false2024Q3--12-310001315098P1YP3Yxbrli:sharesiso4217:USDiso4217:USDxbrli:sharesxbrli:pureutr:sqftrblx:voterblx:planrblx:measurerblx:installmentrblx:period00013150982024-01-012024-09-300001315098us-gaap:CommonClassAMember2024-10-150001315098us-gaap:CommonClassBMember2024-10-1500013150982024-09-3000013150982023-12-310001315098us-gaap:CommonClassAMember2023-12-310001315098us-gaap:CommonClassAMember2024-09-300001315098us-gaap:CommonClassBMember2024-09-300001315098us-gaap:CommonClassBMember2023-12-3100013150982024-07-012024-09-3000013150982023-07-012023-09-3000013150982023-01-012023-09-300001315098rblx:ClassAAndClassBCommonStockMember2024-06-300001315098us-gaap:AdditionalPaidInCapitalMember2024-06-300001315098us-gaap:AccumulatedOtherComprehensiveIncomeMember2024-06-300001315098us-gaap:RetainedEarningsMember2024-06-300001315098us-gaap:NoncontrollingInterestMember2024-06-3000013150982024-06-300001315098rblx:ClassAAndClassBCommonStockMember2024-07-012024-09-300001315098us-gaap:AdditionalPaidInCapitalMember2024-07-012024-09-300001315098us-gaap:AccumulatedOtherComprehensiveIncomeMember2024-07-012024-09-300001315098us-gaap:NoncontrollingInterestMember2024-07-012024-09-300001315098us-gaap:RetainedEarningsMember2024-07-012024-09-300001315098rblx:ClassAAndClassBCommonStockMember2024-09-300001315098us-gaap:AdditionalPaidInCapitalMember2024-09-300001315098us-gaap:AccumulatedOtherComprehensiveIncomeMember2024-09-300001315098us-gaap:RetainedEarningsMember2024-09-300001315098us-gaap:NoncontrollingInterestMember2024-09-300001315098rblx:ClassAAndClassBCommonStockMember2023-12-310001315098us-gaap:AdditionalPaidInCapitalMember2023-12-310001315098us-gaap:AccumulatedOtherComprehensiveIncomeMember2023-12-310001315098us-gaap:RetainedEarningsMember2023-12-310001315098us-gaap:NoncontrollingInterestMember2023-12-310001315098rblx:ClassAAndClassBCommonStockMember2024-01-012024-09-300001315098us-gaap:AdditionalPaidInCapitalMember2024-01-012024-09-300001315098us-gaap:AccumulatedOtherComprehensiveIncomeMember2024-01-012024-09-300001315098us-gaap:NoncontrollingInterestMember2024-01-012024-09-300001315098us-gaap:RetainedEarningsMember2024-01-012024-09-300001315098rblx:ClassAAndClassBCommonStockMember2023-06-300001315098us-gaap:AdditionalPaidInCapitalMember2023-06-300001315098us-gaap:AccumulatedOtherComprehensiveIncomeMember2023-06-300001315098us-gaap:RetainedEarningsMember2023-06-300001315098us-gaap:NoncontrollingInterestMember2023-06-3000013150982023-06-300001315098rblx:ClassAAndClassBCommonStockMember2023-07-012023-09-300001315098us-gaap:AdditionalPaidInCapitalMember2023-07-012023-09-300001315098us-gaap:AccumulatedOtherComprehensiveIncomeMember2023-07-012023-09-300001315098us-gaap:NoncontrollingInterestMember2023-07-012023-09-300001315098us-gaap:RetainedEarningsMember2023-07-012023-09-300001315098rblx:ClassAAndClassBCommonStockMember2023-09-300001315098us-gaap:AdditionalPaidInCapitalMember2023-09-300001315098us-gaap:AccumulatedOtherComprehensiveIncomeMember2023-09-300001315098us-gaap:RetainedEarningsMember2023-09-300001315098us-gaap:NoncontrollingInterestMember2023-09-3000013150982023-09-300001315098rblx:ClassAAndClassBCommonStockMember2022-12-310001315098us-gaap:AdditionalPaidInCapitalMember2022-12-310001315098us-gaap:AccumulatedOtherComprehensiveIncomeMember2022-12-310001315098us-gaap:RetainedEarningsMember2022-12-310001315098us-gaap:NoncontrollingInterestMember2022-12-3100013150982022-12-310001315098rblx:ClassAAndClassBCommonStockMember2023-01-012023-09-300001315098us-gaap:AdditionalPaidInCapitalMember2023-01-012023-09-300001315098us-gaap:AccumulatedOtherComprehensiveIncomeMember2023-01-012023-09-300001315098us-gaap:NoncontrollingInterestMember2023-01-012023-09-300001315098us-gaap:RetainedEarningsMember2023-01-012023-09-3000013150982024-01-012024-03-3100013150982024-04-012024-06-300001315098srt:ScenarioForecastMember2024-01-012024-12-310001315098rblx:UnitedStatesAndCanadaMemberus-gaap:GeographicConcentrationRiskMemberus-gaap:SalesRevenueNetMember2024-07-012024-09-300001315098rblx:UnitedStatesAndCanadaMemberus-gaap:GeographicConcentrationRiskMemberus-gaap:SalesRevenueNetMember2023-07-012023-09-300001315098srt:EuropeMemberus-gaap:GeographicConcentrationRiskMemberus-gaap:SalesRevenueNetMember2024-07-012024-09-300001315098srt:EuropeMemberus-gaap:GeographicConcentrationRiskMemberus-gaap:SalesRevenueNetMember2023-07-012023-09-300001315098rblx:AsiapacificIncludingAustraliaAndNewZealandMemberus-gaap:GeographicConcentrationRiskMemberus-gaap:SalesRevenueNetMember2024-07-012024-09-300001315098rblx:AsiapacificIncludingAustraliaAndNewZealandMemberus-gaap:GeographicConcentrationRiskMemberus-gaap:SalesRevenueNetMember2023-07-012023-09-300001315098rblx:RestOfTheWorldMemberus-gaap:GeographicConcentrationRiskMemberus-gaap:SalesRevenueNetMember2024-07-012024-09-300001315098rblx:RestOfTheWorldMemberus-gaap:GeographicConcentrationRiskMemberus-gaap:SalesRevenueNetMember2023-07-012023-09-300001315098us-gaap:GeographicConcentrationRiskMemberus-gaap:SalesRevenueNetMember2024-07-012024-09-300001315098us-gaap:GeographicConcentrationRiskMemberus-gaap:SalesRevenueNetMember2023-07-012023-09-300001315098rblx:UnitedStatesAndCanadaMemberus-gaap:GeographicConcentrationRiskMemberus-gaap:SalesRevenueNetMember2024-01-012024-09-300001315098rblx:UnitedStatesAndCanadaMemberus-gaap:GeographicConcentrationRiskMemberus-gaap:SalesRevenueNetMember2023-01-012023-09-300001315098srt:EuropeMemberus-gaap:GeographicConcentrationRiskMemberus-gaap:SalesRevenueNetMember2024-01-012024-09-300001315098srt:EuropeMemberus-gaap:GeographicConcentrationRiskMemberus-gaap:SalesRevenueNetMember2023-01-012023-09-300001315098rblx:AsiapacificIncludingAustraliaAndNewZealandMemberus-gaap:GeographicConcentrationRiskMemberus-gaap:SalesRevenueNetMember2024-01-012024-09-300001315098rblx:AsiapacificIncludingAustraliaAndNewZealandMemberus-gaap:GeographicConcentrationRiskMemberus-gaap:SalesRevenueNetMember2023-01-012023-09-300001315098rblx:RestOfTheWorldMemberus-gaap:GeographicConcentrationRiskMemberus-gaap:SalesRevenueNetMember2024-01-012024-09-300001315098rblx:RestOfTheWorldMemberus-gaap:GeographicConcentrationRiskMemberus-gaap:SalesRevenueNetMember2023-01-012023-09-300001315098us-gaap:GeographicConcentrationRiskMemberus-gaap:SalesRevenueNetMember2024-01-012024-09-300001315098us-gaap:GeographicConcentrationRiskMemberus-gaap:SalesRevenueNetMember2023-01-012023-09-300001315098country:USus-gaap:GeographicConcentrationRiskMemberus-gaap:SalesRevenueNetMember2024-07-012024-09-300001315098country:USus-gaap:GeographicConcentrationRiskMemberus-gaap:SalesRevenueNetMember2024-01-012024-09-300001315098country:USus-gaap:GeographicConcentrationRiskMemberus-gaap:SalesRevenueNetMember2023-07-012023-09-300001315098country:USus-gaap:GeographicConcentrationRiskMemberus-gaap:SalesRevenueNetMember2023-01-012023-09-300001315098us-gaap:ProductConcentrationRiskMemberrblx:DurableVirtualItemsMemberus-gaap:SalesRevenueNetMember2024-07-012024-09-300001315098us-gaap:ProductConcentrationRiskMemberrblx:DurableVirtualItemsMemberus-gaap:SalesRevenueNetMember2024-01-012024-09-300001315098us-gaap:ProductConcentrationRiskMemberrblx:DurableVirtualItemsMemberus-gaap:SalesRevenueNetMember2023-07-012023-09-300001315098us-gaap:ProductConcentrationRiskMemberrblx:DurableVirtualItemsMemberus-gaap:SalesRevenueNetMember2023-01-012023-09-300001315098us-gaap:ProductConcentrationRiskMemberrblx:ConsumableVirtualItemsMemberus-gaap:SalesRevenueNetMember2024-07-012024-09-300001315098us-gaap:ProductConcentrationRiskMemberrblx:ConsumableVirtualItemsMemberus-gaap:SalesRevenueNetMember2024-01-012024-09-300001315098us-gaap:ProductConcentrationRiskMemberrblx:ConsumableVirtualItemsMemberus-gaap:SalesRevenueNetMember2023-07-012023-09-300001315098us-gaap:ProductConcentrationRiskMemberrblx:ConsumableVirtualItemsMemberus-gaap:SalesRevenueNetMember2023-01-012023-09-300001315098rblx:DataCenterAgreementMember2024-01-012024-03-310001315098rblx:DataCenterAgreementMember2024-03-310001315098rblx:DataCenterAgreementMember2024-09-012024-09-300001315098rblx:SubLesseeAgreementMember2024-02-070001315098rblx:SubLessorAgreementMember2024-02-070001315098us-gaap:FairValueInputsLevel1Memberus-gaap:DebtSecuritiesMemberus-gaap:MoneyMarketFundsMember2024-09-300001315098us-gaap:FairValueInputsLevel1Memberus-gaap:DebtSecuritiesMemberus-gaap:USTreasurySecuritiesMember2024-09-300001315098us-gaap:FairValueInputsLevel1Memberus-gaap:DebtSecuritiesMember2024-09-300001315098us-gaap:FairValueInputsLevel2Memberus-gaap:DebtSecuritiesMemberus-gaap:USGovernmentAgenciesDebtSecuritiesMember2024-09-300001315098us-gaap:FairValueInputsLevel2Memberus-gaap:DebtSecuritiesMemberus-gaap:CommercialPaperMember2024-09-300001315098us-gaap:FairValueInputsLevel2Memberus-gaap:DebtSecuritiesMemberus-gaap:CorporateDebtSecuritiesMember2024-09-300001315098us-gaap:FairValueInputsLevel2Memberus-gaap:DebtSecuritiesMember2024-09-300001315098us-gaap:DebtSecuritiesMember2024-09-300001315098us-gaap:FairValueInputsLevel1Memberus-gaap:EquitySecuritiesMemberus-gaap:MutualFundMember2024-09-300001315098us-gaap:FairValueInputsLevel1Memberus-gaap:EquitySecuritiesMember2024-09-300001315098us-gaap:FairValueInputsLevel1Memberus-gaap:DebtSecuritiesMemberus-gaap:MoneyMarketFundsMember2023-12-310001315098us-gaap:FairValueInputsLevel1Memberus-gaap:DebtSecuritiesMemberus-gaap:USTreasurySecuritiesMember2023-12-310001315098us-gaap:FairValueInputsLevel1Memberus-gaap:DebtSecuritiesMember2023-12-310001315098us-gaap:FairValueInputsLevel2Memberus-gaap:DebtSecuritiesMemberus-gaap:USGovernmentAgenciesDebtSecuritiesMember2023-12-310001315098us-gaap:FairValueInputsLevel2Memberus-gaap:DebtSecuritiesMemberus-gaap:CommercialPaperMember2023-12-310001315098us-gaap:FairValueInputsLevel2Memberus-gaap:DebtSecuritiesMemberus-gaap:CorporateDebtSecuritiesMember2023-12-310001315098us-gaap:FairValueInputsLevel2Memberus-gaap:DebtSecuritiesMember2023-12-310001315098us-gaap:DebtSecuritiesMember2023-12-310001315098us-gaap:FairValueInputsLevel1Memberus-gaap:EquitySecuritiesMemberus-gaap:MutualFundMember2023-12-310001315098us-gaap:FairValueInputsLevel1Memberus-gaap:EquitySecuritiesMember2023-12-310001315098srt:MinimumMember2024-01-012024-09-300001315098srt:MaximumMember2024-01-012024-09-300001315098us-gaap:USTreasurySecuritiesMember2024-09-300001315098us-gaap:USGovernmentAgenciesDebtSecuritiesMember2024-09-300001315098us-gaap:CommercialPaperMember2024-09-300001315098us-gaap:CorporateDebtSecuritiesMember2024-09-300001315098us-gaap:USTreasurySecuritiesMember2023-12-310001315098us-gaap:USGovernmentAgenciesDebtSecuritiesMember2023-12-310001315098us-gaap:CorporateDebtSecuritiesMember2023-12-310001315098rblx:SpeechlyIncMember2023-09-182023-09-180001315098rblx:SpeechlyIncMember2023-09-180001315098us-gaap:TechnologyBasedIntangibleAssetsMember2024-09-300001315098us-gaap:PatentsMember2024-09-300001315098rblx:AssembledWorkforceMember2024-09-300001315098us-gaap:TradeNamesMember2024-09-300001315098us-gaap:TechnologyBasedIntangibleAssetsMember2023-12-310001315098us-gaap:PatentsMember2023-12-310001315098rblx:AssembledWorkforceMember2023-12-310001315098us-gaap:TradeNamesMember2023-12-310001315098rblx:ServersAndRelatedEquipmentAndSoftwareMember2024-09-300001315098rblx:ServersAndRelatedEquipmentAndSoftwareMember2023-12-310001315098rblx:ComputerHardwareAndSoftwareLicensesMember2024-09-300001315098rblx:ComputerHardwareAndSoftwareLicensesMember2023-12-310001315098us-gaap:FurnitureAndFixturesMember2024-09-300001315098us-gaap:FurnitureAndFixturesMember2023-12-310001315098us-gaap:LeaseholdsAndLeaseholdImprovementsMember2024-09-300001315098us-gaap:LeaseholdsAndLeaseholdImprovementsMember2023-12-310001315098us-gaap:ConstructionInProgressMember2024-09-300001315098us-gaap:ConstructionInProgressMember2023-12-310001315098us-gaap:ServiceLifeMemberrblx:ComputerHardwareAndSoftwareLicensesMember2024-07-012024-09-300001315098rblx:A3875NotesDue2030Memberus-gaap:UnsecuredDebtMember2021-10-290001315098rblx:A3875NotesDue2030Memberus-gaap:UnsecuredDebtMember2021-10-292021-10-290001315098rblx:A3875NotesDue2030Memberus-gaap:UnsecuredDebtMemberus-gaap:DebtInstrumentRedemptionPeriodOneMember2021-10-292021-10-290001315098rblx:A3875NotesDue2030Memberus-gaap:UnsecuredDebtMemberus-gaap:DebtInstrumentRedemptionPeriodOneMember2021-10-290001315098rblx:A3875NotesDue2030Memberus-gaap:UnsecuredDebtMemberrblx:DebtInstrumentRedemptionPeriodYear2024Member2021-10-292021-10-290001315098rblx:A3875NotesDue2030Memberus-gaap:UnsecuredDebtMemberrblx:DebtInstrumentRedemptionPeriodYear2025Member2021-10-292021-10-290001315098rblx:A3875NotesDue2030Memberus-gaap:UnsecuredDebtMemberrblx:DebtInstrumentRedemptionPeriodYear2026AndAfterMember2021-10-292021-10-290001315098rblx:A3875NotesDue2030Memberus-gaap:UnsecuredDebtMemberus-gaap:DebtInstrumentRedemptionPeriodThreeMember2021-10-292021-10-290001315098rblx:A3875NotesDue2030Memberus-gaap:UnsecuredDebtMemberus-gaap:DebtInstrumentRedemptionPeriodFourMember2021-10-290001315098rblx:A3875NotesDue2030Memberus-gaap:UnsecuredDebtMemberus-gaap:DebtInstrumentRedemptionPeriodFourMembersrt:MinimumMember2021-10-292021-10-290001315098rblx:A3875NotesDue2030Memberus-gaap:UnsecuredDebtMemberus-gaap:DebtInstrumentRedemptionPeriodFourMembersrt:MaximumMember2021-10-292021-10-290001315098rblx:A3875NotesDue2030Memberus-gaap:UnsecuredDebtMemberus-gaap:DebtInstrumentRedemptionPeriodFourMember2021-10-292021-10-290001315098rblx:A3875NotesDue2030Memberus-gaap:UnsecuredDebtMemberus-gaap:DebtInstrumentRedemptionPeriodFiveMember2021-10-292021-10-290001315098rblx:A3875NotesDue2030Memberus-gaap:UnsecuredDebtMember2024-09-300001315098rblx:A3875NotesDue2030Memberus-gaap:UnsecuredDebtMember2023-12-310001315098rblx:A3875NotesDue2030Memberus-gaap:UnsecuredDebtMember2024-07-012024-09-300001315098rblx:A3875NotesDue2030Memberus-gaap:UnsecuredDebtMember2023-07-012023-09-300001315098rblx:A3875NotesDue2030Memberus-gaap:UnsecuredDebtMember2024-01-012024-09-300001315098rblx:A3875NotesDue2030Memberus-gaap:UnsecuredDebtMember2023-01-012023-09-300001315098us-gaap:FairValueInputsLevel2Memberrblx:A3875NotesDue2030Member2024-09-300001315098us-gaap:FairValueInputsLevel2Memberrblx:A3875NotesDue2030Member2023-12-310001315098us-gaap:CommonClassBMemberrblx:DavidBaszuckiFounderMember2024-01-012024-03-310001315098us-gaap:CommonClassBMemberrblx:DavidBaszuckiFounderMember2023-01-012023-03-310001315098us-gaap:EmployeeStockOptionMember2024-09-300001315098us-gaap:EmployeeStockOptionMember2023-12-310001315098us-gaap:RestrictedStockUnitsRSUMember2024-09-300001315098us-gaap:RestrictedStockUnitsRSUMember2023-12-310001315098us-gaap:PerformanceSharesMemberrblx:A2022PerformanceStockUnitsMember2024-09-300001315098us-gaap:PerformanceSharesMemberrblx:A2022PerformanceStockUnitsMember2023-12-310001315098us-gaap:PerformanceSharesMemberrblx:CEOLongTermPerformanceAwardMember2024-09-300001315098us-gaap:PerformanceSharesMemberrblx:CEOLongTermPerformanceAwardMember2023-12-310001315098rblx:EquityIncentivePlanMember2024-09-300001315098rblx:EquityIncentivePlanMember2023-12-310001315098rblx:TwoThousandAndTwentyEmployeeStockPurchasePlanMember2024-09-300001315098rblx:TwoThousandAndTwentyEmployeeStockPurchasePlanMember2023-12-310001315098us-gaap:WarrantMember2024-09-300001315098us-gaap:WarrantMember2023-12-310001315098us-gaap:RestrictedStockMember2024-09-300001315098us-gaap:RestrictedStockMember2023-12-310001315098us-gaap:EmployeeStockOptionMemberrblx:TwoThousandAndFourIncentiveStockOptionPlanMember2024-09-300001315098rblx:InfrastrcutureAndTrustAndSafetyMember2024-07-012024-09-300001315098rblx:InfrastrcutureAndTrustAndSafetyMember2023-07-012023-09-300001315098rblx:InfrastrcutureAndTrustAndSafetyMember2024-01-012024-09-300001315098rblx:InfrastrcutureAndTrustAndSafetyMember2023-01-012023-09-300001315098us-gaap:ResearchAndDevelopmentExpenseMember2024-07-012024-09-300001315098us-gaap:ResearchAndDevelopmentExpenseMember2023-07-012023-09-300001315098us-gaap:ResearchAndDevelopmentExpenseMember2024-01-012024-09-300001315098us-gaap:ResearchAndDevelopmentExpenseMember2023-01-012023-09-300001315098us-gaap:GeneralAndAdministrativeExpenseMember2024-07-012024-09-300001315098us-gaap:GeneralAndAdministrativeExpenseMember2023-07-012023-09-300001315098us-gaap:GeneralAndAdministrativeExpenseMember2024-01-012024-09-300001315098us-gaap:GeneralAndAdministrativeExpenseMember2023-01-012023-09-300001315098us-gaap:SellingAndMarketingExpenseMember2024-07-012024-09-300001315098us-gaap:SellingAndMarketingExpenseMember2023-07-012023-09-300001315098us-gaap:SellingAndMarketingExpenseMember2024-01-012024-09-300001315098us-gaap:SellingAndMarketingExpenseMember2023-01-012023-09-3000013150982023-01-012023-12-310001315098rblx:RestrictedStockAwardsMember2023-12-310001315098us-gaap:RestrictedStockUnitsRSUMember2024-01-012024-09-300001315098rblx:RestrictedStockAwardsMember2024-01-012024-09-300001315098rblx:RestrictedStockAwardsMember2024-09-300001315098rblx:CEOLongTermPerformanceAwardMemberus-gaap:RestrictedStockUnitsRSUMemberrblx:FounderCEOMember2021-02-012021-02-280001315098rblx:CEOLongTermPerformanceAwardMemberus-gaap:RestrictedStockUnitsRSUMemberrblx:FounderCEOMemberus-gaap:CommonClassAMember2021-02-012021-02-280001315098rblx:A2024CEOPSUsAndRSUsMemberus-gaap:RestrictedStockUnitsRSUMemberrblx:FounderCEOMember2024-03-010001315098rblx:A2024CEOPSUsAndRSUsMember2024-03-012024-03-010001315098rblx:A2024CEOPSUsAndRSUsMember2024-03-010001315098rblx:PerformanceBasedRestrictedStockUnitsRSUsMemberrblx:A2024CEOPSUsAndRSUsMember2024-03-010001315098rblx:A2024CEOPSUsAndRSUsMemberrblx:PerformanceBasedRestrictedStockUnitsRSUsMembersrt:MinimumMember2024-03-010001315098rblx:A2024CEOPSUsAndRSUsMemberrblx:PerformanceBasedRestrictedStockUnitsRSUsMembersrt:MaximumMember2024-03-010001315098rblx:PerformanceBasedRestrictedStockUnitsRSUsMemberrblx:A2024CEOPSUsAndRSUsMember2024-01-012024-09-300001315098rblx:A2024CEOPSUsAndRSUsMemberrblx:PerformanceBasedRestrictedStockUnitsRSUsMemberus-gaap:ShareBasedCompensationAwardTrancheOneMember2024-03-012024-03-010001315098rblx:A2024CEOPSUsAndRSUsMemberrblx:PerformanceBasedRestrictedStockUnitsRSUsMemberus-gaap:ShareBasedCompensationAwardTrancheOneMember2024-03-010001315098rblx:PerformanceBasedRestrictedStockUnitsRSUsMemberrblx:A2024CEOPSUsAndRSUsMember2024-03-012024-03-010001315098rblx:A2024CEOPSUsAndRSUsMember2024-07-012024-09-300001315098rblx:A2024CEOPSUsAndRSUsMember2024-01-012024-09-300001315098rblx:A2024CEOPSUsAndRSUsMemberus-gaap:RestrictedStockUnitsRSUMemberrblx:FounderCEOMember2023-07-012023-09-300001315098rblx:A2024CEOPSUsAndRSUsMemberus-gaap:RestrictedStockUnitsRSUMemberrblx:FounderCEOMember2023-01-012023-09-300001315098us-gaap:RestrictedStockUnitsRSUMemberrblx:A2024CEOPSUsAndRSUsMember2024-03-012024-03-010001315098rblx:PerformanceBasedRestrictedStockUnitsRSUsMemberrblx:A2024ExecutivePSUAwardsMember2024-03-310001315098rblx:PerformanceBasedRestrictedStockUnitsRSUsMemberrblx:A2024ExecutivePSUAwardsMember2024-01-012024-03-310001315098rblx:PerformanceBasedRestrictedStockUnitsRSUsMemberrblx:A2024ExecutivePSUAwardsMember2024-07-012024-09-300001315098rblx:PerformanceBasedRestrictedStockUnitsRSUsMemberrblx:A2024ExecutivePSUAwardsMember2024-01-012024-09-300001315098rblx:A2023PSUAwardsMemberrblx:PerformanceBasedRestrictedStockUnitsRSUsMembersrt:MinimumMember2023-06-300001315098rblx:A2023PSUAwardsMemberrblx:PerformanceBasedRestrictedStockUnitsRSUsMembersrt:MaximumMember2023-06-300001315098rblx:PerformanceBasedRestrictedStockUnitsRSUsMemberrblx:A2023PSUAwardsMember2023-06-300001315098rblx:PerformanceBasedRestrictedStockUnitsRSUsMemberrblx:A2023PSUAwardsMember2023-04-012023-06-300001315098rblx:A2023PSUAwardsMemberrblx:PerformanceBasedRestrictedStockUnitsRSUsMemberus-gaap:ShareBasedCompensationAwardTrancheOneMember2023-04-012023-06-300001315098rblx:A2023PSUAwardsMemberrblx:PerformanceBasedRestrictedStockUnitsRSUsMemberus-gaap:ShareBasedCompensationAwardTrancheTwoMember2023-04-012023-06-300001315098rblx:PerformanceBasedRestrictedStockUnitsRSUsMemberrblx:A2023PSUAwardsMember2024-09-300001315098rblx:PerformanceBasedRestrictedStockUnitsRSUsMemberrblx:A2023PSUAwardsMember2024-01-012024-09-3000013150982024-08-012024-08-010001315098rblx:A2023PSUAwardsMemberrblx:PerformanceBasedRestrictedStockUnitsRSUsMemberrblx:MichaelGuthrieMember2024-08-012024-08-010001315098rblx:PerformanceBasedRestrictedStockUnitsRSUsMemberrblx:A2023PSUAwardsMember2024-07-012024-09-300001315098rblx:PerformanceBasedRestrictedStockUnitsRSUsMemberrblx:A2023PSUAwardsMember2023-07-012023-09-300001315098rblx:PerformanceBasedRestrictedStockUnitsRSUsMemberrblx:A2023PSUAwardsMember2023-01-012023-09-300001315098rblx:PerformanceBasedRestrictedStockUnitsRSUsMemberrblx:A2022PSUAwardsMember2022-06-300001315098rblx:A2022PSUAwardsMemberrblx:PerformanceBasedRestrictedStockUnitsRSUsMembersrt:MinimumMember2022-06-300001315098rblx:A2022PSUAwardsMemberrblx:PerformanceBasedRestrictedStockUnitsRSUsMembersrt:MaximumMember2022-06-300001315098rblx:PerformanceBasedRestrictedStockUnitsRSUsMemberrblx:A2022PSUAwardsMember2022-04-012022-06-300001315098rblx:PerformanceBasedRestrictedStockUnitsRSUsMemberrblx:A2022PSUAwardsMember2024-07-012024-09-300001315098rblx:PerformanceBasedRestrictedStockUnitsRSUsMemberrblx:A2022PSUAwardsMember2024-01-012024-09-300001315098rblx:PerformanceBasedRestrictedStockUnitsRSUsMemberrblx:A2022PSUAwardsMember2023-07-012023-09-300001315098rblx:PerformanceBasedRestrictedStockUnitsRSUsMemberrblx:A2022PSUAwardsMember2023-01-012023-09-300001315098rblx:TwoThousandAndTwentyEmployeeStockPurchasePlanMember2024-07-012024-09-300001315098rblx:TwoThousandAndTwentyEmployeeStockPurchasePlanMember2024-01-012024-09-300001315098rblx:TwoThousandAndTwentyEmployeeStockPurchasePlanMember2023-07-012023-09-300001315098rblx:TwoThousandAndTwentyEmployeeStockPurchasePlanMember2023-01-012023-09-300001315098us-gaap:AccumulatedTranslationAdjustmentMember2023-12-310001315098us-gaap:AccumulatedNetUnrealizedInvestmentGainLossMember2023-12-310001315098us-gaap:AccumulatedTranslationAdjustmentMember2024-01-012024-09-300001315098us-gaap:AccumulatedNetUnrealizedInvestmentGainLossMember2024-01-012024-09-300001315098us-gaap:AccumulatedTranslationAdjustmentMember2024-09-300001315098us-gaap:AccumulatedNetUnrealizedInvestmentGainLossMember2024-09-300001315098rblx:EmployeeMemberrblx:NQDCPlanMember2024-01-012024-09-300001315098rblx:NonEmployeeDirectorMemberMemberrblx:NQDCPlanMember2024-01-012024-09-300001315098rblx:RobloxChinaHoldingCorpMember2019-02-280001315098rblx:RobloxChinaHoldingCorpMemberrblx:SonghuaRiverInvestmentLimitedMember2019-02-012019-02-280001315098rblx:SonghuaRiverInvestmentLimitedMemberrblx:RobloxChinaHoldingCorpMember2019-02-280001315098rblx:RobloxChinaHoldingCorpMemberrblx:A60NotesDue2026Memberus-gaap:UnsecuredDebtMember2023-05-100001315098rblx:RobloxChinaHoldingCorpMemberrblx:A60NotesDue2026Memberus-gaap:UnsecuredDebtMember2023-05-102023-05-100001315098rblx:RobloxChinaHoldingCorpMemberrblx:A60NotesDue2026Member2023-05-102023-05-100001315098rblx:A60NotesDue2026Memberrblx:SonghuaRiverInvestmentLimitedMember2023-05-102023-05-100001315098rblx:A60NotesDue2026Memberus-gaap:UnsecuredDebtMember2023-05-100001315098rblx:A60NotesDue2026Member2024-07-012024-09-300001315098rblx:A60NotesDue2026Member2024-01-012024-09-300001315098rblx:A60NotesDue2026Member2023-07-012023-09-300001315098rblx:A60NotesDue2026Member2023-01-012023-09-300001315098us-gaap:EmployeeStockOptionMember2024-01-012024-09-300001315098us-gaap:EmployeeStockOptionMember2023-01-012023-09-300001315098us-gaap:RestrictedStockUnitsRSUMember2024-01-012024-09-300001315098us-gaap:RestrictedStockUnitsRSUMember2023-01-012023-09-300001315098rblx:TwoThousandAndTwentyEmployeeStockPurchasePlanMember2024-01-012024-09-300001315098rblx:TwoThousandAndTwentyEmployeeStockPurchasePlanMember2023-01-012023-09-300001315098rblx:TwoThousandAndTwentyThreePSUsGrantsMember2024-01-012024-09-300001315098rblx:TwoThousandAndTwentyThreePSUsGrantsMember2023-01-012023-09-300001315098us-gaap:WarrantMember2024-01-012024-09-300001315098us-gaap:WarrantMember2023-01-012023-09-300001315098us-gaap:RestrictedStockMember2024-01-012024-09-300001315098us-gaap:RestrictedStockMember2023-01-012023-09-300001315098us-gaap:SubsequentEventMember2024-10-310001315098us-gaap:SubsequentEventMembersrt:MinimumMember2024-10-310001315098us-gaap:SubsequentEventMembersrt:MaximumMember2024-10-31
目錄
美國
證券交易委員會
華盛頓特區20549
表格 10-Q 
(標記一個)
☒根據1934年證券交易法第13或15(d)條款的季度報告。
截至2024年6月30日季度結束 2024年9月30日

或
☐根據1934年證券交易法第13或15(d)條款的過渡報告
過渡期從
委員會檔案編號： 001-39763
roblox公司
（根據其章程所指定的正式名稱）
特拉華州 20-0991664
(依據所在地或其他管轄區)
的註冊地或組織地點)		 (國稅局雇主識別號碼)
識別號碼)
970公園道。
San Mateo, 加利福尼亞州, 94403
(主要執行辦公室的地址和郵政編碼)
(888) 858-2569
(註冊人電話號碼，包括區號)
根據本法第 12 (b) 條註冊的證券：
每種類別的名稱 交易
標的		 每個交易所的名稱
註冊在哪裡的
普通A級股票，面值$0.0001 RBLX 紐約證券交易所
請以勾選的方式表示，公司是否（1）在過去12個月內（或者該公司需要提交此類報告的較短期限內）按照1934年證券交易法第13條或第15(d)條的要求提交了所有應提交的報告，以及（2）在過去90天內一直受到此類報告要求的約束。是☒ 否 ☐
請勾選表示：申報人在過去12個月內(或其應當提交此类文件的縮短期間內)，是否已提出每份互動數據文件，該提交根據Regulation S-t第405條規定(本章232.405條)。是☒ 否 ☐
勾選表示登記人是大型加速申報人、加速申報人、非加速申報人、較小型申報公司或新興成長公司。詳細定義請參閱《交易所法》第1202條中“大型加速申報人”、“加速申報人”、“較小型申報公司”和“新興成長公司”的定義。
大型加速歸檔人 ☒  加速檔案提交者 ☐
非加速歸檔人 ☐  較小報告公司 ☐
新興成長企業 ☐   
如果是新興成長型公司，請在勾選處表明，若公司已選擇不適用根據《交易所法》第13(a)條提供的任何新的或修改後的財務會計標準的延長過渡期。 ☐
以勾號標示註冊人是否為外殼公司（如《交易法》第 120 億 2 條所定義）。是☐否 ☒
截至2024年10月15日，申報人大約持有 607,546,629 一級普通股股份及其 48,677,643 股B類普通股，每股面值為$0.0001。

