rblx-20220510
FALSE0001315098970 Park PlaceSan MateoSan MateoCalifornia00013150982022-05-102022-05-10

UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
____________________________
FORM 8-K
____________________________
CURRENT REPORT
Pursuant to Section 13 or 15(d)
of the Securities Exchange Act of 1934
Date of Report (Date of earliest event reported): May 10, 2022
____________________________
Roblox Corporation
(Exact name of Registrant as Specified in Its Charter)
____________________________
Delaware001-3976320-0991664
(State or Other Jurisdiction
of Incorporation)
(Commission
File Number)
(IRS Employer
Identification No.)
970 Park Place,
San Mateo, California
94403
(Address of Principal Executive Offices)(Zip Code)
Registrant’s Telephone Number, Including Area Code: (888) 858-2569
Not Applicable
(Former Name or Former Address, if Changed Since Last Report)
____________________________
Check the appropriate box below if the Form 8-K filing is intended to simultaneously satisfy the filing obligation of the registrant under any of the following provisions:
☐
Written communications pursuant to Rule 425 under the Securities Act (17 CFR 230.425)
☐
Soliciting material pursuant to Rule 14a-12 under the Exchange Act (17 CFR 240.14a-12)
☐
Pre-commencement communications pursuant to Rule 14d-2(b) under the Exchange Act (17 CFR 240.14d-2(b))
☐
Pre-commencement communications pursuant to Rule 13e-4(c) under the Exchange Act (17 CFR 240.13e-4(c))
Securities registered pursuant to Section 12(b) of the Act:
Title of each class
Trading
Symbol(s)
Name of each exchange
on which registered
Class A Common Stock, $0.0001 par valueRBLXThe New York Stock Exchange
Indicate by check mark whether the registrant is an emerging growth company as defined in Rule 405 of the Securities Act of 1933 (§ 230.405 of this chapter) or Rule 12b-2 of the Securities Exchange Act of 1934 (§ 240.12b-2 of this chapter).
Emerging growth company  ☐
If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act.  ☐


Item 2.02    Results of Operations and Financial Condition.
On May 10, 2022, Roblox Corporation (the “Company”) issued a press release announcing financial results for its first quarter ended March 31, 2022. The Company also posted on its investor relations website (ir.roblox.com) a shareholder letter and supplemental materials for its first quarter ended March 31, 2022. A copy of the press release and shareholder letter are furnished as Exhibit 99.1 and Exhibit 99.2, respectively, to this Current Report on Form 8-K and are incorporated by reference herein. Information on the Company’s website is not, and will not be deemed, a part of this report or incorporated into this or any other filings that the Company makes with the Securities and Exchange Commission.
Item 7.01    Regulation FD Disclosure.
The Company also reported estimates for certain key metrics for April 2022 in its press release and shareholder letter, which were both issued on May 10, 2022, copies of which are furnished as Exhibit 99.1 and 99.2, respectively, and are incorporated by reference herein. Each month the Company intends to post on its investor relations website (ir.roblox.com) to report certain estimated key metrics for the prior month, with the results for the third month of each quarter included in the Company’s quarterly or annual report, as applicable.
The information in Item 2.02 and Item 7.01 of this Current Report on Form 8-K, including Exhibit 99.1 and Exhibit 99.2 attached hereto, shall not be deemed “filed” for purposes of Section 18 of the Securities Exchange Act of 1934, as amended (the “Exchange Act”) or otherwise subject to the liabilities of that section, nor shall it be deemed incorporated by reference in any filing under the Securities Act of 1933, as amended, or the Exchange Act, except as shall be expressly set forth by specific reference in such a filing.
Item 9.01    Financial Statements and Exhibits.
(d)Exhibits
Exhibit
Number
Description
99.1
99.2
104Cover Page Interactive Data File (formatted as inline XBRL)
1


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: May 10, 2022By:/s/ Michael Guthrie
Michael Guthrie
Chief Financial Officer
(Principal Financial Officer)
2


Exhibit 99.1
Roblox Reports First Quarter 2022 Financial Results
Revenue up 39% over prior year up to $537.1 million
Strong year over year growth in Daily Active Users and Hours Engaged, up 28% and 22%, respectively
SAN MATEO, Calif., May 10, 2022 - Roblox Corporation (NYSE: RBLX), a global platform bringing millions of people together through shared experiences, released its first quarter 2022 financial results today and separately posted a letter to shareholders and supplemental materials on the Roblox investor relations website at ir.roblox.com.
First Quarter 2022 Financial Highlights
•Revenue increased 39% over Q1 2021 to $537.1 million
•Net cash provided by operating activities of $156.4 million; Free cash flow was $104.6 million
•Bookings decreased -3% over Q1 2021 to $631.2 million
•Average Daily Active Users (DAUs) were 54.1 million, an increase of 28% year over year
•Hours Engaged were 11.8 billion, an increase of 22% year over year
•Average Bookings per DAU (ABPDAU) was $11.67

