Good morning. My name is Tamika, and I will be your conference operator. At this time, I would like to welcome everyone to the Roblox First Quarter 2024 Earnings Conference Call. As a reminder, today's call is being recorded. I will now hand today's call over to Stefanie Notaney. Stefanie, you may begin.

Good morning, everyone. Thank you for joining our Q&A session to discuss Roblox's first quarter 2024 results. With me today is Roblox's Co-Founder and CEO, David Baszucki, and CFO, Mike Guthrie. As a reminder, our shareholder letter, press release, SEC filings, supplemental slides and a replay of today's call can be found on our Investor Relations website at ir.roblox.com. On this call, we will make some brief opening remarks and reserve the rest of the time for your questions. Our commentary today may include forward-looking statements, including, but not limited to, expectations of our business, future financial results and strategy. Forward-looking statements are subject to risks, uncertainties and assumptions that could cause actual results to differ materially from those described in our forward-looking statements. A description of these are included in our SEC filings including our most recent reports on Form 10-K and Form 10-Q. You should not rely on our forward-looking statements as predictions of future events. We disclaim any obligation to update these statements, except as required by law. During this call, we will also discuss certain non-GAAP financial measures. Reconciliations between GAAP and non-GAAP metrics can be found in our press release and supplemental slides. With that, I'll turn the call over to Dave.

Thank you. Hey, welcome all Roblox investors, new investors and longtime investors. We're pleased to be here with you to report on our Q1 2024 results. We continue on our mission to connect 1 billion people every day with optimism and civility around the world, and we'd like to report on our progress. In Q1, our DAUs came in at over 77 million daily people on our platform with year-on-year growth of 17%. Our over 13 DAUs were particularly strong, growing at 22% year-on-year. We continue to highlight the growth of our platform around the world with Japan, which is a key gaming market growing at 50% year-on-year, and India, which is a huge market growing at 58% year-on-year. Our hours engaged were 16.7 billion in the quarter that's 15% year-on-year growth. And once again, very strong growth over 13 and strong growth in countries around the world, including Japan and India. Revenue was $801 million, which is 22% year-on-year, and that was higher than our guidance range of $755 million to $780 million. Our bookings were $923.8 million, which was in the middle of our guidance range of $910 million to $940 million, but I do want to highlight we wanted that number to be higher, and we're going to dive into that a bit later. That represents 19.4% year-on-year bookings growth, and one of the big focuses that we've had, which is on our operating efficiency came to light with our cash and consolidated net loss. Our net loss of $272 million based on GAAP accounting was relatively flat with Q1 of last year, while our guidance was a net loss of $347 million to $342 million. This was remarkably less of a GAAP loss than that. We continue to operate extremely efficiently and to manage our CapEx. Our net cash flow from operations in Q1 was $238 million, which was up 37% year-on-year. Our free cash flow in Q1 was up 133% at $191 million, providing 50% more free cash than we generated in all of 2023. Regarding personnel, we've been very thoughtful in our hiring and how we're growing our head count. We've been relatively consistent over the last 3 quarters in the size of our head count, while we continue to focus on growing our economy ads team, our AI safety team, and our live operations events team. I just want to highlight what we started 3 quarters ago, which is getting bookings growing faster than other areas, and we continue down that path. Once again, Q1 bookings grew at 19.4%, while trust and safety infrastructure grew 4% year-on-year and personnel at 20% growth. So we expect to continue this trend. Those of you watching us can see that our bookings in Q1 grew faster than DAUs and hours. I want to make a few comments on this. First, we saw the general number of people on our platform being very strong. We don't report the number, but we did see less growth in Q1 than we expected due to a few factors. First off, we rolled out a lot of new tech in the second half of last year, which started to show some drag. This started to show up in Q1, and we've spent the last 3 months analyzing and improving this. We've also made a lot of enhancements to our search and discovery system. We've taken a lot of steps on live ops and content within the last 3 months. Over the last few weeks of April and the first half of May, we've seen USA and Canada bookings, DAUs, and hour growth come back to over 20%. That said, we are going to be more conservative on our guidance due to the limited data we have from these improvements, but we continue to have a lot of operating efficiency. We're not going to change our implied guidance on free cash flow for the year. We will keep conservative hiring growth in economy, AI safety, content, and live ops. I also want to highlight our advertising plan is on track. Regarding discovery, we've added curation to the homepage, called top picks, and increased sponsored impressions. We’ve also made adjustments to our core ML algorithm, which we believe has increased the discovery and velocity of new content. We're excited about our more aggressive live ops philosophy. We ran our first live ops event, 'The Hunt,' over the few weeks before and during Easter, which the community loved. On the virtual economy side, we launched dynamic price floors in February, driving a healthier economy for both users and creators. There have been significant improvements made on low-end Android devices with better frame rates and stability. We’ve also made significant progress on the advertising front, as we launched a partnership with PUBMATIC in April. We've started to see encouraging early signals from our collaborations with various brands. On the AI side, we continue to roll out tools for creators, including a Texture Generator, Avatar Auto Setup, and Code Assist. We believe these tools are enhancing efficiency for developers. Our ongoing work in safety, particularly leveraging AI in moderation, continues to show improvement. Overall, we recognize that in Q1, we saw less growth than we expected. Still, we've exceeded our cash flow margins, and our recent data shows a recovery, thus we will adjust our bookings guidance. Now, I'll turn it over to Mike, and then we will have Q&A.

