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UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, DC 20549
FORM 10-Q 
(Mark One)
QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
For the quarterly period ended September 30, 2022
OR
TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
For the transition period from
Commission File Number: 001-39763
Roblox Corporation
(Exact Name of Registrant as Specified in its Charter)
Delaware 20-0991664
(State or other jurisdiction of
incorporation or organization)
 (I.R.S. Employer
Identification No.)
970 Park Place
San Mateo, California, 94403
(Address of principal executive offices and Zip Code)
(888) 858-2569
(Registrant’s telephone number, including area code)
Securities registered pursuant to Section 12(b) of the Act:
Title of each class Trading
Symbol(s)
 Name of each exchange
on which registered
Class A Common Stock, $0.0001 par value RBLX The New York Stock Exchange
Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days.     Yes  ☒    No  ☐
Indicate by check mark whether the registrant has submitted electronically every Interactive Data File required to be submitted pursuant to Rule 405 of Regulation S-T (§232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit such files).     Yes  ☒    No  ☐
Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, smaller reporting company, or an emerging growth company. See the definitions of “large accelerated filer,” “accelerated filer,” “smaller reporting company,” and “emerging growth company” in Rule 12b-2 of the Exchange Act.
Large accelerated filer   Accelerated filer 
Non-accelerated filer   Smaller reporting company 
Emerging growth company    
If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act.  ☐
Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act).     Yes      No  ☒
As of November 1, 2022, the registrant had 549,478,789 shares of Class A common stock and 51,337,302 of Class B common stock, each with a par value of $0.0001 per share, outstanding.


Table of Contents
  Page
PART I.
Item 1.
Item 2.
Item 3.
Item 4.
PART II.
Item 1.
Item 1A.
Item 2.
Item 3.
Item 4.
Item 5.
Item 6.
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SPECIAL NOTE REGARDING FORWARD-LOOKING STATEMENTS
This Quarterly Report on Form 10-Q contains forward-looking statements within the meaning of the federal securities laws, which statements involve substantial risks and uncertainties. Forward-looking statements generally relate to future events or our future financial or operating performance. In some cases, you can identify forward-looking statements because they contain words such as “expect,” “anticipate,” “should,” “believe,” “hope,” “target,” “project,” “plan,” “goals,” “estimate,” “potential,” “predict,” “may,” “will,” “might,” “could,” “would,” “intend,” “shall,” “project,” “contemplate,” “opportunity,” or “continue” or the negative of these words or other similar terms or expressions that concern our expectations, strategy, plans, or intentions. Forward-looking statements contained in this Quarterly Report on Form 10-Q include, but are not limited to, statements about:
our expectations regarding future financial performance, including but not limited to our expectations regarding revenue, cost of revenue, including as a result of a change in estimated user life, operating expenses, and our key metrics, and our ability to achieve and maintain future profitability;
our ability to successfully execute our business and growth strategy, including our potential to scale and grow our international users, developers, and creators and our ability to create new revenue opportunities;
the sufficiency of our cash and cash equivalents to meet our liquidity needs;
the demand for our platform in general;
our ability to retain and increase our number of users, developers, and creators;
the impact of the COVID-19 pandemic and the easing of restrictions related to the COVID-19 pandemic, including on our users’, developers’, and creators’ usage and spending habits;
the impact of inflation and global economic conditions on our operations;
challenges associated with our future of work plans;
our ability to develop enhancements to our platform, and bring them to market in a timely manner;
our beliefs about and objectives for future operations;
our ability to attract and retain employees and key personnel and maintain our corporate culture;
future acquisitions or investments;
the ability for developers to build, launch, scale, and monetize experiences for users;
our expectations regarding our ability to generate revenue from our users;
our ability to convert users into developers and creators;
our expectations regarding new target demographics;
the functionality and economics of our platform on mobile operating systems;
our ability to continue to provide a safe and civil online environment, particularly for children;
our ability to develop and protect our brand;
our ability to maintain the security and availability of our platform;
the impact of disruption in supply chains on our ability to expand or increase the capacity of the platform or replace defective equipment;
our business model and expectations and management of future growth, including expansion in international markets and expenditures associated with such growth;
our ability to compete with existing and new competitors;
our expectations regarding outstanding litigation and legal and regulatory matters;
our expectations regarding the effects of existing and developing laws and regulations, including with respect to privacy, data protection, online safety, and the regulation of Robux as a security, both in the U.S. and internationally, including how such laws and regulations may interfere with user, developer, and creator access to our platform and experiences;
our ability, through our joint venture, to successfully publish and operate Luobulesi in China;
our expectations surrounding Robux as an attractive virtual currency and incentives to reinvest Robux in the platform;
the impact of foreign currency exchange rates and rising interest rates on results of operations;
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economic, seasonal, and industry trends;
the impact of geopolitical events, including the war in Ukraine and its impact on economies in Europe and globally;
our expectations regarding new accounting standards;
our ability to achieve and maintain effective control over financial reporting;
our estimates related to stock-based compensation expenses;
our indebtedness may limit our operations and our use of our cash flow, and any failure to comply with the covenants that apply to our indebtedness could adversely affect our liquidity and financial condition; and
the increased expenses associated with being a public company.
