Roblox reported daily active users (DAUs) over 77 million, a 17% year-on-year growth, with strong growth in users over 13 years old at 22%.
Significant geographical growth in Japan (50%) and India (58%).
Hours engaged reached 16.7 billion for the quarter, marking a 15% year-on-year increase.
Revenue for Q1 was $801 million, surpassing guidance with a 22% year-on-year increase.
Bookings were $923.8 million, within the guidance range and representing a 19.4% year-on-year growth.
GAAP net loss was $272 million, less than the guided net loss of $347 million to $342 million.
Net cash flow from operations in Q1 was $238 million, up 37% year-on-year, and free cash flow increased by 133% to $191 million.
Operational Efficiency and Growth Initiatives
Roblox emphasized operating efficiency and managed CapEx effectively.
The platform saw significant efficiency gains in infrastructure, trust and safety through the use of AI, leading to cost reductions.
Personnel growth has been consistent, focusing on expanding the economy ads team, AI safety team, and live operations events team.
Bookings growth outpaced DAUs and hours engaged, with a focus on improving bookings growth faster than other areas.
Challenges and Adjustments
Encountered technical challenges on low-end Android devices due to new tech rollouts, impacting growth.
Adjustments made in search and discovery systems, live ops, and content to enhance user engagement and platform growth.
Recent improvements led to bookings, DAUs, and hour growth in the USA and Canada exceeding 20% in the latter part of Q1 2024.
Due to these challenges, Roblox is lowering its guidance for 2024 but remains confident in operating efficiency and cash flow projections.
Future Directions and Innovations
Continued focus on discovery optimization, including curation and adjustments to core ML algorithms for better content visibility.
Introduction of a more aggressive live ops philosophy to enhance user engagement.
Development of a UGC economy, including dynamic price floors for a healthier marketplace and tooling adjustments to encourage more creators.
Significant performance and quality improvements on low-end Android and other devices, contributing to recent growth trends.
Launch of advertising partnerships and initiatives, including a partnership with PUBMATIC and testing with Walmart.
Investment in AI for content creation and platform safety, leveraging Roblox’s extensive data for training proprietary AI solutions.
Financial Outlook and Strategy
Despite adjusting bookings guidance, Roblox projects strong cash flow and free cash flow for the full year.
Guidance now includes revenue, bookings, consolidated net loss, and adjusted EBITDA, aiming for continued growth and solid financial performance.
Question and Answer
Content Quality and Live Events
Question
Are there any changes in the pace or quality of content hitting the platform, and how many live events are planned for the year and their impact on the platform?
Answer
In Q1, there was a more distributed distribution of content, with new experiences gaining market share and increased velocity of new experiences entering the top 20.
The company plans to hold live events every 1 to 2 months, with the next event focused on highlighting the platform’s strength in diverse content and featuring experiences with over 1 million daily actives.
Bookings Growth and KPIs
Question
What factors are driving bookings growth outpacing DAUs and hours engaged, and is the 20% growth target still appropriate for the longer term?
Answer
The company aims for all key metrics (DAUs, hours, bookings) to grow at a consistent 20% rate, with recent trends showing improvement and all three metrics in the U.S. and Canada exceeding 20% in the last three weeks.
While bookings growth has outpaced DAUs and hours engaged due to increased monetization, the company expects these metrics to move in lockstep over time.
The 20% growth target for 2025-2027 is still believed to be achievable based on current trends and the business’s growth potential.
2025 Outlook and Advertising
Question
Is the lower guidance for 2024 a one-time event, and what is the outlook for 2025 in terms of growth drivers, including advertising versus the core business?
Answer
The lower 2024 guidance is primarily due to lapping PlayStation and Easter, and the company expects to continue growing the core business at the rates discussed in November 2023.
Advertising is expected to be a nice increment to the business in 2025 but not a substantial driver of overall growth until 2026-2027.
The company plans to provide guidance on advertising for the first time early next year and believes it has a strong foundation and momentum in that area.
EBITDA Margin and Investment Plans
Question
Why has the EBITDA margin remained stable despite the slight decrease in the top-line guidance, and has there been any change in the investment plan?
Answer
The EBITDA margin has stayed consistent due to operating leverage in the business, particularly on fixed costs like infrastructure, trust and safety, and headcount.
CapEx is also coming down as planned, contributing to stable profitability and free cash flow generation.
The company’s strong unit economics and cash flow generating ability provide flexibility to deliver similar cash flow despite the lower top-line guidance.
Q1 Engagement Drivers
Question
What factors contributed to the engagement recovery in Q1, and how does the Q2 guidance reflect this?
Answer
The engagement recovery in Q1 was driven by a combination of factors, including performance improvements, the rollout of dynamic heads, increased use of voice on the platform, and a focus on quality and performance across various areas.
The Q2 guidance reflects caution in extrapolating the recent positive trends into the future and aims to provide a prudent and rational outlook.
Developer Engagement and Content Distribution
Question
Was the challenge with new content a result of both user and developer engagement moderating, and how is the company addressing this?
Answer
The company is actively engaging with top creators and developers through initiatives like developer days and focusing on optimizing the long-term health of the platform by ensuring all creators, including those in the top 300, see growth opportunities.
Efforts to flatten and distribute the content curve have led to increased visibility and engagement for a broader range of creators, and live events like The Hunt have also contributed to content discovery and creator exposure.
Product Launch Pipeline and Moderation
Question
Has there been any moderation in the pipeline or product launch initiatives, particularly in the areas of advertising, economy, and AI, for Q3 and Q4?
Answer
The company has a robust pipeline of initiatives across various areas, including advertising, economy, AI, and content/live ops, and is continuing to drive progress and launch new features.
Branded Experiences Engagement and Monetization
Question
How does the engagement and monetization of branded experiences compare to traditional non-branded content on the platform?
Answer
While it’s still early to provide specific metrics, branded experiences generally see higher engagement than traditional video content, with interactive movie trailers, for example, offering deeper engagement and interaction opportunities.
Walmart Discover and In-World Shopping
Question
How is the Walmart Discover experience performing, and what is the timeline for a broader rollout of in-world shopping features?
Answer
In-world shopping is in the early stages, and the company is not incorporating corporate revenue from this feature into its 2024 or 2025 models.
The Walmart partnership is a positive step in exploring commerce opportunities on the platform, and the company is excited about the potential for in-world shopping to offer a new and engaging way for users to shop together in the future.
