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What changed in Roblox Corp's 10-K — 2023 vs 2024

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Paragraph-level year-over-year comparison of Roblox Corp's 2023 and 2024 10-K annual filings, covering the Business, Risk Factors, Legal Proceedings, Cybersecurity, MD&A and Market Risk sections. Every new, removed and edited paragraph is highlighted side-by-side so you can see exactly what management changed in the 2024 report.

+666 added−587 removedSource: 10-K (2025-02-18) vs 10-K (2024-02-21)

Top changes in Roblox Corp's 2024 10-K

666 paragraphs added · 587 removed · 514 edited across 8 sections

Item 1. Business

Business — how the company describes what it does

124 edited+32 added−17 removed84 unchanged
Biggest changeTheir efforts contribute to an expanding content library that included over 13 million active experiences and millions of available Marketplace items during the year ended December 31, 2023. 14 Table of Contents Developers build, publish, and operate 3D immersive experiences with Roblox Studio, a free suite of tools accessible to all skill levels.
Biggest changeVariety of Content Developers and creators build nearly all of the content for the Roblox Platform, including a variety of experiences from gaming, to education, to entertainment, and beyond. Their efforts contribute to an expanding content library that included over 14 million active experiences and millions of available Marketplace items during the year ended December 31, 2024.
The social graph is central to human communication and connection. When a user chooses to join an experience, the Roblox Cloud is designed to automatically place that user into the same virtual environment as others connected through the social graph.
The social graph is central to human connection and communication. When a user chooses to join an experience, the Roblox Cloud is designed to automatically place that user into the same virtual environment as others connected through the social graph.
We also leverage targeted penetration testing, a bug bounty program, code reviews, secure by design principles, security testing, and vulnerability scanning to promote the security of the Platform. Roblox operates a customer service portal that provides self-help information along with ways to contact Roblox via email or from within the Roblox Client.
We also leverage targeted penetration testing, a bug bounty program, code reviews, secure by design principles, targeted security testing, and vulnerability scanning to promote the security of the Platform. Roblox operates a customer service portal that provides self-help information along with ways to contact Roblox via email or from within the Roblox Client.
For example, we believe that features such as automated translation and built-in regional compliance will enable us to scale usage in global markets, allowing developers to publish in multiple languages and allowing users to communicate with each other even when they speak different languages. • Vibrant Economy : We believe there is significant potential to increase monetization on our Platform and we are constantly investing in new ways to empower our creator community.
For example, we believe that features such as automated translation and built-in regional compliance will enable us to scale usage in global markets, allowing developers to publish in multiple languages and allowing users to communicate with each other even when they speak different languages. • Vibrant Economy : We believe there is significant potential to increase monetization on our Platform and we are constantly investing in new ways to empower our developer and creator community.
Our scanning algorithms also review and monitor communications that flow through Roblox to block and protect users from inappropriate behavior, such as questions about personal information and instructions on how to connect on less protective third-party chat applications. The algorithms in our chat filters are age-sensitive: they monitor both what users can say and see based on their ages.
Our scanning algorithms also review and monitor communications that flow through Roblox to proactively block and protect users from inappropriate behavior, such as questions about personal information and instructions on how to connect on less protective third-party chat applications. The algorithms in our chat filters are age-sensitive: they monitor both what users can say and see based on their ages.
We have a dedicated team and thousands of trust & safety agents whose role is to protect our users by focusing on detecting inappropriate content and behavior 24/7 through a combination of AI and human moderation. We take swift action to address any content or developer or creator that violates our terms of use once detected.
We have a dedicated team and thousands of trust & safety agents whose role is to protect our users by focusing on detecting inappropriate content and behavior 24/7 through a combination of AI and human moderation. We take swift action to address any content, developer, creator, or user that violates our terms of use once detected.
Social Communication The Roblox Client allows users to easily connect with real life friends (through features such as contact importer) and meet new friends (by matching users with similar characteristics, such as country location, for example). The social graph created by these connections is stored in the Roblox Cloud and requires mutual opt-in to avoid unwanted communications.
Connection and Communication The Roblox Client allows users to easily connect with real life friends (through features such as contact importer) and meet new friends (by matching users with similar characteristics, such as country location, for example). The social graph created by these connections is stored in the Roblox Cloud and requires mutual opt-in to avoid unwanted communications.
How Users Purchase Robux Users can generally purchase Robux in two ways: as one-time purchases or via Roblox Premium, a subscription service that is billed monthly or annually and includes discounted Robux, access to exclusive in-experience benefits, exclusive and discounted marketplace items and the ability to buy, sell, and trade certain Avatar items.
How Users Purchase Robux Users can generally purchase Robux in two ways: as one-time purchases or via Roblox Premium, a subscription service that is billed monthly and includes discounted Robux, access to exclusive in-experience benefits, exclusive and discounted marketplace items and the ability to buy, sell, and trade certain Avatar items.
Actual or perceived noncompliance with the AADC may result in audits or other proceedings by the United Kingdom’s Information Commissioner Office, the body set up to uphold information rights in the United Kingdom, and other regulators in the EEA or Switzerland, as noncompliance with the AADC may indicate noncompliance with applicable data protection law.
Also, actual or perceived noncompliance with the AADC may result in audits or other proceedings by the United Kingdom’s Information Commissioner Office, the body set up to uphold information rights in the United Kingdom, and other regulators in the EEA or Switzerland, as noncompliance with the AADC may indicate noncompliance with applicable data protection law.
Roblox also allows developers, creators, and brands to reach their audiences by purchasing ads. Further, Roblox offers sponsored experiences and sponsored avatar items, whereby developers and creators can pay to purchase ads to increase discoverability of their creations, which appear where experiences and items are discovered, including through search.
Roblox also allows developers, creators, and brands to reach their audiences by purchasing ads. Further, Roblox offers sponsored experiences and sponsored items, whereby developers and creators can pay to purchase ads to increase discoverability of their creations, which appear where experiences and items are discovered, including through search.
In addition, the EU’s Digital Services Act, which became fully applicable on February 17, 2024 imposes new content moderation obligations, notice and transparency obligations, advertising restrictions and other requirements on digital platforms to protect consumers and their rights online.
In addition, the EU’s Digital Services Act (“DSA”), which became fully applicable on February 17, 2024 imposes new content moderation obligations, notice and transparency obligations, advertising restrictions and other requirements on digital platforms to protect consumers and their rights online.
We continue to work diligently with other digital platforms to report bad actors and inappropriate content so that they can also take appropriate actions on their platforms. Our Trust & Safety Systems We use AI and a dedicated team of human moderators to review content, including images, sound, and video, uploaded into our Platform.
We continue to work diligently with other digital platforms to report bad actors and inappropriate content so that they can also take appropriate actions on their platforms. Our Trust & Safety Systems We use AI and a dedicated team of human moderators to review content, including images, audio, and video, uploaded into our Platform.
Although we take reasonable efforts to comply with these laws and regulations, we may in the future face claims under COPPA, the GDPR, the CCPA, the ADCA, and the AADC, or other laws or actual or asserted obligations relating to children’s privacy. There are also a number of legislative proposals pending before the U.S.
Although we take reasonable efforts to comply with these laws and regulations, we may in the future face claims under COPPA, the GDPR, the CCPA, the ADCA, the AADC, DSA and OSA or other laws or actual or asserted obligations relating to children’s privacy. There are also a number of legislative proposals pending before the U.S.
Item 1. BUSINESS Overview Roblox operates a free to use immersive platform for connection and communication (the “Roblox Platform” or “Platform”), where every day, millions of people come to create, play, work, learn, and connect with each other in experiences built by our global community of creators.
Item 1. BUSINESS Overview Roblox operates a free to use immersive platform for connection and communication (the “Roblox Platform” or “Platform”), where every day, millions of users come to create, play, work, learn, and connect with each other in experiences built by our global community of creators.
Roblox accepts payments through app stores, credit cards, and prepaid cards. The average price for a Robux for the year ended December 31, 2023 was $0.01. How Developers and Creators Earn Robux Robux are considered “earned” if a developer or creator receives them as payments for a bona fide third-party transaction through the Roblox Platform.
Roblox accepts payments through app stores, credit cards, and prepaid cards. The average price for a Robux for the year ended December 31, 2024 was $0.01. How Developers and Creators Earn Robux Robux are considered “earned” if a developer or creator receives them as payments for a bona fide third-party transaction through the Roblox Platform.
As of December 31, 2023 , the Creator Store contained millions of models, meshes, textures, scripts, audio clips, developer tools, and packaged combinations of these items. We provide developers with reference material, tutorials, community forums, and analytics to build their creations. Creator Hub includes reference material, API documentation, and tutorials for developers.
As of December 31, 2024 , the Creator Store contained millions of models, meshes, textures, scripts, audio clips, developer tools, and packaged combinations of these items. We provide developers with reference material, tutorials, community forums, and analytics to build their creations. Creator Hub includes reference material, API documentation, and tutorials for developers.
We compete for users and their engagement hours with global technology leaders such as Amazon, Apple, Meta Platforms, Google, Microsoft, and Tencent, global entertainment companies such as Comcast, Disney, and ViacomCBS, global gaming companies such as Activision Blizzard (now owned by Microsoft), Electronic Arts, Take-Two, Epic Games, Krafton, and Valve, online content platforms including Netflix, Spotify, and YouTube, as well as social platforms such as Facebook, TikTok, Instagram, Pinterest, X (formerly known as Twitter), Reddit, Discord, and Snap.
We compete for users and their engagement hours with global technology leaders such as Amazon, Apple, Meta Platforms, Google, Microsoft, and Tencent, global entertainment companies such as Comcast, Disney, ViacomCBS, and Warner Bros Discovery, global gaming companies such as Activision Blizzard (now owned by Microsoft), Electronic Arts, Take-Two, Epic Games, Krafton, and Valve, online content platforms including Netflix, Spotify, and YouTube, as well as social platforms such as Facebook, TikTok, Instagram, Pinterest, X (formerly known as Twitter), Reddit, Discord, and Snap.
We regularly monitor and screen usage of our Platform with the aim of identifying and preventing these activities, as well as regularly send cease-and desist letters to operators of third-party websites offering fraudulent Robux or digital goods offers. Consistent with our free to use business model, a small portion of our users have historically been payers.
We regularly monitor and screen usage of our Platform with the aim of identifying and preventing these activities, as well as regularly send cease-and desist letters to operators of third-party websites offering fraudulent Robux or digital goods offers. 16 Table of Contents Consistent with our free to use business model, a small portion of our users have historically been payers.
This drives more users to our Platform through word of mouth from their existing friends on the Platform. 8 Table of Contents Our User and Creator Community Roblox is powered by content from our community of developers and creators who build immersive and engaging experiences found only on Roblox, as well as the vast majority of the items for customizing avatars.
This drives more users to our Platform through word of mouth from their existing friends on the Platform. Our User and Creator Community Roblox is powered by content from our community of developers and creators who build immersive and engaging experiences found only on Roblox, as well as the vast majority of the items for customizing avatars.
Congress, various state legislative bodies and foreign governments concerning content regulation and data protection that could affect us if enacted in the future. We take a variety of technical and organizational security measures and other measures designed to protect our data, including data pertaining to our users, employees and business partners.
Congress, various state legislative bodies and foreign governments concerning content regulation and data protection that could affect us if enacted in the future. 20 Table of Contents We take a variety of technical and organizational security measures and other measures designed to protect our data, including data pertaining to our users, employees and business partners.
In order to be qualified for our Developer Exchange Program and eligible to exchange earned Robux for real-world currency, developers and creators must meet certain conditions, such as having earned the minimum amount of Robux required to qualify for the program, a verified developer account, and an account in good standing.
In order to be qualified for our Developer Exchange Program and eligible to exchange earned Robux for fiat currency, developers and creators must meet certain conditions, such as having earned the minimum amount of Robux required to qualify for the program, a verified developer account, and an account in good standing.
We empower developers and creators to get started with minimal upfront costs as we cover hosting, storage, customer support, localization, regulatory requirements, payment processing, and platform fees. We provide appropriate support for all developers and creators to ensure engagement and growth in our developer and creator community.
We empower developers and creators to get started with minimal upfront costs as we cover hosting, storage, customer support, localization, certain regulatory requirements, payment processing, and platform fees. We provide appropriate support for all developers and creators to promote engagement and growth in our developer and creator community.
In order to be qualified for our Developer Exchange Program and eligible to exchange earned Robux for real-world currency, developers and creators must meet certain conditions, such as having earned the minimum amount of Robux required to qualify for the program, a verified developer account, and an account in good standing.
In order to be qualified for our Developer Exchange Program and eligible to exchange earned Robux for fiat currency, developers and creators must meet certain conditions, such as having earned the minimum amount of Robux required to qualify for the program, a verified developer account, and an account in good standing.
These laws and regulations may involve privacy, data protection, security, rights of publicity, content regulation, intellectual property, gambling, loot boxes, ratings, competition, protection of minors, including verified parental consent, consumer protection, communication, credit card processing, taxation, anti-bribery, anti-money laundering and corruption, economic or other trade prohibitions or sanctions or securities law compliance or other subjects.
These laws and regulations may involve privacy, data protection, security, rights of publicity, content regulation, intellectual property, use of AI, online safety, gambling, loot boxes, ratings, competition, protection of minors, including verified parental consent, consumer protection, communication, credit card processing, taxation, anti-bribery, anti-money laundering and corruption, economic or other trade prohibitions or sanctions or securities law compliance or other subjects.
Any updates to the list of disclosure channels through which we will announce information will be posted on the investor relations page on our website. 25 Table of Contents
Any updates to the list of disclosure channels through which we will announce information will be posted on the investor relations page on our website. 23 Table of Contents
Aspects of the CCPA and these other state laws and regulations, as well as their enforcement, remain unclear, and we may be required to modify our practices in an effort to comply with them. California has also enacted the California Age-Appropriate Design Code Act (“ADCA”), which will take effect on July 1, 2024.
Aspects of the CCPA and these other state laws and regulations, as well as their enforcement, remain unclear, and we may be required to modify our practices in an effort to comply with them. California has also enacted the California Age-Appropriate Design Code Act (“ADCA”), which originally was scheduled to take effect on July 1, 2024.
As of December 31, 2023, the Roblox Client operates on iOS, Android, PC, Mac, Xbox, PlayStation, and VR hardware, such as Meta Quest, and supports VR experiences on PC.
As of December 31, 2024, the Roblox Client operates on iOS, Android, PC, Mac, Xbox, PlayStation, and VR hardware, such as Meta Quest, and supports VR experiences on PC.
If the rules, doctrines or currently available defenses change, if international jurisdictions refuse to apply protections similar to those that are currently available in the U.S. or the EU, or if a court were to disagree with our application of those rules to our service, we could be required to expend significant resources to try to comply with the new rules or incur liability, and our business, revenue and financial results could be harmed.
If the rules, doctrines or currently available defenses change, if international jurisdictions refuse to apply protections similar to those that are currently available, or if a court were to disagree with our application of those rules to our service, we could be required to expend significant resources to try to comply with the new rules or incur liability, and our business, revenue and financial results could be harmed.
For additional information on risks relating to intellectual property, please see the sections titled “Risk Factors—Risks Related to Intellectual Property—Claims by others that we infringe their proprietary technology or other rights, the activities of our users, or the content of the experiences on our Platform could subject us to liability and harm our business,” “Risk Factors—Risks Related to Intellectual Property—Failure to protect or enforce our intellectual property rights or the costs involved in such enforcement would harm our business,” and “Risk Factors—Risks Related to Intellectual Property—We use open source software as part of, and in connection with certain experiences on, our Platform, which may pose particular intellectual property and security risks to and could have a negative impact on our business.” 23 Table of Contents Human Capital As of December 31, 2023 , we employed 2,457 full time employees.
For additional information on risks relating to intellectual property, please see the sections titled “Risk Factors—Risks Related to Intellectual Property—Claims by others that we infringe their proprietary technology or other rights, the activities of our users, or the content of the experiences on our Platform could subject us to liability and harm our business,” “Risk Factors—Risks Related to Intellectual Property—Failure to protect or enforce our intellectual property rights or the costs involved in such enforcement would harm our business,” and “Risk Factors—Risks Related to Intellectual Property—We use open source software as part of, and in connection with certain experiences on, our Platform, which may pose particular intellectual property and security risks to and could have a negative impact on our business.” Human Capital As of December 31, 2024 , we employed 2,474 full time employees.
Roblox allows developers and creators to convert earned Robux into the real-world currency of their choice through our Developer Exchange Program. All Developer Exchange Program requests are reviewed on a risk-based approach to mitigate fraud and money laundering.
Roblox allows developers and creators to convert earned Robux into the fiat currency of their choice through our Developer Exchange Program. All Developer Exchange Program requests are reviewed on a risk-based approach to mitigate fraud and money laundering.
We offer developers and creators five mechanisms to earn Robux: • sale of access to their experiences and enhancements in their experiences, which may be one-time or recurring; • Engagement-Based Payouts, which reward developers for the amount of time that Roblox Premium subscribers spend in their experiences; • generating impressions for ad units within their experiences and teleporting users to other experiences through ad portals; • sale of content and tools between developers; and • sale of Avatar items to users (through the Marketplace or directly within experiences).
We offer developers and creators the following mechanisms to earn Robux: • sale of access to their experiences and enhancements in their experiences, which may be one-time or recurring; • Engagement-Based Payouts, which reward developers for the amount of time that Roblox Premium subscribers spend in their experiences; • generating impressions for ad units within their experiences and teleporting users to other experiences through ad portals; and • sale of Avatar items to users (through the Marketplace or directly within experiences).
The Roblox Cl oud is designed to be fault tolerant and prepared for disaster recovery and we continue to expand into multiple data centers within and across geographic regions to improve reliability and fault tolerance.
The Roblox Cloud is designed to be fault tolerant and prepared for disaster recovery and we continue to expand into multiple data centers within and across geographic regions to improve reliability and fault tolerance.
The Federal Trade Commission and state attorneys general in the U.S. have in recent years increased enforcement of COPPA, which requires companies to obtain parental consent before collecting personal information from children under the age of 13.
The Federal Trade Commission and state attorneys general in the U.S. have in recent years increased enforcement of relevant legal frameworks, including COPPA, which requires companies to obtain parental consent before collecting personal information from children under the age of 13.
To achieve an optimal balance between latency, scale, and consistency, computations for the simulation are distributed across Roblox Clients and the Roblox Cloud. 13 Table of Contents Assets that make up the 3D immersive experience are stored in a persistent tree hierarchy that is the foundation for collaborative editing and interactive multiuser experiences.
To achieve an optimal balance between latency, scale, and consistency, computations for the simulation are distributed across Roblox Clients and the Roblox Cloud. 12 Table of Contents Assets that make up the 3D immersive experience are stored in a persistent tree hierarchy that is the foundation for collaborative editing and interactive multi-user experiences.
The evolving regulatory landscape internationally results in uncertainty and could require us to incur additional costs and expenses to comply. 21 Table of Contents Children’s privacy has also been a focus of recent enforcement activity and subjects our business to potential liability that could adversely affect our business, financial condition or operating results.
The evolving regulatory landscape internationally results in uncertainty and could require us to incur additional costs and expenses to comply. Children’s privacy and online safety has also been a focus of recent enforcement activity and subjects our business to potential liability that could adversely affect our business, financial condition or operating results.
We believe these reductions in the minimum amounts required incentivize our developer and creator community, and promote the long term growth and health of such community. As of December 31, 2023 and 2022, over 16,500 and 11,000 developers and creators were qualified and registered in our Developer Exchange Program, respectively.
We believe these reductions in the minimum amounts required incentivize our developer and creator community, and promote the long term growth and health of such community. As of December 31, 2024 and 2023, over 24,500 and 16,500 developers and creators were qualified and registered in our Developer Exchange Program, respectively.
As of December 31, 2023, we had over 1,800 employees in product and engineering functions, accounting for approximately 75% of our total full time employees, and over 100 of our full time employees were located outside of the U.S.
As of December 31, 2024, we had over 1,800 employees in product and engineering functions, accounting for approximately 77% of our total full time employees, and over 100 of our full time employees were located outside of the U.S.
These AI tools help developers and creators with varying levels of experience. For example, AI tools help beginner developers and creators with no coding experience by answering common questions, while AI tools such as Code Assist or Materials Generator help developers and creators with minimal coding experience learn how to write and improve code and create more complex materials.
These AI tools help developers and creators with varying levels of experience. For example, AI tools such as Assistant help beginner developers and creators by answering common questions, while AI tools such as Code Assist or Materials Generator help developers and creators with some coding experience learn how to write and improve code and easily create more complex materials.
