Roblox (RBLX) 8 Nov 232023 Q3 Earnings call transcript

Good morning. My name is Krista, and I'll be your conference operator today. At this time, I would like to welcome everyone to the Roblox Third Quarter 2023 Earnings Conference Call. [Operator Instructions] I will now turn the conference over to Stefanie Notaney, Senior Director, Financial Communication. Stefanie, you may begin.

Krista. you, Thank everyone. Good morning, for QX joining to you Q&A our results. Roblox's XXXX discuss Thank session With Roblox's today Mike me is Guthrie. and David CFO, Bezucki; Co-Founder and CEO,

slides press As remarks be can and brief of call, our at rest SEC shareholder we reminder, website on replay the letter, reserve Relations your On a filings today's the our found questions. supplemental time opening ir.roblox.com. and Investor call will a of some release, for this make

statements, including, our forward-looking not Our limited results of commentary include today expectations but business, and to, may strategy. financial future

Forward-looking most that are forward-looking these statements materially reports and XX-K recent statements. results are from subject cause differ our of description included to on risks, Form in uncertainties and to XX-Q. our A Form could our assumptions those SEC in described including actual filings,

not by should disclaim We except obligation You as statements on forward-looking law. future as rely predictions these events. of to statements, required update any our

we also release measures, this and During press non-GAAP metrics GAAP supplemental our and financial between slides. reconciliations will be in non-GAAP call, can found discuss certain

that, Dave. call turn the over to I'll With

and been on operating on, in highlight the update letter. product of to working everyone, deliver highlighting civility. welcome, reimagining we and also to velocity give highlights. on forward come about XXXX some billion monetization and we X to leverage, We'll continue Roblox growth going our couple optimism of new opportunities with of shared commitment connect you, we've and Thank people quick earnings call. We're delivering our moving going our continued talk our to our QX and vision which an we're to strategy, A to together how our mission

guidance complexity a a people world, going a for of to you business really spans the little is which give will many at people all all so forward, first that my highlighting backgrounds do around and that the are looking Mike time, the of our today business, highlighting hint and after ages cohorts Finally, of the and connecting discussion. breadth connecting we

strong up XXXX all run GAAP flow. year-on-year. flow into and million and real cash into is million, how quarter from around. $XXX.X over up QX QX a of which business, XX% bookings million, $XXX million bookings revenue, Cash Diving on the $XX QX cash, of and operations, diving we $XXX more XX% free

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million. basis on covenant a EBITDA finally, adjusted hit we And $XX

let's every for the growth On the economy. growth So to in talk back to world, This all X ages, the want initiatives. vibrant world, XX% hours, also all is big XXX%. XX% monetization up XX%. XX%, huge XX%, XX%. hours opportunity Brazil, DAUs up XX%, a for XX% future DAUs, world, XX%, India, Japan up up bookings, in hours bookings areas. highlight, really not of a which a DAUs these around bookings our many connecting XX%, the Roblox a areas hours bit Germany everywhere our S-X acceleration but up XX%, the I bookings is up DAU and about and filing, goes just around Roblox connecting everyone way platform the just

of Roblox We age. a is for great in vision continue also show that to our progress platform irregardless everyone

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for everywhere. And our Roblox goal is really be to

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And touch Day. a on couple more Investor of highlights. We'll

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highlight over for Investor on a more we'll Day to want pass to leverage. lot Finally, some this, and of to at in week, discussion our just be Mike going a more it now that covering operating I'm

Good thanks morning, everybody, for and joining.

just which point which business, of is was management accompanied lower something did quarter we've think and rate that substantially at our growth, in I happened about been a solid another at of are our quarters, quarter. those the Dave the and it highlights. growth, trust that our very great had want which in expense job this past fixed costs a and in costs, with particular, the growth to was indicated safety quarter. rate covering a than of bookings out talking costs, lower a personnel I we of grew for And last about and talked few what infrastructure both grew this growth

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less generation. but operating XXXX capital the you've which seen good is X a than substantially cash So leverage over setup years, just not expenditures also in last for

Finally, Typically, of as beginning to we report next morning, provide guidance will begin letter for we guidance. and our full each that in we year when intend providing XXXX, ensuing financial first the this in shareholder quarter year we our the February, mentioned annual results for year.

guidance. February, of we each guidance quarter, earnings of XXXX fair. XXXX. will will provide fiscal update quarter our is the full and the For annual This provide our standard pretty Thus, next guidance QX next we for year QX call forward on and for for ensuing

for the year we QX on. year, In of and for so 'XX update guidance provide will May guidance the next and of full

we that bookings We provides margins. revenue, because recognize the change from differences in a net to revenue of deferred in not of in paying the income bookings, user. operating our and lifetime the of the The estimated believe a reconciling indication revenue majority timelier will results majority revenue necessarily are trends reflected on average revenue vast of constitutes guide We over our bookings.