April 2022 Key Metric Estimates
•Revenue was between $189 million - $192 million, up 30% - 32% year over year
•Bookings were between $221 million and $224 million, down 8% - 10% year over year
•DAUs were 53.1 million, up 23% year over year
•Hours Engaged were 3.8 billion, up 18% year over year
•ABPDAU were between $4.16 - $4.22, down 25% - 26% year over year

"We remained focused on delivering our innovation roadmap to unlock the full potential of the Roblox platform and drive long-term returns for investors," said David Baszucki, chief executive officer of Roblox. "Over the past two quarters, we have launched a number of notable innovations including spatial voice and layered clothing that will continue driving user growth, engagement and monetization."
Earnings Q&A Session
Roblox will host a live Q&A session to answer questions regarding their first quarter 2022 results on Wednesday, May 11, 2022 at 5:30 a.m. Pacific Time. The webcast will be open to the public at ir.roblox.com or by clicking here.


Forward-Looking Statements
This press release contains “forward-looking statements” within the meaning of the “safe harbor” provisions of the Private Securities Litigation Reform Act of 1995, including but not limited to, statements regarding our business, product and investment strategy and growth plans, our expectation of successfully executing such strategies and plans and our expectations for our April financial and operational results. These forward-looking statements are made as of the date they were first issued and were based on current expectations, estimates, forecasts, and projections as well as the beliefs and assumptions of management. Words such as “expect,” “anticipate,” “should,” “believe,” “hope,” “target,” “continue,” “project,” “plan,” “goals,” “opportunity,” “appeal,” “estimate,” “potential,” “predict,” “may,” “will,” “might,” “could,” “intend,” “shall,” and variations of these terms or the negative of these terms and similar expressions are intended to identify these forward-looking statements. Forward-looking statements are subject to a number of risks and uncertainties, many of which involve factors or circumstances that are beyond our control. Our actual results could differ materially from those stated or implied in forward-looking statements due to a number of factors, including but not limited to risks detailed in our filings with the Securities and Exchange Commission (the “SEC”), including in our Annual Report on Form 10-K filed for the fiscal year ended December 31, 2021 and other filings and reports we make with the SEC from time to time. In particular, the following factors, among others, could cause results to differ materially from those expressed or implied by such forward-looking statements: our ability to successfully execute our business and growth strategy; the sufficiency of our cash and cash equivalents to meet our liquidity needs; the impact of our senior notes and any future indebtedness on our business, financial condition and results of operations; the demand for our platform in general; our ability to increase our number of new users and revenue generated from users; our ability to retain and expand our user base; the impact on our business of the COVID-19 pandemic restrictions and the easing of those restrictions as vaccinations become more prevalent; the fluctuation of our results of operations and our key business measures on a quarterly basis in future periods, including as a result of changes in our accounting estimates; our ability to successfully develop and deploy new technologies to address the needs of our users; our ability to maintain and enhance our brand and reputation; our ability to hire and retain talent; news or social media coverage about Roblox, including but not limited to coverage that presents, or relies on, inaccurate, misleading, incomplete, or otherwise damaging information; any breach or access to user or third-party data; and our ability to maintain the security and availability of our platform. Additional information regarding these and other risks and uncertainties that could cause actual results to differ materially from our expectations is included in the reports we have filed or will file with the SEC, including our Annual Report Form 10-K for the fiscal year ended December 31, 2021.
The forward-looking statements included in this press release represent our views as of the date of this press release. We anticipate that subsequent events and developments will cause our views to change. We undertake no intention or obligation to update or revise any forward-looking statements, whether as a result of new information, future events or otherwise. These forward-looking statements should not be relied upon as representing our views as of any date subsequent to the date of this press release. Past performance is not necessarily indicative of future results.