Since our founding, we have invested heavily in building the Roblox Platform, and as of December 31, 2023, 75% of our employees were dedicated to maintaining, improving, and expanding it. Our technology supports the following key characteristics of the Roblox Platform: Identity, Social Communication, Immersive, Low Friction, Variety of Content, Anywhere, Economy, and Safety.
Since our founding, we have invested heavily in building the Roblox Platform, and as of December 31, 2024, 77% of our employees were dedicated to maintaining, improving, and expanding it. Our technology supports the following key characteristics of the Roblox Platform: Identity, Connection and Communication, Immersive, Low Friction, Variety of Content, Anywhere, Economy, and Safety.
We are focused on the following key growth strategies: • Roblox Everywhere : We want to give users the ability to interact with experiences almost instantly across the most popular client devices.
We are focused on the following key growth strategies: 17 Table of Contents • Roblox Everywhere : We want to give users the ability to interact with experiences almost instantly across the most popular client devices.
Data centers in the Roblox Cloud are linked through a high-performance dedicated backbone network bypassing the public internet for server-to-server calls and we operate under an open peering policy where we have direct interconnection with Internet providers globally. Operating our own network maximizes performance and increases the immersiveness experienced by our users.
Data centers in the Roblox Cloud are linked through a high-performance dedicated backbone network bypassing the public internet for traffic within and between our data centers and we operate under an open peering policy where we have direct interconnection with Internet providers globally. Operating our own network maximizes performance, security, and increases the immersiveness experienced by our users.
Developers also have the ability to customize all or part of their translations if needed. To meet an evolving global regulatory environment, the Roblox Client can adjust a user’s experience and available content based on their age, device type, current location and where the client application was obtained.
Developers also have the ability to customize all or part of their translations if needed. The Roblox Client can adjust a user’s experience and available content based on their age, device type, current location and where the client application was obtained.
The ADCA implements into law certain principles taken from the U.K.’s Age Appropriate Design Code (“AADC”), which went into effect in September 2021, and imposes substantial new obligations upon companies that offer online services, products, or features “likely to be accessed” by children, defined under the ADCA as anyone under 18 years of age. A U.S.
The ADCA would have implemented into law certain principles taken from the U.K.’s Age Appropriate Design Code (“AADC”), which went into effect in September 2021, and imposed substantial new obligations upon companies that offer online services, products, or features “likely to be accessed” by children, defined under the ADCA as anyone under 18 years of age.
As of December 31, 2023, over 16,500 developers qualified for and were registered in our Developer Exchange Program and therefore met certain conditions, such as having earned the minimum amount of Robux required to qualify, having a verified developer account, and having an account in good standing, and were therefore eligible to exchange their earned Robux for real-world currency.
As of December 31, 2024, over 24,500 developers qualified for and were registered in our Developer Exchange Program and therefore met certain conditions, such as having earned the minimum amount of Robux required to qualify, having a verified developer account, and having an account in good standing, and were therefore eligible to exchange their earned Robux for fiat currency.
The Roblox Client normalizes camera and avatar control inputs from different device form factors, including mobile, tablet, desktop, and game console, to simplify the process of building multiuser, multiplatform, and avatar-based experiences. 12 Table of Contents Within most experiences, avatars appear exactly how they were configured in the Avatar Editor, creating a sense of persistent identity.
The Roblox Client normalizes camera and avatar control inputs from different device form factors, including mobile, tablet, desktop, and game console, to simplify the process of building multi-user, multi-platform, and avatar-based experiences. Within most experiences, avatars appear exactly how they were configured in the Avatar Editor, creating a sense of persistent identity.
We are also a member of various organizations, such as the Association for United Kingdom Interactive Entertainment and the Technology Coalition, with a goal of cross-industry collaboration, knowledge and technology exchange in areas of user safety, and child safety. As a member of the Technology Coalition, we are committed to providing transparency and promoting child safety online.
We are also a member of various organizations, such as the Association for United Kingdom Interactive Entertainment and the Technology Coalition, with a goal of cross-industry collaboration, knowledge and technology exchange in areas of user safety, and child safety.
This allows Roblox to dynamically apply relevant content filters, anti-addiction rules, payment limits, and parental consent requirements. 15 Table of Contents Economy Roblox has a vibrant economy built on a currency called Robux, which can be purchased through the Roblox Client and Roblox website or through prepaid cards purchased via online and physical retailers.
This allows Roblox to dynamically apply relevant content filters, anti-addiction rules, payment limits, parental consent requirements, and certain other regional requirements. Economy Roblox has a vibrant economy built on a virtual currency called Robux, which can be purchased through the Roblox Client and Roblox website or through prepaid cards purchased via online and physical retailers.
All servers tasked with simulating the virtual environment and optimizing assets for Roblox Clients are owned by Roblox and operate from data centers and regional edge data centers widely distributed across 19 cities in North America, Asia-Pacific , and Europe. As of December 31, 2023 , the Roblox Cloud uses over 140,000 servers.
Nearly all of the servers tasked with simulating the virtual environment and opti mizing assets for Roblox Clients are owned by Roblox and operate from data centers and regional edge data centers widely distributed across 23 cities in North America, Asia-Pacific, and Europe. As of December 31, 2024, the Roblox Cloud uses over 140,000 servers.
Engagement-Based Payouts , which allows developers to earn Robux based on the share of time that Roblox Premium subscribers engage in their experience. c. Immersive advertisements ( “a ds ”) , which are high-quality, in-experience native ad units that can programmatically serve ads through which developers can earn Robux from impressions and/or teleports generated. 2.
Engagement-Based Payouts , which allows developers to earn Robux based on the share of time that Roblox Premium subscribers engage in their experience. c. Advertisements ( “a ds ”) , which include a range of high-quality, programmatically served ad units through which developers can earn Robux from impressions and/or teleports generated. 2.
We have a Safety Advisory Board, made up of global industry experts that advise on the best practices to protect our community. We continue to invest in technology and people to combat bad actors who attempt to undermine our efforts to connect millions of people. Our priority remains the safety and digital civility of our community.
We have a Safety Advisory Board, made up of global industry experts that advise on the best practices to protect our community. We continue to innovate and release new safety features and policies and invest in technology and people to combat bad actors who attempt to undermine our efforts to connect millions of people.
Of such developers and creators, for the year ended December 31, 2023 , over 12,000 developers and creators actually exchanged their earned Robux for real-world currency through our Developer Exchange Program.
Of such developers and creators, for the year ended December 31, 2024 , over 17,000 developers and creators actually exchanged their earned Robux for fiat currency through our Developer Exchange Program.
Creating and selling or reselling avatar items: Creators can create and sell accessories, clothes, bodies, and heads for avatars in the Marketplace or in their own or other developers ’ experiences. 3.
Creating and selling or reselling avatar items: Creators can create and sell entire avatars, accessories, clothes, bodies, and heads for avatars in the Marketplace or inside experiences. 3.
Teams can work together using built-in access control management and collaborative editing. Once content is built, it can be replicated and shared across multiple experiences, giving developers the ability to scale their efforts and make rapid updates. In addition to constructing 3D objects and environments, developers can script complex behaviors into their experience with Roblox Luau.
Once content is built, it can be replicated and shared across multiple experiences, giving developers the ability to scale their efforts and make rapid updates. 13 Table of Contents In addition to constructing 3D objects and environments, developers can script complex behaviors into their experience with Roblox Luau.
In addition, foreign data protection, privacy, consumer protection, communication, content regulation, and other laws and regulations may be more restrictive and burdensome. For example, GDPR imposes stringent operational requirements for entities processing personal information and significant penalties for non-compliance.
Due to legal challenges, the ADCA has not yet gone into effect. In addition, foreign data protection, privacy, consumer protection, communication, content regulation, and other laws and regulations may be more restrictive and burdensome. For example, GDPR imposes stringent operational requirements for entities processing personal information and significant penalties for non-compliance.
Brand and Marketing Our go-to-market approach is driven by the strength and continued enhancement of our brand, organic adoption across our user, creator and developer communities, and an influencer-based marketing strategy, with a goal to demonstrate the Platform’s wide-ranging appeal across demographics, geographies, and interests. 19 Table of Contents Users build a direct relationship with the Roblox brand by establishing an identity and creating their social graph.
Brand and Marketing Our go-to-market approach is driven by the strength and continued enhancement of our brand, organic adoption across our user, creator and developer communities, and an influencer-based marketing strategy, with a goal to demonstrate the Platform’s wide-ranging appeal across demographics, geographies, and interests.
Using Roblox Studio, developers can also insert immersive ad units into their environments, which are native and 3D structures, and include images and immersive portals. Each 3D immersive experience is simulated in the Roblox Cloud with a custom physics engine built for rigid body and constraint-based physics.
Using Roblox Studio, developers can also insert immersive ads into their experiences, which are native and 3D ad units that can programmatically serve ads in image, video, and portal ad formats. Each 3D immersive experience is simulated in the Roblox Cloud with a custom physics engine built for rigid body and constraint-based physics.
For example, in the year ended December 31, 2023, of our 68.4 million DAUs, only 852,000 represented our average daily unique paying users. Similarly, in the year ended December 31, 2023, our average daily bookings per DAU was $0.14, whereas our average daily bookings per daily unique paying user was $11.32.
For example, in the year ended December 31, 2024, of our average 82.9 million DAUs, only approximately 1.0 million represented our average daily unique paying users. Similarly, in the year ended December 31, 2024, our average daily bookings per DAU was $0.14, whereas our average daily bookings per daily unique paying user was $11.48.
All developers on the Roblox Platform have access to dashboards that show daily visits to their experience, as well as earned Robux generated from their experience and Marketplace items. Within the Roblox Client, users find experiences through personalized content recommendations and search. Recommendations are based on past user behavior, the social graph, and demographic information collected at signup.
All developers on the Roblox Platform have access to dashboards that show daily visits to their experience, as well as earned Robux generated from their experience and Marketplace items. Within the Roblox Client, users find experiences through personalized content recommendations, curated homepage sorts and search.
Despite our efforts, we may not be able to obtain or maintain sufficient protection for or successfully enforce our intellectual property. Any current and future patents, trademarks and other intellectual property or other proprietary rights we own or license, or otherwise have a right to use, may be contested, circumvented or found unenforceable or invalid.
Any current and future patents, trademarks and other intellectual property or other proprietary rights we own or license, or otherwise have a right to use, may be contested, circumvented or found unenforceable or invalid.
The Roblox Client features the Avatar Editor, which enables users to manipulate the size and body shape of their avatars as well as equip their avatar with clothing, gear, animations, simulated gestures, or emotes, and other accessories from the Marketplace.
Creators can also build avatar creation tools in their experiences, allowing users to create more personalized avatars. 11 Table of Contents The Roblox Client features the Avatar Editor, which enables users to manipulate the size and body shape of their avatars as well as equip their avatar with clothing, gear, animations, simulated gestures, or emotes, and other accessories from the Marketplace.
Developers and creators earn Robux by selling virtual content or access to virtual content (including through subscriptions), as well as through the incorporation of immersive ads into their experiences, which are ad units that developers can insert into their experience for Roblox to programmatically serve ad content from advertisers.
Developers may also choose to offer additional benefits to active Roblox Premium subscribers in the form of discounted virtual merchandise or access to exclusive in-experience features. 14 Table of Contents Developers and creators earn Robux by selling virtual content or access to virtual content (including through subscriptions), as well as through the incorporation of immersive ads into their experiences, which are ad units that developers can insert into their experience for Roblox to programmatically serve ad content from advertisers.
Most free experiences allow users to spend Robux by purchasing experience-specific enhancements. Users can also use Robux to obtain items such as clothing, accessories, and emotes from our Marketplace or within an experience. Roblox retains a portion of every Robux transaction and distributes the rest to developers and creators.
Users can also use Robux to obtain items such as clothing, accessories, and emotes from our Marketplace or within an experience. Roblox retains a portion of every Robux transaction and distributes the rest to developers and creators. Robux can only be purchased from us at a price set by us, and can only be spent within our Platform.
As our Platform has scaled, our monetizing developers and creators have enjoyed meaningful earnings expansion over time, reflecting the increasing popularity and opportunities for monetization of our Platform and driving a growing incentive for our developers and creators to continue to build high-quality content. 9 Table of Contents Developers and creators are able to earn Robux through the following methods: 1.
As our Platform has scaled, our monetizing developers and creators have enjoyed meaningful earnings expansion over time, reflecting the increasing popularity and opportunities for monetization of our Platform and driving a growing incentive for our developers and creators to continue to build high-quality content. 9 Table of Contents We offer our creator and developer community several economic models to help support their goals.
As it relates to generating impressions for ads units and portals, developers earn Robux based on the number of impressions and teleports that occur within their experience. 18 Table of Contents Earned Robux are deposited into the virtual accounts of the developers and creators, who can convert Robux into real-world currency at an exchange rate which is determined by Roblox in its sole discretion of 1 Robux to $0.0035 as of December 31, 2023, if they qualify for and are registered in our Developer Excha nge Program.
Earned Robux are deposited into the virtual accounts of the developers and creators, who can convert Robux into fiat currency at an exchange rate which is determined by Roblox in its sole discretion of 1 Robux to $0.0035 as of December 31, 2024, if they qualify for and are registered in our Developer Excha nge Program.
Creators can share their work with other creators through the Creator Store. The Creator Store drives collaboration within our developer community, accelerates creation of new experiences, and provides additional ways for creators to monetize their work.
Finally, AI tools like Avatar Auto-Setup save creators time by turning 3D avatar models into animated avatar technology. Creators can share their work with other creators through the Creator Store. The Creator Store drives collaboration within our developer community, accelerates creation of new experiences, and provides additional ways for creators to monetize their work.
We rely on a variety of statutory and common-law frameworks and defenses relevant to the content available on our service, including the Digital Millennium Copyright Act (“DMCA”), the Communications Decency Act, and the fair-use doctrine in the U.S., and the Electronic Commerce Directive in the European Union (“EU”).
Our intent is to make it easy for our developers and creators to securely build and distribute their content on our Platform. 19 Table of Contents We rely on a variety of statutory and common-law frameworks and defenses relevant to the content available on our service, including the Digital Millennium Copyright Act (“DMCA”), the Communications Decency Act, and the fair-use doctrine in the U.S., and the Digital Services Act in the European Union (“EU”).
Monetizing a developed experience: Developers qualified for our Developer Exchange Program can earn Robux through: a. In-experience purchases, which consist of microtransactions generated from the sale of in-experience virtual items, subscription-based offerings (including access to private servers), access to certain experiences, and/or passes granting special in-experience privileges. b.
In-experience purchases, which consist of microtransactions generated from the sale of in-experience virtual items, subscription-based offerings (including access to private servers), access to certain experiences (referred to as paid access), and/or passes granting special in-experience privileges. b.
Finally, all assets are subject to review by humans or AI trained on our Community Standards. During the year ended December 31, 2023, including automated reviews, we evaluated over 300 million assets. Assets refer to images, audio files, and video files that developers upload to the Roblox Platform to include in their experiences and in the Marketplace.
During the year ended December 31, 2024, including automated reviews, we evaluated over 400 million assets. Assets refer to images, audio files, and video files that developers upload to the Roblox Platform to include in their experiences and in the Marketplace.
For the same period, there were over 3,500 developers and creators that earned the equivalent of $10,000 or more in Robux and over 750 developers and creators that earned the equivalent of $100,000 or more in Robux. 10 Table of Contents Rewards and Experiences Breakdown We invest in our developers and creators by providing a comprehensive set of free tools and services through Roblox Studio, the Roblox Open Cloud, and a range of other creator resources that enable them to easily build, publish, analyze, grow, and monetize experiences.
F or the year ended December 31, 2024, over 17,000 developers and creators actually exchanged their earned Robux for fiat currency through our Developer Exchange Program. 10 Table of Contents We invest in our developers and creators by providing a comprehensive set of free tools and services through Roblox Studio, the Roblox Open Cloud, and a range of other creator resources that enable them to easily build, publish, analyze, grow, and monetize experiences.
In the year ended December 31, 2023, Roblox responded to millions of customer inquiries and had a human respond to actionable safety issues on average within 22 minutes of their submission. 16 Table of Contents Safety and Digital Civility We aspire to build a safe and civil online society.
In the year ended December 31, 2024, Roblox responded to millions of customer inquiries and had a human respond to actionable safety issues on average within 18 minutes of their submission. Safety and Digital Civility Our highest priority is to create a safe and civil online environment for our users.
In addition, the recently introduced avatar animation allows all users to use their camera to animate their avatar with their movement, allowing them to communicate and express themselves in more natural, real-time, and immersive ways. Further, users can now connect through Roblox Connect, a way to communicate with another user within a 3D immersive experience.
In addition, avatar animation allows all users to use their camera to animate their avatar with their movement, allowing them to communicate and express themselves in more natural, real-time, and immersive ways. Recently, we launched Party, a new way to connect and coordinate with friends.
Our issued patents are scheduled to expire between 2025 and 2041. We also had more than 250 pending patent applications in the U.S. and abroad. There can be no assurance that each of our patent applications will result in the issuance of a patent. In addition, any resulting issued patents may have claims narrower than those in our patent applications.
There can be no assurance that each of our patent applications will result in the issuance of a patent. In addition, any resulting issued patents may have claims narrower than those in our patent applications.
Information contained on, or that can be accessed through, our website is not incorporated by reference into this Annual Report on Form 10-K. “Roblox,” “Robux,” our logo and our other registered or common law trademarks, service marks or trade names appearing in this Annual Report on Form 10-K are the property of Roblox Corporation.
“Roblox,” “Robux,” our logo and our other registered or common law trademarks, service marks or trade names appearing in this Annual Report on Form 10-K are the property of Roblox Corporation. Other trademarks and trade names referred to in this Annual Report on Form 10-K are the property of their respective owners.
We also typically see higher levels of engagement in the months of June, July, and August, which are summer periods in the northern hemisphere, and lower levels of engagement in the post-summer months of September, October, and November.
We also typically see higher levels of engagement in the months of June, July, and August, which are summer periods in the northern hemisphere, and lower levels of engagement in the post-summer months of September, October, and November. Other periods of seasonality include holidays such as Lunar New Year, Easter, and Ramadan, each of which may differ in timing year-over-year.
When a user joins a 3D immersive experience, the Roblox Cloud assigns that user to a particular game instance based on, among other considerations, the user’s social graph, geographic location, spoken language, and age group. When the number of users in a given experience increases, the Roblox Cloud automatically spawns additional server instances necessary to support additional users.
The Roblox Cloud enables low-latency, responsive interactivity between millions of concurrent users within 3D environments. When a user joins a 3D immersive experience, the Roblox Cloud assigns that user to a particular game instance based on, among other considerations, the user’s social graph, geographic location, spoken language, and age group.
These seasonal impacts may be more or less pronounced in the future or different altogether. 20 Table of Contents Security, Privacy, Data Protection and Regulatory Matters We are subject to a number of U.S. federal and state and foreign laws and regulations that involve matters central to our business.
Security, Privacy, Data Protection and Regulatory Matters We are subject to a number of U.S. federal and state and foreign laws and regulations that involve matters central to our business.
We make available on our website at ir.roblox.com, free of charge, copies of these reports and other information as soon as reasonably practicable after we electronically file such material with, or furnish it to, the SEC. 24 Table of Contents Investors, the media and others should note that we intend to announce material information to the public through filings with the SEC, the investor relations page on our website, at www.ir .roblox.com, press releases, public conference calls and webcasts.
We make available on our website at ir.roblox.com, free of charge, copies of these reports and other information as soon as reasonably practicable after we electronically file such material with, or furnish it to, the SEC.
The majority of services operated by the Roblox Cloud are hosted in Roblox managed data centers. For some of our high-speed databases, scalable object storage, and message queuing services we leverage Amazon Web Services.
For some of our high-speed databases, scalable object storage, and message queuing services we leverage Amazon Web Services.
Localization and compliance systems embedded within the Roblox Client and Roblox Cloud help to lower cultural barriers and enable our developers to meet regional requirements with little to no additional effort.
In the year ended December 31, 2024, developers from over 170 countries and users spanning over 180 countries accessed our Platform. Localization systems embedded within the Roblox Client and Roblox Cloud help to lower cultural barriers and enable our developers to meet certain regional requirements with little to no additional effort.
This includes managing and moderating our online developer and creator forums and operating special programs for aspiring and top developers and creators such as our annual Roblox Developers Conference.
This includes managing and moderating our online developer and creator forums and operating special programs for aspiring and top developers and creators such as our annual Roblox Developers Conference. With Roblox Open Cloud, developers and creators can leverage a suite of backend APIs to seamlessly build and scale their experiences.

