Roblox Corporation (RBLX) Q4 2025 Earnings Call Transcript
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Overview
The earnings call summary presents a mixed outlook. While there are positive aspects like double-digit bookings growth, AI integration, and a focus on the 18+ demographic, there are also concerns. Margins are expected to decline, and there's uncertainty with a wider guidance range. The Q&A section highlights optimism but also acknowledges some challenges like sequential decline in bookings and potential friction from safety policies. The absence of a viral hit and wider guidance range contribute to a neutral sentiment. Without market cap information, predicting a strong reaction is difficult.
Key Financial Performance
Revenue Q4 revenue was $1.4 billion, up 43% year-on-year. The increase was attributed to strong growth across all regions.
Bookings Q4 bookings were $2.2 billion, up 63% year-on-year. This growth was driven by strong engagement and viral hits.
Daily Active Users (DAUs) DAUs in Q4 grew 69% year-on-year, with strong growth across all regions.
Engagement Hours Engagement hours in Q4 were 35 billion hours, up over 88% year-on-year. This was driven by advancements in search and discovery.
Monthly Unique Payers Nearly 37 million monthly unique payers in Q4, close to double from a year ago and up sequentially. Growth was strong globally.
Developer Exchange (DevEx) DevEx in Q4 was $477 million, up 70% year-on-year. The increase reflects an 8.5% increase rate in September.
Creator Earnings Creators earned over $1.5 billion in 2025, with the top 1,000 creators earning an average of $1.3 million, up over 50% year-on-year.
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Operating Highlights
Novel game expansion: Introduced the concept of novel game expansion to target older audiences, with the 18+ demographic growing at over 50% and monetizing 40% higher than younger cohorts. Optimized platform for high-monetizing genres like shooters, RPGs, and sports.
AI-driven creation: Launched 4D Generation for AI-driven object creation and enhanced NPCs. Introduced photo upsampling for higher photorealism and internal world model services for creating immersive worlds.
Safety enhancements: Rolled out facial age estimation globally, achieving 45% penetration of global DAUs by January 2026. Enhanced matchmaking based on age and skill level.
Global market share: Currently at 3.4% of the $200 billion global gaming content market, aiming for 10%.
Regional growth: APAC grew 96% year-on-year, with standout growth in Indonesia (700%), India (110%), and Japan (60%). U.S. and Canada grew 41% year-on-year.
Revenue and bookings: Q4 revenue reached $1.4 billion (up 43% YoY), and bookings were $2.2 billion (up 63% YoY). Full-year revenue grew 36%, and bookings grew 55% YoY.
Engagement and monetization: Q4 DAUs grew 69% YoY, with engagement hours at 35 billion (up 88% YoY). Monthly unique payers nearly doubled to 37 million.
Creator earnings: Creators earned over $1.5 billion in 2025, with the top 1,000 creators averaging $1.3 million each (up 50% YoY).
AI integration: Running over 400 AI models for creation, safety, and discovery. AI drove a double-digit increase in unique experiences surfaced in recommendations.
Safety leadership: Focused on leading online gaming safety with innovations like Roblox Sentinel and Guard, and continuous refinement of text and voice filters.
Long-term growth strategy: Investing in creators, infrastructure, and safety to drive long-term growth and margin expansion. Bookings growth for 2026 projected at 22%-26%.
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Risk or Challenges
Regulatory and Safety Compliance: The company is investing heavily in safety measures, including age verification and AI-driven safety models. However, these efforts may face challenges in global adoption, reliability, and compliance with diverse regulatory standards across different regions.
Monetization and Growth in Older Demographics: While the 18+ demographic is growing and monetizes 40% higher than younger cohorts, the company faces challenges in optimizing its platform for high-monetizing genres and ensuring sustained engagement from this audience.
Dependence on Viral Hits: The company's growth in 2025 was significantly driven by viral hits like 'Steal a Brainrot' and 'Grow a Garden.' Future growth may be at risk if similar viral successes are not achieved.
Cost Management and Margin Expansion: Investments in AI, safety, and infrastructure, along with increased DevEx rates, may lead to challenges in maintaining or expanding margins, especially if bookings growth does not meet expectations.
