Data from company reports. On a consolidated basis, segmental operating profits had been broadly flat at around $15 billion p.a. since 2015. Since then, operating profitability has declined significantly falling below $10 billion in FY21. Given the major disruptions the company has faced, the decline is not unexpected and not a reason for major concern. In fact, the ability of the company to maintain the profits that it has done during the pandemic is testament to its resilience - and highlights the importance of the Linear Networks, which are given much less attention than Disney+ but consistently contribute significant amounts to the bottom line every year. Cash Flow Prepared by author. Data from company reports. Despite the many headwinds experienced in recent years, the company has continued to generate positive free cash flow in each of the last three years. Across the period FY19-FY21, the company generated cumulative free cash flow of almost $7 billion, which is well below the historical norm. The majority of the company’s free cash has historically been returned to investors, through an ongoing progressive dividend and ad-hoc repurchases. However, the dividend program was paused during FY20 and has yet to be re-continued, while no repurchases have taken place since 2018.







Sep 22

Roblox: Don't Be Too Excited With Immersive Ads Yet

Summary Roblox wants to introduce immersive ads as it aims to diversify its revenue from its core bookings. However, the company is not ready to provide any projections yet. Hence, investors are urged to focus on its bookings growth to assess the opportunity in Roblox. The execution risk in its nascent ads category remains elevated. Notwithstanding, we parsed that Roblox's bookings growth could have bottomed out in Q2, helping pave the way for a better H2'22. We discuss why we are ready to re-rate RBLX, as we revise our rating from Sell to Speculative Buy. Thesis We urged investors in our pre-earnings article not to join the rally in Roblox Corporation (RBLX) stock, despite its marked recovery from its May lows. We noted that RBLX rallied well into overbought zones and, therefore, was susceptible to selling pressure that could force it lower. Accordingly, RBLX is down more than 16% since our article, underperforming the broad market. However, we gleaned that the post-earnings sell-off was well-supported before the recent pullback in the market led to further weakness in RBLX stock. The company's recent developer conference and investor day had also not piqued buying interest, as RBLX continues to consolidate. The company intends to make its forays into digital advertising through a new category of immersive ads that it believes is accretive to its business model. Furthermore, it has made headway into older cohorts (above 13 years old), broadening Roblox's appeal to expand its brand advertising opportunity. Notwithstanding, Roblox remains tentative over the accretion and timing of its revenue opportunity with its new immersive ads, given its nascent development. Therefore, we urge investors to stay focused on its core bookings. Also, Roblox's core Bookings metrics are expected to have bottomed out in Q2, with its profitability growth also estimated to recover through 2023. Coupled with its battered valuation and price action, we believe a speculative exposure at the current levels seems appropriate. We revise our rating on RBLX from Sell to Speculative Buy. Roblox Wants Immersive Ads To Diversify Its Revenue Growth Investors should note that having ads on the Roblox platform is not a novel discussion. Street analysts have been clamoring for Roblox to develop a platform to generate sustainable ad revenue and diversify its revenue growth from its core bookings. Therefore, we believe it's reassuring to investors that management is ready to move into digital advertising through its immersive ads category. The company believes its unique offering could be used for the upper funnel (brand spend) or lower funnel (performance spend) for its creators. We believe management has been holding off the ad revenue opportunity for a while, as it first needed to gain more sustainable traction with the older users' cohort. Management alluded to it on its recent Investor Day: Immersive ads are ads that are built natively from the ground up for 3D immersive shared experiences. We want this ads to be fun. We want this ads to be interactive. We want these ads, of course, to be safe. We want this ads to be nonobtrusive and we want to be privacy respecting. And one important thing about our ads is that we're going to be honoring our safety, culture and DNA, and immersive ads are only going to target users above the age of 13. (Roblox Investor Day) Also, Roblox was cautious not to telegraph the revenue potential of its immersive ads opportunity, given its nascent development. Hence, we urge investors to be careful in modeling its revenue model until we receive more guidance in its future commentary. Management accentuated: [We are] optimistic long term, we're going to be in really good shape all around the world, even without advertising. It's very difficult to put financial projections around the brands. But we feel really comfortable that in 3 to 5 years, this is going to be a big part of our business. So things that can happen here [for immersive ads] haven't happened anywhere else. That makes it inherently hard to forecast, but it also makes it inherently exciting about the long-term value of the business. (Investor Day) So, Focus On Its Bookings For Now Roblox Bookings change % and Adjusted EBITDA change % consensus estimates (S&P Cap IQ) Accordingly, investors should remain focused on its core bookings growth to assess the company's operating metrics. The consensus estimates (bullish) suggest that its recent Q2 could have seen the nadir in its bookings growth, as it fell by 3.8% YoY, following Q1's 3.2% decline.