Roblox Corp Q3 FY2025 Earnings Call

Good morning. My name is Kate. Welcome to Roblox's Third Quarter 2025 Earnings Conference Call. Stephanie Notaney, you may now begin your conference.

Thanks, Kate. Good morning, everyone. Thank you for joining our Q&A session to discuss Roblox's Q3 2025 results. With me today is Roblox's Co-Founder and CEO, David Baszucki; and our Chief Financial Officer, Naveen Chopra. Our shareholder letter, SEC filings, supplemental slides, and a replay of today's call can be found on our Investor Relations website. Our commentary today may include forward-looking statements, which 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 risks, uncertainties and assumptions 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 shareholder letter and supplemental slides. With that, I'll turn it over to Dave.

Thank you, Stefanie. Good morning and thank you for joining us today. A year ago, at RDC, we shared the goal of capturing 10% of the global gaming content market. We'd like to report that we've made tremendous progress. We estimate now that 3.2% of global gaming bookings or revenue is going through Roblox, and that's up from 2.3% last year. Our platform and our creator ecosystem is healthier than it has ever been. Similarly to Q2, in Q3, we saw strength across the platform with both existing and new experiences on the platform. The number of experiences that have more than 10 million daily active users on the platform at some point during Q3 2025 hit 7, which includes a lot of experiences we're all familiar with as well as 5 that were created in the last 12 months. That's Grow a Garden, Steal a Brainrot, Brookhaven, 99 Nights in the Forest, Plants Vs. Brainrots, Ink Game, and Blox Fruits. We believe the success on our platform continues to be driven by raw platform capabilities and performance, continued improvements in Discovery, continued improvements in our virtual economy, and complementing that, the investments we've made in infrastructure, which supported multiple groundbreaking records over the last quarter, including a 45 million peak concurrency during the weekend in August. Let's get into the financial results. In Q3, our DAUs hit 151.5 million. That's up 70% year-on-year. This was growth really across all regions, including U.S. and Canada, where we saw a 32% increase year-on-year; APAC was up 108% year-on-year. And importantly, we see continued evolution of our age demographic with 13 and over DAUs growing 89% year-on-year. Right now, 2/3 of total DAUs are 13 and up. Hours had similar strength, hitting 39.6 billion hours of engagement in Q3. That's up 91% year-on-year. Strong growth across all regions, U.S., and Canada, up 47% year-on-year. APAC hours of engagement up 127% year-on-year. Commensurate growth with 13 and up 107% year-on-year; 68% of our total hours are from users aged 13 and up. Q3 revenue was $1.36 billion, up 48% year-on-year. Q3 bookings were $1.92 billion, up 70% year-on-year. Once again, strong growth across regions, U.S. and Canada, bookings up 50% year-on-year, and APAC bookings were up 110% year-on-year. Some highlights include Japan at 125%, India at 146%, and Indonesia bookings up 804% year-on-year. Our monthly unique payers continue to be strong at 35.8 million, up 88% year-on-year. And in Q3, through DevEx, we hit $427.9 million of DevEx, up 85%, a new record. I want to highlight that DevEx, which is what our creators are earning on the platform, has grown 250% from the same period 2 years ago. We continue to have strong conviction for our long-term vision, and we'll continue to be more diligent about investing in this innovation to support long-term genre expansion and growth. We've talked about genre expansion a lot over the last year, and I want to do a few highlights here. We have a lot of technology that showed at RDC this year that's rolling out, including server authority and custom matchmaking, which will make Roblox more resilient and powerful for competitive genres like shooters, sports, and racing. We've already showcased avatar enhancement technology that is in the pipeline, which we believe is going to really expand the look and feel of Roblox to higher fidelity and more lifelike avatars and continued focus on raw performance on the platform, including tech like Harmony and SLIM, which we believe are part of the future of high fidelity gaming. The ability of our creators to make experiences that can run both on low-end 2-gig Android devices as well as really nice high-end gaming PCs is core to our vision. On Discovery, we've continued really a commitment to transparency that we also believe is good for the company. We shared the notion that we're sharing our Discovery signals with our creators, making those transparent in their analytics dashboard. We've highlighted that we're using play-through rates, 7-day play days per user, and 7-day intentional co-play days. So our creators can see exactly what we’re using to make recommendations. We continue to see Discovery highlight new hits. For example, in Indonesia, Fish It! has become extremely popular, and we believe our Discovery system has helped promote