Roblox(RBLX) - 2024 Q3 - Quarterly Results

Third Quarter 2024 Performance Overview This section reviews Roblox's Q3 2024 financial, operational, and liquidity performance, including management commentary Key Financial Highlights Roblox reported strong financial growth in Q3 2024, with significant year-over-year increases in revenue, bookings, and free cash flow, while still incurring a net loss | Metric | Q3 2024 (Millions) | YoY Change | | :-------------------------------- | :----------------- | :--------- | | Revenue | $919.0 | +29% | | Bookings | $1,128.5 | +34% | | Net loss attributable to common stockholders | $(239.3) | - | | Consolidated net loss | $(240.4) | - | | Adjusted EBITDA | $55.0 | - | | Net cash from operating activities | $247.4 | +120% | | Free cash flow | $218.0 | +266% | Key Operational Highlights The platform experienced record user engagement and growth in its active user base and payer community during Q3 2024 | Metric | Q3 2024 | YoY Change | | :-------------------------------- | :-------- | :--------- | | Average Daily Active Users (DAUs) | 88.9 million | +27% | | Average monthly unique payers | 19.1 million | +30% | | Hours engaged | 20.7 billion | +29% | | Average bookings per DAU | $12.70 | +6% | | Average bookings per monthly unique payer | $19.70 | - | Key Liquidity Highlights Roblox maintained a strong liquidity position at the end of Q3 2024, with substantial cash and investments | Metric | Q3 2024 (Billions) | | :---------------------------------------------------------------- | :----------------- | | Cash and cash equivalents, short-term investments, and long-term investments | $3.9 | | Net liquidity | $2.9 | Management Commentary Management expressed satisfaction with Q3 results, attributing success to platform strength and growth strategies, and highlighted commitment to empowering creators, fostering social connections, and expanding global reach - CEO David Baszucki emphasized the strength of the platform and effectiveness of growth strategies, highlighting progress in empowering creators, fostering social connections, and expanding global reach. He reiterated commitment to building the world's largest social platform for play, focusing on innovation and safety[3] - CFO Michael Guthrie noted that key financial and operating metrics in Q3 2024 grew at high rates and exceeded previous guidance, with significant year-over-year growth in revenue (29%), bookings (34%), DAUs (27%), and Hours engaged (29%)[4] Forward-Looking Guidance This section provides Roblox's financial outlook and operational projections for the upcoming quarter and the full fiscal year 2024 Fourth Quarter 2024 Guidance Roblox provided guidance for Q4 2024, projecting continued growth in revenue and bookings, alongside an anticipated net loss and positive free cash flow | Metric | Q4 2024 Guidance (Millions) | | :------------------------------------------ | :-------------------------- | | Revenue | $935 - $960 | | Bookings | $1,336 - $1,361 | | Consolidated net loss | $(303) - $(283) | | Adjusted EBITDA | $10 - $30 | | Net cash from operating activities | $170 - $185 | | Capital expenditures and purchases of intangible assets | $(70) | | Free cash flow | $100 - $115 | Updated Full Year 2024 Guidance The company updated its full-year 2024 guidance, forecasting substantial bookings and revenue, while expecting a consolidated net loss and healthy free cash flow | Metric | Full Year 2024 Guidance (Millions) | | :------------------------------------------ | :--------------------------------- | | Revenue | $3,549 - $3,574 | | Bookings | $4,343 - $4,368 | | Consolidated net loss | $(1,023) - $(1,003) | | Adjusted EBITDA | $125 - $145 | | Net cash from operating activities | $808 - $823 | | Capital expenditures and purchases of intangible assets | $(187) | | Free cash flow | $621 - $636 | Condensed Consolidated Financial Statements This section presents Roblox's key financial statements, including balance sheets, statements of operations, and cash flows, for the reported periods Condensed Consolidated Balance Sheets As of September 30, 2024, Roblox reported an increase in total assets, driven by long-term investments, while total liabilities also grew, primarily due to deferred revenue | Balance