We caution you that the foregoing list may not contain all of the forward-looking statements made in this Quarterly Report on Form 10-Q.
You should not rely upon forward-looking statements as predictions of future events. We have based the forward-looking statements contained in this Quarterly Report on Form 10-Q primarily on our current expectations and projections about future events and trends that we believe may affect our business, financial condition, results of operations and prospects. The outcome of the events described in these forward-looking statements is subject to risks, uncertainties and other factors, including those described in the section titled “Risk Factors” and elsewhere in this Quarterly Report on Form 10-Q. Moreover, we operate in a very competitive and rapidly changing environment. New risks and uncertainties emerge from time to time and it is not possible for us to predict all risks and uncertainties that could have an impact on the forward-looking statements contained in this Quarterly Report on Form 10-Q. We cannot assure you that the results, events and circumstances reflected in the forward-looking statements will be achieved or occur, and actual results, events or circumstances could differ materially from those described in the forward-looking statements.
Neither we nor any other person assumes responsibility for the accuracy and completeness of any of these forward-looking statements. Moreover, the forward-looking statements made in this Quarterly Report on Form 10-Q relate only to events as of the date on which the statements are made. We undertake no obligation to update any forward-looking statements made in this Quarterly Report on Form 10-Q to reflect events or circumstances after the date of this Quarterly Report on Form 10-Q or to reflect new information or the occurrence of unanticipated events, except as required by law. We may not actually achieve the plans, intentions or expectations disclosed in our forward-looking statements and you should not place undue reliance on our forward-looking statements. Our forward-looking statements do not reflect the potential impact of any future acquisitions, mergers, dispositions, joint ventures or investments we may make.
In addition, statements that “we believe” and similar statements reflect our beliefs and opinions on the relevant subject. These statements are based upon information available to us as of the date of this Quarterly Report on Form 10-Q, and while we believe such information forms a reasonable basis for such statements, such information may be limited or incomplete, and our statements should not be read to indicate that we have conducted an exhaustive inquiry into, or review of, all potentially available relevant information. These statements are inherently uncertain and investors are cautioned not to unduly rely upon these statements.
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SPECIAL NOTE REGARDING OPERATING METRICS
We manage our business by tracking several operating metrics, including daily active users, or DAUs, hours engaged, and average bookings per DAU, or ABPDAU. As a management team, we believe each of these operating metrics provides useful information to investors and others. For information concerning these metrics as measured by us, see “Management’s Discussion and Analysis of Financial Condition and Results of Operations.”
While these metrics are based on what we believe to be reasonable estimates of our user base for the applicable period of measurement, there are inherent challenges in measuring how our platform is used. These metrics are determined by using internal data gathered on an analytics platform that we developed and operate and have not been validated by an independent third party. This platform tracks user account and session activity. If we fail to maintain an effective analytics platform, our metrics calculations may be inaccurate. These metrics are also determined by certain demographic data provided to us by the user, such as age or gender. If our users provide us with incorrect or incomplete information, then our estimates may be inaccurate.
We believe that these metrics are reasonable estimates of our user base for the applicable period of measurement, and that the methodologies we employ and update from time-to-time to create these metrics are reasonable bases to identify trends in user behavior. Because we update the methodologies we employ to create metrics, our DAUs or other metrics may not be comparable to those in prior periods. Additionally, the accuracy of these metrics may be affected by certain factors relating to user activity and systems and our ability to identify and detect attempts to replicate legitimate user activity, often referred to as botting. See the sections titled “Risk Factors—Our user metrics and other estimates are subject to inherent challenges in measurement, and real or perceived inaccuracies in those metrics may significantly harm and negatively affect our reputation and our business”.
Daily active users, or DAUs
We define a DAU as a user who has logged in and visited Roblox through our website or application on a unique registered account on a given calendar day. If a registered, logged in user visits Roblox more than once within a 24-hour period that spans two calendar days, that user is counted as a DAU only for the first calendar day. We believe this method better reflects global engagement on the platform compared to a method based purely on a calendar-day cutoff. DAUs for a specified period is the average of the DAUs for each day during that period, so 30 days, for example, in the month of September.
Other companies, including companies in our industry, may calculate DAUs differently.
We track DAUs as an indicator of the size of the audience engaged on our platform. DAUs are also broken out by geographic region to help us understand the global engagement on our platform.
The geographic location data collected is based on the IP address associated with the account when an account is initially registered on Roblox. The IP address may not always accurately reflect a user’s actual location at the time they engaged with our platform. We do not collect the geographic location of our Xbox users, which are grouped into Rest of World DAUs for the purposes of our reporting. The platform data collected is based on the platform associated with the account when an account is initially registered on Roblox. The demographic data collected is self-reported to us and may not always accurately represent the actual attributes of the user.