目錄
目錄
  頁面
第一部分
項目一。
項目二。
第三項目。
第四項。
第二部分。
項目一。
項目 1A。
項目二。
第三項目。
第四項。
第五項。
第六項
i
目錄
有關前瞻性陳述的特別提示
本季度10-Q表上的這些前瞻性陳述涉及聯邦證券法律意義上的重大風險和不確定性。前瞻性陳述通常涉及未來事件或我們未來的財務或營運表現。在某些情況下，你可以識別前瞻性陳述，因為它們包含如 “期待”、“預期”、“應該”、“相信”、“希望”、“目標”、“項目”、“計劃”、“目標”、“估算”、“潛力”、“預測”、“可能”、“將”、“可能”、“會”、“可能”、“將”、“打算”、“應該”、“考慮”、“機遇”、“繼續”等字眼，或這些詞語的否定形式，或其他類似詞語或表達，涉及我們的期望、策略、計劃或意圖。本季度10-Q報告中包含的前瞻性陳述包括，但不限於以下陳述：
•我們對未來財務表現的預期，包括但不限於我們對營業收入、營業成本、付費使用者預計平均壽命的變化、營業費用、營業損失、營業杠杆和關鍵指標的期望，以及我們實現和保持未來盈利能力的能力；
•我們成功執行業務和增長策略的能力，包括我們擴大和發展廣告業務、國際用戶、開發者和創作者的潛力以及創造新的營業收入機會的能力;
•我們的現金及現金等價物是否足夠滿足我們的流動性需求；
•經濟、季節和行業趨勢；
•我們平台的功能和經濟效益在操作系統、分發渠道和軟體應用商店中。
•我們平台的需求整體上增加了;
•我們有能力保留和增加用戶數、開發者和創作者；
•通脹和全球經濟條件對我們的運營產生的影響；
•我們能夠及時開發並推出我們的平台增強功能。
•我們對未來業務的信念和目標;
•我們的能力吸引和留住員工和重要人才，並保持我們的企業文化;
•未來的收購或投資，包括增加產能的製造行業投資；
•開發者能夠為用戶建立、推出、擴展和獲利化的體驗；
•我們對於能從我們的用戶獲得營業收入的期望；
•我們將用戶轉化為開發者和創作者的能力;
•我們對於新目標客群的期望;
•我們能夠繼續為在線環境，特別是兒童提供安全和文明的環境；
•我們開發和保護品牌的能力；
•我們維護平台的安防和可用性的能力;
•我們能夠檢測和最小化對我們平台的未經授權使用。
•供應鏈中斷對我們擴充或增加平台容量，以及更換有缺陷設備的能力造成的影響。
•我們的業務模式和預期，以及對未來增長的管理，包括人員增長率、國際市場擴展和相關支出。
•我們與現有和新競爭對手競爭的能力；
•關於未了結的訴訟和法律及監管事項，我們的期望；
•關於我們、我們的業務或我們的市場的不準確或不利第三方報告，包括做空者的報告，影響和效果。
•我們對現行和發展中的法律法規效果的期望，包括涉及隱私、數據保護、在線安全以及將Robux作爲一種安防在美國和國際上的監管，以及這些法律法規如何可能干擾用戶、開發者和創作者訪問我們平台和體驗的情況；
•我們對Robux作爲一種有吸引力的虛擬貨幣的期望；
•我們的目標是儘可能增加開發者和創作者的收入；
1
目錄
•地緣政治事件的影響，包括烏克蘭戰爭、以哈馬斯襲擊以色列爲起因的中東衝突，以及它們對全球經濟的影響；
•我們對新會計準則的期望；
•我們實現和保持有效財務報告控制的能力;
•外幣匯率和利率期貨對經營業績的影響;
•我們的估計與股票補償費用有關；
•產生足夠的現金以償付我們的債務和其他適用於我們負債的義務；以及
•與成爲一家上市公司相關的費用增加。
我們提醒您，上述列表可能不包含在本季度報告第10-Q表格中所做的所有前瞻性聲明。
您不應當將前瞻性聲明視爲未來事件的預測。我們在本季度的10-Q表格中的前瞻性聲明主要基於我們對未來事件和趨勢的當前期望和預測，我們認爲這些事件和趨勢可能會影響到我們的業務、財務狀況、經營業績和前景。這些前瞻性聲明中描述的事件的結果受風險、不確定性和其他因素的影響，包括「風險因素」部分和本季度的10-Q表格的其他地方所描述的。此外，我們運作環境競爭激烈且迅速變化。新的風險和不確定性不時出現，我們無法預測所有可能對本季度10-Q表格中的前瞻性聲明產生影響的風險和不確定性。我們無法保證前瞻性聲明中反映的結果、事件和情況將實現或發生，實際結果、事件或情況可能與前瞻性聲明中描述的有重大差異。
我們和任何其他人對這些前瞻性聲明的準確性和完整性不承擔責任。此外，在這份《10-Q表格季度報告》中所做的前瞻性聲明僅涉及聲明發表之日起的事件。我們無義務更新本《10-Q表格季度報告》中作出的任何前瞻性聲明，以反映本《10-Q表格季度報告》之日後發生的事件或情況，或反映新信息或未預期事件的發生，除非法律要求。我們可能無法實際實現我們前瞻性聲明披露的計劃、意圖或期望，您不應過度依賴我們的前瞻性聲明。我們的前瞻性聲明不反映任何未來收購、合併、處置、合資或投資可能產生的潛在影響。
2
目錄
關於運營指標的特別說明
我們通過跟蹤幾個運營指標來管理我們的業務，包括平均每日活躍用戶數（「DAUs」），參與的小時數，預訂量，平均每個DAU的預訂量（「ABPDAU」），平均新舊月度獨立付款者，月度回購率，以及每月獨立付款者的平均預訂量。作爲管理團隊，我們相信這些運營指標中的每一個都爲投資者和其他人提供了有用的信息。有關我們測量的指標的信息，請參閱「管理層對財務狀況和經營結果的討論與分析。」
儘管這些指標是基於我們認爲是適用於測量期間的用戶基數的合理估計，但在衡量我們平台的使用方式時存在固有挑戰。這些指標是通過我們開發和運營的內部數據分析平台確定的，並未經獨立第三方驗證。該平台跟蹤用戶帳戶和會話活動。如果我們未能維護有效的分析平台，我們的指標計算可能會出現不準確。這些指標還取決於用戶提供給我們的某些人口統計數據，如年齡或性別。如果我們的用戶向我們提供不正確或不完整的信息，那麼我們的估計可能會不準確。我們的估計也可能會隨着方法和平台的演變而改變，包括應用新的數據集或技術，或隨着平台通過新功能和增強功能的更改而改變。
我們相信這些指標是對我們的用戶基數在適用測量期的合理估計，並且我們不時採用和更新的方法來創造這些指標是識別用戶行爲趨勢的合理基礎。由於我們不時更新創造指標的方法，我們目前的期間指標可能無法與過去期間的指標進行比較。例如，在2023年第一季度，我們修改了我們用於計算通過指定分銷商之一購買預付卡的付費用戶的平均每月獨立付費用戶數的方法（對2023年第一季度前的期間的平均新增及返回每月獨立付費用戶以及每月獨立付費用戶的平均預訂量的影響並不顯著）。同樣，我們的指標可能與第三方發佈的估計或其他公司的同名指標由於方法的不同而有所不同。最後，我們的指標的準確性可能受到與用戶活動以及我們平台系統、以及我們識別和檢測試圖複製合法用戶活動的嘗試有關的某些因素的影響，通常稱爲機器人操作。請參閱標題爲「風險因素—我們的用戶指標和其他估計面臨固有的測量挑戰，這些指標的實際或被認爲是不準確的情況可能嚴重損害並負面影響我們的聲譽和業務。」
DAUs
我們將DAU定義爲在給定日曆日的獨立註冊帳戶上通過我們的網站或應用程序登錄並訪問roblox的用戶。如果註冊用戶在跨越兩個日曆日的24小時內訪問roblox超過一次，則該用戶僅在第一個日曆日被視爲DAU。我們認爲這種方法更好地反映了平台上的全球參與度，而不是純粹基於每日日曆截止的方法。特定時間段的DAU是該時間段內每天的DAU的平均值。例如，9月份的DAU將是該30天時間段內每天DAU的平均值。
其他公司，包括我們行業板塊的公司，可能以不同方式計算DAU。
我們追蹤DAU，作爲衡量我們平台受衆規模的指標。DAU也按地域板塊細分，幫助我們了解在我們平台上的全球參與度。
收集的地理位置數據基於與帳戶關聯的IP地址，該IP地址在用戶最初在roblox上註冊時。IP地址可能並不總是準確反映用戶在使用我們平台時的實際位置。歷史上，我們將Xbox用戶歸爲「世界其他地區」以供報告目的（自2020年第四季度以來，Xbox用戶在我們總季度DAU和季度使用時長中佔不到2%）。從2023年第四季度開始，Xbox用戶將按其各自的地理位置報告。
3
目錄
由於DAU衡量帳戶活躍度，一個用戶可能在特定一天內使用我們的平台的多個帳戶，而這些帳戶均是該用戶註冊的，因此我們的DAU不是衡量訪問roblox的獨立個體的指標。「用戶」或「用戶群」在本報告中的提及指的是我們定義的DAU描述中的用戶。此外，如果未被發現，詐騙和未經授權訪問我們的平台可能不時導致DAU被誇大。在許多情況下，欺詐帳戶是由機器人創建的，旨在爲我們平台上特定開發人員的內容增加用戶活躍度，從而使開發人員的體驗（指由開發人員創建的標題）或其他內容看起來比實際更受歡迎。我們致力於檢測和減少詐騙和未經授權訪問我們的平台。請參閱標題爲「風險因素—我們的用戶指標和其他估計存在固有的測量挑戰，這些指標的真實性或感知上的不準確可能會嚴重損害並負面影響我們的聲譽和業務」，以及「風險因素—我們平台上的一些開發人員、創作者和用戶可能未經授權、欺詐或非法使用Robux和其他數字商品或體驗，包括通過未經授權的第三方網站或「作弊」程序。」
訂婚時間
我們將用戶在平台上花費的時間定義爲參與小時數。我們通過計算給定時期內用戶會話長度的總和來計算總參與小時數。我們使用內部公司系統來估計這段時間的長度，該系統跟蹤用戶在我們平台上的活動作爲離散事件，並將這些離散活動彙總到一個用戶會話中。在我們平台上的特定用戶會話中可能包括諸如在體驗中花費的時間、在 roblox Studio 中的時間、在聊天和頭像個性化等平台功能中的時間、在創作者商店中的時間，以及由於跟蹤系統和我們的估算方法內的限制而導致的一定數量的非活動時間。由於功能和用戶行爲上的固有差異，我們的平台上的用戶會話可能會在不同設備和平台上進行不同方式的跟蹤，包括移動設備、平板電腦、網絡、桌面電腦和 遊戲主機。隨着我們不斷開發新功能和產品，我們預計我們的用戶會話計算將繼續發展。我們繼續審查我們的用戶會話計算方法，並可能開發替代計算方法，以提高未來時期一致性和準確性。
我們追蹤參與小時數作爲用戶在我們平台上的參與度指標。參與小時數也根據地域板塊細分，幫助我們了解全球貨幣在我們平台上的參與度。
我們不斷努力提升公司系統的複雜度，以偵測各種用戶活動，包括機器人操作、非活動時間和所有設備上的其他活動。隨着我們不斷改進對平台和不同設備上特定用戶行爲的檢測和阻止能力，包括對平台未經授權使用的監測，我們可能會看到我們整體參與時間受到影響，因爲我們的測量系統不斷髮展，而我們減少機器人操作的努力變得更加成功。
查看"風險因素 - 我們的用戶指標和其他估計受到測量中固有挑戰的影響，這些指標的真實或被理解爲不準確可能嚴重損害並負面影響我們的聲譽和業務。"
預訂
預訂代表在特定時期內的銷售活動，不考慮某些非現金調整的影響，如下所詳。我們絕大部分的預訂是通過銷售虛擬貨幣而產生的，這些貨幣最終可以兌換爲平台上的虛擬物品。作爲預訂的虛擬貨幣銷售包括通過支付處理器購買的一次性購買或月度訂閱，或通過預付卡購買。預訂最初記錄在遞延營收中，並按照消費者使用虛擬貨幣購買的虛擬物品在平台上可用的預估時間段（估計爲付費用戶的平均生命週期）或虛擬貨幣購買的虛擬物品被消耗時確認爲營業收入。預訂還包括來自廣告和許可安排中微不足道的金額。
我們相信預訂提供了對我們業務運營結果趨勢更及時的指示，這並不一定反映在我們的營業收入上，因爲我們將大部分營業收入確認在付費用戶的預計平均壽命上，該平均壽命從2024年第一季度的28個月降至2024年第二季度的27個月。遞延收入的變化構成了從營業收入到預訂的協調差異的絕大部分。通過排除這些非現金調整，我們能夠根據實際與用戶的交易時間以及這些交易所產生的現金來衡量和監控我們的業務績效。從長期來看，影響我們營業收入和預訂趨勢的因素是相同的。然而，在短期內，可能會有因素導致營業收入和預訂趨勢出現差異。
4
目錄
我們使用這些非GAAP財務信息來評估我們的持續運營情況，並用於內部規劃和預測。我們認爲這些非GAAP財務信息可能對投資者有所幫助，因爲它提供了與過去財務績效的一致性和可比性。然而，非GAAP財務指標在對投資者的用處上存在侷限性，因爲它們沒有GAAP規定的標準含義，並且沒有按任何全面的會計規則或原則準備。此外，其他公司，包括我們所在行業的公司，可能會以不同方式計算同名非GAAP財務指標，或者可能使用其他指標來評估其績效，所有這些都可能降低我們的非GAAP財務信息作爲比較工具的實用性。因此，我們的非GAAP財務信息僅用於補充信息目的，不應單獨或作爲根據GAAP提供的財務信息的替代品來考慮。
預訂還根據我們付款人的賬單國家對地域板塊進行了拆分，以幫助我們了解平台上的全球參與和貨幣化。賬單地址未必總能準確反映付款人在購買時的實際位置。
ABPDAU
我們將ABPDAU定義爲特定期間內的預訂金額除以該期間的DAUs。我們主要使用ABPDAU來了解通過出售虛擬貨幣和訂閱向所有用戶進行貨幣化的方式。ABPDAU還按地域板塊進行拆分，以幫助我們了解平台上的全球貨幣化。
新用戶和老用戶每月平均獨立付款者及每月回購率
我們將新的月度獨立付款用戶定義爲在平台上首次付款或通過充值卡兌換付款的用戶帳戶，在特定月份內。 指定期間的平均新月度獨立付款用戶是該期間內每個月新月度獨立付款用戶的平均值。 由於我們並非總是具備將已在多個用戶帳戶下付款的個人進行關聯所需的數據，因此個人可能被計爲多個新的月度獨立付款用戶。
我們將每月返回的獨立付款用戶定義爲在平台上進行付款或通過預付卡兌現的用戶帳戶，在當月和任何先前月份。指定週期內的平均每月返回的獨立付款用戶是該期間內每個月的每月返回的獨立付款用戶的平均值。由於我們並不總是擁有必要的數據來關聯在多個用戶帳戶下付款的個人，因此一個個人可能被計爲多個每月返回的獨立付款用戶。
我們將月度回購率定義爲本月返回的獨立付款者人數，除以上個月新的獨立付款者和返回的獨立付款者人數總和。特定時期的平均月度回購率是該時期每個月的月度回購率的平均值。
每月獨立付款人的平均預訂次數
我們將每月獨立付款人的平均預訂定義爲指定期間的預訂數除以相同指定期間的平均每月獨立付款人數。
5
目錄
第一部分——財務信息
項目1.基本報表（未經審計）
robloxcorporation
簡明合併資產負債表
（以千美元爲單位，除權價值）
(未經審計)
 截至
 
2024年9月30日
2023年12月31日
資產
流動資產：
現金及現金等價物$602,631 $678,466 
短期投資1,720,323 1,514,808 
應收賬款淨額385,591 505,769 
預付費用和其他流動資產70,702 74,549 
營業收入遞延成本，流動部分588,915 501,821 
總流動資產3,368,162 3,275,413 
所有基金類型投資1,558,846 1,043,399 
房地產和設備淨值642,637 695,360 
經營租賃權使用資產626,486 665,107 
營業收入遞延成本，長期部分295,894 283,326 
無形資產, 淨額38,486 53,060 
商譽142,236 142,129 
其他15,215 10,284 
總資產$6,687,962 $6,168,078 
負債和股東權益
流動負債:
應付賬款$42,842 $60,087 
應計費用及其他流動負債273,694 271,121 
開發者交易所負債330,271 314,866 
待確認營業收入-流動部分2,792,396 2,406,292 
流動負債合計3,439,203 3,052,366 
待確認營業收入-扣除流動部分1,397,803 1,373,250 
經營租賃負債620,257 646,506 
長期負債淨額1,006,023 1,005,000 
其他長期負債46,218 22,330 
負債合計6,509,504 6,099,452 
股東權益：
股東權益
普通股，每股面值爲 $0.0001；0.0001每股面值; 5,000,000 於2024年9月30日和2023年12月31日批准授權 656,132和頁面。631,221 分別爲2024年9月30日和2023年12月31日已發行並流通的股份；A類普通股—4,935,000 於2024年9月30日和2023年12月31日批准授權 607,454和頁面。581,135 自2024年9月30日和2023年12月31日分別已發行和流通股數；B類普通股—65,000 截至2024年9月30日和2023年12月31日，已授權股數爲 48,678和頁面。50,086 截至2024年9月30日和2023年12月，已發行和流通股份分別爲
62 61 
額外實收資本3,949,491 3,134,946 
累計其他綜合收益/（虧損）
16,416 1,536 
累積赤字(3,776,064)(3,060,253)
roblox公司股東權益總額189,905 76,290 
非控股權益(11,447)(7,664)
未經審計的中期簡明合併利潤表 截至2024年6月30日和2023年6月30日的六個月期間 （以美元千元爲單位，每股數據和每股數據除外）178,458 68,626 
負債和股東權益總計$6,687,962 $6,168,078 
隨附說明是這些簡明合併財務報表的一部分。
6
目錄
robloxcorporation
簡明合併利潤表
（以千爲單位，每股金額除外）
(未經審計)
 三個月之內結束九個月結束
2020年9月30日2020年9月30日
 2024202320242023
營業收入$918,953 $713,225 $2,613,796 $2,049,335 
成本和費用：
營業收入成本(1)
204,998 163,581 582,421 477,451 
開發人員交易所費用231,536 170,719 642,211 519,002 
製造行業和信任與安全244,598 218,968 692,596 655,051 
研發365,424 321,613 1,089,173 912,469 
ZSCALER, INC.98,733 97,508 302,184 291,279 
銷售及營銷費用52,592 40,874 124,416 97,957 
總成本和費用1,197,881 1,013,263 3,433,001 2,953,209 
經營虧損(278,928)(300,038)(819,205)(903,874)
利息收入46,718 36,442 133,271 102,288 
利息支出(10,286)(10,268)(30,853)(30,409)
其他收入/（費用），淨額2,352 (4,262)(1,309)(1,425)
稅前虧損(240,144)(278,126)(718,096)(833,420)
所得稅借項（或貸項）303 682 1,466 177 
合併淨虧損(240,447)(278,808)(719,562)(833,597)
歸屬於非控股股權持有人的淨損失(1,123)(1,650)(3,751)(5,349)
歸屬於普通股股東的淨虧損$(239,324)$(277,158)$(715,811)$(828,248)
每股普通股股東淨虧損，基本與稀釋後$(0.37)$(0.45)$(1.11)$(1.35)
用於計算每股淨虧損歸屬於普通股股東的加權平均份額—基本和稀釋650,961 619,350 642,977 612,938 
(1)服務器和製造行業設備的折舊已經包括在製造行業和信任&安全中。
隨附說明是這些簡明合併財務報表的一部分。
7
目錄
robloxcorporation
綜合損失簡明合併財務報表
（以千爲單位）
(未經審計)
 三個月之內結束九個月結束
2020年9月30日2020年9月30日
 2024202320242023
合併淨虧損$(240,447)$(278,808)$(719,562)$(833,597)
其他綜合收益/（虧損），淨額（稅後）：
外幣翻譯調整1,303 (506)682 301 
可供出售金融資產未實現收益/(損失)的淨變動21,223 (1,263)14,166 (16,443)
其他綜合收益/(虧損)，稅後淨額22,526 (1,769)14,848 (16,142)
包括非控股權益的總綜合損失(217,921)(280,577)(704,714)(849,739)
扣除歸屬於非控制股權的淨虧損後的淨收益/(虧損)(1,123)(1,650)(3,751)(5,349)
減：歸屬於非控股權益的累計外匯調整(119)15 (32)408 
歸屬於非控股權益的其他綜合損失，扣除稅後淨額(1,242)(1,635)(3,783)(4,941)
歸屬於普通股股東的全面損失$(216,679)$(278,942)$(700,931)$(844,798)
隨附說明是這些簡明合併財務報表的一部分。
8
目錄
robloxcorporation
股東權益的簡明合併報表
（以千爲單位）
(未經審計)
2024年9月30日止三個月
 A 類和
B 級
普通股		額外
付費
資本		累積
其他
全面
收入/（損失）		累積
赤字		非-
控制
利息		總計
股東
股權
 股票金額
截至 2024 年 6 月 30 日的餘額646,611 $61 $3,664,414 $(6,229)$(3,536,740)$(10,205)$111,301 
行使股票期權時發行普通股3,529 1 8,887 — — — 8,888 
根據員工股票購買計劃發行普通股445 — 11,025 — — — 11,025 
限制性股票單位的歸屬5,547 — — — — — — 
股票薪酬支出— — 265,165 — — — 265,165 
其他綜合收益/（虧損）— — — 22,645 — (119)22,526 
淨虧損— — — — (239,324)(1,123)(240,447)
截至 2024 年 9 月 30 日的餘額656,132 $62 $3,949,491 $16,416 $(3,776,064)$(11,447)$178,458 
2024年9月30日止九個月
 A 類和
B 級
普通股		額外
付費
資本		累積
其他
全面
收入/（損失）		累積
赤字		非-
控制
利息		總計
股東
股權
 股票金額
截至2023年12月31日的餘額631,221 $61 $3,134,946 $1,536 $(3,060,253)$(7,664)$68,626 
行使股票期權時發行普通股7,815 1 21,220 — — — 21,221 
根據員工股票購買計劃發行普通股1,530 — 35,767 — — — 35,767 
限制性股票單位的歸屬15,566 — — — — — — 
股票薪酬支出— — 757,558 — — — 757,558 
其他綜合收益/（虧損）— — — 14,880 — (32)14,848 
淨虧損— — — — (715,811)(3,751)(719,562)
截至 2024 年 9 月 30 日的餘額656,132 $62 $3,949,491 $16,416 $(3,776,064)$(11,447)$178,458 
隨附說明是這些簡明合併財務報表的一部分。
9
目錄
robloxcorporation
股東權益的簡明合併報表
（以千爲單位）
(未經審計)
2023年9月30日止三個月
 A 類和
B 級
普通股		額外
付費
資本		累積
其他
全面
收入/（虧損） 		累積
赤字		非-
控制
利息		總計
股東
股權
 股票金額
截至 2023 年 6 月 30 日的餘額616,301 $60 $2,641,929 $(14,095)$(2,459,397)$(4,297)$164,200 
行使股票期權時發行普通股3,047 — 6,501 — — — 6,501 
根據員工股票購買計劃發行普通股426 — 9,708 — — — 9,708 
限制性股票單位的歸屬3,814 — — — — — — 
股票薪酬支出— — 220,022 — — — 220,022 
其他綜合收益/（虧損）— — — (1,784)— 15 (1,769)
淨虧損— — — — (277,158)(1,650)(278,808)
截至 2023 年 9 月 30 日的餘額623,588 $60 $2,878,160 $(15,879)$(2,736,555)$(5,932)$119,854 
2023年9月30日止九個月
 A 類和
B 級
普通股		額外
付費
資本		累積
其他
全面
收入/（損失）		累積
赤字		非-
控制
利息		總計
股東
股權
 股票金額
截至2022年12月31日的餘額604,674 $59 $2,213,603 $671 $(1,908,307)$(991)$305,035 
行使股票期權時發行普通股7,618 1 17,640 — — — 17,641 
根據員工股票購買計劃發行普通股1,065 — 29,629 — — — 29,629 
限制性股票單位的歸屬10,231 — — — — — — 
股票薪酬支出— — 617,288 — — — 617,288 
其他綜合收益/（虧損）— — — (16,550)— 408 (16,142)
淨虧損— — — — (828,248)(5,349)(833,597)
截至 2023 年 9 月 30 日的餘額623,588 $60 $2,878,160 $(15,879)$(2,736,555)$(5,932)$119,854 
隨附說明是這些簡明合併財務報表的一部分。
10
目錄
robloxcorporation
現金流量表簡明綜合報表
（以千爲單位）
(未經審計)
 
截至9月30日的九個月
 20242023
經營活動現金流量：
合併淨虧損$(719,562)$(833,597)
調整以協調淨損失，包括非控制利益，以淨現金和經營活動提供的現金及現金等價物：
折舊與攤銷費用175,126 153,611 
股票補償費用757,558 617,288 
經營租賃非現金費用88,592 70,801 
有價證券的(累積)/攤銷淨額(60,442)(52,219)
債務發行成本攤銷1,023 982 
減值費用，投資損益/(利潤)以及其他資產出售損益及其他，淨額2,350 7,747 
運營資產和負債的變化，除併購效應外的淨額：
應收賬款119,460 93,174 
預付費用和其他流動資產3,340 (1,861)
營業收入待攤費用(99,491)(62,074)
其他(4,922)(6,189)
應付賬款(4,404)3,855 
應計費用及其他流動負債(15,278)(2,599)
開發者交易所負債15,405 7,724 
遞延收入409,809 360,098 
經營租賃負債(54,621)(46,837)
其他長期負債23,882 4,971 
淨現金及現金等價物提供的經營活動637,825 314,875 
投資活動現金流量：
購置房地產和設備(115,786)(255,470)
與業務組合相關的支付，減去取得的現金(2,840)(3,859)
購買無形資產(1,370)(13,500)
投資購買(3,474,187)(3,803,911)
投資到期日2,431,770 956,010 
投資銷售額394,853 346,766 
投資活動使用的淨現金及現金等價物(767,560)(2,773,964)
籌集資金的現金流量：
普通股的發行收益57,196 47,316 
債務發行收入— 14,700 
與收購相關的融資支付(4,450)(750)
籌資活動提供的淨現金及現金等價物52,746 61,266 
匯率變動對現金及現金等價物的影響1,154 398 
現金及現金等價物的淨增加/(減少)(75,835)(2,397,425)
現金及現金等價物
期初678,466 2,977,474 
期末$602,631 $580,049 
非現金投資和籌資活動補充披露：
在應付賬款、應計費用和其他負債中的物業和設備增加$23,255 $62,248 
隨附說明是這些簡明合併財務報表的一部分。
11
目錄
roblox公司
簡明聯合財務報表附註(未經審計)
1. 機構和業務描述
業務描述
Roblox公司（以下簡稱「公司」或「roblox」）於2004年3月根據特拉華州的法律成立。 公司經營一個免費使用的沉浸式平台，用於連接和溝通（稱爲「Roblox平台」或「平台」），人們可以在這裏創建、玩耍、工作、學習，並與我們全球創作者社區建立聯繫。 用戶可以自由地沉浸在Roblox平台上的體驗中，並可以通過使用購買的Robux，我們的虛擬貨幣，獲得特定體驗的增強功能或角色扮演物品。 任何用戶都可以使用Roblox Studio（一套免費軟件工具）成爲平台上的開發者或創作者。 開發者和創作者構建在Roblox上發佈的體驗，並可以通過實現體驗的商業化、創建和出售或轉售角色扮演物品，或創建和出售Roblox Studio插件來賺取Robux。
2. 報告基礎及重要會計政策摘要
財年
公司的財政年度截止於12月31日。例如，提到2024年和2023年的財政年度是指分別截至2024年12月31日和2023年12月31日。
報告範圍
附帶的未經審計簡明綜合財務報表是根據美國通用會計準則（「U.S. GAAP」）和美國證券交易委員會（「SEC」）的適用規則和法規編制的，涉及中期財務報告。因此，它們不包括通常在根據U.S. GAAP編制的年度綜合財務報表中需要披露的所有信息。因此，應當將這些未經審計的簡明綜合財務報表與公司截至2023年12月31日在SEC提交的10-k表格上披露的審計綜合財務報表和附註一起閱讀。
公司認爲，本文件中包含的信息已經進行了所有必要的調整，以公平地展示公司的經營業績、財務狀況、現金流量和股東權益。所有這些調整都屬於正常、經常性質。本報告中顯示的截至2024年9月30日三個月和九個月的經營業績，並不能必然反映出截至2024年12月31日全年或其他任何中間期望預期的結果。
有關公司重要會計政策的討論，請參閱下文的「外幣交易」標題，以及公司合併財務報表中描述的重要會計政策和相關附註，這些內容包括截至2023年12月31日的公司年度10-K表格以及於2024年2月21日向美國證券交易委員會提交的年度報告。
合併原則
綜合簡明財務報表包括公司及其控股子公司的賬目。所有公司間交易和餘額已經被消除。綜合簡明財務報表包括絕大部分以及全部擁有股權的子公司的賬目，並且少數投資者的股權被記錄爲非控制權益。
12
目錄
使用估計
根據美國通用會計準則編制簡明綜合財務報表需要管理層進行涉及到影響簡明綜合財務報表及附註中報告數額的估計和假設。在簡明綜合財務報表中反映的重要估計和假設包括但不限於虛擬物品對用戶的可用時間估計，該時間被估計爲付費用戶的平均生命週期，以及購買的消耗品和耐用品虛擬物品的估計金額，其中公司缺乏用於收入確認的具體信息，預付卡銷售相關的預期報廢量估計，物業和設備以及無形資產的預期使用壽命，通過收購獲得的資產和負債的公允價值，應計負債（包括應計的開發者交易所費用），或有負債，遞延稅款資產和負債的估值，以股權爲基礎的薪酬開支，用於衡量經營租賃負債的折現率，經營租賃使用權利資產的賬面價值，商譽，無形資產和長期資產的可收回性評估，以及必要時，公允價值估計以衡量減值損失。管理層認爲他們依賴的估計和判斷是合理的，基於他們在作出這些估計和判斷時可獲得的信息。實際結果可能與這些估計不同，任何這樣的差異可能對簡明綜合財務報表具有重大影響。在這些估計和實際結果之間存在重大差異的程度上，公司的簡明綜合財務報表將受到影響。
會計估計變更
在2024年第二季度初，我們更新了預估付費用戶壽命爲 28個月至 27 個月。根據截至2024年3月31日的遞延營業收入和遞延營業成本賬面價值，這一變化導致營業收入和營業成本分別增加了26.4萬美元和5.4 百萬美元，在截至2024年9月30日的三個月內分別增加了85.3萬美元和17.8 百萬美元，在截至2024年9月30日的九個月內。預計這一變化將使我們2024年財政年度的營業收入和營業成本增加98.0萬美元和20.42024年4月30日和2023年4月30日的六個月內的外匯重新計量淨收益分別爲$百萬。
預估付費用戶生命週期爲 28 月，截至2023年9月30日的三個月和九個月。
請參考公司基本報表中的「報告基礎和重大會計政策摘要—營業收入確認政策」，以及公司於2023年12月31日結束的年度10-k表格中包含的相關附註，該報告已於2024年2月21日向證券交易委員會提交，以獲取關於公司營業收入確認政策的詳細討論。
公司大多數境外子公司的功能貨幣是其本地貨幣。對於以其他貨幣作爲功能貨幣進行交易的非美國子公司，其資產和負債按照當前匯率在資產負債表日期進行折算。所得和支出項目按照期間的加權平均匯率進行折算。由於將公司的外國運營的財務報表折算成美元所導致的調整被排除在淨收益的確定之外，並記錄在積累的其他綜合收益中，即股東權益的其他組成部分。不以實體貨幣爲功能貨幣的交易被重新計量爲功能貨幣，從重新計量中獲得的盈虧計入其他費用中。
自2024年1月1日起，對於某些非美元功能貨幣的國際子公司，其功能貨幣已從美元重新評估爲該國際子公司運營的當地貨幣。2024年1月1日之前，公司國際子公司的功能貨幣主要爲美元。功能貨幣變更的影響並不顯著，未對我們的簡明合併基本報表產生重大影響。
公司將非美元功能貨幣附屬公司的基本報表翻譯爲美元，使用期末資產和負債的匯率，以及營收和費用的平均匯率。外幣翻譯的影響被包含在股東權益中，週期性變動被總結爲綜合損益簡明綜合報表中的一行項目。
公司通過反映外匯交易的匯率期貨收益和損失，由交易貨幣轉換爲功能貨幣產生的收益和損失，包括資產和負債的重新計量收益和損失，作爲其他收入/費用的組成部分。
最近的會計聲明
最近未採納的會計聲明
2023年11月，FASB發佈了ASU 2023-07，分部門披露 需要公開實體根據其可報告細分板塊的重要支出和其他板塊事項，在中期和年度基礎上披露擴展信息。ASU不會改變公開實體如何確定或彙總其經營細分板塊。ASU於2023年12月15日後開始的財政年度和2024年12月15日後開始的財年內的中期期間生效，允許提前採用。一旦採用，ASU要求對基本報表中提供的所有先前期間進行追溯應用。公司正在評估與新標準相關的披露要求，並預計ASU的採用將導致額外的必要披露。
13
目錄
2023年12月，FASB發佈了ASU 2023-09，《所得稅（主題740）：改進所得稅披露》， 需要公開實體披露特定的稅率調解類別，以及按司法管轄區細分的所得稅支付情況，以及其他披露增強措施。該ASU適用於2024年12月15日之後開始部署的年度財務報表，允許提前採納。ASU可以根據前瞻性或回顧性基礎採納。公司正在評估與新標準相關的披露要求。
3. 與客戶的合同收入
以下表格總結了按用戶的賬單國家劃分的地域板塊營業收入（以千爲單位，除百分比外）：
 
截至9月30日的三個月
 20242023
 數量營業收入百分比數量營業收入百分比
美國和加拿大 (1)
$583,011 64 %$458,563 65 %
歐洲167,758 18 128,412 18 
亞太地區，包括澳洲和新西蘭95,507 10 73,772 10 
全球其他地區72,677 8 52,478 7 
總費用$918,953 100 %$713,225 100 %
 