Sheet Item (in thousands) | Sep 30, 2024 | Dec 31, 2023 | | :-------------------------------- | :----------- | :----------- | | Total Assets | $6,687,962 | $6,168,078 | | Total Liabilities | $6,509,504 | $6,099,452 | | Cash and cash equivalents | $602,631 | $678,466 | | Short-term investments | $1,720,323 | $1,514,808 | | Long-term investments | $1,558,846 | $1,043,399 | | Deferred revenue—current portion | $2,792,396 | $2,406,292 | | Deferred revenue—net of current portion | $1,397,803 | $1,373,250 | Condensed Consolidated Statements of Operations For Q3 2024, Roblox saw substantial revenue growth but continued to report a consolidated net loss, albeit a smaller one compared to the prior year, with increased operating expenses | Income Statement Item (in thousands) | Three Months Ended Sep 30, 2024 | Three Months Ended Sep 30, 2023 | | :----------------------------------- | :------------------------------ | :------------------------------ | | Revenue | $918,953 | $713,225 | | Total cost and expenses | $1,197,881 | $1,013,263 | | Loss from operations | $(278,928) | $(300,038) | | Consolidated net loss | $(240,447) | $(278,808) | | Net loss attributable to common stockholders | $(239,324) | $(277,158) | | Net loss per share (basic and diluted) | $(0.37) | $(0.45) | - Effective April 1, 2024, the estimated average lifetime of a payer was changed from 28 months to 27 months. This change increased revenue by $26.4 million and cost of revenue by $5.4 million for the three months ended September 30, 2024. For the full fiscal year 2024, this change is expected to increase revenue by $98.0 million and cost of revenue by $20.4 million[17] Condensed Consolidated Statements of Cash Flows Roblox significantly increased net cash provided by operating activities in Q3 2024, despite a net loss, while investing activities resulted in a net cash outflow, primarily due to purchases of investments | Cash Flow Item (in thousands) | Three Months Ended Sep 30, 2024 | Three Months Ended Sep 30, 2023 | | :------------------------------------------ | :------------------------------ | :------------------------------ | | Net cash from operating activities | $247,430 | $112,704 | | Net cash used in investing activities | $(633,653) | $(68,719) | | Net cash from financing activities | $19,949 | $16,209 | | Net increase/(decrease) in cash and cash equivalents | $(363,775) | $59,785 | | Cash and cash equivalents, end of period | $602,631 | $580,049 | Non-GAAP Financial Measures and Reconciliations This section defines and reconciles Roblox's non-GAAP financial measures, including bookings, Adjusted EBITDA, and free cash flow, to their GAAP equivalents Non-GAAP Definitions and Purpose Roblox utilizes non-GAAP financial measures like bookings, Adjusted EBITDA, and free cash flow to provide additional insights into its operational performance and liquidity, believing these metrics offer a more timely and comparable view of business trends - Bookings are defined as revenue plus the change in deferred revenue and other non-cash adjustments, primarily reflecting sales of virtual currency. This measure provides a timelier indication of operating trends than GAAP revenue, which is recognized over the estimated average lifetime of a paying user[20] - Adjusted EBITDA represents GAAP consolidated net loss, excluding interest income/expense, other income/expense, income taxes, depreciation and amortization, stock-based compensation, and certain nonrecurring adjustments. It is used to understand ongoing operations and trends[20] - Free cash flow is defined as net cash from operating activities less purchases of property, equipment, and intangible assets. It serves as an indicator of unit economics and liquidity, showing cash generated from core operations available for strategic initiatives[20] - Non-GAAP measures are presented for supplemental informational purposes only and should not be considered in isolation from, or as a substitute for, GAAP financial information due to their non-standardized meaning and potential for differing calculations by other companies[21] Historical GAAP to Non-GAAP Reconciliations This section provides reconciliations of key GAAP financial measures to their non-GAAP counterparts for historical