Roblox(RBLX) - 2025 Q2 - Quarterly Report

Special Note Regarding Forward-Looking Statements This section highlights that the 10-Q report contains forward-looking statements about future financial and operating performance, business strategy, growth, and market conditions. These statements are subject to substantial risks and uncertainties, and actual results may differ materially from projections Forward-Looking Statements Overview This section highlights that the 10-Q report contains forward-looking statements about future financial and operating performance, business strategy, growth, and market conditions. These statements are subject to substantial risks and uncertainties, and actual results may differ materially from projections - Forward-looking statements cover expectations regarding future financial performance (revenue, costs, profitability), business and growth strategy (advertising, international users, AI investments), liquidity needs, economic trends, platform functionality, user retention, and legal/regulatory matters[8][12] - Readers are cautioned not to rely on these statements as predictions of future events, as outcomes are subject to risks detailed in the 'Risk Factors' section and other competitive and rapidly changing environmental factors[10] Special Note Regarding Operating Metrics This section defines key operating metrics used to manage the business, including Daily Active Users (DAUs), Hours Engaged, Bookings, and Average Bookings per DAU (ABPDAU). It also notes the inherent challenges and potential inaccuracies in measuring these metrics due to internal data reliance and evolving methodologies Operating Metrics Overview This section defines key operating metrics used to manage the business, including Daily Active Users (DAUs), Hours Engaged, Bookings, and Average Bookings per DAU (ABPDAU). It also notes the inherent challenges and potential inaccuracies in measuring these metrics due to internal data reliance and evolving methodologies - Key operating metrics tracked include DAUs, hours engaged, bookings, ABPDAU, average new and returning monthly unique payers, monthly repurchase rate, and average bookings per monthly unique payer[14] - Metrics are based on internal analytics and reasonable estimates, but are subject to measurement challenges, methodological limitations, operational constraints, and potential inaccuracies from incorrect user data or botting[14][15][16] - Starting in Q3 2025, reported age demographics will be based on a hierarchy of data sources, potentially impacting comparability with prior periods[15] - Bookings are a non-GAAP measure representing sales activity, primarily from virtual currency sales, recognized over the estimated average lifetime of a paying user (27 months as of June 30, 2025)[23][24] PART I. FINANCIAL INFORMATION This section presents the unaudited condensed consolidated financial statements for Roblox Corporation, including the balance sheets, statements of operations, comprehensive loss, stockholders' equity, and cash flows, along with detailed notes explaining accounting policies, revenue recognition, and other financial components Item 1. Financial Statements (Unaudited) This section presents the unaudited condensed consolidated financial statements for Roblox Corporation, including the balance sheets, statements of operations, comprehensive loss, stockholders' equity, and cash flows, along with detailed notes explaining accounting policies, revenue recognition, and other financial components Condensed Consolidated Balance Sheets Condensed Consolidated Balance Sheets (in thousands) | Item | June 30, 2025 | December 31, 2024 | Change | % Change | | :-------------------------------- | :------------ | :---------------- | :----- | :------- | | Total assets | $7,845,571 | $7,175,003 | $670,568 | 9.35% | | Cash and cash equivalents | $994,570 | $711,683 | $282,887 | 39.75% | | Short-term investments | $1,632,626 | $1,697,862 | $(65,236) | -3.84% | | Long-term investments | $2,111,258 | $1,610,215 | $501,043 | 31.12% | | Total liabilities | $7,507,915 | $6,966,349 | $541,566 | 7.77% | | Deferred revenue—current portion | $3,365,460 | $3,004,969 | $360,491 | 12.00% | | Total Stockholders' equity | $337,656 | $208,654 | $129,002 | 61.83% | Condensed Consolidated Statements of Operations Condensed Consolidated Statements of Operations (in thousands, except per share amounts) | Item | Three Months Ended June 30, 2025 | Three Months Ended June 30, 2024 | % Change | Six Months Ended June 30, 2025 | Six Months Ended June 30, 2024 | % Change | | :----------------------------------- | :------------------------------- | :------------------------------- | :------- | :----------------------------- | :----------------------------- | :------- | | Revenue | $1,080,677 | $893,543 | 21.0% | $2,115,884 | $1,694,843 | 24.8% | | Total costs and expenses | $1,403,137 | $1,131,492 | 24.0% | $2,693,053 | $2,235,120 | 20.5% | | Loss from operations | $(322,460) | $(237,949) | 35.5% | $(577,169) | $(540,277) | 6.8% | | Consolidated net loss | $(279,800) | $(207,195) | 35.0% | $(496,140) | $(479,115) | 3.6% | | Net loss per share (basic and diluted) | $(0.41) | $(0.32) | 28.1% | $(0.73) | $(0.75) | -2.7% | Condensed Consolidated Statements of Comprehensive Loss Condensed Consolidated Statements of Comprehensive Loss (in thousands) | Item | Three Months Ended June 30, 2025 | Three Months Ended June 30, 2024 | Six Months Ended June 30, 2025 | Six Months Ended June 30, 2024 | | :------------------------------------------------ | :------------------------------- | :------------------------------- | :----------------------------- | :----------------------------- | | Consolidated net loss | $(279,800) | $(207,195) | $(496,140) | $(479,115) | | Other comprehensive income/(loss), net of tax | $8,808 | $(619) | $17,663 | $(7,678) | | Total comprehensive loss, including noncontrolling interest | $(270,992) | $(207,814) | $(478,477) | $(486,793) | Condensed Consolidated Statements of Stockholders' Equity Condensed Consolidated Statements of Stockholders' Equity (in thousands) | Item | Balance at Dec 31, 2024 | Stock-based compensation expense (6 months) | Net loss (6 months) | Balance at June 30, 2025 | | :-------------------------------- | :---------------------- | :------------------------------------------ | :------------------ | :--------------------- | | Total Stockholders' equity | $208,654 | $543,698 | $(496,140) | $337,656 | - Total stockholders' equity increased from $208.7 million as of December 31, 2024, to $337.7 million as of June 30, 2025, primarily due to stock-based compensation expense and issuance of common stock, partially offset by net loss[44] Condensed Consolidated Statements of Cash Flows Condensed Consolidated Statements of Cash Flows (in thousands) | Item | Six Months Ended June 30, 2025 | Six Months Ended June 30, 2024 | % Change | | :---------------------------------------------------- | :----------------------------- | :----------------------------- | :------- | | Net cash and cash equivalents provided by operating activities | $643,176 | $390,395 | 64.7% | | Net cash and cash equivalents used in investing activities | $(429,658) | $(133,907) | 220.9% | | Net cash and cash equivalents provided by financing activities | $63,692 | $32,797 | 94.2% | | Cash and cash equivalents (End of period) | $994,570 | $966,406 | 2.9% | Notes to Unaudited Condensed Consolidated Financial Statements 1. Organization and Description of Business - Roblox Corporation reincorporated from Delaware to Nevada on May 30, 2025[54] - The company operates a free-to-use immersive platform for connection and communication, where users create, play, work, learn, and connect in experiences built by a global community of creators[55] - Users can acquire experience-specific enhancements or avatar items using Robux, the virtual currency. Developers and creators earn Robux by monetizing experiences, selling avatar items, or creating Roblox Studio plugins[55] 2. Basis of Presentation and Summary of Significant Accounting Policies - The unaudited condensed consolidated financial statements are prepared in accordance with U.S. GAAP and SEC rules for interim financial reporting[57] - Effective April 1, 2024, the estimated paying user life for revenue recognition of durable virtual items was updated from 28 months to 27 months, increasing Q2 2024 revenue by $58.9 million and cost of revenue by $12.4 million[62] - New accounting pronouncements (ASU 2023-09 and ASU 2024-03) related to income tax and expense disaggregation disclosures are being evaluated for future impact[64][65] 3. Revenue from Contracts with Customers Revenue by Geographic Region (in thousands) | Region | Three Months Ended June 30, 2025 (Amount) | Three Months Ended June 30, 2025 (Percentage) | Three Months Ended June 30, 2024 (Amount) | Three Months Ended June 30, 2024 (Percentage) | | :------------------------------------ | :---------------------------------------- | :-------------------------------------------- | :---------------------------------------- | :-------------------------------------------- | | United States and Canada | $669,648 | 62% | $565,867 | 63% | | Europe | $204,672 | 19% | $163,407 | 18% | | Asia-Pacific | $115,706 | 11% | $95,055 | 11% | | Rest of world | $90,651 | 8% | $69,214 | 8% | | Total | $1,080,677 | 100% | $893,543 | 100% | | Region | Six Months Ended June 30, 2025 (Amount) | Six Months Ended June 30, 2025 (Percentage) | Six Months Ended June 30, 2024 (Amount) | Six Months Ended June 30, 2024 (Percentage) | | :------------------------------------ | :---------------------------------------- | :-------------------------------------------- | :---------------------------------------- | :-------------------------------------------- | | United States and Canada | $1,316,914 | 62% | $1,075,431 | 63% | | Europe | $398,308 | 19% | $308,971 | 18% | | Asia-Pacific | $224,742 | 11% | $180,329 | 11% | | Rest of world | $175,920 | 8% | $130,112 | 8% | | Total | $2,115,884 | 100% | $1,694,843 | 100% | - Durable virtual items accounted for 90% and 91% of virtual item-related revenue for the three and six months ended June 30, 2025, respectively, showing consistent dominance[68] - Deferred revenue increased for the six months ended June 30, 2025, as sales exceeded recognized revenue, with $1,680.7 million of prior period deferred revenue recognized[71] 4. Leases Sublease Income (in thousands) | Period | Three Months Ended June 30, 2025 | Three Months Ended June 30, 2024 | Six Months Ended June 30, 2025 | Six Months Ended June 30, 2024 | | :------------- | :------------------------------- | :------------------------------- | :----------------------------- | :----------------------------- | | Sublease income | $2,465 | $2,338 | $4,796 | $3,743 | 5. Cash Equivalents and Investments Cash Equivalents and Investments (in thousands) | Item | As of June 30, 2025 (Fair Value) | As of December 31, 2024 (Fair Value) | | :------------------------ | :------------------------------- | :------------------------------- | | Money