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Roblox, the platform for Lego-like user-generated games, reported its bookings for the third quarter ended September 30 were $637.8 million, up 28% from the same period a year ago.

The San Mateo company reported a net loss of $74 million on revenues of $509.3 million (up 102%) for the third quarter.

Roblox has done well among its target audience of children and teens during the pandemic, as players turned to it for remote, socially distanced play with their friends at a time when they couldn’t meet in-person.

Roblox previously raised $520 million at a $29.5 billion valuation in a financing round ahead of its direct listing on the New York Stock Exchange as a public company. It opened on March 10 at a valuation of $41.9 billion a share and has hovered around that value. And now it said that it is raising up to $1 billion through debt known as secured notes.

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In after-hours trading, Roblox’s stock is up 25% to $96.66 a share.

“Engagement is our north star. We’re very pleased that during the third quarter, people of all ages from across the globe chose to spend over 11 billion hours on Roblox,” said David Baszucki, CEO of Roblox, in a statement. “We are happy to report that the developer community earned over $130 million in the quarter and is on pace to earn well over $500 million this year. As we finish 2021 and head into 2022, we will continue to invest in innovative technology to enable our developer community to do what they do best — build and create.”

Q3 results

Dave Baszucki (left) and Dan Sturman of Roblox.

Above: Dave Baszucki (left) and Dan Sturman of Roblox.

Image Credit: Roblox

Analysts expected a loss of 14 cents a share on bookings of $636.5 million. Most video game companies emphasize non-GAAP bookings, or the total value of virtual currency purchases by players during the quarter, instead of revenues, which under accounting rules are limited to those purchases that are expected to be fully resolved within a certain time period. For instance, a player may buy Robux currency in the first quarter, but spend it over 10 months. That revenue has to be recognized over time, as it is spent inside the platform’s games.

“We feel really good about [the growth]for two reasons. One, it’s measured against extraordinary growth last year,” said Craig Donato, chief business officer, in an interview with GamesBeat. “We also typically have back-to-school seasonality. So to see 28% bookings growth in the fall is really exciting for us.”

Donato said that 74% of Roblox’s usage is outside the U.S. and Canada, so the company is seeing really good growth rates in other parts of the world. And the Roblox audience is aging up, as a higher percentage of users are now over 13. The top 1,000 experiences on Roblox are also seeing higher ages, and more content is targeting older players as well.

Roblox’s quarterly revenue came in at $509.3 million, up 102% from a year earlier. The GAAP net loss for the quarter was $74 million, or 13 cents a share. Net cash from operations was $181.2 million.

Roblox’s goal is to build the metaverse, the universe of virtual worlds that are all interconnected, like in novels such as Snow Crash and Ready Player One.

Roblox gets a 30% cut from the bookings generated by sales of Robux, the virtual currency used by players to play user-generated games, the company’s bookings for 2020 were $1.9 billion, double what they were the year before. Roblox’s games have become so popular that people have played the best ones billions of times.

In the quarter, average daily active users (DAU) were 47.3 million, up 31% from a year earlier and up from 43 million in the second quarter. Hours engaged were 11.2 billion, up 28% from a year ago, and average bookings per DAU were $13.49, down from $13.73 due to a shift in the demographic user base for the company.

For the year 2020, on average, Roblox said that 32.6 million people came to the platform every day. More than 1.25 million creators have made money in Roblox. In the year ended December 31, 2020, users spent 30.6 billion hours engaged on the platform, an average of 2.6 hours per daily active user each day.

“Growth in all of our core metrics — DAUs, hours, and bookings — displayed strong year-over-year growth despite lapping Covid-impacted periods and back-to-school seasonality,” said Michael Guthrie, chief financial officer of Roblox, in a statement. “Notwithstanding significant investments in developer economics and hiring, we also generated healthy cash from operations. Based on our October results, we appear to be having a great start to the last quarter of the year.”

In the previous quarter, Roblox had 1,234 employees. Now it has 1,435 employees, up 66% from 865 employees at this time last year. Engineering and product talent still comprise approximately 80% of the employee base.

October results

The Roblox EDC front view.

Above: The Roblox EDC front view.

Image Credit: Roblox

In October, Roblox issued $1 billion aggregate principal amount of 3.875% senior unsecured notes due 2030. Net proceeds will be used for general corporate purposes. Donato said the point was to increase the size of the company’s war chest.

Adjusted EBITDA, a measure of operating performance used in the covenant calculations specified in the indenture related to our 3.875% senior unsecured notes due 2030, was $135.7 million in Q3 2021 compared to $161.0 million in Q3 2020.

Rather than make forecasts about how its upcoming quarter is expected to go, Roblox is not making a forecast. Rather, it is disclosing the actual results for the month of October, which is part of the fourth quarter.

Roblox had an outage across its platform from October 28 through October 31.

As for the outage, Donato said the company knows what happened with the outage and is publishing a post-mortem for it soon. He noted that developers and users will be made whole for that outage time.

“We feel really bad about that, as our players look to us to make social connections and our developers look to make a living,” he said.

Through the first 27 days of October (prior to the outage), average DAUs were 50.5 million, an increase of 43% over the same period in 2020. Given the outage, actual average DAUs for the full month of October dropped to 47.1 million.

Through the first 27 days of October, cumulative hours of engagement were 3.2 billion, up 41% over the same period in 2020. Actual cumulative hours of engagement for the full month of October were 3.4 billion.

Through the first 27 days of October, bookings were estimated to be between $177 to $179 million, an increase of 30% – 34% over the same period in 2020. Actual bookings for the entire month of October were estimated to be between $189 to $192 million.

Roblox said that the branded experience created by Vans and a Roblox developer has generated 40 million visits. On top of that, music experiences and concerts are generating strong audiences as well.

“There is increasing levels of engagement with brands,” Donato said. “The first is that we’ll just sell gear, or give away gear. The second is more like pop-up experiences like with the movie In the Heights.”

And then there are persistent locations in the world, like the Vans experience.

The top 10 experiences on Roblox account for 40% of Robux spent, and that is down from 50% a year ago.

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