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spk01: I would like to welcome everyone to the Roblox first quarter 2022 earnings conference call. Today's conference is being recorded and all lines have been placed on mute to prevent any background noise. After the speaker's remarks, there will be a question and answer session. If you would like to ask a question during this time, simply press the star key followed by the number one on your telephone keypad. If you would like to withdraw your question, you can press star one once again. Thank you. And at this time, I would like to turn the conference over to Stephanie Natani, Director of Financial Communications. Ms. Natani, you may begin your conference.
spk05: Thank you, Abby. Good morning, everyone, and thank you for joining our Q&A session to discuss Roblox Q1 2022 results. With me today is Roblox's CEO, David Bezouki, and CFO, Mike Guthrie. Before we start, I want to remind everyone that yesterday after market close, We published a shareholder letter and earnings results on our investor relations website at ir.roblox.com. On this call, we will make some brief opening remarks and reserve the rest of the time for your questions. For our webcast participants, please note the question icon at the bottom of your screen where you can type in your questions. We'll do our best to take as many questions as possible in the time we have allotted today. On today's call, we may be making forward-looking statements, including but not limited to our expectations of our business, future financial results, and strategy. Forward-looking statements are subject to risks and uncertainties that could cause actual results to differ materially from those described in our forward-looking statements. And such risks are described in our risk factors included in our SEC filings, including our Form 10-K filed for the fiscal year ended December 31st, 2021. You should not rely on our forward-looking statements as predictions of future events. We disclaim any obligation to update forward-looking statements, except as required by law. During this call, we will also discuss certain non-GAAP financial measures. Reconciliations between GAAP and non-GAAP metrics for our reported results can be found in our press release issued yesterday, as well as in our supplemental slides. copies of which can be found on our investor relations website finally this call is being webcast and as a reminder for those participants you can enter your questions in the top right side of your screen the webcast will be archived on our website shortly afterwards with that i'll turn the call over to dave welcome everyone we welcome all of our investors and the roblox community
spk09: I'm going to share a few notes before we dive in on the Q&A, especially for those who maybe didn't deeply read our shareholder letter. Reiterating on our growth, daily active users were at 54 million for Q1, which was up 28% year over year and our highest ever. And our hours of engagement were up 22%. Bookings were at $631 million for Q1, which was 3% below Q1 of 2021. And I want to highlight we generated over $150 million of net cash and $100 million of free cash in Q1. March, we believe, was our most difficult month lapping COVID. And what is really exciting is all of the user gains generally we accrued during COVID we've kept. That said, as expected, really, our bookings are highly correlated with hours of engagement, and our hours have decreased in some cohorts as we've emerged from COVID. I'll give an example, which is the USA 9 through 12 cohort, which is an extremely dynamic part of our numbers. And pre-COVID, we had 2 million VAUs in the 9 through 12 cohort spending less than 5 million hours per week. In the middle of COVID, that jumped to 3 million VAUs in that same 9 through 12 cohort spending 10 million hours per week. We emerged from COVID with that same 3 million VAUs but now spending 8 million hours per week And once again, this is highly correlated bookings in our hours of engagement. It partially explains our year-on-year bookings number. For those of you that read our GAAP results, you'll notice that we're going to move to accruing revenue with an average user lifetime moving from 23 to 25 months. This will essentially increase the time we've smear out our revenue, but I want to highlight it could be interpreted as a sign of increased user retention, which is very positive for us. We have enormous headroom. even in the U.S. 9 through 12 cohort, because we have a lot of room on our frequency there. We do not share our NMAU numbers right now, but there's a lot of room there. I also want to highlight that in our 17 through 24 cohort, in the core markets, while lapping COVID, we are still seeing solid DAU growth numbers year on year. And in Q1 in core, we saw 6% year on year. Internationally, I want to highlight two countries. The first is India, which has enormous potential user activity. We saw in Q1 of 22, India grow 160% relative to Q1 of 2021 at under a million DAUs with a lot of headroom there. And then Japan, which is Our potential for enormous economic activity in Q1 of 