market funds | $795,856 | $615,890 | | U.S. Treasury securities | $2,273,848 | $2,156,998 | | U.S. agency securities | $466,991 | $293,294 | | Commercial paper | $277,694 | $280,242 | | Corporate debt securities | $772,920 | $595,183 | | Mutual funds (Equity) | $3,026 | $2,178 | | Total Fair Value | $4,590,335 | $3,943,785 | - Total fair value of cash equivalents and investments increased by $646.55 million from December 31, 2024, to June 30, 2025[73] - Unrealized losses on debt securities as of June 30, 2025, were primarily due to increases in market interest rates, but the Company does not intend to sell these securities before recovery of amortized cost[75] 6. Goodwill and Intangible Assets Goodwill (in thousands) | Item | Amount | | :-------------------------- | :------- | | Balance as of December 31, 2024 | $141,688 | | Foreign currency translation adjustments | $922 | | Balance as of June 30, 2025 | $142,610 | Finite-Lived Intangible Assets (Net Carrying Amount in thousands) | Item | As of June 30, 2025 | As of December 31, 2024 | | :------------------ | :------------------ | :-------------------- | | Developed technology | $13,668 | $20,943 | | Patents | $11,300 | $12,050 | | Assembled workforce | $0 | $250 | | Trade name | $117 | $167 | | Total | $25,085 | $33,410 | - Amortization expense for finite-lived intangible assets was $8.3 million for the six months ended June 30, 2025, down from $10.1 million in the prior year period[79] 7. Other Balance Sheet Components Prepaid Expenses and Other Current Assets (in thousands) | Item | As of June 30, 2025 | As of December 31, 2024 | | :------------------------------------ | :------------------ | :-------------------- | | Prepaid expenses | $59,681 | $47,919 | | Accrued interest receivable | $29,088 | $19,690 | | Other current assets | $11,793 | $7,806 | | Total | $100,562 | $75,415 | Property and Equipment, Net (in thousands) | Item | As of June 30, 2025 | As of December 31, 2024 | | :------------------------------------ | :------------------ | :-------------------- | | Total property and equipment | $1,212,849 | $1,247,029 | | Less accumulated depreciation and amortization | $(599,142) | $(587,440) | | Property and equipment—net | $613,707 | $659,589 | - Total depreciation and amortization expense of property and equipment was $99.2 million for the six months ended June 30, 2025, up from $96.5 million in the prior year period[82] Accrued Expenses and Other Current Liabilities (in thousands) | Item | As of June 30, 2025 | As of December 31, 2024 | | :------------------------------------ | :------------------ | :-------------------- | | Accrued operating expenses and liabilities | $72,455 | $49,478 | | Short-term operating lease liabilities | $136,909 | $128,857 | | Taxes payable | $49,012 | $54,609 | | Accrued compensation and other employee related liabilities | $22,150 | $28,147 | | Short-term debt | $14,700 | $0 | | Total | $317,150 | $275,754 | 8. Debt - The Company issued $1.0 billion aggregate principal amount of 3.875% Senior Notes due 2030, with interest payable semi-annually[84] - The net carrying amount of the 2030 Notes was $992.4 million as of June 30, 2025, and the estimated fair value was approximately $946.4 million[90][93] - The Company was in compliance with all covenants under the Indenture as of June 30, 2025[90] 9. Commitments and Contingencies - The Company is involved in legal proceedings, including class action lawsuits (Colvin v. Roblox and Gentry v. Roblox) alleging minors used third-party virtual casinos to gamble Robux, and a copyright infringement case (Robinson v. Binello)[99][100][101] - The Company accrues for probable and estimable litigation losses but cannot reasonably estimate the maximum possible loss for all matters due to their varying stages[98][102] - No material changes to lease commitments or purchase obligations occurred during the six months ended June 30, 2025, other than in the ordinary course of business[95][96] 10. Stockholders' Equity - As of June 30, 2025, the Company had 4,935.0 million authorized Class A common shares (1 vote/share) and 65.0 million authorized Class B common shares (20 votes/share)[105] - 0.1 million Class B common shares were converted to Class A common stock during Q2 2025[106] Shares Reserved for Future Issuance (in thousands) | Item | As of June 30, 2025 | As of December 31, 2024 | | :------------------------------------ | :------------------ | :-------------------- | | Stock options outstanding | 13,086 | 27,458 | | Restricted Stock Units ("RSUs") outstanding | 31,296 | 34,941 | | Performance Stock Units ("PSUs") outstanding | 3,030 | 2,304 | | 2020 Equity Incentive Plan | 116,525 | 91,642 | | 2020 Employee Stock Purchase Plan | 26,508 | 20,855 | | Other awards and warrants outstanding or unreleased | 335 | 367 | | Total | 190,780 | 177,567 | 11. Stock-Based Compensation Expense Stock-Based Compensation Expense (in thousands) | Item | Three Months Ended June 30, 2025 | Three Months Ended June 30, 2024 | Six Months Ended June 30, 2025 | Six Months Ended June 30, 2024 | | :------------------------------------ | :------------------------------- | :------------------------------- | :----------------------------- | :----------------------------- | | Infrastructure and trust & safety | $34,618 | $27,973 | $68,168 | $55,248 | | Research and development | $188,698 | $180,556 | $365,598 | $353,803 | | General and administrative | $48,551 | $34,796 | $84,565 | $66,441 | | Sales and marketing | $12,895 | $8,566 | $25,367 | $16,901 | | Total stock-based compensation expense | $284,762 | $251,891 | $543,698 | $492,393 | - Total stock-based compensation expense increased by $32.871 million (13.05%) for the three months ended June 30, 2025, and by $51.305 million (10.42%) for the six months ended June 30, 2025, compared to the prior year periods[110] - The 2024 CEO PSU Award and RSU award, granted on March 1, 2024, did not result in incremental stock-based compensation expense upon modification, with $84.4 million remaining to be recognized[115] - New 2025 PSU Awards were granted to management, with performance measures based on cumulative bookings and PSU Adjusted EBITDA margin over a two-year period ending December 31, 2026[121] 12. Accumulated Other Comprehensive Income/(Loss) Changes in Accumulated Other Comprehensive Income/(Loss) (in thousands) | Item | Balance as of December 31, 2024 | Change (6 months) | Balance as of June 30, 2025 | | :---------------------------------------------------- | :------------------------------ | :---------------- | :-------------------------- | | Foreign Currency Translation | $(2,167) | $7,603 | $5,436 | | Unrealized Gains/(Losses) on Available-For-Sale Debt Securities | $(1,728) | $10,124 | $8,396 | | Total | $(3,895) | $17,727 | $13,832 | 13. Joint Venture - Roblox operates a joint venture, Roblox China Holding Corp., with Songhua River Investment Limited (an affiliate of Tencent Holdings Ltd.), holding a 51% ownership interest[126] - The joint venture focuses on developing, localizing, and licensing the Roblox application and Studio for the Chinese market[126] - In May 2023, Roblox China Holding Corp. issued $30.0 million in debt (2026 Notes) funded by Roblox and Songhua, bearing 6.0% interest[128][129] 14. Income Taxes - The Company maintains a full valuation allowance on its federal, state, and certain foreign net deferred tax assets due to the unlikelihood of their utilization[133] - The provision for income taxes was immaterial for the three and six months ended June 30, 2025 and 2024[133] 15. Basic and Diluted Net Loss Per Common Share Net Loss Per Common Share (in thousands, except per share data) | Item | Three Months Ended June 30, 2025 | Three Months Ended June 30, 2024 | Six Months Ended June 30, 2025 | Six Months Ended June 30, 2024 | | :------------------------------------------------------------------------------------------------ | :------------------------------- | :------------------------------- | :----------------------------- | :----------------------------- | | Net loss attributable to common stockholders | $(278,375) | $(205,883) | $(493,431) | $(476,487) | | Weighted-average common shares used in computing net loss per share (basic and diluted) | 684,837 | 642,814 | 678,307 | 638,917 | | Net loss per share attributable to common stockholders, basic and diluted | $(0.41) | $(0.32) | $(0.73) | $(0.75) | - Potential common shares (stock options, RSUs, ESPP, PSUs, other awards) were excluded from diluted EPS calculation as their inclusion would be anti-dilutive due to net losses[134] 16. Reportable Segments - The Company operates as a single operating segment[135] Segment Information (in thousands) | Item | Three Months Ended June 30, 2025 | Three Months Ended June 30, 2024 | Six Months Ended June 30, 2025 | Six Months Ended June 30, 2024 | | :------------------------------------ | :------------------------------- | :------------------------------- | :----------------------------- | :----------------------------- | | Revenue | $1,080,677 | $893,543 | $2,115,884 | $1,694,843 | | Consolidated net loss | $(279,800) | $(207,195) | $(496,140) | $(479,115) | 17. Subsequent Events - On July 30, 2025, the Company executed a lease agreement for an additional 68,333 square feet of office space for approximately 8 years, with an incremental base rent of $82.0 million[136] Item 2. Management's Discussion and Analysis of Financial Condition and Results of Operations This section provides management's perspective on Roblox's financial condition, results of operations, and cash flows, discussing key business drivers, operating metrics, non-GAAP financial measures, and significant changes in revenue and expenses for the reported periods Overview - Roblox operates a free-to-use immersive platform for connection and communication, powered by user-generated content, drawing inspiration from gaming, entertainment, social media, and toys[140] - The platform consists of Roblox Client (for users), Roblox Studio (for developers/creators), and Roblox Cloud (services/infrastructure). Investments are focused on high-fidelity avatars, realistic experiences, AI tools, and social features[141] - In Q2 2025, only a small portion of DAUs (1.48 million out of 111.8 million) were paying users, with average daily bookings per DAU at $0.14 and per paying user at $10.68[143] - Platform policy changes and safety feature refinements in late 2024 and 2025 have impacted user engagement, revenue, and bookings, particularly from younger users[144] Key Metrics - Management tracks DAUs, hours engaged, bookings, and ABPDAU as key indicators of performance, trends, and for strategic decisions[146][147] - DAUs are defined as unique registered users logged in and visiting Roblox on a given calendar day, serving as an indicator of audience size and platform value[148] - Hours engaged measures the total time users spend on the platform, reflecting user engagement and platform value[151] - Bookings, a non-GAAP measure, represents sales activity, primarily