Because DAUs measure account activity and an individual user may actively use our platform within a particular day on multiple accounts for which that individual registered, our DAU metric is not a measure of unique individuals accessing Roblox. Additionally, if undetected, fraud and unauthorized access to our platform may contribute, from time to time, to an overstatement of DAUs. In many cases, fraudulent accounts are created by bots to inflate user activity for a particular developer’s content on our platform, thus making the developer’s experience or other content appear more popular than it really is. We strive to detect and minimize fraud and unauthorized access to our platform. See the sections titled “Risk Factors—Our user metrics and other estimates are subject to inherent challenges in measurement, and real or perceived inaccuracies in those metrics may significantly harm and negatively affect our reputation and our business” and “Risk Factors—Some developers, creators, and users on our platform may make unauthorized, fraudulent, or illegal use of Robux and other digital goods or experiences on our platform, including through unauthorized third-party websites or “cheating” programs.”
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Hours engaged
We define hours engaged as the time spent by our users on the platform, which includes time spent in experiences, which refer to the titles that have been created by developers, and within platform features such as chat and avatar personalization. Users can personalize the size and body shape of their avatars as well as equip their avatars with items acquired from the Avatar Marketplace, a marketplace that allows users to acquire items such as clothing, gear, simulated gestures, or emotes, and other accessories.
We calculate total hours engaged as the aggregate of user session lengths in a given period. We determine this length of time using internal company systems that track user activity on our platform, and aggregate discrete activities into a user session.
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PART I—FINANCIAL INFORMATION
Item 1. Financial Statements (unaudited)
ROBLOX CORPORATION
CONDENSED CONSOLIDATED BALANCE SHEETS
(in thousands, except par values)
(unaudited)
 As of
 September 30, 2022December 31, 2021
Assets
Current assets:
Cash and cash equivalents$3,021,507 $3,004,300 
Accounts receivable—net of allowances185,831 307,349 
Prepaid expenses and other current assets72,925 32,091 
Deferred cost of revenue, current portion387,817 406,025 
Total current assets3,668,080 3,749,765 
Property and equipment—net525,928 271,352 
Operating lease right-of-use assets452,852 221,285 
Deferred cost of revenue, long-term204,921 137,524 
Intangible assets, net53,655 59,666 
Goodwill130,453 118,071 
Other assets2,435 2,933 
Total assets$5,038,324 $4,560,596 
Liabilities and Stockholders’ Equity
Current liabilities:
Accounts payable$45,099 $64,395 
Accrued expenses and other current liabilities273,832 180,769 
Developer exchange liability168,367 163,906 
Deferred revenue—current portion1,750,860 1,758,022 
Total current liabilities2,238,158 2,167,092 
Deferred revenue—net of current portion960,924 616,834 
Operating lease liabilities425,973 194,616 
Long-term debt, net988,663 987,723 
Other long-term liabilities13 1,408 
Total liabilities4,613,731 3,967,673 
Commitments and contingencies (Note 11)
Stockholders’ Equity
Common stock, $0.0001 par value; 5,000,000 and 5,000,000 authorized as of September 30, 2022, and December 31, 2021, respectively, 600,641 and 585,878 shares issued and outstanding as of September 30, 2022, and December 31, 2021, respectively; Class A common stock—4,935,000 and 4,935,000 shares authorized as of September 30, 2022, and December 31, 2021, respectively, 549,303 and 534,541 shares issued and outstanding as of September 30, 2022, and December 31, 2021, respectively; Class B common stock—65,000 and 65,000 shares authorized as of September 30, 2022, and December 31, 2021, respectively, 51,337 and 51,337 shares issued and outstanding as of September 30, 2022, and December 31, 2021, respectively
59 58 
Additional paid-in capital2,041,042 1,568,638 
Accumulated other comprehensive income/(loss)
997 62 
Accumulated deficit(1,618,381)(983,941)
Total Roblox Corporation stockholders’ equity423,717 584,817 
Noncontrolling interests876 8,106 
Total stockholders’ equity424,593 592,923 
Total liabilities and stockholders’ equity$5,038,324 $4,560,596 
The accompanying notes are an integral part of these condensed consolidated financial statements.