22, we saw growth of 3X relative to Q1 of 21 with 183,000 BAUs. So that market is just in formation. We continue to drive innovation up and down our stack. And a couple of innovations that I'll share with you that have emerged in Q1 that we've talked about include spatial voice, our layered clothing and fashion system, our age verification system that is working hand-in-hand with spatial voice, We've introduced Roblox Cloud and the ability for developers to access really the whole backend of their experience through their own APIs if they so choose. We have migrated to our own internal Roblox Translate system that has shown better long-term engagement growth than other Translate providers we've used from the cloud. We've added a data center in India, which is part of the very rapid growth there, and has decreased latency by 50% in India. And we're in our first steps of our facial animation data in Roblox Studio now. We continue to believe that part of the long-term growth for our company is continuous innovation. And in addition to these, we have many more in the pipeline. We have shared in our shareholder letter the enormous opportunity for us to lean in on the efficient frontier on the economy on Roblox. And we are taking steps up and down our economy stack to nudge towards optimizing long-term retention and engagement with the revenue flowing through our system and the ability for our developers to build larger and larger teams as they recognize more economic activity. A few I'll highlight that are underway at Roblox include both on game experience discovery and marketplace discovery. We're well into projects there to balance long-term engagement and retention with the monetization of the various experiences. We're adding... validated accounts and including the ability for people to trust that the items they're buying are from the real Nike or the real bands. We are in the midst of shortly releasing the ability for brands and developers to boost their experiences through discovery on our homepage. And we started work on our immersive advertising system, which is really long-term division we've had for really a parallel economy that supports brands bringing traffic to their experiences. I want to highlight anything we do with advertising will be consistent with our values, will be consistent with the ages on our platform. will be consistent with all laws and regulations around advertising, but there is enormous economic opportunity here. And then just highlighting before we jump into the Q&A, and you'll have to excuse my voice as I go through this, we have a lot more great brand experiences, including the NFL, who launched NFL Tycoon, McLaren and Halo Yoga, American Eagle and Chipotle, who all launched experiences on our platform. And then on the music side, we hosted Grammy Week, we hosted the Brit Awards, We hosted David Guetta. And with Sony, we did the 2014 Golden Virtual Concert. As your CEO, I still just want to highlight in closing the bullishness we have within the company based on the ultimate size of this market. We have a very healthy amount of cash, even as we are in the midst of generating cash. We are unique in our developer community and the foundation of civility that we really rest our business on. And we have enormous network effects that drive our growth. So with that, thank you for joining us, and we'll move to Q&A.
spk01: Thank you. And at this time, I would like to remind everyone, in order to ask a question, press star then the number one on your telephone keypad. And we'll pause for just a moment to compile the Q&A roster. And we will take our first question from Drew Crum with Stifel. Your line is open.
spk10: Okay, thanks. Hey, guys, good morning. So, Dave, in your shareholder letter, you discussed innovations that are currently in beta testing, specifically custom materials and dynamic heads. What have you found in your testing in terms of how these initiatives have impacted your KPIs, and when do you expect these to go live? And then I have a follow-up.
spk09: Yeah, custom materials... We're actually live with parts of that right now. It's a more subtle feature in that it affects the overall look and feel of everything on Roblox. One thing custom materials is going to allow is more diversity in the look and feel of experiences on Roblox because right now Roblox runs on a physically-based rendering paradigm. So there'll be different types of brick and different types of grass, and developers will be able to customize that. I think one long-term Roblox developer, and I'm going to quote them for just quoting the developer rather than making my own statement, said Roblox is doing God's work with custom materials. So I think our developer community is really accepting this. On facial animation, We're launching the beta in Roblox Studio, and developers have access to that right now. We're not sharing a date on the longer-term launch. As you can imagine, we want that to be as soon as possible to get that into every game, so every avatar on Roblox is animated. So both of these will have more subtle long-term effects rather than direct KPI effects.