截至9月30日的九個月
 20242023
 數量營業收入百分比數量營業收入百分比
美國和加拿大 (1)
$1,658,442 63 %$1,323,849 65 %
歐洲476,729 18 370,474 18 
亞太地區，包括澳大利亞和新西蘭275,836 11 208,002 10 
全球其他地區202,789 8 147,010 7 
總費用$2,613,796 100 %$2,049,335 100 %
(1)公司在美國的營業收入分別爲 60%和592024年9月30日結束的三個月和九個月中分別佔合併營業收入的 602023年9月30日結束的三個月和九個月中分別佔比
除了美國外，沒有任何一個單獨的國家在任何展示的時期內超過公司綜合營業收入的10%。
耐用虛擬物品佔營業收入的 922024年9月30日結束的三個和九個月分別佔總虛擬物品收入的 92%和91，分別爲2023年9月30日結束的三個和九個月的 8消耗品虛擬物品分別佔2024年9月30日結束的三個和九個月總虛擬物品收入的 8%和9，分別爲2023年9月30日結束的三個和九個月的。
遞延收益
公司根據合同中建立的付款條件從用戶那裏收到付款。這些付款最初記錄爲遞延營業收入，並在公司履行其履約義務時確認爲營業收入。分配給未履行履約義務的收入總金額包括在我們的遞延營業收入餘額中。
2024年9月30日結束的九個月中，遞延營業收入的增加是由於該期間的銷售超過了從履行我們的履約義務中確認的營業收入，其中包括在期初屬於遞延營業收入當前部分的營業收入。2024年9月30日結束的九個月內，我們確認了營業收入$1,983.4 百萬，這筆收入包括2023年12月31日作爲遞延營業收入餘額的一部分。
14
目錄
4. 租賃
公司於2024年第一季度收回了一個租賃空間的idc概念，租金支付淨額-不包括租賃激勵-總計$95.4百萬美元在一個 七年。 簽約期內。2024年9月，公司取消了與該idc概念租賃相關的使用權資產和租賃負債各70.3百萬美元，因爲提前終止了這項租約。這項提前終止對截至2024年9月30日的三個月和九個月的業務結果沒有重大影響。
租賃轉租
於2024年2月7日，公司根據次級承租方執行了一項租賃轉讓協議，根據該協議，公司次級承租了約 133,137 平方英尺的加利福尼亞州聖馬特奧辦公空間，租期約爲 公司使用資產和負債的會計方法來計算所得稅。根據這種方法，根據資產和負債的金融報表及稅基之間的暫時區別，使用實施稅率來決定遞延稅資產和遞延稅負債，該稅率適用於預期差異將反轉的年份。稅法的任何修改對遞延稅資產和負債的影響將於生效日期在財務報告期內確認在彙總的綜合收益報表上。 （「2024次級承租方協議」）。與2024次級承租方協議簽訂同時，公司根據次級出租方執行了一項租約轉讓協議，根據該協議，公司向次級承租方出租了約 61,773 平方英尺的聖馬特奧加利福尼亞州總部辦公空間，租期約爲 三年 （「2024次級出租方協議」）。
公司根據2024年轉租人協議在轉租期內應支付的總租金爲$38.9百萬美元，公司於2024年4月取得了指定的空間。根據2024年轉租人協議，在轉租期內應支付給公司的總租金約爲$13.0百萬美元，公司於2024年4月向轉租人提供了空間。
5. 現金及現金等價物和投資
以下是公司的現金及現金等價物以及短期和長期投資彙總（單位：千美元）：
截至2024年9月30日
攤餘成本未實現的總收益額毛額未實現虧損公正價值現金等價物短期投資開多期長期投資
債務證券。
一級
貨幣市場基金$513,512 $— $— $513,512 $513,512 $— $— 
美國國債2,150,181 7,485 (127)2,157,539 30,929 1,382,112 744,498 
小計2,663,693 7,485 (127)2,671,051 544,441 1,382,112 744,498 
二級
美國機構證券269,994 172 (65)270,101 — 22,505 247,596 
商業票據285,884 — (2)285,882 — 285,882 — 
企業債券587,872 6,817 (20)594,669 — 27,917 566,752 
小計1,143,750 6,989 (87)1,150,652 — 336,304 814,348 
所有基金類型債務證券$3,807,443 $14,474 $(214)$3,821,703 $544,441 $1,718,416 $1,558,846 
股票的權益
一級
所有基金類型(1)
$1,907 $— $1,907 $— 
所有權益證券$1,907 $— $1,907 $— 
所有基金類型貨幣等價物和投資$3,807,443 $14,474 $(214)$3,823,610 $544,441 $1,720,323 $1,558,846 
15
目錄
截至 2023 年 12 月 31 日
攤銷成本未實現收益總額未實現虧損總額公允價值現金等價物短期投資長期投資
債務證券
第 1 級
貨幣市場基金$614,888 $— $— $614,888 $614,888 $— $— 
美國國債1,692,700 2,007 (2,547)1,692,160 — 1,155,218 536,942 
小計2,307,588 2,007 (2,547)2,307,048 614,888 1,155,218 536,942 
第 2 級
美國機構證券286,007 27 (197)285,837 — 137,151 148,686 
商業票據184,465 — — 184,465 14,827 169,638 — 
公司債務證券409,037 2,066 (1,262)409,841 — 52,070 357,771 
小計879,509 2,093 (1,459)880,143 14,827 358,859 506,457 
債務證券總額$3,187,097 $4,100 $(4,006)$3,187,191 $629,715 $1,514,077 $1,043,399 
股票證券
第 1 級
共同基金 (1)
$731 $— $731 $— 
總股本證券$731 $— $731 $— 
現金等價物和投資總額$3,187,097 $4,100 $(4,006)$3,187,922 $629,715 $1,514,808 $1,043,399 
(1)股權證券涉及公司的非合格遞延報酬計劃，並持有在一項rabbi trust中。請參閱附註14「僱員和董事福利」和簡明合併基本報表附註了解更多信息。
截至2024年9月30日，公司的所有短期債務投資均具有合同到期日 一年 或更短，公司的所有長期債務投資均具有合同到期日在 之一和頁面。月內。2023年和2022年的三個和九個月期權授予均以授予日公司普通股的公允價值相等的行權價格授予，並且是非法定股票期權。.
市場利率期貨的變動、借款人信用風險和整體市場流動性等因素，可能導致我們的短期和長期債務投資低於其攤銷成本基礎，從而導致未實現損失。截至2024年9月30日，處於未實現損失位置的債務證券主要受到購買日期後利率上升的推動，公司無意出售，也不太可能被要求出售此類證券在收回攤銷成本基礎之前，我們不打算賣出這些債券證券.
下表列出了按投資類別和證券連續處於虧損狀態的時間長度進行聚合的公允價值和總未實現損失（以千爲單位）：
截至 2024 年 9 月 30 日
少於 12 個月12 個月或更長時間總計
公允價值未實現的虧損公允價值未實現的虧損公允價值未實現的虧損
美國國債$141,181 $(82)$62,000 $(45)$203,181 $(127)
美國機構證券47,443 (65)— — 47,443 (65)
商業票據10,797 (2)— — 10,797 (2)
公司債務證券11,138 (11)3,032 (9)14,170 (20)
總計$210,559 $(160)$65,032 $(54)$275,591 $(214)
16
目錄
截至 2023 年 12 月 31 日
少於 12 個月12 個月或更長時間總計
公允價值未實現的虧損公允價值未實現的虧損公允價值未實現的虧損
美國國債$486,424 $(2,547)$— $— $486,424 $(2,547)
美國機構證券182,475 (197)— — 182,475 (197)
公司債務證券248,287 (1,262)— — 248,287 (1,262)
總計$917,186 $(4,006)$— $— $917,186 $(4,006)
6. 收購
Speechly，公司。
2023年9月18日（「Speechly收購日期」），公司收購了Speechly, Inc.及其全資子公司Speechly Oy的所有股權（統稱爲「Speechly」）。Speechly是一傢俬人公司，主要經營語音識別軟件，專注於語音管理。該收購已被確認爲業務組合。考慮總額爲$10.1百萬美元，其中包括（i）$4.8百萬美元的現金在Speechly收購日期支付，以及（ii）$5.3百萬美元的現金，暫時保留，直到滿足一定的後收購條件爲止。
以下表格總結了公司在Speechly收購日根據獲取的資產和承擔的負債的公允價值分配（單位：千美元）：
 2023年9月18日
現金及現金等價物$970 
其他流動資產已獲得111 
無形資產, 淨額
開發的科技，有用壽命 月內。2023年和2022年的三個和九個月期權授予均以授予日公司普通股的公允價值相等的行權價格授予，並且是非法定股票期權。
2,800 
商譽7,536 
其他流動負債假定$(1,117)
其他長期負債承擔(182)
總購買價格$10,118 
商譽歸因於組織的員工和預期收購帶來的協同效應。商譽無法用於所得稅目的進行扣減。
7.商譽和無形資產
商譽
以下表格顯示了截至2024年9月30日九個月期間商譽的變化情況（以千爲單位）：
 公允價值
2023年12月31日期初餘額
$142,129 
外幣翻譯調整107 
2024年9月30日的餘額
$142,236 
在任何提出的期間內都沒有累積減值損失。
17
目錄
無形資產
以下表格列出了截至2024年9月30日和2023年12月31日的公司有限壽命無形資產的詳細信息（以千爲單位）：
截至2024年9月30日
總賬面價值累計攤銷費用淨額
數量
開發的科技資產$75,495 $(50,744)$24,751 
專利14,200 (1,775)12,425 
組裝的勞動力10,000 (9,625)375 
交易名稱500 (308)192 
無形資產總額$100,195 $(62,452)$37,743 
截至 2023 年 12 月 31 日
總賬面金額累計攤銷費用淨負載
金額
開發的技術$75,455 $(39,411)$36,044 
專利14,200 (650)13,550 
集結的勞動力10,000 (7,374)2,626 
商標名稱500 (233)267 
無形資產總額$100,155 $(47,668)$52,487 
上述表格不包括資產0.7萬美元和0.6 2024年9月30日和2023年12月31日分別不包括無限生命週期無形資產的百萬美元。
與我們有限壽命無形資產相關的攤銷費用爲$4.7萬美元和14.8 百萬和$5.2萬美元和14.2 百萬，截至2023年9月30日的票息費用分別爲$
到2024年9月30日爲止，公司有限壽命無形資產的預期未來攤銷費用如下（以千美元計）：
12月31日到期：
2024年餘下的時間$4,180 
202515,735 
20266,700 
20273,137 
20281,940 
此後6,051 
剩餘攤銷費用總額$37,743 
8. 其他資產負債表元件
預付費用和其他流動資產
預付款項及其他流動資產包括以下內容（以千美元爲單位）:
 截至
 2020年9月30日
2024		12月31日
2023
預付費用$47,419 $48,555 
應計利息應收款16,265 14,697 
其他資產7,018 11,297 
預付款和其他流動資產總計$70,702 $74,549 
18
目錄
資產和設備，淨值
以下爲固定資產淨值（以千美元計）：
 截至
 2020年9月30日
2024		12月31日
2023
服務器及相關設備和軟件$919,932 $914,989 
電腦硬件和軟件許可證50,980 43,732 
2,5512,084 520 
租賃改良102,551 101,785 
施工進度154,013 77,043 
總財產與設備1,229,560 1,138,069 
累計折舊和攤銷費用較少(586,923)(442,709)
房地產和設備淨值$642,637 $695,360 
Construction in progress primarily relates to leasehold improvements for the Company’s leased office buildings and network equipment infrastructure to support the Company’s data centers.
In the third quarter of 2024, the Company re-assessed the estimated useful life of certain software licenses, resulting in the acceleration of their remaining depreciation expense of $17.9 million within infrastructure and trust & safety expenses. Total depreciation and amortization expense of property and equipment was $63.9 million and $160.4 million for the three and nine months ended September 30, 2024, respectively, and $48.4 million and $139.4 million for the three and nine months ended September 30, 2023, respectively.
Accrued expenses and other current liabilities
Accrued expenses and other current liabilities consisted of the following (in thousands):
 As of
 September 30,
2024		December 31,
2023
Accrued operating expenses$60,486 $51,921 
Short term operating lease liabilities132,977 111,293 
Accrued interest on the 2030 Notes16,146 6,458 
Taxes payable45,493 59,632 
Accrued compensation and other employee related liabilities13,174 32,125 
Other current liabilities5,418 9,692 
Total accrued expenses and other current liabilities$273,694 $271,121 
9. Debt
2030 Notes
On October 29, 2021, the Company issued $1.0 billion aggregate principal amount of its 3.875% Senior Notes due 2030 (the “2030 Notes”). The 2030 Notes mature on May 1, 2030. The 2030 Notes bear interest at a rate of 3.875% per annum. Interest on the 2030 Notes is payable semi-annually in arrears on May 1 and November 1 of each year, commencing on May 1, 2022.
The aggregate proceeds from offering of the 2030 Notes were approximately $987.5 million, after deducting lenders costs and other issuance costs incurred by the Company. The issuance costs of $12.5 million are amortized into interest expense using the effective interest method over the term of the 2030 Notes.
19
Table of Contents
The Company may voluntarily redeem the 2030 Notes, in whole or in part, under the following circumstances:
(1)at any time prior to November 1, 2024, the Company may on any one or more occasions redeem up to 40% of the aggregate principal amount of the 2030 Notes at a redemption price of 103.875% of the principal amount including accrued and unpaid interest, if any, with the net cash proceeds of certain equity offerings; provided that (1) at least 50% of the aggregate principal amount of 2030 Notes originally issued remains outstanding immediately after the occurrence of such redemption (excluding 2030 Notes held by the Company and its subsidiaries); and (2) the redemption occurs within 180 days of the date of the closing of such equity offerings.
(2)on or after November 1, 2024, the Company may redeem all or a part of the 2030 Notes at the following redemption prices (expressed as percentages of principal amount), plus accrued and unpaid interest, if any, to, but excluding, the applicable redemption date:
YearPercentage
2024
101.938 %
2025
100.969 %
2026 and thereafter
100.000 %
(3)at any time prior to November 1, 2024, the Company may redeem all or a part of the 2030 Notes at a redemption price equal to 100% of the principal amount of 2030 Notes redeemed, including accrued and unpaid interest, if any, plus the applicable “make-whole” premium set forth in the indenture governing the 2030 Notes (the “Indenture”) as of the date of such redemption; and
(4)in connection with any tender offer for the 2030 Notes, including an offer to purchase (as defined in the Indenture), if holders of not less than 90% in aggregate principal amount of the outstanding 2030 Notes validly tender and do not withdraw such notes in such tender offer and the Company (or any third party making such a tender offer in lieu of the Company) purchases all of the 2030 Notes validly tendered and not withdrawn by such holders, the Company (or such third party) will have the right, upon not less than 10, but not more than 60 days’ prior notice, given not more than 30 days following such purchase date to the holders of the 2030 Notes and the trustee, to redeem all of the 2030 Notes that remain outstanding following such purchase at a redemption price equal to the price offered to each holder of 2030 Notes (excluding any early tender or incentive fee) in such tender offer plus to the extent not included in the tender offer payment, accrued and unpaid interest, if any.
In certain circumstances involving a change of control triggering event (as defined in the Indenture), the Company will be required to make an offer to repurchase all, or at the holder’s option, any part, of each holder’s 2030 Notes at a repurchase price equal to 101% of the principal amount, plus accrued and unpaid interest, if any, to the applicable repurchase date.
The 2030 Notes are unsecured obligations and the Indenture contains covenants limiting the Company and its subsidiaries’ ability to: (i) create certain liens and enter into sale and lease-back transactions; (ii) create, assume, incur or guarantee certain indebtedness; or (iii) consolidate or merge with or into, or sell or otherwise dispose of all of substantially all of the Company and its subsidiaries’ assets to another person. These covenants are subject to a number of limitations and exceptions set forth in the Indenture and non-compliance with these covenants may result in the accelerated repayment of the 2030 Notes and any accrued and unpaid interest.
As of September 30, 2024, the Company was in compliance with all of its covenants under the Indenture.
The net carrying amount of the 2030 Notes, which is presented as a component of long-term debt in the Company’s condensed consolidated financial statements, was as follows (in thousands):
As of
September 30,
2024		December 31,
2023
2030 Notes
Principal
$1,000,000 $1,000,000 
Unamortized issuance costs
(8,677)(9,700)
Net carrying amount
$991,323 $990,300 
20
Table of Contents
Interest expense related to the 2030 Notes was as follows (in thousands):
Three Months Ended September 30,
Nine Months Ended September 30,
2024202320242023
Contractual interest expense
$9,688 $9,688 $29,064 $29,063 
Amortization of debt issuance costs
344 331 1,023 982 
Total interest expense
$10,032 $10,019 $30,087 $30,045 
The debt issuance costs for the 2030 Notes are amortized to interest expense over the term of the 2030 Notes using an annual effective interest rate of 4.05%.
As of September 30, 2024 and December 31, 2023, the estimated fair value of the 2030 Notes was approximately $931.6 million and $891.8 million, respectively, determined based on the last trading price of the 2030 Notes during the reporting period (a Level 2 input).
Joint Venture Financing
Refer to Note 15, “Joint Venture”, in the notes to the condensed consolidated financial statements for additional information on debt issued by the Company’s consolidated subsidiary, Roblox China Holding Corp.
10. Commitments and Contingencies
Lease Commitments—The Company leases office facilities and space for data center operations under operating leases expiring in various years through 2035. Certain of these arrangements have free or escalating rent payment provisions and optional renewal clauses. All of the Company’s leases are accounted for as operating leases. There has been no material change in the Company’s lease commitments during the nine months ended September 30, 2024, except for (i) the early termination of a data center lease in the third quarter of 2024 and (ii) lease commitments primarily related to office facilities and data centers in the ordinary course of business. Refer to Note 4, “Leases” in the notes to the condensed consolidated financial statements for additional information.
Purchase Obligations—Non-cancellable contractual purchase obligations primarily consist of contracts associated with data center and software vendors. There has been no material change in the Company’s purchase obligations during the nine months ended September 30, 2024, other than non-cancellable purchase commitments made in the ordinary course of business, primarily related to data center and software vendors.
Letters of Credit—The Company has letters of credit in connection with its operating leases which are not reflected in the Company’s condensed consolidated balance sheets as of September 30, 2024 and December 31, 2023. There have been no material changes to the Company’s letters of credit during the nine months ended September 30, 2024.
Legal Proceedings—The Company is and, from time to time may in the future become, involved in legal proceedings, claims and litigation in the ordinary course of business.
As of September 30, 2024 and December 31, 2023, the Company accrued for immaterial losses related to litigation matters that the Company believes to be probable and for which an amount of loss can be reasonably estimated. The Company considered the progress of these cases, the opinions and views of its legal counsel and outside advisors, its experience and settlements in similar cases, and other factors in arriving at the conclusion that a potential loss was probable. The Company cannot determine a reasonable estimate of the maximum possible loss or range of loss for all of these matters given that they are at various stages of the litigation process and each case is subject to the inherent uncertainties of litigation. The Company may incur substantial legal fees, which are expensed as incurred, in defending against these legal proceedings. The maximum amount of liability that may ultimately result from any of these matters cannot be predicted with absolute certainty and the ultimate resolution of one or more of these matters could ultimately have a material adverse effect on our operations.
On August 1, 2023, a putative class action was filed against the Company in the United States District Court for the Northern District of California, captioned Colvin v. Roblox (the “Colvin matter”), asserting various claims arising from allegations that minors used third-party virtual casinos to gamble Robux. On December 15, 2023, the Company filed a motion to dismiss and on March 26, 2024, the motion to dismiss was granted in part and denied in part, allowing plaintiffs’ negligence and California Unfair Competition Law claims to proceed. On March 28, 2024, a supplemental order clarified that plaintiffs’ claims for unjust enrichment and equitable relief could proceed as well. On April 9, 2024, plaintiffs filed an amended complaint realleging the California Consumer Legal Remedies Act and New York General Business Law claims that had been dismissed.
21
Table of Contents
Separately, on March 14, 2024, Gentry v. Roblox was filed in the United States District Court for the Northern District of California premised on substantially identical allegations as the Colvin matter. On April 18, 2024, the Gentry v. Roblox matter was consolidated with the Colvin matter. Plaintiffs filed a consolidated complaint on April 23, 2024. The consolidated complaint seeks monetary damages, including actual, punitive, and statutory damages, restitution, attorneys’ fees and costs, and declaratory and injunctive relief. The Company filed a motion to dismiss the consolidated complaint on May 14, 2024, which the court granted in part and denied in part on September 19, 2024. The Court dismissed with prejudice plaintiffs’ fraud-based claims and claims for injunctive relief, but allowed plaintiffs’ claims under California’s Unfair Competition Law and for negligence and unjust enrichment to proceed.
The Company intends to defend itself vigorously against all claims asserted. At this time, the Company is unable to reasonably estimate the loss or range of loss, if any, arising from the above-referenced matter.
Indemnification—In the ordinary course of business, the Company enters into agreements that may include indemnification provisions. Pursuant to such agreements, the Company may indemnify, hold harmless and defend an indemnified party for losses suffered or incurred by the indemnified party. Some of the provisions will limit losses to those arising from third-party actions. In some cases, the indemnification will continue after the termination of the agreement. The maximum potential amount of future payments the Company could be required to make under these provisions is not determinable. To date, the Company has not incurred material costs to defend lawsuits or settle claims related to these indemnification provisions.
The Company has also entered into indemnification agreements with its directors and officers that may require the Company to indemnify its directors and officers against liabilities that may arise by reason of their status or service as directors or officers to the fullest extent permitted by Delaware corporate law. To date, the Company has not incurred any material costs and has not accrued any liabilities related to such obligations. The Company also has directors’ and officers’ insurance.
11. Stockholders’ Equity
As of September 30, 2024, the Company had 4,935.0 million shares of Class A common stock authorized, with a par value of $0.0001 per share, 65.0 million shares of Class B common stock authorized, with a par value of $0.0001 per share, and 100.0 million shares of preferred stock authorized, with a par value of $0.0001 per share. Holders of Class A common stock are entitled to one vote per share. Holders of Class B common stock are entitled to 20 votes per share.
During the first quarter of 2024 and 2023, respectively, 1.4 million and 1.3 million shares of Class B common stock held by entities affiliated with Mr. Baszucki, Founder, President, CEO and Chair of our Board of Directors (the “CEO”) were converted to Class A common stock.
Class A and Class B common stock are referred to as common stock throughout the notes to the condensed consolidated financial statements, unless otherwise noted.
The Company had reserved shares of common stock for future issuance as follows (in thousands):
 As of
 September 30,
2024		December 31,
2023
Stock options outstanding32,160 40,159 
Restricted Stock Units (“RSUs”) outstanding36,467 39,846 
Performance Stock Units (“PSUs”) (1)
2,304 905 
CEO Long-Term Performance Award (1)(2)
— 11,500 
2020 Equity Incentive Plan95,773 66,114 
2020 Employee Stock Purchase Plan20,855 16,075 
Stock warrants outstanding264 264 
Unregistered stock awards (“RSAs”) outstanding50 149 
Total187,873 175,012 
(1)Represents the shares of common stock reserved for future issuance at the maximum achievement levels.
(2)On March 1, 2024, the Leadership Development and Compensation Committee (i) approved the cancellation of the CEO Long-Term Performance Award, which was previously granted to the CEO under the 2017 Amended and Restated Equity Incentive Plan and (ii) granted Mr. Baszucki a new PSU award and RSU award. The PSUs and RSUs granted to Mr. Baszucki on March 1, 2024 are included in those respective rows above as of September 30, 2024. Refer to Note 12, “Stock-Based Compensation Expense”, to the notes to the condensed consolidated financial statements for further discussion.
22
Table of Contents
12. Stock-Based Compensation Expense
The Company has three equity incentive plans: its 2004 Incentive Stock Plan (the “2004 Plan”), its 2017 Amended and Restated Equity Incentive Plan (the “2017 Plan”) and its 2020 Equity Incentive Plan (the “2020 Plan”). The Company’s stockholders approved the 2020 Plan in 2020, which became effective in connection with the Company’s March 10, 2021 direct listing of its Class A common stock (the “Direct Listing”). The 2017 Plan was terminated effective immediately prior to the direct listing in connection with the effectiveness of the Company’s 2020 Plan, and accordingly no shares are available for issuance under the 2017 Plan. The 2004 Plan was terminated on the effective date of the 2017 Plan, and accordingly no shares are available for issuance under the 2004 Plan. Any outstanding stock awards under the 2004 Plan and 2017 Plan remain outstanding, subject to the terms of the applicable plan and award agreements, until such shares are issued under those stock awards, by exercise of stock options or settlement of RSUs or until those stock awards become vested or expired by their terms.
Additionally, in 2020, the Company’s stockholders approved the 2020 Employee Stock Purchase Plan (the “2020 ESPP”), which became effective in connection with the Direct Listing.
Stock-based compensation expense
Stock-based compensation expense included in the condensed consolidated statements of operations was as follows (in thousands):
 Three Months Ended September 30,Nine Months Ended September 30,
 2024202320242023
Infrastructure and trust & safety$29,078 $24,483 $84,326 $65,710 
Research and development189,064 155,651 542,867 432,676 
General and administrative36,345 32,200 102,786 97,673 
Sales and marketing10,678 7,688 27,579 21,229 
Total stock-based compensation expense$265,165 $220,022 $757,558 $617,288 
Stock Options
The following table summarizes the Company’s stock option activity (in thousands, except per option data and remaining contractual term):
 Options Outstanding
 Number of
Shares Subject
to Options		Weighted-Average
Exercise
Price (per Option)		Weighted-Average Remaining
Contractual
Term (Years)		Aggregate
Intrinsic
Value
Balances as of December 31, 202340,159 $2.98 5.16$1,716,171 
Granted— — 
Cancelled, forfeited, and expired(184)$4.79 
Exercised(7,815)$2.72 
Balances as of September 30, 202432,160 $3.04 4.48$1,325,679 
Exercisable as of September 30, 2024
31,825 $3.02 4.46$1,312,577 
Vested and expected to vest at September 30, 2024
32,160 $3.04 4.48$1,325,679 
RSUs and RSAs
The following table summarizes the Company’s RSU and RSA activity (in thousands, except per share data):
 RSUsRSAs
 Number of
Shares		Weighted-Average
Grant Date
Fair Value (per Share)		Number of
Shares		Weighted-Average
Grant Date
Fair Value (per Share)
Unvested as of December 31, 202339,846 $42.25 149 $46.00 
Granted16,867 $38.95 — — 
Vested and released(15,566)$42.93 (74)$46.00 
Cancelled(4,680)$41.16 (25)$46.00 
Unvested as of September 30, 202436,467 $40.57 50 $46.00 
23
Table of Contents
CEO PSUs and RSUs
CEO Long-Term Performance Award
In February 2021, the Leadership Development and Compensation Committee granted a PSU award (the “CEO Long-Term Performance Award”) under the 2017 Plan, which provided our CEO the opportunity to earn a maximum number of 11,500,000 shares of Class A common stock. The CEO Long-Term Performance Award would have vested upon the satisfaction of a service condition and achievement of certain Class A common stock price targets over five years. The Leadership Development and Compensation Committee approved the cancellation of the CEO-Long Term Performance Award on March 1, 2024, as further discussed below. The Class A common stock price targets were not achieved and therefore no shares vested under the CEO Long-Term Performance Award prior to its cancellation.
2024 CEO PSUs and RSUs
On March 1, 2024 (the “Modification Date”), the Leadership Development and Compensation Committee (i) approved the cancellation of the CEO Long-Term Performance Award and (ii) granted Mr. Baszucki a new PSU award (the “2024 CEO PSU Award”) and RSU award (collectively, the “2024 CEO Award”). As of the Modification Date, $84.4 million of stock-based compensation expense remained unrecognized related to the CEO Long-Term Performance Award.
The Company determined that the concurrent cancellation of the CEO Long-Term Performance Award and granting of the 2024 CEO Award represented a modification of the CEO Long-Term Performance Award. As of the Modification Date, total subsequent stock-based compensation expense to be recognized was measured as (i) the remaining unrecognized stock-based compensation expense related to the grant date fair value of the CEO Long-Term Performance Award and (ii) the incremental fair value resulting from the modification, if any. To estimate the incremental fair value resulting from the modification (if any), the Company first estimated the fair value of the modified CEO Long-Term Performance Award immediately prior to the Modification Date using a model based on multiple stock price outcomes developed through the use of a Monte Carlo simulation that incorporated into the valuation the possibility that the stock price targets may not be satisfied. A Monte Carlo simulation model requires the use of various assumptions, including the underlying stock price, volatility, and the risk-free interest rate as of the valuation date, corresponding to the length of time remaining in the performance period, and expected dividend yield. On the Modification Date, the estimated fair value of the CEO Long-Term Performance Award immediately prior to the modification was greater than the estimated fair value of the 2024 CEO Award (which was generally estimated based on the Modification Date fair value of the Class A common stock underlying the 2024 CEO Award, with consideration of the probability of achievement against the pre-established performance measures). As a result, the modification did not result in any incremental stock-based compensation expense. As of the Modification Date, total subsequent stock-based compensation expense to be recognized totaled $84.4 million. Of the total estimated stock-based compensation expense, 75% of the value was allocated to the 2024 CEO PSU Award with the remaining 25% allocated to the RSUs, based on the relative value of the two awards on the Modification Date.
Under the 2024 CEO PSU Award, the number of shares that can be earned will range from 0% to 200% of the target number of shares based on the Company’s performance against two independent performance measures relative to pre-established thresholds during a two-year performance period ending on December 31, 2025. The two independent performance measures include the Company’s cumulative (i) bookings during the performance period, as defined in the grant agreement with the CEO and (ii) Adjusted EBITDA during the performance period, which correlates to the covenant adjusted EBITDA calculation used in certain covenant calculations specified in the indenture governing our 2030 Notes (the “PSU Adjusted EBITDA”). Further, the awards are subject to Mr. Baszucki’s continuous service with the Company through each vesting date, with the initial vesting date to occur in the first quarter of 2026 (of which 67% of the award earned, if any, will vest) and the remaining vesting dates to occur in four equal quarterly installments beginning in the second quarter of 2026. The Company will recognize stock-based compensation expense for the 2024 CEO PSU Award on an accelerated attribution method over the requisite service period of each separately vesting tranche. Actual performance against the pre-established threshold under the 2024 CEO PSU Award will have no impact on the subsequent stock-based compensation expense recognized.
The target number of the 2024 CEO PSU Award was 446,534 in aggregate, with 80% of the target number of shares allocated to the cumulative bookings performance measure and 20% of the target number of shares allocated to the cumulative PSU Adjusted EBITDA performance measure.
24
Table of Contents
The Company recorded $7.3 million of stock-based compensation expense related to the 2024 CEO PSU Award and $25.1 million of stock-based compensation expense related to the 2024 CEO PSU Award and CEO Long-Term Performance Award, in total, during the three and nine months ended September 30, 2024, respectively, within general and administrative expenses. The Company recorded $12.3 million and $36.5 million of stock-based compensation expense related to the CEO Long-Term Performance Award during the three and nine months ended September 30, 2023, respectively, within general and administrative expenses.
The number of RSUs granted under the 2024 CEO Award totaled 148,844 and the RSUs will vest quarterly over a three-year service period beginning March 1, 2024, subject to Mr. Baszucki’s continued service with the Company on each vesting date.
Other PSUs
2024 Executive PSU Awards
During the first quarter of 2024, the Leadership Development and Compensation Committee granted PSU awards to certain members of management (the “2024 Executive PSU Awards”). The vesting requirements, performance metrics, and performance period of the 2024 Executive PSU Awards are consistent with those of the 2024 CEO PSU Award.
The target number of 2024 Executive PSU Awards was 353,241 in total, with 80% of the target number of shares allocated to the cumulative bookings performance measure and 20% of the target number of shares allocated to the cumulative PSU Adjusted EBITDA performance measure.
The Company recognizes stock-based compensation expense for the 2024 Executive PSU Awards based upon the per-share grant date fair value of $41.32 on an accelerated attribution method over the requisite service period of each separately vesting tranche. At each reporting period, the amount of stock-based compensation is determined based on the probability of achievement against the pre-established performance measures and if necessary, a cumulative catch-up adjustment is recorded to reflect any revised estimates regarding the probability of achievement.
During the three and nine months ended September 30, 2024, $5.2 million and $7.9 million of stock-based compensation expense was recorded related to the 2024 Executive PSU Awards, respectively.
2023 PSU Awards
During the second quarter of 2023, the Leadership Development and Compensation Committee granted PSU awards to certain members of management (the “2023 PSU Awards”). The number of shares that can be earned will range from 0% to 200% of the target number of shares, based on the Company’s performance against two independent performance measures relative to pre-established thresholds during a two-year performance period ending on December 31, 2024. The two independent performance measures include the Company’s cumulative (i) bookings during the performance period, as defined in the respective grant agreements with each employee and (ii) PSU Adjusted EBITDA during the performance period. Further, the awards are subject to continuous employment, with the first vesting to occur in the first quarter of 2025 (in which 50% of any awards earned will vest) and the second vesting to occur in the second quarter of 2026 (in which the remaining 50% of any awards earned will vest).
As of September 30, 2024, the number of shares under the 2023 PSU Awards that can be earned at target performance totaled 213,502, with 80% of the target number of shares allocated to the cumulative bookings performance measure and 20% of the target number of shares allocated to the cumulative PSU Adjusted EBITDA performance measure.
The Company recognizes stock-based compensation expense for the 2023 PSU Awards based upon the per-share grant date fair value of $45.70 on an accelerated attribution method over the requisite service period of each separately vesting tranche. At each reporting period, the amount of stock-based compensation is determined based on the probability of achievement against the pre-established performance measures and if necessary, a cumulative catch-up adjustment is recorded to reflect any revised estimates regarding the probability of achievement.
On August 1, 2024, Michael Guthrie, the Company’s Chief Financial Officer, notified Roblox of his intent to resign as Chief Financial Officer to pursue personal interests. The Company entered into a Separation and Transition Agreement with Mr. Guthrie on September 30, 2024 (the “Transition Agreement”), pursuant to which Mr. Guthrie’s employment with the Company will terminate upon the commencement of employment of the Company’s next Chief Financial Officer. Following his termination of employment, Mr. Guthrie will continue to serve the Company as an advisor until March 1, 2025, or, if later, the one-month anniversary of his termination date.
25
Table of Contents
Pursuant to his agreement, on the determination date (as defined in his applicable PSU agreement and which is expected to occur in the first quarter of fiscal 2025), Mr. Guthrie will vest into the first 50% of his 2023 PSUs, contingent upon the Company achieving performance measures, provided he remains a service provider until December 31, 2024. The Company has concluded that this constitutes a modification of the remaining requisite service period on September 30, 2024, and any remaining expense will be recognized prospectively over the remaining three-month requisite service period.
The Company recorded net stock-based compensation expense of $3.2 million and $4.8 million during the three and nine months ended September 30, 2024, respectively, and stock-based compensation expense of $1.4 million and $2.9 million during the three and nine months ended September 30, 2023, respectively, related to the 2023 PSU Awards.
2022 PSU Awards
During the second quarter of 2022, the Leadership Development and Compensation Committee granted PSU awards to certain members of management (the “2022 PSU Awards”). On the grant date, the target number of 2022 PSU Awards was 207,284. The number of shares that can be earned will range from 0% to 200% of the target number of shares, based on the Company’s stock price performance and achievement of certain stock price hurdles during the last quarter of the second year through the end of the third year of a three-year performance period (the “2022 PSU Awards Stock Price Hurdles”) and subject to continuous employment through such date.
The Company estimated the grant date fair value of the 2022 PSU Awards using a model based on multiple stock price outcomes developed through the use of a Monte Carlo simulation which incorporates into the valuation the possibility that the 2022 PSU Awards Stock Price Hurdles may not be satisfied. The grant date fair value of the 2022 PSU Awards was estimated to be $43.13 per share, and the Company estimates that it will recognize total stock-based compensation expense of approximately $6.0 million using the accelerated attribution method over the derived service period of each tranche which is equal to five measurement periods commencing with the last quarter of the second year and ending with the last quarter of the third year. If the 2022 PSU Awards Stock Price Hurdles are met sooner than the derived service period, the stock-based compensation expense will be adjusted to reflect the cumulative expense associated with the vested award. Stock-based compensation expense will be recognized over the requisite service period if the members of management continue to provide service to the Company, regardless of whether the 2022 PSU Awards Stock Price Hurdles are achieved.
The Company recorded stock-based compensation expense of $0.1 million during the three months ended September 30, 2024 and a net stock-based compensation benefit of $0.4 million during the nine months ended September 30, 2024 related to the 2022 PSU Awards, primarily driven by the departure of an executive in the second quarter of 2024, and stock-based compensation expense of $0.2 million and $2.2 million during the three and nine months ended September 30, 2023, respectively.
Employee Stock Purchase Plan
The Company recorded $3.2 million and $14.7 million of stock-based compensation expense related to the 2020 ESPP during the three and nine months ended September 30, 2024, respectively, and $8.7 million and $24.1 million during the three and nine months ended September 30, 2023, respectively.
13. Accumulated Other Comprehensive Income/(Loss)
The following table shows a summary of changes in accumulated other comprehensive income/(loss) by component for the nine months ended September 30, 2024 (in thousands):
Foreign Currency TranslationUnrealized Gains/ (Losses) on Available-For-Sale Debt SecuritiesTotal
Balance as of December 31, 2023$1,442 $94 $1,536 
Other comprehensive income/(loss), net of tax, before reclassifications714 12,677 13,391 
Amounts reclassified from accumulated other comprehensive income/(loss), net of tax— 1,489 1,489 
Change in accumulated other comprehensive income/(loss), net of tax714 14,166 14,880 
Balance as of September 30, 2024$2,156 $14,260 $16,416 
26
Table of Contents
14. Employee and Director Benefits
Deferred Compensation Plan
The Company established the Roblox Corporation Nonqualified Deferred compensation Plan (as amended, the “NQDC Plan”) for its non-employee directors and a select group of management employees. Eligible participants may voluntarily elect to participate in the NQDC Plan. Unless otherwise determined by the committee that administers the NQDC Plan, eligible employee participants may elect annually to defer up to 90% of their base salary, up to 100% of their cash bonus compensation (if any) and up to 65% of any RSUs or PSUs granted under the Company’s 2020 Plan (if any), and eligible non-employee director participants may elect annually to defer up to 100% of their cash director fees and any RSUs granted under the Company’s 2020 Plan. Obligations of the Company under the NQDC Plan represent at all times unsecured general obligations of the Company to pay deferred compensation in the future in accordance with the terms of the NQDC Plan.
Cash amounts deferred under the plan may only later be settled in cash and are credited or charged with the performance of investment options offered under the NQDC Plan as elected by the participants. The amount credited or charged to each participant’s cash deferrals are based on the performance of a hypothetical portfolio of investments which are tracked by an administrator, with such credits or charges included as a component of operating expenses in the Company’s condensed consolidated statements of operations. The cash obligations due to participants are presented as other long-term liabilities on the Company’s condensed consolidated balance sheet.
The Company generally funds the cash obligations associated with the NQDC Plan by purchasing investments that match the hypothetical investment choices made by the plan participants. The investments (and any uninvested cash) are held in a rabbi trust in order to receive certain tax benefits. The rabbi trust is subject to creditor claims in the event of insolvency, but the assets held in the rabbi trust are not available for general corporate purposes. The investments held in the rabbi trust are presented as short-term investments and any uninvested cash is presented as cash and cash equivalents on the Company’s condensed consolidated balance sheet.
As it relates to any deferred RSUs and PSUs, the Company ensures enough shares of its Class A common stock are reserved to settle all obligations under the NQDC Plan. These obligations are settled on the date(s) elected by the participant. The accounting for the RSUs and PSUs deferred under the NQDC Plan is consistent with the accounting for non-deferred RSUs and PSUs.
15. Joint Venture
Background
In February 2019, the Company entered into a joint venture agreement with Songhua River Investment Limited (“Songhua”), an affiliate of Tencent Holdings Ltd., (“Tencent Holdings”), to create Roblox China Holding Corp. (in which Roblox holds a 51% ownership interest as it relates to the voting shares). Songhua contributed $50.0 million in capital in exchange for a 49% ownership interest in Roblox China Holding Corp. The business of the joint venture (either directly or indirectly through the joint venture’s wholly owned subsidiaries) is to engage in the (i) development, localization, and licensing of the Roblox application to Shenzhen Tencent Computer Systems Co., Ltd. for operation and publication as a game in China, and (ii) development, localization, and licensing to creators of a Chinese version of the Roblox Studio and to oversee relations with local Chinese developers.
The joint venture is consolidated into the Company’s condensed consolidated financial statements as the Company maintains a controlling financial interest through voting rights, while the minority member of the joint venture does not have substantive participating rights or veto rights. The Company classifies the 49% ownership interest held by Songhua as a noncontrolling interest on its condensed consolidated balance sheet.
Joint Venture Financing
On May 10, 2023, Roblox China Holding Corp. (the “Borrower”) issued $30.0 million aggregate principal debt which matures on May 10, 2026 (the “2026 Notes”), unless earlier prepaid by the Borrower or converted by the holders into the Borrower’s voting shares. Further, the Borrower, at its sole election, may extend the maturity date by two years.
The 2026 Notes were funded by the Company and Songhua (the “Lenders”) in the amount of $15.3 million and $14.7 million, respectively. The 2026 Notes bear interest at a rate of 6.0% per annum, with accrued interest payable on the final maturity date.
27
Table of Contents
At any point, the Lenders may voluntarily convert the 2026 Notes into voting shares of the Borrower, provided that immediately after such conversion, the Lenders continue to own the same percentage of voting shares in the Borrower as they did immediately prior to the conversion. The conversion ratio will be determined at the time of such conversion (if any), and will be determined by dividing the then fair value of the Borrower’s voting shares (as mutually agreed to by the Lenders and Borrower) into the sum of the unpaid principal and accrued interest.
The portion of the 2026 Notes outstanding to Songhua is reflected in the Company’s condensed consolidated financial statements as long-term debt, net, at its principal amount, while the portion outstanding to the Company – including any related interest expense – is eliminated upon consolidation. Interest expense related to the 2026 Notes was $0.2 million and $0.7 million for the three and nine months ended September 30, 2024, respectively, and was $0.2 million and $0.3 million for the three and nine months ended September 30, 2023, respectively.
16. Income Taxes
The Company is subject to federal and state income tax in the United States, as well as foreign tax jurisdictions in which it conducts business. The Company does not provide for U.S. income taxes or foreign withholding taxes on the undistributed earnings of its profitable foreign subsidiaries because it intends to permanently reinvest such earnings in foreign operations.
The provision for/(benefit from) income taxes for the three and nine months ended September 30, 2024 and 2023 consisted of immaterial federal, state and foreign income taxes. The Company continues to maintain a full valuation allowance on its net deferred tax assets as it is not likely that the deferred assets will be utilized. The primary difference between the effective tax rate and the federal statutory tax rate relates to the valuation allowance on the Company’s deferred tax assets.
17. Basic and Diluted Net Loss Per Common Share
The following table presents the calculation of basic and diluted net loss per share (in thousands, except per share data):
 Three Months EndedNine Months Ended
September 30,
September 30,
 2024202320242023
Basic and diluted net loss per share
Numerator
Consolidated net loss$(240,447)$(278,808)$(719,562)$(833,597)
Less: net loss attributable to noncontrolling interest(1,123)(1,650)(3,751)(5,349)
Net loss attributable to common stockholders$(239,324)$(277,158)$(715,811)$(828,248)
Denominator
Weighted-average common shares used in computing net loss per share attributable to common stockholders, based and diluted650,961 619,350 642,977 612,938 
Net loss per share attributable to common stockholders, basic and diluted$(0.37)$(0.45)$(1.11)$(1.35)
28
Table of Contents
The potential shares of common stock that were excluded from the computation of diluted net loss per share because including them would have been anti-dilutive are as follows (in thousands):
 