for guidance and of adjusted expect the not last calculation first that for with $X.XXX guidance we and provide correlates question views X, our for haven't we mean QX, QX $XXX.X follows: reflect want information of of provide is are And to November today bookings for guidance of numbers QX covenant XXXX we $XXX.X adjusted billion, not our guidance. XXXX, to XXXX, our we provided we about on of quarter since revenue formal of which quarterly as adjusted FactSet on QX consensus are a consensus million, will bookings we comfortable consensus while million, as Since EBITDA. the be based to for which will estimates going for EBITDA any EBITDA just

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about payer, that's XX quarters. you average XX-month to think the of X about If life a

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welcome done we So and our with questions. remarks, that, with we're opening

comes [Operator Instructions] Tilchen Your question Genuity. Canaccord from line first of from the Jason

on of just see I areas? bookings as the there's drove in strong sequentially. were other down you just fees anything and percent results. was community a reinvest as level, in developer exchange view continuing that if leverage Congrats how wondering, you to onetime curious higher that the I'm

is invest the priority developer top absolutely we community. continue to in Jason, to

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we And one-on-one. cards recently currencies. and go versus to detail buy more in Roblox the a number bookings this the with the and result, as can bookings ability But through number on an artificially there DevEx a an number, prepaid was at actually discount was DevEx in there to ability inflated the want number. certain get us if was through call you So a until

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quite X,XXX Yes. as growth XXX and the top And top revenue. our to grow far developers the at as all the we developer continue and their the this XX, of highlighted conference, rate as top rapidly

follow-up. you Great. East Europe It's quick helpful. growth X Western really in bookings shareholder, the And strong In just called Asia. really and out

Just any underlying quarter? of the curious in performance if there drivers out stood was that that

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those new content has lots popped in markets. up seen have We that of

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Your Bernard of next from from question the comes Needham McTernan Company. & line

on to one. just the Maybe Great. follow last up

next of on there guys underpenetrated to there couple about target? out a is been Japan other talking list for that You kind quarters the of now. countries have Are wealthy

sprouting Well, driven, [indiscernible] technology, Europe, Bernie, dramatically. less mean growing said, product And the as that's that community Dave Spain, as great marketplaces. those and France, fact all up really local fact you If it's immediate developer a growth in an it's all Italy better, Western the about throughout there's they're an by know, I about target. that search translation organic are more

-- it's So it's believe, very we organic because and sustainable just and it's organic.

already monetization. around And and particularly users so and strong and Asia, East users we're U.S., really the strong growth are But more in. countries very very Western we're and Canada more globe, including the targeting healthy just the in that in with Europe showing markets

Japan, example, India, like when help on accelerate the that's highlighting quality, goes And talk about countries. can we that down product help Japan-only performance in all low-end product product devices, all raw platform-wide And quality. way quality accelerate for which product can not countries to search

as a whole So generally. really, platform we target the

on a like And below then like just that guys to than infrastructure, you're on might and be there on to discovering wanted Is just to initiatives. be do. right there's initiatives might it. it we more the internal see double commentary shareholder but that especially the I internal maybe Especially Understood. the a that in It sounds read, just it growing click cost-saving the broader efficiency talking just push job this doing are about efficiencies. It feels you do, pushing in more from infrastructure, great that. letter, obviously, bookings,

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on the side. I infra think

gives more lot that us a going resilience of to room grow forward without level high a into CapEx. get we As a lot of

these discoveries are natural less of some So than evolution. are

growth growth of it be us and that be the was and COVID larger when and that allows balance and is for platform more really to thing the macro platform and much decision that And predictable pandemic we're sheet. The -- and reasonable hyper did. was build it before. of that sort invest we made But to adjustment through took happy when we efficient and capable started the heavily so that more that much rate and had growth now we're the maybe and throughout into X rational of the the And we obviously, to much, aggressively just economy statement scale than add that. much more significant the hyper we invest income to last through started, a should

into I and for We're efficiency, and our doing voice gets help doing voice and there's want to this very to this safety. highlight on on the inference stability, X doing our and players other exact own same And safety what safety infrastructure. sophisticated work by on same real-time we incredible moderation. all of using that nuance with infra voice, we're of that efficiency for simulation XD voice we're use using