spk10: Got it. Okay, fair enough. And then, Mike, the April bookings are up high single digits month to month, setting COVID aside, which would create some distortion in the numbers. Can you remind us historically what the shape of 2Q bookings looks like and what you're anticipating as you progress through May and June this year? Thanks.
spk06: Yeah. Hey, Drew. I'll comment on what the shape of the curve normally looks like. Normally, April is a very strong month for us. It was incredibly strong in 21. It was one of the last super high year-over-year growth rates as COVID last year was starting to wane and reopen. So we had expected year-over-year growth to bottom in April. Right now, it looks like it bottomed in March, which is good. So sequentially, our year-over-year growth rates in April were better than they were in March. And on a year-over-year basis, I expect that to be true in May and again in June. In terms of the overall shape of the curve, normally April is higher than May. um and then uh june is higher than uh than i'm sorry uh may is uh lower than april and then uh and then june is uh back up higher than may and really the opening of the summer season where normal seasonality starts to to kick in last year 21 We didn't see the normal seasonal curves because we were going from heavy COVID period early in the year, first three to four months, to much more of a reopened period, May, June, July, through the summer. This year, we're open. And so we expect more normal seasonality to take hold, meaning we do expect the summer to be strong vis-a-vis where we are in the spring. And so we'll see that in June, July, August. So we're glad to see the sequential improvement and expect that to continue in May, June, and into the third quarter.
spk10: Thanks, guys.
spk06: Thanks.
spk01: And we will take our next question from Bernie McTernan with Needham & Company. Your line is open.
spk12: Great. Thanks for taking the questions. Maybe just to start just high level, why is now the right time to be leaning into monetization and what gives you the confidence that consumers are willing to spend more on Roblox right now?
spk09: I'll answer this. I want to highlight earlier what I said about values consistent and efficient frontier. I'll give you a highlight of the opportunity we have, and I think this is more of an opportunity than consumers spending more money. We right now, for example, in search and discovery historically have made no real difference in how we feature experiences with the same engagement and the same long-term retention, even if one of those experiences monetizes 10X, which the other one does. So I think this is more of a consumer value of highlighting experiences that historically consumers have liked to spend Robux in, rather than new kind of ways of trying to pull more money out of consumers. I would say the same is true of our catalog experience, which there is a lot of room for optimization. One thing we're doing in our catalog that I'll dive in a little bit more deeply on. We're moving our catalog to be 100% user generated, and that includes clothing, bodies, heads, and faces. But a second part of what we're doing in our catalog is enhancing the trading efficiency and really the dynamic nature of our catalog. So we have a range of free items and rare items. This historically has been something Roblox has done very well with Roblox-related items, and we've been doing this for over 10 years, and the Roblox economy has gotten to the point where we have items that trade for 20,000 U.S. dollars or 2 million Robux as they become rare. We want to add that level of fun and dynamic nature to our catalog. This is actually something our community wants is more opportunity to really work in that kind of trading economy. Everything we do for our economy is consistent with engagement first, but it is, we believe, an opportunity to realize the efficient frontier.
spk12: Understood. And then moving on to advertising, acknowledging that it's still early days and thinking through the opportunity. As you're thinking about what advertising is going to look like on Roblox, is it possible to have a performance marketing piece on advertising in addition to brand marketing and then If there is performance, would that call to action only be based on experiences within the Roblox metaverse or goods as well, or could it translate to the real world as well?
spk09: Yeah, I don't want to speculate on any dates or any times. I do want to highlight that everything we do is values consistent and within advertising guidelines and appropriate for the various ages. One can imagine advertising units that appear as in-game billboards, in-game teleports, that all developers on Roblox can choose to use. So this creates a dynamic ad server rather than with 2D image or video pre-roll. These are in-game 3D units. You can imagine brands using these units to bring traffic to their own brand experience. We've highlighted in the past brands like Vans and Nike have built brand experiences. We would never claim that they would use this form of advertising, that these are the types of brands that might do it. And then as fans are hanging out in brand experiences, You can imagine a wide range of activities within those experiences. That includes acquiring virtual items. Just like in the physical world, that can include drops. That can include limited numbers of those items that our community would be interested in acquiring. That can include items related to stars, celebrities, athletes that our community would like to acquire virtually. and then i think longer term that gets into the virtual item is tied with a physical item either through traditional shopping or possibly in the future those virtual items are bought those virtual items can go off our platform wrapped in an nft and that nft is really the equivalent of owning and redeeming the physical item So, yeah, I think it goes way beyond performance into, you know, the whole life cycle of a fan with a brand and wanting to own part of that brand virtually or physically. Understood. Thanks for taking the question.