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Item 1A. Risk Factors

Risk Factors — what could go wrong, per management

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Biggest changeRisk Factors Summary Below is a summary of the principal factors that make an investment in our Class A common stock speculative or risky: • We have a history of net losses and we may not be able to achieve or maintain profitability in the future. • Our business is affected by seasonal demands, and our financial condition and results of operations will fluctuate from quarter to quarter, which makes our financial results difficult to predict and may not fully reflect our underlying performance. • We experienced rapid growth in prior periods and our prior growth may not be indicative of our future growth or the growth of our market. • We depend on effectively operating with mobile operating systems, hardware, and networks that we do not control; changes to any of these or our Platform may significantly harm our user retention, growth, engagement, and monetization, or require us to change our data collection and privacy, cybersecurity, and data protection practices, business models, operations, practices, advertising activities or application content, which could restrict our ability to maintain our Platform through these systems, hardware, and networks and would adversely impact our business. • Because we recognize revenue from bookings over the estimated average lifetime of a paying user or as the virtual items are consumed, changes in our business may not be immediately reflected in our operating results. • If our business becomes constrained by changing legal and regulatory requirements, including with respect to privacy, cybersecurity and data protection, artificial intelligence (“AI”), consumer protection, communication, verified parental consent and user-generated content, or enforcement by government regulators, including fines, orders, or consent decrees in the US or other jurisdictions in which we operate, our operating results will suffer. • The success of our business model is contingent upon our ability to provide a safe online environment for children to experience and if we are not able to continue to provide a safe environment, our business will suffer dramatically. • If we are not able to provide sufficiently reliable services to our developers, creators, and users and maintain the performance of our Platform in the event of outages, constraints, disruptions or degradations in our services and our Platform, our business and reputation will suffer. • If the security of our Platform is compromised, it could compromise our and our developers’, creators’, and users’ proprietary information, disrupt our internal operations and harm public perception of our Platform, which could cause our business and reputation to suffer. • We must continue to attract and retain highly qualified personnel in very competitive markets to continue to execute on our business strategy and growth plans. 26 Table of Contents • We may identify material weaknesses or otherwise fail to maintain an effective system of internal controls, which may result in material misstatements of our consolidated financial statements or cause us to fail to meet our periodic reporting obligations. • Our business and results of operations are affected by fluctuations in currency exchange rates. • We may incur liability as a result of content published using our Platform or as a result of claims related to content generated by our developers, creators, and users, including copyright infringement, and legislation regulating content on our Platform may require us to change our Platform or business practices. • The loss of one or more of the members of our senior management team or other key personnel (or the inability to attract senior management or other key personnel), in particular our Founder, President, CEO and Chair of our Board of Directors, David Baszucki, could significantly harm our business. • The public trading price of our Class A common stock is volatile and may decline. • The dual class stock structure of our common stock has the effect of concentrating voting control in our Founder, which may limit or preclude your ability to influence corporate matters, including the election of directors and the approval of any change of control transaction. • Securities or industry analysts or other third parties may publish inaccurate or unfavorable research about us, our business or our market which may cause the market price and trading volume of our Class A common stock to decline.
Biggest changeRisk Factors Summary Below is a summary of the principal factors that make an investment in our Class A common stock speculative or risky: • We have a history of net losses and we may not be able to achieve or maintain profitability in the future. • Our business is affected by seasonal demands, and our financial condition and results of operations will fluctuate from quarter to quarter, which makes our financial results difficult to predict and may not fully reflect our underlying performance. • If our business becomes constrained by changing legal and regulatory requirements, including with respect to online safety, privacy, cybersecurity and data protection, AI, online platform liability, communication, verifiable parental consent and user-generated content, or enforcement by government regulators, including fines, orders, or consent decrees in the US or other jurisdictions in which we operate, our operating results will suffer. • We experienced rapid growth in prior periods and our prior growth may not be indicative of our future growth or the growth of our market. • We depend on effectively operating with third-party operating systems, hardware, and networks that we do not control; changes to any of these or our Platform may significantly harm our user retention, growth, engagement, and monetization, or require us to change our data collection and privacy, cybersecurity, and data protection practices, business models, operations, practices, advertising activities or application content, which could restrict our ability to maintain our Platform through these systems, hardware, and networks and would adversely impact our business. • The success of our business model is contingent upon our ability to provide a safe online environment for our users, many of whom are children, to experience and if we are not able to provide such an environment, our business will suffer dramatically. • If we are not able to provide sufficiently reliable services to our developers, creators, and users and maintain the performance of our Platform in the event of outages, constraints, disruptions, degradations or regulatory actions in our services and our Platform, our business and reputation will suffer. • If the security of our Platform is compromised, it could compromise our and our developers’, creators’, and users’ private information, disrupt our internal operations and harm public perception of our Platform, which could cause our business and reputation to suffer. • Because we recognize revenue from bookings over the estimated average lifetime of a paying user or as the virtual items are consumed, changes in our business may not be immediately reflected in our operating results. • We may incur liability as a result of content published using our Platform or as a result of claims related to content generated by our developers, creators, and users, including copyright infringement, and legislation regulating content on our Platform may require us to change our Platform or business practices. • We must continue to attract and retain highly qualified personnel in very competitive markets to support out growth, and the loss of one or more of the members of our senior management team or other key personnel (or the inability to attract senior management or other key personnel) could significantly harm our business. • The public trading price of our Class A common stock is volatile and may decline. • The dual class stock structure of our common stock has the effect of concentrating voting control in our Founder, which may limit or preclude your ability to influence corporate matters, including the election of directors and the approval of any change of control transaction. • Securities or industry analysts or other third parties may publish inaccurate or unfavorable research about us, our business or our market which may cause the market price and trading volume of our Class A common stock to decline. 24 Table of Contents Risks Related to Our Business We have a history of net losses and we may not be able to achieve or maintain profitability in the future.
We have banned individuals as a result of unauthorized, fraudulent, or illegal use of Robux or other digital goods on our Platform. We have also employed technological measures to help detect unauthorized Robux transactions and continue to develop additional methods and processes through which we can identify unauthorized transactions and block such transactions.
We have banned individuals as a result of unauthorized, fraudulent, or illegal use of our Platform, Robux or other digital goods on our Platform. We have also employed technological measures to help detect unauthorized Robux transactions and continue to develop additional methods and processes through which we can identify unauthorized transactions and block such transactions.
If developers do not find the Lua scripting language or our Platform simple and attractive for developing content or determine that our Lua scripting language or other features of our Platform are undesirable or inferior to other scripting languages or platforms, or Lua scripting language becomes unavailable for use by the developers for any reason, they may shift their resources to developing content on other platforms and our business may be harmed.
If developers do not find our Lua scripting language or our Platform simple and attractive for developing content or determine that our Lua scripting language or other features of our Platform are undesirable or inferior to other scripting languages or platforms, or Lua scripting language becomes unavailable for use by the developers for any reason, they may shift their resources to developing content on other platforms, and our business may be harmed.
A prolonged AWS service disruption affecting our cloud-native Platform for any of the foregoing reasons would adversely impact our ability to serve our users, developers, and creators and could damage our reputation with current and potential users, developers, and creators, expose us to liability, result in substantial costs for remediation, cause us to lose users, developers, and creators, or otherwise harm our business, financial condition, or results of operations. and users.
A prolonged AWS service disruption affecting our cloud-native Platform for any of the foregoing reasons would adversely impact our ability to serve our users, developers, and creators and could damage our reputation with current and potential users, developers, and creators, expose us to liability, result in substantial costs for remediation, cause us to lose users, developers, and creators, or otherwise harm our business, financial condition, or results of operations.
Any failure to comply with applicable laws and regulations also could have negative consequences for us, including reputational harm, government investigations, and monetary penalties. In addition, various foreign governments may also impose controls, export license requirements, and/or restrictions applicable to our Platform and experiences.
Any failure to comply with applicable laws and regulations could have negative consequences for us, including reputational harm, government investigations, and monetary penalties. In addition, various foreign governments may also impose controls, export license requirements, and/or restrictions applicable to our Platform and experiences.
Any intellectual property claim asserted against us, or for which we are required to provide indemnification, may require us to cease selling or using or recall products that incorporate the intellectual property rights that we allegedly infringe, misappropriate, or violate; make substantial payments for legal fees, settlement payments, or other costs or damages; obtain a license, which may not be available on reasonable terms or at all, to sell or use the relevant technology; or redesign or rebrand the allegedly infringing products to avoid infringement, misappropriation, or violation, which could be costly, time-consuming, or impossible.
Any intellectual property claim asserted against us, or for which we are required to provide indemnification, may require us to cease selling or using or to recall products that incorporate the intellectual property rights that we allegedly infringe, misappropriate, or violate; make substantial payments for legal fees, settlement payments, or other costs or damages; obtain a license, which may not be available on reasonable terms or at all, to sell or use the relevant technology; or redesign or rebrand the allegedly infringing products to avoid infringement, misappropriation, or violation, which could be costly, time-consuming, or impossible.
Any failure or perceived failure by us to comply with our privacy policies, our obligations to users or other third parties relating to privacy, cybersecurity or data protection, or our other policies or obligations relating to privacy, cybersecurity, data protection, or related matters, or any actual or perceived compromise of security, including any such compromise that results in the unauthorized loss, unavailability, modification, release, transfer, or other processing of personal information or other user, developer or creator data, may result in governmental investigations and enforcement actions, litigation, claims or public statements against us by consumer advocacy groups or others and could cause our developers, creators, and users to lose trust in us, any or all of which could have an adverse effect on our business, financial condition, or results of operations.
Any failure or perceived failure by us to comply with our privacy policies, our obligations to users or other third parties relating to privacy, cybersecurity, data protection, or related matters, or our other policies or actual or asserted obligations relating to privacy, cybersecurity, data protection, or related matters, or any actual or perceived compromise of security, including any such compromise that results in the unauthorized loss, unavailability, modification, release, transfer, or other processing of personal information or other user, developer or creator data, may result in governmental investigations and enforcement actions, litigation, claims or public statements against us by consumer advocacy groups or others and could cause our developers, creators, and users to lose trust in us, any or all of which could have an adverse effect on our business, financial condition, or results of operations.
While we have dedicated technology and trained human moderator staff that can detect and remove sexual content involving children, there have been instances where such content has been uploaded, and any future non-compliance by us or allegations of non-compliance by us with respect to U.S. federal laws on child pornography or the sexual exploitation of children could significantly harm our reputation, create criminal liability, and could be costly and time consuming to address or defend.
While we have dedicated technology and trained human moderator staff that can detect and remove sexual content involving children, there have been instances where such content has been uploaded, and any unforeseen future non-compliance by us or allegations of non-compliance by us with respect to U.S. federal laws on child pornography or the sexual exploitation of children could significantly harm our reputation, create criminal liability, and could be costly and time consuming to address or defend.
Adverse macroeconomic conditions, including lower consumer confidence, persistent unemployment, wage and income stagnation, slower growth or recession, changes to fiscal and monetary policy, inflation, higher interest rates, currency fluctuations, economic and trade sanctions, the availability and cost of credit, and the strength of the economies in which we and our users are located, have adversely affected and may continue to adversely affect our consolidated financial condition and results of operations.
Adverse macroeconomic conditions, including lower consumer confidence, persistent unemployment, wage and income stagnation, slower growth or recession, changes to fiscal and monetary policy, inflation, changes in interest rates, currency fluctuations, economic and trade sanctions, the availability and cost of credit, and the strength of the economies in which we and our users are located, have adversely affected and may continue to adversely affect our consolidated financial condition and results of operations.
We can be held liable for the corrupt or other illegal activities of our employees, agents, representatives, business partners or third-party intermediaries, even if we do not authorize such activities and notwithstanding having policies, training, and procedures to address compliance with these laws, we cannot assure you that no violations of our policies or these laws will occur.
We can be held liable for the corrupt or other illegal activities of our employees, agents, representatives, business partners or third-party intermediaries, even if we do not authorize such activities and notwithstanding having policies, training, and procedures designed to address compliance with these laws, we cannot assure you that no violations of our policies or these laws will occur.
We believe our overall market acceptance, revenue growth, and increases in bookings depend on a number of factors, some of which are not within our control. There can be no assurance that users will not reduce their usage or engagement with our Platform or reduce their discretionary spending on Robux, which would adversely impact our revenue and financial condition.
We believe our overall market acceptance, revenue growth, and increases in bookings depend on a number of factors, some of which are not within our control. There can be no assurance that users will not reduce their usage or engagement with our Platform or reduce their discretionary spending on our Platform, which would adversely impact our revenue and financial condition.
We rely on third-party distribution channels and third-party payment processors to facilitate Robux purchases by our Platform users. If we are unable to maintain a good relationship with such providers, if their terms and conditions change, or fail to process or ensure the safety of users’ payments, our business will suffer.
We rely on third-party distribution channels and third-party payment processors to facilitate purchases by our Platform users. If we are unable to maintain a good relationship with such providers, if their terms and conditions change, or fail to process or ensure the safety of users’ payments, our business will suffer.
Despite our efforts, users, developers, or creators may become dissatisfied with our billing or payment policies, our handling of personal data, or other aspects of our Platform. If we fail to adequately address these or other user, developer, or creator complaints, negative publicity about us or our Platform could diminish confidence in and the use of our Platform.
Despite our efforts, users, developers, or creators may become dissatisfied with our Platform technology, billing or payment policies, our handling of personal data, or other aspects of our Platform. If we fail to adequately address these or other user, developer, or creator complaints, negative publicity about us or our Platform could diminish confidence in and the use of our Platform.
These provisions could also discourage proxy contests and make it more difficult for stockholders to elect directors of their choosing and to cause us to take other corporate actions they desire, any of which, under certain circumstances, could limit the opportunity for our stockholders to receive a premium for their shares of our Class A common stock, and could also affect the price that some investors are willing to pay for our Class A common stock. 59 Table of Contents Our amended and restated bylaws provide that the Court of Chancery of the State of Delaware and the federal district courts of the United States will be the exclusive forums for substantially all disputes between us and our stockholders, which could limit our stockholders’ ability to obtain a favorable judicial forum for disputes with us or our directors, officers, or employees.
These provisions could also discourage proxy contests and make it more difficult for stockholders to elect directors of their choosing and to cause us to take other corporate actions they desire, any of which, under certain circumstances, could limit the opportunity for our stockholders to receive a premium for their shares of our Class A common stock, and could also affect the price that some investors are willing to pay for our Class A common stock. 56 Table of Contents Our amended and restated bylaws provide that the Court of Chancery of the State of Delaware and the federal district courts of the United States will be the exclusive forums for substantially all disputes between us and our stockholders, which could limit our stockholders’ ability to obtain a favorable judicial forum for disputes with us or our directors, officers, or employees.
In addition, any patents issued from pending or future patent applications or licensed to us in the future may not provide us with competitive advantages, or it may be successfully challenged by third parties. Furthermore, legal standards relating to the validity, enforceability, and scope of protection of intellectual property rights are uncertain.
In addition, any patents issued from pending or future patent applications or licensed to us in the future may not provide us with competitive advantages or may be successfully challenged by third parties. Furthermore, legal standards relating to the validity, enforceability, and scope of protection of intellectual property rights are uncertain.
If a third party is able to obtain an injunction preventing us from accessing or exercising intellectual property rights, or if we cannot license or develop alternative technology for any infringing aspect of our business, we could be forced to limit or cease access to our Platform or cease business activities related to such intellectual property.
If a third party is able to obtain an injunction preventing us from exercising intellectual property rights, or if we cannot license or develop alternative technology for any infringing aspect of our business, we could be forced to limit or cease access to our Platform or cease business activities related to such intellectual property.
We expect to continue making significant expenditures to grow our Platform and develop new features, integrations, capabilities, and enhancements to our Platform for the benefit of our developers, creators, and users. We will also be required to invest in our internal IT systems, technological operations infrastructure, financial infrastructure, and operating and administrative systems and controls.
We expect to continue making significant expenditures to grow our Platform and develop new features, integrations, capabilities, and enhancements to our Platform for the benefit of our developers, creators, and users. We will also be required to invest in our internal IT systems, technological operations infrastructure, financial infrastructure, and operating, compliance and administrative systems and controls.
We expect our costs and investments to continue to increase in future periods as we intend to continue to make investments to grow our business, including an expected increase in infrastructure, stock-based compensation expenses, and acquisitions. These efforts may be more costly than we expect and may not result in increased revenue or growth of our business.
We expect our costs and investments to continue to increase in future periods as we intend to continue to make investments to grow our business, including an expected increase in infrastructure and stock-based compensation expenses. These efforts may be more costly than we expect and may not result in increased revenue or growth of our business.
Further, we have faced and are currently defending allegations that our Platform has been used by criminal offenders to identify and communicate with children and to possibly entice them to interact off-Platform, outside of the restrictions of our chat, content blockers, and other on-Platform safety measures.
Further, we have faced and are currently defending allegations that our Platform has been used by criminal offenders to identify and communicate with children and to possibly entice them to interact off-Platform, outside of the restrictions of our moderated chat, content blockers, and other on-Platform safety measures.
We also may not achieve the anticipated benefits of synergies from the acquired business, may encounter challenges with incorporating the acquired features and technologies into our Platform while maintaining quality and security standards consistent with our brand, or may fail to identify security vulnerabilities in acquired technology prior to integration with our technology and Platform.
We also may not achieve the anticipated benefits of synergies from the target business, may encounter challenges with incorporating the acquired features and technologies into our Platform while maintaining quality and security standards consistent with our brand, or may fail to identify security vulnerabilities in acquired technology prior to integration with our technology and Platform.
In February 2019, we entered into a joint venture agreement with Songhua River Investment Limited, referred to as Songhua, an affiliate of Tencent Holdings Ltd. (“Tencent Holdings”), under which we created Roblox China Holding Corp (the “China JV”), of which we own a 51% ownership interest.
In February 2019, we entered into a joint venture agreement with Songhua River Investment Limited, referred to as Songhua, an affiliate of Tencent Holdings Limited (“Tencent Holdings”), under which we created Roblox China Holding Corp (the “China JV”), of which we own a 51% ownership interest.
Despite a reliability program focused on anticipating and solving issues that may impact the availability of our Platform and precautions taken at our data centers, such as disaster recovery and business continuity arrangements, the occurrence of spikes in usage volume, the occurrence of a natural disaster, a hacking event or act of terrorism, a decision to close the facilities without adequate notice, our inability to secure additional or replacement data center capacity as needed, or other unanticipated problems at our data centers could result in interruptions or delays on our Platform, impede our ability to scale our operations or have other adverse impacts upon our business and adversely impact our ability to serve our developers, creators, and users.
Despite a reliability program focused on anticipating and solving issues that may impact the availability of our Platform and precautions taken at our data centers, such as disaster recovery and business continuity arrangements, the occurrence of spikes in usage volume, the occurrence of a natural disaster, a cyber event or act of terrorism, a decision to close the facilities without adequate notice, our inability to secure additional or replacement data center capacity as needed, or other unanticipated problems at our data centers could result in interruptions or delays on our Platform, impede our ability to scale our operations or have other adverse impacts upon our business and adversely impact our ability to serve our developers, creators, and users.
Each provider of an operating system or application store may also change its fee structure or add fees associated with access to and use of its operating system, which could have an adverse impact on our business.
Each provider of an operating system, application store or console may also change its fee structure or add fees associated with access to and use of its operating system, which could have an adverse impact on our business.
However, there can be no assurance that our efforts to prevent or minimize these unauthorized, fraudulent, or illegal transactions will be successful. 40 Table of Contents We have made and are continuing to make investments in privacy, data protection, user safety, cybersecurity, and content review efforts to combat misuse of our services and user data by third parties, including investigations of individuals we have determined to have attempted to access and, in some cases, have accessed, user data without authorization.
However, there can be no assurance that our efforts to prevent or minimize these unauthorized, fraudulent, or illegal transactions will be successful. 39 Table of Contents We have made and are continuing to make investments in privacy, data protection, user safety, cybersecurity, and content review efforts to combat misuse of our services and user data by third parties, including investigations of individuals we have determined to have attempted to access and, in some cases, have accessed, user data without authorization.
Delaware law and provisions in our amended and restated certificate of incorporation and amended and restated bylaws could make a merger, tender offer, or proxy contest difficult, thereby depressing the market price of our Class A common stock. 58 Table of Contents If securities or industry analysts or other third parties do not publish research or publish inaccurate or unfavorable research about us, our business, or our market, or if they change their recommendation regarding our Class A common stock adversely, the market price and trading volume of our Class A common stock could decline.
Delaware law and provisions in our amended and restated certificate of incorporation and amended and restated bylaws could make a merger, tender offer, or proxy contest difficult, thereby depressing the market price of our Class A common stock. 55 Table of Contents If securities or industry analysts or other third parties do not publish research or publish inaccurate or unfavorable research about us, our business, or our market, or if they change their recommendation regarding our Class A common stock adversely, the market price and trading volume of our Class A common stock could decline.
In the future, we may not be able to find other suitable acquisition or investment candidates, and we may not be able to complete acquisitions or similar strategic transactions on favorable terms, if at all.
In the future, we may not be able to find other suitable acquisition or investment candidates, and we may not be able to complete acquisitions, investments or similar strategic transactions on favorable terms, if at all.
Although we have policies and procedures in place designed to swiftly characterize the potential impact of such vulnerabilities and develop appropriate patching or upgrade recommendations and also maintain policies and procedures related to vulnerability scanning and management of our internal corporate systems and networks, such policies and procedures may not be followed or detect every issue, and from time to time, we have, and may in the future again, need to proactively disable access to our Platform in order to provide necessary patching or upgrades.
Although we have policies and procedures in place designed to promptly characterize the potential impact of such vulnerabilities and develop appropriate patching or upgrade recommendations and also maintain policies and procedures related to vulnerability scanning and management of our internal corporate systems and networks, such policies and procedures may not be followed or detect every issue, and from time to time, we have, and may in the future again, need to proactively disable access to our Platform in order to provide necessary patching or upgrades.
Many states have also passed their own laws that require verifiable parental consent before allowing children to create an account or impact companies that process children’s personal data.
Many states have also passed their own laws that require verifiable parental consent before allowing children to create an account or that otherwise impact companies that process children’s personal data.
These agreements may be breached, and we may not be able to detect any such breach and may not have adequate remedies for any such breach even if we know about it. 56 Table of Contents We use open source software as part of, and in connection with certain experiences on, our Platform, which may pose particular intellectual property and security risks to and could have a negative impact on our business.
These agreements may be breached, and we may not be able to detect any such breach and may not have adequate remedies for any such breach even if we know about it. 53 Table of Contents We use open source software as part of, and in connection with certain experiences on, our Platform, which may pose particular intellectual property and security risks to and could have a negative impact on our business.
Moreover, measures intended to make our Platform more attractive to an older, age verified audience, such as less highly moderated or unmoderated chat and the introduction of experiences with mature content, and new methods of communication could fail to gain sufficient market acceptance by its intended audience and may create the perception that our Platform is not safe for young users.
Moreover, measures intended to make our Platform more attractive to an older, age verified audience, such as less highly moderated or unmoderated chat and the introduction of experiences with mature content, and new methods of communication could fail to gain sufficient market acceptance by its intended audience and may create the perception that our Platform is not safe for younger users.
Our reputation and brand could also be negatively affected by the actions of developers and users that are hostile, inappropriate, or illegal, whether on or off our Platform.
Our reputation and brand could also be negatively affected by the actions of developers, contractors and users that are hostile, inappropriate, or illegal, whether on or off our Platform.
For example, in December 2021, a vulnerability in popular logging software, Log4j, was publicly announced, and while we have taken steps to ensure these and similar vulnerabilities have been patched in our systems, we cannot guarantee that all vulnerabilities have been patched in every system upon which we are dependent or that additional critical vulnerabilities of open source software which we rely upon will not be discovered.
For example, in December 2021, a vulnerability in popular logging software, Log4j, was publicly announced, and while we have taken steps to patch these and similar vulnerabilities in our systems, we cannot guarantee that all vulnerabilities have been patched in every system upon which we are dependent or that additional critical vulnerabilities of open source software which we rely upon will not be discovered.
Any disruption or delay in the supply of our hardware components may delay the opening of new data centers, edge data centers, co-location facilities or the creation of fully redundant operations, limit capacity expansion, or replacement of defective or obsolete equipment at existing data centers and edge data centers or cause other constraints on our operations that could damage our ability to serve our developers, creators, and users.
Any disruption or delay in the supply of hardware components or data center availability may delay the opening of new data centers, edge data centers, co-location facilities or the creation of fully redundant operations, limit capacity expansion, or replacement of defective or obsolete equipment at existing data centers and edge data centers or cause other constraints on our operations that could damage our ability to serve our developers, creators, and users.
Additionally, the Personal Information Protection Law, or PIPL of the People’s Republic of China (“PRC”), was adopted on August 20, 2021, and went into effect on November 1, 2021. The PIPL shares similarities with the GDPR, including extraterritorial application, data minimization, data localization, and purpose limitation requirements, and obligations to provide certain notices and rights to citizens of the PRC.
Additionally, the Personal Information Protection Law, (“PIPL”) of the People’s Republic of China (“PRC”), was adopted on August 20, 2021, and went into effect on November 1, 2021. The PIPL shares similarities with the GDPR, including extraterritorial application, data minimization, data localization, and purpose limitation requirements, and obligations to provide certain notices and rights to citizens of the PRC.
The DSA imposes additional obligations as provided under the E-Commerce Directive and includes new content moderation obligations, notice and transparency obligations, advertising restrictions and other requirements on digital platforms to protect consumers and their rights online. In countries in Asia and Latin America, generally there are not similar statutes to the CDA or the DSA.
The DSA imposes additional obligations as provided under the E-Commerce Directive and includes new content moderation obligations, notice and transparency obligations, advertising restrictions and other requirements on digital platforms to protect consumers and their rights online. In countries in Asia and Latin America, generally there are no similar statutes to the CDA or the DSA.
We may experience greater incident response forensics, data recovery, legal fees, and costs of notification related to any such potential incident, and we may face an increased risk of reputational harm, regulatory enforcement, and consumer litigation, which could further harm our business, financial condition, results of operations, and future business opportunities.
We may experience greater incident response forensics, data recovery, legal fees, and costs of notification related to any such potential incident or vulnerabilities, and we may face an increased risk of reputational harm, regulatory enforcement, and consumer litigation, which could further harm our business, financial condition, results of operations, and future business opportunities.
Additionally, many of our employees and third-party service providers with access to user data currently are and may in the future be working remotely, which may increase our or our third-party service providers’ risk of security breaches or incidents. Moreover, the risk of state-supported and geopolitical-related cyber-attacks may increase with recent geopolitical events.
Additionally, many of our employees and third-party service providers with access to user data currently are and may in the future be working remotely, which may increase our employees’ or our third-party service providers’ risk of security breaches or incidents. Moreover, the risk of state-supported and geopolitical-related cyber-attacks may increase with geopolitical events.
Any such developments may also subject us to future litigation and regulatory inquiries, investigations, and proceedings, including from data protection authorities in countries where we offer services and/or have users, which could subject us to monetary penalties and damages, divert management’s time and attention, and lead to enhanced regulatory oversight.
Any such developments have and may continue to subject us to future litigation and regulatory inquiries, investigations, and proceedings, including from data protection authorities in countries where we offer services and/or have users, which could subject us to monetary penalties and damages, divert management’s time and attention, and lead to enhanced regulatory oversight.