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ROBLOX CORPORATION
CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS
(in thousands, except per share amounts)
(unaudited)
 Three Months EndedNine Months Ended
September 30,September 30,
 2022202120222021
Revenue$517,707 $509,336 $1,646,048 $1,350,412 
Cost and expenses:
Cost of revenue(1)
126,437 130,015 405,226 344,882 
Developer exchange fees151,470 129,952 441,740 378,604 
Infrastructure and trust & safety190,986 117,387 490,576 320,509 
Research and development235,551 138,245 625,070 359,637 
General and administrative81,165 51,584 217,613 243,637 
Sales and marketing32,105 19,599 87,708 58,591 
Total cost and expenses817,714 586,782 2,267,933 1,705,860 
Loss from operations(300,007)(77,446)(621,885)(355,448)
Interest income12,764 28 17,206 59 
Interest expense(10,005) (29,895) 
Other income/(expense), net(4,302)(770)(7,732)(1,810)
Loss before income taxes(301,550)(78,188)(642,306)(357,199)
Provision for/(benefit from) income taxes352 (998)350 (976)
Consolidated net loss(301,902)(77,190)(642,656)(356,223)
Net loss attributable to the noncontrolling interest(4,104)(3,188)(8,216)(7,870)
Net loss attributable to common stockholders$(297,798)$(74,002)$(634,440)$(348,353)
Net loss per share attributable to common stockholders, basic and diluted$(0.50)$(0.13)$(1.07)$(0.73)
Weighted-average shares used in computing net loss per share attributable to common stockholders—basic and diluted597,779 575,932 593,452 480,357 
(1)Depreciation of servers and infrastructure equipment included in infrastructure and trust & safety.
The accompanying notes are an integral part of these condensed consolidated financial statements.
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ROBLOX CORPORATION
CONDENSED CONSOLIDATED STATEMENTS OF COMPREHENSIVE LOSS
(in thousands)
(unaudited)
 Three Months EndedNine Months Ended
September 30,September 30,
 2022202120222021
Consolidated net loss$(301,902)$(77,190)$(642,656)$(356,223)
Other comprehensive income/(loss):
Foreign currency translation adjustments1,064 (4)1,921 44 
Other comprehensive income/(loss), net of tax1,064 (4)1,921 44 
Total comprehensive loss including noncontrolling interests(300,838)(77,194)(640,735)(356,179)
Less: net loss attributable to noncontrolling interests(4,104)(3,188)(8,216)(7,870)
Less: cumulative translation adjustments attributable to noncontrolling interests475 (2)986 22 
Total comprehensive loss attributable to noncontrolling interests(3,629)(3,190)(7,230)(7,848)
Total comprehensive loss attributable to common stockholders$(297,209)$(74,004)$(633,505)$(348,331)
The accompanying notes are an integral part of these condensed consolidated financial statements.
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ROBLOX CORPORATION
CONDENSED CONSOLIDATED STATEMENTS OF CONVERTIBLE PREFERRED STOCK AND STOCKHOLDERS’ EQUITY/((DEFICIT)
(in thousands)
(unaudited)
Three Months Ended September 30, 2022
 Convertible
Preferred Stock
Class A and
Class B
Common Stock
Additional
Paid-In
Capital
Accumulated
Other
Comprehensive
(Loss) Income
Accumulated
Deficit
Non-
controlling
Interest
Total
Stockholders’
Equity
 SharesAmountSharesAmount
Balance at June 30, 2022  596,622 $59 $1,867,204 $408 $(1,320,583)$4,505 $551,593 
Issuance of common stock upon exercise of stock options— — 1,820 — 4,020 — — — 4,020 
Issuance of common stock under ESPP— — 240 — 8,459 — — — 8,459 
Stock-based compensation— — — — 161,359 — — — 161,359 
Release of restricted stock units— — 1,959 — — — — — — 
Other— — — — — — — —  
Cumulative translation adjustments— — — — — 589 — 475 1,064 
Net loss— — — — — — (297,798)(4,104)(301,902)
Balance at September 30, 2022  600,641 $59 $2,041,042 $997 $(1,618,381)$876 $424,593 
Nine Months Ended September 30, 2022
 Convertible
Preferred Stock
Class A and
Class B
Common Stock
Additional
Paid-In
Capital
Accumulated
Other
Comprehensive
(Loss) Income
Accumulated
Deficit
Non-
controlling
Interest
Total
Stockholders’
Equity
 SharesAmountSharesAmount
Balance at December 31, 2021  585,878 $58 $1,568,638 $62 $(983,941)$8,106 $592,923 
Issuance of common stock upon exercise of stock options— — 8,176 1 19,672 — — — 19,673 
Issuance of common stock from acquisition of a business— — 385 — 10,138 — — — 10,138 
Issuance of common stock under ESPP— — 575 — 22,702 — — — 22,702 
Release of restricted stock units— — 5,575 — — — — — — 
Withholding taxes related to net share settlement of
restricted stock units
— — (3)— (150)— — — (150)
Exercise of common stock warrants— — 60 — 204 — — — 204 
Others— — (5)— (204)— — — (204)
Stock-based compensation— — — — 420,042 — — — 420,042 
Cumulative translation adjustments— — — — — 935 — 986 1,921 
Net loss— — — — — — (634,440)(8,216)(642,656)
Balance at September 30, 2022  600,641 $59 $2,041,042 $997 $(1,618,381)$876 $424,593 
The accompanying notes are an integral part of these condensed consolidated financial statements.