ROBLOX CORPORATION
CONDENSED CONSOLIDATED BALANCE SHEETS
(in thousands, except par values)
(unaudited)
 As of
 March 31, 2022December 31, 2021
Assets
Current assets:
Cash and cash equivalents$3,132,964 $3,004,300 
Accounts receivable—net of allowances179,732 307,349 
Prepaid expenses and other current assets43,123 32,091 
Deferred cost of revenue, current portion398,194 406,025 
Total current assets3,754,013 3,749,765 
Property and equipment—net338,879 271,352 
Operating lease right-of-use assets286,242 221,285 
Deferred cost of revenue, long-term159,404 137,524 
Intangible assets, net55,854 59,666 
Goodwill118,071 118,071 
Other assets3,368 2,933 
Total assets$4,715,831 $4,560,596 
Liabilities and Stockholders’ Equity
Current liabilities:
Accounts payable$54,295 $64,395 
Accrued expenses and other current liabilities223,323 180,769 
Developer exchange liability149,816 163,906 
Deferred revenue—current portion1,747,294 1,758,022 
Total current liabilities2,174,728 2,167,092 
Deferred revenue—net of current portion724,359 616,834 
Operating lease liabilities259,841 194,616 
Long-term debt, net988,034 987,723 
Other long-term liabilities1,408 1,408 
Total liabilities4,148,370 3,967,673 
Commitments and contingencies
Stockholders’ Equity
Common stock, $0.0001 par value; 5,000,000 and 5,000,000 authorized as of March 31, 2022, and December 31, 2021, respectively, 592,196 and 585,878 shares issued and outstanding as of March 31, 2022, and December 31, 2021, respectively; Class A common stock—4,935,000 and 4,935,000 shares authorized as of March 31, 2022, and December 31, 2021, respectively, 540,858 and 534,541 shares issued and outstanding as of March 31, 2022, and December 31, 2021, respectively; Class B common stock—65,000 and 65,000 shares authorized as of March 31, 2022, and December 31, 2021, respectively, 51,337 and 51,337 shares issued and outstanding as of March 31, 2022, and December 31, 2021, respectively
59 58 
   Additional paid-in capital1,705,201 1,568,638 
   Accumulated other comprehensive income/(loss)
(30)62 
   Accumulated deficit(1,144,143)(983,941)
Total Roblox Corporation stockholders’ equity561,087 584,817 
Noncontrolling interests6,374 8,106 
Total stockholders’ equity567,461 592,923 
Total liabilities and stockholders’ equity$4,715,831 $4,560,596 


ROBLOX CORPORATION
CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS
(in thousands, except per share amounts)
(unaudited)
 Three Months Ended March 31,
 20222021
Revenue(1)
$537,134 $386,976 
Cost and expenses:
Cost of revenue(1)(2)
135,632 97,937 
Developer exchange fees147,122 118,938 
Infrastructure and trust & safety141,355 94,136 
Research and development177,762 96,644 
General and administrative57,772 94,375 
Sales and marketing29,102 20,002 
Total cost and expenses688,745 522,032 
Loss from operations(151,611)(135,056)
Interest income245 5 
Interest expense(9,999)— 
Other income/(expense), net(379)(1,050)
Loss before income taxes(161,744)(136,101)
Provision for/(benefit from) income taxes276 2 
Consolidated net loss(162,020)(136,103)
Net loss attributable to the noncontrolling interest(1,818)(1,886)
Net loss attributable to common stockholders$(160,202)$(134,217)
Net loss per share attributable to common stockholders, basic and diluted$(0.27)$(0.46)
Weighted-average shares used in computing net loss per share attributable to common stockholders—basic and diluted588,521 291,074 
(1)In Q1 of 2022 our estimated user life changed from 23 months to 25 months. Based on the carrying amount of deferred revenue and deferred cost of revenue as of December 31, 2021, the change resulted in a decrease in revenue and cost of revenue during the three months ended March 31, 2022, by $82.5 million and $19.6 million, respectively.
(2)Depreciation of servers and infrastructure equipment included in infrastructure and trust & safety.


ROBLOX CORPORATION
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
(in thousands)
(unaudited)
 Three Months Ended March 31,
 20222021
Cash flows from operating activities:
Consolidated net loss$(162,020)$(136,103)
Adjustments to reconcile net loss including noncontrolling interests to net cash provided by operations:
Depreciation and amortization24,497 16,620 
Stock-based compensation expense112,295 50,744 
        Operating lease non-cash expense13,997 10,044 
        Other non-cash charges/(credits)(567)(52)
Amortization of debt issuance costs311 — 
Changes in operating assets and liabilities, net of effect of acquisitions
Accounts receivable128,183 13,256 
Accounts payable(3,768)(782)
Prepaid expenses and other current assets(10,940)(10,967)
Other assets(435)(3,401)
Developer exchange liability(14,090)3,425 
Accrued expenses and other current liabilities(2,066)16,273 
Other long-term liability— 304 
Operating lease liabilities(11,709)(2,069)
Deferred revenue96,797 269,439 
Deferred cost of revenue(14,049)(62,262)
Net cash provided by operating activities156,436 164,469 
Cash flows from investing activities:
Acquisition of property and equipment(51,790)(22,133)
Purchases of intangible assets— (256)
Net cash used in investing activities(51,790)(22,389)
Cash flows from financing activities:
Proceeds from issuance of common stock24,328 30,221 
Payment of withholding taxes related to net share settlement of restricted stock units(150)— 
Net proceeds from issuance of preferred stock— 534,286 
Payment of debt issuance cost(154)— 
Net cash provided by financing activities24,024 564,507 
Effect of exchange rate changes on cash and cash equivalents(6)— 
Net increase in cash and cash equivalents128,664 706,587 
Cash and cash equivalents
Beginning of period3,004,300 893,943 
End of period$3,132,964 $1,600,530 
Supplemental disclosure of cash flow information:
Cash paid for interest— — 
Cash paid for income taxes— — 
Supplemental disclosure of noncash investing and financing activities:
Property and equipment additions in accounts payable and accrued expenses86,813 $9,476 
Conversion of convertible preferred stock to common stock upon direct listing— $879,113 