In addition, if we fail to successfully close transactions or integrate new teams into our corporate culture, or fail to integrate the features and technologies associated with these acquisitions, our business could be significantly harmed. Any integration process may require significant time and resources, and we may not be able to manage the process successfully.
In addition, if we fail to successfully close transactions or integrate new teams into our corporate culture, or fail to integrate the features and technologies associated with acquisitions or investments, our business could be significantly harmed. Any integration process may require significant time and resources, and we may not be able to manage the process successfully.
Additionally, if AWS were to experience a hacking attack or another security incident, it could result in unauthorized access to, damage to, disablement or encryption of, use or misuse of, disclosure of, modification of, destruction of, or loss of our data or our developers’, creators’, and users’ data or disrupt our ability to provide our Platform or service.
Additionally, if AWS were to experience a hacking attack or other security incident, it could result in unauthorized access to, damage to, disablement or encryption of, use or misuse of, disclosure of, modification of, destruction of, or loss of our data or our developers’, creators’, and users’ data or disrupt our ability to provide our Platform or service.
Some of our demographic data may also be incomplete or inaccurate. For example, because users self-report their dates of birth, our age demographic data may differ from our users’ actual ages. If our users provide us with incorrect or incomplete information regarding their age or other attributes, then our estimates may prove inaccurate.
In addition, some of our demographic data may also be incomplete or inaccurate. For example, because users self-report their dates of birth, our age demographic data may differ from our users’ actual ages. If our users provide us with incorrect or incomplete information regarding their age or other attributes, then our estimates may prove inaccurate.
We also have agreements with third parties to manufacture and distribute merchandise based on user content on our Platform, and there is a possibility that such content could be found to be infringing. Lawsuits are time-consuming and expensive to resolve and they divert management’s time and attention.
We also have entered into agreements with third parties to manufacture and distribute merchandise based on user content on our Platform, and there is a possibility that such content could be found to be infringing. Lawsuits are time-consuming and expensive to resolve and they divert management’s time and attention.
Finally, the Organization for Economic Cooperation and Development has proposed the Pillar One framework as part of the OECD/G20 Base Erosion and Profit Shifting (BEPS) Project, which would revise existing profit allocation and nexus rules to require profit allocation based on location of sales versus physical presence for certain large multinational businesses, but if implemented, could result in the removal of unilateral digital services tax initiatives described above.
In addition, the Organization for Economic Cooperation and Development has proposed the Pillar One framework as part of the OECD/G20 Base Erosion and Profit Shifting Project, which would revise existing profit allocation and nexus rules to require profit allocation based on location of sales versus physical presence for certain large multinational businesses, but if implemented, could result in the removal of unilateral digital services tax initiatives described above.
Bills have recently been proposed in Congress calling for a range of changes to Section 230 of the CDA which include a complete repudiation of the statute to modifications of it in such a way as to remove certain social media companies from its protection. The U.S.
Bills have recently been proposed in Congress calling for a range of changes to Section 230 of the CDA which include a complete repudiation of the statute to modifications of it in such a way as to remove certain social media companies from its protection.
(“CFIUS”) has continued to apply a more stringent review of certain foreign investment in U.S. companies, including investment by Chinese entities, and has made inquiries to us with respect to Tencent Holding’s equity investment in us and involvement in the China JV.
The Committee on Foreign Investment in the U.S. (“CFIUS”) has continued to apply a more stringent review of certain foreign investment in U.S. companies, including investment by Chinese entities, and has made inquiries to us with respect to Tencent Holding’s equity investment in us and involvement in the China JV.
A successful assertion by a jurisdiction that we should have been or should be collecting additional sales, value added, or other taxes for the sale of content between our developers, creators, and users, could, among other things, result in substantial tax payments, create significant administrative burdens for us, discourage potential users, developers or creators from subscribing to our Platform, or otherwise harm our business, results of operations, and financial condition. 45 Table of Contents We may not realize the benefits expected through our China joint venture.
A successful assertion by a jurisdiction that we should have been or should be collecting additional sales, value added, or other taxes for the sale of content or physical goods between our developers, creators, and users, could, among other things, result in substantial tax payments, create significant administrative burdens for us, discourage potential users, developers, or creators from subscribing to our Platform, or otherwise harm our business, results of operations, and financial condition. 44 Table of Contents We may not realize the benefits expected through our China joint venture.
In the United States, a number of civil lawsuits have been initiated related to the foregoing and other concerns, the outcome of any one of which may, amongst other things, require us to limit the ways in which we use AI in our business.
In the United States, a number of civil lawsuits have been initiated related to the foregoing and other issues, the outcome of any one of which may, amongst other things, require us to limit the ways in which we use AI in our business.
For our experiences accessed through mobile platforms such as the Apple App Store and the Google Play Store, we are required to share a portion of the proceeds from in-game sales with the platform providers.
For our experiences accessed through mobile platforms such as the Apple App Store and the Google Play Store and consoles, we are required to share a portion of the proceeds from in-game sales with the platform and console providers.
As part of our business strategy, we have made and intend to make acquisitions to add specialized employees and complementary companies, features, and technologies. Our ability to acquire and successfully integrate larger or more complex companies, features, and technologies is unproven.
As part of our business strategy, we have made and intend to make acquisitions and investments to add or access specialized employees and complementary companies, features, and technologies. Our ability to acquire and successfully integrate larger or more complex companies, features, and technologies is unproven.
Any failure to implement and maintain effective internal control over financial reporting also could adversely affect the results of periodic management evaluations and annual independent registered public accounting firm attestation reports. Any legal proceedings or claims against us could be costly and time-consuming to defend and could harm our reputation regardless of the outcome.
Any failure to implement and maintain effective internal control over financial reporting also could adversely affect the results of periodic management evaluations and annual independent registered public accounting firm attestation reports. 58 Table of Contents Any legal proceedings or claims against us could be costly and time-consuming to defend and could harm our reputation regardless of the outcome.
We also incur expenses for employee compensation and other operating expenses at our non-U.S. locations in the local currency. Additionally, global events as well as geopolitical developments, including conflict in Europe and inflation have caused, and may in the future cause, global economic uncertainty, and uncertainty about the interest rate environment, which could amplify the volatility of currency fluctuations.
We also incur expenses for employee compensation and other operating expenses at our non-U.S. locations in the local currency. Additionally, global events as well as geopolitical developments, and inflation have caused, and may in the future cause, global economic uncertainty, and uncertainty about the interest rate environment, which could amplify the volatility of currency fluctuations.
For example, the European Union’s (“EU”) General Data Protection Regulation (“GDPR”) imposed more stringent data protection requirements regarding EU personal data, and its provisions include increasing the maximum level of fines that EU regulators may impose for the most serious breaches of noncompliance of €20 million or 4% of annual global revenues of the previous year, whichever is greater.
For example, the European Union’s (“EU”) General Data Protection Regulation (“GDPR”) imposes stringent data protection requirements regarding EU personal data, and its provisions include increasing the maximum level of fines that EU regulators may impose for the most serious breaches of noncompliance of €20 million or 4% of annual global revenues of the previous year, whichever is greater.
Further, laws in some Asian countries also provide for primary or secondary liability, which can include criminal liability, if a platform failed to take sufficient steps to prevent such content from being uploaded.
Further, laws in some Asian countries also provide for primary or secondary liability, which can include criminal liability, if a platform fails to take sufficient steps to prevent such content from being uploaded.
The techniques used by malicious actors to obtain unauthorized access to, to sabotage, systems or networks, or to utilize our systems maliciously are constantly evolving and generally are not recognized until launched against a target.
The techniques used by malicious actors to obtain unauthorized access to, or to sabotage our systems or networks, or to utilize our systems maliciously, are constantly evolving and generally are not recognized in the industry until launched against a target.
Moreover, the use of hedging instruments may introduce additional risks if we are unable to structure effective hedges with such instruments. We plan to continue to make acquisitions and investments in other companies, which could require significant management attention, disrupt our business, dilute our stockholders, and significantly harm our business.
Moreover, the use of hedging instruments may introduce additional risks if we are unable to structure effective hedges with such instruments. 42 Table of Contents We plan to continue to make acquisitions and investments in other companies, which could require significant management attention, disrupt our business, dilute our stockholders, and significantly harm our business.
Noncompliance with the DSA could result in fines of up to 6% of annual global revenues, which are in addition to the ability of civil society organizations and non-governmental organizations to lodge class action lawsuits.
Noncompliance with the DSA could result in fines of up to 6% of annual global revenues, which are in addition to the ability of civil society organizations and non-governmental organizations to commence class action lawsuits.
The laws in Utah and Arkansas impose new restrictions and obligations in connection with users who are, or are deemed to be, under 18, including access restrictions and restrictions on abilities for minors to create accounts.
The laws in Utah, Florida, and Arkansas impose restrictions and obligations in connection with users who are, or are deemed to be, under 18, including access restrictions and restrictions on abilities for minors to create accounts.
Because of the potential risks, expenses, and uncertainties of litigation, we may, from time to time, settle disputes, even where we have meritorious claims or defenses, by agreeing to settlement agreements. Any of the foregoing could adversely affect our business, financial condition, and results of operations. 62 Table of Contents Catastrophic events may disrupt our business.
Because of the potential risks, expenses, and uncertainties of litigation, we may, from time to time, settle disputes, even where we have meritorious claims or defenses, by agreeing to settlement agreements. Any of the foregoing could adversely affect our business, financial condition, and results of operations. Catastrophic events may disrupt our business.
O ur revenue, bookings, and user base growth rates have slowed and may continue to slow, and we may not experience any growth in bookings or our user base during periods where we are comparing against historical periods.
Our revenue, bookings, and user base growth rates have slowed and may continue to slow, and we may not experience any growth in bookings or our user base during periods where we are comparing against historical periods.
In addition, there are ongoing academic, political, and regulatory discussions in the U.S., Canada, Europe, United Kingdom, Australia, and other jurisdictions regarding whether certain mechanisms that may be included in the experiences on our Platform, such as features commonly referred to as “loot boxes,” and certain genres of experiences, such as social casino, that may reward gambling, should be subject to a higher level or different type of regulation than other genres of experiences to protect consumers, in particular minors and persons susceptible to addiction, and, if so, what such regulation should include.
In addition, there are ongoing academic, political, and regulatory discussions in the U.S., Canada, European Union, United Kingdom, Australia and other jurisdictions regarding whether certain mechanisms that may be included in experiences on our Platform, such as features commonly referred to as “loot boxes,” and certain genres of experiences, such as social casino, that may reward gambling-like behavior, should be subject to a higher level or different type of regulation than other genres of experiences to protect consumers, in particular minors and persons susceptible to addiction, and, if so, what such regulation should include.
Maintaining, protecting, and enhancing our reputation and brand may require us to make substantial investments, and these investments may not be successful. If we fail to retain users or add new users, or if our users decrease their level of engagement with our Platform, revenue, bookings, and operating results will be harmed.
Maintaining, protecting, and enhancing our reputation and brand may require us to make substantial investments, and these investments may not be successful. 30 Table of Contents If we fail to retain users or add new users, or if our users decrease their level of engagement with our Platform, revenue, bookings, and operating results will be harmed.
This would lead to a reduction in the number of developers, creators, and users on our Platform, a reduction in our revenues, bookings, and ability to compete, and our reputation with existing or potential developers, creators, or users could suffer. 34 Table of Contents The lack of comprehensive encryption for communications on our Platform may increase the impact of a security breach or incident.
This would lead to a reduction in the number of developers, creators, and users on our Platform, a reduction in our revenues, bookings, and ability to compete, and our reputation with existing or potential developers, creators, or users could suffer. The lack of comprehensive encryption for communications on our Platform may increase the impact of a security breach or incident.
In the event of a major earthquake, hurricane, or catastrophic event such as fire, power loss, rolling blackouts or power loss, telecommunications failure, pandemic, geopolitical conflict such as the Russian invasion of Ukraine and Hamas’ attack against Israel and the ensuing war, cyber-attack, war, other physical security threats or terrorist attack, we may be unable to continue our operations and may endure system interruptions, reputational harm, delays in our Platform development, lengthy interruptions in our Platform, breaches of security, and loss of critical data, all of which would harm our business, results of operations, and financial condition.
In the event of a major earthquake, hurricane, or catastrophic event such as fire, power loss, rolling blackouts or power loss, telecommunications failure, pandemic, geopolitical conflict such as the Russian invasion of Ukraine and the conflict in the Middle East stemming from Hamas’ attack against Israel, cyber-attack, war, other physical security threats or terrorist attack, we may be unable to continue our operations and may endure system interruptions, reputational harm, delays in our Platform development, lengthy interruptions in our Platform, breaches of security, and loss of critical data, all of which would harm our business, results of operations, and financial condition.
We have policies and procedures designed to ensure compliance with applicable laws and regulations, but we cannot assure you that we will not experience violations of such laws and regulations or our policies and procedures.
We have policies and procedures designed to promote compliance with applicable laws and regulations, but we cannot assure you that we will not experience violations of such laws and regulations or our policies and procedures.
Maintaining adequate research and development resources, such as the appropriate personnel and development technology, to meet the demands of the market is essential. Developments and innovations on our Platform may rely on new or evolving technologies which are still in development and may never be fully developed.
Developments and innovations on our Platform may rely on new or evolving technologies which may at times be still in development and may never be fully developed. Maintaining adequate research and development resources, such as the appropriate personnel and development technology, to meet the demands of the market is essential.
The multitude of other entertainment options, online gaming, and other interactive experiences is high, making it difficult to retain users who are dissatisfied with our Platform and seek other entertainment options. 37 Table of Contents Additionally, we may not succeed in further monetizing our Platform and user base.
The multitude of other entertainment options, online gaming, and other interactive experiences is high, making it difficult to retain users who are dissatisfied with our Platform and seek other entertainment options. Additionally, we may not succeed in further monetizing our Platform and user base.
The CCPA provides for civil penalties for violations, as well as a private right of action for data breaches, which may increase the likelihood and cost of data breach litigation. Additionally, the California Privacy Rights Act (“CPRA”), was approved in November 2020, and significantly modified the CCPA.
The CCPA provides for civil penalties for violations, as well as a private right of action for data breaches, which may increase the likelihood and cost of data breach litigation. The CCPA was significantly modified and supplemented by the California Privacy Rights Act (“CPRA”), which was approved in November 2020.
Any dispute with a third-party with respect to such obligations could have adverse effects on our relationship with such party and harm our business and results of operations. 55 Table of Contents Failure to protect or enforce our intellectual property rights or the costs involved in such enforcement would harm our business.
Any dispute with a third-party with respect to such obligations could have adverse effects on our relationship with such a party and harm our business and results of operations. Failure to protect or enforce our intellectual property rights or the costs involved in such enforcement would harm our business.
We may also incur significant costs for using alternative hosting cloud infrastructure services or taking other actions in preparation for, or in reaction to, events that damage or interfere with the AWS services we use. 42 Table of Contents We have entered into an enterprise agreement with AWS and a supplemental private pricing addendum that will remain in effect until June 2026.
We may also incur significant costs for using alternative hosting cloud infrastructure services or taking other actions in preparation for, or in reaction to, events that damage or interfere with the AWS services we use. We have entered into an enterprise agreement with AWS and a supplemental private pricing addendum that will remain in effect until June 2026.
The risks and challenges associated with expanding our international presence and operations include: • greater difficulty in enforcing contracts and accounts receivable collection, and longer collection periods; • higher costs of doing business internationally, including increased accounting, travel, infrastructure, legal and compliance costs; • double taxation of our international earnings and potentially adverse tax consequences due to changes in the tax laws of the U.S. or the foreign jurisdictions in which we operate; • compliance with multiple, ambiguous, or evolving governmental laws and regulations, including those relating to employment, tax, content regulation, privacy, data protection, anti-corruption, import/export, customs, anti-boycott, sanctions and embargoes, antitrust, data transfer, storage and security, content monitoring, preclusion, and removal, online entertainment offerings, advertising and consumers in general, and industry-specific laws and regulations, particularly as these rules apply to interactions with children; • expenses related to monitoring and complying with differing labor regulations, especially in jurisdictions where labor laws may be more favorable to employees than in the U.S.; • increased exposure to fluctuations in exchange rates between the U.S. dollar and foreign currencies in markets where we do business; • challenges inherent to efficiently recruiting and retaining qualified employees in foreign countries and maintaining our company culture and employee programs across all of our offices; 36 Table of Contents • management communication and integration problems resulting from language or cultural differences and geographic dispersion; • the uncertainty of protection for intellectual property in some countries; • the uncertainty of our exposure to third-party claims of intellectual property infringement and the availability of statutory safe harbors in some countries; • foreign exchange controls that might prevent us from repatriating cash earned outside the U.S.; • risks associated with trade restrictions and foreign legal requirements, and greater risk of unexpected changes in regulatory requirements, tariffs and tax laws, trade laws, and export and other trade restrictions; • risks relating to the implementation of exchange controls, including restrictions promulgated by the Office of Foreign Asset Control (“OFAC”), and other similar trade protection regulations and measures; • exposure to regional or global public health issues, and to travel restrictions and other measures undertaken by governments in response to such issues; • general economic and political conditions in these foreign markets, including political and economic instability in some countries and regions; • localization of our services, including translation into foreign languages and associated expenses and the ability to monitor our Platform in new and evolving markets and in different languages to confirm that we maintain standards consistent with our brand and reputation; • regulatory frameworks or business practices favoring local competitors; • changes in the perception of our Platform by governments in the regions where we operate or plan to operate; • uncertainty regarding the imposition of and changes in the U.S.’ and other governments’ trade regulations, trade wars, tariffs, other restrictions or other geopolitical events, and without limitation, including the evolving relations between the U.S. and China, evolving relations with Russia due to Russia’s invasion of Ukraine, and the escalation of regional tension as a result of Hamas’ attack against Israel and the ensuing war; and • natural disasters, acts of war, and terrorism, and resulting changes to laws and regulations, including changes oriented to protecting local businesses.
The risks and challenges associated with expanding our international presence and operations include: • greater difficulty in enforcing contracts and accounts receivable collection, and longer collection periods; • higher costs of doing business internationally, including increased accounting, travel, infrastructure, legal and compliance costs; • double taxation of our international earnings and potentially adverse tax consequences due to changes in the tax laws of the U.S. or the foreign jurisdictions in which we operate; • compliance with multiple, ambiguous, or evolving laws and regulations, including those relating to employment, tax, content regulation, online safety, privacy, data protection, anti-corruption, import/export, customs, anti-boycott, sanctions and embargoes, antitrust, data transfer, storage and security, content monitoring, preclusion, and removal, online entertainment offerings, advertising and consumer protection in general, and industry-specific laws and regulations, particularly as these rules apply to interactions with users under the age of 18; • uncertainty regarding the imposition of and changes in the U.S.’ and other governments’ trade regulations, trade wars, tariffs, other restrictions or other geopolitical events, including, without limitation, the evolving relations between the U.S. and China, evolving relations with Russia due to Russia’s invasion of Ukraine, and the conflict in the Middle East stemming from Hamas’ attack against Israel; • expenses related to monitoring and complying with differing labor and employment regulations, especially in jurisdictions where labor and employment laws may be more favorable to employees than in the U.S.; • increased exposure to fluctuations in exchange rates between the U.S. dollar and foreign currencies in markets where we do business; • challenges inherent to efficiently recruiting and retaining qualified employees in foreign countries and maintaining our company culture and employee programs across all of our offices; • management communication and integration problems resulting from language or cultural differences and geographic dispersion; • the uncertainty of protection for intellectual property in some countries; • the uncertainty of our exposure to third-party claims of intellectual property infringement and the availability of statutory safe harbors in some countries; • foreign exchange controls that might prevent us from repatriating cash earned outside the U.S.; • risks associated with trade restrictions and foreign legal requirements, and greater risk of unexpected changes in regulatory requirements, tariffs and tax laws, trade laws, and export and other trade restrictions; • risks relating to the implementation of exchange controls, including restrictions promulgated by the Office of Foreign Asset Control (“OFAC”), and other similar trade protection regulations and measures; • exposure to regional or global public health issues, and to travel restrictions and other measures undertaken by governments in response to such issues; • general economic and political conditions in these foreign markets, including political and economic instability in some countries and regions; • localization of our services, including translation into foreign languages and associated expenses and the ability to monitor our Platform in new and evolving markets and in different languages to confirm that we maintain standards, including trust and safety standards, consistent with our brand and reputation; • regulatory frameworks or business practices favoring local competitors; • changes in the perception of our Platform by governments in the regions where we operate or plan to operate; and 35 Table of Contents • natural disasters, acts of war, and terrorism, and resulting changes to laws and regulations, including changes oriented to protecting local businesses.
Because of the popularity of our Platform, we believe that we are an attractive target for these sorts of attacks and have seen the frequency of these types of attacks increase.
Because of the popularity of our Platform, we believe that we are an attractive target for these sorts of attacks and have seen the frequency of these types of attacks increase over time.
In addition to limiting content to the age-appropriate audience and blocking other inappropriate content, we have statutory obligations under U.S. federal law to block or remove child pornography and report offenses to the National Center for Missing and Exploited Children.
In addition to limiting content to age-appropriate audiences and blocking other inappropriate content, we have statutory obligations under U.S. federal law to block or remove child pornography and report apparent offenses to the National Center for Missing and Exploited Children.
If we are not able to comply with the requirements of the Sarbanes-Oxley Act in a timely manner, or if we are unable to maintain proper and effective internal controls over financial reporting, we may not be able to produce timely and accurate financial statements.
If we are not able to, or if we are perceived as being unable to, comply with the requirements of the Sarbanes-Oxley Act in a timely manner, or if we are unable to, or if we are perceived as being unable to, maintain proper and effective internal controls over financial reporting, we may not be able to produce timely and accurate financial statements.
Factors that could cause fluctuations in the public trading price of our Class A common stock include the following: • the number of shares of our Class A common stock made available for trading; • sales or expectations with respect to sales of shares of our Class A common stock by holders of our Class A common stock; • price and volume fluctuations in the overall stock market from time to time; • volatility in the trading prices and trading volumes of technology stocks; • changes in operating performance and stock market valuations of other technology companies generally, or those in our industry in particular; • failure of securities analysts to maintain coverage of us, changes in financial estimates by securities analysts who follow us or our failure to meet these estimates or the expectations of investors; • any plans we may have to provide or not provide disclosure about certain key metrics, financial guidance, or projections, which may increase the probability that our financial results are perceived as not in line with analysts’ expectations; • if we do provide disclosure about certain key metrics, financial guidance, or projections, any changes with respect to timing or our failure to meet those projections; • announcements by us or our competitors of new services or platform features; • the public’s reaction to our press releases, other public announcements, and filings with the SEC; • rumors and market speculation involving us or other companies in our industry; 57 Table of Contents • actual or anticipated changes in our results of operations or fluctuations in our results of operations; • actual or anticipated developments in our business, our competitors’ businesses, or the competitive landscape generally; • litigation involving us, our industry or both, or investigations by regulators into our operations or those of our competitors; • actual or perceived privacy or security breaches or other incidents; • developments or disputes concerning our intellectual property or other proprietary rights; • announced or completed acquisitions of businesses, services, or technologies by us or our competitors; • new laws or regulations, public expectations regarding new laws or regulations or new interpretations of existing laws or regulations applicable to our business; • changes in accounting standards, policies, guidelines, interpretations, or principles; • any significant change in our management or other key personnel; • other events or factors, including those resulting from war, such as Russia’s invasion of Ukraine and Hamas’ attack against Israel, incidents of terrorism, pandemics, or wildfires, earthquakes or severe weather and power outages or responses to these events; and • general economic conditions and slow or negative growth of our markets.
Factors that could cause fluctuations in the public trading price of our Class A common stock include the following: • the number of shares of our Class A common stock made available for trading; • sales or expectations with respect to sales of shares of our Class A common stock by holders of our Class A common stock including our directors, officers, and significant holders; • price and volume fluctuations in the overall stock market from time to time; • volatility in the trading prices and trading volumes of technology stocks; • changes in operating performance and stock market valuations of other technology companies generally, or those in our industry in particular; • failure of securities analysts to maintain coverage of us, changes in financial estimates by securities analysts who follow us or our failure to meet these estimates or the expectations of investors; • any plans we may have to provide or not provide disclosure about certain key metrics, financial guidance, or projections, which may increase the probability that our financial results are perceived as not in line with analysts’ expectations; • if we do provide disclosure about certain key metrics, financial guidance, or projections, any changes to such reported items due to changes in our methodology or underlying assumptions for those items and with respect to timing or our failure to meet those projections; • announcements by us or our competitors of new services or Platform features; • the public’s reaction to our press releases, other public announcements, and filings with the SEC; • rumors, market speculation, and media reports involving us or other companies in our industry; • actual or anticipated changes in our results of operations or fluctuations in our results of operations; • actual or anticipated developments in our business, our competitors’ businesses, or the competitive landscape generally; • litigation involving us, our industry or both, or investigations by regulators into our operations or those of our competitors; • actual or perceived privacy or security breaches or other incidents; 54 Table of Contents • developments or disputes concerning our intellectual property or other proprietary rights; • announced or completed acquisitions of businesses, services, or technologies by us or our competitors; • new laws or regulations, public expectations regarding new laws or regulations or new interpretations of existing laws or regulations applicable to our business; • changes in accounting standards, policies, guidelines, interpretations, or principles; • any significant change in our management or other key personnel; • other events or factors, including those resulting from war, such as Russia’s invasion of Ukraine and the conflict in the Middle East stemming from Hamas’ attack against Israel, incidents of terrorism, pandemics, or wildfires, earthquakes or severe weather and power outages or responses to these events; and • general economic conditions and slow or negative growth of our markets.
The use of open source software used in our Platform has exposed us to security vulnerabilities in the past and will likely continue to expose us to security vulnerabilities in the future.
In addition, the use of open source software in our Platform has exposed us to security vulnerabilities in the past and will likely continue to expose us to security vulnerabilities in the future.
We expect that the occurrence of infringement claims is likely to grow as the market for our Platform grows. Accordingly, our exposure to damages resulting from infringement claims could increase, and this could further exhaust our financial and management resources. Indemnity provisions in various agreements potentially expose us to substantial liability for intellectual property infringement and other losses.
We expect that the occurrence of asserted infringement claims will grow as the market for our Platform grows. Accordingly, our exposure to damages resulting from infringement claims could increase, and this could further exhaust our financial and management resources. Indemnity provisions in various agreements potentially expose us to substantial liability for intellectual property infringement and other losses.
It is possible that at some point the Roblox Cloud may make decisions unpredictably or autonomously, which can raise new or exacerbate existing ethical, technological, legal, and other challenges, and may negatively affect the performance of the Roblox Platform and the user, developer, and creator experience. However, AI algorithms may be flawed. Datasets may be insufficient or contain biased information.
Datasets may be insufficient or contain biased information. It is possible that at some point the Roblox Cloud may make decisions unpredictably or autonomously, which can raise new or exacerbate existing ethical, technological, legal, and other challenges, and may negatively affect the performance of the Roblox Platform and the user, developer, and creator experience.
If our estimates are inaccurate, then investors will have less confidence in our company and our prospects, which could cause the market price of our Class A common stock to decline, and our reputation and brand could be harmed.
If our metrics, which are based on estimates, are inaccurate, then investors will have less confidence in our company and our prospects, which could cause the market price of our Class A common stock to decline, and our reputation and brand could be harmed.
Our results of operations may be harmed if we are required to collect sales, value added, or other similar taxes for the purchase of our virtual currency, or for the sale of content between our developers, creators, and users.
Our results of operations may be harmed if we are required to collect sales, value added, or other similar taxes for the purchase of our virtual currency, for the sale of digital content, or purchase of physical goods, between our developers, creators, and users.
If we or our partners or third party service providers experience outages and our Platform is unavailable or if our developers, creators, and users are unable to access our Platform within a reasonable amount of time or at all, as a result of any such events, our reputation and brand may be harmed, developer, creator and user engagement with our Platform may be reduced, and our revenue, bookings and profitability could be negatively impacted.
If we or our partners or third party service providers experience outages and our Platform is unavailable or if our developers, creators, and users are unable to access our Platform within a reasonable amount of time or at all, as a result of any such events, our reputation and brand may be harmed, developer, creator and user engagement with our Platform may be reduced, and our revenue, bookings and profitability could be, and has been in the past, negatively impacted.

