Roblox CEO on Shopping, Socializing, and Selling in 3D
David Baszucki (00:00):
We're not really trying to replace humans, we're trying to accelerate humans just like digital photography did a while back. AI is going to do this for a lot of Roblox creators.
Ann Berry (00:11):
Gaming isn't about consoles and cartridges anymore. It's a global industry where platforms combine play, commerce and social interaction increasingly feeling like an always on digital marketplace. Roblox is a key player in this space. It started out as an online game platform for children under age 13, but today it's growing fast among teens and young adults, giving developers a new audience and a new way to make real money building virtual worlds. The platform hosts interactive experiences for movies, music events and brands, so studios, artists and advertisers can build their own games, virtual concerts and digital worlds directly inside Roblox. The company posted strong Q1 results including revenue up 29%, and daily active users blowing past analyst estimates to hit almost 98 million users at the same time. Roblox is under growing pressure to spend more to keep users safe as its older player base grows and more immersive content lures the lines between play and reality. Today we're joined by Roblox, founder and CEO David Zuki to unpack the company's next chapter and his vision to grow share from three to 10% of global gaming spend. Let's get into it. When you founded Roblox 20 years ago, tell us what you started with as your original vision for the company and tell us about where you've ended up today that perhaps may be surprising or really different from where you thought you would end up 20 years later.
David Baszucki (01:29):
When we founded Roblox, even way back then, we were imagining a new category to bring people together, and when we founded Roblox, if we roll the clock back, social connection was big, social networking was big, user generated content was interesting. We, and of course gaming was starting to become more multiplayer and online. We saw a confluence of all of these and essentially a glimmer back then of what is the future of the way people are going to communicate? What is the future of the phone system and video communication. So we had an inkling of that vision of 3D connection and that vision's been very similar to where we are today.
Ann Berry (02:20):
Roadblocks had been known historically for focusing on children and having under thirteens as its primary user base. And I take a look at your latest earnings, which we'll touch on. I saw this, I was kind of astonished by how much that shifted, about 31% or so of your daily average users, 13 or under the vast majority being older teens and adults. Talk to us about that. How many of your users are actually 18 and over? How many real adults do you have now coming onto the Roblox platform,
David Baszucki (02:49):
We're really glad we started the company focused on young people. In a way it was much more difficult. We had to, from day one, focus on being fun, being engaging, and really from day one focus on safety and civility. But combining that with this vision of a platform where all of the content is created by the community, where we now have hundreds and thousands of interesting experiences, naturally, we believed that we would see more and more older people. And as you noted, we just finished a quarter where we outperformed on every single metric, revenues, bookings, hours, and inside of those quarterly stats, there's a really cool metric that are over 13 players are growing at over 35% year on year. So we already passed the time when the majority of people are over 13 on our platform. It's an amazing opportunity for growth and it's really an opportunity for growth that we've just started on. We have about 3% of the world's gaming running on Roblox, and we've publicly said we aspire to have that be 10%.
Ann Berry (04:04):
Let's talk about some of the initiatives that drove this really terrific top line set of results in your earnings, David, 26% growth in your daily average users hitting just under 98 million for the quarter 29% revenue growth. Some of the things that were touched on in your release were improved search and discovery, more direct payments channels, more license experiences, just to name three of those buckets. Hit the highlights on those three for us so we can really understand what's getting you to that 3% plus going forward in terms of global share,
David Baszucki (04:37):
Highlighting that over performance everywhere and also north of 30% growth on our bookings, north of 30% on our hours of engagement, a generation of over 400 million of free cashflow. We've been on this vision of driving the performance, the raw technical capabilities of roblox. We've seen many, many places where Roblox just runs better, where creators can make more immersive experiences. We've also seen the creator community more and more offering a wider diversity of experiences. Last summer, dress to impress came on out of nowhere and all of a sudden we had college students playing dress to impress in the classroom. We've seen more great content. NASCAR has hooked up with driving Empire, so we're starting to see driving experiences on Roblox. PGA tour has hooked up with Ultimate Golf Simulator, so we're seeing golf experiences. SpongeBob has connected with Tower Defense Simulator, so in addition to raw technical performance, we're seeing great content and of course the economics are getting better and better as well. This year we project over a billion dollars will flow to that ROBLOX creator community, allowing some of them to be creating really larger and larger amazing businesses.