America. Dessouky next from Omar from of line Your of Bank comes question the

on wanted the quite actually numbers more to double-click because I are bit question remarkable. infrastructure a little this

if look results, infrastructure quarter, up total at but hours looks third were So per hour your in XX%. your cost it was I your XX%, hours down the just engagement like your

So that's my came estimates. pretty in strong costs and your infrastructure well below

caused there how -- events infrastructure they and about this your would going there similar the is that So where quarter? at will cost they quarter? Do Or should onetime I rate a think up of second are have of And to this were kind per as any they we in -- they were high on come be -- cost line you follow-up. back kind savings then very that a hour in forward?

and we've in we data fair build amount Omar, actually data efficiency the centers feel centers we through on capacity. of there resiliency edge have on core the happened we're data onetime Once resiliency, that again, and past, now, where great on to which run simulation. CapEx got core out on event has was a that centers

So I don't event think real. forward there's a

in that of the we've think a past. lot I done

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a... XX%. just grew But think the hours I at

I'm just quarter-on-quarter, your XX% Yet, about per down hours hour quarter-on-quarter. cost XX%. your were Mike. talking was up Quarter-on-quarter,

Okay. Understood.

of Investor that is So to capacity. what unlike show was else Dave building just or absorbing data a anything factory talked lot of a which Day. X at investment factors not now we're going capacity, building But the some more about,

and second have cost this over continue drive engineering is front served. X declines more as down them, an of to The going incredible we challenging get hours on target team of and efficient done focus to believe that organization in metric time an and the plenty to cost-to-serve job, a they're per X,XXX and to they've

the and that see to lower actually reflected bookings be in infrastructure question, statement, should leverage the a or as answer revenue. we as So the continued -- numbers your numbers income of line lower either in a percentage in future on percentage

Awesome. Okay.

focusing in sort Okay. just to to, ago? let's your say, compared was accurately confidence in X that your guide on And line X to increased top maybe of as your guidance. What then your it ability months

We've Well, out the model to whole of fair ability to I had always our want do team. financial to future. a shout a modeling amount confidence the in

Mike, So to is can world. maybe this less the about confidence. comment real

all, Mark, the guidance. said you Well, existing first of

other And show the going I coming given margins COVID number is and haven't that become to A the a commented would merely a for made. our like that side, to actually having reasons. we've models easier does of quarter. deeper big on out to that the any forecasting lot through leverage the QX. into going the And yet. of insight a of demand. I coming gone guidance. now who we with and out investors think and guidance fourth and forward. it do through We're to We way talked cycle of guide operating COVID So best There's certainly people a big really conversation have such investments and

healthy a think I be everybody. So dynamic for it will

more Mike complexity, countries, in of the then highlight I bunch bunch We're different support ambitious really of It's is as help but mentioned, come. a the GAAP scope economic to moving of side, that And vision, far virtual the building the and on a of fairly think a Yes. not as world our can more breadth top and models different guidance and internally. vision more around on and platform age different have that people connecting complexity. revenue complexities that complex, and we groups want broad the and currency, regions revenue. several as to that deferred advertising that, to we the a

line the next Your Clark BTIG. comes Lampen question of from from

average question have on rates. I a spending

those prepared spending. early You average mix of, guess, guys of stages highlighted monetization selectively spending now expansion products maybe at the that a we release That's point from a lift international from likely to late prerelease Are to see that sort in where the products remarks some whether and or we here can seem shift the sort one. number be to of of of I headwinds offset going seem forward. question right maybe throughout now accretive

Clark, good to to talk you.

from highlight like would 'XX, payer that ] average the so $XX.XX [ First in was QX. the thing the $XX.XX to ] monetized at third which of the [ quarter, I quarter up over prior

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think well. I as through we'll So that work

do believe I strongly monetization. yes, I'm So about optimistic

Day, those we they move in, also on obviously, will we Dave talk we went million it monetization set up economies is as will now always that of top grow economy Overall, a And platform, it is economies is our the about Investor very things active very daily we've materially. a public, -- that virtual and at about highlighted, that large funnel built including platform healthy just clip. in XX advertising as we'll up, and users vibrant with as virtual addition, other the growing talked when at or things to back and goes

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more with younger we And a a where seeing and users shift so are spend user slowly, growing mix to positive monetization are definitely base, even who bookings do older more.