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Item 1C. Cybersecurity

Cybersecurity — threats and controls disclosure

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Biggest changeThis incident response plan includes immediate actions to mitigate the impact of the incident, long-term strategies for remediation and prevention of future incidents, and provides for internal notification of the incident functional areas (e.g. legal) as well as senior leadership and the ACC of the Board of Directors, as appropriate. 64 Table of Contents Our CISO provides briefings to the ACC at least quarterly regarding, among other topics, recent notable cybersecurity incidents, even if immaterial, and the Company’s response, cybersecurity systems testing results, the cybersecurity landscape and emerging risks and threats, compliance with regulatory requirements and industry standards.
Biggest changeOur CISO provides briefings to the ACC at least quarterly regarding, among other topics, recent notable cybersecurity incidents, even if immaterial, and the Company’s response, cybersecurity systems testing results, the Company’s cybersecurity threat landscape, which includes emerging risks and threats, compliance with regulatory requirements and industry standards.
Our CISO, and management committee on cybersecurity consisting of our Chief Technology Officer, General Counsel, Chief Financial Officer, and CISO, are primarily responsible for assessing and managing our material risks from cybersecurity threats and overseeing our cybersecurity policies and processes, including those described in “Risk Management and Strategy” above.
Our CISO, and management committee on cybersecurity consisting of our Chief People and Systems Officer, General Counsel, Chief Financial Officer, and CISO, are primarily responsible for assessing and managing our material risks from cybersecurity threats and overseeing our cybersecurity policies and processes, including those described in “Risk Management and Strategy” above.
We devote significant resources and designate high-level personnel, including our Chief Information Security Officer (“CISO”) who reports to our Chief Technology Officer, to manage the risk assessment and mitigation process.
We devote significant resources and designate high-level personnel, including our Chief Information Security Officer (“CISO”) who reports to our Chief People and Systems Officer, to manage the risk assessment and mitigation process.
Our collaboration with these third-party service providers includes threat assessments and consultation on security enhancements. We perform risk-tiered information security risk reviews for certain third-party service providers who have access to sensitive Company, user or employee information, reviewing areas such as data protection, endpoint management and protection, phishing, business continuity, and incident response management.
Our collaboration with these third-party service providers includes threat assessments, risk analyses, assessments of the effectiveness of our cybersecurity program, policies and practices, and consultations on opportunities and potential enhancements to strengthen our cybersecurity program. 60 Table of Contents We perform risk-tiered information security risk reviews for certain third-party service providers who have access to sensitive Company, user or employee information, reviewing areas such as data protection, endpoint management and protection, phishing, business continuity, and incident response management.
For additional information regarding whether any risks from cybersecurity threats, including as a result of any previous cybersecurity incidents, have materially affected or are reasonably likely to materially affect our company, including our business strategy, results of operations, or financial condition, please refer to Item 1A, “Risk Factors,” in this annual report on Form 10-K, including the risk factors entitled “Risks Related to Our Business: If the security of our Platform is compromised, it could compromise our and our developers’, creators’, and users’ private information, disrupt our internal operations, and harm public perception of our Platform, which could cause our business and reputation to suffer.”
For additional information regarding the cybersecurity risks we face, please refer to Item 1A, “Risk Factors,” in this annual report on Form 10-K, including the risk factors entitled “Risks Related to Our Business: If the security of our Platform is compromised, it could compromise our and our developers’, creators’, and users’ private information, disrupt our internal operations, and harm public perception of our Platform, which could cause our business and reputation to suffer.” 61 Table of Contents
We routinely assess material risks from cybersecurity threats, including taking reasonable steps to detect any potential unauthorized occurrence on or behaviors conducted through our information systems that may result in adverse effects on the confidentiality, integrity, or availability of our information systems or any information residing therein. 63 Table of Contents Risk Management and Strategy We conduct periodic risk assessments to identify significant cybersecurity threats that may affect information systems that are vulnerable to such cybersecurity threats and regularly review these risk assessments for changes in our business practices and the external cybersecurity landscape as well as the impacts of our security processes.
We routinely assess material risks from cybersecurity threats, including taking reasonable steps to detect any potential unauthorized occurrence on or behaviors conducted through our information systems that may result in adverse effects on the confidentiality, integrity, or availability of our information systems or any information residing therein.
We also share and receive threat intelligence with federal, state, and local government agencies, peers and other organizations, information sharing and analysis centers, and cybersecurity associations.
Certain of our service providers are contractually required to notify us promptly of information security incidents that may affect our systems or data, including personal information. We also share and receive threat intelligence with federal, state, and local government agencies, peers and other organizations, information sharing and analysis centers, and cybersecurity associations.
He has an MS in Information Assurance from the University of Advanced Technology in Arizona and a BS in Computer Science from the University of Arkansas at Little Rock. We also engage third-party service providers in connection with our risk assessment process and certain risk management processes.
He has an MS in Information Assurance from the University of Advanced Technology in Arizona and a BS in Computer Science from the University of Arkansas at Little Rock. All employees receive cybersecurity training during their onboarding.
Item 1C. Cybersecurity We have established policies and processes for assessing, identifying, and managing material risk from cybersecurity threats, and have integrated these processes into our overall enterprise risk management systems and processes.
Item 1C. Cybersecurity We have an enterprise-wide information security program that is designed to identify, protect, detect, and respond to significant cybersecurity risks and threats and we have integrated this program into our overall enterprise risk management systems and processes.
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We maintain an incident response plan designed to identify, evaluate, respond to, and recover from a cybersecurity incident. The plans are designed to be flexible so that they may be adapted to an array of potential scenarios, and provide for the creation of cross-functional incident response teams in the event of a cybersecurity incident.
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We also periodically conduct testing, simulations, and tabletop exercises to help support our overall preparedness for a cybersecurity incident.
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Risk Management and Strategy We conduct periodic risk assessments to identify significant cybersecurity threats that may affect information systems that are vulnerable to such cybersecurity threats and regularly review these risk assessments for changes in our business practices and the external cybersecurity landscape as well as the impacts of our security processes.
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In addition, we have implemented a cybersecurity awareness program designed to educate employees on best security practices, emerging risk areas, and how to identify and report security threats. We include security expectations in employee performance management systems. We also engage third-party service providers in connection with our risk assessment process and certain risk management processes.
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We contractually require certain third-party service providers with access to our information technology systems, sensitive business data, and/or personal information to implement and maintain appropriate security controls and provide for contractual restrictions on their ability to use our data.
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This incident response plan includes immediate actions to assess and mitigate the impact of the incident, long-term strategies for remediation and prevention of future incidents, and provides for internal notification of the incident functional areas (e.g. legal) as well as senior leadership and the ACC of the Board of Directors, as appropriate.
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During the last fiscal year, we did not identify any risks from cybersecurity threats, including as a result of any previous cybersecurity incidents, that materially affected the Company, including its business strategy, results of operations, or financial condition. However, we face ongoing and increasing cybersecurity risks, including those from threat actors who are becoming more sophisticated and effective over time.
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If realized, these risks may materially affect the Company.

Item 2. Properties

Properties — owned and leased real estate

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Biggest changeItem 2. Properties As of December 31, 2023, our corporate headquarters consisted of approximately 348,360 square feet of office space in San Mateo, California, with lease terms expiring between 2027 and 2031. In addition, we possess approximately 619,409 square feet of separate office space in San Mateo, California, with lease terms expiring between 2029 and 2035.
Biggest changeItem 2. Properties On January 1, 2025, we relocated our corporate headquarters to a new leased office complex in San Mateo, California. As of December 31, 2024, all of our San Mateo-based employees had been re-located to the new corporate headquarters, which consists of approximately 752,546 square feet, with lease terms expiring between 2029 and 2035.
We lease additional office space internationally in Canada, the United Kingdom, and China. We also operate several data centers in the U.S. in Florida, Georgia, Illinois, New Jersey, Texas, Virginia, California, and Washington and around the world including in France, Germany, Hong Kong, Japan, Poland, Singapore, the Netherlands, India, Australia, and the United Kingdom pursuant to various lease agreements.
We also operate several data centers in the U.S. in Florida, Georgia, Illinois, New Jersey, Texas, Virginia, California, and Washington and around the world including in France, Germany, Hong Kong, Japan, Singapore, the Netherlands, India, Australia, and the United Kingdom pursuant to various lease agreements.
We believe our existing facilities including the planned expansion under newly signed leases are adequate to meet our current requirements and for our operations in the foreseeable future.
We believe our existing facilities are adequate to meet our current requirements and for our operations in the foreseeable future.
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In addition, we continue to lease approximately 427,271 square feet of office space at our prior corporate headquarters in San Mateo, California, with lease terms expiring between 2027 and 2031. We have sub-leased approximately 140,684 square feet of the office space from our prior corporate headquarters to various sub-lessees, with sub-lease terms expiring in 2027.
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We lease additional office space internationally in Canada, the United Kingdom, China, South Korea, and India.

Item 3. Legal Proceedings

Legal Proceedings — active lawsuits and investigations

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Biggest changeItem 3. Legal Proceedings The information set forth under the heading “Legal Proceedings” in Note 9, Commitments and Contingencies, in Part II, Item 8 of this Annual Report on Form 10-K is incorporated herein by reference. Item 4. Mine Safety Disclosures None. 65 Table of Contents Part II
Biggest changeItem 3. Legal Proceedings The information set forth under the heading “Legal Proceedings” in Note 9, Commitments and Contingencies, in Part II, Item 8 of this Annual Report on Form 10-K is incorporated herein by reference. Item 4. Mine Safety Disclosures None. 62 Table of Contents Part II

Item 5. Market for Registrant's Common Equity

Market for Common Equity — stock, dividends, buybacks

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Biggest changeUnregistered Sales of Equity Securities Other than any sales that were already disclosed under a Current Report on Form 8-K or Quarterly Report on Form 10-Q during the year ended December 31, 2023, there have been no other sales of unregistered securities by the Company. Issuer Purchases of Equity Securities None. Item 6. [Reserved]
Biggest changeUnregistered Sales of Equity Securities Other than any sales that were already disclosed under a Current Report on Form 8-K or Quarterly Report on Form 10-Q , there have been no other sales of unregistered securities by the Company during the years ended December 31, 2024, 2023, and 2022. Issuer Purchases of Equity Securities None.
The performance graph below shows the cumulative total return to our stockholders between March 10, 2021 (the date that our Class A common stock commenced trading on the NYSE) through December 31, 2023, in comparison to the S&P 500 Index and the S&P 500 Information Technology Index.
The performance graph below shows the cumulative total return to our stockholders between March 10, 2021 (the date that our Class A common stock commenced trading on the NYSE) through December 31, 2024, in comparison to the S&P 500 Index and the S&P 500 Information Technology Index.
The stock price performance shown in the graph represents past performance and should not be considered an indication of future stock price performance. 66 Table of Contents *$100 invested on March 10, 2023 in Roblox Class A common stock or February 28, 2021 in index, including reinvestment of dividends. Fiscal year ending December 31.
The stock price performance shown in the graph represents past performance and should not be considered an indication of future stock price performance. 63 Table of Contents *$100 invested on March 10, 2021 in Roblox Class A common stock or February 28, 2021 in index, including reinvestment of dividends. Fiscal year ending December 31.
The number of holders of record presented here also does not include stockholders whose shares may be held in trust by other entities. As of February 1, 2024, there were 3 holders of record of our Class B common stock. All shares of our Class B common stock are beneficially owned by David Baszucki.
The number of holders of record presented here also does not include stockholders whose shares may be held in trust by other entities. As of February 3, 2025, there were 3 holders of record of our Class B common stock. All shares of our Class B common stock are beneficially owned by David Baszucki.
Holders of Record As of February 1, 2024, there were 1,687 stockholders of record of our Class A common stock. The actual number of holders of our Class A common stock is greater than the number of record holders and includes stockholders who are beneficial owners, but whose shares are held in street name by brokers or other nominees.
Holders of Record As of February 3, 2025, there were 1,689 stockholders of record of our Class A common stock. The actual number of holders of our Class A common stock is greater than the number of record holders and includes stockholders who are beneficial owners, but whose shares are held in street name by brokers or other nominees.