Ann Berry (06:06):
About a hundred of your creators are already earning more than a million dollars each. I read that. David, what are some of the tools, what are some of the AI driven capabilities that Roblox has been coming up with to enable creators to get more reach and to be able to reach new frontiers in terms of the content that they're putting together?
David Baszucki (06:25):
AI has been driving ROBLOX for over four years, some of it behind the scenes. We started innovating on AI to moderate all the content on our platform to look at all the images, what everyone uploads to moderate, all the communication that built the AI muscle in the company where today we're combining that with much more generative ai. We announced in Q1 available for developers now 3D generation in any Roblox game, which is a very future vision of how AI will be used, not just for the creators on Roblox, but creators making experiences with AI inside of them. It's very early, about 1500 creators have started using AI inside Roblox experiences, but a lot of those games we've dreamed about. For example, I talk about a fashion design experience on Roblox where everyone can feel like a fashion designer by describing your ultimate outfit, by talking about it and have that be created.
(07:40)
We're going to see ultimately the ability to create Roblox experiences with AI as well. We're going to see educational experiences where text generation as a service can power historical figures in an experience as well. So we're just at the cusp of using all of the AI skills we've built running over 200 separate AI models to now start really interacting with all of the players on Roblox. And we're really optimistic where we see this going in our area. We're not really trying to replace humans, we're trying to accelerate humans just like digital photography did a while back. AI is going to do this for a lot of Roblox creators.
Ann Berry (08:28):
And when you think David, about the mix of content that's available on the Roblox platform, some of it really organically created as you've described with the community of creators, but an increasing amount of your revenue coming from brands who are coming with you to do collaborations. I mean, you referenced things like PGA and sports tours, but some of the brands that you are partnering with are very adult brands like Aloe, for example, the leisure wear brand, NAS cosmetics. When you think about your mix, what is your mix right now of content coming from creators versus coming from brand partnerships and where do you think it needs to go to for you to hit that 10% mark?
David Baszucki (09:08):
We believe immersive 3D is ultimately going to support every brand. Just as when video started to become available on the web, it was a very early form of communication. Everyone is asking, whoa, will we see brands move from print to video? Will we interact with all of our brands on video? And now that's a foregone conclusion. Whether I'm using social media short form or YouTube or watching, I interact with all of my favorite brands on video all the time. We're going to see, we believe the same thing on immersive 3D. Our vision is really to connect a billion people with optimism and civility. We've leaned a bit into gaming, so we're seeing brands like we mentioned, nascar, PGA Tour that might be more connected with gaming. But more and more you're going to see things like shopping on Roblox, where other things we do in the physical world that aren't possible right now online we believe are going to become really a lot of fun when we shop together in person.
(10:18)
It's a lot of, I like walking around Stanford shopping center with my family and look at that. Should we try that on? Check it out. It's a lot different than currently shopping online, which is a little bit more solo and I do it by myself. So just as we see people playing together on Roblox, we think people are going to shop together on Roblox. They're going to walk around, try things on buy, not just digital items, but ultimately even physical items as well. So we're optimistic with brands like you mentioned, aloe and others who are starting to look into how to connect with people both spatially to interact, but also in a future to advertise and support shopping as well.
Ann Berry (11:06):
And in order to do that, talk to us a bit more about the payments capabilities that you've been rolling out and Roblox and there's been a number of partnerships that you've been exploring with other large tech companies, David, to realize some of these initiatives. Talk to us about those.