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Understood.

adjustments earlier You it about Also, currency to values you changes. some economy were this per looked of sort like quarter. and talked then Could were unit there the of that made packaging Roblox maybe packages guess, all? at about how to if of forward. secondarily, user going impact P&L the talk And those and moving those could maybe developer affect the sort I how changes, are community,

these plans We constantly big just now. Yes, massive right a the on have economy. experiments to shift, I we're may consider want seeing small that any highlight running don't be nudges for economy you

next question Handler Eric Your MKM. of line comes Roth from from the

couple A things on of advertising.

third were I in advertising there it's very small, contributions First, imagine any the but quarter?

correct, little were, to bit very of Investor to do do Day. they There small. and you're a preface a were want I

virtual on is into our economy -- virtual around there are ad is was overall. the related brands economy there's the economy actual integrated a content around vibrant platform. a economy brands brands virtual publishing virtual there that the small, to and is And brands just a While revenue pretty like the economy

the dollars the ad were they're contributing while themselves small, platform. to already So

week, imagine that are I Great. have and for of of billboards that here, probably terms sort then the low but getting in the testing maybe next of pricing. I'm suite look digital And at myself now more you advertising, you'll you're I when end advertising, talk the ahead video

You've proposition got and buckets? this portals about unique have can now video, those maybe of value talk the concept X you with you

again, vision Yes. browsing, friends is And a value example, at picture on it. mall, for Sunday behavior out in platform. the be Roblox or we real any locations, paint the proposition well. I'm this then into is to going and back year life, step visionary is virtual or will goods no future to all and X ultimately promise physical But and with delivery going on take goods revenue. as do And a to of a on this various we that what our both the once out can product really replicated buying hanging as happen into trying ultimately, a And literally well will on fully going buying platform. shopping back go as

virtual brands. to bring traffic a advertising Vans, the can where virtual way brands, Gucci videos, then And stuff great whatever essentially their on and So and is we've by watch our some mentioned interact of with to partners, Nike, friends great physical XD for and destination ultimately goods. people try

closed-loop just solution. we So actually fully long-term think a really the advertising is the first step shopping to

to cover this and will Day a at we're this talk about more Cristina Investor who comment quick runs more because on business going just Eric, Roblox, And it.

than portal type You're to ads be and really ads. of talking ads and video X going there more about are video

unique. ads. multiple about and talk very video interesting of value products. to going underestimate we're the I are So Portals wouldn't

have age We that's engaged. demographic base very a highly interesting highly, massive a and also user

for in the a experiences, base breadth they of really where other a real products is and But really various And brands at value there's excited own about activity. to we see a So engagement we're on lot when look have level future. platform. and the we've for incredibly at monetization portals, engage seen brands products. that Ultimately, of their and it persistent good interesting

Brandon from line comes of from question next Lightshed. Our the Ross

impact or And DAU to an on platforms those launched a to size new on any come? couple type including Sony there's have the an engagement. recently more platforms, way from a You then I wondering any of on PlayStation. of update there's We're And follow-up. if just launches if

we say platform wouldn't would any estimates. platform I engagement share by

existing to think an expected on console doing have with content content the reason I really that other phones, computers, we that say doing it's tablets, that as amazing safe better already it's better And than that's accelerant expected. running it's think I new destination. just is than of a we so much

And more loss. that. of actually, add Meta Quest little would a to Brandon, bit also It's I

the So those other can on connect people on and things. desktops network people other to and phones

that And discrete with the and going are week everything. on and can't But all It's about view explain strong so healthy. we're They're over. very seeing maybe seeing talk we we an benefit to just we're on really that numbers download impact next a very what's PlayStation. of happening

So we're sort it's about think it. excited I of super But multiplicative.

run future And connection multiplayer any vision device. should and the immersive communication be platforms, ultimately on would on technology any XD factor on form

then DevEx. on And the Great.

and earlier, it Devex the are you from only DevEx, clarify generally XX% leverage was to quarter? your how control and how of Dev cost that? to will into affect goes back of bookings like the versus kind And about thinking the of loophole Just that what And community, on advertising generation then profit cash of in flow made decision? that kind the giving

question. in lot a there's So that

DevEx content So first the foremost, our to have that to content. to goal is high community. and is in push growth continue we why growing make there great investment and The we

COGS, last really Generally, fixed much the dollar community, we cost the around our COGS effective. share pretty primary Those in that's to few our as always over cash we're for we so efficiency ways grow desire, headcount to and years, in the efficiency Brandon, that really with and cost, which are the is to dollar have as flow fixed overall seen infrastructure. is looking the leverage tried and been business. in for those And on leverage

or today. quite so years, the back you X rates bit historically, a DevEx lower than X if are were they And look

developers. those a So continue we're more place economics the in much and ability to more to an of push sustainable to

to those advertising, economics. community we participate in the up for like things fully intend As the open economy, we

