Roblox Corporation (RBLX) on Q1 2023 Results - Earnings Call Transcript
Operator: Good morning. My name is Brent, and I will be your conference operator today. At this time, I would like to welcome everyone to the Roblox First Quarter 2023 Earnings Conference Call. All lines have been placed on mute to prevent any background noise. After the speakers' remarks, there will be a question-and-answer session. [Operator instructions] Thank you. Stefanie Notaney, you may begin your conference. Stefanie Notaney: Thank you, Brent. Good morning, everyone, and thank you for joining our Q&A session to discuss Roblox's Q1 2023 results. With me today is Roblox Co-Founder and CEO, David Baszucki; and CFO, Michael Guthrie. As a reminder, our shareholder letter, press release, SEC filings, supplemental slides, and a replay of today's call can be found on our Investor Relations Web site at ir.roblox.com. On this call, we will make some brief opening remarks and reserve the rest of the time for your questions. Our commentary today may include forward-looking statements, including but not limited to our expectations of our business, future financial results and business, and financial strategy. Forward-looking statements are subject to risks and uncertainties that could cause actual results to differ materially from those described in our forward-looking statements, and such risks are described in our risk factors, included in our SEC filings, including our annual report on Form 10-K and 10-Q. You should not rely on our forward-looking statements as predictions of future events. We disclaim any obligation to update any forward-looking statements, except as required by law. During this call, we will also discuss certain non-GAAP financial measures. Reconciliations between GAAP and non-GAAP metrics for our reported results can be found in our press release, as well as in our supplemental slides. For our webcast participants, please note that question icon at the bottom of your screen where you can submit your questions. With that, I'll turn it over to Dave. David Baszucki: Thank you. Hey, and good morning, everyone. We are going to start with a prelude. And I want to talk a bit about bookings acceleration and the generation of cash, which is really exciting for our business. We're going to talk about our future bookings growth rate relative to cost of sales, infrastructure, and compensation expense, which is also a wonderful story. And then, finally, we'll touch base on innovation and what we've done since the start of this year. Our revenue in Q1 grew 22%, to $655 million. Our bookings grew 23% to $773 million. And I want to just highlight bookings is how we run the business. We run the business based on cash. Our bookings growth rate year-on-year over the last five quarters have gone from negative 3%, to negative 4%, to plus 10%, to plus 17%, to plus 23%. We believe this is being driven by eight quarters of innovation and awesome engineering that have expanded our platform. And our platform is growing in all directions, and I'll touch on that. GAAP loss was $268 million, while cash from operations was positive $173 million. We generated over $100 million of free cash and operational cash in the quarter, and this just highlights the difference between cash and our GAAP loss, which is driven by deferred revenue and other factors. Finally, our cash has been steady relatively over the last six quarters, and we have approximately $3 billion of cash with no external financing. On the user side, our DAUs are up 22%, with an all-time high of 66 million DAUs. Our hours are up 23% year-on-year, once again an all-time high of 14.5 billion hours of engagement in Q1. All regions are up, and I want to highlight that our 13-and-up segment is growing 31% year-on-year, which bodes very well for our future growth as that's an amazingly large available market for us. On the developer community, money flowing to our developer community increased 24% year-on-year to a record $182 million in Q1. We have some exciting things happening in our business. Our bookings growth year-on-year is already exceeding our cost of sales growth year-on-year. And we believe, in Q3 of this year, our year-on-year bookings growth will exceed our infrastructure year-on-year growth. This is a testament to the efficiency on our infrastructure spend and the way we have built out our redundant datacenter in [Ash] (ph). I want to highlight that we spent almost $400 million of cash on infrastructure over the last year, and we're still showing positive cash flow in Q1. Finally, we believe, in Q1 of 2024, our year-on-year bookings growth will pass our year-on-year compensation expense growth through just operational excellence. We have not suffered layoffs. We continue to highlight that we're being very thoughtful in hiring the best and growing our headcount efficiently. On the cash side, once again, I highlighted we're in an awesome cash position. And on the innovation side, we continue to innovate. Our vision is to bring together a billion people every day with optimism and civility, and we're very bullish about this vision. We continue to feel very positively about this opportunity. In the last eight quarters, we've driven a lot of innovation. I want to highlight on the innovation we've really executed on, since January 1 of this year. And that innovation falls in categories of cost control, revenue