that. I would also highlight that our content ecosystem continues to be strong with what have now become perennial successes like Brookhaven, Adopt Me!, and Blox Fruits, which all continue to draw strong engagement. Some of our hits from last year like RIVALS and Dress To Impress continue to launch active and successful updates. Really important at RDC, we announced an 8.5% increase to the DevEx rate. Creator earnings surpassed $1 billion in the first 9 months of 2025. In support of our creator ecosystem, we've launched our IP platform, which we believe really is the future way to allow IP holders and creators to connect without all of the complexity of handcrafted individual one-on-one contracts. I want to highlight that IP owners like Mattel and Kodansha have joined that platform. We recently announced and launched Roblox Moments, which we believe is an additional innovative discovery surface for our creators. Along with all of this, I want to make a couple of highlights on some of the areas of tech we've been really working on before I hand over to Naveen. First, safety — which has always been a top priority for us and foundational to everything we do at Roblox. Just yesterday, we announced a partnership with the Attorney General Alliance on a child safety coalition. Stay tuned for this; we believe there's a wonderful opportunity to share and develop what we believe is going to be the industry standard in communication for social and mobile apps, including our commitment by the end of this year to use AI-based facial age estimation to estimate the age of everyone on our platform. We intend to use that to gate who uses communication technology and help route who can communicate with whom, in addition to what we already do, which is the filtering of all text and no image sharing on Roblox. We believe as new technology rolls out, it allows us to adopt and use this technology for continued advancements in safety and civility. We've also released over 100 innovations this year in our safety and civility group, including the announcement that we're going to be adopting the International Age Rating Coalition rating over the next few quarters. We've raised our minimum age for restricted content to the global standard of 18 years old. I want to highlight that we do run stricter than typical industry policies on Roblox, which we believe is an essential strategic investment for how we run the company. As we roll out our facial age estimation, we really do believe this is going to add long-term value creation for shareholders, even if there are any short-term headwinds from that rollout. On the AI side, we are now up to running over 400 AI systems inside the company. These are core within safety, discovery, and creation, highlighting a few things that we've shipped so far. Our Cube 3D model, which we shipped earlier, is really going to come to life over the next 1 to 2 quarters as this goes live in multiplayer mode for everyone on the platform. We've also open-sourced the Studio MCP server, which is enhancing Roblox Studio's ability to integrate as both a client and a server in complex AI-based workflows. Behind the scenes, our safety model for PII continues to improve. We also released RoGuard for ensuring the safety of our text-generated models in-game. Stay tuned for a lot more generative AI. Additionally, there has been a lot of conversation regarding the volume of training data various entities have access to. Within Roblox, every day, we are moving forward to capturing literally over 30,000 years of human interaction data, and we are doing this in a PII-compliant way. This data is unique, and we have no intent of ever getting it outside of our walls or selling it. This can be utilized as we start to roll out our future vision of allowing people to play both with others as well as with non-playable characters, supporting unlimited creation in Roblox. That can mean per object, with clothing, per the world you're in, per game creation, and ultimately, with friends in real-time gameplay. Finally, 45 million concurrent users is a significant milestone for us. We supported this while moving towards what we think is more of an optimized mix of our own data centers, including core data centers, edge data centers, and GPU installations on our own bare metal in combination with our cloud partners. We did this by bursting over weekends for several hours when we hit peak numbers. We're going to continue down this route. We're investing more in our own bare metal for scale. Core data centers provide load balancing and efficiency. Everyone in Brazil is happy because we added a new edge data center there to reduce latency. We're going to continue building out our native bare metal GPU capability while collaborating with our cloud partners. While the improvements in cost to serve may be more challenging in the coming quarters, this aligns with our long-term focus. With all this innovation happening, we certainly have a variety of initiatives we work on every day to enhance our platform. We focus on the details. And with that, I'm going to hand it over to Naveen to complement my introduction.

