Roblox Corporation

by the number one on your telephone keypad. And if you would like to withdraw your question, press the star one again. Thank you. I would now like to turn the call over to Stephanie Notany. You may begin your conference.

Thank you, Kathleen. Good morning, everyone. Thank you for joining our Q&A session to discuss Roblox's Q1 2025 results. With me today are Roblox co-founder and CEO, David Bazzucchi, and CFO Mike Guthrie. Our shareholder letter, press release, SEC filings, supplemental slides, and a replay of today's call can be found on our investor relations website. Our commentary today may include forward-looking statements which are subject to risk, uncertainties, and assumptions that could cause actual results to differ materially from those described in our forward-looking statements. A description of these risk, uncertainties, and assumptions 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 measures can be found in our press release and supplemental slides. With that, I'll turn the call over to Dave.

Hey, thank you and good morning and welcome today. I want to share our results and highlight surpassing our guidance that we provided in our Q4 earnings call and also surpassing what we shared with you in our 2023 investor day goals. So let's dive in first with some numbers that are in our letter and then I'll share some more commentary as well. We saw high growth rates in many, if not all, of our operating metrics. Q1 revenue was $1.035 billion. That was up 29% year-on-year. And ahead of our guidance of $990 million to $1,015 million or $1.015 billion. Our Q1 bookings were 1.207 billion. That was up 31% year-on-year. And that was ahead of the high end of our guidance, which was 1.125 to 1.15 billion. Q1 DAUs, 97.8 million, just shy of 100 million DAUs, up 26% year-on-year. And let's dive into a couple of the areas we've been talking about growing ever since our S1. First, U.S. and Canada still growing with solid DAU growth of 22%. APAC, 40%. Japan, one of the largest gaming markets, growing 48% year-on-year. And India growing 77% year-on-year. We'll talk a bit about some of the performance things we're doing on our app and ecosystem to support that. And on demographics, a very large opportunity for us, over 13. 13 and up DAUs grew at 36% year-on-year. And now our DAUs are at 62% over 13%. On hours, we hit 21.7 billion hours in Q1. That's up 30% year-on-year. Similar to the DAU trend, U.S.-Canada, 27%, APAC, 40%, 44% growth. Japan hours, 50% year-on-year. India hours, 78% year-on-year. 13 and up, 40% engagement growth year-on-year. And on the hours, very similar to DAU, 64% of the hours in 13 and up. Continuing on our effort for thoughtful cost management, combined with our growth in Q1, our cash from operations was $443 million. That was up 86% year on year. And that's 17% above the high end of our guidance, which was 380 million. Pre-cash flow in Q1, 426 million, up 123%, 18% above the high end of our guidance. Just a little dive on some of the operational efficiencies we've been focusing on. Trust and safety up 8% year-in-year, now 13% of revenue, 11% of bookings. I want to highlight, as we generate this operational efficiency, quality continues to go up. AI continues to be a key component of our efficiency there, and we're getting better on all fronts. AI-driven moderation has really driven the quality of our system, both for content safety and communication safety. Our personnel costs, exclusive of stock-based comp, were $238 million want to highlight these are growing less fast or slower than bookings and revenue at 23 of revenue and 20 of bookings and we're getting great leverage here and more leverage to come as we start to continue to accelerate our coding efforts with ai um on this at the very very same time Where we would like to see more money moving in addition to our bottom line is creator earnings. DevEx was up 39% year on year in Q1 at $281 million. That's 27% of revenue, 23% of bookings. Our creators are on track for earnings over a billion this year for the first time ever. and want to dive a bit into our investments on creator success and making them more successful. We highlighted a few of them. Differential Robux pricing is really working. We shared some of the results here in our letter, and the creator community is really getting into this. Also, the inexperienced price optimization that we rolled out is giving us roughly 4% more in median creator earnings for creators who are participating. We're now at 35% of top 100 experiences by spending using price optimization. We've seen some experiences do as well as 15% improvement in earnings, including slap battles. Really, really satisfying thing here. When we started running this optimizer, prices went down, not up, which is really just a great testament for helping creators find more revenue and really an engagement and spending positive way. Also, last week, regional pricing recommendations for game passes. For example, India or Brazil will see different prices than they would if they're in the UK. Our early testing is showing really promising results. We've only released it for game passes. Stay tuned. We're going to be adding in-game and avatar marketplace items. Going over to search and discovery, we want to highlight, we really try to surface diversity in content in a fair way. And this is really, really important because 90% of the traffic on Roblox originates from our homepage, so this is a really crucial channel. We said publicly, and I would say not just on Roblox but across the industry, a belief and commitment to transparency in search and discovery algorithms. And we have started outlining how retention, engagement, monetization, and intentional co-play are signals. We've gone so far as to make these signals available as much as possible on our analytics dashboard for creators. So transparency, but giving feedback to creators so they can see how they're doing on these signals. We have a lot of creators of all sizes. We're trying to really drive search and discovery, not just with short-term optimization, but factoring long-term ecosystem health, which is really long-term enterprise value, into our search and discovery and recommendation algorithms. I'll share a few results. Our top 100 creators now earned $6.7 million on average in the last 12 months. That's up 35% versus the 12-month period ended March 31, 2024. And the top 100 creators earned over a million in the last 12 months. That means a creator number 100, if we stack rank them by earnings over the top 12 months, creator number 100 earned over a million. So we have over 100 creators and studios supporting themselves, which is a great diversity of content. And discovery efforts are really helping. 