David Baszucki (11:19):
I would say it is very early on the advertising side. Advertising is a nice compliment to all of the other ways that creators on our platform can really create an economy. And we highlighted on Roblox, our Q1 bookings. Were 1.2 billion of bookings flowing through our platform. We think advertising is going to be a great compliment to the virtual economy and the robuck economy that all of our creators are using. So we have a partnership with Google. They're going to help deliver video ads for those creators who choose to do it. Stay tuned because we're going to be announcing more and more partnerships in the physical shopping side as well. And there's a lot of avenues out there where online destinations can use a partner to sell physical goods as well. We have some announcements coming up on there as well, so more and more creators can sell not just digital items, but the real items in their experience.
Ann Berry (12:25):
Interesting. Roblox became the poster child for the market's enthusiasm for the Metaverse, particularly in that covid aftermath when Metaverse became the buzzword du jour. A couple of companies have pulled back from the Metaverse narrative, David, ironically, meta being one of them, heavily publicized investment into reality labs, which haven't necessarily generated some of the returns that the market had been expecting. But you've hung on in there and you've made 3D and you've made the metaverse, perhaps we call it something else now. Still very much core to how Roblox plans to grow. Do you think the rest of the tech ecosystem's going to come along with you quickly enough, whether it's hardware that supports metaverse and immersive gaming better to build the market with you?
David Baszucki (13:14):
We believe we can get to 10% of the gaming market, which is about 190 billion in revenue right now independent of hardware. We run on all hardware platforms today. We run on phones, tablets, computers, consoles, VR headsets, and ultimately maybe a few more. So in a way, our growth is untethered by developments in hardware, and we also view the infrastructure we provide for creators to run and operate games is offering several advantages over what we might call traditional gaming. And traditional gaming really hasn't evolved that much in the last 20 years. We download things, some of the things we download are 200 gigabytes. We have to wait if we want to try something else or a friend invites us somewhere. We can't just spontaneously go there. The game we might see on a mobile device is very different than the game we'll see on a pc.
(14:16)
There's different things. So having all of these experiences connected, being able to have the technology to join them instantly, having unlimited AI on demand, we think is really just a complete paradigm shift in how gaming operates. That's what makes us bullish about moving from close to 3% to ultimately 10% of the gaming space running on our platform. The market's already there, we can see it and we think there's huge advantages. I am very optimistic on the future development of new forms of hardware to support new and interesting types of immersive experiences. I have a parata ray bands, I'm playing with those. I've got the Apple Vision Pro. We're playing around with all of those. And as those devices become more popular, Roblox will be there on those devices.
Ann Berry (15:12):
What about a version of the physical goods that you've alluded to that ultimately could be purchased? One of the areas that has received some attention, including here? I was lucky to interview the CFO and COO of Hasbro actually last week, and Hasbro seen enormous growth in tabletop gaming and adults wanting to play in the real world and participate in board games together. Do you see content crossing over more and more between the digital world, for example, and Roblox and then people saying, actually, I want the real life version now. I want to get people into my home and play the board game version.
David Baszucki (15:49):
I'm a big fan of Hasbro and very early on when the very first Roblox experience came alive, we saw a young creator try to make an immersive version of Monopoly. Oh, interesting. Where you and I could walk around the monopoly board and be there inside of it with giant markers and all of that. And I think that was an early signal of brands having enormous power. Monopoly from Hasbro obviously has some enormous brand power and is used in other mobile gaming. And more and more I think consumers are looking for ways to interact with these brands. And whether it's on a mobile device, whether it's on a 3D device, whether you're immersing in it or I do believe as AR goggles headsets become higher and higher fidelity, it will become very common for us to just say, we want to put the board game down on this table and play that board game without the physical board game and have it feel just as good as ever. Arguably one could imagine a AR monopoly game being much more lively, animated, all the characters doing all kinds of things, cool animations going on. So I do think as AR capability or MR capability becomes more commonly used, we're going to see an explosion of tabletop traditional gaming that maybe comes to life a bit more.