acceleration, AI-generative creation, international ageing up, and our vision of social communication. We've got a 15-year history of innovation. And we believe innovation is once again contributing to our bookings acceleration. On the cost efficiency, we've been using AI and machine learning for quite some time to drive the efficiency of our safety organization, which is really the primary focus of our business. And we've got to the point where we're highly automating reviews of 3D objects, audio, and images. On the revenue side, I want to highlight that our advertising system is now in test. We have over 200 developers that are participating. We're not going to share the number. We will make a small amount of advertising revenue in Q2 of this year. And I'll quote what the NFL shared with our advertising system is that, "Portals have helped the NFL reach and convert a high percentage of new users into their experience." We're really excited about this. It is a new ad format that complements image and video that is very immersive and native to Roblox. We've launched two AI-generative accelerators to help our creators create better and create more quickly. First is a material generator that allows developers to create any type of 3D material purely by using a few words. If a creator on Roblox says, "I would like a brick wall that's a little bit covered with moss," that's enough to generate a 3D material. We're proud that we did this early this year. And we're also launching code generation. Roblox has an amazing repository of Lua code. And we're using this to train a code generator that won't just help people auto-complete, but really helps create and script on Roblox. On the international side, we continue to drive the vision that Roblox is a platform that will work around the world. And also drive the vision that anyone's creation can go live in many, many countries. I want to highlight Japan, which is now growing at over 100% year-on-year on daily active. It's been driven by some advances we've made on semantic search and the quality of our translation. We continue, behind the scenes, to drive the quality, the performance, and efficiency of our Core 3D engine. And we've made enormous strides on our vision of social communication as well. Since the start of the year, voice on Roblox is now being used by almost 10% of over-13 daily users in the U.S.A., 9% to be exact. And we've rolled out lip sync as well on our journey to fully animating avatars on the platform, either using lip-sync or ultimately camera. A fun other thing just to highlight. By day seven, based on all the work we've don't on contacts and friend-finding, people are finding 10% more real-life friends on the platform in the first seven days than they were a year ago. Just want to once again recap, and then we'll start answering questions. Long-term mission is a billion users every day connected with optimism and civility. We're focusing on driving bookings growth with innovation. Behind that bookings growth, we have an enormous focus on operational excellence and efficiency. And once again, we believe, by Q1 of next year, bookings on a year-on-year basis will be growing more quickly than cost of sales, infrastructure expense or headcount compensation expense. And then finally, the cash that we spin-off, as much as possible, we want to really share with the creator community to drive innovation. With that, we'll open up for questions. Thank you. Operator: [Operator Instructions] Your first question is from the line of Andrew Crum with Stifel. Your line is open. Operator: Your next question is from the line of Omar Dessouky with Bank of America. Your line is open. Operator: Your next question comes from the line of Matthew Thornton with Truist Securities. Your line is open. Operator: Your next question is from the line of Matthew Cost with Morgan Stanley. Your line is open. Operator: Your next question is from the line of Clark Lampen with BTIG. Your line is open. Operator: Your next question is from the line of Bernie McTernan with Needham. Your line is open. Operator: Your next question is from the line of Andrew Uerkwitz with Jefferies. Your line is open. Operator: Your next question comes from the line of Tom Champion with Piper Sandler. Your line is open. Operator: Your next question is from the line of Jonathan Kees from Daiwa. Your line is open. Operator: We have time for one more question from the line of Brandon Ross with LightShed Partners. Your line is open. Stefanie Notaney: Thank you for joining us today. And that's a wrap. Bret, you can close it out. Operator: Thank you. This does conclude today's conference call. Thank you for your participation. You may now disconnect.
UBS Upgrades Roblox (NYSE:RBLX) to "Buy"
- Roblox's stock has nearly doubled in value since April 2025, showcasing significant growth.
- The company has reported over 20% quarterly revenue growth year-over-year for seven consecutive quarters.
- "Grow a Garden," a new game on Roblox, has significantly contributed to the company's revenue growth and popularity.
On June 22, 2025, UBS updated its rating for Roblox (NYSE:RBLX) to "Buy," with the stock priced at $102.09. Roblox is a prominent player in the online gaming industry, known for its platform that allows users to create and play games. It competes with major companies like Nintendo, Electronic Arts, and Take-Two Interactive.