Use of Non-GAAP Financial Measures
This press release and the accompanying tables contain the non-GAAP financial measures bookings, free cash flow, and Adjusted EBITDA.
We use this non-GAAP financial information to evaluate our ongoing operations, for internal planning and forecasting purposes, and ongoing operating trends for purposes of analyzing the covenants specified in the indenture governing our senior notes due 2030. We believe that this non-GAAP financial information may be helpful to investors because it provides consistency and comparability with past financial performance.
Bookings is defined as revenue plus the change in deferred revenue during the period and other non-cash adjustments. Bookings is equal to the amount of virtual currency purchased by users in a given period of measurement. 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. Free cash flow represents the net cash provided by operating activities less purchases of property, equipment, and intangible assets. 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 generated from our core operations that, after the purchases of property, equipment, and intangible assets, can be used for strategic initiatives, including investing in our business, making strategic acquisitions, and strengthening our balance sheet. Adjusted EBITDA is a measure of operating performance used in certain covenant calculations specified in the indenture governing our senior notes due 2030 that is not calculated in accordance with GAAP and may not conform to the calculation of EBITDA in other circumstances. Adjusted EBITDA should not be considered as a substitute for net loss as determined in accordance with GAAP. We believe that, when considered together with reported amounts, Adjusted EBITDA is useful to investors and management in understanding our ongoing operations and ongoing operating trends for purposes of analyzing the covenants specified in the indenture governing our senior notes due 2030.
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.
A reconciliation table of the most comparable GAAP financial measure to each non-GAAP financial measure used in this press release is included at the end of this release. We encourage investors and others to review our business, results of operations, and financial information in their entirety, not to rely on any single financial measure, and to view these non-GAAP measures in conjunction with the most directly comparable GAAP financial measure.


 Three Months Ended March 31,
 20222021
 (dollars in thousands)
Bookings$631,206 $652,277 
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:
 Three Months Ended March 31,
 20222021
(dollars in thousands)
Reconciliation of revenue to bookings:
Revenue$537,134 $386,976 
Add (deduct):
Change in deferred revenue96,797 269,439 
Other(2,725)(4,138)
Bookings$631,206 $652,277 
 Three Months Ended March 31,
 20222021
 (dollars in thousands)
Free cash flow$104,646 $142,080 
The following table presents a reconciliation of net cash from operating activities, the most directly comparable financial measure calculated in accordance with GAAP, to free cash flow, for each of the periods presented:
 Three Months Ended March 31,
 20222021
(dollars in thousands)
Reconciliation of net cash from operating activities to free cash flow:
Net cash provided by operating activities$156,436 $164,469 
Add (deduct):
Acquisition of property and equipment(51,790)(22,133)
Purchases of intangible assets— (256)
Free cash flow$104,646 $142,080 
Acquisition of property and equipment primarily includes servers, infrastructure equipment and tenant improvements.


 Three Months Ended March 31,
 20222021
 (dollars in thousands)
Adjusted EBITDA$67,929 $190,174 
The following table presents a reconciliation of consolidated net loss, the most directly comparable financial measure calculated in accordance with GAAP, to adjusted EBITDA, for each of the periods presented:
 Three Months Ended March 31,
 20222021
(dollars in thousands)
Reconciliation of consolidated net loss to adjusted EBITDA:
Consolidated net loss$(162,020)$(136,103)
Add (deduct):
Interest income(245)(5)
Interest expense9,999 — 
Other income/(expense), net379 1,050 
Provision for/(benefit from) income taxes276 2 
Depreciation and amortization24,497 16,620 
Stock-based compensation expense112,295 50,744 
Change in deferred revenue96,797 269,439 
Change in deferred cost of revenue(14,049)(62,262)
Fees related to equity offering— 50,689 
Adjusted EBITDA $67,929 $190,174 

###
About Roblox
Roblox’s mission is to connect a billion people with optimism and civility. Every day, tens of millions of people around the world have fun with friends as they explore millions of immersive digital experiences. All of these experiences are built by the Roblox community, made up of millions of creators. We believe in building a safe, civil, and diverse community—one that inspires and fosters creativity and positive relationships between people around the world. For more information, please visit corp.roblox.com.
CONTACTS
Stefanie Notaney
Roblox Corporate Communications
[email protected]
ROBLOX and the Roblox logo are among the registered and unregistered trademarks of Roblox Corporation in the United States and other countries. © 2022 Roblox Corporation. All rights reserved.