Ann Berry (17:23):
Let's bring it all back to your recent earnings, David, because we've talked a lot about how you've been driving revenue growth, everything you've just described, whether it's investing more in ai, maintaining safety and trust, which has been an enormous focus roadblocks or it's developing for these different kinds of hardware as they evolve. This is all research and development spend, right? This is all innovation dollars. ROBLOX has posted losses. What do you think is a path forward to keep building on the cashflow momentum that you delivered this quarter?
David Baszucki (17:50):
ROBLOX generates a lot of cash, and that cash has increasingly put us in a more powerful financial configuration. We have well over 3 billion cash in the bank right now that's growing all the time. The reason we post loss is the way we do accounting at Roblox. We post bookings, which is based on cash. We also do share gap revenue and our current gap revenue numbers, which are fully SEC compliant tax compliant. We defer the revenue we get from virtual goods over the course of many, many months, and so in a sense, we get the cash in, but we treat those as durable goods and don't show the revenue. So we typically see all of our very integrated investors looking at bookings and cash and understanding how we post revenue relative to gap.
Ann Berry (18:53):
And in terms of that cash, the treasure chest. David, where do you see it going? Are we going to see you doing mergers and acquisitions? Are we going to see you perhaps thinking of more return of capital to your shareholders? What's the outlook there?
David Baszucki (19:05):
We believe we're going to return capital to our shareholders primarily by growing enterprise value, and we see enterprise value as we march towards 10% of the gaming market with growth over 20% year on year being an enormous enterprise value generator. We do like the idea of showing we can generate cash. We like the idea of slowly and conservatively nudging our cash flow forward thoughtfully, but we never want to crimp on innovation. We never want to crimp on research and development. We believe the growth rate we're operating at for hiring, and we are hiring. We are hiring at a rate where the spending is less than our bookings growth, but at a rate that's driving innovation. We think we're not being constrained by that. So no current plans for that cash, but we do believe it's healthy to have that cash in the bank.
Ann Berry (20:06):
We're going to wrap David with a couple of rapid fire questions starting with Let's Do It. Which is the one company you admire that is not Roblox? That's a cheat answer.
David Baszucki (20:17):
Arguably in early ROBLOX and innovation company, I'm really a big fan of Disney. What they did, they innovated in movies, they innovated in theme parks, they integrated in brands and just what an amazing company that was in the early days.
Ann Berry (20:32):
What would your Roblox avatar wear to a board meeting?
David Baszucki (20:35):
I like the idea that when we start having our board meetings in Roblox and we've already experimented having our one-on-ones in Roblox, we actually have our virtual office simulator running on Roblox. What I think we're going to find is when I go to a board meeting in Roblox, I'm going to wear roughly the same thing I wear in the real life. The same clothing is available. I have outfits on Roblox that look like this outfit,
Ann Berry (21:02):
Your digital twin David. What's just one potential path for roadblocks if people were to unleash their imaginations, release themselves from thinking about what seems to be immediately possible in the digital gaming world and really go into the blue sky area, something you did when you started this business, what do you think roadblocks will be capable of another 20 years from now that no one could possibly imagine today other than perhaps you because you have that kind of vision.
David Baszucki (21:28):
I feel just like education has adopted books and then has adopted video and has adopted sometimes video communication, I think optimizing connection in a even an educational context where for very imagine some subjects that are hard to teach in a specific classroom, but a digital classroom could be created with people around the world to come together to learn. So I'm really excited about the long-term educational aspects of a platform that brings people together optimistically.
Ann Berry (22:04):
I'm Anne Berry. Thanks for tuning into After earnings, the show that brings you up close and personal with the executives behind the world's most interesting publicly traded companies. If you learn something today, don't forget to like, subscribe, and share with your friends. Upcoming episodes will feature CEOs and CFOs from Carver, Lyft, and Intuit. Come back and we'll see you soon.