Great. Thanks, Dave. Good morning, everybody. I'm going to try to keep my comments relatively brief so we can get to some questions. As Dave noted, the tremendous growth that we saw in the quarter was driven by a combination of big viral hits and underlying platform growth. With that in mind, I want to just share a few observations regarding overall platform health. Last quarter, I highlighted the engagement growth that we were seeing in experiences outside of our top 10. Well, this quarter, the growth in engagement for these experiences, again, outside of the top 10 accelerated even further from 47% in Q2 to 58% in Q3. That's the engagement side. Then on the monetization side, spending in that cohort of experiences remained north of 40%; spending growth remained above 40%. We also saw healthy growth in bookings per daily active user. That was true in every region other than APAC. I call this out because, very importantly, in APAC, the trend is really a function of mix shift at the country level. Payers, as Dave highlighted, grew 88% year-on-year, which is a very healthy growth rate in and of itself. Notably, it's higher than the rate of user growth, which was 70%. We believe that this dynamic is at least in part caused by changes we've made in our economy. Remember, we launched regional pricing for marketplace items back in June. We think that it helped drive higher payer penetration in markets like Southeast Asia. We did see a decline in bookings per payer on a blended basis, but similar to my comments on bookings per DAU, it's important to understand that this was really driven by geographic mix shift. So overall, platform evolution looks healthy, and that really increases our conviction in our long-term goals. What does that look like financially? On the top line, we see momentum in the business to continue to deliver healthy double-digit bookings growth. We think this will be aided by the launch of a number of the key technologies Dave touched on that will roll out in late Q1 and early Q2 of 2026. Many of these technologies are designed to enable genre expansion on our platform. You saw some of those demoed at RDC. From a reported growth perspective in '26, we think the adoption of these technologies will be a factor, meaning how quickly developers adopt some of these new capabilities will influence the growth rate, particularly given the tough comparisons that we know we will have coming out of 2025. We're also conscious of the fact that the new safety policies we're rolling out, consistent with our commitment to being the gold standard for safety, may cause some short-term friction to engagement and bookings. Ultimately, we think those are magnifiers of long-term growth. Then on the expense side of the equation, we envision more investments in DevEx, infrastructure, and people to support our goals around safety and genre expansion. That's the reason you're not seeing year-over-year margin expansion in Q4 based on our guidance, and it’s also the reason we expect margins to decline slightly in 2026 due to the combined impact of a full year of higher DevEx rates, limited cost to serve improvements around infrastructure and safety, and higher growth rates in comp and ben expense lines. There will also be incremental CapEx starting in Q4 2025, which is incorporated into the guidance we've shared. Expect similar levels of CapEx in 2026, which implies that CapEx intensity next year should be lower than 2025, but still somewhat elevated relative to 2024. I realize I'm going a little bit into the weeds, but let me step back for a second. The key takeaways here are that we are way ahead of our long-term growth plans. The reality is that bookings have grown faster than our ability to deploy appropriate growth investments. That means you're going to see slight margin compression as we catch up over the next few quarters. However, we believe those investments will give everyone more confidence in our ability to continue delivering sustainable long-term growth. So hopefully, that's some helpful color on what we're seeing and what we're expecting. With that, I think we'll open the line for questions.

We'll first go to Matthew Cost at Morgan Stanley.

Dave, I want to start on AI. When I look at your infrastructure plans, clearly, you're very excited about putting GPUs and more data center power behind what you're doing. Tie that back to what the user experience or the games on Roblox are going to look like in this world that you're building towards. When you think about what Cube is capable of, what will real-time content generation and what you're calling 4D content creation mean for Roblox experiences and for engagement over the next couple of years? And then I have one for Naveen as a follow-up.