International Expansion: While international markets are growing rapidly, the company faces challenges in scaling its platform, localizing content, and navigating diverse market dynamics in regions like APAC and emerging markets.
AI and Infrastructure Investments: The company is heavily investing in AI and infrastructure, including GPUs and data centers. These investments carry risks related to cost overruns, technological obsolescence, and the ability to deliver expected performance improvements.
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Guidance & Outlook
Bookings Growth for 2026: Expected bookings growth of 22% to 26%, informed by the quality of users in 2025, recent content trends, and adoption of age-checking technology. Guidance does not assume another viral hit of the magnitude of 'Grow a Garden' or 'Steal a Brainrot'.
Margins for 2026: At the high end of bookings guidance, margins are expected to be relatively flat year-over-year. At the low end, a slight year-over-year decline in margin is anticipated due to the increase in the DevEx rate and investments in safety, marketing, and AI workloads.
Free Cash Flow Growth for 2026: Estimated 26% year-over-year growth in free cash flow at the midpoint of guidance range. Includes a slight uptick in CapEx spend for GPUs in data centers and inflation in memory prices.
Long-Term Growth and Margin Expansion: Conviction in the ability to grow in excess of 20% and achieve long-term margin expansion through operating leverage from COGS, infrastructure, and fixed costs.
International Growth: International business is growing at close to triple-digit rates, with significant opportunities in nascent markets.
Older Audience Growth: 18 and over cohort is growing at more than 50% and monetizes 40% higher than younger cohorts, especially in the U.S.
AI and Platform Innovation: AI is expected to accelerate growth beyond gaming into communication, entertainment, and commerce. Investments in AI workloads and safety enhancements are planned.
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Shareholder Return Plan
The selected topic was not discussed during the call.
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Key Q&A
Q:Could you give more color on the elements that inform your outlook for the bookings outlook for the year?
A:Management highlighted internal leading indicators such as content diversity, distribution, velocity, and types of content hitting different age ranges and genres. They noted increasing diversity and freshness of content, with experiences outside the top 10 growing faster. They also emphasized the quality of new users resembling core users in engagement, spending, and retention. However, they acknowledged uncertainty in predicting 12 months out and used a wider guidance range for 2026, excluding assumptions of massive viral hits.
Q:Could you elaborate on the better opportunity to target the 18+ demographic and the role of AI gaming?
A:Management expressed optimism about AI expanding the definition of gaming. They discussed using AI for upsampling 3D, training NPCs with 13 billion hours of data, and building multiplayer platform technology. They emphasized the difference between their synchronized 3D multiplayer cloud space and other video latent space technologies, highlighting their focus on multiplayer environments and real-time creation.
Q:What have been the key lessons learned about the evolution of discovery on the platform over the last 12 months?
A:Management emphasized the importance of optimizing discovery for long-term user engagement, platform health, and creator health. They noted increased diversity in content mix and future opportunities like in-game browsing as a complement to discovery. They aim to personalize discovery to connect users with great content for long-term gains.
Q:What contributed to the improvement in gross margins in the quarter?
A:The improvement was attributed to a shift towards direct payments, which performed better than anticipated, and better-than-expected bookings growth, providing leverage against fixed costs. Management expects continued improvement in COGS rates as more business shifts to lower-cost platforms, though not necessarily in a linear fashion.
Q:What is your response to concerns about potential disruption to your business from advances in AI by other companies?
A:Management sees AI as an opportunity for expansion rather than a threat. They highlighted their focus on multiplayer technology, 3D cloud synchronization, and building communication technology. They believe their approach will blur the lines between gaming and entertainment, leveraging AI for creating interactive environments and expanding the Roblox vision.
Q:How do you think about dilution in stock-based compensation in 2026 with your stock price significantly down?
A:Management runs multiyear models on stock-based compensation and dilution across a wide range of stock prices. They focus on long-term operating results, believing that shareholder value creation will reduce dilution over time. They emphasized the importance of strategic investments, including headcount and other high-ROI areas.
Q:What is the update on your advertising ambitions and the potential growth contribution from advertising in 2026?