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ROBLOX CORPORATION
CONDENSED CONSOLIDATED STATEMENTS OF CONVERTIBLE PREFERRED STOCK AND STOCKHOLDERS’ EQUITY/((DEFICIT)
(in thousands)
(unaudited)
Three Months Ended September 30, 2021
 Convertible
Preferred Stock
Class A and
Class B
Common Stock
Additional
Paid-In
Capital
Accumulated
Other
Comprehensive
(Loss) Income
Accumulated
Deficit
Non-
controlling
Interest
Total
Stockholders’
Equity
 SharesAmountSharesAmount
Balance at June 30, 2021  574,595 $57 $1,293,160 $114 $(766,641)$15,349 $542,039 
Issuance of common stock upon exercises of stock options— — 2,944 1 9,169 — — (45)9,125 
Issuance of common stock from acquisition of a business— — 487 — 31,274 — — — 31,274 
Issuance of common stock under Employee Purchase Plan— — 191 — 11,268 — — — 11,268 
Stock-based compensation— — — — 89,319 — — — 89,319 
Release of restricted stock units— — 254 — — — — — — 
Other— — — — — — — —  
Cumulative translation adjustments— — — — — (2)— (2)(4)
Net loss— — — — — — (74,002)(3,188)(77,190)
Balance at September 30, 2021  578,471 $58 $1,434,190 $112 $(840,643)$12,114 $605,831 
Nine Months Ended September 30, 2021
 Convertible
Preferred Stock
Class A and
Class B
Common Stock
Additional
Paid-In
Capital
Accumulated
Other
Comprehensive
(Loss) Income
Accumulated
Deficit
Non-
controlling
Interest
Total
Stockholders’
Equity/(deficit)
 SharesAmountSharesAmount
Balance at December 31, 2020337,235 $344,827 201,327 $20 $239,792 $90 $(492,290)$20,007 $(232,381)
Issuance of common stock upon exercises of stock options— — 27,083 3 51,056 — — (45)51,014 
Issuance of common stock from acquisition of a business— — 487 — 31,274 — — — 31,274 
Issuance of common stock under Employee Purchase Plan— — 191 — 11,268 — — — 11,268 
Issuance of Series H preferred stock, net11,889 534,286 — — — — — — — 
Conversion of convertible preferred stock to common stock in connection with the direct listing(349,124)(879,113)349,124 35 879,078 — — — 879,113 
Stock-based compensation— — — — 221,722 — — — 221,722 
Release of restricted stock units— — 258 — — — — — — 
Other— — 1 — —  — — — 
Cumulative translation adjustments— — — — — 22 — 22 44 
Net loss— — — — — — (348,353)(7,870)(356,223)
Balance at September 30, 2021  578,471 $58 $1,434,190 $112 $(840,643)$12,114 $605,831 
The accompanying notes are an integral part of these condensed consolidated financial statements.
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ROBLOX CORPORATION
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
(in thousands)
(unaudited)
 
Nine Months Ended September 30,
 20222021
Cash flows from operating activities:
Consolidated net loss$(642,656)$(356,223)
Adjustments to reconcile net loss including noncontrolling interests to net cash provided by operations:
Depreciation and amortization87,545 53,439 
Stock-based compensation expense420,042 221,722 
Operating lease non-cash expense49,115 31,936 
Other non-cash charges/(credits)(34)1,137 
Amortization of debt issuance costs940  
Changes in operating assets and liabilities, net of effect of acquisitions
Accounts receivable119,948 77,086 
Accounts payable(8,331)(230)
Prepaid expenses and other current assets(42,604)(19,501)
Other assets498 (4,188)
Developer exchange liability4,461 36,844 
Accrued expenses and other current liabilities6,982 38,098 
Other long-term liability(579)(1,022)
Operating lease liabilities(32,989)(24,055)
Deferred revenue336,928 616,375 
Deferred cost of revenue(49,189)(134,532)
Net cash provided by operating activities250,077 536,886 
Cash flows from investing activities:
Acquisition of property and equipment(268,958)(48,331)
Payments related to business combination, net of cash acquired(6,165)(45,692)
Purchases of intangible assets(1,500)(7,856)
Net cash used in investing activities(276,623)(101,879)
Cash flows from financing activities:
Proceeds from issuance of common stock42,706 62,278 
Payment of term license related obligations(420) 
Payment of withholding taxes related to net share settlement of restricted stock units(150) 
Net proceeds from issuance of preferred stock 534,286 
Payment of debt issuance cost(154) 
Payments related to business combination, after acquisition date (150) 
Net cash provided by financing activities41,832 596,564 
Effect of exchange rate changes on cash and cash equivalents1,921 45 
Net increase in cash and cash equivalents17,207 1,031,616 
Cash and cash equivalents
Beginning of period3,004,300 893,943 
End of period$3,021,507 $1,925,559 
Supplemental disclosure of cash flow information:
Cash paid for interest$19,590  
Cash paid for income taxes$887  
Supplemental disclosure of noncash investing and financing activities:
Property and equipment additions in accounts payable and accrued expenses$111,121 $32,935 
Fair value of common stock and unregistered restricted stock units issued as consideration for business combination $31,274 
Conversion of convertible preferred stock to common stock upon direct listing $879,113 
The accompanying notes are an integral part of these condensed consolidated financial statements.