Shareholder Letter Q1 2022 MAY 10, 2022

 
To Our Shareholders: For the past 18 years, we have been shepherding a new category into existence. We believe this category will change the way we connect with others in profound ways. And while our growth over the past few years has been impressive, we have much in front of us. Over the past two quarters we launched a number of notable innovations. Spatial Voice now allows users to communicate directly via speech in a manner that emulates what one would expect in the real world. Roblox users also now have dramatically more choice and fidelity in the expression of their avatars via Layered Clothing, which allows mixing and matching of items from the catalog (layering) while also setting the ground- work for much greater choice in avatar body shape and style. We have made a number of notable innovations in user safety, through a new age verification system (critical for spatial voice), significant improvements to cross-device login (boosting retention), and advances in our machine learning models that dramatically enhance our confidence in the identification of egregious content and our ability to automatically remove it. We also launched a number of innovations to support the growth of our platform world- wide. Our native deep learning text translation engine, Roblox Translate, is live and translating content in 13 dierent languages. Building our own solution has yielded notable improvements in translation quality and, consequently, user engagement. De- ployment of a datacenter in India has dropped latencies by 50% in that important market, realizing an almost immediate and very notable increase in user engagement. We will continue to be unrelenting in our focus on innovation, as is hinted at by some of our recent beta releases. Our public beta of Custom Materials, based on physically based rendering, will enable significant gains in the realism of places and items in our experiences while preserving creator control. We also took the first steps, via an open beta in Roblox Studio, to fundamentally change how users communicate emotion and expression via Dynamic Heads. We capture real-time facial expressions from a user’s camera, and translate that expression directly onto their avatar. We believe the future size of the human co-experience / metaverse category is profoundly large, but will only be realized through an unrelenting focus on invention and innovation.

 
Now let’s focus on our key operating metrics. Daily Active Users (DAUs) DAUs in Q1 of 2022 were 54.1 million, an all-time high, and up 28% over Q1 of last year. In April 2022, DAUs totaled 53.1 million, up 23% over April 2021. To put recent growth in context, in the four quarters leading up to COVID (Q2 2019 - Q1 2020), DAUs grew at an average of 46% annually. That rate nearly doubled for the first four quarters aected by COVID (Q2 2020 - Q1 2021) when users grew at an average of 91%, and in the subsequent four quarters lapping COVID (Q2 2021 - Q1 2022) DAUs grew on average at 30%. In the three years between Q1 2019 and Q1 2022, DAUs grew by 51% compounded. Hours Engaged Hours Engaged in Q1 of 2022 totaled 11.8 billion, which is a quarterly record and is up 22% over Q1 of 2021. In April 2022, Hours Engaged were 3.8 billion, up 18% over April 2021. Again, to put that growth in context, in the four quarters leading up to COVID, Hours Engaged on Roblox grew an average of 50%; in the first four quarters aected by COVID, year over year engagement growth averaged 131%; and in the subsequent four quarters lapping COVID, hours grew by 23%. In the three years between Q1 2019 and Q1 2022, Hours Engaged grew by 58% com- pounded. Bookings In Q1 2022, bookings totaled $631.2 million which was 3% lower than Q1 2021. In April 2022, bookings were between $221 million and $224 million, 8% to 10% lower than in April 2021. As expected, however, the April 2022 bookings growth rate improved sequentially over March 2022 when bookings were 11% below March 2021 bookings. In the US & Canada during Q1 and April 2022 we saw fewer hours per DAU relative to the relevant period in 2021 when most users were subject to COVID lockdowns. Generally our bookings are highly correlated with engagement hours.

 
Bookings, over the same periods as above, grew at 52% leading up to COVID, then 191% (in the first 4 quarters of COVID), and then 20% (in the subsequent four quarters lapping COVID). In the three years between Q1 2019 and Q1 2022, bookings grew by 64% compounded. We are growing in almost every country around the world. This includes countries with relatively higher levels of GDP per capita such as Germany, France, South Korea, and Japan, as well as countries with lower GDP per capita like parts of Latin America, South- east Asia, and Eastern Europe. The percentage of our users over the age of 13 is also growing in all geographies. This is referred to as “aging up.” We believe in the long term, aging up will benefit bookings growth because we expect older users to monetize better than younger users. Since the US is our biggest driver of bookings, it is helpful to expand on some specifics: • In early 2020, prior to COVID, Roblox had approximately 2 million US DAUs in the 9-12 age range who spent nearly 5 million hours per day on the platform. At the time, the 9-12 cohort was the most penetrated and engaged cohort on Roblox. Within a few weeks after COVID, we had 3 million 9-12 year old US DAUs spending over 10 million hours each day. That’s a 33% increase in engagement per user - even as users grew by 50% very quickly - because people were stuck at home. We continue to have approximately 3 million DAUs in the 9-12 age cohort, spending 7 million hours each day following the reopening. The decline in daily engagement relative to peak COVID in this cohort (US 9-12 year olds) is a large contributor to the year over year decline in US bookings in Q1 2022. We don’t believe this cohort is fully penetrated, and we are focused on growing our daily active users (US 9-12 year olds) beyond the level of engagement we hit at the peak of COVID. We have many more users visiting our platform on a monthly basis than we do on a daily basis, and we have seen improvements in user frequency (expressed as either the ratio of DAUs/monthly average users, or the average days out of a week) over the past several years. We are continuing to develop product functionality targeted at increasing our retention and frequency, with the goal that if these improvements are successful we would see continued DAU growth in US 9-12 year olds.