periods, illustrating the adjustments made to derive bookings, Adjusted EBITDA, and free cash flow Revenue to Bookings Reconciliation The reconciliation shows how bookings are derived from revenue by adjusting for changes in deferred revenue and other minor items, reflecting the timing difference in revenue recognition | (in thousands, unaudited) | Three Months Ended Sep 30, 2024 | Three Months Ended Sep 30, 2023 | | :-------------------------- | :------------------------------ | :------------------------------ | | Revenue | $918,953 | $713,225 | | Change in deferred revenue | $216,325 | $130,957 | | Other | $(6,758) | $(4,729) | | Bookings | $1,128,520 | $839,453 | Consolidated Net Loss to Adjusted EBITDA Reconciliation This reconciliation details the adjustments made to consolidated net loss to arrive at Adjusted EBITDA, primarily adding back non-cash expenses and non-operating items | (in thousands, unaudited) | Three Months Ended Sep 30, 2024 | Three Months Ended Sep 30, 2023 | | :------------------------------------------ | :------------------------------ | :------------------------------ | | Consolidated net loss | $(240,447) | $(278,808) | | Interest income | $(46,718) | $(36,442) | | Interest expense | $10,286 | $10,268 | | Other (income)/expense, net | $(2,352) | $4,262 | | Provision for/(benefit from) income taxes | $303 | $682 | | Depreciation and amortization expense | $68,613 | $53,600 | | Stock-based compensation expense | $265,165 | $220,022 | | RTO severance charge | $108 | — | | Other non-cash charges | — | — | | Adjusted EBITDA | $54,958 | $(26,416) | - Depreciation and amortization expense for Q3 2024 includes a one-time charge of $17.9 million related to the re-assessment of the estimated useful life of certain software licenses, accelerating their remaining depreciation[24] - The RTO severance charge relates to cash severance costs associated with the Company's return-to-office plan announced in October 2023[24] Net Cash from Operations to Free Cash Flow Reconciliation This reconciliation shows the calculation of free cash flow by deducting capital expenditures and purchases of intangible assets from net cash provided by operating activities | (in thousands, unaudited) | Three Months Ended Sep 30, 2024 | Three Months Ended Sep 30, 2023 | | :------------------------------------------ | :------------------------------ | :------------------------------ | | Net cash from operating activities | $247,430 | $112,704 | | Acquisition of property and equipment | $(29,405) | $(53,196) | | Purchases of intangible assets | — | — | | Free cash flow | $218,025 | $59,508 | Forward-Looking GAAP to Non-GAAP Reconciliations This section provides reconciliations for the forward-looking guidance, detailing how projected GAAP figures are adjusted to derive non-GAAP bookings, Adjusted EBITDA, and free cash flow for Q4 and the full year 2024 - The forward-looking guidance reflects the change in the estimated average lifetime of a payer from 28 months to 27 months, effective April 1, 2024. This change is expected to increase Q4 2024 revenue by $12.7 million and cost of revenue by $2.6 million, and full year 2024 revenue by $98.0 million and cost of revenue by $20.4 million[28] Revenue to Bookings Guidance Reconciliation The guidance reconciliation for bookings shows the projected adjustments to revenue, primarily the change in deferred revenue, to forecast future bookings | (in thousands) | Q4 2024 Guidance (Low) | Q4 2024 Guidance (High) | Full Year 2024 Guidance (Low) | Full Year 2024 Guidance (High) | | :-------------------------- | :--------------------- | :---------------------- | :---------------------------- | :----------------------------- | | Revenue | $935,000 | $960,000 | $3,548,796 | $3,573,796 | | Change in deferred revenue | $406,000 | $406,000 | $816,657 | $816,657 | | Other | $(5,000) | $(5,000) | $(21,998) | $(21,998) | | Bookings | $1,336,000 | $1,361,000 | $4,343,455 | $4,368,455 | Consolidated Net Loss to Adjusted EBITDA Guidance Reconciliation This reconciliation provides the projected adjustments to consolidated net loss to forecast Adjusted EBITDA for the upcoming periods, including non-cash and non-operating items | (in thousands) | Q4 2024 Guidance (Low) | Q4 2024 Guidance (High) | Full