spk01: And we will take our next question from Eric Sheridan with Goldman Sachs. Your line is open.
spk04: Thanks for taking the question. I want to come back to the topic you raised in the shareholder letter around the innovation in user safety. Can we get a better sense of how we should be thinking about spend behind user safety in 2022 and a wider lens of how you think about spending on user safety beyond 2022? And then maybe one quick follow-up would be, you call out examples of how user safety drives continued momentum on the platform. From our position from the outside looking into the company, how should we think about user safety as driving sort of narratives and momentum around the broader platform you're trying to build for the longer term and measure it in terms of business performance? Thanks so much.
spk09: Yeah, I think we should nuance this in that on user safety, we would imagine as user growth continues, as engagement continues, as the various ways people use Roblox, whether it's expanding to learning, education, working, school, concerts. We believe safety and civility is a competitive advantage and something that consumers will just assume is there. So in a way, it's a hidden function that we believe consumers will expect. And it's almost think of it in reverse as We set very, very high targets for all of our internal safety and stability metrics because we believe we then enforce the expanded growth on the platform. We're doing a lot of work in ML. We're doing a lot of work in recognizing bad behavior automatically. We're doing a lot of work in our ways of detecting both bad content as bad conversations. I think these are things we just view as a foundation of the company and supporters of really our reputation and the fact that Roblox is a safe and civil environment. I think that's how we view them as accelerators of long-term growth rather than maybe the more traditional metrics of what is our retention or what is our hours per user.
spk06: Yeah, and Eric, it's Mike. In terms of modeling, I think in the short term, modeling it in a consistent percentage of bookings is probably a decent assumption. It's not an area where we are looking for great amounts of operating leverage. We're looking for high quality and safety and breakthroughs for the user base. Having said that, as Dave mentioned, they make the platform better, and you can argue they actually make monetization easier and better if people feel like they're in a safe and civil environment. In the short run, I would say it'll be relatively similar as a percentage of bookings as what you've seen in the last few quarters. If there is leverage there, it's because top line just grew a little bit faster. But overall, as an area of focus for aggregate dollars, this one is high on the list.
spk09: Yeah. And then I'm not going to say anything contradictory to what Mike said, but a big part of what our safety and stability team is doing is as we automate tasks that human moderators and human reviewers do, without making any forward-looking prediction on that, one can imagine our safety and stability system actually becomes more efficient. And so we are both not claiming any long-term increases in efficiency, but simultaneously seeing great gains internally on our ability to automate tasks that human moderators do. Great.
spk01: And we will take our next question from David Karnofsky with J.P. Morgan. Your line is open.
spk02: Hi, thank you. David, in the shareholder letter, you noted some changes to product functionality to drive, you know, higher frequency and retention for that 9- to 12-year-old cohort of U.S. users. Maybe just walk through, you know, what some of these updates are. And then are you already seeing the impact of that in your Q1 U.S.-Canada DAU figure, or is the increase there kind of more from aging up?
spk09: Yeah, this one is tricky because we do not share MAU numbers, and so you cannot discern our DAU to MAU frequency. We've historically, not just through COVID, but over the last three or four years, made gains in these frequency numbers. And at the same time, the... There's many more people on our platform monthly than there are daily. Frequency goes up and down the stack. It goes all the way from what is the... might seem counterintuitive, but what is the raw launch time of our mobile app? What is the raw launch time of getting into an experience? That influences how quickly can someone get into game. We've made games technically so that if you're in the middle of a Roblox experience and on your mobile phone patch switch out to some other app and then come back in, you don't lose your context. Longer term, We believe anything around improving the usage of Roblox as a spontaneous communication medium for shorter conversations, maintaining context with friends will drive that frequency. And I guess I'm personally optimistic we have a lot of headroom there.