 
• The trends among the older cohorts in the US are dierent and also bode well for long term growth in bookings. In early 2020 we had roughly 1 million DAUs in the 13-16 cohort spending 2 million hours per day on the platform and 1 million DAUs in the 17-24 cohort spending about 2.3 million hours per day on the platform. By late 2020 these increased to 2 million 13-16 year olds spending over 5 million hours per day and 2.1 million 17-24 year olds spending about 5.5 million hours per day. These cohorts are less penetrated than the 9-12 age group and as these cohorts grow sequentially in users, and spend more time on the platform, we expect their book- ings to grow as well. While COVID and the subsequent re-opening have contributed to slowing growth in several of our metrics, based on third party data we believe we are gaining share on both users and hours relative to certain other companies in gaming and social media that compete for our users’ attention. Expanding Monetization Initiatives For much of our history, monetization has not been the primary goal of our innovative business model. We are now increasing our focus on improving the monetization per hour of time spent on our platform across all age demographics and around the world. As we improve monetization per hour we expect to see additional top line growth. Our dedicated Economy team is focused on three primary areas: discovery, advertising, and UGC catalog. We believe the economic opportunity for immersive co-experience is vast. When people come together in the metaverse, they adopt an identity through a digital avatar, and ultimately do more than simply communicate. In the metaverse users are able to do things together. We believe that while users are engaged on Roblox, their appear- ance and identity, as well as the surrounding environment will come to have as much meaning as they do when people interact in the physical world. As an example, when Gucci built their Gucci Garden experience we saw our users react to virtual digital goods in ways similar to real life. In fact, one of their digital bags traded in the second- ary market on our platform for a price in excess of the actual physical bag upon which it was based.

 
We have several product innovations under development that we believe will have significant impacts on monetization: Search and Discovery: Historically, we have not used economic signals as consideration for how or what we show to a specific user. We know, for example, that we have a lot of aged up content that monetizes well with older users that doesn’t always appear in our search results for those users. We also know that there are differences in preferences by gender that are not currently considered in our discovery algorithms. We believe that being more sensitive to age, gender, and monetization potential will help to improve booking per hour, and as a result overall bookings. Advertising: More and more developers and brands are looking for ways to drive new users to their experiences and avatar items. We believe a good way to help creators do this is with a sponsored search results and recommendations system on our platform that allows them to showcase their experiences. Consumers are used to search and discovery systems that highlight “sponsored” results side by side with organic search and discovery results. Through this system, developers and brands can directly and efficiently reach our 50M+ DAUs. The system currently under development will allow creators to predictably bid for impressions or visits. For new developers who are launching an experience, this will help kick-start traffic as these new developers try to get to critical mass. This will also allow brands to self-serve traffic to their event or space directly without having to work with Roblox for a dedicated sponsorship. This is a mature and proven model, and we believe it will be a great complement to the organic search and discovery that we already support. Beyond sponsored ads, we are at the beginning stages of developing native and immer- sive advertising in the Roblox metaverse. We envision several new advertising units that we imagine as being complementary to our user experience. These ad units will include ways for brands and developers to bring traffic to their experience, as well as ways for brands to dynamically become part of experiences. We plan to introduce these units in a way that is both consistent with our values as well as conservative with respect to advertising guidelines for younger people around the world, especially for our users below the age of 13.