Roblox has been a standout stock in 2025, nearly doubling its value since April. The stock is currently trading at $103.71, close to its 52-week high of $104.63. This surge is driven by consistent revenue growth, with over 20% quarterly revenue growth year-over-year for seven consecutive quarters.
A significant factor in Roblox's success is the popularity of its new game, "Grow a Garden," which is trending on the platform. This game has contributed to the company's impressive performance and has helped it outpace competitors in revenue growth. Despite its high valuation, Roblox's growth prospects make it an attractive long-term investment.
Today, RBLX has fluctuated between a low of $101.34 and a high of $104.63, marking its highest price over the past year. The lowest price it reached in the past year was $34.62. The company's market capitalization is approximately $70.34 billion, with a trading volume of 3.81 million shares, as highlighted by Fool.com.
Piper Sandler Adjusts Roblox (NYSE:RBLX) Rating to "Overweight"
- Piper Sandler has adjusted the grade of Roblox (NYSE:RBLX) to "Overweight" with a stock price of approximately $100.17.
- Roblox's impressive 29% revenue growth is driven by its creator economy, outpacing Take-Two Interactive's 5-6% outlook.
- The current price of RBLX on the NYSE is $100.33, showing a 3.25% increase and highlighting significant volatility and growth potential.
On June 16, 2025, Piper Sandler adjusted the grade of Roblox (NYSE:RBLX) to "Overweight." Despite being labeled as a downgrade, the grade remained "Overweight," with the stock price at approximately $100.17. Roblox is a prominent player in the gaming industry, known for its innovative platform that empowers creators to build and monetize experiences.
Roblox's growth fundamentals are impressive, with a 29% revenue growth, outpacing Take-Two Interactive's 5-6% outlook. This growth is driven by Roblox's creator economy, which enhances user engagement and generates network effects. In contrast, Take-Two relies on blockbuster franchises like Grand Theft Auto and NBA 2K, focusing on premium game sales and content updates. The current price of RBLX on the NYSE is $100.33, reflecting a 3.25% increase.
The stock has fluctuated between $98.36 and $100.73 today. Over the past year, RBLX has seen a high of $100.74 and a low of $34.41, indicating significant volatility and growth potential. Roblox's market capitalization is approximately $68.05 billion, with a trading volume of 5.8 million shares. This highlights the company's strong market presence and investor interest. As the gaming industry evolves, Roblox's platform-based model, which supports a thriving virtual economy, offers a compelling investment appeal.
Benchmark Reaffirms Buy Rating on Roblox, Highlights AI and Monetization as Growth Drivers
Roblox (NYSE:RBLX) received a reaffirmed Buy rating from Benchmark analysts, who maintained a $71 price target, citing the company’s AI-driven content creation, expanding monetization, and growing user engagement as key catalysts for long-term growth.
Roblox’s strategy for market expansion is built on three pillars: AI-assisted development, robust monetization, and broad user engagement. The introduction of the open-source Cube 3D model is accelerating content creation while expanding creative possibilities for developers, potentially reshaping game development on the platform.
With an increasingly engaged user base and high-profile collaborations with major intellectual properties (IP), Roblox continues to strengthen its competitive positioning. The company’s approach combines AI-driven game development, targeted advertising, and friend-based referral systems, fostering a highly interactive ecosystem that boosts both user engagement and developer earnings.
Looking ahead, Roblox aims for 10% of total industry content revenue to flow through its platform, reinforcing its strong developer payout structure and AI-enhanced innovation pipeline.
With a proven ability to support both major studios and independent creators, the company remains well-positioned for sustained growth in the global gaming market.
Benchmark Reaffirms Buy Rating on Roblox, Highlights AI and Monetization as Growth Drivers
Roblox (NYSE:RBLX) received a reaffirmed Buy rating from Benchmark analysts, who maintained a $71 price target, citing the company’s AI-driven content creation, expanding monetization, and growing user engagement as key catalysts for long-term growth.
Roblox’s strategy for market expansion is built on three pillars: AI-assisted development, robust monetization, and broad user engagement. The introduction of the open-source Cube 3D model is accelerating content creation while expanding creative possibilities for developers, potentially reshaping game development on the platform.