Matthew, great question. This is a fun one to answer. It highlights the enormous future technical innovation we have in front of us. We've shared publicly at RDC and elsewhere a vision of what the ultimate specification for Roblox should be. That ultimate specification allows creators to decide everything from fun, anime look and feel all the way up to photorealism, with the ability to support anywhere from one player to 100,000 players at a concert simultaneously. The ability to use AI to do real-time modifications of that world—everything from a piece of clothing to really 100,000 people with a Dungeon Master modifying the entire environment in real-time—a mixture of true human players and NPC players all doing this with a very tight focus on efficiency and cost because we are a freemium platform. Ultimately, this will be done on everything from a 2-gig RAM Android device to a high-end gaming PC. This is a remarkably complex specification. What you will see coming out soon with Cube 4D is real-time generation within experiences in multiplayer—not just of static objects, but of complex objects, vehicles, weapons, and other types of things that users can interact with in multiplayer contexts. More of that to come, with more AI supporting the stack everywhere. We are marching as quickly as we can to that visionary specification. We're noticing that the gameplay we will eventually see is unpredictable; we've seen it historically on Roblox as we explore new and existing genres in a predictable manner, combined with new types of games. For instance, Dress To Impress was an example last year where the technology we were building to support more traditional gaming led to the creation of an entirely new genre. So stay tuned for more coverage of existing genres at higher performances as well as as yet unimagined types of gameplay.

We'll move next to Brian Pitz with BMO Capital Markets.

Dave, you mentioned increasing the DevEx rate by 8.5%, putting more economics into creators' hands. However, if you look at competing UGC platforms like Fortnite, they're also offering very attractive economics to win over creators to build a mere UGC platform. How do you think about the need to continue driving economics toward creators to fend off any competition from other platforms that may be currently under development or could be coming in the future?

Great question. I want to highlight that at Roblox, we run the company by looking towards the future, not just over our shoulder. In this case, there's one additional component to the DevEx rate, and that is the ability of a new or existing creator to achieve significant economic returns. Thus, it is important to multiply the DevEx rate by the volume of users on the platform, the breadth of the creative tools, and the speed with which new creators can create new experiences. Ultimately, this is how I believe, and we believe, creators analyze the situation—not simply by the DevEx rate. For every incremental percentage, while obviously balancing our earnings and other costs, we believe there can be some effect on the creators that makes Roblox a more appealing platform. It ultimately comes down to wanting to run our company where we aim to keep our costs as lean and efficient as possible while responsibly moving cash flow back to the creator community.

We'll move next to Eric Sheridan with Goldman Sachs.

Can you share with us key learnings as older age cohorts continue to scale as a percentage of the mix in the business? Based on those learnings, how can you align your investment priorities to sustain that growth and stimulate that aspect of the mix in the years ahead?

I'll share some key learnings and then explain how we are aligning things. One of the key learnings is that Roblox has a significant ability to virally attract new users to the platform through new hits. We've seen this with both Dress To Impress and Grow a Garden, where user acquisition occurs at an immense scale organically as word-of-mouth spreads regarding these properties. We've also observed that older players are excited and interested in experimenting with these new types of gameplay. Looking at the global gaming market space, which is estimated to be between $180 billion and $200 billion, we recognize that all existing genres can be aligned with our technical roadmap. As mentioned before, much of our technology is set to enhance sports gameplay, improve racing, and enhance RPG experiences. We believe we're going to see a greater diversity of avatars on Roblox that reflects the gaming ecosystem overall concerning what we currently have on the platform. This in turn guides our technical roadmap. We believe there is still a lot of growth potential for us in these genres where we currently have not fully captured 3% of the global gaming market.

We'll move next to Jason Bazinet with Citigroup.