24% of the top 100 experiences by spending in March were created in the last 12 months, which is amazing content velocity. Let's look at the top 10 creators. They earned $36 million on average in the last 12 months. That's up 28% versus the 12 months ended March 31st, 2024. We highlighted at RDC, I guess it was just last year, the goal of having a Roblox studio valued at a billion dollars. We're seeing a lot of M&A action in the Roblox ecosystem. You can read about it on the news. And we're really proud that we're starting to see this kind of growth on the platform. We've shared publicly our goal and our belief is we're going to see 10% of the gaming market by consumer spending. on the roblox platform we're growing faster than the gaming industry as a whole because we are a platform we have a lot of headroom and we've also shared that one of the tools we're going to use to do this is a real focus on genres and watching how we're doing in sports and racing how we're doing in role playing how we're doing in battle genres and tracking these and making sure our platform, from a technology point of view, search and discovery, economics point of view, can support awesome properties on this. I do want to share in the three genres we're tracking, we've seen 69% year-on-year growth in these three genres that I just mentioned. A couple of highlights about LiveOps. We're continuing to run LiveOps events The most recent event was the Hunt Mega Edition. And mega, yes, mega stands for a million. We had 10 finalists compete for a million dollars in cash on April 4th at our headquarters. There were over 183 million visits to our hub during this event. And I would invite you to track down this event and watch it if you want. It's really fun to watch top flight super high quality pro gamers playing a fashion game like dress to impress competitively. So that's a fun, fun highlight on brands and ads. We announced our partnership with Google to help scale ads in formats like video and rewarded video that integration is underway. We've also added additional tech and analytics providers, um, You know, Sient, DoubleVerify, IAS, Kantor, and Nielsen. And we continue to be really excited about creating an ecosystem where our creators have a wide range of monetization opportunities, including freemium, including paid access, including ads. On brand activations, you know, we're seeing more and more licensing-type deals, NASCAR, teamed up and did an activation with Driving Empire, PGA Tour Ultimate Golf Simulator launched. We've seen European Soccer League show up with, and I want to pronounce it right, Bundesliga. We've also seen people using our platform to reach out to young people. The Ad Council did a program with Love Your Mind to support teen mental health. with resources from Headspace. And Alo Yoga also updated their experience that's focused on mental health and physical well-being. And I'll look around and see if we can announce there's a fun food activation on the platform. I'm looking whether we can announce it. So yeah, Chipotle is also activated with a repeat of their great partnership. On the AI side, We're live now with Cube 3D. We've built our own foundational 3D model and trained it on over one and a half million licensed and publicly available data sets in the Roblox ecosystem. We now have 1.5 thousand experiences that are playing around and experimenting within experience generative 3D AI. And this is just the beginning. We have shared publicly that we're moving forward to full 3D scene creation, and we're also enabling over the next few quarters what we call 4D generation. 4D generation means not just creating props and static assets, but creating native Roblox 3D immersive assets that are functional, that include embedded code, And the example there is cars where you can walk up, open the door, hop in the car, drive the car, and get a heads-up instrument display on the car, as well as avatars and other interactive elements. We have also done, we are live now with a beta of a text generation API in our system using an LLM. Creators can also use this directly and experience to power NPCs that are conversational and AI characters. And we're now over 300 ROBLOX-created ML models that we're running in our system, where we got that start way back four years ago with our first few models in trust and safety. We are running this with a focus on low-latency real-time inference at low cost. And then highlighting on safety and civility, really our top priority since we started We launched in April the latest iteration of our open source AI voice classifier model, which is even more accurate, runs more efficiently. This is open source. And I want to highlight a personal anecdote. When I now go to GDC, I bump into companies and I've heard them say, we're using your model, which is awesome. We added three powerful parental controls in April. to give parents even more control of how their children spend time on roadblocks. And we've joined the Roost Consortium to contribute more of our open source work to that for this industry-wide initiative to improve civility and safety. So a lot of great opportunities in front of us. And with that, I'll hand it over to Mike.