Year 2024 Guidance (Low) | Full Year 2024 Guidance (High) | | :------------------------------------------ | :--------------------- | :---------------------- | :---------------------------- | :----------------------------- | | Consolidated net loss | $(303,000) | $(283,000) | $(1,022,562) | $(1,002,562) | | Interest income | $(40,000) | $(40,000) | $(173,271) | $(173,271) | | Interest expense | $11,000 | $11,000 | $41,853 | $41,853 | | Other (income)/expense, net | — | — | $1,309 | $1,309 | | Provision for/(benefit from) income taxes | $2,000 | $2,000 | $3,466 | $3,466 | | Depreciation and amortization expense | $55,000 | $55,000 | $230,126 | $230,126 | | Stock-based compensation expense | $285,000 | $285,000 | $1,042,558 | $1,042,558 | | RTO severance charge | — | — | $1,101 | $1,101 | | Adjusted EBITDA | $10,000 | $30,000 | $124,580 | $144,580 | Net Cash from Operations to Free Cash Flow Guidance Reconciliation This reconciliation outlines the projected calculation of free cash flow by deducting anticipated capital expenditures and intangible asset purchases from forecasted net cash provided by operating activities | (in thousands) | Q4 2024 Guidance (Low) | Q4 2024 Guidance (High) | Full Year 2024 Guidance (Low) | Full Year 2024 Guidance (High) | | :------------------------------------------ | :--------------------- | :---------------------- | :---------------------------- | :----------------------------- | | Net cash from operating activities | $170,000 | $185,000 | $807,825 | $822,825 | | Acquisition of property and equipment | $(70,000) | $(70,000) | $(185,786) | $(185,786) | | Purchase of intangible assets | — | — | $(1,370) | $(1,370) | | Free cash flow | $100,000 | $115,000 | $620,669 | $635,669 | Additional Company Information This section provides important contextual information, including disclaimers on forward-looking statements, details on operating metrics, company overview, and contact information Forward-Looking Statements This section contains a standard disclaimer regarding forward-looking statements, outlining the inherent risks and uncertainties that could cause actual results to differ materially from projections, and clarifies that the company undertakes no obligation to update these statements - The press release includes forward-looking statements regarding Roblox's vision, platform improvements, investments in trust and safety, advertising efforts, AI use, economy and product efforts, user growth, and financial outlook for Q4 and full year 2024[13] - These statements are subject to risks and uncertainties, including the ability to execute business strategy, liquidity needs, demand for the platform, user retention, impact of economic conditions, regulatory changes, platform enhancements, brand protection, data misuse, platform security, and the impact of AI[13] - Roblox does not undertake any obligation to update or revise any forward-looking statements, and they should not be relied upon as representing views as of any date subsequent to the press release date[13] Special Note Regarding Operating Metrics Investors are encouraged to review the company's SEC filings, such as Form 10-K and 10-Q, for additional detailed information on core financial and operating metrics - Additional information regarding core financial and operating metrics is available in the company's SEC filings, including annual reports on Form 10-K and quarterly reports on Form 10-Q[14] About Roblox Roblox is an immersive platform focused on connection and communication, enabling millions of people globally to create, play, work, learn, and connect in user-generated experiences, with a vision to build a safe, civil, and optimistic social platform - Roblox is an immersive platform for connection and communication, where millions of people create, play, work, learn, and connect in experiences built by a global community of creators[30] - The company's vision is to reimagine how people come together in a safe, civil, and optimistic world, aiming to strengthen social fabric and support economic growth globally[30] Contacts Contact information for Roblox Corporate Communications is provided for media inquiries - For corporate communications, Stefanie Notaney can be reached at press@roblox.com[31]