Roblox Corporation

Good afternoon, everyone. This is Kate, and I will be your conference coordinator today. Welcome to Roblox Q1 2026 earnings conference call. After the speaker's remarks, there will be a question and answer session. If you would like to ask a question during that time, please press start and then the number one on your telephone keypad. We ask that you please limit yourself to one question and rejoin the queue if needed. Now I will turn the call over to Jamie Morris. Roblox Head of Investor Relations, Jamie.

Good afternoon, everyone. Thank you for joining us to discuss our Q1 2026 results. With me today is Roblox's co-founder and CEO, David Bazzucchi, and our Chief Financial Officer, Naveen Chopra. Before we begin, I would like to remind you that our commentary today may include forward-looking statements that 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 risks, uncertainties, and assumptions are included in our FCC filings, including in 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, and 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 shareholder letter and supplemental slides, which are available on our investor relations website. With that, I'll turn the call over to Dave.

Thank you. Good afternoon, and thank you for joining us today. We continue to make progress towards our target of capturing 10% of the global gaming content market on our platform. and an even greater share of the US market. In Q1, we had revenue of $1.4 billion, which grew 39% year over year, bookings of $1.7 billion, which grew 43% year over year. And I'll note that's roughly twice what we've shared with investors as our long-term growth trajectory. We generated $629 million in operating cash flow and $596 million in free cash flow. up 42% and 40% year-over-year, respectively. Monthly unique payers increased to 31 million, up 52% compared to a year ago. And we had strong payer growth in international markets and continued solid growth in the U.S. and Canada, up 19% year-over-year on a larger payer base. We also saw year-over-year user and engagement growth, DAUs of 132 million, up 35% year-over-year, and DAUs outside of the U.S. and Canada grew 40%. DAUs in the U.S. and Canada grew 17%. DAUs in Japan grew 96% year-on-year in Q1, and DAUs in India grew 84%. Hours of engaged were at 31 billion, up 43% year-over-year. Outside of U.S. and Canada, that number grew 50%. Hours in the U.S. and Canada grew 21%. Hours in Japan grew 101% year-on-year in Q1. And hours in India grew 91% year-on-year. For our 18 and up numbers, as of Q1, over 18 users represent 26% of DAUs who have age checked. In the U.S., DAUs and hours for the 18 and up cohort grew over 40%, and within that, our 18 through 34 cohort grew over 50%, faster than any other age cohort. Additionally, in the U.S., the over 18, 18 and over users on Roblox monetized over 50% higher than our under 18 users. As we expected, DAU growth, while very healthy at 35%, has declined from the roughly 70% growth rates we saw in the past two quarters. User acquisition and engagement was also impacted by our global rollout of age checks to access chat in January. At Roblox, we're committed to setting the global standard for healthy, safe, and age-appropriate digital engagement. And we're building a platform for all ages as part of the core vision to connect a billion users with optimism and civility. As part of this commitment in Q1, we became the first large online gaming platform to introduce age checks to access chat on a global basis. And I want to also note we're really the first large platform Another major announcement in our plans to introduce age-based accounts, which leverage our age check technology, and we expect this to roll out globally in June. I want to note, because we've globally introduced age check, we've been able to introduce kids' accounts within our core app. These proactive measures are setting a new industry benchmark And also, we've been incorporating really input from policymakers and regulators around the world. Note that not all of our users have age checked. Even as the percentages continue to grow, in the United States, we're at 65% age checked. In Australia, where we started a bit earlier, we're at 70% age checked. This is always in addition to our robust text filtering technology that we're continuously improving and also our open source voice safety tech. We're now better able to understand the impact in the short term of age checking. For communication engagement, we have had a follow-on reduction in the percent of users communicating on our platform. Just because people right now who have not age checked, we don't allow them to communicate. In addition, along with age checking, we've now banded communication, so we no longer allow adults to communicate with users under 16, even with our existing industry-leading filters and with no image sharing. We believe this reduction in comms does affect both people who have age checks as well as those who have not, because those who have age checks do have fewer people to communicate with. Also, as we push towards 10% of gaming, we believe our discovery algorithms should be focused primarily on driving