David Baszucki (00:00):
We're not really trying to replace humans, we're trying to accelerate humans just like digital photography did a while back. AI is going to do this for a lot of Roblox creators.
Ann Berry (00:11):
Gaming isn't about consoles and cartridges anymore. It's a global industry where platforms combine play, commerce and social interaction increasingly feeling like an always on digital marketplace. Roblox is a key player in this space. It started out as an online game platform for children under age 13, but today it's growing fast among teens and young adults, giving developers a new audience and a new way to make real money building virtual worlds. The platform hosts interactive experiences for movies, music events and brands, so studios, artists and advertisers can build their own games, virtual concerts and digital worlds directly inside Roblox. The company posted strong Q1 results including revenue up 29%, and daily active users blowing past analyst estimates to hit almost 98 million users at the same time. Roblox is under growing pressure to spend more to keep users safe as its older player base grows and more immersive content lures the lines between play and reality. Today we're joined by Roblox, founder and CEO David Zuki to unpack the company's next chapter and his vision to grow share from three to 10% of global gaming spend. Let's get into it. When you founded Roblox 20 years ago, tell us what you started with as your original vision for the company and tell us about where you've ended up today that perhaps may be surprising or really different from where you thought you would end up 20 years later.
David Baszucki (01:29):
When we founded Roblox, even way back then, we were imagining a new category to bring people together, and when we founded Roblox, if we roll the clock back, social connection was big, social networking was big, user generated content was interesting. We, and of course gaming was starting to become more multiplayer and online. We saw a confluence of all of these and essentially a glimmer back then of what is the future of the way people are going to communicate? What is the future of the phone system and video communication. So we had an inkling of that vision of 3D connection and that vision's been very similar to where we are today.
Ann Berry (02:20):
Roadblocks had been known historically for focusing on children and having under thirteens as its primary user base. And I take a look at your latest earnings, which we'll touch on. I saw this, I was kind of astonished by how much that shifted, about 31% or so of your daily average users, 13 or under the vast majority being older teens and adults. Talk to us about that. How many of your users are actually 18 and over? How many real adults do you have now coming onto the Roblox platform,
David Baszucki (02:49):
We're really glad we started the company focused on young people. In a way it was much more difficult. We had to, from day one, focus on being fun, being engaging, and really from day one focus on safety and civility. But combining that with this vision of a platform where all of the content is created by the community, where we now have hundreds and thousands of interesting experiences, naturally, we believed that we would see more and more older people. And as you noted, we just finished a quarter where we outperformed on every single metric, revenues, bookings, hours, and inside of those quarterly stats, there's a really cool metric that are over 13 players are growing at over 35% year on year. So we already passed the time when the majority of people are over 13 on our platform. It's an amazing opportunity for growth and it's really an opportunity for growth that we've just started on. We have about 3% of the world's gaming running on Roblox, and we've publicly said we aspire to have that be 10%.
Ann Berry (04:04):
Let's talk about some of the initiatives that drove this really terrific top line set of results in your earnings, David, 26% growth in your daily average users hitting just under 98 million for the quarter 29% revenue growth. Some of the things that were touched on in your release were improved search and discovery, more direct payments channels, more license experiences, just to name three of those buckets. Hit the highlights on those three for us so we can really understand what's getting you to that 3% plus going forward in terms of global share,
David Baszucki (04:37):
Highlighting that over performance everywhere and also north of 30% growth on our bookings, north of 30% on our hours of engagement, a generation of over 400 million of free cashflow. We've been on this vision of driving the performance, the raw technical capabilities of roblox. We've seen many, many places where Roblox just runs better, where creators can make more immersive experiences. We've also seen the creator community more and more offering a wider diversity of experiences. Last summer, dress to impress came on out of nowhere and all of a sudden we had college students playing dress to impress in the classroom. We've seen more great content. NASCAR has hooked up with driving Empire, so we're starting to see driving experiences on Roblox. PGA tour has hooked up with Ultimate Golf Simulator, so we're seeing golf experiences. SpongeBob has connected with Tower Defense Simulator, so in addition to raw technical performance, we're seeing great content and of course the economics are getting better and better as well. This year we project over a billion dollars will flow to that ROBLOX creator community, allowing some of them to be creating really larger and larger amazing businesses.