 
Fully UGC Catalog: Roblox has a long history of a vibrant avatar item marketplace. We introduced UGC shirts and pants for avatars in 2008 and then followed up with 3D Roblox items, including gear and hats. As we allowed trading of these items, we saw that rare items could become exceedingly valuable. For example, the highly sought after Dominus Aureus crown recently sold for 2.4 million Robux. We are in the midst of transitioning our catalog to being 100% UGC. This will ultimately go beyond clothing and accessories to include avatars themselves. With so much more choice, we expect a higher percentage of our users will be able to find more and more items that they want to purchase. We will soon offer validated accounts for top creators, including brands and influencers, so there will be no confusion as to when a user is visiting a validated place or acquiring validated merchandise. As such, brands will be able to emulate the marketplace dynamics they achieve in the physical world, including limited editions, scarcity, and a healthy resale market. Financial Results and Key Metrics For more information, please refer to our Q1 2022 earnings release and supplemental materials accessible at ir.roblox.com. Revenue in Q1 2022 was $537.1 million, an increase of 39% over Q1 2021. In Q1 of 2022 our estimated user life changed from 23 months to 25 months. Based on the carrying amount of deferred revenue as of December 31, 2021, the change resulted in a decrease of $82.5 million in revenue recognized during the three months ended March 31, 2022. If the estimated user life had not changed, revenue in Q1 2022 would have been $619.6 million, an increase of 60.1% over Q1 2021. Cost of revenue totaled $135.6 million, up 38% year over year. As mentioned above, in Q1 of 2022 we changed our estimated user life from 23 months to 25 months. Based on the carrying amount of deferred cost of revenue as of December 31, 2021, the change resulted in a decrease of $19.6 million in cost of revenue during the three months ended March 31, 2022. If the estimated user life had not changed, cost of revenue would have been $155.2 million, an increase of 59% over Q1 2021.

 
Personnel costs, excluding stock-based compensation, were $126.7 million, up 42% year over year primarily driven by an increase in headcount. Developer exchange fees were $147.1 million, an increase of 24% over the same quarter last year. Certain infrastructure and trust & safety spending, which excludes personnel costs, stock-based compensation, and depreciation, was $98.0 million, up 53% from Q1 2021. Net loss attributable to common stockholders, which includes a portion of the net loss attributable to our Luobu subsidiary, was $160.2 million, compared to a net loss attributable to common stockholders of $134.2 million last year. Our net losses in Q1 2022 increased over the same period in 2021 due to the higher levels of expense required to support the growth of the business and the fact that we defer a significant amount of revenue to later periods. Since our investment decisions are generally based on levels of non-GAAP bookings, we expect to continue to report net losses for the foreseeable future even as we anticipate generating net cash from operating activities. Daily Active Users: DAUs were 54.1 million in Q1 2022, up 28% from Q1 2021. Approximately 77% of users were from outside of the US and Canada, up from 70% last year. Users over the age of 13 grew 38% year over year and accounted for 52% of total DAUs, up from 49% last year. Hours Engaged: Hours Engaged totaled 11.8 billion in Q1 2022, up 22% from Q1 2021. We generally see similar trends in international and aged up engagement growth as we see in DAU growth. Bookings: Bookings in Q1 2022 were $631.2 million, down 3% from Q1 of 2021. We believe the small year over year decline in bookings is the result of dicult comparisons against Q1 2021 when COVID restrictions were widespread. Adjusted EBITDA and Free Cash Flow: In Q1 2022, adjusted EBITDA was $67.9 million, or 10.8% of bookings. Free cash flow for the quarter was $104.6 million. Both figures were down significantly from Q1 last year because we continued to invest in developer expenses, headcount, and infrastructure, while bookings were essentially flat. Those investment decisions were deliberate and we believe were in the best interest of supporting the long term health and growth of the platform.

 
Earnings Q&A Session Key Metrics - April 2022 Roblox will host a live Q&A session to answer questions regarding their first quarter 2022 results on Wednesday, May 11, 2022 at 5:30 a.m. Pacific Time. The live webcast and Q&A session will be open to the public at ir.roblox.com and we invite you to join us and to visit our investor relations website at ir.roblox.com to review supplemental information. Turning to the month of April 2022, DAUs were 53.1 million, an increase of 23% over last April. Hours of engagement were 3.8 billion, up 18% over last year. Revenue for April 2022 is estimated to be between $189 million and $192 million, up 30% - 32% over the same month last year. Estimated bookings for April 2022 were between $221 million and $224 million, down 8 - 10% year over year. Estimated average bookings per DAU (ABPDAU) in April 2022 were between $4.16 - $4.22, down 25% - 26% year over year driven primarily by comparisons to peak COVID periods, and significant international expansion. We are in the midst of an uncommon opportunity. What started as early online bulletin boards and games coupled with social and the cloud is morphing into a new form of communication that will ultimately support work, learning, play and entertainment. This new category that we call co-experience (sometimes referred to as the metaverse) will change how we connect with others. We believe the long-term opportunity is potentially larger and more profound than the various innovations we’ve seen in social networking, messaging and video.