Item 7. Management's Discussion & Analysis

Management's Discussion & Analysis (MD&A) — revenue / margin commentary

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Biggest changeManagement believes that this calculation is useful to investors for purposes of analyzing our compliance with certain covenants specified in the Indenture. 82 Table of Contents The following table presents the calculation of Covenant Adjusted EBITDA in accordance with the terms of the Indenture, for each of the periods presented (in thousands): Year Ended December 31, 2023 2022 Calculation of Covenant Adjusted EBITDA: Consolidated net loss $ (1,158,937) $ (934,141) Add (deduct): Interest income (141,818) (38,842) Interest expense 40,707 39,903 Other (income)/expense, net 527 5,744 Provision for/(benefit from) income taxes 454 3,552 Depreciation and amortization 208,142 130,083 Stock-based compensation expense 867,967 589,498 RTO severance charge (1) 5,228 — Other non-cash charges (2) 6,988 — Change in deferred revenue 742,308 662,378 Change in deferred cost of revenue (139,879) (101,719) Covenant Adjusted EBITDA $ 431,687 $ 356,456 (1) Relates to cash severance costs associated with the Company’s return-to-office (“RTO”) plan announced in October 2023, which requires a subset of the Company’s remote employees to begin working from the San Mateo headquarters for three days a week, beginning in the summer of 2024.
Biggest changeThe following table presents the calculation of Covenant Adjusted EBITDA in accordance with the terms of the Indenture, for each of the periods presented (in thousands): Year Ended December 31, 2024 2023 Calculation of Covenant Adjusted EBITDA: Consolidated net loss $ (940,614) $ (1,158,937) Add (deduct): Interest income (179,531) (141,818) Interest expense 41,184 40,707 Other (income)/expense, net 11,530 527 Provision for/(benefit from) income taxes 4,114 454 Depreciation and amortization expense (1) 226,437 208,142 Stock-based compensation expense 1,015,794 867,967 RTO severance charge (2) 1,274 5,228 Other non-cash charges (3) — 6,988 Change in deferred revenue 792,434 742,308 Change in deferred cost of revenue (164,909) (139,879) Covenant Adjusted EBITDA $ 807,713 $ 431,687 (1) For the twelve months ended December 31, 2024, includes a one time charge of $17.9 million related to the re-assessment of the estimated useful life of certain software licenses, resulting in the acceleration of their remaining depreciation within infrastructure and trust & safety expenses in the third quarter of 2024.
We also expect to continue making investments in our business, including, but not limited, capital expenditures related to our technology infrastructure. We believe our existing cash and cash equivalents and short-term investments, together with expected cash to be provided by future operations, will be sufficient to meet our needs for the next 12 months.
We also expect to continue making investments in our business, including, but not limited to, capital expenditures related to our technology infrastructure. We believe our existing cash and cash equivalents and short-term investments, together with expected cash to be provided by future operations, will be sufficient to meet our needs for the next 12 months.
Our actual results could differ materially from these forward-looking statements as a result of many factors, including those discussed in the section titled “Risk Factors,” “Special Note Regarding Forward-Looking Statements”, and “Special Note Regarding Operating Metrics” included elsewhere in this Annual Report on Form 10-K.
Our actual results could differ materially from these forward-looking statements as a result of many factors, including those discussed in the section titled “Risk Factors,” “Special Note Regarding Forward-Looking Statements,” and “Special Note Regarding Operating Metrics” included elsewhere in this Annual Report on Form 10-K.
We believe that free cash flow is a useful indicator of our unit economics and liquidity that provides information to management and investors about the amount of cash generated from our core operations that, after the purchases of property, equipment, and intangible assets, can be used for strategic initiatives.
We believe that free cash flow is a useful indicator of our unit economics and liquidity that provides information to management and investors about the amount of cash and cash equivalents generated from our core operations that, after the purchases of property, equipment, and intangible assets, can be used for strategic initiatives.
Deferred revenue consists of the unearned portion of bookings for which we have not yet satisfied our performance obligation. Our deferred revenue obligation is recognized as revenue over the estimated average lifetime of a paying user or as the virtual items are consumed.
Deferred revenue consists of the unearned portion of bookings for which we have not yet satisfied our performance obligations. Our deferred revenue obligation is recognized as revenue over the estimated average lifetime of a paying user or as the virtual items are consumed.
Bookings also include an insignificant amount from advertising and licensing arrangements. 74 Table of Contents We believe bookings provide a timelier indication of trends in our operating results that are not necessarily reflected in our revenue as a result of the fact that we recognize the majority of revenue over the estimated average lifetime of a paying user.
Bookings also include an insignificant amount from advertising and licensing arrangements. 71 Table of Contents We believe bookings provide a timelier indication of trends in our operating results that are not necessarily reflected in our revenue as a result of the fact that we recognize the majority of revenue over the estimated average lifetime of a paying user.
Costs and Expenses We allocate shared costs, such as certain facilities (including rent and depreciation on equipment and leasehold improvements shared by all departments) and software costs, to all departments based on headcount. As such, allocated shared costs are reflected in each expense category, with the exception of cost of revenue and developer exchange fees expense.
Costs and expenses We allocate shared costs, such as certain facilities (including rent and depreciation on equipment and leasehold improvements shared by all departments), software costs, and certain other operating expenses, to all departments based on headcount. As such, allocated shared costs are reflected in each expense category, with the exception of cost of revenue and developer exchange fees expense.
These costs include third-party service providers costs, such as cloud computing or other hosting and data storage, facilities-related expenses for our co-located data centers and edge data centers that we lease and operate, and network and bandwidth costs, as well as depreciation and associated support and maintenance costs of our servers and infrastructure equipment.
These costs include third-party service provider costs, such as cloud computing or other hosting and data storage, facilities-related expenses for our co-located data centers and edge data centers that we lease and operate, and network and bandwidth costs, as well as depreciation and associated support and maintenance costs of our servers and infrastructure equipment.
The risk-free interest rate is based on the U.S. Treasury yield curve in effect at the time of grant for zero-coupon U.S. Treasury notes. The expected volatility is derived from the historical stock volatility of selected peers over a period equivalent to the expected term of the CEO Long-Term Performance Award.
The risk-free interest rate was based on the U.S. Treasury yield curve in effect at the time of grant for zero-coupon U.S. Treasury notes. The expected volatility was derived from the historical stock volatility of selected peers over a period equivalent to the expected term of the CEO Long-Term Performance Award.
Average new monthly unique payers for a specified period is the average of the new monthly unique payers for each month during that period. We define returning monthly unique payers as user accounts that have made a purchase on the platform, or via redemption of prepaid cards, in the current month and in any prior month.
Average new monthly unique payers for a specified period is the average of the new monthly unique payers for each month during that period. We define returning monthly unique payers as user accounts that have made a payment on the Platform, or via redemption of prepaid cards, in the current month and in any prior month.
For all periods presented, we have generated losses from our operations and positive cash flows from operating activities. A substantial source of our cash provided by operating activities is our deferred revenue, which is included in our consolidated balance sheet as a liability.
For all periods presented, we have generated losses from our operations and positive cash flows from operating activities. A substantial source of our net cash and cash equivalents provided by operating activities is our deferred revenue, which is included in our consolidated balance sheet as a liability.
This section of our Annual Report on Form 10-K discusses our financial condition as of and results of operations for the fiscal years ended December 31, 2023 and 2022, as well as year-to-year comparisons between fiscal years 2023 and 2022.
This section of our Annual Report on Form 10-K discusses our financial condition as of and results of operations for the fiscal years ended December 31, 2024 and 2023, as well as year-to-year comparisons between fiscal years 2024 and 2023.
The average number of daily unique paying users represents the number of user accounts that made a purchase on the Platform, including via redemption of prepaid cards for Robux, on an average daily basis during the respective period.
The average number of daily unique paying users represents the number of user accounts that made a payment on the Platform, including via redemption of prepaid cards for Robux, on an average daily basis during the respective period.
The Company records forfeitures when they occur for all stock-based awards. 86 Table of Contents The fair value of each stock option and stock purchase right granted is estimated using the Black-Scholes option-pricing model and is recognized as compensation expense on a straight-line basis over the requisite service period of the awards.
The Company records forfeitures when they occur for all stock-based awards. The fair value of each stock option and stock purchase right granted is estimated using the Black-Scholes option-pricing model and is recognized as compensation expense on a straight-line basis over the requisite service period of the awards.
Research and development expenses also include costs associated with our Game Fund program, which funds certain developers up front to develop new experience types for the Platform. We plan to increase research and development expenses for the foreseeable future primarily driven by increased headcount to develop new features, functionality, and innovation of our product.
Research and development expenses also include costs associated with our Game Fund program, which funds certain developers upfront to develop new experience types for the Platform. We plan to increase research and development expenses for the foreseeable future primarily driven by increased headcount to develop new features, functionality, and innovation of our product.
While in recent years, we saw a shift of our sales toward prepaid card distribution channels and credit card sales directly through our website, which are subject to lower processing fees compared to other distribution channels, such as the Apple App Store, Google Play Store, and consoles such as Xbox and PlayStation, we have seen this trend moderate over the last several quarters.
While in recent years, we saw a shift of our sales toward prepaid card distribution channels and credit card sales directly through our website, which are subject to lower processing fees compared to other distribution channels, such as the Apple App Store, Google Play Store, and consoles such as Xbox and PlayStation, we have seen this trend moderate over the last several quarters with some seasonal variations.
In order to be qualified for our Developer Exchange Program and eligible to exchange earned Robux for real-world currency, developers and creators must meet certain conditions, such as having earned the minimum amount of Robux required to qualify for the program, a verified developer account, and an account in good standing.
In order to be qualified for our Developer Exchange Program and eligible to exchange earned Robux for fiat currency, developers and creators must meet certain conditions, such as having earned the minimum amount of Robux required to qualify for the program, a verified developer account, and an account in good standing.
Our primary uses of cash from operating activities are for payment processing fees, personnel-related expenses, data center and infrastructure-related operations, developer exchange fees, and other operating expenses.
Our primary uses of net cash and cash equivalents from operating activities are for payment processing fees, personnel-related expenses, data center and infrastructure-related operations, developer exchange fees, and other operating expenses.
We believe that the growth in hours engaged reflects the increasing value of our Platform. 69 Table of Contents Bookings Bookings is a non-GAAP financial measure and represents the sales activity in a given period without giving effect to certain non-cash adjustments.
We believe that the growth in hours engaged reflects the increasing value of our Platform. Bookings Bookings is a non-GAAP financial measure and represents the sales activity in a given period without giving effect to certain non-cash adjustments.
(2) Includes impairment expense related to certain operating lease right-of-use assets and related property and equipment. As of December 31, 2023, contractual obligations related to the 2030 Notes are remaining payments of $38.8 million each year from 2024 through 2029 and $1,019.4 million due in 2030.
(3) Includes impairment expense related to certain operating lease right-of-use assets and related property and equipment. As of December 31, 2024, contractual obligations related to the 2030 Notes are remaining payments of $38.8 million each year from 2025 through 2029 and $1,019.4 million due in 2030.
Developers and creators can earn Robux primarily through the sale of access to their experiences and enhancements in their experiences, the incorporation of immersive ads, the sale of content and tools between developers through the Creator Store (formerly the Creator Marketplace), and the sale of items to users through the Marketplace.
Developers and creators can generally earn Robux through the sale of access to their experiences and enhancements in their experiences, the incorporation of immersive ads, the sale of content and tools between developers through the Creator Store, and the sale of items to users through the Marketplace.
Refer to the section titled “Non-GAAP Financial Measures” for the definition of and discussion on bookings, including its limitations as a non-GAAP financial measure. 71 Table of Contents 72 Table of Contents Average New and Returning Monthly Unique Payers and Monthly Repurchase Rate We define new monthly unique payers as user accounts that made their first purchase on the platform, or via redemption of prepaid cards, during a given month.
Refer to the section titled “Non-GAAP Financial Measures” for the definition of and discussion on bookings, including its limitations as a non-GAAP financial measure. 68 Table of Contents 69 Table of Contents Average New and Returning Monthly Unique Payers and Monthly Repurchase Rate We define new monthly unique payers as user accounts that made their first payment on the Platform, or via redemption of prepaid cards, during a given month.
As a result, the sum of the components reported in millions may not equal the total amount reported in millions due to rounding. In addition, percentages presented are calculated from the underlying numbers in thousands and may not add to their respective totals due to rounding.
Amounts reported in millions are rounded based on the amounts in thousands. As a result, the sum of the components reported in millions may not equal the total amount reported in millions due to rounding. In addition, percentages presented are calculated from the underlying numbers in thousands and may not add to their respective totals due to rounding.
Stock-Based Compensation Expense The Company measures and recognizes stock-based compensation expense for all stock-based awards, including stock options, unregistered restricted stock awards (“RSAs”), restricted stock units (“RSUs”) , and performance stock units (“PSUs”) granted to employees, directors, and non-employees, and stock purchase rights granted under the 2020 ESPP to employees, based on the estimated grant date fair value of the awards.
Stock-Based Compensation Expense The Company measures and recognizes stock-based compensation expense for all stock-based awards, including stock options, unregistered restricted stock awards (“RSAs”), restricted stock units (“RSUs”) , and performance stock units (“PSUs”) granted to employees, directors, and non-employees, and stock purchase rights granted under the 2020 Employee Stock Purchase Plan (the “2020 ESPP”) to employees, based on the estimated grant date fair value of the awards.
The increase is primarily due to a higher amortization of prior period deferred revenue and an increase in bookings in the current period. The increase in bookings was primarily driven by a higher average number of daily unique paying users during 2023, which increased from approximately 725,000 in 2022 to approximately 852,000 in 2023.
The increase is primarily due to an increase in bookings and higher amortization of prior period deferred revenue in the current period. The increase in bookings was primarily driven by a higher average number of daily unique paying users during 2024, which increased from approximately 852,000 in 2023 to approximately 1,040,000 in 2024.
We believe these reductions in the minimum amounts required incentivize our developer and creator community, and promote the long term growth and the health of such community. As of December 31, 2023, over 16,500 developers and creators qualified for and were registered in our Developer Exchange Program.
We believe these reductions in the minimum amounts required further incentivize our developer and creator community, and promote the long term growth and the health of such community. As of December 31, 2024, over 24,500 developers and creators qualified for and were registered in our Developer Exchange Program.
Personnel costs generally include employee expenses (salaries, benefits, and stock-based compensation expense) and contractor expenses, and are reflected in each expense category, with the exception of cost of revenue and developer exchange fees. In the years ended December 31, 2023 and 2022, personnel costs were $1,654.9 million and $1,180.5 million, respectively.
Personnel costs generally include employee expenses (salaries, benefits, and stock-based compensation expense) and contractor expenses, and are reflected in each expense category, with the exception of cost of revenue and developer exchange fees. In the years ended December 31, 2024 and 2023, personnel costs were $1,849.2 million and $1,654.9 million, respectively.
Our future capital requirements, however, will depend on many factors, including our growth rate, investment in our headcount, capital expenditures to build out new facilities and purchase hardware for infrastructure, timing and extent of spending to support our efforts to develop our Platform, and the effects of inflation on these various expenses, amongst other factors.
Our future capital requirements, however, will depend on many factors, including our growth rate, investment in our headcount, capital expenditures to build out new facilities and purchase hardware for infrastructure, timing and extent of spending to support our efforts to develop our Platform, amongst other factors.
The increase was further supplemented by an increase of $25.6 million in facilities-related costs, primarily driven by higher rent expense associated with our office leases.
The increase was further supplemented by an increase of $28.1 million in facilities-related costs, primarily driven by higher rent expense associated with our office leases.
The increase is primarily due to a net increase of $99.9 million in expense for payment processing fees, primarily driven by a higher amortization of prior period deferred cost of revenue and an increase in current period payment processing fees from the related growth in bookings.
The increase was primarily due to a net increase of $156.8 million in expense for payment processing fees, primarily driven by an increase in current period payment processing fees from the related growth in bookings and higher amortization of prior period deferred cost of revenue.
Determining the estimated average lifetime of a paying user requires management’s judgment as the Company analyzes the most recent trends in player cohort activity and other qualitative factors, including paying user behavior (e.g. impacts due to macroeconomic factors such as COVID-19), existing and new competition from a variety of entertainment resources for our users, the availability of the Roblox Platform across markets and user demographics, and other factors.
Determining the estimated average lifetime of a paying user requires management’s judgment as the Company analyzes the most recent trends in player cohort activity and other qualitative factors, including changes to paying user behavior influenced by broader product changes and/or content virality, the availability of the Roblox Platform across markets and user demographics, impacts due to macroeconomic factors such as COVID-19, existing and new competition from a variety of entertainment resources for our users, and other factors.
Over the next few years, a major goal is to increase our developer and creator earnings by creating new earnings methods and enhancing existing ones, as well as through efficiencies realized in other areas of our business, while maintaining reasonable margins.
Over the next few years, a major goal is to increase our developer and creator earnings by (i) creating new earnings methods and enhancing existing ones and (ii) passing on efficiencies realized in other areas of our business, while maintaining reasonable margins.
The increase is primarily due to an increase of $333.3 million in personnel costs, which includes an increase of $208.7 million in stock-based compensation expense, primarily due to continued growth in headcount supporting our engineering, design, and product teams.
The increase was primarily due to an increase of $154.3 million in personnel costs, which includes an increase of $115.7 million in stock-based compensation expense, primarily due to continued growth in headcount supporting our engineering, design, and product teams.
Common Stock Valuations Prior to the Direct Listing, due to the absence of a public trading market for our common stock, and in accordance with the American Institute of Certified Public Accountants Accounting and Valuation Guide: Valuation of Privately-Held Company Equity Securities Issued as Compensation, our Board of Directors along with management exercised its reasonable judgment and considered numerous objective and subjective factors to determine the best estimate of fair value of our common stock, including: • the prices at which we or other holders sold our common and convertible preferred stock to outside investors in arms-length transactions; • contemporaneous valuations performed by an unrelated third-party valuation firm; 87 Table of Contents • our operating and financial performance; • the lack of marketability of our common stock; • the valuation of comparable companies; • the industry outlook; • the likelihood of achieving a liquidity event, such as an initial public offering or a sale of our company given prevailing market conditions; and • the U.S. and global economic and capital market conditions and outlook.
Prior to the Direct Listing, we estimated the fair value of Class A common stock, as discussed below in the section titled “Common Stock Valuations.” For RSUs granted subsequent to the Direct listing, the fair value of our Class A common stock is determined based on the NYSE closing price on the date of grant. 84 Table of Contents Common Stock Valuations Prior to the Direct Listing, due to the absence of a public trading market for our common stock, and in accordance with the American Institute of Certified Public Accountants Accounting and Valuation Guide: Valuation of Privately-Held Company Equity Securities Issued as Compensation, our Board of Directors along with management exercised its reasonable judgment and considered numerous objective and subjective factors to determine the best estimate of fair value of our common stock, including: • the prices at which we or other holders sold our common and convertible preferred stock to outside investors in arms-length transactions; • contemporaneous valuations performed by an unrelated third-party valuation firm; • our operating and financial performance; • the lack of marketability of our common stock; • the valuation of comparable companies; • the industry outlook; • the likelihood of achieving a liquidity event, such as an initial public offering or a sale of our company given prevailing market conditions; and • the U.S. and global economic and capital market conditions and outlook.
However, we plan to slow our headcount growth rate and expect to generate operating leverage beginning in fiscal year 2024 and generally through the end of fiscal year 2025. General and administrative General and administrative expenses consist primarily of personnel costs and allocated overhead for our finance and accounting, legal, human resources, talent acquisition, and other administrative teams.
However, we moderated our headcount growth rate throughout 2024 and expect to continue generating operating leverage generally through the end of fiscal year 2025. General and administrative General and administrative expenses consist primarily of personnel costs and allocated overhead for our finance and accounting, legal, human resources, talent acquisition, and other administrative teams.
Contractual Obligations and Commitments As of December 31, 2023, we have non-cancellable lease arrangements for office facilities and space for data center operations expiring in various years through 2035. As of December 31, 2023, the Company had fixed lease payment obligations of $1,008.1 million, with $97.5 million payable within 12 months.
Contractual Obligations and Commitments As of December 31, 2024, we have non-cancellable lease arrangements for office facilities and space for data center operations expiring in various years through 2035. As of December 31, 2024, the Company had fixed lease payment obligations of $1,028.3 million, with $144.4 million payable within 12 months.
Roblox Studio is the free toolset that allows developers and creators to build, publish, and operate 3D immersive experiences and other content accessed with the Roblox Client. Roblox Cloud includes the services and infrastructure that power our Platform. Our mission is to connect a billion users with optimism and civility.
Roblox Studio is the free toolset that allows developers and creators to build, publish, and operate 3D immersive experiences and other content accessed with the Roblox Client. Roblox Cloud includes the services and infrastructure that power our Platform.
We use these measures to understand our monetization across our payers through the sale of virtual currency and subscriptions. 73 Table of Contents Average Bookings per Monthly Unique Payer We define average bookings per monthly unique payer as bookings in the specified period divided by the average monthly unique payers for the same specified period.
We use these measures to understand our monetization across our payers. 70 Table of Contents Average Bookings per Monthly Unique Payer We define average bookings per monthly unique payer as bookings in the specified period divided by the average monthly unique payers for the same specified period.
A discussion of our financial condition as of and results of operations for the fiscal year ended 2021 and year-to-year comparisons between fiscal years 2022 and 2021 that is not included in this Annual Report on Form 10-K can be found in “Management’s Discussion and Analysis of Financial Condition and Results of Operations” in our Annual Report on Form 10-K for the year ended December 31, 2022. 67 Table of Contents Amounts reported in millions are rounded based on the amounts in thousands.
A discussion of our financial condition as of and results of operations for the fiscal year ended 2022 and year-to-year comparisons between fiscal years 2023 and 2022 that is not included in this Annual Report on Form 10-K can be found in “Management’s Discussion and Analysis of Financial Condition and Results of Operations” in our Annual Report on Form 10-K for the year ended December 31, 2023.
Refer to the heading “Change in Accounting Estimate” earlier in this section for more information on the change in paying user life estimates in fiscal year 2022.
Refer to the heading “Changes in Accounting Estimate” earlier in this section for more information on the change in paying user life estimate in fiscal year 2024.
The Company derives substantially all of its revenue from the sale of virtual items on the Roblox Platform. Roblox Platform The Company operates the Roblox Platform as live services that allow users to play and socialize with others for free. Within the experience, however, users can purchase virtual currency (“Robux”) to ultimately obtain virtual items to enhance their social experience.