Ann Berry (06:06):
About a hundred of your creators are already earning more than a million dollars each. I read that. David, what are some of the tools, what are some of the AI driven capabilities that Roblox has been coming up with to enable creators to get more reach and to be able to reach new frontiers in terms of the content that they're putting together?
David Baszucki (06:25):
AI has been driving ROBLOX for over four years, some of it behind the scenes. We started innovating on AI to moderate all the content on our platform to look at all the images, what everyone uploads to moderate, all the communication that built the AI muscle in the company where today we're combining that with much more generative ai. We announced in Q1 available for developers now 3D generation in any Roblox game, which is a very future vision of how AI will be used, not just for the creators on Roblox, but creators making experiences with AI inside of them. It's very early, about 1500 creators have started using AI inside Roblox experiences, but a lot of those games we've dreamed about. For example, I talk about a fashion design experience on Roblox where everyone can feel like a fashion designer by describing your ultimate outfit, by talking about it and have that be created.
(07:40)
We're going to see ultimately the ability to create Roblox experiences with AI as well. We're going to see educational experiences where text generation as a service can power historical figures in an experience as well. So we're just at the cusp of using all of the AI skills we've built running over 200 separate AI models to now start really interacting with all of the players on Roblox. And we're really optimistic where we see this going in our area. We're not really trying to replace humans, we're trying to accelerate humans just like digital photography did a while back. AI is going to do this for a lot of Roblox creators.
Ann Berry (08:28):
And when you think David, about the mix of content that's available on the Roblox platform, some of it really organically created as you've described with the community of creators, but an increasing amount of your revenue coming from brands who are coming with you to do collaborations. I mean, you referenced things like PGA and sports tours, but some of the brands that you are partnering with are very adult brands like Aloe, for example, the leisure wear brand, NAS cosmetics. When you think about your mix, what is your mix right now of content coming from creators versus coming from brand partnerships and where do you think it needs to go to for you to hit that 10% mark?
David Baszucki (09:08):
We believe immersive 3D is ultimately going to support every brand. Just as when video started to become available on the web, it was a very early form of communication. Everyone is asking, whoa, will we see brands move from print to video? Will we interact with all of our brands on video? And now that's a foregone conclusion. Whether I'm using social media short form or YouTube or watching, I interact with all of my favorite brands on video all the time. We're going to see, we believe the same thing on immersive 3D. Our vision is really to connect a billion people with optimism and civility. We've leaned a bit into gaming, so we're seeing brands like we mentioned, nascar, PGA Tour that might be more connected with gaming. But more and more you're going to see things like shopping on Roblox, where other things we do in the physical world that aren't possible right now online we believe are going to become really a lot of fun when we shop together in person.
(10:18)
It's a lot of, I like walking around Stanford shopping center with my family and look at that. Should we try that on? Check it out. It's a lot different than currently shopping online, which is a little bit more solo and I do it by myself. So just as we see people playing together on Roblox, we think people are going to shop together on Roblox. They're going to walk around, try things on buy, not just digital items, but ultimately even physical items as well. So we're optimistic with brands like you mentioned, aloe and others who are starting to look into how to connect with people both spatially to interact, but also in a future to advertise and support shopping as well.
Ann Berry (11:06):
And in order to do that, talk to us a bit more about the payments capabilities that you've been rolling out and Roblox and there's been a number of partnerships that you've been exploring with other large tech companies, David, to realize some of these initiatives. Talk to us about those.