With an increasingly engaged user base and high-profile collaborations with major intellectual properties (IP), Roblox continues to strengthen its competitive positioning. The company’s approach combines AI-driven game development, targeted advertising, and friend-based referral systems, fostering a highly interactive ecosystem that boosts both user engagement and developer earnings.
Looking ahead, Roblox aims for 10% of total industry content revenue to flow through its platform, reinforcing its strong developer payout structure and AI-enhanced innovation pipeline.
With a proven ability to support both major studios and independent creators, the company remains well-positioned for sustained growth in the global gaming market.
Roblox Shares Jump 20% as Company Raises Full-Year Bookings Guidance
Roblox (NYSE:RBLX) saw its shares surge around 20% intra-day today after the company lifted its full-year bookings guidance, signaling strong demand despite recent challenges.
The gaming platform now expects fiscal 2024 bookings between $4.34 billion and $4.37 billion, up from its previous forecast of $4.18 billion to $4.23 billion and surpassing the consensus estimate of $4.22 billion. This guidance boost came as Roblox reported strong third-quarter results, with bookings reaching $1.13 billion, well above the expected $1.02 billion.
Despite recent controversies, including Turkey’s August ban over child safety concerns and allegations from Hindenburg Research questioning user metrics and safety practices, Roblox continued to perform well. The company’s daily active users jumped 27% year-over-year to 88.9 million, marking its largest spike in nearly two years. Roblox has also been actively expanding its offerings to appeal to older audiences, aiming to broaden its user base and boost engagement.
Roblox Shares Jump 20% as Company Raises Full-Year Bookings Guidance
Roblox (NYSE:RBLX) saw its shares surge around 20% intra-day today after the company lifted its full-year bookings guidance, signaling strong demand despite recent challenges.
The gaming platform now expects fiscal 2024 bookings between $4.34 billion and $4.37 billion, up from its previous forecast of $4.18 billion to $4.23 billion and surpassing the consensus estimate of $4.22 billion. This guidance boost came as Roblox reported strong third-quarter results, with bookings reaching $1.13 billion, well above the expected $1.02 billion.
Despite recent controversies, including Turkey’s August ban over child safety concerns and allegations from Hindenburg Research questioning user metrics and safety practices, Roblox continued to perform well. The company’s daily active users jumped 27% year-over-year to 88.9 million, marking its largest spike in nearly two years. Roblox has also been actively expanding its offerings to appeal to older audiences, aiming to broaden its user base and boost engagement.
Roblox Corporation (NYSE:RBLX) Faces Legal Challenges Amid Positive Outlook from Wells Fargo
- Wells Fargo maintains an "Overweight" rating on Roblox Corporation (NYSE:RBLX), raising its price target from $46 to $54.
- Roblox is currently under investigation by The Schall Law Firm for potential securities law violations.
- Edelson Lechtzin LLP is also investigating Roblox for potential securities fraud and breach of fiduciary duty claims.
Roblox Corporation (NYSE:RBLX) is a leading online gaming platform that allows users to create and play games created by other users. It has gained significant popularity, especially among younger audiences. As of October 8, 2024, Wells Fargo maintained an "Overweight" rating for Roblox, with the stock priced at $40.51. The bank also raised its price target from $46 to $54, as highlighted by TheFly.
Despite the positive outlook from Wells Fargo, Roblox is currently facing legal challenges. The Schall Law Firm has launched an investigation into potential securities law violations by Roblox. This investigation seeks to determine if the company issued false or misleading statements or failed to disclose important information to investors. Shareholders are encouraged to participate in this investigation to address any potential infractions.
Additionally, Edelson Lechtzin LLP is conducting a separate investigation into potential securities fraud and breach of fiduciary duty claims against Roblox. This investigation is on behalf of investors holding common stock in the company. These legal proceedings could have significant implications for Roblox and its shareholders.
The current stock price of Roblox is $40.51, reflecting a decrease of 2.13% or $0.88. The stock has fluctuated between a low of $37.51 and a high of $40.52 today. Over the past year, Roblox has seen a high of $48.43 and a low of $29.55. The company's market capitalization is approximately $26.22 billion, with a trading volume of 29.37 million shares.