And that's really invest to so users and and the excited because to that It's continue we're investment driving and scale we growth flywheel. in the really the about back. it ability content what's pays the that make and

trying it. So always to grow we're

Your Cost Morgan next question the line from comes Stanley. Matthew from of

with X and Maybe then for X I'll for start Mike. Dave

tools. the direction from you AI here? And a moderation scratch? mentioned fully shifting or you is your cases from baked and exciting those then track the in perspective that is an new build AI from everything on of on use a Just that to of CapEx in to and to build planning pipeline you're for open that view kind headcount lot Are still source on perspective, tools, more from

Yes.

have inside ML more running goes way search discovery think user-facing XX real-time Roblox of much company highlighted things and assistant. the the right our our and from the systems safety the We've we've got AI. like now systems, that get breadth into gets systems into I then we all pipelines translation moderation so in systems,

as in big possible I our efficiently. much we extremely hardware we do run think super on I as example, is to for want own And can high the voice so takeaway volume print, active It would our are us on centers as not that possible data highlight inference. ability edge the hardware world in as as much inference. the run gives to for of to use same using parts the this

training and our and use As are that we're people tools far for optimizing and distilling the collection yes, as open time building and AI full generally, as and teams in far really of building what will many of [indiscernible] using, markets high-performance source, say, the a as internal we're then inference. platform tuning a interesting internally, would I

quarter. And then want to for the of revisit last guys I mentioned million you Mike, just DevEx that $XXX of goal

I think quarter. XX% guess $XXX bookings versus that to need million target? that at in you DevEx you reiterating to order do consensus, of I next hit are

about we've I Mat many talked times. many, this think So

super a it million you would high it's of at unlikely capital to that to at hit just developers the we in grown the growth like operating of business year, So margins few $XXX massive excited the delivering line we're the business. this if we're accomplishing over what the very are for be this with year. year excited we what are us look and years, pool But about last this rates top has and

So developers of that, incredibly sharing the and on. proud in going continue incredibly we're to proud efficiencies the the going of we're and to that are drive printing and across to numbers how what that's focus business, we're

from line Eric Goldman Sheridan from the comes of question Sachs. Your next

of more about in a coming come longer to term? week. to center understand your about to Maybe community, then be on capacity But about not engagement you And under and we've infrastructure data running think up and XXXX have back now developer filling on XXXX? X priority out to of a in to is and that move platform expectations next like lining now the items talked capacity are finer excess trend utilization developer front your to point when capacity a way investment, CapEx sort meet to normalized network and better as it, you how that highest there the the needs put right much follow-ups growth versus community the of topics you hopefully investments think could and into where

as on to intra much very efficiency cost going just performance On to cloud really cost much we as there core can the as we're of want as I Yes, out X on centers, to thoughtful componentry expenses, moving all being I'm of platform side. improving on really our data teams Also points. quality our ruthlessly go tough very, internally possible. squeeze highlight our there,

just real-time ability capacity grid could we where super, simulation, cost. for On run low inference the we more highlighted run on so edge inference super to and same run more

little a vision of there as So well. a bit

go. And you thinking you would capacity It's long Eric, direct a to way would to but we to capacity, about before I'm XXXX going have suggest has give I capacity. start for to quite not our not number adding a through sure that on

a So really we're in right comfortable now place

X have Tom Champion We from for more Sandler. time question, Piper

Tom. for on Jim is This

of a X on revenue. Just cost quick

forward? bookings that talk continued? line channels. we through going like the how trend of And -- shift can has modeling fee toward seen So leverage I should think about we that we've guess, sort in about lower

and I'll talked modeling. really you then first about level high to Mike, go

highlighting more different consumable again, complexity, shift. You're the of durable mix once

partners the some on bodes over other developer which platform Robux subscriptions As have type time an purchases, COGS may COGS. of with example, than of different our well for

Our as the well. prepaid mix more about business for bodes shift? may well talk COGS Mike,

Tom. Yes.

at interesting And of we at talk is vast operating infrastructure to generally, in. focus numbers in our we've provide time. improvement definitely next will, Day. over that to But least. that next right over We're think, a leverage are leverage job now doing been where some the areas dive could I years years going few Investor good we're there. about real There margin really more some able of So and and are majority the couple -- those drive personnel,

That's from at comfortable much where I -- today are modeling in bet. for about COGS And costs costs. operating more about they a from more people from think now. Those you're infer and that's think our are coming leverage control. a fairly safe

over the closing call for turn Stefanie to now will remarks. I

and today, us a for joining wrap for us. you that's Thank

today's may call. for concludes your you disconnect. Thank This conference you and participation, now