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Roblox Corporation
Notes to Unaudited Condensed Consolidated Financial Statements
1. Organization and Description of Business
Description of Business
Roblox Corporation, or the Company, was incorporated under the laws of the state of Delaware in March 2004. The Company operates a human co-experience platform, or the Platform, or Roblox Platform, where users interact with each other to explore and develop immersive, user generated, 3D experiences. Upon signing up for Roblox, a user personalizes their unique Roblox identity, or avatar. Users are then free to immerse themselves in experiences on Roblox and can acquire experience-specific enhancements or avatar items in the Company’s Avatar Marketplace using the virtual currency, or Robux. Any user can be a developer or creator on the Company’s platform using Roblox’s studio of software tools. Developers build the experiences that are published on Roblox and can earn Robux through micro transactions in their experiences, through engagement-based payouts, and by selling virtual items in the Roblox virtual economy.
2. Basis of Presentation and Summary of Significant Accounting Policies
Fiscal Year
The Company’s fiscal year ends on December 31. For example, references to fiscal year 2022 and 2021 refer to the fiscal year ending December 31, 2022 and December 31, 2021, respectively.
Basis of Presentation
The accompanying unaudited condensed consolidated financial statements have been prepared in accordance with accounting principles generally accepted in the United States of America, or GAAP, and applicable rules and regulations of the U.S. Securities and Exchange Commission, or the SEC, regarding interim financial reporting. Accordingly, they do not include all disclosures normally required in annual consolidated financial statements prepared in accordance with GAAP. Therefore, these unaudited condensed consolidated financial statements should be read in conjunction with the audited consolidated financial statements and notes included in the Company’s Annual Report on Form 10-K for the year ended December 31, 2021, which was filed with the SEC on February 25, 2022.
In the Company’s opinion, the information contained herein reflects all adjustments necessary for a fair presentation of the Company’s results of operations, financial position, cash flows, and stockholders’ equity. All such adjustments are of a normal, recurring nature. The results of operations for the three and nine months ended September 30, 2022 shown in this report are not necessarily indicative of the results to be expected for the full year ending December 31, 2022 or any other period.
There have been no material changes in the Company’s significant accounting policies as described in the Company’s consolidated financial statements for the year ended December 31, 2021 included in the audited consolidated financial statements and related notes included in the Company’s Annual Report on Form 10-K for the year ended December 31, 2021, which was filed with the SEC on February 25, 2022.
Principles of Consolidation
The condensed consolidated financial statements include the accounts of the Company and subsidiaries over which the Company has control. All intercompany transactions and balances have been eliminated. The condensed consolidated financial statements include 100% of the accounts of wholly owned and majority owned subsidiaries, and the ownership interest of minority investors is recorded as noncontrolling interest.
Segments
The Company operates as a single operating and reportable segment, which is at the consolidated entity level. The chief operating decision maker, or CODM, of the Company is its Chief Executive Officer, or the CEO, who makes resource allocation decisions and assesses performance based on financial information presented on a consolidated basis, accompanied by disaggregated information of the Company’s revenue.
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Use of Estimates
The preparation of condensed consolidated financial statements in conformity with GAAP requires management to make estimates and assumptions that affect the amounts reported in the consolidated financial statements and accompanying notes. Significant estimates and assumptions reflected in the consolidated financial statements include, but are not limited to, the estimated period of time the virtual items are available to the user and the estimated amount of consumable and durable virtual items purchased for which the Company lacks specific information that the Company uses for revenue recognition, useful lives of property and equipment and intangible assets, valuation of acquired goodwill and intangible assets, accrued liabilities (including accrued developer exchange fees), contingent liabilities, valuation of deferred tax assets and liabilities, stock-based compensation, the carrying value of operating lease right-of-use assets, evaluation of recoverability of long-lived assets and carrying value of goodwill. Management believes that the estimates, and judgments upon which they rely, are reasonable based upon information available to them at the time that these estimates and judgments are made. Actual results could differ from those estimates and any such differences may be material to the consolidated financial statements. To the extent that there are material differences between these estimates and actual results, the Company’s condensed consolidated financial statements will be affected.
Although there remains significant uncertainty surrounding the COVID-19 pandemic for global and regional economies, its overall impact is gradually declining. As of the date of issuance of the condensed consolidated financial statements, the Company is not aware of any specific event of circumstance related to COVID-19 that would require it to update its estimates or judgments or adjust the carrying value of its assets or liabilities. As events continue to evolve and additional information becomes available, the Company’s estimates and assumptions may change materially in future periods.
Change in Accounting Estimate
In the third quarter of 2022, the Company completed its quarterly assessment of paying user life estimate, which is used for revenue recognition of durable virtual items and calculated based on historical monthly retention data for each paying user cohort to project future participation on the Roblox Platform. Based on this assessment, the Company updated its paying user life estimate to 28 months in the third quarter of 2022 compared to the previous estimate of 25 months, which was updated from 23 months in the first quarter of 2022. Based on the carrying amount of deferred revenue and deferred cost of revenue as of June 30, 2022, the change resulted in a decrease in revenue of $111.0 million and a decrease in cost of revenue of $25.5 million during the three months ended September 30, 2022.