Revenue Recognition Roblox Platform The Company operates the Roblox Platform as live services that allow users to play and socialize with others for free. However, users can purchase virtual currency (“Robux”) to ultimately obtain virtual items to enhance their social experience.
“Risk Factors” for more information. 83 Table of Contents Cash Flows The following table summarizes our cash flows for the periods presented: Year Ended December 31, 2023 2022 (dollars in thousands) Consolidated Statements of Cash Flow Data: Net cash and cash equivalents provided by operating activities $ 458,180 $ 369,296 Net cash and cash equivalents used in investing activities $ (2,825,099) $ (441,051) Net cash and cash equivalents provided by financing activities $ 67,176 $ 43,642 Operating activities Our largest source of operating cash is cash collection from sales of Robux and monthly subscriptions.
“Risk Factors” for more information. 81 Table of Contents Cash Flows The following table summarizes our cash flows for the periods presented (in thousands): Year Ended December 31, 2024 2023 Consolidated Statements of Cash Flow Data: Net cash and cash equivalents provided by operating activities $ 822,316 $ 458,180 Net cash and cash equivalents used in investing activities $ (852,072) $ (2,825,099) Net cash and cash equivalents provided by financing activities $ 65,894 $ 67,176 Operating activities Our largest source of operating cash is cash collection from sales of Robux and monthly subscriptions.
The overall increase was offset by a $139.9 million increase in deferred cost of revenue, primarily due to payment process fees associated with bookings generated in the current period, a $126.2 million increase in our accounts receivable balance, net due to the timing of cash receipts on bookings generated in the current period and a $50.5 million decrease in our operating lease liabilities.
The overall increase was offset by a $165.7 million increase in deferred cost of revenue, primarily due to payment processing fees associated with bookings generated in the current period, a $110.5 million increase in our accounts receivable balance, net due to the timing of cash receipts on bookings generated in the current period and collection of prior period bookings and a $77.4 million decrease in our operating lease liabilities.
The ownership interest of a minority investor, Songhua River Investment Limited, is recorded as a noncontrolling interest. 79 Table of Contents Comparison of the Years Ended December 31, 2023 and 2022 Revenue Year Ended December 31, 2022 to 2023 2023 2022 % Change (dollars in thousands) Revenue $ 2,799,274 $ 2,225,052 26 % Revenue in the year ended December 31, 2023 increased $574.2 million, or 26%, compared to the year ended December 31, 2022.
The ownership interest of a minority investor, Songhua River Investment Limited, is recorded as a noncontrolling interest. 77 Table of Contents Comparison of the Years Ended December 31, 2024 and 2023 Revenue Year Ended December 31, 2023 to 2024 2024 2023 % Change (dollars in thousands) Revenue $ 3,601,979 $ 2,799,274 29 % Revenue in the year ended December 31, 2024 increased $802.7 million, or 29%, compared to the year ended December 31, 2023.
We are constantly improving the ways in which our Platform supports shared experiences, ranging from how these experiences are built by an engaged community of developers and creators to how they are enjoyed and safely accessed by users across the globe. Consistent with our free to play business model, a small portion of our users have historically been payers.
We are constantly improving the ways in which our Platform supports shared experiences, ranging from how these experiences are built by an engaged community of developers and creators to how they are enjoyed and safely accessed by users across the globe.
The increase was also supplemented by an impairment charge of $7.0 million related to the operating lease right-of-use asset and related leasehold improvements of a portion of our San Mateo headquarters for which a sub-lease agreement was executed during the first quarter of 2023.
The increase was offset by an impairment charge of $7.0 million related to the operating lease right-of-use asset and related leasehold improvements of a portion of our San Mateo headquarters for which a sub-lease agreement was executed during the first quarter of 2023, as well as a decrease of $2.6 million in personnel costs, primarily due to a decrease in headcount.
After the completion of the Direct Listing, we continue to use the historical volatility of the stock price of similar publicly traded peer companies since we have not established sufficient public trading history. • Expected dividend yield—We utilize a dividend yield of zero, as we have no history or plan of declaring dividends on its common stock.
After the completion of the Direct Listing, we continued to use the historical volatility of the stock price of similar publicly traded peer companies until the first quarter of 2024, which is the point at which we believed we had sufficient public trading history. • Expected dividend yield—We utilize a dividend yield of zero, as we have no history or plan of declaring dividends on its common stock.
We believe that maintaining and growing our overall number of users, including the number of users who may not purchase and spend Robux, is important to the success of our business. As a result, we believe that the number of users who choose to purchase and spend Robux will continue to constitute a small portion of our overall users.
As a result, we believe that the number of DAUs who choose to purchase and spend Robux will continue to constitute a small portion of our overall users.
Our primary areas of investment have been, and we expect will continue to be, our developer and creator community, and the people, technology, and infrastructure required to keep improving the Roblox Platform.
Our primary areas of investment have been, and we expect will continue to be, our developer and creator community, and the people, technology, and infrastructure, including our trust and safety systems, required to keep improving the Roblox Platform while maintaining and building a safe and civil online community.
The Company also considers results from prior analyses in determining the estimated average lifetime of a paying user. The Company believes this estimate is the best representation of the average life of the durable virtual items. The estimated paying user life was 28 months, 28 months, and 23 months as of December 31, 2023, 2022, and 2021, respectively.
The Company also considers results from prior analyses in determining the estimated average lifetime of a paying user. The Company believes this estimate is the best representation of the average life of the durable virtual items.
(2) Includes stock-based compensation expense as follows (in thousands): Year Ended December 31, 2023 2022 Infrastructure and trust & safety $ 92,147 $ 56,197 Research and development 607,593 398,899 General and administrative 131,577 109,607 Sales and marketing 36,650 24,795 Total stock-based compensation expense $ 867,967 $ 589,498 (3) Our consolidated financial statements include our majority-owned subsidiary Roblox China Holding Corp.
(2) Includes stock-based compensation expense as follows (in thousands): Year Ended December 31, 2024 2023 Infrastructure and trust & safety $ 113,708 $ 92,147 Research and development 723,326 607,593 General and administrative 138,444 131,577 Sales and marketing 40,316 36,650 Total stock-based compensation expense $ 1,015,794 $ 867,967 (3) Our consolidated financial statements include our majority-owned subsidiary Roblox China Holding Corp.
During the year ended December 31, 2023, cash and cash equivalents provided by operating activities was $458.2 million, which consisted of a consolidated net loss of $1,158.9 million, adjusted by non-cash charges of $1,110.3 million and net cash inflows from the change in net operating assets and liabilities of $506.8 million.
During the year ended December 31, 2024, cash and cash equivalents provided by operating activities was $822.3 million, which consisted of a consolidated net loss of $940.6 million, adjusted by non-cash charges of $1,282.0 million and net cash inflows from the change in net operating assets and liabilities of $481.0 million.
Research and development Year Ended December 31, 2022 to 2023 2023 2022 % Change (dollars in thousands) Research and development $ 1,253,598 $ 873,477 44 % Research and development expenses increased $380.1 million, or 44%, for the year ended December 31, 2023 compared to the year ended December 31, 2022.
Research and development Year Ended December 31, 2023 to 2024 2024 2023 % Change (dollars in thousands) Research and development $ 1,444,207 $ 1,253,598 15 % Research and development expenses increased $190.6 million, or 15%, for the year ended December 31, 2024 compared to the year ended December 31, 2023.
General and administrative Year Ended December 31, 2022 to 2023 2023 2022 % Change (dollars in thousands) General and administrative $ 390,055 $ 297,317 31 % General and administrative expenses increased $92.7 million, or 31%, for the year ended December 31, 2023 compared to the year ended December 31, 2022.
General and administrative Year Ended December 31, 2023 to 2024 2024 2023 % Change (dollars in thousands) General and administrative $ 407,507 $ 390,055 4 % General and administrative expenses increased $17.5 million, or 4%, for the year ended December 31, 2024 compared to the year ended December 31, 2023.
The non-cash charges were primarily comprised of stock-based compensation of $868.0 million and depreciation and amortization of $208.1 million.
The non-cash charges were primarily comprised of stock-based compensation expense of $1,015.8 million and depreciation and amortization expense of $226.4 million.
Accordingly, the Company presents Covenant Adjusted EBITDA calculated in accordance with “Consolidated EBITDA” as that term is defined in the Indenture, which is not calculated in accordance with GAAP and may not conform to the calculation of Adjusted EBITDA by other companies.
Non-compliance with these covenants may result in the acceleration of repayment of the 2030 Notes and any accrued and unpaid interest. 80 Table of Contents Accordingly, the Company presents Covenant Adjusted EBITDA calculated in accordance with “Consolidated EBITDA” as that term is defined in the Indenture, which is not calculated in accordance with GAAP and may not conform to the calculation of Adjusted EBITDA by other companies.
For more information regarding the operating lease commitments, refer to Note 3, “Leases” to the notes to consolidated financial statements. 84 Table of Contents Our other purchase obligations primarily consist of non-cancellable obligations with our data center hosting providers and software vendors.
For more information regarding the operating lease commitments, refer to Note 3, “Leases” to the notes to consolidated financial statements. Our other purchase obligations primarily consist of non-cancellable obligations with our data center hosting providers and software vendors. As of December 31, 2024, we had other purchase obligations of $325.9 million, with $233.1 million payable within 12 months.
The change was primarily due to a decrease in state income tax expense in certain states. Liquidity and Capital Resources As of December 31, 2023 and 2022, our principal sources of liquidity were cash and cash equivalents, short-term and long-term investments of $3.2 billion and $3.0 billion, respectively, which were primarily held for working capital purposes, capital expenditures, and acquisitions.
Liquidity and Capital Resources As of December 31, 2024 and 2023, our principal sources of liquidity were cash and cash equivalents and short-term and long-term investments of $4.0 billion and $3.2 billion, respectively, which were primarily held for working capital purposes, capital expenditures, and acquisitions.
We maintain a full valuation allowance on our federal, state, and foreign deferred tax assets as we have concluded that it is not likely that the deferred assets will be utilized. 78 Table of Contents Results of Operations The following tables set forth our results of operations for the periods presented in dollars and as a percentage of our revenue for each period presented (in thousands, except percentages): Year Ended December 31, 2023 2022 Revenue $ 2,799,274 100 % $ 2,225,052 100 % Cost and expenses: Cost of revenue (1) 649,115 23 % 547,658 25 % Developer exchange fees 740,752 27 % 623,855 28 % Infrastructure and trust & safety (2) 878,361 31 % 689,081 31 % Research and development (2) 1,253,598 45 % 873,477 39 % General and administrative (2) 390,055 14 % 297,317 13 % Sales and marketing (2) 146,460 5 % 117,448 5 % Total cost and expenses 4,058,341 145 % 3,148,836 142 % Loss from operations (1,259,067) (45) % (923,784) (42) % Interest income 141,818 5 % 38,842 2 % Interest expense (40,707) (1) % (39,903) (2) % Other income/(expense), net (527) — % (5,744) — % Loss before income taxes (1,158,483) (41) % (930,589) (42) % Provision for/(benefit from) income taxes 454 — % 3,552 — % Consolidated net loss (1,158,937) (41) % (934,141) (42) % Net loss attributable to noncontrolling interests (3) (6,991) — % (9,775) — % Net loss attributable to common stockholders $ (1,151,946) (41) % $ (924,366) (42) % Net loss per share attributable to common stockholders, basic and diluted $ (1.87) $ (1.55) Weighted-average shares used in computing net loss per share attributable to common stockholders—basic and diluted 616,445 595,559 ______________________________ (1) Depreciation of servers and infrastructure equipment included in infrastructure and trust & safety.
We maintain a full valuation allowance on our federal, state, and certain foreign deferred tax assets as we have concluded that it is not likely that the deferred assets will be utilized. 76 Table of Contents Results of Operations The following tables set forth our results of operations for the periods presented in dollars and as a percentage of our revenue for each period presented (in thousands, except per share data and percentages): Year Ended December 31, 2024 2023 Revenue $ 3,601,979 100 % $ 2,799,274 100 % Costs and expenses: Cost of revenue (1) 801,162 22 % 649,115 23 % Developer exchange fees 922,821 26 % 740,752 27 % Infrastructure and trust & safety (2) 915,418 25 % 878,361 31 % Research and development (2) 1,444,207 40 % 1,253,598 45 % General and administrative (2) 407,507 11 % 390,055 14 % Sales and marketing (2) 174,181 5 % 146,460 5 % Total costs and expenses 4,665,296 130 % 4,058,341 145 % Loss from operations (1,063,317) (30) % (1,259,067) (45) % Interest income 179,531 5 % 141,818 5 % Interest expense (41,184) (1) % (40,707) (1) % Other income/(expense), net (11,530) — % (527) — % Loss before income taxes (936,500) (26) % (1,158,483) (41) % Provision for/(benefit from) income taxes 4,114 — % 454 — % Consolidated net loss (940,614) (26) % (1,158,937) (41) % Net loss attributable to noncontrolling interest (3) (5,230) — % (6,991) — % Net loss attributable to common stockholders $ (935,384) (26) % $ (1,151,946) (41) % Net loss per share attributable to common stockholders, basic and diluted $ (1.44) $ (1.87) Weighted-average shares used in computing net loss per share attributable to common stockholders—basic and diluted 647,482 616,445 ______________________________ (1) Depreciation of servers and infrastructure equipment included in infrastructure and trust & safety.
Cost of revenue Year Ended December 31, 2022 to 2023 2023 2022 % Change (dollars in thousands) Cost of revenue $ 649,115 $ 547,658 19 % Cost of revenue increased $101.5 million, or 19%, for the year ended December 31, 2023 compared to the year ended December 31, 2022.
Cost of revenue Year Ended December 31, 2023 to 2024 2024 2023 % Change (dollars in thousands) Cost of revenue $ 801,162 $ 649,115 23 % Cost of revenue increased $152.0 million, or 23%, for the year ended December 31, 2024 compared to the year ended December 31, 2023.
Developer exchange fees Year Ended December 31, 2022 to 2023 2023 2022 % Change (dollars in thousands) Developer exchange fees $ 740,752 $ 623,855 19 % Developer exchange fees increased $116.9 million, or 19%, for the year ended December 31, 2023 compared to the year ended December 31, 2022.
Developer exchange fees Year Ended December 31, 2023 to 2024 2024 2023 % Change (dollars in thousands) Developer exchange fees $ 922,821 $ 740,752 25 % Developer exchange fees increased $182.1 million, or 25%, for the year ended December 31, 2024 compared to the year ended December 31, 2023.
Proceeds from the sale of Robux are initially recorded in deferred revenue and recognized as revenue as a user purchases and uses virtual items.
Proceeds from the sale of Robux are initially recorded in deferred revenue and recognized as revenue as a user purchases and uses virtual items. The Company classifies deferred revenue as short-term or long-term based on when the Company expects to recognize the revenue.
Recent Accounting Pronouncements See section “Recent Accounting Pronouncements” within Item 8. Financial Statements and Supplementary Information, Note 1, “Overview and Summary of Significant Accounting Policies”, for discussion of recent accounting pronouncements.
Financial Statements and Supplementary Information, Note 1, “Overview and Summary of Significant Accounting Policies”, for discussion of recent accounting pronouncements. 85 Table of Contents
Components of Results of Operations Revenue We generate substantially all of our revenue through the sale of virtual content or access to virtual content to users, enabling them to enhance their social experience on the Roblox Platform.
Refer to the heading “Critical Accounting Policies and Estimates — Revenue Recognition” below for a complete discussion on the Company’s revenue recognition policies. 73 Table of Contents Components of Results of Operations Revenue We generate substantially all of our revenue through the sale of virtual content or access to virtual content to users, enabling them to enhance their social experience on the Roblox Platform.
As of December 31, 2023, we had other purchase obligations of $459.8 million, with $223.2 million payable within 12 months. For more information regarding our contractual obligations, refer to Note 9, “Commitments and Contingencies” to the notes to consolidated financial statements. Critical Accounting Policies and Estimates The preparation of these financial statements in accordance with U.S.
For more information regarding our contractual obligations, refer to Note 9, “Commitments and Contingencies” to the notes to consolidated financial statements. 82 Table of Contents Critical Accounting Policies and Estimates The preparation of these financial statements in accordance with U.S.
The net cash and cash equivalent inflows from the change in our net operating assets and liabilities were primarily due to a $742.3 million increase in deferred revenue, primarily due to bookings generated in the current period, and a $83.2 million increase in our developer exchange liability, primarily driven by the increase in bookings generated in the current period, coupled with the timing of payments.
The net cash and cash equivalents inflow from the change in our net operating assets and liabilities was primarily due to a $795.4 million increase in deferred revenue, primarily due to bookings generated in the current period, a $31.2 million increase in other long-term liabilities, primarily driven by non-income tax-related accruals, and a $24.7 million increase in our developer exchange liability, primarily driven by the increase in bookings generated in the current period, coupled with the timing of payments.
We use ABPDAU as a way to understand our monetization across our users through the sale of virtual currency and subscriptions.
We use ABPDAU as a way to understand our monetization across our users.
Investing activities During the year ended December 31, 2023, cash and cash equivalents used in investing activities was $2,825.1 million, primarily consisting of $2,487.1 million of investment purchases – net of sales and maturities, $320.7 million of capital expenditures, and $13.5 million of payments related to the purchase of intangible assets.
Investing activities During the year ended December 31, 2024, cash and cash equivalents used in investing activities was $852.1 million, primarily consisting of $668.2 million of investment purchases – net of sales and maturities and $179.6 million of capital expenditures.
Interest expense Interest expense consists primarily of contractual interest and amortization of debt issuance costs on our 3.875% Senior Notes due 2030 (the “2030 Notes”). Other income/(expense), net Other income/(expense), net primarily includes foreign currency exchange gains/(losses) and realized gains/(losses) on our short-term and long-term investments, as well as certain insurance recoveries (if any).
Interest income Interest income consists primarily of interest earned and net accretion/(amortization) of our short-term investments, long-term investments, and cash equivalents. Interest expense Interest expense consists primarily of contractual interest and amortization of debt issuance costs on our 3.875% Senior Notes due 2030 (the “2030 Notes”).
Cost of revenue also includes costs associated with the printing of prepaid cards. 76 Table of Contents Cost of revenue as a percentage of revenue is affected by shifts in user purchasing preferences and trends.
Cost of revenue also includes sales tax expense for jurisdictions where the Company does not collect sales tax from the purchaser at the time of the sale and costs associated with the printing of prepaid cards. Cost of revenue as a percentage of revenue is affected by shifts in user purchasing preferences and trends.
Developer exchange fees Developer exchange fees expense represent the amount earned by developers and creators on the Roblox Platform that are qualified and registered in the Developer Exchange Program. Developers and creators are able to exchange their earned Robux for real-world currency under certain conditions outlined in our Developer Exchange Program.
Developers and creators are able to exchange their earned Robux for fiat currency under certain conditions outlined in our Developer Exchange Program.
We intend to achieve scalability by building and maintaining our own technical infrastructure, while generally generating operating leverage over the long-term. 77 Table of Contents Research and development Research and development expenses consist primarily of personnel costs and allocated overhead expenses for our engineering, design, product management, data science, and other employees engaged in maintaining and enhancing the functionality of the Platform.
Research and development Research and development expenses consist primarily of personnel costs and allocated overhead expenses for our engineering, design, product management, data science, and other employees engaged in maintaining and enhancing the functionality of the Platform.
Key Metrics We believe our performance is dependent upon many factors, including the key metrics described below that we track and review to measure our performance, identify trends, formulate financial projections, and make strategic decisions. Operating Metrics We manage our business by tracking several operating metrics, including those outlined below.
These areas of focus are how we drive the business, and along with payment processing fees, represent our primary operating costs. 65 Table of Contents Key Metrics We believe our performance is dependent upon many factors, including the key metrics described below that we track and review to measure our performance, identify trends, formulate financial projections, and make strategic decisions.
The average lifetime of a paying user estimate is calculated based on historical monthly retention data for each user cohort to project future participation on the Roblox Platform.
Changes in Accounting Estimate At the onset of each quarter, we complete an assessment of our estimated average lifetime of a paying user, which is used for revenue recognition of durable virtual items and calculated based on historical monthly retention data for each paying user cohort to project future participation on the Roblox Platform.
The following table presents a reconciliation of net cash provided by operating activities, the most directly comparable financial measure calculated in accordance with GAAP, to free cash flow, for each of the periods presented (in thousands): Year Ended December 31, 2023 2022 Reconciliation of net cash provided by operating activities to free cash flow: Net cash provided by operating activities $ 458,180 $ 369,296 Deduct: Acquisition of property and equipment (320,667) (426,163) Purchases of intangible assets (13,500) (1,500) Free cash flow $ 124,013 $ (58,367) Acquisition of property and equipment primarily includes servers, infrastructure equipment, tenant improvements, and capitalized software licenses. 75 Table of Contents Change in Accounting Estimate Quarterly, we complete an assessment of our estimated paying user life, which is used for revenue recognition of durable virtual items and calculated based on historical monthly retention data for each paying user cohort to project future participation on the Roblox Platform.
The following table presents a reconciliation of net cash and cash equivalents provided by operating activities, the most directly comparable financial measure calculated in accordance with GAAP, to free cash flow, for each of the periods presented (in thousands): Year Ended December 31, 2024 2023 Reconciliation of net cash and cash equivalents provided by operating activities to free cash flow: Net cash and cash equivalents provided by operating activities $ 822,316 $ 458,180 Deduct: Acquisition of property and equipment (179,646) (320,667) Purchases of intangible assets (1,370) (13,500) Free cash flow $ 641,300 $ 124,013 Acquisition of property and equipment primarily includes tenant improvements related to our leased office spaces and data centers, servers, infrastructure equipment, and capitalized software licenses.
The estimation of consumable and durable virtual items purchased for the population of purchases not specifically identified requires management’s judgment as the Company evaluates and estimates the expected behavior of users in the population using information from known purchases in similar experiences.
The estimation of consumable and durable virtual items purchased for the population of purchases not specifically identified requires management’s judgment as the Company evaluates and estimates the expected behavior of users in the population using information from known purchases in similar experiences. 83 Table of Contents At the onset of each quarter, the average lifetime of a paying user estimate is calculated based on historical monthly retention data for each user cohort to project future participation on the Roblox Platform.
Sales and marketing Sales and marketing expenses consist primarily of personnel costs and allocated overhead for our marketing, business development, brand partnerships, and developer relations functions, as well as user acquisition expenses. Other expenses include those associated with market research, branding, public relations, and developer relations programs, including our annual Roblox Developer Conference.
Other expenses include those associated with market research, branding, public relations, and developer relations programs, including our annual Roblox Developer Conference. We plan to increase our sales and marketing expenses for the foreseeable future, primarily to support the growth of our business.
Revenue is recorded net of taxes assessed by government authorities that are both imposed on and concurrent with specific revenue transactions between the Company and its users, and estimated chargebacks and refunds. 85 Table of Contents The satisfaction of the Company’s performance obligation is dependent on the nature of the virtual item purchased and as a result, the Company categorizes its virtual items as either consumable or durable. • Consumable virtual items represent items that can be consumed by a specific user action.
The satisfaction of the Company’s performance obligation is dependent on the nature of the virtual item purchased and as a result, the Company categorizes its virtual items as either consumable or durable. • Consumable virtual items represent items that can be consumed by a specific user action (e.g., a one-time boost or the ability to skip or redo an action).
In the first quarter of 2022, we updated our estimated paying user life from 23 months to 25 months, which was subsequently updated again to 28 months in the third quarter of 2022.
The estimated average paying user life was 28 months from the third quarter of 2022 through the first quarter of 2024 and decreased to 27 months in the second quarter of 2024.
For more information regarding the debt issued by Roblox China Holding Corp., see Note 15, “Joint Venture” in the notes to consolidated financial statements. Off-Balance Sheet Arrangements As of December 31, 2023, we had $11.6 million in letters of credit outstanding related to our office facilities in San Mateo, California and data center facilities in Ashburn, Virginia and Chicago, Illinois.
Off-Balance Sheet Arrangements As of December 31, 2024 and December 31, 2023, we had letters of credit related to office facilities in San Mateo, California and data center facilities in Ashburn, Virginia and Chicago, Illinois of $8.3 million and $11.6 million, respectively, which are not reflected in the Company’s consolidated balance sheets.