incremental long-term platform retention over short-term monetization, especially to grow our 18 and up user base. we're implementing this transition now. And as we continue to adjust to local customs and regulations, we do foresee some restrictions of content to both non-AgeCheck users relative to their age range and also as part of region-specific content guidelines. We believe as a result of AgeCheck also and reduced communication discovery that we've weighted more towards monetization, we have seen a reduction in app store ratings, and we believe this may be contributing to a reduction in organic signups that typically flow from app stores. We believe the strategic upside of everything we're doing is significant and the right thing to do for the long-term health of the platform. Kids accounts and select accounts offer the long-term opportunity of increasing safety and civility, which in turn drives organic engagement growth in line with our mission to connect a billion users with optimism and civility. And we're unique among large platforms in our focus on the safety of users who are under 13, especially given the reality that a large number of young people under the age of 13 have access to phones and to these other large platforms. And these platforms typically aren't designing safety systems for those under 13. However, as a result of this, we do expect to see continued short-term bookings headwinds as a result. And this will lead to a revision in our full-year guidance. Naveen will discuss more in his remarks. Now, to address the short-term friction, we are taking a number of actions across several key areas. Age checking is our vision of the future, and we believe this tech will continue to scale across the industry. We expect to see continued adoption by other companies in the gaming, social networking, social media, and AI chatbot spaces. Through the end of Q1, 51% of global Roblox DAUs have age checked. As we work to set the global standard in safety, full adoption of age check will take time. We expect our new age-based account framework to drive an increase in age check penetration rates, and we're focusing on additional means to drive our percent of users that have age checked to a level that long-term we hope to bring above 90%, which then also unlocks our ability to significantly improve our native communication features. Communication engagement is fundamental to our user engagement and retention, and following global rollout of age checks to access chat, we do see new opportunities to enhance communication features and boost engagement through our higher confidence user age data. Over the next few months, we're going to be rolling out several enhancements designed to increase communication adoption and improve the chat experience on ROBLOX. This includes global chat, which is going to allow players across multiple servers in the same game to communicate in a single shared room, which we believe will increase in-game chat density. And we're also going to be integrating party chat directly into the in-game chat window, which we believe is going to remove the need for users to leave an experience to coordinate with friends. We plan to expand party chat between trusted friends when appropriate age and necessary parental consent is granted to include voice and avatar video. And as of now, we're not sharing a ship date for this. We've also planned a system for preset messages that will enable all users to easily coordinate gameplay. Collectively, these investments paired with our incentives for age check will be engineered to drive on-platform communication beyond our pre-check levels and deepen user connection. We continue also to evolve our discovery system. Last year, we enhanced really the discovery of long-tail content, and we improved content diversity. We're now focusing on high-quality games with deeper long-term engagement, and we're currently experimenting with enhanced discovery algorithms designed to optimize for 28-day retention and beyond. Some of our creators have already taken notice, as I tweeted this week, and we're implementing changes on how to really create a market that levels the playing field for high-quality long-term experiences. We continue to see an acceleration of AI tool chain use by our top creators. Nearly half of the top thousand creators on Roblox now leverage either Roblox Assistant, which is our own AI entry point, or MCP model context protocol to compress dev timelines. In addition to our own Assistant AI, our creators are using Quad Code, Cursor, Codex, and other third-party tools tightly with Roblox Studio. These technologies are being used to support creators on everything ranging from light assistance to fully vibe-coded content. We ultimately believe gaming is a much more complex space than the coding space, and really we're driving to achieve iterative Wiggums loop-style programming Because games are not just based on code, but 3D assets, NPCAI, core gaming loops, and live ops, among others, we really want to get to the point where devs can have Roblox Studio working overnight on their game and come back in the morning and see those improvements. We really want to try to do a game