A:Management expects healthy growth in advertising in 2026 but noted it remains a modest contributor to the top line. They are methodically building the business, focusing on product development, technology integration, and expanding inventory with creators. They emphasized the long-term opportunity given the platform's scale and engagement.
Q:What is your perspective on building your presence in China and the opportunity there?
A:Management sees a huge opportunity in China and continues to partner with Tencent. They are considering an air-gapped approach for deployment in China, leveraging their infrastructure's unique design for multiple locations.
Q:What gives you confidence in investing in the 18+ demographic despite younger users being tougher to age up?
A:Management highlighted over 50% year-on-year growth in the 18+ demographic and noted that the same platform and technical advantages used for under-18 users apply to 18+. They believe their vertical integration and support for realistic experiences will drive growth in this demographic.
Q:Have you noticed any change in behavior or engagement levels for users who have completed age verification?
A:Management noted that age verification allows for better matchmaking by age bands, which they believe will drive long-term growth. They view age verification as a gold standard and are optimistic about its impact on engagement and platform quality.
Q:What explains the sequential decline in Q1 bookings guidance?
A:Management attributed the decline to the absence of a big new viral hit, which they had anticipated. They emphasized the 40%-44% top-line growth as a positive indicator of platform health, despite the sequential trend.
Q:Review of Unclear Management Responses
A:Management avoided directly addressing specific challenges or adjustments made during the age verification rollout, instead emphasizing their satisfaction with the process and its long-term benefits. They also did not provide detailed numerical data on advertising growth or specific ROI metrics for stock-based compensation investments.
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Earnings Word Cloud
The most frequently occurring keywords in this quarter's earning call
AI model
Australia New
Investor Relations
New Zealand
addition
adoption
advancement
afternoon
age estimation
age platform
area
asset
auto
civility
client
cloud
communication
content market
cost
course
digit
fidelity
filter
future gaming
gaming content
gaming industry
genre expansion
highlight
innovation
language
matchmaking
opportunity platform
progress
rollout
service
text voice
training
translation
use
world model
RBLX Transcript
Roblox Corporation (RBLX) Q4 2025 Earnings Call Transcript
Unknown2-5
The earnings call summary presents a mixed outlook. While there are positive aspects like double-digit bookings growth, AI integration, and a focus on the 18+ demographic, there are also concerns. Margins are expected to decline, and there's uncertainty with a wider guidance range. The Q&A section highlights optimism but also acknowledges some challenges like sequential decline in bookings and potential friction from safety policies. The absence of a viral hit and wider guidance range contribute to a neutral sentiment. Without market cap information, predicting a strong reaction is difficult.
Roblox Corporation (RBLX) Q3 2025 Earnings Call Transcript
Positive10-30
Roblox's earnings call summary indicates strong growth projections, with revenue and bookings guidance showing significant year-over-year increases. The company's focus on technological advancements and expanding market share further supports a positive outlook. However, some caution is noted in Q4 guidance and the lack of specific 2026 projections. The Q&A section reveals analyst concerns about long-term growth, but management's optimism about AI and advertising suggests potential upside. Overall, the positive elements outweigh the uncertainties, leading to a 'Positive' sentiment rating.
Roblox Corporation (RBLX) Q2 2025 Earnings Call Transcript
Positive7-31
The earnings call reflects strong financial performance with significant growth in revenue, bookings, and user engagement. The Q&A section highlights strategic advancements, including successful APAC expansion and new monetization strategies. Despite some management vagueness, the company's optimistic outlook and robust metrics suggest a positive stock reaction. The lack of market cap data prevents precise categorization, but the overall sentiment leans positive.
Roblox Corporation (RBLX) Q1 2025 Earnings Call Transcript
Positive5-1
Despite competitive pressures and regional growth challenges, Roblox reported robust financial metrics with significant increases in revenue, bookings, DAUs, and engagement hours. The Q&A session highlighted continued focus on growth areas like genre expansion and partnerships, although there was some lack of clarity on differential pricing and Shopify integration. The strong financial performance, especially in free cash flow and cash reserves, suggests a positive outlook. Given the absence of clear negative catalysts and the company's strong financial health, the stock price is likely to see a positive movement in the next two weeks.
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