Thanks, Dave. I just want to turn everyone's attention to Pages 24 and 25 in our supplemental materials, which are on the IR website. To reiterate, on a bookings number of about 19.4% growth, we continue to generate good cash flow dynamics. Page 24 shows cash from operations, reflecting operating leverage in infra, trust and safety. Operating cash flow for the quarter was almost $240 million, up significantly from last year. Q1 is typically our highest quarter, due to working capital cash flow inflow from the Christmas holidays. So, while Q2 will likely drop, we are guiding for strong growth in Q3 and Q4 as well. On Page 25, you'll see our free cash flow for Q1 at $191 million, significantly more than last year, demonstrating our operating leverage and reduced capital expenditures as we have completed our infrastructure investments. As it relates to guidance, we are now guiding to revenue bookings, consolidated net loss, and adjusted EBITDA. We still forecast solid growth in cash from operations and strong free cash flow year-over-year.

Great. Just two from me. First, understand the commentary on search and discovery, but are you seeing any changes in the pace or quality of content that's hitting the platform? And for live ops, Dave, you suggested that there's a next event coming, but how many events are you doing a year, and what's the pipeline of good ideas that would have the accretive benefit like The Hunt had?

I'd say, first, the distribution of content in Q1 is more spread out than in Q4, indicating new content is gaining market share. In Q1, we saw increased velocity of new experiences entering our top rankings compared to Q4. Regarding events, we have to be thoughtful in announcing the full schedule, but we expect to do one event every 1 to 2 months. The upcoming event, if you dig into Twitter, you can figure out what it's going to be, and it's going to be awesome.

So you mentioned recent performance for KPIs trending around 20% year-on-year. This was the second consecutive quarter in which year-on-year bookings growth has outpaced year-on-year rates of change for some other KPIs like DAUs and hours engaged. Any sense as to what's driving this? Do you expect this trend to continue? You had previously endorsed a 20% growth rate for bookings for 2025 through '27. Is 20% still an appropriate longer-term target?

Yes. I'm happy to comment. We want all those key numbers to move in step at 20%. One sign in Q1 that things weren't on track was this drift between bookings, engagement, and hours. However, in the last 3 weeks, we've seen all metrics in our highly mature market - USA and Canada - exceed 20%. We want the DAU number to align with that too.

Over the last couple of quarters, we've seen bookings per DAU and bookings per payer go up, reflecting better monetization and bookings growth. Typically, we expect these numbers to move together, but in any single quarter, there can be fluctuations. So we aim for them to move in lockstep.

It's Omar Dessouky. Did you answer the prior analysts about the 20% kind of outlook you talked about in the Investor Day for '25 to '27? If you could provide any color on how much of the growth would be driven by core versus advertising. Is the outlook still north of 25%?

No, we didn't address that question. Yes, we believe that the business maintains that growth potential. Early signs in Q2 are encouraging, and we are confident about the business's capacity for such growth.

Thanks, Omar. Our projections for 2025 regarding ads versus core business haven't changed. We'll provide specific advertising guidance early next year when we provide '25 guidance. We believe that we can achieve the growth rates discussed last November.

I was hoping you could expand on what you think drove the engagement with clients in Q1. I know you mentioned low-end Android slowness, but anything else to call out? And, Mike, you said U.S. and Canada bookings are north of 20% to start the quarter; however, the Q2 guide implies 13% bookings growth. Could you help bridge that gap?

For Q1, we believe the combination of factors affected performance. One of the largest growth drivers on our platform is raw performance, including the time to join a game, frame rate consistency, and user experience. We've also rolled out new features, which impacted performance balance. We recognize these are critical factors. In the last 3 weeks, following substantial improvements, we have seen a positive trend in U.S. and Canada returning over 20%.

The activity we've recently seen is encouraging. The April improvements began around April 15, which greatly influenced our numbers. As we approach our second quarter guide, we remain cautious seeing fluctuations in forecasts as May and June progress. We aimed to set our growth estimates prudently and with consideration of the earlier period.

David, I wanted to come back to the new content discussion. Is the moderation in growth driven by both the user and developer engagement, or is it more one versus the other?

Yes, we are actively running a developer day with top creators. We have several of the most creative individuals and studios on our platform. Although the content already exists, our goal is to optimize the long-term growth of our developers. We're focusing on ensuring all creators derive the growth they need.

Our advertising plans continue on track, and we are progressing in areas such as dynamic price floors and enhancing our advertisement placements. Our pipeline remains strong, and we’re still on track with our product launch initiatives. We’re dedicated to improving ad integrations and supporting our creators as well.

Over the last 12 to 18 months, you've seen a large increase in branded experiences. How does the engagement and monetization of those branded experiences compare to traditional non-branded content on the platform?

Engagement metrics vary; branded experiences often yield shorter engagement than standard games but are evolving. We see early positive engagement signals indicating that audience interaction is becoming significantly different from traditional content, allowing friends to shop together and engage meaningfully with each brand.

No hard numbers are available at this time around branded experiences. Each branded collaboration varies, with some achieving significant engagement while others are still in the learning phase.

This year is focused on advertising and video expansion, and we’re excited about combining in-world shopping experiences with real-world partners to enhance measurements. This lays the groundwork for future development where shopping experiences can seamlessly integrate as social activities.

Thank you for joining us today, and I'll turn it over to Tamika to close this out.

Thank you. That does conclude today's call. Thank you for participating. You may now disconnect.