• Q4 Revenue: $988 million, up 32% year-on-year.
• Q4 Bookings: $1.362 billion, up 21% year-on-year.
• Daily Active Users (DAUs): 85.3 million in Q4, up 19% year-on-year.
• Engagement Hours: 18.7 billion hours in Q4, up 21% year-on-year.
• Developer Exchange (DevEx) Payments: $280 million in Q4, up 27% year-on-year.
• Q4 Cash Flow: $184 million, up 29% year-on-year.
• Q4 Free Cash Flow: $120 million, up 54% year-on-year.
• Full Year Free Cash Flow: $641 million, up from $124 million in 2023.
• Trust and Safety and Infrastructure Costs: 13% of revenue and 9% of bookings, decreased year-on-year.
• Personnel Costs (excluding stock-based compensation): $200 million, decreased as a percentage of revenue and bookings.

• Warning! GuruFocus has detected 4 Warning Signs with RBLX.

Release Date: February 06, 2025

For the complete transcript of the earnings call, please refer to the full earnings call transcript.

Positive Points

• Roblox Corp (NYSE:RBLX) reported Q4 revenue of $988 million, up 32% year-on-year, surpassing their guidance.
• Q4 bookings reached $1.362 billion, a 21% increase year-on-year, exceeding expectations.
• Daily Active Users (DAUs) grew to 85.3 million in Q4, marking a 19% year-on-year increase, with significant growth in Japan and India.
• Roblox Corp (NYSE:RBLX) achieved a record high of 18.7 billion hours of engagement in Q4, up 21% year-on-year.
• Free cash flow for the year increased over five times from $124 million in 2023 to $641 million in 2024.

Negative Points

• Developer exchange costs (DevEx) increased by 25%, with $922 million shared with the developer community in 2024.
• Trust and safety infrastructure costs rose by 2% year-on-year, despite efforts to improve efficiency.
• Personnel costs, excluding stock-based compensation, amounted to $200 million, representing 20% of revenue.
• There was a slight decline in DAUs from Q3 to Q4, attributed to lapping the launch of PlayStation and Xbox updates.
• Eastern Europe, particularly Turkey, experienced slower DAU growth, impacting overall user growth in the region.

Q & A Highlights

Q: How does Roblox plan to achieve 10% of the video game market, and which tiers of production value will developers emulate? A: David Baszucki, CEO, explained that Roblox aims to have more creators using their platform rather than taking share from others. They are focusing on various genres, such as battle royale on low-end mobile devices, and are developing a 3D streaming architecture to support high-quality experiences across devices. The strategy includes technical innovation, economic incentives, and collaboration with high-end developers.

Q: What are Roblox's plans for the advertising business in 2025, and how significant is its contribution to the outlook? A: David Baszucki, CEO, mentioned that Roblox is expanding its ad products, including streaming video ads and shopping ads. While the advertising business is growing, it is not yet significant enough to be broken out separately in financial reports. Mike Guthrie, CFO, added that there is very little advertising revenue included in the 2025 guidance.

Q: How is Roblox addressing potential developer burnout due to increased content creation demands? A: David Baszucki, CEO, emphasized transparency in search and discovery algorithms and encourages creators to make small, frequent updates rather than large ones. This approach aligns with Roblox's engineering practices and aims to prevent burnout while maintaining a healthy development environment.

Q: What are the implications of differential pricing on Roblox's gross margins and developer exchange fees? A: David Baszucki, CEO, stated that differential pricing aligns Robux distribution with cash received, improving economics and increasing funds flowing to developers. Mike Guthrie, CFO, noted that while the guidance does not yet model significant COGS leverage, the strategy aims to increase developer share without reducing margins.

Q: How are AI-powered tools impacting game development on Roblox, and what is the adoption rate among developers? A: David Baszucki, CEO, highlighted that AI tools are enhancing efficiency and reducing development costs, leading to better earnings for developers and improved game quality. Adoption of AI tools is growing, and Roblox expects the overall market for experience creation jobs to expand, driven by AI advancements.

For the complete transcript of the earnings call, please refer to the full earnings call transcript.