As of September 30,
 20242023
Stock options outstanding32,160 43,306 
RSUs outstanding36,467 36,880 
2020 ESPP1,665 3,406 
2023 PSUs Awards based on performance target achievement at period-end (1)
43 — 
Stock warrants outstanding264 264 
RSAs outstanding50 276 
Total70,649 84,132 
(1)Represents the hypothetical number of shares that would have been earned under the Company’s 2023 PSU Awards had the performance period ended on the balance sheet date.
Except for the 2023 PSU Awards, all other PSUs were excluded from the above table because the respective stock price or performance targets had not been met as of the periods presented.
18. Subsequent Events
In October 2024, the Company started moving employees that remained at its current headquarters in San Mateo to its new campus in San Mateo, and the move is expected to be completed during the fourth quarter of 2024. As of September 30, 2024, the carrying value of the operating lease right-of-use asset and the related leasehold improvements, and the associated lease liability as it relates to the buildings the Company is exiting, is approximately $143.0 million and $126.0 million, respectively, with remaining lease terms ranging between three and seven years. While the exit of the buildings is an impairment trigger in the fourth quarter of 2024, the Company is still in the process of assessing its real estate needs for future periods which will inform its decision as to whether or not to sublease these buildings for their respective remaining terms. As a result, the Company’s impairment assessment is ongoing and will be completed in the fourth quarter of 2024.
29
Table of Contents
Item 2. Management’s Discussion and Analysis of Financial Condition and Results of Operations.
MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS
The following discussion and analysis of our financial condition, results of operations, and cash flows should be read in conjunction with our unaudited condensed consolidated financial statements and related notes appearing elsewhere in this Quarterly Report on Form 10-Q and our audited consolidated financial statements and the related notes and the discussion under the heading “Management’s Discussion and Analysis of Financial Condition and Results of Operations” for the fiscal year ended December 31, 2023 included in the Annual Report on Form 10-K, filed with the SEC on February 21, 2024. This discussion and analysis and other parts of this Quarterly Report on Form 10-Q contain forward-looking statements, such as those relating to our plans, objectives, expectations, intentions, and beliefs, that involve risks, uncertainties and assumptions. Our actual results could differ materially from these forward-looking statements as a result of many factors, including those discussed in the section titled “Risk Factors,” “Special Note Regarding Forward-Looking Statements,” and “Special Note Regarding Operating Metrics” included elsewhere in this Quarterly Report on Form 10-Q. Our historical results are not necessarily indicative of the results that may be expected for any periods in the future. Unless the context otherwise requires, all references in this report to “Roblox,” the “Company,” “we,” “our,” “us,” or similar terms refer to Roblox Corporation and its subsidiaries.
Amounts reported in millions are rounded based on the amounts in thousands. As a result, the sum of the components reported in millions may not equal the total amount reported in millions due to rounding. In addition, percentages presented are calculated from the underlying numbers in thousands and may not add to their respective totals due to rounding.
Overview
People from around the world come to Roblox every day to connect with friends. Together they create, play, work, learn, and connect with each other in experiences built by our global community of creators. Our Platform is powered by user-generated content and draws inspiration from gaming, entertainment, social media, and even toys.
Our free to use immersive platform for connection and communication consists of the Roblox Client, the Roblox Studio, and the Roblox Cloud (collectively, the “Roblox Platform” or the “Platform”). Roblox Client is the free application that allows users to explore 3D immersive experiences. Roblox Studio is the free toolset that allows developers and creators to build, publish, and operate 3D immersive experiences and other content accessed with the Roblox Client. Roblox Cloud includes the services and infrastructure that power our Platform.
Our mission is to connect a billion users with optimism and civility. We are constantly improving the ways in which our Platform supports shared experiences, ranging from how these experiences are built by an engaged community of developers and creators to how they are enjoyed and safely accessed by users across the globe.
Consistent with our free to play business model, a small portion of our users have historically been payers. For example, in the three months ended September 30, 2024, of our 88.9 million average DAUs, only approximately 1,143,000 represented our average daily unique paying users. Similarly, in the three months ended September 30, 2024, our average daily bookings per DAU was $0.14, whereas our average daily bookings per daily unique paying user was $10.73. We believe that maintaining and growing our overall number of DAUs, including the number of DAUs who may not purchase and spend Robux, is important to the success of our business. As a result, we believe that the number of DAUs who choose to purchase and spend Robux will continue to constitute a small portion of our overall users.
We are continually innovating our Platform by investing in high fidelity avatars, more realistic experiences, artificial intelligence (“AI”) tools, and other social features. In the second half of 2024 and into 2025, we have implemented, and expect to continue to implement, certain Platform policy and other changes in anticipation of and in response to regulatory requirements and evolving guidance from leading global organizations focused on child and internet safety in the United States and abroad. These changes could impact user engagement, revenue, and bookings, particularly from younger users.
Our primary areas of investment have been, and we expect will continue to be, our developer and creator community, and the people, technology, and infrastructure, including our trust and safety systems, required to keep improving the Roblox Platform while maintaining and building a safe and civil online community. These areas of focus are how we drive the business and, along with payment processing fees, represent our primary operating costs.
30
Table of Contents
Key Metrics
We believe our performance is dependent upon many factors, including the key metrics described below that we track and review to measure our performance, identify trends, formulate financial projections, and make strategic decisions.
Operating Metrics
We manage our business by tracking several operating metrics, including those outlined below. As a management team, we believe each of these operating metrics provides useful information to investors and others. For complete definitions and limitations of these metrics, refer to the section titled “Special Note Regarding Operating Metrics” of this Quarterly Report on Form 10-Q.
Average Daily Active Users (“DAUs”)
We define a DAU as a user who has logged in and visited Roblox through our website or application on a unique registered account on a given calendar day. If a registered, logged in user visits Roblox more than once within a 24-hour period that spans two calendar days, that user is counted as a DAU only for the first calendar day. We track DAUs as an indicator of the size of the audience engaged on our Platform. We believe that the growth in DAUs reflects the increasing value of our Platform.
936
31
Table of Contents
Hours engaged
We define hours engaged as the time spent by our users on the Platform. We calculate total hours engaged as the aggregate of user session lengths in a given period. We estimate this length of time using internal company systems that track user activity on our Platform as discrete events, and aggregate these discrete activities into a user session. A given user session on our Platform may include, among other things, time spent in experiences, in Roblox Studio, in Platform features such as chat and avatar personalization, in the Creator Store, and some amount of non-active time due to limits within the tracking systems and our estimation methodology. We believe that the growth in hours engaged reflects the increasing value of our Platform.
767
32
Table of Contents
Bookings
Bookings is a non-GAAP financial measure and represents the sales activity in a given period without giving effect to certain non-cash adjustments. Bookings is presented for supplemental informational purposes only and should not be considered in isolation from, or as a substitute for, financial information presented in accordance with GAAP. Refer to the section “Non-GAAP Financial Measures” below for further discussion on this measure, including its limitations.
Below we also include revenue calculated in accordance with GAAP, the most directly comparable financial measure to bookings.
607
609
We believe that DAUs, hours engaged, and bookings are highly correlated and over time we would expect hours engaged to grow slightly faster than DAUs, and bookings to grow faster than hours engaged. There are many reasons, but generally over time, as the content on our Platform improves and DAUs increase in tenure, engagement tends to go up. Similarly, over time as the content improves and our Platform functionality gets better, we expect more users to become payers and for those payers, on average, to increase their purchase of Robux which drives up both average bookings per monthly unique payer and overall bookings per hour. Further, we expect growth in our payers and monetization to lead to growth in revenue and bookings. These expectations are over long periods of time. Within any given month or quarter, the behavior of the metrics has not been, and will not always be, consistent.
33
Table of Contents
Average Bookings per DAU (“ABPDAU”)
We define ABPDAU as bookings in a given period divided by the DAUs for the same period. We use ABPDAU as a way to understand our monetization across our users through the sale of virtual currency and subscriptions.
Refer to the section titled “Non-GAAP Financial Measures” for the definition of and discussion on bookings, including its limitations as a non-GAAP financial measure.
422
424425
427428
34
Table of Contents
Average New and Returning Monthly Unique Payers and Monthly Repurchase Rate
We define new monthly unique payers as user accounts that made their first payment on the Platform, or via redemption of prepaid cards, during a given month. Average new monthly unique payers for a specified period is the average of the new monthly unique payers for each month during that period.
We define returning monthly unique payers as user accounts that have made a payment on the Platform, or via redemption of prepaid cards, in the current month and in any prior month. Average returning monthly unique payers for a specified period is the average of the returning monthly unique payers for each month during that period.
We define monthly repurchase rate as the returning monthly unique payers in the current month, divided by the sum of the prior month’s new monthly unique payers and returning monthly unique payers. Average monthly repurchase rate for a specified period is the average of the monthly repurchase rates for each month during that period.
We use these measures to understand our monetization across our payers through the sale of virtual currency and subscriptions.
1174
Average Bookings per Monthly Unique Payer
We define average bookings per monthly unique payer as bookings in the specified period divided by the average monthly unique payers for the same specified period. We use this measure to understand our monetization across our payers through the sale of virtual currency and subscriptions. Refer to the section titled “Non-GAAP Financial Measures” for the definition of and discussion on bookings, including its limitations as a non-GAAP financial measure.
1674
35
Table of Contents
Non-GAAP Financial Measures
In addition to our results determined in accordance with GAAP, we believe the following non-GAAP financial measures are useful in evaluating our performance. We use this non-GAAP financial information to evaluate our ongoing operations, for internal planning and forecasting purposes, and to evaluate our operating performance. We believe that this non-GAAP financial information may be helpful to investors because it provides consistency and comparability with past financial performance. However, non-GAAP financial measures have limitations in their usefulness to investors because they have no standardized meaning prescribed by GAAP and are not prepared under any comprehensive set of accounting rules or principles. In addition, other companies, including companies in our industry, may calculate similarly titled non-GAAP financial measures differently or may use other measures to evaluate their performance, all of which could reduce the usefulness of our non-GAAP financial information as a tool for comparison. As a result, our non-GAAP financial information is presented for supplemental informational purposes only and should not be considered in isolation from, or as a substitute for financial information presented in accordance with GAAP.
Bookings
Bookings represent the sales activity in a given period without giving effect to certain non-cash adjustments, as detailed below. Substantially all of our bookings are generated from sales of virtual currency, which can ultimately be converted to virtual items on the Roblox Platform. Sales of virtual currency reflected as bookings include one-time purchases or monthly subscriptions purchased via payment processors or through prepaid cards. Bookings are initially recorded in deferred revenue and recognized as revenues over the estimated period of time the virtual items purchased with the virtual currency are available on the Roblox Platform (estimated to be the average lifetime of a paying user) or as the virtual items purchased with the virtual currency are consumed. Bookings also include an insignificant amount from advertising and licensing arrangements.
We believe bookings provide a timelier indication of trends in our operating results that are not necessarily reflected in our revenue as a result of the fact that we recognize the majority of revenue over the estimated average lifetime of a paying user. The change in deferred revenue constitutes the vast majority of the reconciling difference from revenue to bookings. By removing these non-cash adjustments, we are able to measure and monitor our business performance based on the timing of actual transactions with our users and the cash that is generated from these transactions. Over the long-term, the factors impacting our revenue and bookings trends are the same. However, in the short-term, there are factors that may cause revenue and bookings trends to differ.
The following table presents a reconciliation of revenue, the most directly comparable financial measure calculated in accordance with GAAP, to bookings, for each of the periods presented (in thousands):
 Three Months Ended September 30,Nine Months Ended September 30,
 2024202320242023
Reconciliation of revenue to bookings:
Revenue$918,953 $713,225 $2,613,796 $2,049,335 
Add (deduct):
Change in deferred revenue216,325 130,957 410,657 360,112 
Other(6,758)(4,729)(16,998)(15,489)
Bookings$1,128,520 $839,453 $3,007,455 $2,393,958 
36
Table of Contents
Adjusted EBITDA
Adjusted EBITDA represents our GAAP consolidated net loss, excluding interest income, interest expense, other (income)/expense, provision for/(benefit from) income taxes, depreciation and amortization expense, stock-based compensation expense, and certain other nonrecurring adjustments and differs from Covenant Adjusted EBITDA which is used in certain covenant calculations specified in the indenture governing our senior notes due 2030. Refer to the section titled “Liquidity and Capital Resources” for the definition of and discussion on Covenant Adjusted EBITDA.
We believe that, when considered together with reported GAAP amounts, Adjusted EBITDA is useful to investors and management in understanding our ongoing operations and ongoing operating trends. Our definition of Adjusted EBITDA may differ from the definition used by other companies and therefore comparability may be limited.
The following table presents a reconciliation of consolidated net loss, the most directly comparable financial measure calculated in accordance with GAAP, to Adjusted EBITDA, for each of the periods presented (in thousands):
Three Months Ended September 30,Nine Months Ended September 30, 2023
2024202320242023
Reconciliation of consolidated net loss to Adjusted EBITDA:
Consolidated net loss$(240,447)$(278,808)$(719,562)$(833,597)
Add (deduct):
Interest income(46,718)(36,442)(133,271)(102,288)
Interest expense10,286 10,268 30,853 30,409 
Other (income)/expense, net(2,352)4,262 1,309 1,425 
Provision for/(benefit from) income taxes303 682 1,466 177 
Depreciation and amortization expense(1)
68,613 53,600 175,126 153,611 
Stock-based compensation expense265,165 220,022 757,558 617,288 
RTO severance charge(2)
108 — 1,101 — 
Other non-cash charges(3)
— — — 6,988 
Adjusted EBITDA$54,958 $(26,416)$114,580 $(125,987)
(1)Includes a one-time charge of $17.9 million related to the re-assessment of the estimated useful life of certain software licenses, resulting in the acceleration of their remaining depreciation within infrastructure and trust & safety expenses.
(2)Relates to cash severance costs associated with the Company’s return-to-office (“RTO”) plan announced in October 2023, which required a subset of the Company’s remote employees to begin working from the San Mateo headquarters for three days a week, beginning in the summer of 2024.
(3)Includes impairment expense related to certain operating lease right-of-use assets and related property and equipment.
37
Table of Contents
Free cash flow
We define free cash flow as net cash and cash equivalents provided by operating activities less purchases of property, equipment, and intangible assets acquired through asset acquisitions. We believe that free cash flow is a useful indicator of our unit economics and liquidity that provides information to management and investors about the amount of cash and cash equivalents generated from our core operations that, after the purchases of property, equipment, and intangible assets, can be used for strategic initiatives.
The following table presents a reconciliation of net cash and cash equivalents provided by operating activities, the most directly comparable financial measure calculated in accordance with GAAP, to free cash flow, for each of the periods presented (in thousands):
 Nine Months Ended September 30,
 20242023
Reconciliation of net cash and cash equivalents provided by operating activities to free cash flow:
Net cash and cash equivalents provided by operating activities$637,825 $314,875 
Deduct:
Acquisition of property and equipment(115,786)(255,470)
Purchases of intangible assets(1,370)(13,500)
Free cash flow$520,669 $45,905 
Acquisition of property and equipment primarily includes tenant improvements, servers, infrastructure equipment, and capitalized software licenses.
Change in Accounting Estimate
At the onset of each quarter, we complete an assessment of our estimated average lifetime of a paying user, which is used for revenue recognition of durable virtual items and calculated based on historical monthly retention data for each paying user cohort to project future participation on the Roblox Platform. Following that assessment and effective April 1, 2024, the average lifetime of a paying user was estimated to be 27 months, a decrease compared to the previous estimate of 28 months. The estimated paying user life was also 28 months during the three and nine months ended September 30, 2023.
Based on the carrying amount of deferred revenue and deferred cost of revenue as of March 31, 2024, the change resulted in an increase in revenue and cost of revenue during the three months ended September 30, 2024 of $26.4 million and $5.4 million, respectively, and during the nine months ended September 30, 2024 by $85.3 million and $17.8 million, respectively. It is estimated that this change will increase our fiscal year 2024 revenue and cost of revenue by $98.0 million and $20.4 million, respectively.
Refer to the heading “Critical Accounting Policies and Estimates — Revenue Recognition” below for a complete discussion on the Company’s revenue recognition policies.
Components of Results of Operations
Revenue
We generate substantially all of our revenue through the sale of virtual content or access to virtual content to users, enabling them to enhance their social experience on the Roblox Platform. We recognize revenue over the estimated period of time the virtual items are available to the user on the Roblox Platform (estimated average lifetime of a paying user) or at the time the virtual item is consumed. The estimated average lifetime of a paying user is calculated based on the monthly retention data for each paying user cohort. We then calculate the average retention period by determining the weighted-average period paying users have spent on the Platform and are projected to participate in the Roblox environment.
Other revenue streams include an insignificant amount of revenue from advertising and licensing arrangements. We plan to invest in and expand our advertising business for the foreseeable future.
All of our revenue is recorded net of taxes assessed by a government authority that are both imposed on and concurrent with specific revenue transactions between us and our users, and estimated chargebacks and refunds.
38
Table of Contents
Costs and Expenses
We allocate shared costs, such as certain facilities (including rent and depreciation on equipment and leasehold improvements shared by all departments) and software costs, to all departments based on headcount. As such, allocated shared costs are reflected in each expense category, with the exception of cost of revenue and developer exchange fees expense.
Personnel costs generally include employee expenses (salaries, benefits, and stock-based compensation expense) and contractor expenses, and are reflected in each expense category, with the exception of cost of revenue and developer exchange fees. In the three and nine months ended September 30, 2024, personnel costs were $467.4 million and $1,390.7 million, respectively, and during the three and nine months ended September 30, 2023, were $415.9 million and $1,205.6 million, respectively.
Cost of revenue
Cost of revenue primarily consists of third-party payment processing fees charged by the various distribution channels in connection with sales of our virtual currency. We initially defer payment processing fees and recognize them as expense over the same period as the respective revenue. Cost of revenue also includes costs associated with the printing of prepaid cards and sales tax expense for jurisdictions where the Company does not collect sales tax from the purchaser at the time of the sale.
Cost of revenue as a percentage of revenue is affected by shifts in user purchasing preferences and trends. While in recent years, we saw a shift of our sales toward prepaid card distribution channels and credit card sales directly through our website, which are subject to lower processing fees compared to other distribution channels, such as the Apple App Store, Google Play Store, and consoles such as Xbox and PlayStation, we have seen this trend moderate over the last several quarters with some seasonal variations. We expect to see the overall distribution channel mix shift based on user purchasing preferences, demographics and seasonal variations in future periods.
We intend to use nearly all of any efficiencies earned in this area over time to increase earnings for our developers and creators.
Developer exchange fees
Developer exchange fees expense represent the amount earned by developers and creators on the Roblox Platform that are qualified and registered in the Developer Exchange Program. Developers and creators are able to exchange their earned Robux for real-world currency under certain conditions outlined in our Developer Exchange Program. Developers and creators can earn Robux primarily through the sale of access to their experiences and enhancements in their experiences, the incorporation of immersive ads, the sale of content and tools between developers through the Creator Store (formerly the Creator Marketplace), and the sale of items to users through the Marketplace. Developers can also earn Robux through our engagement-based reward program that rewards developers based on the number of hours spent in their experiences by Roblox Premium subscribers (the “Engagement-Based Payouts” program).
In order to be qualified for our Developer Exchange Program and eligible to exchange earned Robux for real-world currency, developers and creators must meet certain conditions, such as having earned the minimum amount of Robux required to qualify for the program, a verified developer account, and an account in good standing. On January 31, 2022, we reduced the minimum amount of earned Robux required to qualify for the program from 100,000 Robux to 50,000 Robux and subsequently on January 31, 2023, we further reduced the minimum requirement from 50,000 Robux to 30,000 Robux. We believe these reductions in the minimum amounts required further incentivize our developer and creator community, and promote the long term growth and the health of such community. As of September 30, 2024, over 22,500 developers and creators qualified for and were registered in our Developer Exchange Program.
Over the next few years, a major goal is to increase our developer and creator earnings (i) by creating new earnings methods and enhancing existing ones and (ii) through efficiencies realized in other areas of our business, while maintaining reasonable margins.
39
Table of Contents
Infrastructure and trust & safety
Infrastructure and trust & safety expenses consist primarily of expenses related to the operation of our data centers and technical infrastructure. These costs include third-party service providers costs, such as cloud computing or other hosting and data storage, facilities-related expenses for our co-located data centers and edge data centers that we lease and operate, and network and bandwidth costs, as well as depreciation and associated support and maintenance costs of our servers and infrastructure equipment. Depreciation and amortization expense related to infrastructure and trust & safety in the three months ended September 30, 2024 and 2023 was $61.3 million and $46.0 million, respectively, and in the nine months ended September 30, 2024 and 2023 was $152.9 million and $132.8 million, respectively.
We plan to continue increasing the capacity, capability, and reliability of our infrastructure to support more sophisticated content, more users, and increased engagement. Through the end of 2023, we were investing heavily in our infrastructure, and as a result, we were able to moderate our investment in infrastructure throughout fiscal year 2024, but expect to increase our investment supporting our global infrastructure over the long-term. We intend to achieve scalability by building and maintaining our own technical infrastructure, while generating operating leverage over the long-term.
Infrastructure and trust & safety expenses also include personnel costs and moderation and customer support related costs, as well as allocated overhead expenses, to support our infrastructure and trust & safety initiatives. We have been investing in AI and automation to increase the accuracy and efficiency of our safety moderation and customer support related efforts, which has increased the quality of our safety and civility systems and led to a decrease in safety moderation and customer support costs in recent periods.
Research and development
Research and development expenses consist primarily of personnel costs and allocated overhead expenses for our engineering, design, product management, data science, and other employees engaged in maintaining and enhancing the functionality of the Platform. Research and development expenses also include costs associated with our Game Fund program, which funds certain developers upfront to develop new experience types for the Platform. We plan to increase research and development expenses for the foreseeable future primarily driven by increased headcount to develop new features, functionality, and innovation of our product. However, we have been, and expect to continue, moderating our headcount growth rate throughout fiscal year 2024 and expect to continue to generate operating leverage generally through the end of fiscal year 2025.
General and administrative
General and administrative expenses consist primarily of personnel costs and allocated overhead for our finance and accounting, legal, human resources, talent acquisition, and other administrative teams. General and administrative expenses also include professional services fees such as outside legal, accounting, audit, and outsourcing services, and other corporate expenses, as well as certain accruals and settlements associated with legal proceedings. We have been, and expect to continue, moderating our headcount growth rate in fiscal year 2024, but generally expect to increase general and administrative expenses for the foreseeable future thereafter to support the growth of the business.
Sales and marketing
Sales and marketing expenses consist primarily of personnel costs and allocated overhead for our marketing, business development, brand partnerships, and developer relations functions, as well as user acquisition expenses. Other expenses include those associated with market research, branding, public relations, and developer relations programs, including our annual Roblox Developer Conference. We plan to increase our sales and marketing expenses for the foreseeable future, primarily to support the growth of our business.
Interest income
Interest income consists primarily of interest earned and net accretion/(amortization) of our short-term investments, long-term investments, and cash equivalents.
Interest expense
Interest expense consists primarily of contractual interest and amortization of debt issuance costs on our 3.875% Senior Notes due 2030 (the “2030 Notes”).
40
Table of Contents
Other income/(expense), net
Other income/(expense), net primarily includes foreign currency exchange gains/(losses) and realized gains/(losses) on our short-term and long-term investments, as well as certain insurance recoveries (if any).
Provision for/(benefit from) income taxes
Provision for/(benefit from) income taxes consists primarily of income taxes in foreign jurisdictions and U.S. federal and state income taxes. We maintain a full valuation allowance on our federal, state, and foreign deferred tax assets as we have concluded that it is not likely that the deferred assets will be utilized.
Results of Operations
The following tables set forth our results of operations for the periods presented in dollars and as a percentage of our revenue for each period presented (in thousands, except per share data and percentages):
 
Three Months Ended September 30,
Nine Months Ended September 30,
 2024202320242023
Revenue$918,953 100 %$713,225 100 %$2,613,796 100 %$2,049,335 100 %
Cost and expenses:
Cost of revenue(1)
204,998 22 163,581 23 582,421 22 477,451 23 
Developer exchange fees231,536 25 170,719 24 642,211 25 519,002 25 
Infrastructure and trust & safety(2)
244,598 27 218,968 31 692,596 26 655,051 32 
Research and development(2)
365,424 40 321,613 45 1,089,173 42 912,469 45 
General and administrative(2)
98,733 11 97,508 14 302,184 12 291,279 14 
Sales and marketing(2)
52,592 6 40,874 6 124,416 5 97,957 5 
Total cost and expenses1,197,881 130 1,013,263 142 3,433,001 131 2,953,209 144 
Loss from operations(278,928)(30)(300,038)(42)(819,205)(31)(903,874)(44)
Interest income46,718 5 36,442 5 133,271 5 102,288 5 
Interest expense(10,286)(1)(10,268)(1)(30,853)(1)(30,409)(1)
Other income/(expense), net2,352 — (4,262)(1)(1,309)— (1,425)— 
Loss before income taxes(240,144)(26)(278,126)(39)(718,096)(27)(833,420)(41)
Provision for/(benefit from) income taxes303 — 682 — 1,466 — 177 — 
Consolidated net loss(240,447)(26)(278,808)(39)(719,562)(28)(833,597)(41)
Net loss attributable to noncontrolling interest(3)
(1,123)— (1,650)— (3,751)— (5,349)— 
Net loss attributable to common stockholders$(239,324)(26)%$(277,158)(39)%$(715,811)(27)%$(828,248)(40)%
Net loss per share attributable to common stockholders, basic and diluted$(0.37)$(0.45)$(1.11)$(1.35)
Weighted-average shares used in computing net loss per share attributable to common stockholders—basic and diluted650,961 619,350 642,977 612,938 
(1)Depreciation of servers and infrastructure equipment included in infrastructure and trust & safety.
(2)Includes stock-based compensation expense as follows (in thousands):
 
Three Months Ended September 30,
Nine Months Ended September 30,
 2024202320242023
Infrastructure and trust & safety$29,078 $24,483 $84,326 $65,710 
Research and development189,064 155,651 542,867 432,676 
General and administrative36,345 32,200 102,786 97,673 
Sales and marketing10,678 7,688 27,579 21,229 
Total stock-based compensation expense$265,165 $220,022 $757,558 $617,288 
(3)Our condensed consolidated financial statements include our majority-owned subsidiary Roblox China Holding Corp. The ownership interest of a minority investor, Songhua River Investment Limited, is recorded as a noncontrolling interest.
41
Table of Contents
Comparison of the Three and Nine Months Ended September 30, 2024 and 2023
Revenue
 
Three Months Ended
September 30,
2024 to 2023
Nine Months Ended
September 30,
2024 to 2023
 20242023% Change20242023% Change
 (dollars in thousands)(dollars in thousands)
Revenue$918,953 $713,225 29 %$2,613,796 $2,049,335 28 %
Revenue increased $205.7 million, or 29%, for the three months ended September 30, 2024 compared to the three months ended September 30, 2023. The increase is primarily due to a higher amortization of prior period deferred revenue and an increase in bookings in the current period. The increase in the amortization of prior period deferred revenue was supplemented by the decrease of the estimated average lifetime of a paying user to 27 months in the second quarter of 2024. Refer to the heading “Changes in Accounting Estimate” earlier in this section above for more information on the change in paying user life estimates in fiscal year 2024.
The increase in bookings during the three months ended September 30, 2024 compared to the three months ended September 30, 2023 was primarily driven by a higher average number of daily unique paying users during the current period, which increased from approximately 870,000 during the three months ended September 30, 2023 to approximately 1,143,000 during the three months ended September 30, 2024. The average number of daily unique paying users represents the number of user accounts that made a payment on the Platform, including via redemption of prepaid cards for Robux, on an average daily basis during the respective period.
Revenue increased $564.5 million, or 28%, for the nine months ended September 30, 2024 compared to the nine months ended September 30, 2023. The increase is primarily due to higher amortization of prior period deferred revenue and an increase in bookings in the current period. The increase in the amortization of prior period deferred revenue was supplemented by the decrease of the estimated average lifetime of a paying user to 27 months in the second quarter of 2024. Refer to the heading “Changes in Accounting Estimate” earlier in this section above for more information on the change in paying user life estimates in fiscal year 2024.
The increase in bookings during the nine months ended September 30, 2024 compared to the nine months ended September 30, 2023 was primarily driven by a higher average number of daily unique paying users during the current period, which increased from approximately 824,000 during the nine months ended September 30, 2023 to approximately 1,013,000 during the nine months ended September 30, 2024.
Cost of revenue
 
Three Months Ended
September 30,
2024 to 2023
Nine Months Ended
September 30,
2024 to 2023
 20242023% Change20242023% Change
 (dollars in thousands)(dollars in thousands)
Cost of revenue$204,998 $163,581 25 %$582,421 $477,451 22 %
Cost of revenue increased $41.4 million, or 25%, for the three months ended September 30, 2024 compared to the three months ended September 30, 2023. The increase is primarily due to a net increase of $40.9 million in expense for payment processing fees, primarily driven by a higher amortization of prior period deferred cost of revenue and an increase in current period payment processing fees from the related growth in bookings. The increase in the amortization of prior period deferred cost of revenue was supplemented by the decrease of the estimated average lifetime of a paying user to 27 months in the second quarter of 2024. Refer to the heading “Changes in Accounting Estimate” earlier in this section above for more information on the change in paying user life estimates in fiscal year 2024.
Cost of revenue increased $105.0 million, or 22%, for the nine months ended September 30, 2024 compared to the nine months ended September 30, 2023. The increase is primarily due to a net increase of $109.2 million in expense for payment processing fees, primarily driven by a higher amortization of prior period deferred cost of revenue and an increase in current period payment processing fees from the related growth in bookings. The increase in the amortization of prior period deferred cost of revenue was supplemented by the decrease of the estimated average lifetime of a paying user to 27 months in the second quarter of 2024. Refer to the heading “Changes in Accounting Estimate” earlier in this section above for more information on the change in paying user life estimates in fiscal year 2024.
42
Table of Contents
Developer exchange fees
 
Three Months Ended
September 30,
2024 to 2023
Nine Months Ended
September 30,
2024 to 2023
 20242023% Change20242023% Change
 (dollars in thousands)(dollars in thousands)
Developer exchange fees$231,536 $170,719 36 %$642,211 $519,002 24 %
Developer exchange fees increased $60.8 million, or 36%, for the three months ended September 30, 2024 compared to the three months ended September 30, 2023. The increase is primarily driven by an increase in amounts earned by developers and creators due to the growth in bookings over the same period.
Developer exchange fees increased $123.2 million, or 24%, for the nine months ended September 30, 2024 compared to the nine months ended September 30, 2023. The increase is primarily driven by an increase in amounts earned by developers and creators due to the growth in bookings over the same period.
Infrastructure and trust & safety
 
Three Months Ended
September 30,
2024 to 2023
Nine Months Ended
September 30,
2024 to 2023
 20242023% Change20242023% Change
 (dollars in thousands)(dollars in thousands)
Infrastructure and trust & safety$244,598 $218,968 12 %$692,596 $655,051 6 %
Infrastructure and trust & safety expenses increased $25.6 million, or 12%, for the three months ended September 30, 2024 compared to the three months ended September 30, 2023. The increase is primarily driven by $17.9 million of accelerated depreciation expense related to certain software licenses as the Company re-assessed the estimated useful life of these licenses in the third quarter of 2024. The increase was further supplemented by an increase of $12.7 million related to data center and technical infrastructure expenses (including depreciation and amortization) and hosting costs associated with providing the Platform to our users, as well as an increase of $5.4 million in personnel costs, which includes an increase of $4.6 million in stock-based compensation expense. The overall increase was offset by a decrease of $7.8 million in moderation and customer support related costs primarily due to internal efficiency gains and automation from AI-driven tools.
Infrastructure and trust & safety expenses increased $37.5 million, or 6%, for the nine months ended September 30, 2024 compared to the nine months ended September 30, 2023. The increase is primarily due to an increase of $31.2 million related to data center and technical infrastructure expenses (including depreciation and amortization) associated with providing the Platform to our users. The increase was further supplemented by an increase of $28.7 million in personnel costs, which includes an increase of $18.6 million in stock-based compensation expense, and $17.9 million of accelerated depreciation expense related to certain software licenses as the Company re-assessed the estimated useful life of these licenses in the third quarter of 2024. The overall increase was offset by a decrease of $18.1 million in hosting costs as a result of savings realized from the renegotiation of a contract with a third party cloud service provider in the third quarter of 2023 and $17.7 million in moderation and customer support related costs primarily due to internal efficiency gains and automation from AI-driven tools.
Research and development
 
Three Months Ended
September 30,
2024 to 2023
Nine Months Ended
September 30,
2024 to 2023
 20242023% Change20242023% Change
 (dollars in thousands)(dollars in thousands)
Research and development$365,424 $321,613 14 %$1,089,173 $912,469 19 %
Research and development expenses increased $43.8 million, or 14%, for the three months ended September 30, 2024 compared to the three months ended September 30, 2023. The increase is primarily due to an increase of $41.9 million in personnel costs, which includes an increase of $33.4 million in stock-based compensation expense, primarily due to growth in headcount supporting our engineering, design, and product teams.
43
Table of Contents
Research and development expenses increased $176.7 million, or 19%, for the nine months ended September 30, 2024 compared to the nine months ended September 30, 2023. The increase is primarily due to an increase of $145.9 million in personnel costs, which includes an increase of $110.2 million in stock-based compensation expense, primarily due to growth in headcount supporting our engineering, design, and product teams. The increase was further supplemented by an increase of $21.7 million in facilities-related costs, primarily driven by higher rent expense associated with our office leases.
General and administrative
 
Three Months Ended
September 30,
2024 to 2023
Nine Months Ended
September 30,
2024 to 2023
 20242023% Change20242023% Change
 (dollars in thousands)(dollars in thousands)
General and administrative$98,733 $97,508 1 %$302,184 $291,279 4 %
General and administrative expenses increased $1.2 million, or 1%, for the three months ended September 30, 2024 compared to the three months ended September 30, 2023. The increase is primarily due to an increase of $1.1 million in indirect and payroll related taxes and $1.0 million in facilities-related costs, offset by a $1.4 million decrease in business travel and related expenses.
General and administrative expenses increased $10.9 million, or 4%, for the nine months ended September 30, 2024 compared to the nine months ended September 30, 2023. The increase is primarily due to an increase of $8.5 million in professional services, $6.6 million of indirect and payroll related taxes, of which $3.3 million relates to a newly enacted digital services tax in Canada, $3.4 million in facilities-related costs, and $2.9 million of withholding-related taxes. The increase was offset by an impairment charge of $7.0 million related to the operating lease right-of-use asset and related leasehold improvements of a portion of our San Mateo headquarters for which a sub-lease agreement was executed during the first quarter of 2023, as well as a decrease of $4.4 million in contractor costs.
Sales and marketing
 
Three Months Ended
September 30,
2024 to 2023
Nine Months Ended
September 30,
2024 to 2023
 20242023% Change20242023% Change
 (dollars in thousands)(dollars in thousands)
Sales and marketing$52,592 $40,874 29 %$124,416 $97,957 27 %
Sales and marketing expenses increased $11.7 million, or 29%, for the three months ended September 30, 2024 compared to the three months ended September 30, 2023. The increase is primarily due to an increase of $4.8 million in advertising and promotional expenses and $5.0 million in personnel costs, which includes an increase of $3.0 million in stock-based compensation expense, primarily due to continued growth in headcount to support our sales and marketing teams.
Sales and marketing expenses increased $26.5 million, or 27%, for the nine months ended September 30, 2024 compared to the nine months ended September 30, 2023. The increase is primarily due to an increase of $12.8 million in personnel costs, which includes an increase of $6.4 million in stock-based compensation expense, primarily due to continued growth in headcount to support our sales and marketing teams, and an increase of $9.9 million in advertising and promotional expenses.
44
Table of Contents
Interest income, interest expense, other income/(expense), net, and provision for/(benefit from) income taxes
 