I just had a question on the shareholder letter. In your '23 Investor Day, you laid out 20% plus bookings growth from '25 to '27. In the shareholder letter, you acknowledge the great results you've had this year, but you say, as we look to next year, our long-term objectives have not changed. Is that essentially a soft way of saying that you think growth will be below 20% in '26? Is that what you're trying to say? Because I think that's what the market is trying to digest with the premarket exit in your stock.

Jason, it's Naveen. Thanks for the question. We are not providing any specific guidance about 2026 at this point in time. That would be premature. We need to finalize '25 before we focus on '26 expectations more specifically. What we want to highlight for people is that there are important considerations as we look at the expectations for bookings growth next year. There will be tailwinds from the current momentum we see in the platform, as well as benefits from several technologies being implemented in the first half of next year. However, headwinds may arise from the tough comparisons as well as some of the new safety policies we're going to roll out. We don't think any of that changes where we expect this business to be over the next several years. But it is indeed too early to specify numbers for '26.

We'll move next to Cory Carpenter with JPMorgan.

Maybe building on that, you did not mention advertising as a potential tailwind next year. So I’m curious about what your early learnings have been in rewarded video. How big a push or priority do you plan to make that in 2026?

We remain very bullish about long-term opportunities there, but we are cautious about the near term because we want to ensure that we get it right. As you've heard at RDC, we are rolling out rewarded video, albeit on a limited basis. We pointed out in the shareholder letter that we now have over 140 creators onboarded. What we've learned is that we want to be very thoughtful and diligent with those creators about how we integrate rewarded video to ensure it works well for them in terms of engagement and monetization, and that it suits our users in terms of experience and performance. Therefore, we have a lot to accomplish on that front, and it is not something we would yet call out as a major contributor in the short term, but rather, it's a key part of our business as we progress over the next few years.

We'll move next to Ken Gawrelski with Wells Fargo.

Could you talk a bit about the various genres? How do you think about the recommendation engine, which has been successful in surfacing new hit games? Could you address how you're pushing for more diversity of genres to ensure there are sufficient experiences available? Is concentration in certain games a concern?

Great question. Part of my introduction was to highlight that diversity on the platform with 7 titles achieving over 10 million DAUs at some point during the quarter, 5 of which are new. One of the ways we've been thinking about Discovery includes two main focus areas. We're optimizing not for short-term rents but for the long-term enterprise value of the company. Additionally, we're keen on ecosystem health and the variety of products placed before our users. We're trying to promote a combination of new creators and diverse genres. As for our Discovery system, we are increasingly dedicated to transparency where we're sharing the signals we believe contribute to the ecosystem's long-term health. As you correctly noted, we’re using the system to expand into genres including RPGs, shooters, racing, and sports on the platform. Our Discovery system has continuously improved, and I believe it's functioning better than ever. We are not just replicating what worked historically. Instead, we look forward to emerging types of gameplay. Stay tuned.

We'll move next to Benjamin Black with Deutsche Bank.

Touching on the growing number of experiences that are eclipsing 10 million users: With the expanding data set on user engagement and DAU behavior, does the Discovery model increasingly get smarter at recommending content? Are you starting to create a real data moat in Discovery? And then, Naveen, we've observed a divergence in the growth of hours engaged and bookings growth over the past few quarters. Can you help us understand why this is? Is it simply a shift toward lower monetizing experiences or regions? How should we view the relationship between those two trends moving forward?

This is a great question. Firstly, I want to place it in the context of privacy, safety, PII compliance, and adherence to all local laws. I also want to state that we have no financial pressure or intent to ever release the Roblox data outside of our platform. With those first things noted, our data set is extensive. The data is not solely about who clicks where; it focuses on real-time 3D avatar interactions, analyzing what areas retain more users, and evaluating what avatars do in a creator's experience. We are thus able to utilize 3D and time-based immersion signals to inform our Discovery predictions. Therefore, the answer is yes: we incorporate more content understanding and 3D interaction into our Discovery model. I'll turn it over to Naveen for the second part.