spk06: Yeah, and just, David, on the question about the breakout between age demos, in the U.S., in 9 to 12 when covet started the highest rate of penetration was in the 9 to 12 age demo higher than 13 anything 13 plus and so when covet started we had the highest number of users immediately increase their frequency um you know really overnight lots of hours and subsequently lots of associated bookings um in 13 to 16 17 to 24 similar dynamics but on a much lower rate of of market penetration and so in those markets we had more consistent growth in frequency and bookings than we had in in 9 to 12 where you jumped up very very quickly and then depending on where we were with lockdowns we would see those numbers go back up and as we reopen you know users are still growing but the frequency just changes as people go back to school um In the older age demos, though, again, we're getting a higher percentage of new users based on the base in which we started. So those age demos today are caught back up with peak, basically, whereas the 9 to 12 is still below. We assume over time, as we, again, continue to add users in 9 to 12 and get higher levels of penetration, and its frequency improves based on product changes and other things, and just lapping these incredibly high periods of frequency in COVID that will return to growth throughout U.S.
spk02: Okay. And then, Mike, maybe just one on margins. I wanted to see if there was any framework you'd be willing to provide for the balance of the year. You know, just given normal seasonality, should we assume some positive operating leverage as you kind of get into your heavier bookings quarter. Thanks.
spk06: Yeah, good question. We, you know, pre-COVID and as a private company, we would routinely be in the low double digits of EBITDA margins and very high free cash flow margins. And it was, you know, simple. The company was self-financing and we generated a lot of free cash just as a private company, over a billion dollars. As we... saw the step function in top line during COVID, obviously we saw a lot of operating leverage really across all cost areas in Roblox. And we went from that low double digit, maybe mid-teens EBITDA rates to low 30s. And at that time, we felt a keen opportunity to keep investing in the business. It was not a goal to maintain margins at 30%. So we continue to invest in hiring great people. We certainly continue to invest in our developer community, trust and safety and infrastructure. So we continue to make investments for the long run to build the platform. Today we come into the market with $3 billion of cash. So we're incredibly liquid. And the question is, you know, should we continue to invest in the business for the long run? Where should we try to manage our margins? We are not going to test anyone's comfort levels on liquidity. This is a very liquid business. But in the short run, I don't think we're that focused on trying to maintain very high P&L margins. If it happens, that's fine. But right now, the investments that we're making, we see very high returns on. in the long run, and we're very liquid. So we're going to be much more focused on doing the things that we think add value, and we'll let margins play out. Again, if bookings grows a little bit faster, that'll be beneficial to margins. But I don't think we want to let that constrain investment, especially in hiring the dev community, trust and safety, and infrastructure, because the unit economics of this business have always been very strong. And if we needed to dial back some investment, we certainly could do that. I don't think that's really the posture that we're taking right now. We see this as a great opportunity to keep investing.
spk02: Thank you.
spk01: And we will take our next question from Brian Nowak with Morgan Stanley. Your line is open.
spk07: Great. Thanks for taking my questions. I have two. The first one, just around the shape of the year into next year, I think in the fourth quarter letter, you had some commentary about as you go throughout the course of the year, the comps become more normal, the growth rates of bookings and users should get closer, and that the exit rate for the year is going to hit over 23%. You just talked to us about is that still the way you're thinking about the shape of the year in 23 and sort of puts and takes of where you could, you know, overperform or perhaps face more challenges around bookings and user commentary from last quarter is the first one. And the second one, the developer fees, the percentage of bookings did increase a bit in the quarter. And maybe, Mike, you just answered this question in the last one. But just talk to us about how you're thinking about developer fees philosophically. How is the mix changing? And how should we think about developer fee deleverage for the year? Thanks.
