01—Abstract
Summary
Summary of the 10-Q filed November 9, 2022. Cited figures are marked; the original filing is the authoritative source.
Roblox Corporation (RBLX) reported its financial results for the third quarter ended September 30, 2022.
The company experienced a notable increase in revenue, up 2% year-over-year to $517.7 milliona for the quarter, and a significant 22% increase year-over-year to $1.65 billion for the nine-month period. This growth was primarily driven by continued revenue recognition from prior period bookings and an increase in daily active users (DAUs). However, monetization per DAU saw a slight decrease due to DAUs growing at a faster rate than bookings.
The company also reported a substantial increase in operating expenses, particularly in infrastructure, trust & safety, and research & development, reflecting ongoing investments in platform enhancement and user growth. Despite revenue growth, Roblox continued to operate at a net loss. The net loss attributable to common stockholders widened to $297.8 million for the quarter, compared to $74.0 millionb in the prior year.
This was largely driven by the significant increase in operating expenses and a change in accounting estimate related to the paying user life, which reduced revenue by $111 millionc in the quarter. While bookings showed a healthy 10% increase in the quarter, free cash flow turned negative year-over-year for the nine-month period, highlighting the pressure from increased operational investments. Investors should monitor the company's ability to translate user growth into profitable operations amidst continued expansion.
02—Key points
Key Highlights
- Revenue increased by 2% to $517.7 million in Q3 2022 compared to Q3 2021, and by 22% to $1.65 billion for the nine months ended September 30, 2022.
- Bookings increased by 10% to $701.7 million in Q3 2022 compared to Q3 2021, indicating strong user transaction activity.
- Daily Active Users (DAUs) continued to grow, increasing from approximately 675,000 to 768,000 in Q3 2022 compared to the prior year's comparable period.
- Net loss attributable to common stockholders widened significantly to $297.8 million in Q3 2022 from $74.0 million in Q3 2021.
- Operating expenses, particularly in Infrastructure & Trust & Safety (+63% YoY for Q3) and Research & Development (+70% YoY for Q3), increased significantly due to investments in platform and user growth.
- Free cash flow turned negative at $(20.4) million for the nine months ended September 30, 2022, a significant decrease from $480.7 million in the prior year's comparable period.
- The company updated its paying user life estimate to 28 months, which reduced revenue by $111 million and cost of revenue by $25.5 million in Q3 2022.
03—One dollar
Follow one dollar
For each $1.00 of revenue in Q3 FY2022, Roblox Corp lost $0.58.
- Revenue$517.7M100.0%
- Cost of revenue−$126.4M24.4%
- Gross profit$391.3M75.6%
- Operating costs−$691.3M133.5%
- Operating income−$300.0M57.9%
- Interest, other & tax$2.2M0.4%
- Net income−$297.8M57.5%
04—Financials
Financial Highlights
Figures from 10-QQ3 FY2022filed November 9, 2022Financial Statements
Q3 FY2022 against Q3 FY2021
| Line item | Q3 FY2022Q3 FY2021 | Change |
|---|---|---|
| Revenue | $517.71M$509.34M | +1.6% |
| Cost of Revenue | $126.44M$130.01M | −2.8% |
| Gross Profit | $391.27M$379.32M | +3.2% |
| R&D Expenses | $235.55M$138.25M | +70.4% |
| Operating Expenses | $817.71M$586.78M | +39.4% |
| Operating Income | -$300.01M-$77.45M | −287.4% |
| Interest Expense | $10.01M$0 | — |
| Net Income | -$297.80M-$74.00M | −302.4% |
| EPS (Basic) | $-0.50$-0.13 | −284.6% |
| EPS (Diluted) | $-0.50$-0.13 | −284.6% |
| Shares Outstanding (Basic) | 597.78M575.93M | +3.8% |
| Shares Outstanding (Diluted) | 597.78M575.93M | +3.8% |
05—Questions
Frequently Asked Questions
What was Roblox's revenue performance in Q3 2022?
Roblox reported a revenue of $517.7 million for the three months ended September 30, 2022, representing a 2% increase compared to $509.3 million in the same period of the prior year. For the nine months ended September 30, 2022, revenue increased by 22% to $1.65 billion from $1.35 billion in the prior year period.
How did Roblox's expenses change in Q3 2022?
Roblox saw significant increases in operating expenses. Total cost and expenses rose to $817.7 million in Q3 2022 from $586.8 million in Q3 2021. Key drivers of this increase were Infrastructure and trust & safety expenses (up 63% YoY) and Research and development expenses (up 70% YoY), reflecting substantial investments in the platform and user growth. Stock-based compensation also increased significantly across all expense categories.
What is the impact of the change in accounting estimate on revenue?
Roblox updated its paying user life estimate to 28 months in Q3 2022. This change resulted in a decrease in revenue of $111.0 million and a decrease in cost of revenue of $25.5 million for the three months ended September 30, 2022. For the nine months ended September 30, 2022, the change reduced revenue by $329.7 million and cost of revenue by $76.4 million.
What is Roblox's current financial position regarding profitability and cash flow?
Roblox continued to report net losses. The net loss attributable to common stockholders for Q3 2022 was $297.8 million, a significant increase from $74.0 million in Q3 2021. Free cash flow for the nine months ended September 30, 2022, turned negative at $(20.4) million, a stark contrast to the $480.7 million generated in the same period of 2021. This indicates increased investment in growth initiatives impacting short-term profitability and cash generation.
06—Continue