In 2021, the Company’s paying user life estimate was 23 months. Based on the carrying amount of deferred revenue and deferred cost of revenue as of December 31, 2021, the changes in estimates discussed above resulted in a decrease in revenue of $329.7 million and a decrease in cost of revenue of $76.4 million during the nine months ended September 30, 2022. It is estimated that these changes in estimates will decrease our fiscal 2022 revenue and cost of revenue by $344.9 million and $79.3 million, respectively.
Concentration of Credit Risk and Significant Customers
Financial instruments that potentially subject the Company to concentrations of credit risk consist primarily of cash and cash equivalents and accounts receivables. Cash and cash equivalents are deposited with high quality financial institutions and may, at times, exceed federally insured limits. Management believes that the financial institutions that hold the Company’s deposits are financially credit worthy and, accordingly, minimal credit risk exists with respect to those balances. Generally, these deposits may be redeemed upon demand and, therefore, bear minimal interest rate risk.
The Company provides credit, in the normal course of business, to various customers, performs ongoing credit evaluations of its customers, and maintains allowances for potential credit losses on customers’ accounts when deemed necessary. The Company has not experienced any material credit losses to date.
The Company uses various distribution channels to collect payments from users. As of September 30, 2022, and December 31, 2021, two distribution channels accounted for 57% and 54% of the Company’s accounts receivable, respectively. One of the distribution channels accounted for 27% and 19% of the Company’s accounts receivable as of September 30, 2022 and December 31, 2021, respectively. The second distribution channel accounted for 30% and 35% of the Company’s accounts receivable as of September 30, 2022 and December 31, 2021, respectively.
One distribution channel processed 31% and 32% of the Company’s overall revenue transactions for the three and nine months ended September 30, 2022, respectively and 35% for each of the three and nine months ended September 30, 2021. A second distribution channel processed 18% and 19% of the Company’s overall revenue transactions for the three and nine months ended September 30, 2022, respectively and 19% for each of the three and nine months ended September 30, 2021.
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3. Recent Accounting Pronouncements
Accounting Pronouncements Recently Adopted
In June 2016, the FASB issued ASU 2016-13, “Financial Instruments-Credit Losses, Topic 326: Measurement of Credit Losses on Financial Instruments,” which requires a financial asset measured at amortized cost basis to be presented at the net amount expected to be collected, with further clarifications made more recently regarding the treatment of accrued interest, transfers between classifications for loans and debt securities, recoveries and the option to irrevocably elect the fair value option (on an instrument-by-instrument basis) for eligible financial assets at amortized costs. The new standard requires that an entity measure and recognize expected credit losses for financial assets held at amortized cost and replaces the incurred loss impairment methodology in prior GAAP with a methodology that requires consideration of a broader range of information to estimate credit losses. The Company adopted the guidance during the quarter ended September 30, 2021 on a modified retrospective basis as of January 1, 2021. The adoption of this standard did not result in any cumulative effect adjustment on the Company’s condensed consolidated financial statements upon adoption as of January 1, 2021.
In February 2016, the FASB issued ASU No. 2016-02, Topic 842, which amends the existing accounting standards for leases. The new standard requires lessees to record a right-of-use asset, or ROU asset, and a corresponding lease liability on the balance sheet (with the exception of short-term leases). For lessees, leases will continue to be classified as either operating or financing in the income statement. The Company adopted the guidance on January 1, 2021 utilizing the modified retrospective transition method through a cumulative-effect adjustment at the beginning of the first quarter of 2021. The Company elected the package of practical expedients permitted under the transition guidance, which allowed the Company to carryforward its historical lease classification, assessment on whether a contract was or contains a lease, and initial direct costs for leases that existed prior to January 1, 2021. The Company also elected to combine its lease and non-lease components and not recognize ROU assets and lease liabilities for leases with an initial term of 12 months or less. The Company did not elect to apply the hindsight practical expedient when determining lease term and assessing impairment of ROU assets. See Note 5, “Leases” to the Notes to Condensed Consolidated Financial Statements for more information.
In August 2018, the FASB issued ASU No. 2018-15, “Intangibles-Goodwill and Other-Internal-Use Software (Subtopic 350-40): Customer’s Accounting for Implementation Costs Incurred in a Cloud Computing Arrangement That Is a Service Contract,” which aligns the requirements for capitalizing implementation costs incurred in a hosting arrangement that is a service contract with the requirements for capitalizing implementation costs incurred to develop or obtain internal-use software. The new standard requires capitalized costs to be amortized on a straight-line basis generally over the term of the arrangement, and the financial statement presentation for these capitalized costs would be the same as that of the fees related to the hosting arrangements. This new guidance was effective for the Company beginning on January 1, 2021, the effective date and did not have a material impact on the Company’s condensed consolidated financial statements.