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Item 7A. Quantitative and Qualitative Disclosures About Market Risk

Market Risk — interest-rate, FX, commodity exposure

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Biggest changeWe do not enter into investments for trading or speculative purposes. Our investment policy and strategy are focused on the preservation of capital and supporting our liquidity requirements. 88 Table of Contents In October 2021, we issued $1.0 billion aggregate principal amount of the 2030 Notes.
Biggest changeWe do not enter into investments for trading or speculative purposes. Our investment policy and strategy are focused on the preservation of capital and supporting our liquidity requirements. In October 2021, we issued $1.0 billion aggregate principal amount of the 2030 Notes. The 2030 Notes were issued at par and we incurred approximately $12.5 million in debt issuance costs.
Our market risk exposure is primarily the result of fluctuations in interest rates and foreign currency exchange rates. Foreign Currency Exchange Risk The majority of our revenue is generated in U.S. dollars, with revenue generated in Euros, Canadian dollars, Australian dollars, and the British pound primarily comprising the remainder of our revenue.
Our market risk exposure is primarily the result of fluctuations in interest rates and foreign currency exchange rates. Foreign Currency Exchange Risk The majority of our revenue is generated in U.S. dollars, with revenue generated in Euros, British pound, Canadian dollars, and Australian dollars primarily comprising the remainder of our revenue.
Our inability or failure to do so could harm our business, financial condition or results of operations. Additionally, increased inflation rates may reduce consumer discretionary spending, which could affect the buying power of our users, developers, and creators and lead to a reduced demand for our Platform. 89 Table of Contents
Our inability or failure to do so could harm our business, financial condition or results of operations. Additionally, increased inflation rates may reduce consumer discretionary spending, which could affect the buying power of our users, developers, and creators and lead to a reduced demand for our Platform. 86 Table of Contents
The fair value of our 2030 Notes will fluctuate with movements in interest rates, increasing in periods of declining rates of interest and declining in periods of increasing rates of interest. Inflation Risk Inflationary factors, such as increases in overhead costs, may adversely affect our results of operations.
The fair value of our 2030 Notes will fluctuate with movements in interest rates, increasing in periods of declining rates of interest and declining in periods of increasing rates of interest, as well as from other factors. Inflation Risk Inflationary factors, such as increases in overhead costs, may adversely affect our results of operations.
Based on a sensitivity analysis, we have determined that a hypothetical 100 basis points increase in interest rates would have resulted in a decrease in the fair values of our short-term and long-term debt securities of approximately $20.7 million as of December 31, 2023. Such losses would only be realized if we sold the investments prior to maturity.
Based on a sensitivity analysis, we have determined that a hypothetical 100 basis points increase in interest rates would have resulted in a decrease in the fair values of our debt securities of approximately $31.1 million as of December 31, 2024. Such losses would only be realized if we sold the investments prior to maturity.
The 2030 Notes were issued at par and we incurred approximately $12.5 million in debt issuance costs. Interest on the 2030 Notes is payable semiannually in arrears on May 1 and November 1 of each year, beginning on May 1, 2022, and the entire outstanding principal amount of the 2030 Notes is due at maturity on May 1, 2030.
Interest on the 2030 Notes is payable semiannually in arrears on May 1 and November 1 of each year, beginning on May 1, 2022, and the entire outstanding principal amount of the 2030 Notes is due at maturity on May 1, 2030.
Interest Rate Risk As of December 31, 2023, our short-term and long-term investments primarily consist of debt securities, including corporate debt securities, commercial paper, U.S. Treasury securities, U.S. agency securities, and foreign government securities totaling $2.6 billion.
Interest Rate Risk As of December 31, 2024, our cash equivalents, short-term investments, and long-term investments primarily consist of debt securities, including corporate debt securities, commercial paper, money market funds, U.S. Treasury securities, and U.S. agency securities totaling $3.9 billion.

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