from virtual currency, and provides a timelier indication of operating trends than revenue[154][155][157] - ABPDAU (Bookings per DAU) is used to understand monetization across all users[158] - Average new and returning monthly unique payers and monthly repurchase rate are used to understand monetization across payers[168] - Average bookings per monthly unique payer measures monetization from virtual currency and subscriptions among payers[171] Non-GAAP Financial Measures - Non-GAAP measures like bookings, Adjusted EBITDA, and free cash flow are used for evaluating ongoing operations, internal planning, and forecasting, providing consistency and comparability with past financial performance[174] Reconciliation of Revenue to Bookings (in thousands) | Item | Three Months Ended June 30, 2025 | Three Months Ended June 30, 2024 | Six Months Ended June 30, 2025 | Six Months Ended June 30, 2024 | | :------------------------ | :------------------------------- | :------------------------------- | :----------------------------- | :----------------------------- | | Revenue | $1,080,677 | $893,543 | $2,115,884 | $1,694,843 | | Change in deferred revenue | $365,068 | $66,728 | $542,964 | $194,332 | | Other | $(8,117) | $(5,093) | $(14,510) | $(10,240) | | Bookings | $1,437,628 | $955,178 | $2,644,338 | $1,878,935 | Reconciliation of Consolidated Net Loss to Adjusted EBITDA (in thousands) | Item | Three Months Ended June 30, 2025 | Three Months Ended June 30, 2024 | Six Months Ended June 30, 2025 | Six Months Ended June 30, 2024 | | :------------------------------------ | :------------------------------- | :------------------------------- | :----------------------------- | :----------------------------- | | Consolidated net loss | $(279,800) | $(207,195) | $(496,140) | $(479,115) | | Interest income | $(48,844) | $(44,383) | $(95,167) | $(86,553) | | Interest expense | $10,342 | $10,204 | $20,692 | $20,567 | | Other (income)/expense, net | $(5,131) | $3,315 | $(8,390) | $3,661 | | Provision for/(benefit from) income taxes | $973 | $110 | $1,836 | $1,163 | | Depreciation and amortization expense | $53,784 | $52,772 | $107,518 | $106,513 | | Stock-based compensation expense | $284,762 | $251,891 | $543,698 | $492,393 | | Other charges | $2,274 | $(189) | $2,274 | $993 | | Adjusted EBITDA | $18,360 | $66,525 | $76,321 | $59,622 | Reconciliation of Net Cash from Operating Activities to Free Cash Flow (in thousands) | Item | Six Months Ended June 30, 2025 | Six Months Ended June 30, 2024 | | :-------------------------------------------------------------------------------- | :----------------------------- | :----------------------------- | | Net cash and cash equivalents provided by operating activities | $643,176 | $390,395 | | Acquisition of property and equipment | $(39,975) | $(86,381) | | Purchases of intangible assets | $0 | $(1,370) | | Free cash flow | $603,201 | $302,644 | Change in Accounting Estimate - Effective April 1, 2024, the estimated average lifetime of a paying user was updated from 28 months to 27 months, impacting revenue recognition for durable virtual items[184] - This change resulted in an increase in revenue and cost of revenue during the three months ended June 30, 2024, by $58.9 million and $12.4 million, respectively[185] Components of Results of Operations - Revenue is primarily generated from virtual content sales, recognized over the estimated average lifetime of a paying user or upon consumption of virtual items[187] - Cost of revenue mainly consists of third-party payment processing fees, deferred and recognized over the same period as revenue. Differential Robux pricing, launched in November 2024, aims to shift sales to lower transaction fee channels[191][192] - Developer exchange fees represent amounts earned by qualified developers and creators, with a goal to continuously increase these earnings through new methods and business efficiencies[195][197] - Infrastructure and trust & safety expenses include data center operations, hosting, network costs, and personnel. The company is investing in AI and automation to improve safety moderation efficiency[198][200] - Research and development expenses are expected to increase due to headcount growth for new features and platform enhancements[201] - General and administrative expenses are projected to rise to support business growth and complexity, including professional services and litigation costs[202] - Sales and marketing expenses are planned to increase to support business growth, including personnel and advertising/promotional activities[203] - Interest income primarily comes from short-term and long-term investments and cash equivalents, while interest expense relates to the 2030 Notes[204][205] - Other income/(expense), net includes foreign currency exchange gains/losses and realized gains/losses on investments[206] - Provision for income taxes is primarily for foreign jurisdictions, with a full valuation allowance on U.S. deferred tax assets[207] Results of Operations Consolidated Results of Operations (in thousands, except per share data and percentages) | Item | Three Months Ended June 30, 2025 | Three Months Ended June 30, 2024 | % Change | Six Months Ended June 30, 2025 | Six Months Ended June 30, 2024 | % Change | | :------------------------------------ | :------------------------------- | :------------------------------- | :------- | :----------------------------- | :----------------------------- | :------- | | Revenue | $1,080,677 | $893,543 | 21% | $2,115,884 | $1,694,843 | 25% | | Cost of revenue | $236,113 | $198,557 | 19% | $460,838 | $377,423 | 22% | | Developer exchange fees | $316,371 | $208,270 | 52% | $597,935 | $410,675 | 46% | | Infrastructure and trust & safety | $260,684 | $221,064 | 18% | $502,811 | $447,998 | 12% | | Research and development | $384,996 | $361,684 | 6% | $759,596 | $723,749 | 5% | | General and administrative | $152,166 | $105,627 | 44% | $271,298 | $203,451 | 33% | | Sales and marketing | $52,807 | $36,290 | 46% | $100,575 | $71,824 | 40% | | Loss from operations | $(322,460) | $(237,949) | 35.5% | $(577,169) | $(540,277) | 6.8% | | Consolidated net loss | $(279,800) | $(207,195) | 35.0% | $(496,140) | $(479,115) | 3.6% | | Net loss per share | $(0.41) | $(0.32) | 28.1% | $(0.73) | $(0.75) | -2.7% | - Revenue increased by 21% for the three months and 25% for the six months ended June 30, 2025, driven by higher amortization of deferred revenue and increased bookings, primarily from a higher average number of daily unique paying users[211][212][213][214] - Developer exchange fees saw significant increases (52% for three months, 46% for six months), exceeding bookings growth due to differential Robux pricing incentivizing lower transaction fee channels[217][218] - General and administrative expenses increased by 44% and 33% for the three and six months, respectively, mainly due to higher personnel costs (including stock-based compensation) and increased professional services related to litigation[224][225] - Other income/(expense), net, changed from a net expense to a net income, primarily driven by foreign currency exchange gains[229] Liquidity and Capital Resources - As of June 30, 2025, principal liquidity sources were cash, cash equivalents, and investments totaling $4.7 billion, primarily for working capital, capital expenditures, and acquisitions[232] - Net cash provided by operating activities increased to $643.2 million for the six months ended June 30, 2025, from $390.4 million in the prior year, driven by increased deferred revenue and decreased accounts receivable[242][244] - Net cash used in investing activities increased significantly to $429.7 million, primarily due to higher net investment purchases[242][245] - The Company believes existing liquidity and expected cash from operations will be sufficient for the next 12 months, but future capital requirements depend on growth rate, headcount, and infrastructure investments[241] Covenant Adjusted EBITDA (in thousands) | Item | Three Months Ended June 30, 2025 | Three Months Ended June 30, 2024 | Six Months Ended June 30, 2025 | Six Months Ended June 30, 2024 | | :------------------------------------ | :------------------------------- | :------------------------------- | :----------------------------- | :----------------------------- | | Consolidated net loss | $(279,800) | $(207,195) | $(496,140) | $(479,115) | | Change in deferred revenue | $365,068 | $66,728 | $542,964 | $194,332 | | Change in deferred cost of revenue | $(63,553) | $(18,813) | $(94,373) | $(51,745) | | Covenant Adjusted EBITDA | $319,875 | $114,440 | $524,912 | $202,209 | Off-Balance Sheet Arrangements - The Company has letters of credit related to operating leases, which are not reflected in the balance sheets, with no material changes during the six months ended June 30, 2025[247] - Roblox has no relationships with unconsolidated entities or financial partnerships for off-balance sheet arrangements[247] Contractual Obligations and Commitments - Contractual commitments include operating leases for office facilities and data centers, and non-cancellable purchase obligations with data center hosting providers, software vendors, and payment processors[248][249] - No material changes to these commitments occurred during the six months ended June 30, 2025, beyond ordinary course of business[248][249] Critical Accounting Policies and Estimates - The preparation of financial statements requires significant estimates and assumptions, including the estimated average lifetime of a paying user for revenue recognition[251][252] - No material changes to critical accounting policies and estimates were reported compared to the Annual Report on Form 10-K for December 31, 2024[253] Recent Accounting Pronouncements - Refer to Note 2 for a discussion of recent accounting pronouncements[254] Item 3. Quantitative and Qualitative Disclosures About Market Risk This section details Roblox's exposure to market risks, specifically interest rate risk and foreign currency exchange/inflation risk, and how these factors could impact its financial position Interest Rate Risk - The Company's cash equivalents and investments are subject to market risk from changes in interest rates; a hypothetical 100 basis points increase would decrease fair value by approximately $40.1 million as of June 30, 2025[256] - The 2030 Notes have a fixed interest rate, so there is no financial statement risk from interest rate changes, though their fair value fluctuates[258] - Investment policy focuses on capital preservation and liquidity, not trading or speculation[257] Foreign Currency Exchange and Inflation Risk - No significant changes to foreign currency exchange risk or inflation risk disclosures were reported during the six months ended June 30, 2025[259] Item 4. Controls and Procedures This section addresses the effectiveness of Roblox's disclosure controls and procedures and internal control over financial reporting, confirming their effectiveness and noting no material changes Evaluation of