10-KPeriod: FY2021

Roblox Corp Annual Report, Year Ended Dec 31, 2021

Filed February 25, 2022For Securities:RBLX

Summary

Roblox Corporation's 2021 10-K filing reveals significant growth and strategic acquisitions, alongside proactive adoption of new accounting standards. The company's revenue generation continues to be heavily dominated by the United States and Canada, representing approximately 68% of total revenue in 2021, with a slight decrease from 69% in 2020. A notable event during the year was the acquisition of Guilded, Inc. for $77.6 million, aimed at enhancing their communications platform for gaming communities. The company also transitioned to new lease accounting standards (Topic 842) effective January 1, 2021, which resulted in the balance sheet recognition of operating lease ROU assets and liabilities, though it did not materially impact prior periods' income statements. Financially, the company successfully issued $1.0 billion in Senior Notes due 2030, demonstrating access to capital markets. Stock-based compensation remains a significant expense, particularly R&D and G&A, with substantial unrecognized compensation expected to be recognized over future periods. Management has also implemented remediation efforts to address a previously identified material weakness in internal controls over revenue recognition, believing it to be resolved as of December 31, 2021. While the company has a substantial net operating loss carryforward, a significant valuation allowance is maintained against its deferred tax assets.

Financial Highlights

52 data points
Beta

Revenue

$1.92B

74.1% Gross Margin

Net Income

-$503.00M

-26.2% Net Margin

EPS (Diluted)

$-0.97

Total Assets

$4.56B

Cash & Equivalents

$3.00B

Free Cash Flow

$565.84M

Financial Statements
Beta
Revenue$1.92B
Cost of Revenue$496.87M
Gross Profit$1.42B
R&D Expenses$533.21M
Operating Expenses$2.41B
Operating Income-$495.10M
Interest Expense$7.00M
Net Income-$503.00M
EPS (Basic)$-0.97
EPS (Diluted)$-0.97
Shares Outstanding (Basic)505.86M
Shares Outstanding (Diluted)505.86M

Key Highlights

  • 1Revenue continues to be highly concentrated in the United States and Canada, accounting for 68% of total revenue in 2021.
  • 2Acquired Guilded, Inc. for $77.6 million (cash and stock) to enhance communication platform capabilities for gaming communities.
  • 3Issued $1.0 billion of 3.875% Senior Notes due 2030 to fund operations and growth initiatives.
  • 4Adopted new lease accounting standard ASC 842 (Topic 842) effective January 1, 2021, impacting balance sheet presentation with ROU assets and liabilities.
  • 5Significant increase in goodwill to $118.1 million by year-end 2021, primarily from the Guilded acquisition.
  • 6Total stock-based compensation expense increased substantially to $341.9 million in 2021, largely driven by R&D and G&A.
  • 7Remediated a previously disclosed material weakness in internal controls related to revenue recognition, with management believing it is no longer present as of December 31, 2021.

Frequently Asked Questions

The adoption of ASC 842 on January 1, 2021, primarily impacted the balance sheet by requiring the recognition of operating lease ROU assets and operating lease liabilities. For Roblox, this resulted in recognized assets of $195.9 million and liabilities of $245.9 million (present value of lease liabilities) as of December 31, 2021, related to real estate and data center leases. While it changed the balance sheet presentation, it did not materially affect prior periods' income statements and was implemented using a modified retrospective transition method.

In 2021, Roblox made two significant acquisitions: Guilded, Inc. for $77.6 million and two other individually immaterial acquisitions totaling $8.5 million. The Guilded acquisition was strategic, aimed at enhancing Roblox's communications platform to better connect gaming communities. While not presented as material to historical periods, these acquisitions reflect Roblox's strategy to expand its ecosystem and technological capabilities.

Roblox has substantial federal and state NOL carryforwards, amounting to approximately $2.1 billion and $840 million, respectively, as of December 31, 2021. However, due to a history of losses, a significant valuation allowance of $711.3 million is maintained against its gross deferred tax assets, meaning it is not currently recognized as probable that these assets will be utilized. The company continues to assess the recoverability of these assets, with a portion of federal NOLs potentially expiring or being limited in future utilization.

Yes, Roblox reported in its 10-K that it has implemented remediation efforts to address a previously identified material weakness in internal control over financial reporting related to revenue recognition. These efforts included hiring additional technical resources, engaging third-party oversight for complex accounting matters, and implementing enhanced control activities for revenue recognition reviews. Management believes these actions have successfully remediated the material weakness as of December 31, 2021.