creation, what tools like Codex, Cursor, and Cloud Code are doing for coding, which is really radically accelerating speed. And we believe we're uniquely poised to innovate and solve this, given the integrated architecture we have from our cloud to our engine to our developer tools to our native AI. In April, we call that the month that Roblox Studio went agentic. Creators can now engage in focused conversations with our assistant about the design and implementation and test plan of new features. Assistant executes a plan now, launches a suite of building agents to test and really try to deliver new features with minimal creator engagement. We're also on the 3D side to complement coding, introducing new mesh and procedural model generation capabilities, which are going to allow creators to build richer worlds. And we've introduced NPC, which is non-player character testing agents that can now navigate complex 3D worlds and execute gameplay actions as part of really game development. The vision for NPCs really at Roblox goes beyond NPCs you might interact with in game or NPCs used for safety. And part of that vision is really for testing. We believe NPC testing agents can be part of a foundational model that we're building to really help creators iterate quickly on their games using NPCs in addition to humans for testing. And all of this really is to enable small teams to produce super high quality content very quickly. We do believe AI is going to fundamentally accelerate gaming, and we are in a unique position to lead in this transformation. Yesterday, we shared on our blog our vision for the future of really integrated AI and gaming and the creation of photorealistic multiplayer gaming and creation that's easy for anyone to participate in. This is really our most ambitious technical innovation to date. We call it the Roblox Reality Project. And this patent pending architecture integrates hyperscale multiplayer simulation with our current Roblox cloud engine with photorealistic rendering and persistent world state into really a hybrid unified architecture built on our global edge cloud and infra. The goal of Roblox reality is to really enable creators to construct interactive environments that are high fidelity and really drive this new technical frontier, the ultimate introduction of the first easy-to-use, multiplayer, photorealistic platform that we're uniquely poised to build. More details on the blog post if you want to read up on it. In general, on the AI side, just to wrap up, we have over 400 models running, over 1.5 million inferences per second, on-prem and on our cloud. This is powering in addition to creation and Roblox reality, everything from discovery recommendations to communication safety, marketplace recommendations, and 3D generation. And we're now investing in four in-house proprietary models, 4D generation, NPC behavior, our just shared video super up sampler initiative, and coding assistance and generation. Finally, we've announced several initiatives on our novel games initiatives. As we shared, there's a very large opportunity for us in the over 18 cohort. Over 18 represents 26% of the DAUs who have age checked. And once again, in the US, DAUs and hours within our 18 through 34 cohort grew over 50% year on year. We announced an increase in the DevEx rate for age-checked 18 and up users in the U.S. Starting on June 8th, creator earnings for in-game spend generated by age-checked 18 and up users in the U.S. will increase from 37.8% up to 37.8% from 26.6%. I want to highlight what made this possible is age check. Games to do this must meet our definition of novel games, which means they're going to utilize our R15 avatar framework. We're also now working with several well-known game studios to bring reimagined versions of their beloved mobile games to Roblox. More details on this in the coming months. We also have announced an internal jumpstart and incubator program to support internal existing creators with novel game creation. The initial response to this has been amazingly strong. And with our existing creators right now, with our white glove service, we have roughly 100 novel games being onboarded into the program. I recently tweeted in Q1 that we delivered a large number of technical milestones that are all designed at enhancing realism and expanding creator capabilities in parallel with the longer-term Roblox reality project. These are all designed to support high-quality, immersive experiences that scale dynamically from 2-gigabyte Android devices all the way up to high quality on a gaming PC. We've introduced our new R15 Plus avatar framework with dynamic heads And this provides a foundation for more lifelike avatars on the platforms, just like recently released avatar makeup. Together with some of the deep tech like instance streaming, mesh streaming, texture streaming, server authority, and SLIM, these are updates that are removing the barriers that our creators have seen in creating more and more original experiences for older users. We're committed to the long view. Our confidence in the future of gaming on our platform has never been higher. And with that, I return and turn the call over to Naveen.