What we know about Roblox following its first earnings call

11 May 2021

Image: © Leonidas/Stock.adobe.com

Now that Roblox is a public company, we have learned more about its users, engagement and future plans following its results for Q1 2021.

In March this year, massively popular gaming platform Roblox debuted on the stock market, hitting a market cap of $38.26bn following its first day of trading.

Roblox took the direct listing route to the stock market via the New York Stock Exchange. This means the company didn’t issue any new shares, but gave current investors the opportunity to sell their shares at a price determined by the market. Other companies that have arrived on the stock market by direct listing include Spotify, Slack, Palantir and Coinbase.

The timing of Roblox’s direct listing followed a surge in popularity for online gaming and at-home child-friendly entertainment amid the coronavirus pandemic. It added up to a successful debut of RBLX trading at $64.50, significantly raising the company’s valuation from its last private financing round.

‘The opportunity of what we’re building at Roblox is massive, and we will continue to make long-term investments as we build a human co-experience platform’
– DAVID BASZUCKI

Now that it’s a public company, Roblox issued its first earning report on Monday (10 May). The company beat some analyst expectations but reported losses per share that were higher than expected at $0.46.

All in all, however, Roblox had a successful first quarter and CNBC reports that the company’s stock rose as much as 5pc in after-hours trading.

Roblox revenue has more than doubled

Roblox reported a year-on-year increase in revenue, rising 140pc to $387m in its first quarter of 2021.

Bookings (that is, revenue that is booked but not yet in hand) also saw significant annual growth, up 161pc to $652.3m.

All of this was driven by massive user growth at Roblox, which recorded 9.7bn hours of engagement from users in Q1, up 98pc year-on-year.

It’s not just for kids

Much of this growth in engagement is coming from users over the age of 13 as Roblox drives to capture more of this market.

The company reported a 128pc increase in engagement from users over 13, and daily active users in this segment more than doubled.

“We believe we must continue to innovate and so remain focused on building great technology to make progress on our key growth vectors, primarily international expansion and expanding the age demographic of our users,” said CFO Michael Guthrie.

The total average daily active users of Roblox in the first three months of 2021 reached 42.1m. This is a 79pc increase on the previous year and has been attributed to 87pc growth in daily active users outside of the US and Canada.

Average bookings for each daily active user was $15.48, up 46pc year-on-year.

Show of strength for ‘shared experience’

Unlike gaming behemoths such as Activision Blizzard and EA, Roblox does not develop and publish regular new titles. Instead, it puts this creativity in the hands of its users.

Roblox fuses gaming with the familiar structures of online creator and community spaces popularised by the likes of YouTube and Twitch. What’s more, it has a well-proven monetisation strategy.

Millions of user-creators can create their own games within the platform and sell to other users using the digital currency Robux. Robux can buy in-game items or new looks for user avatars, and developers take a 70pc cut of the Robux spent in their games.

According to the company’s recent S1 filing, more than 960,000 developers and creators earned Robux on the platform in the year ended 30 September 2020. Of these, more than 1,050 earned at least $10,000 on the platform up to September 2020, while a top-tier 250 developers made $100,000 or more.

“A fundamental part of being human is connecting with others, and we’re inspired by the way in which the Roblox community creates and shares experiences to play, work and even learn together,” said CEO David Baszucki.

“The opportunity of what we’re building at Roblox is massive, and we will continue to make long-term investments as we build a human co-experience platform that enables shared experiences among billions of users.”

What’s next?

The first ever Roblox earnings report also offered guidance on what to expect in Q2 based on results from April 2021.

Revenue for the month is estimated at up to $145m, which would be an increase of 140pc on April last year.

Daily active users are also set to continue ticking upwards, with April’s estimate standing at 43.3m. Hours engaged, estimated at 3.2bn, is expected to stay flat from the previous month. However, these users are expected to up their spending on the platform, with average bookings per daily active user estimated at a 5pc to 6pc increase from March 2021.

On the back of this strong showing, Guthrie said that the company will continue to invest “aggressively” in key areas to drive long-term growth and value. “Specifically, hiring talented engineering and product professionals and growing the earnings for our developer community.”

Elaine Burke is the editor of Silicon Republic

editorial@siliconrepublic.com