Three Months Ended
September 30,
2024 to 2023
Nine Months Ended
September 30,
2024 to 2023
 20242023% Change20242023% Change
 (dollars in thousands)(dollars in thousands)
Interest income$46,718 $36,442 28 %$133,271 $102,288 30 %
Interest expense$(10,286)$(10,268)0 %$(30,853)$(30,409)1 %
Other income/(expense), net$2,352 $(4,262)NM$(1,309)$(1,425)(8)%
Provision for/(benefit from) income taxes$303 $682 (56)%$1,466 $177 NM
Interest income increased by $10.3 million, or 28%, for the three months ended September 30, 2024 compared to three months ended September 30, 2023, primarily due to higher average investments in debt securities. Interest income increased by $31.0 million, or 30%, for the nine months ended September 30, 2024 compared to the nine months ended September 30, 2023, primarily due to higher average investments in debt securities and higher interest rates.
Other income/(expense), net income changed by $6.6 million for the three months ended September 30, 2024 compared to three months ended September 30, 2023, primarily driven by an increase in foreign currency exchange gains. Other income/(expense), net was relatively flat (in terms of amount) for the nine months ended September 30, 2024 compared to the nine months ended September 30, 2023.
Interest expense and provision for/(benefit from) income taxes, net were all relatively flat (in terms of amount) for the three and nine months ended September 30, 2024 compared to the same periods of the prior year.
Liquidity and Capital Resources
As of September 30, 2024 and December 31, 2023, our principal sources of liquidity were cash and cash equivalents and short-term and long-term investments of $3.9 billion and $3.2 billion, respectively, which were primarily held for working capital purposes, capital expenditures, and acquisitions. Our investment policy and strategy are focused on the preservation of capital and supporting our liquidity requirements. We do not enter into investments for trading or speculative purposes.
Since our inception, we have financed our operations primarily through cash generated from operations and, to a lesser extent, sales of convertible preferred stock, borrowings under our credit facilities, and the sale of our 2030 Notes. We require payment upfront for substantially all of our bookings.
On October 29, 2021, we issued the 2030 Notes, which will mature on May 1, 2030, unless earlier repurchased or redeemed. Interest is payable semi-annually in arrears on May 1 and November 1 of each year, commencing on May 1, 2022. The net proceeds from the 2030 Notes issuance were approximately $987.5 million and we intend to use the net proceeds for general corporate purposes, which may include working capital purposes, capital expenditures and acquisitions.
The 2030 Notes are unsecured obligations and the Indenture contains covenants limiting the Company and its subsidiaries’ ability to: (i) create certain liens and enter into sale and lease-back transactions; (ii) create, assume, incur or guarantee indebtedness; or (iii) consolidate or merge with or into, or sell or otherwise dispose of all of substantially all of the Company and its subsidiaries’ assets to another person, all of which are limited to amounts not to exceed the greater of $4.0 billion and 3.5x “Consolidated EBITDA” (as defined in the Indenture and referred to as “Covenant Adjusted EBITDA” throughout this section). Non-compliance with these covenants may result in the acceleration of repayment of the 2030 Notes and any accrued and unpaid interest.
Accordingly, the Company presents Covenant Adjusted EBITDA calculated in accordance with “Consolidated EBITDA” as that term is defined in the Indenture, which is not calculated in accordance with GAAP and may not conform to the calculation of Adjusted EBITDA by other companies. Covenant Adjusted EBITDA should not be considered as a substitute for a measure of our financial performance or other liquidity measures prepared in accordance with GAAP and is also not indicative of income or loss calculated in accordance with GAAP. Management believes that this calculation is useful to investors for purposes of analyzing our compliance with certain covenants specified in the Indenture.
45
Table of Contents
The following table presents the calculation of Covenant Adjusted EBITDA in accordance with the terms of the Indenture, for each of the periods presented (in thousands):
 Three Months Ended September 30,Nine Months Ended September 30,
 2024202320242023
Calculation of Covenant Adjusted EBITDA:
Consolidated net loss$(240,447)$(278,808)$(719,562)$(833,597)
Add (deduct):
Interest income(46,718)(36,442)(133,271)(102,288)
Interest expense10,286 10,268 30,853 30,409 
Other (income)/expense, net(2,352)4,262 1,309 1,425 
Provision for/(benefit from) income taxes303 682 1,466 177 
Depreciation and amortization expense(1)
68,613 53,600 175,126 153,611 
Stock-based compensation expense265,165 220,022 757,558 617,288 
RTO severance charge(2)
108 — 1,101 — 
Other non-cash charges(3)
— — — 6,988 
Change in deferred revenue216,325 130,957 410,657 360,112 
Change in deferred cost of revenue(47,917)(23,477)(99,662)(62,074)
Covenant Adjusted EBITDA $223,366 $81,064 $425,575 $172,051 
(1)Includes a one-time charge of $17.9 million related to the re-assessment of the estimated useful life of certain software licenses, resulting in the acceleration of their remaining depreciation within infrastructure and trust & safety expenses.
(2)Relates to cash severance costs associated with the Company’s return-to-office (“RTO”) plan announced in October 2023, which required a subset of the Company’s remote employees to begin working from the San Mateo headquarters for three days a week, beginning in the summer of 2024.
(3)Includes impairment expense related to certain operating lease right-of-use assets and related property and equipment.
As of September 30, 2024, contractual obligations related to the 2030 Notes are remaining payments of $19.4 million in 2024 and $38.8 million each year from 2025 through 2029 and $1,019.4 million due in 2030. These amounts represent principal and interest cash payments over the term of the 2030 Notes based on the stated maturity date. Any future redemption of the 2030 Notes could impact the amount or timing of our cash payments. For more information regarding the 2030 Notes, see Note 9, “Debt” to the notes to condensed consolidated financial statements.
For all periods presented, we have generated losses from our operations and positive cash flows from operating activities. A substantial source of our net cash and cash equivalents provided by operating activities is our deferred revenue, which is included in our condensed consolidated balance sheet as a liability. Deferred revenue consists of the unearned portion of bookings for which we have not yet satisfied our performance obligations. Our deferred revenue obligation is recognized as revenue over the estimated average lifetime of a paying user or as the virtual items are consumed.
We also expect to continue making investments in our business, including, but not limited to, capital expenditures related to our technology infrastructure.
We believe our existing cash and cash equivalents and short-term investments, together with expected cash to be provided by future operations, will be sufficient to meet our needs for the next 12 months. Our future capital requirements, however, will depend on many factors, including our growth rate, investment in our headcount, capital expenditures to build out new facilities and purchase hardware for infrastructure, timing and extent of spending to support our efforts to develop our Platform, and the effects of inflation on these various expenses, amongst other factors. We may in the future enter into arrangements to acquire or invest in complementary businesses, services, and technologies, including intellectual property rights. In the event that additional financing is required from outside sources, we may seek to raise additional funds at any time through equity, equity-linked arrangements, or debt. If we are unable to raise additional capital when desired and at reasonable rates, our business, results of operations, and financial condition would be adversely affected. See Part 1, Item 1A. “Risk Factors” for more information.
46
Table of Contents
Cash Flows
The following table summarizes our cash flows for the periods presented:
 Nine Months Ended September 30,
 20242023
(in thousands)
Condensed Consolidated Statements of Cash Flow Data:
Net cash and cash equivalents provided by operating activities$637,825 $314,875 
Net cash and cash equivalents used in investing activities$(767,560)$(2,773,964)
Net cash and cash equivalents provided by financing activities$52,746 $61,266 
Operating activities
Our largest source of operating cash is cash collection from sales of Robux and monthly subscriptions. Our primary uses of net cash and cash equivalents from operating activities are for payment processing fees, personnel-related expenses, data center and infrastructure-related operations, developer exchange fees, and other operating expenses.
During the nine months ended September 30, 2024, net cash and cash equivalents provided by operating activities was $637.8 million, which consisted of consolidated net loss of $719.6 million, adjusted by non-cash charges of $964.2 million and net cash inflows from the change in net operating assets and liabilities of $393.2 million. The non-cash charges were primarily comprised of stock-based compensation expense of $757.6 million and depreciation and amortization expense of $175.1 million. The net cash and cash equivalents inflow from the change in our net operating assets and liabilities was primarily due to a $409.8 million increase in deferred revenue, primarily due to bookings generated in the current period, and a $119.5 million decrease in accounts receivable, primarily driven by collection of outstanding accounts receivable and partially offset by an increase in accounts receivable from bookings generated in the current period. The overall increase was offset by a $99.5 million increase in deferred cost of revenue, primarily due to payment processing fees incurred in the current period, and a $54.6 million decrease due to payment of operating lease liabilities.
Investing activities
During the nine months ended September 30, 2024, net cash and cash equivalents used in investing activities was $767.6 million, primarily consisting of $647.6 million of investment purchases – net of sales and maturities, and capital expenditures of $117.2 million.
Financing activities
During the nine months ended September 30, 2024, net cash and cash equivalents provided by financing activities was $52.7 million, primarily consisting of $57.2 million from the exercise of stock options and purchase of shares under our employee stock purchase plan, offset by $4.5 million of post-acquisition purchase consideration payments related to the satisfaction of certain post-acquisition conditions related to our third quarter 2023 acquisition of Speechly, Inc.
Off-Balance Sheet Arrangements
The Company has letters of credit in connection with its office facilities in San Mateo, California and data center facilities in Ashburn, Virginia and Chicago, Illinois which are not reflected in the Company’s condensed consolidated balance sheets as of September 30, 2024 and December 31, 2023. There have been no material changes to the Company’s letters of credit during the nine months ended September 30, 2024. We did not have any relationships with unconsolidated entities or financial partnerships, such as structured finance or special purpose entities that were established for the purpose of facilitating off-balance sheet arrangements or other purposes.
47
Table of Contents
Contractual Obligations and Commitments
Contractual commitments include obligations under operating leases for office facilities and data center operations. There have been no material changes to the nature of our operating lease commitments since December 31, 2023, except for (i) the early termination of a data center lease in the third quarter of 2024 and (ii) lease commitments primarily related to office facilities and space for data center operations in the ordinary course of business. Refer to Note 4, “Leases” in the notes to condensed consolidated financial statements for more information on the Company’s lease obligations.
Other purchase obligations primarily consist of non-cancellable obligations with our data center hosting providers and software vendors. There have been no material changes in the Company’s purchase obligations since December 31, 2023, other than for non-cancellable obligations primarily related to data center hosting providers and software vendors in the ordinary course of business. Refer to Note 10, “Commitments and Contingencies” in the notes to condensed consolidated financial statements for additional information regarding our contractual commitments.
See our Annual Report on Form 10-K for the year ended December 31, 2023, which was filed with the SEC on February 21, 2024 for additional information regarding our contractual commitments.
Critical Accounting Policies and Estimates
The preparation of these financial statements in accordance with U.S. GAAP requires us to make estimates and assumptions that affect the reported amounts in our condensed consolidated financial statements and related notes. Our estimates are based on various factors that we believe are reasonable. Actual results may differ from these estimates. To the extent that there are differences between our estimates and actual results, our future financial statement presentation, financial condition, results of operations, and cash flows will be affected.
An accounting policy is considered to be critical if it requires an accounting estimate to be made based on assumptions about matters that are highly uncertain at the time the estimate is made, and if different estimates that reasonably could have been used, or changes in the accounting estimates that are reasonably likely to occur periodically, could materially impact the condensed consolidated financial statements.
Refer below for our revenue recognition accounting policy. For our stock-based compensation expense accounting policy, refer to “Management’s Discussion and Analysis of Financial Condition and Results of Operations” set forth in the Annual Report on Form 10-K for the year ended December 31, 2023, which was filed with the SEC on February 21, 2024.
Revenue Recognition
In accordance with ASC 606, Revenue from Contracts with Customers, revenue is recognized when control of the service is transferred to the customer. The amount of revenue recognized reflects the consideration that the Company expects to be entitled to in exchange for these services. To achieve the core principle of this standard, the Company determines revenue recognition by:
•identifying the contract, or contracts, with the customer;
•identifying the performance obligations in the contract;
•determining the transaction price;
•allocating the transaction price to performance obligations in the contract; and
•recognizing revenue when, or as, the Company satisfies performance obligations by transferring the promised services.
The Company derives substantially all of its revenue from the sale of virtual items on the Roblox Platform.
Roblox Platform
The Company operates the Roblox Platform as live services that allow users to play and socialize with others for free. Within the experience, however, users can purchase virtual currency (“Robux”) to ultimately obtain virtual items to enhance their social experience. Proceeds from the sale of Robux are initially recorded in deferred revenue and recognized as revenue as a user purchases and uses virtual items. The Company’s identified performance obligation is to provide users with the ability to acquire, use, and hold virtual items on the Roblox Platform over the estimated period of time the virtual items are available to the user or until the virtual items are consumed.
48
Table of Contents
Users can purchase Robux as one-time purchases or through monthly subscriptions via payment processors or through prepaid cards. Payments from users are non-refundable and relate to non-cancellable contracts for a fixed price that specify Company’s obligations. Revenue is recorded net of taxes assessed by government authorities that are both imposed on and concurrent with specific revenue transactions between the Company and its users, and estimated chargebacks and refunds.
The satisfaction of the Company’s performance obligation is dependent on the nature of the virtual item purchased and as a result, the Company categorizes its virtual items as either consumable or durable.
•Consumable virtual items represent items that can be consumed by a specific user action. Common characteristics of consumable virtual items may include items that are no longer displayed on the user’s inventory after a short period of time or do not provide the user any continuing benefit following consumption. For the sale of consumable virtual items, the Company recognizes revenue as the items are consumed.
•Durable virtual items represent items which result in a persistent change to a users’ character or item set (e.g., virtual hat, pet, or house). These items are generally available to the customer to hold, use, or display for as long as they are on the Roblox Platform. The Company recognizes revenue from the sale of durable virtual items ratably over the estimated period of time the items are available to the user which is estimated as the average lifetime of a paying user.
To separately account for consumable and durable virtual items, the Company specifically identifies each purchase for the majority of virtual items purchased on the Roblox Platform. For the remaining population, the Company estimates the amount of consumable and durable virtual items purchased based on data from specifically identified purchases and the expected behavior of the users within similar experiences. The estimation of consumable and durable virtual items purchased for the population of purchases not specifically identified requires management’s judgment as the Company evaluates and estimates the expected behavior of users in the population using information from known purchases in similar experiences.
At the onset of each quarter, the average lifetime of a paying user estimate is calculated based on historical monthly retention data for each user cohort to project future participation on the Roblox Platform. Determining the estimated average lifetime of a paying user requires management’s judgment as the Company analyzes the most recent trends in player cohort activity and other qualitative factors, including paying user behavior (e.g. impacts due to macroeconomic factors such as COVID-19), existing and new competition from a variety of entertainment resources for our users, the availability of the Roblox Platform across markets and user demographics, and other factors. The Company also considers results from prior analyses in determining the estimated average lifetime of a paying user. The Company believes this estimate is the best representation of the average life of the durable virtual items.
The estimated average paying user life was 28 months from the third quarter of 2022 through the first quarter of 2024 and decreased to 27 months at the onset of the second quarter of 2024. The decrease in the estimated average lifetime of a paying user from 28 months to 27 months was partially attributed to COVID-19 impacted payer cohorts dropping out of the estimated average lifetime of a paying user calculation (as we consider historical monthly retention data), whose average lives generally trended higher than more recent payer cohorts, along with the other qualitative factors including macroeconomic factors, competition, and availability of the Platform. Refer to the heading “Change in Accounting Estimate” for discussion on the quantitative amount of the change in accounting estimates for the respective periods impacted.
The Company offers prepaid cards through online and physical retailers, as well as on the Company website. The Company estimates expected breakage by taking into consideration historical patterns of redemption and escheatment laws as applicable.
Recent Accounting Pronouncements
See Note 2, “Basis of Presentation and Summary of Significant Accounting Policies” to the notes to our condensed consolidated financial statements included in Part I, Item I of this Quarterly Report on Form 10-Q for a discussion of recent accounting pronouncements.
Item 3. Quantitative and Qualitative Disclosures About Market Risk.
We are exposed to market risks in the ordinary course of our business. Market risk represents the risk of loss that may impact our financial position due to adverse changes in financial market prices and rates. Our market risk exposure is primarily the result of fluctuations in interest rates and foreign currency exchange rates.
49
Table of Contents
Interest Rate Risk
As of September 30, 2024, our cash equivalents, short-term investments, and long-term investments primarily consist of debt securities, including corporate debt securities, commercial paper, money market funds, U.S. Treasury securities, and U.S. agency securities. Our debt securities are subject to market risk due to changes in prevailing interest rates that may cause their fair values to fluctuate in the future. Based on a sensitivity analysis, we have determined that a hypothetical 100 basis points increase in interest rates would have resulted in a decrease in the fair values of our debt securities of approximately $30.3 million as of September 30, 2024. Such losses would only be realized if we sold the investments prior to maturity.
We do not enter into investments for trading or speculative purposes. Our investment policy and strategy are focused on the preservation of capital and supporting our liquidity requirements.
In October 2021, we issued $1.0 billion aggregate principal amount of the 2030 Notes. The 2030 Notes were issued at par and we incurred approximately $12.5 million in debt issuance costs. Interest on the 2030 Notes is payable semiannually in arrears on May 1 and November 1 of each year, beginning on May 1, 2022, and the entire outstanding principal amount of the 2030 Notes is due at maturity on May 1, 2030. The 2030 Notes have a fixed interest rate; therefore, we have no financial statement risk associated with changes in interest rates with respect to the 2030 Notes. Additionally, on our balance sheet we carry the 2030 Notes at face value less unamortized discount and debt issuance cost, and we present the fair value for disclosure purposes only. The fair value of our 2030 Notes will fluctuate with movements in interest rates, increasing in periods of declining rates of interest and declining in periods of increasing rates of interest.
Foreign Currency Exchange and Inflation Risk
During the nine months ended September 30, 2024, there were no significant changes to our quantitative and qualitative disclosures about foreign currency exchange risk or inflation risk. For more information, refer to Item 7A. “Quantitative and Qualitative Disclosures About Market Risk” set forth in the Annual Report on Form 10-K for the year ended December 31, 2023, which was filed with the SEC on February 21, 2024.
Item 4. Controls and Procedures.
Evaluation of Disclosure Controls and Procedures
Our management, with the participation of our Chief Executive Officer and Chief Financial Officer, has evaluated the effectiveness of our disclosure controls and procedures as of September 30, 2024. The term “disclosure controls and procedures,” as defined in Rules 13a-15(e) and 15d-15(e) under the Securities Exchange Act of 1934, as amended (the Exchange Act), means controls and other procedures of a company that are designed to ensure that information required to be disclosed by a company in the reports that it files or submits under the Exchange Act is recorded, processed, summarized, and reported within the time periods specified in the SEC’s rules and forms. Disclosure controls and procedures include, without limitation, controls and procedures designed to ensure that information required to be disclosed by a company in the reports that it files or submits under the Exchange Act is accumulated and communicated to the company’s management, including its principal executive and principal financial officers, or persons performing similar functions, as appropriate to allow timely decisions regarding required disclosure. In designing and evaluating our disclosure controls and procedures, our management recognizes that disclosure controls and procedures, no matter how well conceived and operated, can provide only reasonable assurance that the objectives of the disclosure controls and procedures are met. Based on the evaluation of our disclosure controls and procedures as of September 30, 2024, our Chief Executive Officer and Chief Financial Officer concluded that, as of such date, our disclosure controls and procedures were effective at the reasonable assurance level.
Changes in Internal Control Over Financial Reporting
There were no changes in our internal control over financial reporting identified in connection with the evaluation required by Rule 13a-15(d) and 15d-15(d) of the Exchange Act that occurred during the three months ended September 30, 2024, that have materially affected, or are reasonably likely to materially affect, our internal control over financial reporting.
Inherent Limitations on Effectiveness of Controls and Procedures
In designing and evaluating the disclosure controls and procedures and internal control over financial reporting, management recognizes that any controls and procedures, no matter how well designed and operated, can provide only reasonable assurance of achieving the desired control objectives. In addition, the design of disclosure controls and procedures and internal control over financial reporting must reflect the fact that there are resource constraints and that management is required to apply judgment in evaluating the benefits of possible controls and procedures relative to their costs.
50
Table of Contents
PART II—OTHER INFORMATION
Item 1. Legal Proceedings.
This information is set forth under “Note 10 – Commitments and Contingencies – Legal Proceedings” to the condensed consolidated financial statements included in Part I, Item 1 of this Quarterly Report on Form 10-Q is incorporated herein by reference.
51
Table of Contents
Item 1A. Risk Factors
RISK FACTORS
A description of the risks and uncertainties associated with our business is set forth below. You should carefully consider the risks described below, as well as the other information in this Quarterly Report on Form 10-Q, including our condensed consolidated financial statements and “Management’s Discussion and Analysis of Financial Condition and Results of Operations.” The occurrence of any of the events or developments described below could materially and adversely affect our business, financial condition, results of operations, and growth prospects. In such an event, the market price of our Class A common stock could decline, and you may lose all or part of your investment. Additional risks and uncertainties not presently known to us or that we currently believe are not material may also impair our business, financial condition, results of operations, and growth prospects.
Risk Factors Summary
Below is a summary of the principal factors that make an investment in our Class A common stock speculative or risky:
•We have a history of net losses and we may not be able to achieve or maintain profitability in the future.
•Our business is affected by seasonal demands, and our financial condition and results of operations will fluctuate from quarter to quarter, which makes our financial results difficult to predict and may not fully reflect our underlying performance.
•We experienced rapid growth in prior periods and our prior growth may not be indicative of our future growth or the growth of our market.
•We depend on effectively operating with mobile operating systems, hardware, and networks that we do not control; changes to any of these or our Platform may significantly harm our user retention, growth, engagement, and monetization, or require us to change our data collection and privacy, cybersecurity, and data protection practices, business models, operations, practices, advertising activities or application content, which could restrict our ability to maintain our Platform through these systems, hardware, and networks and would adversely impact our business.
•Because we recognize revenue from bookings over the estimated average lifetime of a paying user or as the virtual items are consumed, changes in our business may not be immediately reflected in our operating results.
•If our business becomes constrained by changing legal and regulatory requirements, including with respect to privacy, cybersecurity and data protection, artificial intelligence (“AI”), consumer protection, communication, verified parental consent and user-generated content, or enforcement by government regulators, including fines, orders, or consent decrees in the US or other jurisdictions in which we operate, our operating results will suffer.
•The success of our business model is contingent upon our ability to provide a safe online environment for our users, many of whom are children, to experience and if we are not able to provide a such an environment, our business will suffer dramatically.
•If we are not able to provide sufficiently reliable services to our developers, creators, and users and maintain the performance of our Platform in the event of outages, constraints, disruptions or degradations in our services and our Platform, our business and reputation will suffer.
•If the security of our Platform is compromised, it could compromise our and our developers’, creators’, and users’ private information, disrupt our internal operations and harm public perception of our Platform, which could cause our business and reputation to suffer.
•We must continue to attract and retain highly qualified personnel in very competitive markets to continue to execute on our business strategy and growth plans.
•We may identify material weaknesses or otherwise fail to maintain an effective system of internal controls, which may result in material misstatements of our condensed consolidated financial statements or cause us to fail to meet our periodic reporting obligations.
•We may incur liability as a result of content published using our Platform or as a result of claims related to content generated by our developers, creators, and users, including copyright infringement, and legislation regulating content on our Platform may require us to change our Platform or business practices.
•The loss of one or more of the members of our senior management team or other key personnel (or the inability to attract senior management or other key personnel), in particular our Founder, President, CEO and Chair of our Board of Directors, David Baszucki, could significantly harm our business.
•The public trading price of our Class A common stock is volatile and may decline.
52
Table of Contents
•The dual class stock structure of our common stock has the effect of concentrating voting control in our Founder, which may limit or preclude your ability to influence corporate matters, including the election of directors and the approval of any change of control transaction.
•Securities or industry analysts or other third parties may publish inaccurate or unfavorable research about us, our business or our market which may cause the market price and trading volume of our Class A common stock to decline.
Risks Related to Our Business
We have a history of net losses and we may not be able to achieve or maintain profitability in the future.
We have incurred net losses since our inception, and we expect to continue to incur net losses in the foreseeable future. We incurred net losses attributable to common stockholders of $1,151.9 million, $924.4 million and $491.7 million for the years ended December 31, 2023, 2022, and 2021, respectively. As of September 30, 2024, we had an accumulated deficit of $3,776.1 million. We also expect our operating expenses to continue to increase, and if our growth does not increase to offset these anticipated increases in our operating expenses, our business, results of operations, and financial condition will be harmed, and we may not be able to achieve or maintain profitability. We expect our costs and investments to continue to increase in future periods as we intend to continue to make investments to grow our business, including an expected increase in infrastructure, stock-based compensation expenses, and acquisitions. These efforts may be more costly than we expect and may not result in increased revenue or growth of our business. In addition to the expected costs to grow our business, we have incurred and expect to continue to incur significant additional legal, accounting, and other expenses as a public company. Compliance with these rules and regulations continues to increase our legal and financial compliance costs and demand on our systems, and requires significant attention from our senior management that could divert their attention away from the day-to-day management of our business. If we fail to increase our revenue to sufficiently offset the increases in our operating expenses, we will not be able to achieve or maintain profitability in the future.
Our business is affected by seasonal demands, and our financial condition and results of operations will fluctuate from quarter to quarter, which makes our financial results difficult to predict and may not fully reflect our underlying performance.
Historically, our business has been highly seasonal, with the highest percentage of our bookings occurring in the fourth quarter when holidays permit our users to spend increased time on our Platform and lead to increased spend on pre-paid Robux gift cards, and we expect this trend to continue. We also typically see higher levels of engagement in the months of June, July, and August, which are summer periods in the northern hemisphere, and lower levels of engagement in the post-summer months of September, October, and November. Other periods of seasonality include holidays such as Lunar New Year, Easter, and Ramadan, each of which may differ in timing year over year and therefore have and may continue to impact our quarterly results. We may also experience fluctuations due to factors that may be outside of our control that affect user, developer, or creator engagement with our Platform.
Accordingly, our quarterly results of operations have fluctuated in the past and will fluctuate in the future, both based on the seasonality of our business as well as external factors impacting the global economy, our industry and our company. Our results of operations and financial condition in any given quarter can be influenced by numerous factors, many of which we are unable to predict or are outside of our control, including, but not limited to our ability to maintain and grow our user base, user engagement, developer base and developer engagement; the level of demand for our Platform; the ability of our developers to monetize their experiences; increased competition; our pricing model; the maturation of our business; our ability to introduce new revenue streams such as advertising; legislative or regulatory changes; macroeconomic conditions, such as high inflation, recessionary or uncertain environments, and fluctuating foreign currency exchange rates; our ability to maintain operating margins, cash used in operating activities, and free cash flow; system failures or actual or perceived breaches or other incidents relating to privacy or cybersecurity; adverse litigation judgments, settlements, or other litigation and dispute-related costs; adverse media coverage or unfavorable publicity; the effectiveness of our internal control over financial metric reporting; the amount and timing of our stock-based compensation expenses; changes in our effective tax rate; and changes in accounting standards, policies, guidance, interpretations, or principles. As a result, you should not rely on our past quarterly results of operations as indicators of future performance. You should take into account the risks and uncertainties frequently encountered by companies in rapidly evolving market segments.
53
Table of Contents
We experienced rapid growth in prior periods, and our prior growth rates may not be indicative of our future growth or the growth of our market.
We experienced rapid growth in prior periods relative to our quarterly forecast and historic trends, which may not be indicative of our financial and operating results in future periods. Activity levels in prior periods are not sustainable, and our growth rates have moderated in most markets. The long-term impact to our business, operations, and financial results will depend on numerous evolving factors that we may not be able to accurately predict. For example, our bookings increased 171% from the year ended December 31, 2019 to the year ended December 31, 2020, while our bookings increased 23% from the year ended December 31, 2022 to the year ended December 31, 2023. Our revenue, bookings, and user base growth rates have slowed and may continue to slow, and we may not experience any growth in bookings or our user base during periods where we are comparing against historical periods. We believe our overall market acceptance, revenue growth, and increases in bookings depend on a number of factors, some of which are not within our control. There can be no assurance that users will not reduce their usage or engagement with our Platform or reduce their discretionary spending on our Platform, which would adversely impact our revenue and financial condition. If we are unable to continue to maintain the attractiveness of our Platform to developers, creators, and users, they may no longer seek new experiences in our Platform, which would result in decreased market acceptance, fewer bookings, and lower revenue and could harm our operations.
We depend on effectively operating with third-party mobile operating systems, hardware, and networks that may make changes affecting our operating costs, as well as our ability to maintain our Platform which would hurt our ability to operate our business.
For the three months ended September 30, 2024, 30% of our revenue was attributable to Robux sales through the Apple App Store and 16% of our revenue was attributable to Robux sales through the Google Play Store. Because of the significant use of our Platform on mobile devices, our application must remain interoperable with these and other popular mobile app stores and platforms, and related hardware. We are subject to the standard policies and terms of service of these operating systems, as well as policies and terms of service of the various software application stores that make our application and experiences available to our developers, creators, and users. These policies and terms of service govern the availability, promotion, distribution, content, and operation of applications and experiences on such operating systems and stores. Each provider of these operating systems and stores has broad discretion to change and interpret its terms of service and policies with respect to our Platform and those changes may be unfavorable to us and our developers’, creators’, and users’ use of our Platform. If an operating system provider or application store limits or discontinues access to, or changes the terms governing, its operating system or store for any reason, it could adversely affect our business, financial condition, or results of operations.
Additionally, an operating system provider or application store could also limit or discontinue our access to its operating system or store if it establishes more favorable relationships with one or more of our competitors, launches a competing product itself, or it otherwise determines that it is in its business interests to do so. If competitors control the operating systems and related hardware our application runs on, they could make interoperability of our Platform more difficult or display their competitive offerings more prominently than ours. There is no guarantee that new devices, platforms, systems and software application stores will continue to support our Platform or that we will be able to maintain the same level of service on these new systems. If it becomes more difficult for our users, developers or creators to access and engage with our Platform, our business and user retention, growth, and engagement could be significantly harmed.
Similarly, at any time, our operating system providers or application stores can change their policies on how we operate on their operating system or in their application stores by, for example, applying content moderation for applications and advertising or imposing technical or code requirements. These actions by operating system providers or application stores may affect our ability to collect, process, and use data as desired and could negatively impact our ability to leverage data about the experiences our developers create which in turn could impact our resource planning and feature development planning for our Platform.
54
Table of Contents
We rely on third-party distribution channels and third-party payment processors to facilitate purchases by our Platform users. If we are unable to maintain a good relationship with such providers, if their terms and conditions change, or fail to process or ensure the safety of users’ payments, our business will suffer.
Purchases of Robux and other products (e.g., prepaid gift cards) or services on our Platform are facilitated through third-party online distribution channels and third-party payment processors. We utilize these distribution channels, such as Amazon, Apple, Blackhawk, ePay, Google, Incomm, PayPal, Vantiv, Stripe, and Xsolla, to receive cash proceeds from purchases on our Platform. For our experiences accessed through mobile platforms such as the Apple App Store and the Google Play Store, we are required to share a portion of the proceeds from in-game sales with the platform providers. For operations through the Apple App Store and Google Play Store, we are obligated to pay up to 30% of any money paid by users on our Platform to Apple and Google and this amount could increase. These costs are expected to remain a significant operating expense for the foreseeable future. If the amount these platform providers charge increases, it could have a material impact on our ability to pay developers and our results of operations. Each provider of an operating system or application store may also change its fee structure or add fees associated with access to and use of its operating system, which could have an adverse impact on our business. There has been litigation, as well as governmental inquiries over application store fees, and Apple or Google could modify their platform in response to such litigation and inquiries in a manner that may harm us. Any scheduled or unscheduled interruption in the ability of our users to transact with these distribution channels could adversely affect our payment collection and, in turn, our revenue and bookings.
Additionally, we do not directly process purchases made on our Platform or the exchange of earned Robux for real-world currency through our Developer Exchange Program. Information on those purchases or exchanges (e.g., debit and credit card numbers and expiration dates, personal information, and billing addresses) is disclosed to the third-party online platform and service providers facilitating purchases or exchanges of Robux for real-world currency by users (such as Vantiv, Stripe, Xsolla, and Tipalti). We do not have control over the security measures of those providers, and their security measures may not be adequate. We could be exposed to litigation and possible liability if our users’ (including our developers’) transaction information involving their purchases or exchanges for real-world currency are compromised, which could harm our reputation and our ability to attract users and may materially adversely affect our business.
We also rely on the stability of such distribution channels and their payment transmissions, and third-party payment processors, to ensure the continued payment services provided to our users. If any of these providers fail to process or ensure the security of users’ payments for any reason, our reputation may be damaged and we may lose our paying users and developers interested in our Developer Exchange Program, developers may be discouraged from creating on our Platform, and users may be discouraged from making purchases on our Platform in the future, which, in turn, would materially and adversely affect our business, financial condition, and prospects.
In addition, from time to time, we encounter fraudulent use of payment methods, which could impact our results of operations and if not adequately controlled and managed could create negative consumer perceptions of our Platform services. If we are unable to maintain our fraud and chargeback rate at acceptable levels, card networks may impose fines, our card approval rate may be impacted and we may be subject to additional card authentication requirements. The termination of our ability to process payments on any major payment method would significantly impair our ability to operate our business.
55
Table of Contents
Our estimates or judgments relating to our critical accounting policies could cause our results of operations to fall below expectations, and changes in our business may not be immediately reflected in our operating results.
The preparation of financial statements in conformity with GAAP requires management to make estimates and assumptions that affect the amounts reported in our financial statements and accompanying notes. For example, the majority of the virtual items available on our Platform are durable virtual items, which, when acquired, are recognized ratably over the estimated period of time the virtual items are available to the user (estimated to be the average lifetime of a paying user). Every quarter, we complete an assessment of our estimated average lifetime of a paying user, which is used for revenue recognition of durable virtual items and calculated based on historical monthly retention data for each paying user cohort to project future participation on our Platform. We calculate the average historical monthly retention data by determining the weighted average of monthly paying users that have spent time on our Platform. In 2021, our estimated average lifetime of a paying user was 23 months. In the first quarter of 2022, we updated our estimated average lifetime of a paying user from 23 months to 25 months and in the third quarter of 2022 we increased the estimated average lifetime of a paying user from 25 months to 28 months. The estimated average lifetime of a paying user remained at 28 months through the first quarter of 2024. At the onset of the second quarter of 2024, the estimated average lifetime of a paying user decreased to 27 months. Based on the carrying amount of deferred revenue and deferred cost of revenue as of March 31, 2024, the change resulted in an increase in revenue and cost of revenue during the three months ended September 30, 2024 by $26.4 million and $5.4 million, respectively, and during the nine months ended September 30, 2024 by $85.3 million and $17.8 million, respectively. It is estimated that this change will increase our fiscal year 2024 revenue and cost of revenue by $98.0 million and $20.4 million, respectively. Much of the revenue we report in each quarter is the result of purchases of Robux during previous periods. Consequently, a decline in purchases of Robux in any one quarter will not be fully reflected in our revenue and operating results for that quarter. Any such decline, however, will negatively impact our revenue and operating results in future quarters. Accordingly, the effect of significant near-term downturns in purchases of Robux for a variety of reasons may not be fully reflected in our results of operations until future periods.
We are subject to state, federal, and international regulations and any changes in such regulations could harm or prevent our ability to operate our Platform in those jurisdictions.
The widespread availability of user-generated content is a relatively newer development, and the regulatory framework is new and evolving. We have observed an increased focus on enacting legislation intended to protect minors online and users’ personally identifiable information, among others. These laws occur at the state, federal and international levels. We must comply with existing and new regulations to operate our business in these jurisdictions and our failure to do so could lead to fines or suspension of our Platform until we are in compliance with these laws. Uncertainty over changes in laws and regulations could adversely affect our ability to operate across demographics and geographies or our developer’s ability to monetize their experiences in some geographies. For example, the State of Texas enacted new restrictions on purchasing by minors, including requiring verified parental consent for minors to purchase digital items, including on our Platform. These additional restrictions will likely have an adverse impact on our revenue and bookings in the near term. While any potential reduction in our revenue and bookings from the new regulations in Texas are not expected to be material, additional restrictions on our ability to offer our Platform or users the ability to engage with others on our Platform in other jurisdictions may have a significant adverse impact on our revenue and bookings that we derive from those jurisdictions, which could materially adversely affect our operating results and our business.
We are also subject to content moderation obligations, notice and transparency obligations, advertising restrictions and other requirements on digital platforms to protect consumers and their rights online, and existing and new regulations and policies with respect to privacy, biometrics, data protection, cybersecurity, gambling, loot boxes, intellectual property, consumer protection, ratings, and taxes in addition to protection of minors. Additionally, the U.S. Federal Trade Commission (“FTC”) regulates and restricts deceptive or unfair commercial activities, including with relation to targeted advertising. We are subject to regulations with respect to advertising, in particular, advertising to minors, and advertising regulations could differ based on the jurisdiction of our users. We may not be able to implement an advertising model that is compliant with regulations in all jurisdictions in which we operate. These requirements, among others, may increase our moderation and compliance related costs and expenses, reduce the overall use or demand of our Platform, result in modifications or disablement of certain features or changes to the default settings of our Platform, or result in significant injunctive and monetary remedies for violations.
Moreover, changes to these laws, regulations, standards, or obligations have required us to, and could in the future require us to change our business model for specific jurisdictions or subsets of our users, take on more onerous obligations, including, but not limited to, applying for government-issued licenses to operate, establishing a local presence in certain jurisdictions, or developing localized product offerings, and impact the functionality of our Platform. The costs of compliance with, and other burdens imposed by, these laws, regulations, standards, and obligations, could be prohibitively expensive. Furthermore, any inability to adequately address these burdens, would harm our ability to operate our Platform, limit the attractiveness of our Platform, or reduce overall demand for our Platform, which would harm our business, financial condition, and results of operations.
56
Table of Contents
The success of our business model is contingent upon maintaining a strong reputation and brand, including our ability to provide a safe online environment for our users, many of whom are children, to experience.
Our Platform hosts a number of experiences intended for audiences of varying ages, a significant percentage of which are designed to be experienced by children. As a user-generated content platform, it is relatively easy for developers, creators, and users to upload content that can be viewed broadly. Although illicit activities are in violation of our terms and policies, and we attempt to block objectionable material, we are unable to prevent all such violations from occurring. We continue to make significant efforts to provide a safe, civil and enjoyable experience for users of all ages. We invest significant technical and human resources to prevent inappropriate content on our Platform by using a range of tools and policies, including several aimed at reviewing all images, audio, video, and 3D models at the time of upload in order to block inappropriate content before users have a chance to encounter it on our Platform. Notwithstanding our efforts, from time to time, inappropriate content is successfully uploaded onto our Platform and can be viewed by others prior to being identified and removed by us. Moreover, measures intended to make our Platform more attractive to an older, age verified audience, such as less highly moderated or unmoderated chat and the introduction of experiences with mature content, and new methods of communication could fail to gain sufficient market acceptance by its intended audience and may create the perception that our Platform is not safe for younger users. In addition, the introduction of experiences for users who are 17 years of age and older may create the perception that our Platform is not safe for younger users and may cause some operating system providers, application stores, or regulatory agencies to require a higher age rating for our Platform, which could cause us to become less available to younger users and harm our business, financial condition, and results of operations. Further, children may attempt to evade our age verification system, which could lead them to be exposed to inappropriate content or behavior by participating in experiences that are not age-appropriate or that feature spatial voice chat. While we have introduced experience guidelines that allow developers to label more mature content in their experiences, and are updating our parental controls, users have been from time to time, notwithstanding our efforts, and may continue to be exposed to content that may not be age-appropriate. In addition, as more of our brand partners, developers, and creators offer physical products for sale through our Platform, younger users may be able to purchase products that may not be age-appropriate. Unintentional access to content or physical products could cause harm to our audience and to our reputation of providing a safe environment for younger users. If we are unable to limit, or are perceived as not being able to sufficiently limit, all or substantially all age-inappropriate content and physical products to only users who have been verified as being the appropriate age for such content or goods, then parents and children could lose their trust in the safety of our Platform, which would harm our overall acceptance by these audiences and would likely result in significantly reduced revenue, bookings, profitability, and ultimately, our ability to continue to successfully operate our Platform.
In addition to limiting content to age-appropriate audiences and blocking other inappropriate content, we have statutory obligations under U.S. federal law to block or remove child pornography and report offenses to the National Center for Missing and Exploited Children. While we have dedicated technology and trained human moderator staff that can detect and remove sexual content involving children, there have been instances where such content has been uploaded, and any unforeseen future non-compliance by us or allegations of non-compliance by us with respect to U.S. federal laws on child pornography or the sexual exploitation of children could significantly harm our reputation, create criminal liability, and could be costly and time consuming to address or defend. We may also be subject to additional criminal liability related to child pornography or child sexual exploitation under other domestic and international laws and regulations.
57
Table of Contents