Disclosure Controls and Procedures - Management, with CEO and CFO participation, concluded that disclosure controls and procedures were effective at a reasonable assurance level as of June 30, 2025[260] Changes in Internal Control Over Financial Reporting - No changes in internal control over financial reporting materially affected, or are reasonably likely to materially affect, internal control over financial reporting during the three months ended June 30, 2025[261] Inherent Limitations on Effectiveness of Controls and Procedures - Management acknowledges that controls and procedures, no matter how well designed, can only provide reasonable assurance of achieving objectives due to inherent limitations and resource constraints[262] PART II. OTHER INFORMATION This section covers additional information not included in the financial statements, such as legal proceedings, risk factors, equity sales, defaults, mine safety, other disclosures, and exhibits Item 1. Legal Proceedings This section refers to the detailed discussion of legal proceedings under Note 9 of the financial statements, indicating ongoing and potential litigation matters - Information on legal proceedings is incorporated by reference from Note 9, 'Commitments and Contingencies – Legal Proceedings,' in the condensed consolidated financial statements[263] Item 1A. Risk Factors This comprehensive section outlines various risks that could materially and adversely affect Roblox's business, financial condition, results of operations, and growth prospects, categorized into business-related, government regulations, intellectual property, stock ownership, indebtedness, and general risks Risk Factors Summary - Key risks include a history of net losses, seasonal business fluctuations, evolving global laws/regulations, dependence on third-party operating systems, maintaining a strong brand and safe online environment, potential service outages, security compromises, and reliance on developers for content[266] - Other risks involve the volatility of Class A common stock, concentrated voting control by the Founder, and the impact of analyst research[266] Risks Related to Our Business - Roblox has a history of net losses, with an accumulated deficit of $4,489.1 million as of June 30, 2025, and expects continued losses due to increased operating expenses and investments[268] - The business is highly seasonal, with peak bookings in Q4 and higher engagement in summer months, making financial results difficult to predict[269] - Dependence on third-party operating systems (Apple App Store, Google Play Store) means policy changes or increased fees could adversely affect the business; 29% of revenue from Apple, 15% from Google in Q2 2025[281][284] - Maintaining a strong reputation and safe online environment is critical, especially for child users, as inappropriate content or negative media coverage could harm the brand and business[288][293][294] - The Company relies on developers to create compelling content; failure to incentivize them or if popular experiences wane could lead to decreased user engagement and revenue[298][299][300] - Outages, disruptions, or degradations in services or infrastructure, including reliance on AWS, could harm user relationships and financial results[301][339] - International expansion, while critical, exposes Roblox to risks like weaker spending in developing countries, regulatory complexities, and geopolitical events, as seen with the platform being blocked in Türkiye[314][315] - The introduction and use of generative AI present risks such as flawed algorithms, biased datasets, unpredictable decisions, and evolving regulatory frameworks (e.g., EU AI Act, Texas Responsible AI Governance Act, Colorado AI Act)[322][323][324] - User metrics are estimates based on internal data and are subject to inaccuracies from methodological limitations, botting, and incomplete demographic data, potentially harming reputation and business decisions[325][327][328] - Unauthorized, fraudulent, or illegal use of Robux or digital goods, including through third-party websites or 'cheating' programs, could reduce revenue and increase chargebacks[331][333] - The China joint venture faces risks from U.S.-China trade tensions, potential data export rules, and the need for continued collaboration with Tencent, with the Luobulesi app currently unavailable in China[357][358][359][361] Risks Related to Government Regulations - Roblox is subject to complex and evolving global privacy, cybersecurity, and data protection laws (e.g., GDPR, UK GDPR, COPPA, LGPD, PIPL, NIS2, CCPA, CPRA), which impose stringent requirements and potential significant fines for non-compliance[362][364][365][366][367][368][369][370] - New laws in Utah, Louisiana, and Texas require verifiable parental consent for minors' in-app purchases, potentially impacting revenue and bookings from younger users[275] - Legal and regulatory restrictions on virtual currencies (like Robux), prepaid gift cards, and payment activities could adversely affect the platform, with ongoing discussions about 'loot boxes' and social casino genres[277][372][373] - Compliance with export control, trade sanctions (e.g., OFAC), and import laws is required, with potential liability for violations and impacts from geopolitical events like the Russia-Ukraine conflict[375] - Changes in tax laws (e.g., digital services tax, OECD Pillar One/Two) and unclaimed property audits could increase costs and liabilities[377][378][379][380] - Non-compliance with anti-corruption, anti-bribery (e.g., FCPA, UK Bribery Act), and anti-money laundering laws can lead to criminal or civil liability and reputational harm[381][383] - The Company may incur liability from user-generated content, including copyright infringement, despite relying on legal protections like DMCA and CDA, which are subject to change or challenge[384][391][392] Risks Related to Intellectual Property - Claims by third parties that Roblox infringes their intellectual property rights could lead to costly litigation, damages, or injunctions, harming the business[389][390] - Indemnity provisions in agreements with third parties could expose Roblox to substantial liability for intellectual property infringement and other losses[395] - Failure to adequately protect or enforce intellectual property rights (trademarks, trade secrets, patents, copyrights) could allow competitors to use proprietary technology, diminishing competitive advantage[396][397][398] - Use of open source software in the platform may pose intellectual property and security risks, potentially requiring disclosure of proprietary code or leading to compliance issues[399][400] Risks Related to Ownership of our Class A Common Stock - The public trading price of Class A common stock is volatile and can decline regardless of operating performance, influenced by market fluctuations, analyst coverage, and company announcements[401][402][404] - The dual-class stock structure concentrates voting control in the Founder, David Baszucki, limiting other stockholders' ability to influence corporate matters[403] - Inaccurate or unfavorable research by securities analysts, media, or short sellers could negatively impact the market price and trading volume of Class A common stock[405] - Nevada law and provisions in the articles of incorporation and bylaws (e.g., classified board, advance notice procedures) could make mergers, tender offers, or proxy contests difficult[406][407] - Bylaws designate specific exclusive forums for disputes, potentially limiting stockholders' ability to choose a favorable judicial forum[409][410][413] - The articles of incorporation include a jury trial waiver for internal actions, which could limit stockholders' ability to demand a jury trial[415] - The Company does not expect to pay dividends in the foreseeable future, requiring stockholders to rely on stock sales for gains[416] Risks Related to our Indebtedness - Inability to generate sufficient cash flow to service debt obligations, including the 2030 Notes, could necessitate refinancing or restructuring on unfavorable terms[417][418] - Indebtedness could adversely impact financial flexibility, reduce funds for operations and investments, and create a competitive disadvantage[420][423] General Risks - Failure to maintain effective disclosure and internal controls over financial reporting could impair timely and accurate financial statements, leading to investor distrust and regulatory scrutiny[421][422] - Legal proceedings and claims, regardless of outcome, can be costly, time-consuming, and harm the Company's reputation[424] - Catastrophic events (natural disasters, pandemics, geopolitical conflicts) could disrupt operations, cause system interruptions, and lead to financial losses not fully covered by insurance[425] - Changing inflation rates and volatile global economic conditions could affect expenses, reduce consumer spending, and impact financial results[426][427] - Maintaining cash balances at third-party financial institutions in excess of FDIC limits exposes the Company to risks if banks become insolvent[428] Item 2. Unregistered Sales of Equity Securities and Use of Proceeds This section states that there were no unregistered sales of equity securities or use of proceeds to report - No unregistered sales of equity securities or use of proceeds were reported[430] Item 3. Defaults Upon Senior Securities This section indicates that there were no defaults upon senior securities - No defaults upon senior securities were reported[431] Item 4. Mine Safety Disclosures This section confirms that there are no mine safety disclosures to report - No mine safety disclosures were reported[432] Item 5. Other Information This section details the termination of Rule 10b5-1 trading arrangements by several key officers during the most recent fiscal quarter - Amy Rawlings, Chief Accounting Officer, terminated her Rule 10b5-1 trading arrangement on June 3, 2025[434] - Arvind Chakravarthy, Chief People and Systems Officer, terminated his Rule 10b5-1 trading arrangement on June 10, 2025[435] - Michael Guthrie, former Chief Financial Officer, terminated his Rule 10b5-1 trading arrangement on June 11, 2025[436] Item 6. Exhibits This section lists all exhibits filed with the 10-Q report, including corporate governance documents, employment agreements, certifications, and XBRL data - Exhibits include the Plan of Conversion, Articles of Incorporation, Bylaws, Indemnification Agreements, Offer Letter for Naveen Chopra, Amendment to Separation Agreement for Michael Guthrie, Change in Control Agreement for Naveen Chopra, and various certifications (31.1, 31.2, 32.1)[438] - XBRL Instance Document and Taxonomy Extension Documents are also filed[438][440] Signatures This section contains the required signatures for the Quarterly Report on Form 10-Q, confirming its submission by authorized personnel - The report is signed by Naveen Chopra, Chief Financial Officer (Principal Financial Officer), on behalf of Roblox Corporation, dated July 31, 2025[442][443]