David Baszucki (11:19):
I would say it is very early on the advertising side. Advertising is a nice compliment to all of the other ways that creators on our platform can really create an economy. And we highlighted on Roblox, our Q1 bookings. Were 1.2 billion of bookings flowing through our platform. We think advertising is going to be a great compliment to the virtual economy and the robuck economy that all of our creators are using. So we have a partnership with Google. They're going to help deliver video ads for those creators who choose to do it. Stay tuned because we're going to be announcing more and more partnerships in the physical shopping side as well. And there's a lot of avenues out there where online destinations can use a partner to sell physical goods as well. We have some announcements coming up on there as well, so more and more creators can sell not just digital items, but the real items in their experience.
Ann Berry (12:25):
Interesting. Roblox became the poster child for the market's enthusiasm for the Metaverse, particularly in that covid aftermath when Metaverse became the buzzword du jour. A couple of companies have pulled back from the Metaverse narrative, David, ironically, meta being one of them, heavily publicized investment into reality labs, which haven't necessarily generated some of the returns that the market had been expecting. But you've hung on in there and you've made 3D and you've made the metaverse, perhaps we call it something else now. Still very much core to how Roblox plans to grow. Do you think the rest of the tech ecosystem's going to come along with you quickly enough, whether it's hardware that supports metaverse and immersive gaming better to build the market with you?
David Baszucki (13:14):
We believe we can get to 10% of the gaming market, which is about 190 billion in revenue right now independent of hardware. We run on all hardware platforms today. We run on phones, tablets, computers, consoles, VR headsets, and ultimately maybe a few more. So in a way, our growth is untethered by developments in hardware, and we also view the infrastructure we provide for creators to run and operate games is offering several advantages over what we might call traditional gaming. And traditional gaming really hasn't evolved that much in the last 20 years. We download things, some of the things we download are 200 gigabytes. We have to wait if we want to try something else or a friend invites us somewhere. We can't just spontaneously go there. The game we might see on a mobile device is very different than the game we'll see on a pc.
(14:16)
There's different things. So having all of these experiences connected, being able to have the technology to join them instantly, having unlimited AI on demand, we think is really just a complete paradigm shift in how gaming operates. That's what makes us bullish about moving from close to 3% to ultimately 10% of the gaming space running on our platform. The market's already there, we can see it and we think there's huge advantages. I am very optimistic on the future development of new forms of hardware to support new and interesting types of immersive experiences. I have a parata ray bands, I'm playing with those. I've got the Apple Vision Pro. We're playing around with all of those. And as those devices become more popular, Roblox will be there on those devices.
Ann Berry (15:12):
What about a version of the physical goods that you've alluded to that ultimately could be purchased? One of the areas that has received some attention, including here? I was lucky to interview the CFO and COO of Hasbro actually last week, and Hasbro seen enormous growth in tabletop gaming and adults wanting to play in the real world and participate in board games together. Do you see content crossing over more and more between the digital world, for example, and Roblox and then people saying, actually, I want the real life version now. I want to get people into my home and play the board game version.
David Baszucki (15:49):
I'm a big fan of Hasbro and very early on when the very first Roblox experience came alive, we saw a young creator try to make an immersive version of Monopoly. Oh, interesting. Where you and I could walk around the monopoly board and be there inside of it with giant markers and all of that. And I think that was an early signal of brands having enormous power. Monopoly from Hasbro obviously has some enormous brand power and is used in other mobile gaming. And more and more I think consumers are looking for ways to interact with these brands. And whether it's on a mobile device, whether it's on a 3D device, whether you're immersing in it or I do believe as AR goggles headsets become higher and higher fidelity, it will become very common for us to just say, we want to put the board game down on this table and play that board game without the physical board game and have it feel just as good as ever. Arguably one could imagine a AR monopoly game being much more lively, animated, all the characters doing all kinds of things, cool animations going on. So I do think as AR capability or MR capability becomes more commonly used, we're going to see an explosion of tabletop traditional gaming that maybe comes to life a bit more.