We believe that maintaining, protecting, and enhancing our reputation and brand is critical to grow the number of developers, creators, and users on our Platform, especially given the safe and civil atmosphere that we strive to achieve for our users, many of whom are children. Maintaining, protecting, and enhancing our brand will depend largely on our ability to continue to provide reliable high-quality, engaging, and shared experiences on our Platform. If users, developers, or creators do not perceive our Platform to be reliable or of high quality, the value of our brand could diminish, thereby decreasing the attractiveness of our Platform. Further, we have faced and are currently defending allegations that our Platform has been used by criminal offenders to identify and communicate with children and to possibly entice them to interact off-Platform, outside of the restrictions of our moderated chat, content blockers, and other on-Platform safety measures. While we devote considerable resources to prevent this from occurring, we are unable to prevent all such interactions from taking place. We have also received and expect to continue to receive a high degree of media coverage, alleging the use of our Platform for illicit or objectionable ends. For example, we have experienced negative media publicity from traditional media sources and self-described short seller investors, related to the age of some of our developers, the content that developers produce, our operating metrics and disclosures, the strength of our moderation practices, and the conduct of users on our Platform that may be deemed illicit, explicit, profane, or otherwise objectionable. Additional unfavorable publicity has covered our privacy, cybersecurity or data protection practices, terms of service, product changes, product quality, litigation or regulatory activity, our use of generative AI, the actions of our users, and the actions of our developers or creators whose products are integrated with our Platform. Our reputation and brand could also be negatively affected by the actions of developers, contractors and users that are hostile, inappropriate, or illegal, whether on or off our Platform. Actual or perceived incidents or misuses of user data or other privacy or security incidents, the substance or enforcement of our community standards, the quality, integrity, characterization and age-appropriateness of content shared on our Platform, or the actions of other companies that provide similar services to ours, have and could adversely affect our reputation and lead to scrutiny and inquiries from governments and regulators. Any criminal incidents or allegations involving Roblox, whether or not we are directly responsible, could adversely affect our reputation as a safe place for children and hurt our business. Any negative publicity could create the perception that we do not provide a safe online environment and may have an adverse effect on the size, engagement, and loyalty of our developer, creator, and user community, which would adversely affect our business and financial results. Maintaining, protecting, and enhancing our reputation and brand may require us to make substantial investments, and these investments may not be successful.
If we fail to retain users or add new users, or if our users decrease their level of engagement with our Platform, revenue, bookings, and operating results will be harmed.
We view DAUs as a critical measure of our user engagement, and adding, maintaining, and engaging users has been and will continue to be necessary to our continued growth. Our DAU growth rate has fluctuated in the past and may slow in the future due to various factors including: the introduction of new or updated experiences or virtual items on our Platform, performance issues with our Platform, the availability of our Platform across markets and user demographics, which may be impacted by regulatory or legal requirements, including the use of verified parental consent, changes to the default settings on our Platform overall or for specific user groups, higher market penetration rates and competition from a variety of entertainment sources for our users and their time. In addition, our strategy seeks to expand the age groups and geographic markets that make up our users. If and when we achieve maximum market penetration rates among any particular user cohort overall and in particular geographic markets, future growth in DAUs will need to come from other age or geographic cohorts, which may be difficult, costly or time consuming for us to achieve. Accessibility to the internet and bandwidth or connectivity limitations as well as regulatory requirements, may also affect our ability to further expand our user base in a variety of geographies. If our DAU growth rate slows or becomes stagnant, or we have a decline in DAUs, or we fail to effectively monetize new or existing users, our financial performance could be significantly harmed.
Our business plan assumes that the demand for interactive entertainment offerings will increase for the foreseeable future. However, if this market shrinks or grows more slowly than anticipated or if demand for our Platform does not grow as quickly as we anticipate, whether as a result of competition, product obsolescence, budgetary constraints of our developers, creators, and users, technological changes, unfavorable economic conditions, uncertain geopolitical or regulatory environments or other factors, we may not be able to increase our revenue and bookings sufficiently to ever achieve profitability and our stock price would decline.
Moreover, a large number of our users are under the age of 13. This demographic may be less brand loyal and more likely to follow trends, including viral trends, than other demographics. These and other factors may lead users to switch to another entertainment option rapidly, which can interfere with our ability to forecast usage or DAUs and would negatively affect our user retention, growth, and engagement. We also may not be able to penetrate other demographics in a meaningful manner to compensate for the loss of DAUs in this age group. Falling user retention, growth, or engagement rates could seriously harm our business.
58
Table of Contents
We depend on our developers to create digital content that our users find compelling, and if we fail to properly incentivize our developers and creators to develop and monetize content, our business will suffer.
We spend substantial amounts of time and money to research, develop, and enhance versions of our Platform to incorporate additional features, improve functionality or other enhancements and prioritize user safety and security in order to meet the rapidly evolving demands of our developers, creators, and users. Maintaining adequate research and development resources, such as the appropriate personnel and development technology, to meet the demands of the market is essential. Developments and innovations on our Platform may rely on new or evolving technologies which are still in development and may never be fully developed. For instance, use of AI algorithms presents risks associated with developing technologies, which create technical challenges for us to successfully maintain our technology. In addition, the use of AI involves significant technical complexity and requires specialized expertise. This specialized expertise can be difficult and costly to obtain given the increasing industry focus on AI development and competition for talent.
Our Platform relies on our developers and creators to create experiences and virtual items on our Platform for our users, and we believe the interactions between and within the developer, creator, and user communities on our Platform create a thriving and organic ecosystem, and this network effect drives our growth. To facilitate and incentivize the creation of experiences and virtual items by developers, our Platform offers developers an opportunity to earn Robux, a virtual currency on our Platform, which, as described in our terms of use, is a license to engage in experiences and/or obtain virtual items. When virtual items are acquired on our Platform, the originating developer or creator earns a portion of the Robux paid for the item. Developers are able to exchange their accumulated earned Robux for real-world currency under certain conditions outlined in our Developer Exchange Program. In addition, we recently announced that we expect to launch paid access experiences where developers can offer access to their experiences to users for a set price in fiat currency and in exchange earn a higher revenue share of these user purchases. While we have millions of developers and creators on our Platform, 48% of engagement hours in experience were spent in the top 50 experiences in the month ending December 31, 2023 and only 526 experiences had engagement hours of 10 million or more in 2023. We continuously review and revise our Platform policies to enhance regulatory compliance and the trust and safety of our Platform. Changes to our Platform policies may reduce the ability of developers to monetize their experience. The loss of any of our top developers could have a material impact on our business, financial condition, and operations. If we fail to provide a sufficient return to developers, they may elect to develop user-generated content on other platforms, which would result in a loss of revenue.
Despite our efforts, users, developers, or creators may become dissatisfied with our billing or payment policies, our handling of personal data, or other aspects of our Platform. If we fail to adequately address these or other user, developer, or creator complaints, negative publicity about us or our Platform could diminish confidence in and the use of our Platform. If we do not provide the right technologies, education or financial incentives to our developers and creators, they may develop fewer experiences or virtual items or be unable to or choose not to monetize their experiences, and our users may elect to not participate in the experiences or acquire the virtual items, and, thus, our Platform, revenue, and bookings could be adversely affected. Additionally, if we fail to anticipate developers’ and creators’ needs, the quality of the content they create may not attract users to engage with experiences and result in a decline of users on our Platform. When we develop new or enhanced features for our Platform, we typically incur expenses and expend resources upfront to develop, market, promote, and sell new features, and we may not be able to realize some or all of the anticipated benefits of these investments.
If we are not successful in our efforts to further develop live experiences on our Platform, our business could suffer.
We have undergone efforts to further develop the live experiences available on our Platform, such as virtual platform-wide events, concerts, classrooms, and other meeting types, and to offer commercial partners with branding opportunities in conjunction with key events, such as a product launch. There is no guarantee that these efforts will be successful or that users will engage with these experiences. New features or enhancements and changes to the existing features of our Platform, such as these live experiences or virtual reality applications, could fail to attain sufficient market acceptance for many reasons, including failure to predict market demand accurately in terms of functionality and to supply features that meet this demand in a timely fashion; defects, errors, or failures; negative publicity about performance, safety, privacy, or effectiveness; delays in releasing new features or enhancements on our Platform; and introduction or anticipated introduction of competing products by competitors. The failure to obtain market acceptance for these live experiences would negatively affect our business, financial condition, results of operations, and brand.
59
Table of Contents
If we experience outages, constraints, disruptions, or degradations in our services, Platform support and/or technological infrastructure, our ability to provide sufficiently reliable services to our customers and maintain the performance of our Platform could be negatively impacted, which could harm our relationships with our developers, creators, and users, and, consequently, our business.
Our users expect fast, reliable, and resilient systems to enhance their experience and support their activity on our Platform, which depends on the continuing operation and availability of our Platform from our global network of data centers controlled and operated by us and our external service providers, including third-party “cloud” computing services. We also provide services to our developer and creator community through our Platform, including DevForum and Creator Hub for tutorials, hosting, customer service, regulatory compliance, and translation, among many others. The experiences and technologies on our Platform are complex software products and maintaining the sophisticated internal and external technological infrastructure required to reliably deliver these experiences and technologies is expensive and complex. The reliable delivery and stability of our Platform has been, and could in the future be, adversely impacted by outages, disruptions, failures, or degradations in our network and related infrastructure or those of our partners or service providers.
We have experienced outages from time to time since our inception when the Platform is unavailable for all or some of our users, developers, and creators, including in October 2024, May 2022, October 2021, and at other times during our history. In addition, there may be times when access to our Platform for users, developers, and creators may be temporarily unavailable or limited. This could be due to proactive actions we take while we provide critical updates or as an unexpected outcome of routine maintenance, which most recently occurred in July 2023. Outages can be caused by a number of factors, including a move to a new technology, the demand on our Platform exceeding the capabilities of our technological infrastructure, delays or failures resulting from natural disasters, manmade disasters, or other catastrophic events, the migration of data among data centers and to third-party hosted environments, a cyber event or act of terrorism, and issues relating to our reliance on third-party software, third-party application stores, and third parties that host our Platform in areas where we do not operate our own data centers. The unavailability of our Platform, particularly if outages should become more frequent or longer in duration, could cause our users to seek other entertainment options, including those provided by our competitors, which may adversely affect our financial results. If we or our partners or third party service providers experience outages and our Platform is unavailable or if our developers, creators, and users are unable to access our Platform within a reasonable amount of time or at all, as a result of any such events, our reputation and brand may be harmed, developer, creator and user engagement with our Platform may be reduced, and our revenue, bookings and profitability could be, and has been in the past, negatively impacted. We may also experience a negative impact to our financial results as a result of decreased usage on our Platform or decrease of payouts to developers and creators. We may not have full redundancy for all of our systems at all times and our disaster recovery planning may not be sufficient to mitigate the risks posed by unanticipated technological exploitation used by threat actors and to address all aspects of any unanticipated consequence or incident or allow us to maintain business continuity at profitable levels or at all. Further, in the event of damage or service interruption, our business interruption insurance policies will not adequately compensate us for any losses that we may incur. These factors in turn could further reduce our revenues, subject us to liability, or otherwise harm our business, financial condition, or results of operations.
In addition to the events described above, our data and our technological infrastructure may also be subject to local and federal administrative actions or regulations, changes to legal or permitting requirements, and litigation that could stop, limit, or delay operations. Despite a reliability program focused on anticipating and solving issues that may impact the availability of our Platform and precautions taken at our data centers, such as disaster recovery and business continuity arrangements, the occurrence of spikes in usage volume, the occurrence of a natural disaster, a cyber event or act of terrorism, a decision to close the facilities without adequate notice, our inability to secure additional or replacement data center capacity as needed, or other unanticipated problems at our data centers could result in interruptions or delays on our Platform, impede our ability to scale our operations or have other adverse impacts upon our business and adversely impact our ability to serve our developers, creators, and users.
Customer support personnel and technologies are critical to resolve issues and to allow developers, creators, and users to realize the full benefits that our Platform provides and provide an excellent customer experience. High-quality support is important for the retention of our existing developers, creators, and users and to encourage the expansion of their use of our Platform. We rely on third party service providers to assist in our customer support. Our third party providers, employees, developers or users have been and may in the future be a source of exploitation for bad actors to attempt to compromise our systems and information. If a threat actor is successful in using one or more of our third party service providers, employees, developers, or users to compromise our systems or personal information of our users, it could impact our business and results of operation as well as our reputation.
60
Table of Contents
We must continue to invest in the infrastructure required to support our Platform. If we do not help our developers, creators, and users quickly resolve issues and provide effective ongoing support, our ability to maintain and expand our Platform to existing and new developers, creators, and users could suffer. In addition, if we do not make sufficient investments in servers, software or personnel in support of our infrastructure, to scale effectively and accommodate increased demands placed on our infrastructure, the reliability of our underlying infrastructure will be harmed and our ability to provide a quality experience for our developers, creators, and users will be significantly harmed. This would lead to a reduction in the number of developers, creators, and users on our Platform, a reduction in our revenues, bookings, and ability to compete, and our reputation with existing or potential developers, creators, or users could suffer.
The lack of comprehensive encryption for communications on our Platform may increase the impact of a security breach or incident.
Communications on our Platform are not comprehensively encrypted at this time. As such, any security breach or incident that involves unauthorized access, acquisition, disclosure, or use of communications on our Platform may be particularly impactful to our business. We may experience greater incident response forensics, data recovery, legal fees, and costs of notification related to any such potential incident, and we may face an increased risk of reputational harm, regulatory enforcement, and consumer litigation, which could further harm our business, financial condition, results of operations, and future business opportunities.
If the security of our Platform is compromised, it could compromise our and our developers’, creators’, and users’ private information, disrupt our internal operations, and harm public perception of our Platform, which could cause our business and reputation to suffer.
We collect and store personal data and certain other sensitive and proprietary information in the operation of our business, including developer, creator, user and employee information, and other confidential data. While we have implemented measures designed to prevent unauthorized access to or loss of our confidential data, malware, ransomware, viruses, hacking, social engineering, spam, and phishing attacks have occurred and may occur on our Platform and our systems and those of our third-party service providers again in the future. Because of the popularity of our Platform, we believe that we are an attractive target for these sorts of attacks and have seen the frequency of these types of attacks increase.
The techniques used by malicious actors to obtain unauthorized access to, to sabotage, systems or networks, or to utilize our systems maliciously are constantly evolving and generally are not recognized until launched against a target. Consequently, despite the measures we have taken, we may be unable to anticipate these techniques, detect or react in a timely manner, or implement preventive measures, which could result in delays in our detection or remediation of, or other responses to, security breaches and other security-related incidents. The use of open source software used in our Platform has exposed us to security vulnerabilities in the past and will likely continue to expose us to security vulnerabilities in the future. For example, in December 2021, a vulnerability in popular logging software, Log4j, was publicly announced, and while we have taken steps to ensure these and similar vulnerabilities have been patched in our systems, we cannot guarantee that all vulnerabilities have been patched in every system upon which we are dependent or that additional critical vulnerabilities of open source software which we rely upon will not be discovered. Our use of AI in our products and business practices may increase or create additional cybersecurity risks, including risks of security breaches and incidents.
Our Platform and services operate in conjunction with, and we are dependent upon, third-party products, services, and components. Our ability to monitor our third-party service providers’ cybersecurity is limited, and in any event, attackers may be able to circumvent our third-party service providers’ cybersecurity measures. There have been and may continue to be significant attacks on certain of our third-party providers, and we cannot guarantee that our or our third-party providers’ systems and networks have not been breached or that they do not contain exploitable defects or bugs that could result in a breach of or disruption to our systems and networks or the systems and networks of third parties that support us and our Platform and service. If there is a security vulnerability, error, or other bug in one of these third-party products, services, or components and if there is a security exploit targeting them or even simply the allegation of a vulnerability or security exploit targeting one of these third-party products, services or components, we could face increased costs, claims, liability, reduced revenue, and harm to our reputation or competitive position. We and our service providers may be unable to anticipate these techniques, react, remediate, or otherwise address any security vulnerability, breach, or other incident in a timely manner, or implement adequate preventative measures.
61
Table of Contents
If any unauthorized access to our network, systems or data, including our sensitive and proprietary information, personal data from our users, developers, or creators, or other data, or any other loss or unavailability of, or unauthorized use, modification, disclosure, or other processing of personal data or any other security breach or incident, occurs or is believed to have occurred, whether as a result of third-party action, employee negligence, error or malfeasance, defects, social engineering techniques, ransomware attacks, or otherwise, our reputation, brand and competitive position could be damaged, our and our users’, developers’ and creators’ data and intellectual property could potentially be lost or compromised, and we could be required to spend capital and other resources to alleviate problems caused by such actual or perceived breaches or incidents and remediate our systems. In the past, we have experienced social engineering and phishing attacks, and if similar attacks occur and are successful, this could have a negative impact on our business or result in unfavorable publicity. Additionally, we contract with certain third parties to store and process certain data for us, including our distribution channels, and these third parties face similar risks of actual and potential security breaches and incidents, which could present similar risks to our business, reputation, financial condition, and results of operations.
We incur significant costs in an effort to detect and prevent security breaches and other security-related incidents, including those to secure our product development, test, evaluation, and deployment activities, and we expect our costs will increase as we make improvements to our systems and processes to prevent future breaches and incidents. The economic costs to us to reduce cyber or other security problems, such as spammers, errors, bugs, flaws, “cheating” programs, defects or corrupted data, could be significant and may be difficult to anticipate or measure. Even the perception of these issues may cause developers, creators, and users to use our Platform less or stop using it altogether, and the costs could divert our attention and resources, any of which could result in claims, demands, and legal liability to us, regulatory investigations and other proceedings, and otherwise harm our business, reputation, financial condition, or results of operations. There could also be regulatory fines imposed for certain data breaches that take place around the world. Further, certain laws and regulations relating to privacy, biometrics, cybersecurity, and data protection, such as the California Consumer Privacy Act (“CCPA”), allow for a private right of action, which may lead to consumer litigation for certain data breaches that relate to specified categories of personal information. From time to time, we do identify product vulnerabilities, including through our bug bounty program. Although we have policies and procedures in place designed to swiftly characterize the potential impact of such vulnerabilities and develop appropriate patching or upgrade recommendations and also maintain policies and procedures related to vulnerability scanning and management of our internal corporate systems and networks, such policies and procedures may not be followed or detect every issue, and from time to time, we have, and may in the future again, need to proactively disable access to our Platform in order to provide necessary patching or upgrades.
Although we maintain cyber and privacy insurance, subject to applicable deductibles and policy limits, such coverage may not extend to all types of incidents relating to privacy, data protection, or cybersecurity, and it may be insufficient to cover all costs and expenses associated with such incidents. Further, such insurance may not continue to be available to us in the future on economically reasonable terms, or at all, and insurers may deny us coverage as to any future claim. The successful assertion of one or more large claims against us that exceed available insurance coverage, or the occurrence of changes in our insurance policies, including premium increases or the imposition of large deductible or co-insurance requirements, could have a material adverse effect on our business, including our financial condition, operating results, and reputation.
The expansion of our Platform outside the United States exposes us to risks inherent in international operations.
We operate our Platform throughout the world and are subject to risks and challenges associated with international business. For the three months ended September 30, 2024, approximately 78% of our DAUs and 36% of our revenue was derived from outside the U.S. and Canada region. We intend to continue to expand internationally, and this expansion is a critical element of our future business strategy. However, as we continue to expand internationally, including into developing countries where consumer discretionary spending is relatively weak, while our DAUs increase, the growth rate of our bookings could decelerate due to weaker spending by users from those regions, and our ABPDAU has been and may continue to be negatively impacted. While we have a number of developers, creators, and users outside of the U.S., we have limited offices located outside of the U.S. and Canada, and there is no guarantee that our international expansion efforts will be successful. The risks and challenges associated with expanding our international presence and operations include:
•greater difficulty in enforcing contracts and accounts receivable collection, and longer collection periods;
•higher costs of doing business internationally, including increased accounting, travel, infrastructure, legal and compliance costs;
•double taxation of our international earnings and potentially adverse tax consequences due to changes in the tax laws of the U.S. or the foreign jurisdictions in which we operate;
•compliance with multiple, ambiguous, or evolving laws and regulations, including those relating to employment, tax, content regulation, privacy, data protection, anti-corruption, import/export, customs, anti-boycott, sanctions and embargoes, antitrust, data transfer, storage and security, content monitoring, preclusion, and removal, online entertainment offerings, advertising and consumer protection in general, and industry-specific laws and regulations, particularly as these rules apply to interactions with users under the age of 18;
62
Table of Contents
•expenses related to monitoring and complying with differing labor and employment regulations, especially in jurisdictions where labor and employment laws may be more favorable to employees than in the U.S.;
•increased exposure to fluctuations in exchange rates between the U.S. dollar and foreign currencies in markets where we do business;
•challenges inherent to efficiently recruiting and retaining qualified employees in foreign countries and maintaining our company culture and employee programs across all of our offices;
•management communication and integration problems resulting from language or cultural differences and geographic dispersion;
•the uncertainty of protection for intellectual property in some countries;
•the uncertainty of our exposure to third-party claims of intellectual property infringement and the availability of statutory safe harbors in some countries;
•foreign exchange controls that might prevent us from repatriating cash earned outside the U.S.;
•risks associated with trade restrictions and foreign legal requirements, and greater risk of unexpected changes in regulatory requirements, tariffs and tax laws, trade laws, and export and other trade restrictions;
•risks relating to the implementation of exchange controls, including restrictions promulgated by the Office of Foreign Asset Control (“OFAC”), and other similar trade protection regulations and measures;
•exposure to regional or global public health issues, and to travel restrictions and other measures undertaken by governments in response to such issues;
•general economic and political conditions in these foreign markets, including political and economic instability in some countries and regions;
•localization of our services, including translation into foreign languages and associated expenses and the ability to monitor our Platform in new and evolving markets and in different languages to confirm that we maintain standards, including trust and safety standards, consistent with our brand and reputation;
•regulatory frameworks or business practices favoring local competitors;
•changes in the perception of our Platform by governments in the regions where we operate or plan to operate;
•uncertainty regarding the imposition of and changes in the U.S.’ and other governments’ trade regulations, trade wars, tariffs, other restrictions or other geopolitical events, including, without limitation, the evolving relations between the U.S. and China, evolving relations with Russia due to Russia’s invasion of Ukraine, and the conflict in the Middle East stemming from Hamas’ attack against Israel; and
•natural disasters, acts of war, and terrorism, and resulting changes to laws and regulations, including changes oriented to protecting local businesses.
These and other factors could harm our ability to generate revenue and bookings outside of the U.S. and, consequently, adversely affect our business, financial condition and results of operations. We may not be able to expand our business and attract users in international markets and doing so will require considerable management attention and resources. International expansion is subject to the particular challenges of supporting a business in an environment of multiple languages, cultures, customs, legal systems, alternative dispute systems, regulatory systems and commercial infrastructures. We may not be able to offer our Platform in certain countries, and expanding our international focus may subject us to risks that we have not faced before or increase risks that we currently face. For example, in August 2024 we learned that our platform was blocked in Turkey and we are working with the local authorities with the goal of resolving it.
If we are unable to successfully grow our user base, compete effectively with other platforms, and further monetize our Platform, our business will suffer.
We have made, and are continuing to make, investments to enable our developers and creators to design and build compelling content and deliver it to our users on our Platform. Existing and prospective developers may not be successful in creating content that leads to and maintains user engagement (including maintaining the quality of experiences); they may fail to expand the types of experiences that they can build for users; or our competitors may entice our developers, users and potential users away from, or to spend less time with, our Platform, each of which could adversely affect users’ interest in our Platform and lead to a loss of revenue opportunities and harm our results of operations. The multitude of other entertainment options, online gaming, and other interactive experiences is high, making it difficult to retain users who are dissatisfied with our Platform and seek other entertainment options.
63
Table of Contents
Additionally, we may not succeed in further monetizing our Platform and user base. As a result, our user growth, user engagement, financial performance and ability to grow revenue could be significantly harmed if we fail to increase or maintain DAUs; our user growth outpaces our ability to monetize our users, including if our user growth occurs in markets that are not profitable; we fail to provide the tools and education to our developers and creators to enable them to monetize their experiences and developers do not create engaging or new experiences for users; we fail to increase the overall number of developers and creators on our Platform; we fail to establish a successful advertising model; we fail to increase or maintain the amount of time spent on our Platform, the number of experiences that our users engage with, or the usage of our technology for our developers; we fail to increase the features of our Platform, allowing it to more broadly serve the entertainment, education, communication and business markets; we fail to increase penetration and engagement across all demographics or measures intended to make our Platform more attractive to older-age verified users create the perception that our Platform is not safe for young users; or the experiences on our Platform do not maintain or gain popularity.
If we are able to continue to grow, we will need to manage our growth effectively, which could require expanding our internal IT systems, technological operations infrastructure, financial infrastructure, and operating and administrative systems and controls. In addition, we have expended in the past and may in the future expend significant resources to launch new features and changes on our Platform that we are unable to monetize, which may significantly harm our business. Any future growth would add complexity to our organization and require effective coordination across our organization, and an inability to do so would adversely affect our business, financial conditions, and results of operations.
We have subscription-based Robux offerings through our Roblox Premium service. Only a small portion of our users regularly purchase Robux compared to all users who use our Platform in any period. While we intend for subscription-based offerings to generate increased recurring revenue from our existing user base, they may cause users to decrease their purchases of Robux and decrease these users’ overall spend on our Platform. Our ability to continue to attract and retain users of our paid subscription services will depend in part on our ability to consistently provide our subscribers with a quality experience. If our users do not perceive these offerings to be of value, or if we introduce new or adjust existing features or pricing in a manner that is not favorably received by them, we may not be able to attract and retain subscribers or be able to convince users to become subscribers of such additional service offerings, and we may not be able to increase the amount of recurring revenue from our user base. If users fail to purchase Robux at rates similar to or greater than they have historically and if we fail to attract new paying users, or if our paying users fail to continue interacting with the Platform and purchasing Robux as they increase in age, our revenue will suffer. Subscribers may cancel their subscription to our service for many reasons, including a perception that they do not use the service sufficiently, the need to reduce household expenses, competitive services that provide a better value or experience or as a result of changes in pricing. If our efforts to attract and retain subscribers are not successful, our business, operating results, and financial condition may be adversely impacted.
Introduction of new technology could harm our business and results of operations.
The market for an immersive platform for connection and communication is a new and evolving market characterized by rapid, complex, and disruptive changes in technology and user, developer, and creator demands that could make it difficult for us to effectively compete. The expectations and needs of our users, developers, and creators are constantly evolving. Our future success depends on a variety of factors, including our continued ability to innovate, introduce new products and services efficiently, enhance and integrate our products and services in a timely and cost-effective manner, extend our core technology into new applications, and anticipate technological developments. If we are unable to react quickly to new technology trends—for example the continued growth of generative AI solutions which disrupts the ways developers create experiences or may disrupt the way users consume virtual goods—it may harm our business and results of operation. Further, social and ethical issues relating to the use of new and evolving technologies such as AI in our offerings, may result in reputational harm and liability, and may cause us to incur additional research and development costs to resolve such issues. AI presents emerging ethical issues and if we enable or offer solutions that draw controversy due to their perceived or actual impact on society, we may experience brand or reputational harm, competitive harm, or legal liability. Failure to address AI ethics issues by us or others in our industry could undermine public confidence in AI.
In addition, our use of generative AI in aspects of our Platform may present risks and challenges that could increase as AI solutions become more prevalent. The Roblox Cloud may be relied upon in the future for increasingly complex decision-making as it integrates hardware, accelerated machine learning AI, including generative AI, for a broad range of compute tasks, including control of non-player characters, improved personalization, synthetic content generation, and automation of the player experience. However, AI algorithms may be flawed. Datasets may be insufficient or contain biased information. It is possible that at some point the Roblox Cloud may make decisions unpredictably or autonomously, which can raise new or exacerbate existing ethical, technological, legal, and other challenges, and may negatively affect the performance of the Roblox Platform and the user, developer, and creator experience. These deficiencies and other failures of AI systems could subject us to competitive harm, regulatory action, legal liability, and brand or reputational harm.
64
Table of Contents
Our user metrics and other estimates are subject to inherent challenges in measurement, and real or perceived inaccuracies in those metrics may significantly harm and negatively affect our reputation and our business.
We regularly review metrics, including our DAUs, Hours Engaged, unique payers, user demographics, and ABPDAU to evaluate growth trends, measure our performance, and make strategic decisions. These metrics are calculated using internal data gathered on an analytics platform that we developed and operate and have not been validated by an independent third party. Our metrics are based on estimates and may also differ from estimates published by third parties or from similarly titled metrics of our competitors due to differences in methodology or underlying assumptions. If our metrics, which are based on estimates, are inaccurate, then investors will have less confidence in our company and our prospects, which could cause the market price of our Class A common stock to decline, and our reputation and brand could be harmed.
These metrics are based on what we believe to be reasonable estimates and underlying assumptions for the applicable period of measurement, but there are inherent challenges in measuring how our Platform is used. As a result, the metrics may misstate the number of DAUs, monthly unique payers, average monthly repurchase rate, hours engaged, ABPDAU, and average bookings per monthly unique payer. The methodologies used to measure these metrics require significant judgment and are also susceptible to algorithm or other technical errors. In addition, we are continually seeking to improve our metrics, which are based on estimates, and such metrics may change due to improvements or changes in our methodology or underlying assumptions. We regularly review our processes and assumptions for calculating these metrics, and from time to time we discover inaccuracies in our metrics or make adjustments to improve their accuracy, which can result in our use of updated metrics in a current period and corresponding adjustments to our historical metrics. Our ability to recalculate our historical metrics to reflect any change in methodology of a metric in a current period may be impacted by data limitations, limitations in functionality of and user behaviors on different platforms, or other factors that require us to apply different methodologies for such adjustments over current and historic periods.
Additionally, there are users who have multiple accounts, fake user accounts, or fraudulent accounts created by bots to inflate user activity for a particular developer or creator on our Platform, thus making the developer’s or creator’s experience or other content appear more popular than it really is. Detecting and taking action with respect to such issues requires considerable judgment and is technically challenging. We strive to detect and minimize fraud, the use of bots, and unauthorized use of our Platform, and while these practices are prohibited in our terms of service and we implement measures to detect and suppress that behavior, when we are unsuccessful, our operating results may be negatively affected. Some of our demographic data is also incomplete or inaccurate. For example, because users self-report their dates of birth, our age demographic data may differ from our users’ actual ages. If our users provide us with incorrect or incomplete information regarding their age or other attributes, then our estimates may prove inaccurate.
Errors or inaccuracies in our metrics or data could also result in incorrect business decisions and inefficiencies. For instance, if a significant understatement or overstatement of active users or hours engaged were to occur, we may expend resources to implement unnecessary business measures or fail to take required actions to attract a sufficient number of users to satisfy our growth strategies. If our investors or developers do not perceive our user, geographic, or other demographic metrics to be accurate representations of our user base, or if we discover material inaccuracies in our user, geographic, or other demographic metrics, our reputation may be seriously harmed. Our estimates also may change as our methodologies and Platform evolve, including through the application of new data sets, the introduction of new metrics or technologies, or as our Platform changes with new features and enhancements. Such changes could lead to investor confusion or the perception that our estimates, methodologies and underlying assumptions are unreliable, which could also cause our developers, creators, and brand and other partners to be less willing to allocate their budgets or resources to our Platform, which could seriously harm our business.
65
Table of Contents
We rely on suppliers for certain components of the equipment we use to operate our Platform and any disruption in the availability of these components could delay our ability to expand or increase the capacity of our Platform or replace defective equipment.
We rely on suppliers for several components of the equipment we use to operate our Platform. Our reliance on these suppliers exposes us to risks, including reduced control over production costs and constraints based on the current availability, terms, and pricing of these components. While the network equipment and servers we purchase generally are commodity equipment and we believe an alternative supply source for network equipment and servers on substantially similar terms could be identified quickly, our business could be adversely affected until those efforts are completed. In addition, the technology equipment industry has experienced component shortages and delivery delays, and we have and may in the future experience shortages or delays, including as a result of increased demand in the industry, natural disasters, export and import control restrictions, or our suppliers lacking sufficient rights to supply the components in all jurisdictions in which we have data centers and edge data centers that support our Platform. For example, supply chain constraints for servers and other networking equipment required for our operations has resulted and could in the future result in disruptions and delays for these components and the delivery and installation of such components at our data centers and edge data centers. If our supply of certain components is disrupted or delayed, there can be no assurance that additional supplies or components can serve as adequate replacements for the existing components or that supplies will be available on terms that are favorable to us, if at all. Any disruption or delay in the supply of our hardware components may delay the opening of new data centers, edge data centers, co-location facilities or the creation of fully redundant operations, limit capacity expansion, or replacement of defective or obsolete equipment at existing data centers and edge data centers or cause other constraints on our operations that could damage our ability to serve our developers, creators, and users.
Some developers, creators, and users on our Platform may make unauthorized, fraudulent, or illegal use of Robux and other digital goods or experiences on our Platform, including through unauthorized third-party websites or “cheating” programs.
Robux and digital goods on our Platform have no monetary value outside of our Platform, but users have made and may in the future make unauthorized, fraudulent, or illegal sales and/or purchases of Robux, other digital goods and Roblox accounts on or off of our Platform, including through unauthorized third-party websites in exchange for real-world currency. For example, some users have made fraudulent use of credit cards owned by others on our Platform to purchase Robux and offer the purchased Robux for sale at a discount on a third-party website. For the three months ended September 30, 2024, total chargebacks to us from all fraud was approximately 3.9% of bookings.
While we regularly monitor and screen usage of our Platform with the aim of identifying and preventing these activities, and regularly monitor third-party websites for fraudulent Robux or digital goods offers as well as regularly send cease-and-desist letters to operators of these third-party websites, we are unable to control or stop all unauthorized, fraudulent, or illegal transactions in Robux or other digital goods that occurs on or off of our Platform. Although we are not responsible for such unauthorized, fraudulent, and/or illegal activities conducted by these third parties, our user experience may be adversely affected, and users and/or developers may choose to leave our Platform if these activities are pervasive. These activities may also result in negative publicity, disputes, or even legal claims, and measures we take in response may be expensive, time consuming, and disruptive to our operations.
In addition, unauthorized, fraudulent, and/or illegal purchases and/or sales of Robux, Roblox accounts, or other digital goods on or off of our Platform, including through third-party websites, bots, fake accounts, or “cheating” or malicious programs that enable users to exploit vulnerabilities in the experiences on our Platform or our partners’ websites and platforms, could reduce our revenue and bookings by, among other things, decreasing revenue from authorized and legitimate transactions, increasing chargebacks from unauthorized credit card transactions, causing us to lose revenue and bookings from dissatisfied users who stop engaging with the experiences on our Platform, or could increase costs that we incur to develop technological measures to curtail unauthorized transactions and other malicious programs, or could reduce other operating metrics.
Under our community rules for our Platform, which developers, creators, and users are obligated to comply with, we reserve the right to temporarily or permanently ban individuals for breaching our Terms of Use, including by engaging in any illegal activity on the Platform. We have banned individuals as a result of unauthorized, fraudulent, or illegal use of our Platform, Robux or other digital goods on our Platform. We have also employed technological measures to help detect unauthorized Robux transactions and continue to develop additional methods and processes through which we can identify unauthorized transactions and block such transactions. However, there can be no assurance that our efforts to prevent or minimize these unauthorized, fraudulent, or illegal transactions will be successful.
66
Table of Contents
We have made and are continuing to make investments in privacy, data protection, user safety, cybersecurity, and content review efforts to combat misuse of our services and user data by third parties, including investigations of individuals we have determined to have attempted to access and, in some cases, have accessed, user data without authorization. Our internal teams also continually monitor and address any unauthorized attempts to access data stored on servers that we own or control or data available to our third-party customer service providers. As a result of these efforts, we have discovered and disclosed, and anticipate that we will continue to discover and disclose, additional incidents of misuse of or unauthorized access of user data or other undesirable activity by third parties. We have taken steps to protect the data that we have access to, but despite these efforts, our security measures, or those of our third-party service providers, could be insufficient or breached as a result of third-party action, malfeasance, employee errors, service provider errors, technological limitations, defects or vulnerabilities in our Platform or otherwise. Additionally, many of our employees and third-party service providers with access to user data currently are and may in the future be working remotely, which may increase our employees’ or our third-party service providers’ risk of security breaches or incidents. Moreover, the risk of state-supported and geopolitical-related cyber-attacks may increase with geopolitical events. We have sometimes failed to discover and in the future may not discover all such incidents or activity or be able to respond to or otherwise address them, promptly, in sufficient respects or at all. Such incidents and activities have in the past, and may in the future, involve the use of user data or our systems in a manner inconsistent with our terms, contracts or policies, the existence of false or undesirable user accounts, theft of in-game currency or virtual items in valid user accounts, and activities that threaten people’s safety on- or offline. We may also be unsuccessful in our efforts to enforce our policies or otherwise remediate any such incidents. Any of the foregoing developments, whether actual or perceived, may negatively affect user trust and engagement, harm our reputation and brands, require us to change our business practices in a manner adverse to our business, and adversely affect our business and financial results. Any such developments have and may continue to subject us to future litigation and regulatory inquiries, investigations, and proceedings, including from data protection authorities in countries where we offer services and/or have users, which could subject us to monetary penalties and damages, divert management’s time and attention, and lead to enhanced regulatory oversight.
We focus our business on our developers, creators, and users, and acting in their interests in the long-term may conflict with the short-term expectations of analysts and investors.
A significant part of our business strategy and culture is to focus on long-term growth and developer, creator, and user experience over short-term financial results. We expect our expenses to continue to increase in the future as we broaden our developer, creator, and user community, as developers, creators, and users increase the amount and types of experiences and virtual items they make available on our Platform and the content they consume, as we continue to seek ways to increase payments to our developers and as we develop and further enhance our Platform, expand our technical infrastructure and data centers, and hire additional employees to support our expanding operations. As a result, in the near- and medium-term, we may continue to operate at a loss, or our near- and medium-term profitability may be lower than it would be if our strategy were to maximize near- and medium-term profitability. We expect to continue making significant expenditures to grow our Platform and develop new features, integrations, capabilities, and enhancements to our Platform for the benefit of our developers, creators, and users. We will also be required to invest in our internal IT systems, technological operations infrastructure, financial infrastructure, and operating and administrative systems and controls. Such expenditures may not result in improved business results or profitability over the long-term. If we are ultimately unable to achieve or improve profitability at the level or during the time frame anticipated by securities or industry analysts, investors and our stockholders, the trading price of our Class A common stock may decline.
We may require additional capital to meet our financial obligations and support business growth, and this capital might not be available on acceptable terms or at all.
We intend to continue to make significant investments to support our business growth and may require additional funds to respond to business challenges, improve our Platform and operating infrastructure or acquire complementary businesses, personnel, and technologies. Accordingly, we may need to engage in additional equity or debt financings. If we raise additional funds through future issuances of equity or convertible debt securities, our existing stockholders could suffer significant dilution, and any new equity securities we issue could have rights, preferences, and privileges superior to those of our Class A common stock. Any debt financing that we secure in the future could involve offering security interests and undertaking restrictive covenants relating to our capital raising activities and other financial and operational matters, which may make it more difficult for us to obtain additional capital and to pursue business opportunities, including potential acquisitions. Recently, the trading prices of technology companies have been highly volatile, which may reduce our ability to access capital on favorable terms or at all. Also, to the extent outstanding additional shares subject to options and warrants to purchase our capital stock are authorized and exercised, there will be further dilution. The amount of dilution could be substantial depending on the size of the issuance or exercise. If we are unable to obtain adequate financing or financing on terms satisfactory to us when we require it, our ability to continue to support our business growth and to respond to business challenges could be significantly impaired, and our business, financial condition or results of operations may be harmed.
67
Table of Contents
The popularity of our Lua scripting language is a key driver of content creation and engagement with our Platform, and if other programming languages or platforms become more popular with our developers, it may affect engagement with and content creation for our Platform.
Roblox experiences are programmed using Lua scripting language on the Roblox Platform. In order to enhance the attractiveness of our Platform to potential developers, we have made the Lua scripting language available without charge. The Lua scripting language permits developers on the Roblox Platform to develop customized add-on features for their own or others’ use, and we have trained our developers on how to write add-on programs using Lua scripting language. As part of this strategy, we have encouraged the development of an active community of Lua programmers similar to those which have emerged for other software platforms. The widespread use and popularity of our Lua scripting language is critical to creating engaging content on and demand for our Platform. If developers do not find the Lua scripting language or our Platform simple and attractive for developing content or determine that our Lua scripting language or other features of our Platform are undesirable or inferior to other scripting languages or platforms, or Lua scripting language becomes unavailable for use by the developers for any reason, they may shift their resources to developing content on other platforms and our business may be harmed.