spk06: Yeah, thanks, Brian. Again, when we came into the year, we thought we would bottom in April in terms of year-over-year growth rate of bookings. Again, last year, bookings were very high in 21, and it was sort of the last big quarter before the economy started to reopen. uh people started to go outside again so we saw in may june and july actually declines um much much uh less year-over-year growth a year ago and actual declines in our um users in the us and bookings coming from the us even as we were growing internationally so this year i think we have you know we have the opposite impact we're already open and we think normal seasonality will return and so What we had hoped to see is that we would have sequential improvements in the year-over-year growth rate of bookings. We thought April would be the bottom. It turns out I think maybe March was the bottom, which is great. April was a little bit better than March. We suspect that May will be a little bit better, and that will continue as we go through the summer. And that ought to shrink that gap between user growth numbers and the rate of bookings growth, and that's our expectation. um especially as we go through the summer um now if user growth continues really really strong then we'll we'll close we'll close the gap but we're not going to necessarily catch up with that number but that's fine as long as we're improving sequentially and and the comparisons are in fact getting easier um that's really what we're looking for is that sign and again this time last year we actually had almost negative seasonality from what you'd expect this year. We expect much more normal seasonality. So that's, that's, that's good set up for us for improved, continued improved growth, year over year growth as we go from April, May, June, et cetera. And, and then, you know, before too long, we will have these sort of COVID hopefully these COVID distortions out of the numbers on a year over year basis. On dev fees, we're making investments in the dev community. We have both our normal rates of take from transactions as well as engagement-based payouts. In the last year plus, we've really leaned into engagement-based. We think there have been some real benefits from that. And again, I don't think of the dev community as a place where we see short-term operating leverage. We see an opportunity to keep investing in an incredible developer community. What we want is developers feeling like they can continue to invest in Roblox and build their businesses on our platform. And so it's not an area in which we see we're going after leverage. We talked several quarters ago about moving into the 25% of bookings range. I think we were at 23% this past quarter. So we're in a very comfortable range right now. And so I think that's a good way to model it out, if you will.
spk09: I just want to highlight that with the current place our developer fees are at, we see more and more big organic brands coming to the platform. The Sonic experience on Roblox was highly organic, not an experience where we go out and really push for that to happen. The Spotify experience, once again, highly organic. So this This goes to our vision of having an economy that we migrate from individual hobbyists to small companies to we will pass, I believe we already have a 100-person studio working on our platform to VC-funded studios now working on our platform to brands creating experiences on our platform organically, which is a It's kind of a validation of our developer fee structure. Got it.
spk07: Thank you both. Very helpful.
spk01: And we will take our next question from Omar Dasuki with Bank of America. Your line is open.
spk03: Hi. Thanks so much for taking my question. I have two of them, one on layered clothing and one on your development strategy and philosophy. So in terms of layered clothing, since you released it in March and more fully in April, has adoption been ahead or behind your expectations? On your blog, you described layered clothing as a stepping stone technology. How much time does that need to spend in production or what milestones does it need to reach before you feel confident about releasing UGC avatar bodies and dynamic heads? and have your learnings on layered clothing to date caused you to pull in or push out when you might release those two derivative technologies versus your thinking as of late last year? And I'll follow up with my second question after your answer.
spk09: Yeah, I'll share maybe a little bit of internally what you would hear at the company, and that is I personally believe that as we move to user-created bodies and heads, The long-term impact of that could be bigger than layered clothing because ultimately who you are is your body and your head, and that's underway right now. We had really good adoption of layered clothing. I think roughly 30% of our daily actives are wearing it right now. But bodies and heads we believe will be a much more – I personally, I don't want to quote whether it's going to move our metrics, but my own personal thing is it's just as big, if not bigger, and that is well underway. We've talked about it before. We want to get that out as quickly as possible.
spk03: Okay. All right. So then more of a strategic question just to finish up. Could you tell me why your strategy of developing new technologies like layered clothing to be compatible with previous generations of digital matter is difficult for competitors to replicate, and how it might create barriers to entry as competitors begin to launch their metaverse-like platforms geared towards your similar core demographic?