In December 2019, the FASB issued ASU No. 2019-12, Income Taxes (Topic 740): Simplifying the Accounting for Income Taxes, or ASU 2019-12. The purpose of ASU 2019-12 is to reduce complexity in the accounting standards for income taxes by removing certain exceptions as well as clarifying certain allocations. This update removed the exception to the incremental approach for intra period tax allocation when there is a loss from continuing operation and income or a gain from other items (for example, discontinued operations or other comprehensive income). This update also addresses the split recognition of franchise taxes that are partially based on income between income-based tax and non-income-based tax. This guidance is effective for fiscal years beginning after December 15, 2021, and interim periods within fiscal years beginning after December 15, 2022. Early adoption is permitted. The Company elected to adopt ASU 2019-12 on January 1, 2021. The adoption of ASU 2019-12 did not have a material impact on the Company’s condensed consolidated financial statements.
Recent Accounting Pronouncements Not Yet Adopted
The Company is in the process of reviewing all issued, but not yet effective, accounting pronouncements and does not believe the future adoption of any such accounting pronouncements will cause a material impact on its condensed consolidated financial statements.
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4. Revenue from Contracts with Customers
See Note 2, “Basis of Presentation and Summary of Significant Accounting Policies” to the Notes to Condensed Consolidated Financial Statements for information on the change in the paying user life estimate.
Disaggregation of Revenue
The following table summarizes revenue by region based on the billing country of users (in thousands, except percentages):
 
Three Months Ended September 30,
 20222021
 AmountPercentage
of
Revenue
AmountPercentage
of
Revenue
United States and Canada (1)
$341,519 66 %$345,611 68 %
Europe92,347 18 94,522 19 
Asia-Pacific, including Australia and New Zealand48,573 9 37,529 7 
Rest of world35,268 7 31,674 6 
Total$517,707 100 %$509,336 100 %
 
Nine Months Ended September 30,
 20222021
 AmountPercentage
of
Revenue
AmountPercentage
of
Revenue
United States and Canada (1)
$1,088,535 66 %$919,322 68 %
Europe299,860 18 252,166 19 
Asia-Pacific, including Australia and New Zealand147,568 9 98,891 7 
Rest of world110,085 7 80,033 6 
Total$1,646,048 100 %$1,350,412 100 %
(1)The Company’s revenues in the U.S. were 62% of consolidated net revenues for each of the three and nine months ended September 30, 2022, respectively and 64% for each of the three and nine months ended September 30, 2021.
No individual country, other than those disclosed above, exceeded 10% of the Company’s total revenue for any period presented.
Durable virtual items accounted for 89% and 90% of Roblox Platform revenue for the three and nine months ended September 30, 2022, respectively, and 90% and 88% for the three and nine months ended September 30, 2021, respectively.
Consumable virtual items accounted for 11% and 10% of Roblox Platform revenue for the three and nine months ended September 30, 2022, respectively, and 10% and 12% for the three and nine months ended September 30, 2021, respectively.
Contract Balances and Deferred Revenue
The Company receives payments from its users based on the payment terms established in its contracts. Such payments are initially recorded to deferred revenue and are recognized into revenue as the Company satisfies its performance obligations. Further, payments made by the Company’s users are collected by payment processors and remitted to the Company generally within 30 days.
Deferred revenue mostly consists of payments the Company receives from users in advance of revenue recognition. During the three months ended September 30, 2022 and 2021, $427.5 million and $421.9 million, respectively, of revenue was recognized that was included in the current portion deferred revenue balance at the beginning of the periods. During the nine months ended September 30, 2022 and 2021, $1,176.4 million and $835.2 million, respectively, of revenue was recognized that was included in the current portion deferred revenue balance at the beginning of the periods.
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As of September 30, 2022, the aggregate amount of revenue allocated to unsatisfied performance obligations is included in the Company’s deferred revenue balances. As of September 30, 2022, the Company expects to recognize $1,750.9 million as revenue over the next 12 months and the remainder thereafter.
As mentioned above, the Company bills in advance of its performance obligations and as such, does not have unbilled receivables.
5. Leases
The Company has operating leases for real estate and co-located data centers. During the three and nine months ended September 30, 2022, operating lease expense was approximately $25.0 million and $63.6 million, respectively, compared to approximately $13.9 million and $38.7 million during the three and nine months ended September 30, 2021, respectively. Variable lease cost, short-term lease cost and sublease income were immaterial during the three and nine months ended September 30, 2022 and 2021.
As of September 30, 2022, $64.6 million of our operating lease liabilities was included in accrued expenses and other current liabilities and $426.0 million as long-term operating lease liabilities.
The following table presents maturity of lease liabilities under the Company’s non-cancelable operating leases as of September 30, 2022 (in thousands):
Remainder of 2022$18,579 
202356,384 
202498,494 
202587,564 
202674,055 
Thereafter286,514 
Total lease payments$621,590 
Less: interest(1)
131,022 
Present value of lease liabilities