We rely on Amazon Web Services for a portion of our cloud infrastructure in certain areas, and as a result any disruption of AWS would negatively affect our operations and significantly harm our business.
We rely on Amazon Web Services (“AWS”) as a third-party provider for a portion of our backend services, including for some of our high-speed databases, scalable object storage, and message queuing services, as well as virtual cloud infrastructure. For location-based support areas, we outsource certain aspects of the infrastructure relating to our cloud-native Platform. As a result, our operations depend, in part, on AWS’ ability to protect their services against damage or interruption from natural or manmade disasters. Our developers, creators, and users need to be able to access our Platform at any time, without interruption or degradation of performance. Although we have disaster recovery plans that utilize multiple AWS availability zones to support our cloud infrastructure, any incident affecting their infrastructure that may be caused by natural or manmade disasters and other similar events beyond our control, could adversely affect our cloud-native Platform. Any disruption of or interference with our use of AWS could impair our ability to deliver our Platform reliably to our developers, creators, and users.
Additionally, if AWS were to experience a hacking attack or another security incident, it could result in unauthorized access to, damage to, disablement or encryption of, use or misuse of, disclosure of, modification of, destruction of, or loss of our data or our developers’, creators’, and users’ data or disrupt our ability to provide our Platform or service. A prolonged AWS service disruption affecting our cloud-native Platform for any of the foregoing reasons would adversely impact our ability to serve our users, developers, and creators and could damage our reputation with current and potential users, developers, and creators, expose us to liability, result in substantial costs for remediation, cause us to lose users, developers, and creators, or otherwise harm our business, financial condition, or results of operations. and users. We may also incur significant costs for using alternative hosting cloud infrastructure services or taking other actions in preparation for, or in reaction to, events that damage or interfere with the AWS services we use.
We have entered into an enterprise agreement with AWS and a supplemental private pricing addendum that will remain in effect until June 2026. In the event that our AWS service agreements are terminated, or there is a lapse of service, elimination of AWS services or features that we utilize, we could experience interruptions in access to our Platform as well as significant delays and additional expense in arranging for or creating new facilities or re-architecting our Platform for deployment on a different cloud infrastructure service provider, which would adversely affect our business, financial condition, and results of operations.
We must continue to attract and retain users, developers, and creators, and highly qualified personnel in very competitive markets to continue to execute on our business strategy and growth plans, and the loss of key personnel or failure to attract and retain users, developers, and creators could significantly harm our business.
We compete for users, developers, and creators. We compete to attract and retain our users’ attention and their engagement hours with other global technology leaders such as Amazon, Apple, Meta Platforms, Google, Microsoft, and Tencent, global entertainment companies such as Comcast, Disney, ViacomCBS, and Warner Bros Discovery, global gaming companies such as Activision Blizzard (now owned by Microsoft), Electronic Arts, Take-Two, Epic Games, Krafton, NetEase, and Valve, online content platforms including Netflix, Spotify, and YouTube, as well as social platforms such as Facebook, TikTok, Instagram, WhatsApp, Pinterest, X (Twitter), Reddit, Discord and Snap.
68
Table of Contents
We also rely on developers and creators to create the content that leads to and maintains user engagement (including maintaining the quality of experiences). We compete to attract and retain developers and engineering talent with gaming and metaverse platforms such as Epic Games, Unity, Meta Platforms, and Valve Corporation, which also give developers the ability to create or distribute interactive content. We do not have any agreements with our developers that require them to continue to use our Platform for any time period. Some of our developers have developed attractive businesses in developing content, including games, on our Platform. In the future, if we are unable to continue to provide value to these developers and they have alternative methods to publish and commercialize their offerings, they may not continue to provide content to our Platform. Should we fail to provide compelling advantages to continued use of our ecosystem to developers, they may elect to develop content on competing interactive entertainment platforms. If a significant number of our developers no longer provide content, or we fail to increase the number of developers using our Platform, we may experience an overall reduction in the quality of our experiences, which could adversely affect users’ interest in our Platform and lead to a loss of revenue opportunities and harm our results of operations.
We expect competition to continue to increase in the future. Many of our existing competitors have, and some of our potential competitors could have, substantial competitive advantages, such as larger sales and marketing budgets and resources; broader and more established relationships with users, developers, and creators; greater resources to make acquisitions and enter into strategic partnerships; lower labor and research and development costs; larger and more mature intellectual property portfolios; and substantially greater financial, technical, and other resources.
Additionally, we depend on the continued services and performance of our Founder, President, CEO and Chair of our Board of Directors, David Baszucki, members of our senior management team, and other key personnel. David Baszucki has been responsible for our strategic vision, and should he stop working for us for any reason, it is unlikely that we would be able to immediately find a suitable replacement. We do not maintain key man life insurance for David Baszucki, and do not believe any amount of key man insurance would allow us to recover from the harm to our business if David Baszucki were to leave the Company for any reason. Similarly, members of our senior management team and other key personnel are highly sought after and others may attempt to encourage these individuals to leave the Company. The loss of one or more of the members of the senior management team or other key personnel for any reason, or the inability to attract new or replacement members of our senior management team, other key personnel, or highly qualified employees could disrupt our operations, create uncertainty among investors, adversely impact employee retention and morale, and significantly harm our business.
Our business and results of operations are affected by fluctuations in currency exchange rates.
As we continue to expand our international operations, we become more exposed to the effects of fluctuations in currency exchange rates. We generally collect revenue from our international markets in the local currency. For the three months ended September 30, 2024, approximately 78% our DAUs and 36% of our revenue was derived from outside the U.S. and Canada region. While we periodically adjust the price of Robux to account for the relative value of this local currency to the U.S. dollar, these adjustments are not immediate nor do they typically exactly track the underlying currency fluctuations. As a result, rapid appreciation of the U.S. dollar against these foreign currencies has harmed and may in the future harm our reported results and cause the revenue derived from our foreign users and overall revenue to decrease. In addition, even if we do adjust the cost of our Robux in foreign markets to fluctuations in the U.S. dollar, such fluctuations could change the costs of purchasing Robux to our users outside of the U.S., which may adversely affect our business, results of operations and financial condition, or improve our financial performance.
We also incur expenses for employee compensation and other operating expenses at our non-U.S. locations in the local currency. Additionally, global events as well as geopolitical developments, including conflict in Europe and inflation have caused, and may in the future cause, global economic uncertainty, and uncertainty about the interest rate environment, which could amplify the volatility of currency fluctuations. Fluctuations in the exchange rates between the U.S. dollar and other currencies could result in the dollar equivalent of our expenses being higher which may not be offset by additional revenue earned in the local currency. This could impact our reported results of operations. To date, we have not engaged in any hedging strategies and any such strategies, such as forward contracts, options, and foreign exchange swaps related to transaction exposures that we may implement in the future to mitigate this risk may not eliminate our exposure to foreign exchange fluctuations. Moreover, the use of hedging instruments may introduce additional risks if we are unable to structure effective hedges with such instruments.
69
Table of Contents
We plan to continue to make acquisitions and investments in other companies, which could require significant management attention, disrupt our business, dilute our stockholders, and significantly harm our business.
As part of our business strategy, we have made and intend to make acquisitions and investments to add or access specialized employees and complementary companies, features, and technologies. Our ability to acquire and successfully integrate larger or more complex companies, features, and technologies is unproven. In the future, we may not be able to find other suitable acquisition or investment candidates, and we may not be able to complete acquisitions, investments or similar strategic transactions on favorable terms, if at all. The pursuit of potential acquisitions or investments may divert the attention of management and cause us to incur significant expenses related to identifying, investigating, and pursuing suitable targets, whether or not they are consummated. Our previous and future acquisitions and investments may not achieve our goals, and any future acquisitions or investments we complete could be viewed negatively by users, developers, creators, partners, or investors. In addition, if we fail to successfully close transactions or integrate new teams into our corporate culture, or fail to integrate the features and technologies associated with acquisitions or investments, our business could be significantly harmed. Any integration process may require significant time and resources, and we may not be able to manage the process successfully. We may not successfully evaluate or use the acquired products, technology, and personnel, or accurately forecast the financial impact of an acquisition, including accounting charges which could be recognized as a current period expense. We also may not achieve the anticipated benefits of synergies from the target business, may encounter challenges with incorporating the acquired features and technologies into our Platform while maintaining quality and security standards consistent with our brand, or may fail to identify security vulnerabilities in acquired technology prior to integration with our technology and Platform. We may also incur unanticipated liabilities that we assume as a result of acquiring companies, including claims related to the acquired company, its offerings or technologies or potential violations of applicable law or industry rules and regulations arising from prior or ongoing acts or omissions by the acquired business that were not discovered during diligence. We will pay cash, incur debt, or issue equity securities to pay for any acquisitions or investments, any of which could significantly harm our business. In addition, it generally takes several months after the closing of an acquisition to finalize the purchase price allocation. Therefore, it is possible that our valuation of an acquisition may change and result in unanticipated write-offs or charges, impairment of our goodwill, or a material change to the fair value of the assets and liabilities associated with a particular acquisition, any of which could significantly harm our business. Selling equity to finance any such acquisition would also dilute our stockholders. Incurring debt would increase our fixed obligations and could also include covenants or other restrictions that would impede our ability to manage our operations.
Our acquisition and investment strategy may not succeed if we are unable to remain attractive to target companies or expeditiously close transactions. If we develop a reputation for being a difficult acquirer or having an unfavorable work environment, or if target companies view our Class A common stock unfavorably, we may be unable to consummate key acquisition transactions essential to our corporate strategy and our business may be significantly harmed.
Our ability to use our net operating loss carryforwards and certain other tax attributes may be limited, each of which could significantly harm our business.
As of December 31, 2023, we had federal net operating loss carryforwards of $2,382.3 million, which do not expire, federal net operating loss carryforwards of $52.2 million, which begin to expire in 2035, state net operating loss carryforwards of $1,261.4 million, which begin to expire in 2024, and foreign net operating loss carryforwards of $66.8 million, which begin to expire in 2024. Utilization of our net operating loss carryforwards and other tax attributes may be subject to limitations on utilization or benefit due to the ownership change limitations provided by Sections 382 and 383 of the Internal Revenue Code of 1986, as amended (the “Code”), and other similar provisions. All of the $2,382.3 million of federal net operating losses are carried forward indefinitely but the deductibility of these losses is generally limited to 80% of current year taxable income. Our net operating loss carryforwards may also be subject to limitations under state law. If our net operating loss carryforwards and other tax attributes expire before utilization or are subject to limitations, our business and financial results could be harmed.
70
Table of Contents
Our estimates or judgments relating to our critical accounting policies may be based on assumptions that change or prove to be incorrect, which could cause our results of operations to fall below expectations of securities analysts and investors.
The preparation of financial statements in conformity with GAAP requires management to make estimates and assumptions that affect the amounts reported in our financial statements and accompanying notes. We base our estimates on historical experience and on various other assumptions that we believe to be reasonable under the circumstances, as described in the section titled “Management’s Discussion and Analysis of Financial Condition and Results of Operations.” The results of these estimates form the basis for making judgments about the recognition and measurement of certain assets and liabilities and revenue and expenses that is not readily apparent from other sources. In addition to revenue recognition and estimates of the average lifetime of a paying user, our accounting policies that involve judgment include those related to assumptions used for estimating the fair value of common stock to calculate stock-based compensation, capitalization of internal-use software costs, valuation of goodwill and intangible assets, certain accrued liabilities, and valuation allowances associated with income taxes. If our assumptions change or if actual circumstances differ from those in our assumptions, our results of operations could be adversely affected, which could cause our results of operations to fall below the expectations of securities analysts and investors, resulting in a decline in the market price of our Class A common stock.
Our results of operations may be harmed if we are required to collect sales, value added, or other similar taxes for the purchase of our virtual currency, or for the sale of content between our developers, creators, and users.
Although we, either directly or through our third-party distribution channels, collect and remit taxes from users in certain countries and regions on the sale of our virtual currency, there are some jurisdictions in which we operate where we do not currently collect taxes from users. The application of tax laws pertaining to the collection of sales, value added, and similar taxes to e-commerce businesses, such as ours, is a complex and evolving area. For example, many countries have recently enacted tax laws that require non-resident providers to register for and levy value added taxes on electronically provided services to such country’s residents. This would require us to calculate, collect, and remit value added taxes in some jurisdictions, even if we have no physical presence in such jurisdictions. Further, we may need to invest substantial amounts to modify our solutions or our business model to be able to collect and remit sales, value added, or similar taxes under such tax laws in the future.
Further, many jurisdictions have also adopted or are considering adopting marketplace facilitator laws that shift the burden of tax collection to online marketplaces. If we are characterized as a marketplace facilitator for the sale of content between our developers, creators, and users, we may need to invest substantial amounts to modify our solutions or business model to be able to meet any reporting and collection obligations with respect to sales, value added, or similar taxes. A successful assertion by a jurisdiction that we should have been or should be collecting additional sales, value added, or other taxes for the sale of content between our developers, creators, and users, could, among other things, result in substantial tax payments, create significant administrative burdens for us, discourage potential users, developers, or creators from subscribing to our Platform, or otherwise harm our business, results of operations, and financial condition.
We may not realize the benefits expected through our China joint venture.
In February 2019, we entered into a joint venture agreement with Songhua River Investment Limited, referred to as Songhua, an affiliate of Tencent Holdings Ltd. (“Tencent Holdings”), under which we created Roblox China Holding Corp (the “China JV”), of which we own a 51% ownership interest. Through a wholly-owned subsidiary based in Shenzhen, branded as “Luobu,” the China JV is engaged in the development, localization, and licensing to Chinese creators of a Chinese version of Roblox Studio. Luobu also develops and oversees relations with local Chinese developers and helps them build and publish experiences and content for our global Platform. In December 2020, Shenzhen Tencent Computer Systems Co. Ltd (“Tencent”), received a required publishing license from the Chinese government, which enabled Tencent to publish a localized version of the Roblox Client as a game in China under the name “Luobulesi.” The license could be withdrawn if Tencent fails to comply with applicable existing or future regulations. Such withdrawal could significantly impair or eliminate the ability to publish and operate Luobulesi in China. The Luobulesi app is not currently available to users in China while we and Tencent build the next version of Luobulesi.
Tensions between the U.S. and China have resulted in trade restrictions that could harm our ability to participate in Chinese markets and numerous additional such restrictions have been threatened by both countries. Sustained uncertainty about, or worsening of, current global economic conditions and further escalation of trade tensions between the U.S. and China could result in a global economic slowdown and long-term changes to global trade, including retaliatory trade restrictions that could restrict our ability to participate in the China JV. We may find it difficult or impossible to comply with these or other conflicting regulations in the U.S. and China, which could make it difficult or impossible to achieve our business objectives in China or realize a return on our investment in this market.
71
Table of Contents
Relations may also be compromised if the U.S. pressures the Chinese government regarding its monetary, economic, or social policies. Changes in political conditions in China and changes in the state of China-U.S. relations are difficult to predict and could adversely affect the operations or financial condition of the China JV. In addition, because of our proposed involvement in the Chinese market, any deterioration in political or trade relations might result in our products being perceived as less attractive in the U.S. or elsewhere. The Committee on Foreign Investment in the U.S. (“CFIUS”) has continued to apply a more stringent review of certain foreign investment in U.S. companies, including investment by Chinese entities, and has made inquiries to us with respect to Tencent Holding’s equity investment in us and involvement in the China JV. We cannot predict what effect any further inquiry by CFIUS into our relationship with Tencent and Tencent Holdings or changes in China-U.S. relations overall may have on our ability to effectively support the China JV or on the operations or success of the China JV.
The Chinese economic, legal, and political landscape also differs from other countries in many respects, including the level of government involvement and regulation, control of foreign exchange, and uncertainty regarding the practical enforceability of intellectual property rights. The laws, regulations and legal requirements in China are also subject to frequent changes and the exact obligations under and enforcement of laws and regulations are often subject to unpublished internal government interpretations and policies which makes it challenging to ascertain compliance with such laws. We may incur increased operating expenses related to cybersecurity and data protection in China, including with respect to access to Chinese user data and confidential company information as well as any network interconnections and cross border system integrations.
In addition to market and regulatory factors, any future success of the China JV will require a collaborative effort with Tencent to build and operate Luobu and Luobulesi as together, they will form the exclusive basis for growing our penetration in the China market. In addition, upon the occurrence of certain events, such as a termination of certain of the contractual relationships applicable to Luobu, a change of control of us, or the acquisition of 20% of our outstanding securities by certain specified Chinese industry participants, we may be required to purchase Songhua’s interest in the China JV at a fair market value determined at the time of such purchase. Any future requirement to purchase the interest in China JV from Songhua may have a material adverse effect upon our liquidity, financial condition, and results of operations both as a result of the purchase of such interests and the fact that we would need to identify and partner with an alternative Chinese partner in order for operations to continue in the China market.
Risks Related to Government Regulations
We are subject to laws and regulations worldwide, many of which are unsettled and still developing, which could increase our costs or adversely affect our business.
We are subject to a variety of laws in the U.S. and abroad that affect our business. As a global Platform with users in over 180 countries, we are subject to a myriad of regulations and laws regarding consumer protection, the use of prepaid cards, subscriptions, advertising, electronic marketing, protection of minors, including the use of verified parental consent, privacy, biometrics, cybersecurity, data protection and data localization requirements, AI, online services, online gaming, consumer protection, anti-competition, freedom of speech, labor, real estate, taxation, escheatment, intellectual property ownership and infringement, tax, export and national security, tariffs, anti-corruption, campaign finance and telecommunications, all of which are continuously evolving and developing. The scope and interpretation of the laws that are or may be applicable to us, which in some cases can be enforced by private parties in addition to government entities, are often uncertain and may be conflicting, particularly laws outside the U.S., and compliance with laws, regulations and similar requirements may be burdensome and expensive. Laws and regulations are inconsistent from jurisdiction to jurisdiction, which increases the cost of compliance and doing business and exposes us to possible litigation, penalties or fines. Any such costs, which may rise in the future as a result of changes in these laws and regulations or in their interpretation, could make our Platform less attractive to our users, developers, or creators or cause us to change or limit our ability to sell our Platform. We have policies and procedures designed to ensure compliance with applicable laws and regulations, but we cannot assure you that we will not experience violations of such laws and regulations or our policies and procedures.
In addition, there are ongoing academic, political, and regulatory discussions in the U.S., Canada, Europe, United Kingdom, Australia, and other jurisdictions regarding whether certain mechanisms that may be included in the experiences on our Platform, such as features commonly referred to as “loot boxes,” and certain genres of experiences, such as social casino, that may reward gambling, should be subject to a higher level or different type of regulation than other genres of experiences to protect consumers, in particular minors and persons susceptible to addiction, and, if so, what such regulation should include. In July 2022, Spanish gambling regulators introduced a bill aimed at prohibiting minors from accessing “loot boxes”, which if passed, may require us to limit the availability of certain features in Spain. In Australia, beginning in September 2024, gaming content containing “loot boxes” will require a mature age rating (age 15+). As experiences are required to increase their age rating for certain content, our Platform may become less attractive for the younger users. In addition, the introduction of experiences for users who are 17 and older may cause regulatory agencies to require a higher age rating for our Platform, in general which could cause us to become less attractive to younger users and harm our business, financial condition and results of operations. Other countries may adopt similar rules, which may have a negative impact on our revenue.
72
Table of Contents
Also, new regulations by the U.S. federal government, such as the proposed Kids Online Safety Act, and its agencies, such as the FTC, state agencies or foreign jurisdictions, which have and may continue to vary significantly, have required and could in the future require that certain content in the experiences on our Platform be modified or removed and default settings of our Platform be changed, increase the costs of operating or monitoring the experiences on our Platform, impact user engagement and thus the functionality and effectiveness of our Platform or otherwise harm our business performance. It is difficult to predict how existing or new laws may be applied. If we become liable, directly or indirectly, under these laws or regulations, we could be harmed, and we may be forced to implement new measures to reduce our exposure to this liability. This may require us to expend substantial resources or to modify our Platform, which would harm our business, financial condition and results of operations. In addition, the increased attention focused upon liability issues as a result of lawsuits and legislative proposals could harm our reputation or otherwise impact the growth of our business. Any costs incurred as a result of this potential liability could harm our business, financial condition, or results of operations.
Governmental agencies in any of the countries in which we, our users, developers, or creators are located from time to time have sought and continue to seek to and could in the future seek to block access to, impose restrictions on, or require a license for our Platform, our website, operating system platforms, application stores or the internet generally for a number of reasons, including cybersecurity, privacy, data protection, confidentiality, or regulatory concerns which have included and continue to include, among other things, governmental restrictions on certain content in a particular country, requirements to establish a local presence in a particular jurisdiction, and a requirement that user information be stored on servers in a country within which we operate. Moreover, the adoption of any laws or regulations adversely affecting the growth, popularity or use of the internet, including laws impacting Internet neutrality, could decrease the demand for our Platform and increase our operating costs. The legislative and regulatory landscape regarding the regulation of the internet and, in particular, internet neutrality, in the U.S and internationally is subject to uncertainty. Governmental agencies could issue fines or penalties if there are instances where we are found not to have been in compliance with regulations in any of these areas. Users generally need to access the internet, including in geographically diverse areas, and also mobile platforms such as the Apple App Store and the Google Play Store, to engage with experiences on our Platform. If governmental or other entities block, limit or otherwise restrict developers, creators, and users from accessing our Platform, or users from engaging with experiences on our Platform, we may need to take on more onerous obligations, limit the functionality of our Platform, and/or establish certain local entities, each of which could adversely affect our results of operations or subject us to additional fines and penalties.
Because we store, process, and use data, some of which contains personal information, we are subject to complex and evolving federal, state, and international laws and regulations regarding privacy, cybersecurity, data protection, and other matters. Many of these laws and regulations are subject to change and uncertain interpretation, and could result in investigations, claims, changes to our business practices, increased cost of operations, and declines in user growth, retention, or engagement, any of which could significantly harm our business.
We are subject to a variety of laws and regulations in the U.S. and other countries that involve matters central to our business, including privacy, cybersecurity, and data protection. The regulatory frameworks for these matters worldwide are rapidly evolving and are likely to remain uncertain for the foreseeable future.
Certain privacy, biometrics, cybersecurity, and data protection laws and regulations have placed and will continue to place significant privacy, data protection, and cybersecurity obligations on organizations such as ours and may require us to continue to change our policies and procedures. For example, the European Union’s (“EU”) General Data Protection Regulation (“GDPR”) imposes stringent data protection requirements regarding EU personal data, and its provisions include increasing the maximum level of fines that EU regulators may impose for the most serious breaches of noncompliance of €20 million or 4% of annual global revenues of the previous year, whichever is greater. Such fines would be in addition to (i) the rights of individuals to sue for damages in respect of any data privacy breach which causes them to suffer harm, (ii) the right of individual member states to impose additional sanctions over and above the administrative fines specified in the GDPR, and (iii) the ability of supervisory authorities to impose orders requiring companies to modify their practices. If we are found not to be compliant with GDPR or similar requirements, including obligations to comply with data protection requirements when transferring personal data from the European Economic Area (“EEA”), Switzerland, and the United Kingdom (“U.K.”) to the U.S., we may be subject to significant fines and the risk of civil litigation.
The United Kingdom maintains the Data Protection Act of 2018 and the UK GDPR, which collectively implement and complement the GDPR and provide for penalties for noncompliance of up to the greater of £17.5 million or 4% of annual global revenues of the previous year. On June 28, 2021, the European Commission announced a decision of “adequacy” concluding that the United Kingdom ensures an equivalent level of data protection to the GDPR, which provides some relief regarding the legality of continued personal data flows from the EEA to the U.K. Such adequacy decision must, however, be renewed after four years and may be modified or revoked in the interim. We cannot fully predict how the Data Protection Act, the UK GDPR and other United Kingdom data protection laws or regulations may develop in the medium to longer term, nor the effects of divergent laws and guidance regarding how data transfers to and from the United Kingdom will be regulated.
73
Table of Contents
In addition, various local, national, and foreign laws and regulations apply to our operations, including the Children’s Online Privacy Protection Act (“COPPA”), in the U.S., Article 8 of the GDPR and similar regulations in other jurisdictions. COPPA imposes strict requirements on operators of websites or online services directed to children under 13 years of age (or 16 years of age under other regulatory regimes). 39% of our DAUs were under the age of 13 during the three months ended September 30, 2024. COPPA requires companies to obtain verifiable parental consent before collecting personal information from children under the age of 13. Both the U.S. federal government and the states can enforce COPPA and violations of COPPA can lead to significant fines. The FTC has proposed substantial changes to its rules implementing COPPA that, if finalized, would place significant new requirements on covered companies. No assurances can be given that our compliance efforts will be sufficient to avoid allegations of COPPA violations, and any non-compliance or allegations of non-compliance could expose us to significant liability, penalties and loss of revenue, significantly harm our reputation, and could be costly and time consuming to address or defend. To the extent we rely on consent for processing personal data under the GDPR, consent or authorization from the holder of parental responsibility is required in certain cases for the processing of personal data of children under the age of 16, and member states may enact laws that lower that age to 13. Additionally, in certain jurisdictions the law may allow minors to disaffirm their contracts, including our Terms of Use. If minors on our Platform are able to avoid enforcement of our Terms of Use under applicable law, it could have a material adverse impact on our business, financial condition, results of operations, and cash flow.
We continue to monitor updated guidance from the United Kingdom’s Information Commissioner Office (“ICO”) on the Age Appropriate Design Code (“AADC”), which focuses on online safety and protection of children’s privacy online. The AADC became effective September 2, 2021, and noncompliance with the AADC may result in audits or other proceedings by the ICO, the regulatory body set up to uphold information rights in the United Kingdom, and other regulators in the EEA or Switzerland, as noncompliance with the AADC may indicate noncompliance with applicable data protection law. Further, the United Kingdom Online Safety Act (“OSA”) was enacted in October 2023 and will gradually be implemented as Ofcom publishes its guidance and codes of practice. The OSA introduces, among other things, duties to protect children online, complete risk assessments, and remove illegal content. Noncompliance with the OSA could lead to fines of up to £18 million or 10% of global revenues of the previous year and possible criminal liability on senior managers and company officers, particularly if they fail to safeguard children online. We are also monitoring developments with the EU’s Digital Services Act (“DSA”), which became fully applicable on February 17, 2024. The DSA imposes new content moderation obligations, notice and transparency obligations, advertising restrictions and other requirements on digital platforms to protect consumers and their rights online. Noncompliance with the DSA could result in fines of up to 6% of annual global revenues, which are in addition to the ability of civil society organizations and non-governmental organizations to lodge class action lawsuits. We may incur liabilities, expenses, costs, and other operational losses under the GDPR and laws and regulations of applicable EU Member States and the United Kingdom relating to privacy, cybersecurity, and data protection in connection with any measures we take to comply with them.
Other jurisdictions have adopted laws and regulations addressing privacy, data protection, and cybersecurity, many of which share similarities with the GDPR. For example, Law no. 13.709/2018 of Brazil, the Lei Geral de Proteção de Dados Pessoais or LGPD, entered into effect on September 18, 2020, authorizing a private right of action for violations. Penalties may include fines of up to 2% of the organization’s revenue in Brazil in the previous year or 50M reais (approximately $9.5 million U.S. dollars). The LGPD applies to businesses (both inside and outside Brazil) that process the personal data of users who are located in Brazil. The LGPD provides users with the similar rights as the GDPR regarding their data. A Brazilian Data Protection Authority, Brazilian National Data Protection Authority (Autoridade Nacional de Proteção de Dados) has been established to provide rules and guidance on how to interpret and implement the LGPD’s requirements, including regarding notice of processing, data transfer requirements, and other compliance obligations, such as security measures, recordkeeping, training, and governance. Additionally, the Personal Information Protection Law, (“PIPL”) of the People’s Republic of China (“PRC”), was adopted on August 20, 2021, and went into effect on November 1, 2021. The PIPL shares similarities with the GDPR, including extraterritorial application, data minimization, data localization, and purpose limitation requirements, and obligations to provide certain notices and rights to citizens of the PRC. The PIPL allows for fines of up to 50 million renminbi or 5% of a covered company’s revenue in the prior year. Our approach with respect to regimes such as the LGPD, PIPL, and other foreign legislation may be subject to further evaluation and change, our compliance measures may not be fully adequate and may require modification, we may expend significant time and cost in developing and maintaining a privacy governance program, data transfer or localization mechanisms, or other processes or measures to comply with such regimes, and any implementing regulations or guidance under these regimes, and we may potentially face claims, litigation, investigations, or other proceedings or liability regarding such regimes and may incur liabilities, expenses, costs, and other operational losses under such regimes and any measures we take to comply with them.
74
Table of Contents
In addition, the CCPA, which established a new privacy framework for covered businesses such as ours, went into effect in January 2020, requiring us to modify our data processing practices and policies and incur compliance related costs and expenses. The CCPA provides for civil penalties for violations, as well as a private right of action for data breaches, which may increase the likelihood and cost of data breach litigation. The CCPA was significantly modified and supplemented by the California Privacy Rights Act (“CPRA”), which was approved in November 2020. The CPRA went into effect on January 1, 2023 and, among other things, gives California residents the ability to limit the use of their sensitive information, provides for penalties for CPRA violations concerning California residents under the age of 16, and establishes a new agency to implement and enforce the law. Further, the CCPA has prompted similar legislative developments in other states in the U.S., including laws enacted in Virginia, Colorado, Utah, Connecticut, Florida, Iowa, Indiana, Montana, Tennessee, Oregon, Delaware, Texas, New Hampshire, New Jersey, Kentucky, Maryland, Nebraska, Rhode Island and Minnesota. These developments create the potential for a patchwork of overlapping but different state laws. Other states, including California, Utah and Arkansas, have passed legislation imposing substantial new obligations upon companies that offer online services, products, or features “likely to be accessed” by children 17 years of age or under, or certain types of social media and digital services, respectively. The California legislation includes certain requirements and principles from the AADC including, among other things, data protection impact assessments and the implementation of privacy by design. The laws in Utah, Florida, and Arkansas impose new restrictions and obligations in connection with users who are, or are deemed to be, under 18, including access restrictions and restrictions on abilities for minors to create accounts. Many states have also passed their own laws that require verifiable parental consent before allowing children to create an account or impact companies that process children’s personal data. In June 2024, the New York governor signed a bill into law that prohibits covered social media companies from providing individuals under 18 with “addictive feeds,” as a significant part of their services and imposes obligations on such companies that prohibits the collection, use, sharing, and sale personal data of individuals under 18 unless it is strictly necessary, or where informed consent is obtained. Some countries also are considering or have passed legislation requiring local storage and processing of data, or similar requirements, which could increase the cost and complexity of operating our products and services and other aspects of our business. The impact of these recent regulations and potential future regulations related to privacy, cybersecurity, data protection, and related matters, such as age verification, are far-reaching, create a patchwork of overlapping but different laws, and have required and may continue to require us to, modify practices, policies, features and Platform defaults, incur substantial costs and expenses, and at times restrict our operations. Additionally, requirements for verified parental consent before allowing children to create an account may limit the use of our Platform or reduce our overall demand for our Platform, which could harm our business, financial condition, and results of operations.
We believe we take reasonable efforts to comply with all applicable laws, regulations, and other legal obligations and certain industry codes of conduct relating to privacy, cybersecurity, and data protection. However, it is possible that the obligations imposed on us by applicable laws and regulations, industry codes of conduct or other actual or asserted obligations relating to privacy, cybersecurity, data protection, or related matters, may be interpreted and applied in inconsistent manners and may conflict with other rules or our practices in certain jurisdictions. Additionally, due to the nature of our service, we are unable to maintain complete control over cybersecurity or the implementation of measures that reduce the risk of a security breach or incident. For example, our customers may accidentally disclose their passwords or store them on a mobile device that is “SIM swapped,” lost, or stolen, creating the perception that our systems are not secure against third-party access. Any failure or perceived failure by us to comply with our privacy policies, our obligations to users or other third parties relating to privacy, cybersecurity, data protection, or related matters, or our other policies or actual or asserted obligations relating to privacy, cybersecurity, data protection, or related matters, or any actual or perceived compromise of security, including any such compromise that results in the unauthorized loss, unavailability, modification, release, transfer, or other processing of personal information or other user, developer or creator data, may result in governmental investigations and enforcement actions, litigation, claims or public statements against us by consumer advocacy groups or others and could cause our developers, creators, and users to lose trust in us, any or all of which could have an adverse effect on our business, financial condition, or results of operations.
Legal and regulatory restrictions on virtual currencies like Robux may adversely affect our Platform, experiences, and virtual items on our Platform, which may negatively impact our revenue, bookings, business, and reputation.
The regulations that apply to virtual currencies in the jurisdictions in which we operate are subject to change. It is possible that regulators in the U.S. or elsewhere may take regulatory actions in the future that restrict our ability to license Robux, allow users to acquire or use other digital goods available on our Platform, or that prohibit developers or creators on our Platform from earning Robux. We also make prepaid gift cards available for sale internationally that may be used to redeem Robux, and regulators may impose restrictions or bans on the sale of such prepaid gift cards. Any such restrictions or prohibitions may adversely affect our Platform, business, revenue, and bookings. In the United States, the SEC, its staff, and similar state regulators have deemed certain virtual currencies to be securities subject to regulation under the federal and state securities laws. While we do not consider Robux to be a security, if Robux were subject to the federal or state securities laws of the U.S., we may be required to redesign our Platform considerably, in a manner that would be disruptive to operations and costly to implement, which may threaten the viability of the Platform. We may also be subject to enforcement or other regulatory actions by federal or state regulators, as well as private litigation, which could be costly to resolve. For example, some existing laws regarding the regulation of currency, money transmitters and other financial institutions, and unclaimed property have been interpreted to cover virtual currencies, like Robux.
75
Table of Contents
The increased use of interactive entertainment offerings like ours by consumers, including younger consumers, have prompted and may continue to prompt calls for more stringent consumer protection laws and regulations throughout the world that may impose additional burdens on companies such as ours making virtual currencies like Robux available for sale. The U.S. Consumer Financial Protection Bureau (“CFPB”) has announced that it is monitoring business practices in video gaming marketplaces and gaming currencies for compliance with federal consumer financial protection laws. Increased regulatory scrutiny may increase compliance obligations and require us to devote legal and other resources and make changes to our Platform to address such regulation, which may negatively impact our revenue and profitability. Any inability, or perceived inability, to comply with existing or new compliance obligations issued by the CFPB or any other regulatory authority could lead to regulatory investigations, or result in administrative or enforcement action, such as fines, penalties, and/or enforceable undertakings and adversely affect us and our results of operations.
Although we have structured Robux, as well as our sales of other digital goods and prepaid cards on our Platform, with applicable laws and regulations in mind, including applicable laws relating to money laundering and money transmission services, and believe we are in compliance with all applicable laws, it is possible that a relevant regulator may disagree, which could expose us to penalties. If a relevant regulator disagreed with our analysis of and compliance with applicable laws, we may be required to seek licenses, authorizations, or approvals from those regulators, which may be dependent on us meeting certain capital and other requirements and may subject us to additional regulation and oversight, all of which could significantly increase our operating costs.
Regulatory scrutiny, changes in current laws or regulations or the imposition of new laws and regulations in the U.S. or elsewhere that prohibit us from making Robux available on our Platform would require us to make significant changes to our Platform, which would materially impair our business, financial condition, and operating results.
We are subject to various governmental export control, trade sanctions, and import laws and regulations that require our compliance and may subject us to liability if we violate these controls.
In some cases, our software and experiences are subject to export control laws and regulations, including the Export Administration Regulations administered by the U.S. Department of Commerce and trade and economic sanctions, including those administered by OFAC, which we collectively refer to as Trade Control Laws and Regulations. Thus, we are subject to laws and regulations that could limit our ability to offer access or full access to our Platform and experiences to certain persons and in certain countries or territories. For example, certain U.S. laws and regulations administered and enforced by OFAC, may limit our ability to give certain users, developers, and creators access to aspects of our Platform and experiences. Trade Control Laws and Regulations are complex and dynamic, and monitoring and ensuring compliance can be challenging. In addition, we rely on our payment processors for compliance with certain of these Trade Control Laws and Regulations, including preventing paid activity by users, developers, and creators that attempt to access our Platform from various jurisdictions comprehensively sanctioned by OFAC, including Cuba, Iran, North Korea, Syria, and sanctioned regions of Ukraine. Users, developers, and creators from certain of these countries and territories have access to our Platform and experiences and there can be no guarantee we will be found to have been in full compliance with Trade Control Laws and Regulations during all relevant periods. Users, developers, and creators from certain of these countries and territories have access to our Platform and experiences and there can be no guarantee we will be found to have been in full compliance with Trade Control Laws and Regulations during all relevant periods. Any failure by us or our payment processors to comply with the Trade Control Laws and Regulations may lead to violations of the Trade Control Laws and Regulations that could expose us to liability. Additionally, following Russia’s invasion of Ukraine, the United States and other countries imposed certain economic sanctions and severe export control restrictions against Russia and Belarus and have continued to strengthen these controls. These countries could impose even broader sanctions and additional export restrictions or take other actions that could impact our business. Any failure to comply with applicable laws and regulations could have negative consequences for us, including reputational harm, government investigations, and monetary penalties.
In addition, various foreign governments may also impose controls, export license requirements, and/or restrictions applicable to our Platform and experiences. Compliance with such applicable regulatory requirements may create delays in the introduction of our Platform in some international markets or prevent certain international users from accessing our Platform.
76
Table of Contents
Changes in tax laws could have a material adverse effect on our business, cash flow, results of operations or financial conditions.
We are subject to tax laws, regulations, and policies of several taxing jurisdictions. Changes in tax laws, as well as other factors, could cause us to experience fluctuations in our tax liability and reporting obligations and effective tax rates and otherwise adversely affect our tax positions, cost of compliance, and/or our tax liabilities. Certain jurisdictions, such as Canada, the United Kingdom and France, have recently enacted or have proposed to enact a digital services tax on certain digital revenue streams. Other jurisdictions, such as Brazil, have proposed indirect tax reform which may impose value added tax on the sales of electronically supplied services. Such laws and other attempts to impose taxes on e-commerce activities would likely increase the cost to us of operating our business, discourage potential customers from subscribing to our Platform, or otherwise adversely affect our business, results of operations or financial conditions. In addition, the E.U.’s Directive 2011/16/EU on administrative cooperation in the field of taxation (referred to as “DAC7”), which implements new digital platform reporting rules, may require us to modify our data processing and reporting practices and policies, which may cause us to incur substantial costs and expenses to comply.
Finally, the Organization for Economic Cooperation and Development has proposed the Pillar One framework as part of the OECD/G20 Base Erosion and Profit Shifting Project, which would revise existing profit allocation and nexus rules to require profit allocation based on location of sales versus physical presence for certain large multinational businesses, but if implemented, could result in the removal of unilateral digital services tax initiatives described above. Any developments or changes in federal, state, or international tax laws or tax rulings could adversely affect our compliance costs, effective tax rate, and our operating results.
We are subject to the Foreign Corrupt Practices Act and similar anti-corruption and anti-bribery laws, and anti-money laundering laws, and non-compliance with such laws can subject us to criminal or civil liability and harm our business, financial condition and results of operations.
We are subject to the Foreign Corrupt Practices Act, U.S. domestic bribery laws, the UK Bribery Act and other anti-corruption and anti-bribery laws, and anti-money laundering laws in the countries in which we conduct activities. Anti-corruption and anti-bribery laws have been enforced aggressively in recent years and are interpreted broadly to generally prohibit companies, their employees, agents, representatives, business partners, and third-party intermediaries from authorizing, offering or providing, directly or indirectly, improper payments or benefits to recipients in the public or private sector in order to influence official action, direct business to any person, gain any improper advantage, or obtain or retain business. These laws also require that we keep accurate books and records and maintain internal controls and compliance procedures designed to prevent any such actions.
With regard to our international business, we have engaged with business partners and third-party intermediaries to market our solutions and obtain necessary permits, licenses, and other regulatory approvals. We or our employees, agents, representatives, business partners or third-party intermediaries have had direct or indirect interactions with officials and employees of government agencies or state-owned or affiliated entities. We can be held liable for the corrupt or other illegal activities of our employees, agents, representatives, business partners or third-party intermediaries, even if we do not authorize such activities and notwithstanding having policies, training, and procedures to address compliance with these laws, we cannot assure you that no violations of our policies or these laws will occur.
Detecting, investigating, and resolving actual or alleged violations of anti-corruption and anti-bribery laws and anti-money laundering laws can require a significant diversion of time, resources, and attention from senior management, as well as significant defense costs and other professional fees. In addition, noncompliance with these laws could subject us to whistleblower complaints, investigations, sanctions, settlements, prosecution, enforcement actions, fines, damages, other civil or criminal penalties or injunctions against us, our officers, or our employees, disgorgement of profits, suspension or debarment from contracting with the U.S. government or other persons, reputational harm, adverse media coverage, and other collateral consequences. If any subpoenas or investigations are launched, or governmental or other sanctions are imposed, or if we do not prevail in any possible civil or criminal proceeding, our reputation, business, financial condition, prospects and results of operations and the price of our Class A common stock could be harmed. Responding to any investigation or action will likely result in a materially significant diversion of management’s attention and resources and significant defense costs and other professional fees.