spk09: Yeah, this is a great question. I want to highlight that. long-term, when we view what makes Roblox competitive, it's a holistic collection of things. It includes the momentum and size of our very large creator community. It includes the quality of our development platform and tool set. It includes the foundation we have on safety and civility. It includes the innovations we're making right now, including UGC bodies and UGC layered clothing. But it also includes our ability to continuously innovate and release big innovations over the next one to five years, just as we have over the last 15 years. So these are all part of what I believe makes Roblox extremely competitive, but ultimately it's our ability to innovate. We have a unique stack that we vertically control all the way from our game engine to our cloud, to our clients, to our developer tool set that operates really as a consistent whole. So I think our long-term competitive advantage is much more a holistic mix of all of these, and one could think of any of those as moats. We typically think more in terms of long-term innovation as opposed to relying or depending on anything. We might think of a moat. Basically, innovation is moving forward. And the best way for Roblox to get to a billion monthly actives is not to simply defend what we might think of as nodes. It's really to continue creating our vision of the metaverse, which is still very early. And we feel we have a unique handle on what that's going to be.
spk03: OK, thank you, Dave.
spk09: Yeah, you're welcome.
spk01: And we will take our next question from Brandon Ross with LightShed Partners. Your line is open.
spk08: Hi. Thanks for taking the questions. I have a couple. Earlier in answering, I think it was David's question, you spoke to the high ROI on your investment spend. And I guess throughout the call and the letter, You've spoken to platform features that have rolled out in the past several quarters. Is there any way for you to quantify or explain the impact of any of these features on engagement and or monetization? And will we see some more tangible impact from the likes of voice and layered clothing as this year goes on? Now I have a follow-up.
spk09: Yeah, I want to share... What you're mentioning is something internally we try to do as much as possible. And I'll highlight also, Mike, you can jump in if you want. In the past, through periods of rapid growth, and just as we have rapid growth right now in many cohorts in many places around the world, we've tried to analyze the contributors to that and analyzed the last year of product releases and tried to create statistical correlation and we found that that's difficult to do i think with some of the uh innovations we have coming right now like like spatial audio we will be able to measure the time that those Users are engaged in audio communication rather than text communication, and I think that'll be a good signal going forward for that. So we will try going forward with some of these big innovations, whether it's spatial audio, our avatar system, our translate system our developer cloud to share as much as we can about what makes those users possibly more engaged or possibly more retained generally when we find users that are more engaged and more retained that does contribute to the growth of the overall platform so where we can we will try to share those metrics with you yeah and brandon having said that um
spk06: Pick any point in time, the three-, four-, five-year window of this business, and look at the users, the engagement, and the bookings growth of the business and the platform. The growth rates have been very significant. The investment areas have been very consistent. We invest in great engineers. We have a product roadmap that we – as we're – ushering in a category, we make calls on what we think will make that better for our developers and for our users. And generally, the output of that has been very high growth, more users around the world, an older age demographic, more and more developers building great content, enormous amount of engagement, and huge growth in the top line of the business. So any specific decision is... meant to continue to advance things that we have very good proof of generating high rates of return over time. And so, of course, every time we launch something, we want it to be high return. But generally, the business and the business model that we have has fantastic unit economics, and so we're always trying to improve those kinds of decisions based you know, good decision making. And in a lack of saturation, which we don't believe we have anywhere, we're quite comfortable that those will generate high returns in the future.
spk09: Yeah, I'll share a few just tidbit metrics on layered clothing. As of the end of March, I believe over 200 million items and people on our platform on voice were rolling consistent and conservative way for validated users to start system and for those users on that we've rolled this out to their averaging 20 minutes roughly per daily activity using spatial audio great and then just
spk08: I was kind of comparing in my mind the approach that you've taken with outside IP holders with that of Epic and it seems like you've really taken more of a hands-off approach outside of maybe music while Epic has really aligned themselves closely with some key IP such as Disney and now Lego as a way to kind of widen the funnel. Why is your approach better, and does it make sense to closely align?