Yes. The second part of your hypothesis is correct regarding the dynamic between hours growth versus monetization growth. It stems from geographic mix shifts. You can observe this in our supplemental documents, which contain some disclosures on bookings per daily active user. While you were comparing monetization to hours, a similar dynamic is at play: The hours trend is skewed toward regions that tend to monetize at a lower level, which is reflected in our blended numbers. Also, as I indicated in my remarks, there are geographic shifts between specific countries impacting overall regional monetization. So, the growth in various regions is driving these insights.

We'll move next to Omar Dessouky with Bank of America.

You pointed out the challenges posed by tough comps in '26. Looking back, a lot has changed at Roblox. You have a new CFO, and you've essentially doubled in size in the last two years. Given such changes, when things shift, you might consider different approaches. With '26 potentially being such a tough comp year, Roblox has never utilized advertising to attract users, either through ad networks or otherwise. Since virality is your key engine for growth, why wouldn't Roblox consider advertising to smooth out growth fluctuations?

Omar, great question. To provide some big picture context, we are excited that we've surpassed 3% of the global gaming content market using Roblox; still, 97% remains for us to capture. I remain very optimistic as we roll out new technology and genre expansions in innovative ways, especially with AI. You rightly observe that Roblox's growth has primarily come from viral avenues. However, we do indeed purchase traffic—not necessarily highlighted in our financial statements, but we engage in paid user acquisition responsibly. We're also exploring the idea of partnerships with creators on our platform to supercharge their paid acquisition jointly with us. There's a promising future for us to expand paid acquisition where creators are a little hesitant to invest; as we work together, it benefits both parties. We always adhere to financial prudence, ensuring the expected returns align with our investment timelines.

I'd add that overall, our spending on growth marketing remains modest, and we still rely heavily on organic growth that the platform generates. As Dave mentioned, we added close to 40 million users relative to Q2, so the organic growth engine remains strong. This will primarily drive growth; however, there are several intriguing opportunities for collaboration between us and our developers to promote new content arriving on the platform, which aligns with our goals of genre expansion, content diversity, and content velocity. I'm eager to see how this will evolve.

Time for one last question from Clark Lampen with BTIG.

I’ll try to make these quick. Dave, you've talked about making the platform more appealing to the creator community. Though we have followed user growth closely, we have a much less clear view of developer growth in the ecosystem. Has growth in developers essentially kept pace with user growth? Could we think about it growing in line with DAUs? And just to take this a step further for Naveen, if that’s the case and we think about growth elasticity, we have been through investment cycles in the past. This one feels different because it's AI-oriented. Could the yield from these investments lead to more immediate impacts, and is that reflected in your comments about '26?

I’ll go first, then Naveen can speak to the yield. At RDC, we consistently share statistics regarding the year-on-year growth in bookings and engagement among the top 10, top 100, and top 1,000 developers. We continually observe solid results, which signal that we're still in a healthy space. More creators are now able to earn a substantial income—some even making $1 million or more on our platform, and that ecosystem continues to thrive and expand. Our goal aligns with achieving 10% of the global gaming bookings flowing through Roblox, thus providing a broader context for what we hope to achieve with diverse creators. One note about infrastructure: our ongoing investment in our own bare metal data centers for core, edge, and AI will enhance our efficiency, and I’ll hand it over to Naveen for comments on the yield of these investments.

Regarding the payback period on these investments: various initiatives will yield results fairly quickly, while others may take more time. There's substantial ongoing AI investment whose benefits we're already witnessing—like in Discovery and the economy. These are expected to show returns relatively soon. However, longer-term investments—including CapEx for training and deploying models—will take additional time to see returns. Nevertheless, I would say we're already benefiting from many investments made in 2025, with increasing gains expected in '26 and beyond. I think that's the last question. Thank you for joining us today. I’ll turn it back to Dave for any closing comments.

I want to sincerely thank all of you for your support and insightful questions today. We look forward to continuing to innovate in our pursuit of capturing 10% of the global gaming market on our platform. Thank you all.

Thank you. That concludes today's conference call. Thank you for your participation. You may now disconnect.