77
Table of Contents
We may incur liability as a result of content published using our Platform or as a result of claims related to content generated by our developers, creators, and users, including copyright infringement, and legislation regulating content on our Platform may require us to change our Platform or business practices.
Our success relies in part on the ability of developers and creators to drive engagement with content that is challenging, engaging, fun, interesting, and novel. Developers and creators are responsible for clearing the rights to all of the content they upload to our service or physical goods that they make available for sale, but some developers or creators may upload content or link goods that infringes the rights or violates the terms of use of third parties in violation of our Terms of Use. We rely upon legal protections in various jurisdictions to protect us from claims of monetary damages for content that is uploaded to and stored on our system at the direction of our users, or counterfeit goods and copyright-infringing material made available for sale, but those protections may change or disappear over time, increasing our exposure for claims of copyright or other intellectual property infringement. If we should lose or fail to qualify for statutory or other legal protections that immunize us from monetary damages for intellectual property infringement, the damages could be significant and have a material impact on our business. While we have implemented measures designed to limit our exposure to claims of intellectual property infringement, intellectual property owners may allege that we failed to take appropriate measures to prevent infringing activities on our systems, that we turned a blind eye to infringement, or that we facilitated, induced or contributed to infringement.
Even though we are not required to monitor uploaded content for copyright infringement in the U.S., we have chosen to do so through the services of a third-party audio monitoring service. We now monitor all uploaded sound recordings to exclude recordings owned or controlled by the major record labels and any other record labels who provide their music to the third-party audio monitoring service. These record labels register certain of their content with our service provider. When audio is uploaded to our Platform, we check the service provider’s system to exclude recordings owned or controlled by these record labels from being published on our Platform. If our monitoring proves ineffective or we cease to rely upon a third-party monitoring service to exclude certain content from our Platform, our risk of liability may increase.
In the past, certain record companies and music publishers, either directly or through their authorized representatives, claimed that we are subject to liability for allegedly infringing content that was uploaded and may continue to exist on our Platform. We vigorously disputed such claims of infringement by such labels and publishers and reached settlements. However, we could be subject to additional claims in the future. An adverse judgment against us in any such lawsuit could require us to settle any claims for an undetermined amount which could have a material impact on our business, financial condition, or results of operations.
We may also be required to enter into license agreements with various licensors, including record labels, music publishers, performing rights organizations, and collective management organizations, to obtain licenses that authorize the storage and use of content uploaded by our users. We may not be able to develop technological solutions to comply with these license agreements on economically reasonable terms and there is no guarantee that we will be able to enter into agreements with all relevant rights holders on terms that we deem reasonable. Compliance may therefore negatively impact our financial prospects.
The EU enacted copyright laws such as the Copyright Directive that came into effect on June 6, 2019, that may require us to use best efforts in accordance with the high industry standards of professional diligence to exclude infringing content from our Platform that may be uploaded by our users. In addition, the monitoring and reporting obligations of the DSA may apply also with respect to copyright infringements that would fall outside the scope of the Copyright Directive.
On May 21, 2024, the Council of the European Union approved the latest draft of the Artificial Intelligence Act (the “AI Act”) which was published in the Official Journal of the EU on July 12, 2024. The AI Act proposes a framework of prohibitions as well as disclosure, transparency and other regulatory obligations based on various levels of risk for businesses introducing AI systems in the EU. Once the AI Act becomes effective, certain provisions could require us to alter or restrict our use of AI both in features or products available to our users and in our systems that interact with our users, depending on respective levels of risk-categorization, types of systems, and manner of use, under the AI Act. The AI Act also may require us to comply with monitoring and reporting requirements. As a result, we may need to devote substantial time and resources to evaluate our obligations under the AI Act and to develop and execute a plan designed to ensure compliance. Noncompliance with the AI Act could result in fines of up to €35 million or 7% of annual global turnover for the previous year, whichever is higher. There have been numerous other laws and bills proposed at the U.S. federal and state level, as well as internationally, aimed at regulating the deployment or provision of AI systems and services. This includes the Colorado AI Act, which was passed and will become effective February 1, 2026, and, like the AI Act, provides for a regulatory risk-based framework.
We continue to evaluate and monitor the applicability of these and other laws, including new content related regulations, such as the DSA and OSA mentioned above, and we may need to devote additional resources to ensure compliance, which may increase our costs and impact our financial condition or results of operations.
78
Table of Contents
Risks Related to Intellectual Property
Claims by others that we infringe their proprietary technology or other rights, the activities of our users, or the content of the experiences on our Platform could subject us to liability and harm our business.
We have been and may in the future become subject to intellectual property disputes, costs, and awards of damages and/or injunctive relief as a result of these disputes, and we are subject to liability for our intellectual property that we license to third parties. Our success depends, in part, on our ability to develop and commercialize our Platform without infringing, misappropriating, or otherwise violating the intellectual property rights of third parties. However, there is no assurance that our technologies or Platform will not be found to infringe, misappropriate, or otherwise violate the intellectual property rights of third parties. We also have agreements with third parties to manufacture and distribute merchandise based on user content on our Platform, and there is a possibility that such content could be found to be infringing. Lawsuits are time-consuming and expensive to resolve and they divert management’s time and attention. Further, because of the substantial amount of discovery required in connection with intellectual property litigation, we risk compromising our confidential information during this type of litigation. Companies in the internet, technology, and gaming industries own large numbers of patents, copyrights, trademarks, domain names, and trade secrets and frequently enter into litigation based on allegations of infringement, misappropriation, or other violations of intellectual property or other rights. As we face increasing competition and gain a higher profile, the possibility of intellectual property rights and other claims against us grows. Our technologies may not be able to withstand any third-party claims against their use. In addition, many companies have the capability to dedicate substantially greater resources to enforce their intellectual property rights and to defend claims that may be brought against them.
We have a number of issued patents. We have also filed a number of additional U.S. and foreign patent applications but these applications may not successfully result in issued patents. Any patent litigation against us may involve patent holding companies or other adverse patent owners that have no relevant product revenue, and therefore, our patents and patent applications may provide little or no deterrence as we would not be able to reach meaningful damages if we assert them against such entities or individuals. If a third party is able to obtain an injunction preventing us from accessing or exercising intellectual property rights, or if we cannot license or develop alternative technology for any infringing aspect of our business, we could be forced to limit or cease access to our Platform or cease business activities related to such intellectual property. In addition, we may need to settle litigation and disputes on terms that are unfavorable to us. We may be required to make substantial payments for legal fees, settlement fees, damages, royalties, license, or other fees in connection with a claimant securing a judgment against us. Although we carry general liability insurance, our insurance may not cover potential claims of this type or may not be adequate to cover all liability that may be imposed. We cannot predict the outcome of lawsuits and cannot ensure that the results of any such actions will not have an adverse effect on our business, financial condition, or results of operations. Any intellectual property claim asserted against us, or for which we are required to provide indemnification, may require us to cease selling or using or recall products that incorporate the intellectual property rights that we allegedly infringe, misappropriate, or violate; make substantial payments for legal fees, settlement payments, or other costs or damages; obtain a license, which may not be available on reasonable terms or at all, to sell or use the relevant technology; or redesign or rebrand the allegedly infringing products to avoid infringement, misappropriation, or violation, which could be costly, time-consuming, or impossible.
Furthermore, certain federal statutes in the U.S. may apply to us with respect to various activities of our users, including the Digital Millennium Copyright Act of 1998 (“DMCA”) and Section 230 of the Communications Decency Act (“CDA”). For example, we filter communications to eliminate speech we determine to be offensive based on our objective of creating a civil and safe place for all users. Bills have recently been proposed in Congress calling for a range of changes to Section 230 of the CDA which include a complete repudiation of the statute to modifications of it in such a way as to remove certain social media companies from its protection. The U.S. Supreme Court has also heard two cases in its most recent term that may result in substantial changes to the scope of protection provided to interactive computer services such as Roblox. If Section 230 of the CDA were so repealed, amended, or modified by judicial determination we could potentially be subject to liability if we continue to censor speech, even if that speech were offensive to our users, or we could experience a decrease in user activity and revenues if we are unable to maintain a safe environment for our users if certain blocking and screening activities are prohibited by law. In addition, certain states have either passed or are debating laws that would create potential liability for moderating or removing certain user content. While we believe these laws are of dubious validity under the U.S. Constitution and in light of Section 230 of the CDA, they nevertheless present some risk to our content-moderation efforts going forward.
79
Table of Contents
While we rely on a variety of statutory and common-law frameworks and defenses, including those provided by the DMCA, the CDA, the fair-use doctrine in the U.S. and the E-Commerce Directive in the EU, differences between statutes, limitations on immunity, requirements to maintain immunity, and moderation efforts in the many jurisdictions in which we operate may affect our ability to rely on these frameworks and defenses, or create uncertainty regarding liability for information or content uploaded by developers, creators, or users or otherwise contributed by third parties to our Platform. As an example, Article 17 of the Directive on Copyright in the Digital Single Market was passed in the EU, which affords copyright owners some enforcement rights that may conflict with U.S. safe harbor protections afforded to us under the DMCA. Member states in the EU are in the process of determining how Article 17 will be implemented in their particular country. In addition, the EU’s DSA became fully applicable on February 17, 2024. The DSA imposes additional obligations as provided under the E-Commerce Directive and includes new content moderation obligations, notice and transparency obligations, advertising restrictions and other requirements on digital platforms to protect consumers and their rights online. In countries in Asia and Latin America, generally there are no similar statutes to the CDA or the DSA. The laws of countries in Asia and Latin America generally provide for direct liability if a platform is involved in creating such content or has actual knowledge of the content without taking action to take it down. Further, laws in some Asian countries also provide for primary or secondary liability, which can include criminal liability, if a platform fails to take sufficient steps to prevent such content from being uploaded. Although these and other similar legal provisions provide limited protections from liability for platforms like ours, if we are found not to be protected by the safe harbor provisions of the DMCA, CDA or other similar laws, or if we are deemed subject to laws in other countries that may not have the same protections or that may impose more onerous obligations on us, including Article 17, we may owe substantial damages, and our brand, reputation, and financial results may be harmed.
Additionally, any content created by using generative AI tools may not be subject to copyright protection which may adversely affect our intellectual property rights in, or ability to commercialize or use, the content. In the United States, a number of civil lawsuits have been initiated related to the foregoing and other concerns, the outcome of any one of which may, amongst other things, require us to limit the ways in which we use AI in our business. While AI-related lawsuits to date have generally focused on the AI service providers themselves, our use of any output produced by generative AI tools may expose us to claims, increasing our risks of liability.
Even if the claims do not result in litigation or are resolved in our favor, these claims, and the time and resources necessary to resolve them, could divert the resources of our management and harm our business and operating results. Moreover, there could be public announcements of the results of hearings, motions or other interim proceedings or developments and if securities analysts or investors perceive these results to be negative, it could have a substantial adverse effect on the price of our Class A common stock. We expect that the occurrence of infringement claims is likely to grow as the market for our Platform grows. Accordingly, our exposure to damages resulting from infringement claims could increase, and this could further exhaust our financial and management resources.
Indemnity provisions in various agreements potentially expose us to substantial liability for intellectual property infringement and other losses.
Some of our agreements with third parties include indemnification provisions under which we agree to indemnify these third parties for losses suffered or incurred as a result of claims of intellectual property infringement, or other liabilities relating to or arising from our software, services, Platform, or other contractual obligations. Large indemnity payments could harm our business, results of operations, and financial condition. Although we normally contractually limit our liability with respect to such indemnity obligations, those limitations may not be fully enforceable in all situations, and we may still incur substantial liability under those agreements. Any dispute with a third-party with respect to such obligations could have adverse effects on our relationship with such party and harm our business and results of operations.
Failure to protect or enforce our intellectual property rights or the costs involved in such enforcement would harm our business.
Our success depends to a significant degree on our ability to obtain, maintain, protect, and enforce our intellectual property rights, including our proprietary software technology, know-how, and our brand. We rely on a combination of trademarks, trade secret laws, patents, copyrights, service marks, contractual restrictions, and other intellectual property laws and confidentiality procedures to establish and protect our proprietary rights. However, the steps we take to obtain, maintain, protect, and enforce our intellectual property rights may be inadequate. We will not be able to protect our intellectual property rights if we are unable to enforce our rights or if we do not detect unauthorized use of our intellectual property rights. If we fail to protect our intellectual property rights adequately, or fail to continuously innovate and advance our technology, our competitors could gain access to our proprietary technology and develop and commercialize substantially identical products, services, or technologies. In addition, defending our intellectual property rights might entail significant expense and may not ultimately be successful.
80
Table of Contents
Further, any patents, trademarks, or other intellectual property rights that we have or may obtain may be challenged or circumvented by others or invalidated or held unenforceable through administrative processes, including re-examination, inter partes review, interference and derivation proceedings, and equivalent proceedings in foreign jurisdictions, such as opposition proceedings or litigation. In addition, despite our pending patent applications, there is no assurance that our patent applications will result in issued patents. Even if we continue to seek patent protection in the future, we may be unable to obtain or maintain patent protection for our technology. In addition, any patents issued from pending or future patent applications or licensed to us in the future may not provide us with competitive advantages or may be successfully challenged by third parties. Furthermore, legal standards relating to the validity, enforceability, and scope of protection of intellectual property rights are uncertain. Despite our precautions, it may be possible for unauthorized third parties to copy our Platform and use information that we regard as proprietary to create products that compete with ours. Patent, trademark, copyright, and trade secret protection may not be available to us in every country in which our products are available. The value of our intellectual property could diminish if others assert rights in or ownership of our trademarks and other intellectual property rights, or trademarks that are similar to our trademarks. We may be unable to successfully resolve these types of conflicts to our satisfaction. In some cases, litigation or other actions may be necessary to protect or enforce our trademarks and other intellectual property rights. In addition, the laws of some foreign countries may not be as protective of intellectual property rights as those in the U.S., and mechanisms for enforcement of intellectual property rights may be inadequate. As we expand our global activities, our exposure to unauthorized copying and use of our Platform and proprietary information will likely increase.
We rely, in part, on trade secrets, proprietary know-how, and other confidential information to maintain our competitive position. While we enter into confidentiality and invention assignment agreements with our employees and consultants and enter into confidentiality agreements with other third parties, including suppliers and other partners, we cannot guarantee that we have entered into such agreements with every entity that has or may have had access to our proprietary information, know-how and trade secrets or that has or may have developed intellectual property in connection with an engagement with us. Moreover, there are no assurances that these agreements will be effective in controlling access to, distribution, use, misuse, misappropriation, reverse engineering, or disclosure of our proprietary information, know-how, and trade secrets. Further, these agreements may not prevent our competitors from independently developing technologies that are substantially equivalent or superior to our Platform. These agreements may be breached, and we may not be able to detect any such breach and may not have adequate remedies for any such breach even if we know about it.
We use open source software as part of, and in connection with certain experiences on, our Platform, which may pose particular intellectual property and security risks to and could have a negative impact on our business.
We have in the past and may in the future continue to use open source software in our codebase and our Platform. Some open source software licenses require users who make available open source software as part of their proprietary software to publicly disclose all or part of the source code to such proprietary software or make available any derivative works of such software free of charge, under open source licensing terms. The terms of various open source licenses have not been interpreted by courts, and there is a risk that such licenses could be construed in a manner that imposes unanticipated conditions or restrictions on our use of the open source software. Enforcement activity for open source licenses can also be unpredictable. Were it determined that our use was not in compliance with a particular license, we may be required to release our proprietary source code, defend claims, pay damages for breach of contract or copyright infringement, grant licenses to our patents, re-engineer our games or products, discontinue distribution in the event re-engineering cannot be accomplished on a timely basis, or take other remedial action that may divert resources away from our game development efforts, any of which could negatively impact our business. Open source compliance problems can also result in damage to reputation and challenges in recruitment or retention of engineering personnel. Although we have certain policies and procedures in place to monitor our use of open-source software that are designed to avoid subjecting our Platform to open source licensing conditions, those policies and procedures may not be effective to detect or address all such conditions.
Additionally, although we devote significant resources to ensuring the security of our use of open source software on our Platform, we cannot ensure that these security measures will be sufficient to prevent or mitigate the damage caused by a cybersecurity incident or network disruption, and our open source software may be vulnerable to hacking, insider threats, employee error or manipulation, theft, system malfunctions, or other adverse events.
81
Table of Contents
Risks Related to Ownership of our Class A Common Stock
The public trading price of our Class A common stock is volatile and could decline regardless of our operating performance.
To date, the public trading price of our Class A common stock has been volatile, similar to other newly public companies that have historically experienced highly volatile trading prices. The public trading price of our Class A common stock may fluctuate in response to various factors, including those listed in this Quarterly Report on Form 10-Q, some of which are beyond our control. These fluctuations could cause you to lose all or part of your investment in our Class A common stock since you might be unable to sell your shares at or above the price you paid. Factors that could cause fluctuations in the public trading price of our Class A common stock include the following:
•the number of shares of our Class A common stock made available for trading;
•sales or expectations with respect to sales of shares of our Class A common stock by holders of our Class A common stock including our directors, officer, and significant holders;
•price and volume fluctuations in the overall stock market from time to time;
•volatility in the trading prices and trading volumes of technology stocks;
•changes in operating performance and stock market valuations of other technology companies generally, or those in our industry in particular;
•failure of securities analysts to maintain coverage of us, changes in financial estimates by securities analysts who follow us or our failure to meet these estimates or the expectations of investors;
•any plans we may have to provide or not provide disclosure about certain key metrics, financial guidance, or projections, which may increase the probability that our financial results are perceived as not in line with analysts’ expectations;
•if we do provide disclosure about certain key metrics, financial guidance, or projections, any changes to such reported items due to changes in our methodology or underlying assumptions for those items and with respect to timing or our failure to meet those projections;
•announcements by us or our competitors of new services or Platform features;
•the public’s reaction to our press releases, other public announcements, and filings with the SEC;
•rumors, market speculation, and media reports involving us or other companies in our industry;
•actual or anticipated changes in our results of operations or fluctuations in our results of operations;
•actual or anticipated developments in our business, our competitors’ businesses, or the competitive landscape generally;
•litigation involving us, our industry or both, or investigations by regulators into our operations or those of our competitors;
•actual or perceived privacy or security breaches or other incidents;
•developments or disputes concerning our intellectual property or other proprietary rights;
•announced or completed acquisitions of businesses, services, or technologies by us or our competitors;
•new laws or regulations, public expectations regarding new laws or regulations or new interpretations of existing laws or regulations applicable to our business;
•changes in accounting standards, policies, guidelines, interpretations, or principles;
•any significant change in our management or other key personnel;
•other events or factors, including those resulting from war, such as Russia’s invasion of Ukraine and the conflict in the Middle East stemming from Hamas’ attack against Israel, incidents of terrorism, pandemics, or wildfires, earthquakes or severe weather and power outages or responses to these events; and
•general economic conditions and slow or negative growth of our markets.
In addition, stock markets, and the market for technology companies in particular, have experienced price and volume fluctuations that have affected and continue to affect the market prices of equity securities of many companies. Stock prices of many companies, including technology companies, have fluctuated in a manner often unrelated to the operating performance of those companies. In the past, following periods of volatility in the overall market and the market price of a particular company’s securities, securities class action litigation has often been instituted against these companies. This litigation, if instituted against us, could result in substantial costs and a diversion of our management’s attention and resources. In addition, we may be subject to stockholder activism, which can lead to additional substantial costs, distract management, and impact the manner in which we operate our business in ways we cannot currently anticipate.
82
Table of Contents
The dual class stock structure of our common stock has the effect of concentrating voting control in David Baszucki, our Founder, President, CEO, and Chair of our Board of Directors, which limits or precludes your ability to influence corporate matters, including the election of directors and the approval of any change of control transaction.
Our Class B common stock has 20 votes per share, and our Class A common stock has one vote per share. Our Founder, President, CEO, Chair of our Board of Directors, and largest stockholder, David Baszucki, and his affiliates, beneficially own 100% of our outstanding Class B common stock, together as a single class, representing a substantial percentage of the voting power of our capital stock, which voting power may increase over time as Mr. Baszucki exercises or vests in his equity awards. Mr. Baszucki and his affiliates could exert substantial influence over matters requiring approval by our stockholders. This concentration of ownership may limit or preclude your ability to influence corporate matters for the foreseeable future, including the election of directors, amendments of our organizational documents, and any merger, consolidation, sale of all or substantially all of our assets, or other major corporate transaction requiring stockholder approval. In addition, this may prevent or discourage unsolicited acquisition proposals or offers for our capital stock that you may believe are in your best interest as one of our stockholders. We believe we are eligible for, but do not intend to take advantage of, the “controlled company” exemption to the corporate governance rules for NYSE-listed companies. We cannot predict whether our dual class structure will result in a lower or more volatile trading price of our Class A common stock, in adverse publicity, or other adverse consequences. For example, certain index providers, such as S&P Dow Jones, exclude companies with multiple classes of common stock from being added to certain stock indices, including the S&P 500. As a result, the dual class structure of our common stock may trigger actions or publications by stockholder advisory firms or institutional investors critical of our corporate governance practices or capital structure, or prevent the inclusion of our Class A common stock in certain indices and, as a result, large institutional investors, mutual funds, exchange-traded funds, and other investment vehicles that attempt to passively track those indices may not invest in our Class A common stock. Any exclusion from certain indices could result in a less active trading market for our Class A common stock. As a result, the trading price of our Class A common stock could be adversely affected. Delaware law and provisions in our amended and restated certificate of incorporation and amended and restated bylaws could make a merger, tender offer, or proxy contest difficult, thereby depressing the market price of our Class A common stock.
If securities or industry analysts or other third parties do not publish research or publish inaccurate or unfavorable research about us, our business, or our market, or if they change their recommendation regarding our Class A common stock adversely, the market price and trading volume of our Class A common stock could decline.
The market price and trading volume for our Class A common stock will depend in part on the research and reports that securities or industry analysts and other third parties publish about us, our business, our market or our competitors. The analysts’ estimates are based upon their own opinions and are often different from our estimates or expectations or incorrect. If any of the analysts who cover us change their recommendation regarding our Class A common stock adversely, provide more favorable relative recommendations about our competitors or publish inaccurate or unfavorable research about our business, the price of our Class A common stock would likely decline. If few securities analysts commence coverage of us, or if one or more of these analysts cease coverage of us or fail to publish reports on us regularly, we could lose visibility in the financial markets and demand for our securities could decrease, which could cause the price and trading volume of our Class A common stock to decline. In addition, third parties regularly publish data about us and other mobile, gaming, and social platform companies with respect to DAUs, revenue, bookings, top experience, or game charts, hours engaged and other information concerning social game application usage. These metrics are proprietary to the provider, and in many cases do not accurately reflect the actual levels of bookings, revenue, or usage of our experiences across all platforms. There is a possibility that third parties could change their methodologies for calculating these metrics in the future. For example, short sellers have and may in the future publish reports relying in part on such metrics. These reports appear intended to decrease the price of our Class A common stock and have resulted in and may result in claims, litigation, or investigations due to any published allegations by shareholders, regulators, and others. To the extent that securities analysts or investors base their views of our business or prospects on such third-party data, including reports of short sellers, the price of our Class A common stock may be volatile and may not reflect the performance of our business.
Delaware law and provisions in our amended and restated certificate of incorporation and amended and restated bylaws could make a merger, tender offer, or proxy contest difficult, thereby depressing the market price of our Class A common stock.
Our status as a Delaware corporation and the anti-takeover provisions of the Delaware General Corporation Law may discourage, delay, or prevent a change in control by prohibiting us from engaging in a business combination with an interested stockholder for a period of three years after the date of the transaction in which the person became an interested stockholder, even if a change of control would be beneficial to our existing stockholders. In addition, our amended and restated certificate of incorporation and amended and restated bylaws will contain provisions that may make the acquisition of our company more difficult, including the following:
•any amendments to our amended and restated certificate of incorporation or our amended and restated bylaws will require the approval of at least 66 2/3% of our then-outstanding voting power;
•our Board of Directors is classified into three classes of directors with staggered three-year terms and stockholders will only be able to remove directors from office for cause;
83
Table of Contents
•upon the conversion of our Class A common stock and Class B common stock into a single class of common stock, our stockholders will only be able to take action at a meeting of stockholders and will not be able to take action by written consent for any matter;
•our amended and restated certificate of incorporation does not provide for cumulative voting;
•vacancies on our Board of Directors will be able to be filled only by our Board of Directors and not by stockholders;
•a special meeting of our stockholders may only be called by the chairperson of our Board of Directors, our CEO, our President, or a majority of our Board of Directors;
•certain litigation against us can only be brought in Delaware;
•our amended and restated certificate of incorporation authorizes 100 million shares of undesignated preferred stock, the terms of which may be established and shares of which may be issued without further action by our stockholders; and
•advance notice procedures apply for stockholders to nominate candidates for election as directors or to bring matters before an annual meeting of stockholders.
These provisions, alone or together, could discourage, delay, or prevent a transaction involving a change in control of our company. These provisions could also discourage proxy contests and make it more difficult for stockholders to elect directors of their choosing and to cause us to take other corporate actions they desire, any of which, under certain circumstances, could limit the opportunity for our stockholders to receive a premium for their shares of our Class A common stock, and could also affect the price that some investors are willing to pay for our Class A common stock.
Our amended and restated bylaws provide that the Court of Chancery of the State of Delaware and the federal district courts of the United States will be the exclusive forums for substantially all disputes between us and our stockholders, which could limit our stockholders’ ability to obtain a favorable judicial forum for disputes with us or our directors, officers, or employees.
Our amended and restated bylaws provide that the Court of Chancery of the State of Delaware (or, if the Court of Chancery does not have jurisdiction, another State court in Delaware or the federal district court for the District of Delaware) is the exclusive forum for the following (except for any claim as to which such court determines that there is an indispensable party not subject to the jurisdiction of such court (and the indispensable party does not consent to the personal jurisdiction of such court within ten days following such determination), which is vested in the exclusive jurisdiction of a court or forum other than such court or for which such court does not have subject matter jurisdiction):
•any derivative action or proceeding brought on behalf of us;
•any action asserting a claim of breach of a fiduciary duty;
•any action asserting a claim against us arising under the Delaware General Corporation Law, our amended and restated certificate of incorporation or our amended and restated bylaws (as either may be amended from time to time); and
•any action asserting a claim against us that is governed by the internal affairs doctrine.
This provision would not apply to suits brought to enforce a duty or liability created by the Exchange Act, or any other claim for which the U.S. federal courts have exclusive jurisdiction.
Our amended and restated bylaws further provide that the federal district courts of the U.S. will be the exclusive forum for resolving any complaint asserting a cause of action arising under the Securities Act. These exclusive-forum provisions may limit a stockholder’s ability to bring a claim in a judicial forum that it finds favorable for disputes with us or our directors, officers, or other employees, which may discourage lawsuits against us and our directors, officers, and other employees. Any person or entity purchasing or otherwise acquiring any interest in any of our securities shall be deemed to have notice of and consented to these provisions. There is uncertainty as to whether a court would enforce such provisions, and the enforceability of similar choice of forum provisions in other companies’ charter documents has been challenged in legal proceedings. We also note that stockholders cannot waive compliance (or consent to noncompliance) with the federal securities laws and the rules and regulations thereunder. It is possible that a court could find these types of provisions to be inapplicable or unenforceable, and if a court were to find either exclusive-forum provision in our amended and restated bylaws to be inapplicable or unenforceable in an action, we may incur additional costs associated with resolving the dispute in other jurisdictions, which could significantly harm our business.
84
Table of Contents
We do not expect to pay dividends in the foreseeable future.
We have never declared nor paid cash dividends on our capital stock. We currently intend to retain any future earnings to finance the operation and expansion of our business, and we do not anticipate declaring or paying any dividends to holders of our capital stock in the foreseeable future. Consequently, you may need to rely on sales of our Class A common stock after price appreciation, which may never occur, as the only way to realize any future gains on your investment.
Risks Related to our Indebtedness
We may not be able to generate sufficient cash to service our debt and other obligations, including our obligations under the 2030 Notes.
Our ability to make payments on our indebtedness, including the 2030 Notes, and our other obligations will depend on our financial and operating performance, which is subject to prevailing economic and competitive conditions and to certain financial, business, and other factors beyond our control. We cannot assure you that we will maintain a level of cash flows from operating activities sufficient to permit us to pay the principal, premium, if any, and interest on our indebtedness, including the 2030 Notes, and other obligations.
If we are unable to service our debt and other obligations from cash flows, we may need to refinance or restructure all or a portion of our debt obligations prior to maturity. Our ability to refinance or restructure our debt and other obligations will depend on various factors, including the condition of the capital markets and our financial condition at such time. Any refinancing or restructuring could be at higher interest rates, less favorable terms, or may require us to comply with more onerous covenants, which could further restrict our business operations. If our cash flows are insufficient to service our debt and other obligations, we may not be able to refinance or restructure any of these obligations on commercially reasonable terms or at all. Any refinancing or restructuring could have a material adverse effect on our business, results of operations, or financial condition.
If our cash flows are insufficient to fund our debt and other obligations and we are unable to refinance or restructure these obligations, we could face substantial liquidity problems and may be forced to reduce or delay investments and capital expenditures, or to sell material assets or operations to meet our debt and other obligations. We cannot assure you that we would be able to implement any of these alternative measures on satisfactory terms (if at all) or that the proceeds from such alternatives would be adequate to meet any debt or other obligations then due. If it becomes necessary to implement any of these alternative measures, our business, results of operations, or financial condition could be materially and adversely affected.
Our indebtedness could have adverse consequences to us.
Our indebtedness could have adverse consequences to us, including the following:
•making it more difficult for us to satisfy our obligations with respect to the 2030 Notes and our other indebtedness;
•requiring us to dedicate a substantial portion of our cash flow from operations to debt service payments on our and our subsidiaries’ debt, which reduces the funds available for working capital, capital expenditures, acquisitions, and other general corporate purposes;
•requiring us to comply with restrictive covenants in the Indenture, which limit the manner in which we conduct our business;
•limiting our flexibility in planning for, or reacting to, changes in the industry in which we operate;
•placing us at a competitive disadvantage compared to any of our less leveraged competitors;
•increasing our vulnerability to both general and industry-specific adverse economic conditions; and
•limiting our ability to obtain additional debt or equity financing to fund future working capital, capital expenditures, acquisitions or other general corporate requirements and increasing our cost of borrowing.
85
Table of Contents
General Risks
If we are unable to maintain effective disclosure and internal controls over financial reporting, our ability to produce timely and accurate financial statements or comply with applicable regulations may be impaired.
We are subject to the reporting requirements of the Securities Exchange Act of 1934, as amended (“the Exchange Act”), the Sarbanes-Oxley Act, and the rules and regulations of the listing standards of the NYSE. The Sarbanes-Oxley Act requires, among other things, that we maintain effective disclosure controls and procedures and internal control over financial reporting. Our disclosure controls and other procedures are designed to ensure that information required to be disclosed by us in the reports that we will file with the SEC is recorded, processed, summarized, and reported within the time periods specified in SEC rules and forms and that information required to be disclosed in reports under the Exchange Act is accumulated and communicated to our principal executive and financial officers.
Our current controls and any new controls that we develop may become inadequate because of changes in conditions in our business. In addition, changes in accounting principles or interpretations could also challenge our internal controls and require that we establish new business processes, systems, and controls to accommodate such changes. If these new systems, controls, or standards and the associated process changes do not operate as intended, it could adversely affect our financial reporting systems and processes, our ability to produce timely and accurate financial reports, or the effectiveness of internal control over financial reporting. Moreover, our business may be harmed if we experience problems with any new systems and controls that result in delays in their implementation or increased costs to correct any post-implementation issues that may arise. We have identified in the past, and may identify in the future, deficiencies in our controls, which could harm our results of operations or cause us to fail to meet our reporting obligations and may result in a restatement of our financial statements for prior periods. If we are not able to, or if we are perceived as being unable to, comply with the requirements of the Sarbanes-Oxley Act in a timely manner, or if we are unable to, or if we are perceived as being unable to, maintain proper and effective internal controls over financial reporting, we may not be able to produce timely and accurate financial statements. If that were to happen, our investors could lose confidence in our reported financial information, the trading price of our Class A common stock could decline, and we have been and could be subject to increased regulatory scrutiny, including sanctions or investigations by the SEC or other regulatory authorities. Any failure to implement and maintain effective internal control over financial reporting also could adversely affect the results of periodic management evaluations and annual independent registered public accounting firm attestation reports.
Any legal proceedings or claims against us could be costly and time-consuming to defend and could harm our reputation regardless of the outcome.
We are and/or may in the future become subject to legal proceedings and claims that arise in the ordinary course of business, including intellectual property, privacy, biometrics, cybersecurity, data protection, product liability, consumer protection, false and misleading advertising, employment, class action, whistleblower, contract, securities, tort, civil Racketeer Influenced and Corrupt Organizations Act, unfair competition, and other litigation claims, including claims related to our advertising practices and use of generative AI, and governmental and other regulatory investigations and proceedings. As a result of disclosure of information in filings required of a public company, our business and financial condition will become more visible, which may result in threatened or actual litigation, including by competitors. We are and may continue to be subject to legal proceedings asserting claims arising from allegations that we have facilitated gambling by users of our Platform including by minors, that we have misrepresented the safety of our Platform, that our Platform is addictive or otherwise unsafe, that we unlawfully or unfairly benefit from child labor, and that we have misrepresented information about our user base, that we have engaged in copyright infringement, that we have engaged in unlawful employment practices, and suits related to our refund policies. In lawsuits brought on behalf of child users, the court may allow minors to disaffirm or avoid enforcement of our Terms of Use, depending on the circumstances. We have and may continue to be subject to legal proceedings asserting claims on behalf of shareholders related to allegations that discussions of our growth prospects have been misleading and unsustainable due to concerns related to safety and our implementation of parental controls on the Platform and claims that our leadership has engaged in insider trading. In particular, on August 1, 2023, a putative class action was filed against us in the United States District Court for the Northern District of California captioned Colvin v. Roblox asserting various claims arising from allegations that minors used third-party virtual casinos to gamble Robux and on March 14, 2024, Gentry v. Roblox was filed in the United States District Court for the Northern District of California premised on substantially identical allegations as Colvin v. Roblox. The two cases were consolidated on April 18, 2024. Such matters can be time-consuming, divert management’s attention and resources, cause us to incur significant expenses or liability, or require us to change our business practices. The expense of litigation and the timing of this expense from period to period are difficult to estimate, subject to change, and could adversely affect our financial condition and results of operations. Because of the potential risks, expenses, and uncertainties of litigation, we may, from time to time, settle disputes, even where we have meritorious claims or defenses, by agreeing to settlement agreements. Any of the foregoing could adversely affect our business, financial condition, and results of operations.
86
Table of Contents
Catastrophic events may disrupt our business.
Natural disasters or other catastrophic events may cause damage or disruption to our operations, international commerce, and the global economy, and thus could harm our business. We have our headquarters and a large employee presence in San Mateo, California, an area which in recent years has been increasingly susceptible to fires, severe weather events, and power outages, any of which could disrupt our operations, and which contains active earthquake zones. In the event of a major earthquake, hurricane, or catastrophic event such as fire, power loss, rolling blackouts or power loss, telecommunications failure, pandemic, geopolitical conflict such as the Russian invasion of Ukraine and the conflict in the Middle East stemming from Hamas’ attack against Israel , cyber-attack, war, other physical security threats or terrorist attack, we may be unable to continue our operations and may endure system interruptions, reputational harm, delays in our Platform development, lengthy interruptions in our Platform, breaches of security, and loss of critical data, all of which would harm our business, results of operations, and financial condition. Acts of terrorism and similar events would also cause disruptions to the internet or the economy as a whole. Global climate change could also result in natural disasters occurring more frequently or with more intense effects, which could cause business interruptions. The long-term effects of the COVID-19 pandemic and recovery from it on society and developer, creator, and user engagement remain uncertain, and a subsequent health crisis or pandemic, as well as the actions taken by various governmental, business and individuals in response, will impact our business, operations and financial results in ways that we may not be able to accurately predict. In addition, the insurance we maintain would likely not be adequate to cover our losses resulting from disasters or other business interruptions. Our disaster recovery plan may not be sufficient to address all aspects of any unanticipated consequence or incident, we may not be able to maintain business continuity at profitable levels or at all, and our insurance may not be sufficient to compensate us for the losses that could occur.
Our operations are subject to the effects of changing inflation rates and volatile global economic conditions.
The United States, Europe, and other key global markets have recently experienced historically high levels of inflation. If the inflation rate continues to increase, it will likely affect all of our expenses, including, but not limited to, employee compensation expenses and energy expenses and it may reduce consumer discretionary spending, which could affect the buying power of our users, developers, and creators and lead to a reduced demand for our Platform.
Geopolitical developments, such as the war in Ukraine, the conflict in the Middle East stemming from the Hamas attack against Israel, and tensions with China, and the responses by central banking authorities to control inflation, can increase levels of political and economic unpredictability globally and increase the volatility of global financial markets. Adverse macroeconomic conditions, including lower consumer confidence, persistent unemployment, wage and income stagnation, slower growth or recession, changes to fiscal and monetary policy, inflation, changes in interest rates, currency fluctuations, economic and trade sanctions, the availability and cost of credit, and the strength of the economies in which we and our users are located, have adversely affected and may continue to adversely affect our condensed consolidated financial condition and results of operations.
Additionally, we maintain cash balances at third-party financial institutions in excess of the Federal Deposit Insurance Corporation (the “FDIC”) insurance limit. If the financial conditions affecting the banking industry and financial markets cause additional banks and financial institutions to enter receivership or become insolvent, our ability to access our existing cash, cash equivalents and investments, or to draw on our existing lines of credit, may be threatened and could have a material adverse effect on our business and financial condition.
87
Table of Contents
Item 2. Unregistered Sales of Equity Securities and Use of Proceeds.
None.
Item 3. Defaults Upon Senior Securities.
None.
Item 4. Mine Safety Disclosures.
None.
Item 5. Other Information.
Planned Executive Departure
On August 1, 2024, Michael Guthrie, the Company’s Chief Financial Officer, notified Roblox of his intent to resign as Chief Financial Officer to pursue personal interests. The Company is working to identify a successor and Mr. Guthrie has agreed to remain in the role until a new Chief Financial Officer is appointed and will assist in the search for his successor. The Company entered into a Separation and Transition Agreement with Mr. Guthrie on September 30, 2024 (the “Transition Agreement”), pursuant to which Mr. Guthrie’s employment with the Company will terminate upon the commencement of employment of the Company’s next Chief Financial Officer. For more information regarding the Transition Agreement, see Note 12, “Stock-Based Compensation Expense” to the notes to condensed consolidated financial statements.
Rule 10b5-1 Trading Arrangements
During our last fiscal quarter, none of our directors and officers, as defined in Rule 16a-1(f), adopted, amended or terminated a “Rule 10b5-1 trading arrangement” or a “non-Rule 10b5-1 trading arrangement” as defined in Regulation S-K Item 408.
88
Table of Contents
Item 6. Exhibits.
Exhibit
No.
 Incorporated by Reference
DescriptionFormFile No.ExhibitFiling Date
 3.110-Q001-397633.1May 13, 2021
 3.28-K001-397633.1September 14, 2023
10.1*+
31.1*
31.2*
32.1†
101.INS*
XBRL Instance Document - the instance document does not appear in the Interactive Data File because its XBRL tags are embedded within the Inline XBRL document.
101.SCH*
Inline XBRL Taxonomy Extension Schema Document.
101.CAL*
Inline XBRL Taxonomy Extension Calculation Linkbase Document.
101.DEF*
Inline XBRL Taxonomy Extension Definition Linkbase Document.
101.LAB*
Inline XBRL Taxonomy Extension Label Linkbase Document.
101.PRE*
Inline XBRL Taxonomy Extension Presentation Linkbase Document.
104*
Cover Page Interactive Data File (formatted as inline XBRL with applicable taxonomy extension information contained in Exhibits 101).
*    Filed herewith
+    Indicates management contract or compensatory plan.
†    The certifications attached as Exhibit 32.1 that accompany this Quarterly Report on Form 10-Q are not deemed filed with the Securities and Exchange Commission and are not to be incorporated by reference into any filing of the Registrant under the Securities Act, or the Securities Exchange Act of 1934, as amended, whether made before or after the date of this Quarterly Report on Form 10-Q, irrespective of any general incorporation language contained in such filing.
89
Table of Contents
SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned thereunto duly authorized.
 Roblox Corporation
Date: October 31, 2024
 By:
/s/Michael Guthrie
Michael Guthrie
Chief Financial Officer
(Principal Financial Officer)
90