spk09: The core of our Roblox vision and how we build a platform, when we started our work on this category, what sometimes is referred to as UGC, internally we refer to as self-service. Self-service is really difficult. It's hard to build a platform where everything from a small individual hobbyist all the way to, as I just referred to, Sonic, the hedgehog shows up on Roblox. It's hard to build a platform where those things happen without a custom compiler, a custom build, without a biz dev process, without a lot of close interworking. But we believe what we've seen in games and play will more and more move forward in brands, in music, and ultimately in custom, you know, IP on our platform. So this is a vision for us. I don't want to comment, you know, on Epic or Lego or what they're doing. I personally believe there's enormous scalability in building a self-service platform in all of these dimensions, a single unified platform where ultimately a brand like Lego would build a Lego experience on top of Roblox and more and more be able to present that as their unique experience. So this is more the direction we're going. We believe it's very, very scalable. And at the same time, I think there's a lot of different ways that people have of looking at this. Great. Thank you.
spk01: And we have time for one more question. And that question will be from Clark Lampin with BTIG. Your line is open.
spk11: Thanks a lot. I have two. The first is on engagement. Dave, I wanted to come back to what you had said about U.S. 9 to 12 cohort performance. If we maybe go up a layer and think about the sort of 2.3, I think it is, hours that users are spending on platform right now, Do you expect that to sort of stabilize at kind of an above pre-COVID rate going forward? And as we think about sort of bookings and hours over time, does the incremental hour generation come from growth of the overall user base, or do you see upside to the average user's sort of time spent on platform? And then I've got to follow up on OPEX.
spk09: Yeah, I think I shared earlier there's a lot of headroom in our, you know, one of our core cohorts, which is USA 9 through 12. What I would like to share internally, there's room on huge room. We have such a big portion of the 9 to 12-year-olds in the U.S. already on the platform, but there's room there. There's a lot of room on frequency, which is our DAU ratio. And as I shared earlier, that cohort is spending as much as they emerged from COVID as they were within COVID. I would say our focus will be on more of the DAU to MAU ratio. correlated with retention, we believe that focus will ultimately drive even bigger MAU ratios. And we believe, you know, that's where we're going to be, you know, heads down a bit more than hours per DAU, especially in that cohort.
spk06: Just on Clark, on hours per DAU, we did see a trend. Obviously, pre-COVID, we were at a certain level, very high. Then during COVID, we went you know, very, very high hours per DAO. During COVID, we've come back down a little bit as reopening has started. So we're down below peak COVID hours per DAU, but we are higher than we were hours per DAU going into it. And so as users have come into Roblox, spent a lot of time, even as we've been growing the user base, um there is a an even higher level of overall engagement and that's really true around the world so um in all in all of our regions we see the same behavior so we do we do feel like we're starting at a as we've reopened at a at an accelerated level usually where we were coming into the pandemic
spk11: That's helpful. And then just on hiring, Mike, most of your employees are sort of engineering talent. That hiring backdrop has gotten a lot more competitive. I know in the past you've talked about wanting to increase headcount pretty significantly versus sort of late 21 levels. Are you having any trouble in this market either finding talent or is really the byproduct of what we're seeing right now mainly higher cost per head inflation?
spk06: Yeah, what you're seeing, it is a competitive market, and everyone has seen costs of talented folks go up for sure. Right now, we're ahead of our internal plans, which is great. It was a good first quarter in terms of recruiting. We continue to feel like we're a fantastic place for talented talent. engineers and product professionals and even those in the G&A functions to build their careers. And we expect to continue to grow our talented staff. And so far this year, we're doing great against our targets.
spk11: Thanks a lot.
spk06: Thanks.
spk05: Thank you for joining us today. Abby, that's a wrap for us.
spk01: Thank you. And ladies and gentlemen, this concludes today's conference call. We thank you for your participation, and you may now disconnect.
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