Roblox Corporation

a question and answer session. If you would like to ask a question during that time, simply press star followed by the number one on your telephone keypad. If you would like to withdraw your question, again, press star one. Thank you. I will now turn the conference over to Stephanie Notany, Senior Director, Financial Communications. Stephanie, you may begin.

Thank you, Krista. Good morning, everyone. Thank you for joining our Q&A session to discuss Roblox's Q3 2023 results. With me today is Roblox co-founder and CEO David Bazzucchi and CFO Mike Guthrie. As a reminder, our shareholder letter, press release, SEC filings, supplemental slides, and a replay of today's call can be found 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. Our commentary today may include forward-looking statements, including but not limited to expectations of our business, future financial results, and strategy. Forward-looking statements are subject to risks, uncertainties, and assumptions that could cause actual results to differ materially from those described in our forward-looking statements. A description of these are included in our SEC filings, including our most recent reports on Form 10-K and Form 10-Q. You should not rely on our forward-looking statements as predictions of future events, We disclaim any obligation to update these 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 can be found in our press release and supplemental slides. With that, I'll turn the call over to Dave.

Thank you, and welcome everyone to our Roblox Q3 2023 earnings call. A couple quick highlights. We're going to continue to talk about our delivering growth strategy, highlighting our vision of reimagining how we come together and continue moving forward on our mission to connect a billion people with optimism and civility. We'll highlight some of the product velocity and new monetization opportunities we've been working on. And we're also going to give an update on our commitment to deliver operating leverage, which we shared in our letter. Finally, highlighting really the breadth of our business, which is connecting people around the world, connecting people of all ages and all backgrounds, and highlighting the complexity of a business that spans so many cohorts. Today, for a first time, we are going to give you a little hint at guidance looking forward, and Mike will do that after my discussion. Diving into Q3, a real strong quarter all around. GAAP revenue, Q3 713 million, up 38% over Q3 2022. And diving more into how we run the business, which is on bookings and cash, bookings of 839.5 million, up 20% year on year. Cash flow from operations, 112 million and $59 million of free cash flow. Our DAUs hit 70 million, which is up 20% year on year. Total hours of engagement, 16 billion in Q3, which is up 20% year on year. And from a liquidity standpoint, over 2 billion of net liquidity and 3.1 billion of total cash equivalents and investments. And finally, on a covenant-adjusted EBITDA basis, we hit $81 million. So let's talk a bit about our growth initiatives. This goes all the way back to our S-1 filing, which is connecting everyone around the world, a platform for everyone of all ages, roadblocks everywhere, and a vibrant economy. On connecting the world, just want to highlight not just the growth in many really big future areas around the world, but also the monetization acceleration in these areas. Japan, DAUs up 66%, hours up 64%, bookings up 174%. Germany, DAUs 27%, hours 30%, bookings up 75%. Brazil, DAUs 23%, hours 23%, bookings 62%. And India, a huge opportunity for Roblox. DAUs up 53%, hours 49%, bookings up 76%. We continue to also show great progress in our vision that Roblox is a platform for everyone, irregardless of age. On the DAU side, in our 13 through 16 cohort, we saw 22% growth. 17 through 24, 27% growth, and 25 and up, 25% growth on the DAU side. Ours, very similar growth, 13 through 16, 23%, 17 through 24, 29%. And 25 and up, hours of engagement up 28% year on year. On our vision that Roblox is everywhere, and this goes to the vision that immersive 3D multiplayer in the cloud simulation that connects and helps people communicate should run on every device. We brought forward two new devices recently. First, MetaQuest, which as of October 31st had over 2 million lifetime installs. And then Sony PlayStation, which we announced at our developer conference and launched on October 10th, has had over 15 million downloads in October. And our goal is really for Roblox to be everywhere. On the size of a vibrant economy, we're innovating in many ways there, continuing to grow our monthly unique payers. We had 14.7 million average monthly unique payers in the quarter. which is a record. We have some really exciting, innovative extensions to the platform coming. One is really in the vision of Roblox, giving our developers and creators the tools to run their own business. We are going to be introducing subscriptions for developers so their experiences can host subscriptions. We plan on launching that this month. Advertising, we're going to share a lot more at Investor Day. But we are making amazing progress here. We've hired Stephanie Latham as our VP of Global Partnerships to help supercharge this business. We've also, in addition to portal and image ads, started testing video ads in Q4 and looking for a launch of that in 2024. We'll share more of this at Investor Day. On the overall product velocity and the background, we shared a lot of our 2024 vision at our developer conference in September. And those videos are all available online for anyone who's interested. We have a really strong pipeline of great innovation. On some of the big things we've been working around, which include voice and avatar simulation to more and more host real-time communication, our voice DAUs for the quarter are now up 240% year on year. On avatar side, we are now live with what we call UGC avatars, which is user-generated content for avatars allowing the community participate in the creation of avatars and we're now live with facial animation and over time we expect all avatars on the platform to support real time camera tracking and facial animation at our developer conference we introduced a new platform called roblox connect which is a. showcase of communication technology that will be open source and shows us a set of APIs that allow creators to embed communication capabilities into their own experience, including on mobile, ringing the phone to join with friends. And a couple highlights, we'll touch more on Investor Day. On the AI side, we continue behind the scenes to more and more incorporate AI up and down the stack. And in addition to, of course, added capabilities like Roblox Assistant, which we rolled out in October that you'll hear more about on Investor Day and Roblox, other ways of generating things. I think behind the scenes, I just want to highlight the efficiency that this is bringing us both on safety, on moderation. We're moving many of our moderation pipelines more and more to AI, and this is simultaneously increasing quality as well as cost. And you can see that in our increased operating leverage. Finally, just want to highlight that at Investor Day in a week, we'll be covering a lot more of this. And now I'm going to pass it over to Mike for some more discussion on our operating leverage.