Ann Berry (17:23):
Let's bring it all back to your recent earnings, David, because we've talked a lot about how you've been driving revenue growth, everything you've just described, whether it's investing more in ai, maintaining safety and trust, which has been an enormous focus roadblocks or it's developing for these different kinds of hardware as they evolve. This is all research and development spend, right? This is all innovation dollars. ROBLOX has posted losses. What do you think is a path forward to keep building on the cashflow momentum that you delivered this quarter?
David Baszucki (17:50):
ROBLOX generates a lot of cash, and that cash has increasingly put us in a more powerful financial configuration. We have well over 3 billion cash in the bank right now that's growing all the time. The reason we post loss is the way we do accounting at Roblox. We post bookings, which is based on cash. We also do share gap revenue and our current gap revenue numbers, which are fully SEC compliant tax compliant. We defer the revenue we get from virtual goods over the course of many, many months, and so in a sense, we get the cash in, but we treat those as durable goods and don't show the revenue. So we typically see all of our very integrated investors looking at bookings and cash and understanding how we post revenue relative to gap.
Ann Berry (18:53):
And in terms of that cash, the treasure chest. David, where do you see it going? Are we going to see you doing mergers and acquisitions? Are we going to see you perhaps thinking of more return of capital to your shareholders? What's the outlook there?
David Baszucki (19:05):
We believe we're going to return capital to our shareholders primarily by growing enterprise value, and we see enterprise value as we march towards 10% of the gaming market with growth over 20% year on year being an enormous enterprise value generator. We do like the idea of showing we can generate cash. We like the idea of slowly and conservatively nudging our cash flow forward thoughtfully, but we never want to crimp on innovation. We never want to crimp on research and development. We believe the growth rate we're operating at for hiring, and we are hiring. We are hiring at a rate where the spending is less than our bookings growth, but at a rate that's driving innovation. We think we're not being constrained by that. So no current plans for that cash, but we do believe it's healthy to have that cash in the bank.
Ann Berry (20:06):
We're going to wrap David with a couple of rapid fire questions starting with Let's Do It. Which is the one company you admire that is not Roblox? That's a cheat answer.
David Baszucki (20:17):
Arguably in early ROBLOX and innovation company, I'm really a big fan of Disney. What they did, they innovated in movies, they innovated in theme parks, they integrated in brands and just what an amazing company that was in the early days.
Ann Berry (20:32):
What would your Roblox avatar wear to a board meeting?
David Baszucki (20:35):
I like the idea that when we start having our board meetings in Roblox and we've already experimented having our one-on-ones in Roblox, we actually have our virtual office simulator running on Roblox. What I think we're going to find is when I go to a board meeting in Roblox, I'm going to wear roughly the same thing I wear in the real life. The same clothing is available. I have outfits on Roblox that look like this outfit,
Ann Berry (21:02):
Your digital twin David. What's just one potential path for roadblocks if people were to unleash their imaginations, release themselves from thinking about what seems to be immediately possible in the digital gaming world and really go into the blue sky area, something you did when you started this business, what do you think roadblocks will be capable of another 20 years from now that no one could possibly imagine today other than perhaps you because you have that kind of vision.
David Baszucki (21:28):
I feel just like education has adopted books and then has adopted video and has adopted sometimes video communication, I think optimizing connection in a even an educational context where for very imagine some subjects that are hard to teach in a specific classroom, but a digital classroom could be created with people around the world to come together to learn. So I'm really excited about the long-term educational aspects of a platform that brings people together optimistically.
Ann Berry (22:04):
I'm Anne Berry. Thanks for tuning into After earnings, the show that brings you up close and personal with the executives behind the world's most interesting publicly traded companies. If you learn something today, don't forget to like, subscribe, and share with your friends. Upcoming episodes will feature CEOs and CFOs from Carver, Lyft, and Intuit. Come back and we'll see you soon.