 
Forward-Looking Statements This letter, the live webcast and Q&A session which will be held at 5:30 a.m. Pacific Time on Wednesday, May 11, 2022 contain “forward-looking statements” within the meaning of the “safe harbor” provisions of the Private Securities Litigation Reform Act of 1995, including but not limited to, statements regarding our business and product strategy and growth plans, our expectation of successfully executing such strategies and plans, our anticipations of certain financial results and our expectations for April financial results and future growth rates. These forward-looking statements are made as of the date they were first issued and were based on current expectations, estimates, forecasts, and projections as well as the beliefs and assumptions of management. Words such as “expect,” “envision,” “anticipate,” “should,” “believe,” “hope,” “target,” “continue,” “project,” “plan,” “goals,” “opportunity,” “appeal,” “estimate,” “potential,” “predict,” “may,” “will,” “might,” “could,” “intend,” “shall,” and variations of these terms or the negative of these terms and similar expressions are intended to identify these forward-looking statements. Forward-looking statements are subject to a number of risks and uncertainties, many of which involve factors or circumstances that are beyond our control. Our actual results could dier materially from those stated or implied in forward-looking statements due to a number of factors, including but not limited to risks detailed in our filings with the Securities and Exchange Commission (the “SEC”), including in our Annual Report on Form 10-K filed for the fiscal year ended December 31, 2021 and other filings and reports we make with the SEC from time to time. In particular, the following factors, among others, could cause results to dier materially from those expressed or implied by such forward-looking statements: our ability to successfully execute our business and growth strategy; the suciency of our cash and cash equivalents to meet our liquidity needs; the impact of our senior notes and any future indebtedness on our business, financial condition and results of operations; the demand for our platform in general; our ability to increase our number of new users and revenue generated from users; our ability to retain and expand our user base; the impact on our business of the COVID-19 pandemic restrictions and the easing of those restrictions as vaccinations become more prevalent; the fluctuation of our results of operations and our key business measures on a quarterly basis in future periods, including as a result of changes in our accounting estimates; our ability to successfully develop and deploy new technologies to address the needs of our users; our ability to maintain and enhance our brand and reputation; our ability to hire and retain talent; news or social media coverage about Roblox, including but not limited to coverage that presents, or relies on, inaccurate, misleading, incomplete, or otherwise damaging information; any breach or access to user or third-party data; and our ability to maintain the security and availability of our platform. Additional information regarding these and other risks and uncertainties that could cause actual results to dier materially from our expectations is included in the reports we have filed or will file with the SEC, including our Annual Report Form on 10-K for the fiscal year ended December 31, 2021. The forward-looking statements included in this press release represent our views as of the date of this letter. We anticipate that subsequent events and developments will cause our views to change. We undertake no intention or obligation to update or revise any forward-looking statements, whether as a result of new information, future events or otherwise. These forward-looking statements should not be relied upon as representing our views as of any date subsequent to the date of this letter. Past performance is not necessarily indicative of future results.

 
Non-GAAP Financial Metrics This letter contains the non-GAAP financial measures bookings, free cash flow, and adjusted EBITDA. We use this non-GAAP financial information to evaluate our ongoing operations, for internal planning and forecasting purposes, and ongoing operating trends for purposes of analyzing the covenants specified in the indenture governing our senior notes due 2030. We believe that this non-GAAP financial information may be helpful to investors because it provides consistency and comparability with past financial performance. Bookings is defined as revenue plus the change in deferred revenue during the period and other non-cash adjustments. Bookings is equal to the amount of virtual currency purchased by users in a given period of measurement. 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 dierence 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. Free cash flow represents the net cash provided by operating activities less purchases of property, equipment, and intangible assets. 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 generated from our core operations that, after the purchases of property, equipment, and intangible assets, can be used for strategic initiatives, including investing in our business, making strategic acquisitions, and strengthening our balance sheet. Adjusted EBITDA is a measure of operating performance used in certain covenant calculations specified in the indenture governing our senior notes due 2030 that is not calculated in accordance with GAAP and may not conform to the calculation of EBITDA in other circumstances. Adjusted EBITDA should not be considered as a substitute for net loss as determined in accordance with GAAP. We believe that, when considered together with reported amounts, Adjusted EBITDA is useful to investors and management in understanding our ongoing operations and ongoing operating trends for purposes of analyzing the covenants specified in the indenture governing our senior notes due 2030. 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 dierently 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. A reconciliation table of the most comparable GAAP financial measure to each non-GAAP financial measure used in this letter is included at the end of this letter. We encourage investors and others to review our business, results of operations, and financial information in their entirety, not to rely on any single financial measure, and to view these non-GAAP measures in conjunction with the most directly comparable GAAP financial measure.

 
GAAP to Non-GAAP Reconciliation (dollars in thousands) (dollars in thousands) (dollars in thousands) 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: The following table presents a reconciliation of net cash from operating activities, the most directly comparable financial measure calculated in accordance with GAAP, to free cash flow, for each of the periods presented: 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: