Roblox(RBLX) The Motley Fool·2025-01-05 09:12Company Overview - Roblox operates an online gaming platform with a unique feature, Roblox Studio, which allows users to create 3D games and virtual worlds [1] - The company has a strong following among children, with 39% of its daily active users (DAUs) aged 13 and younger, although the over-13 cohort is growing faster [3] - DAUs grew to 89 million in Q3 2024, a 27% yearly increase, and time spent on the platform surged 29% over the same period [3] Financial Performance - Revenue for the first nine months of 2024 reached $2.6 billion, a 28% increase compared to the same period in 2023 [4] - Costs exceeded $3.4 billion in the first three quarters of 2024, largely due to $758 million in stock-based compensation, resulting in a net loss of $716 million [5] - Free cash flow (FCF) improved significantly to $521 million in the first three quarters of 2024, up from $46 million in the same period in 2023 [6] Growth and Valuation - The company's 2024 guidance projects 28% yearly revenue growth, indicating continued strong performance [7] - The stock's price-to-sales (P/S) ratio has risen to 11, higher than the 7 seen last spring but still below the 30+ multiples during the 2021 bull market [7] Market Position and Future Outlook - Roblox has maintained and increased its popularity by pivoting into artificial intelligence (AI), which has improved creator productivity and reduced technical barriers for game development [2] - Despite its growing user base and improving FCF, the company's high stock-based compensation and ongoing losses may deter some investors [9] - The stock is expected to remain a major player in the gaming industry, but its near-term direction is uncertain, making it a hold rather than a buy for new investments [10]