(Mark One)
(Mark One) |
☒ | QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 |
☐ | TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 |
Delaware | 20-0991664 | |||||||
(State or other jurisdiction of
| (I.R.S. Employer
|
Title of each class | Trading
| Name of each exchange
| ||||||||||||
Class A Common Stock, $0.0001 par value | RBLX | The New York Stock Exchange |
☐
Large accelerated filer | ☐ | Accelerated filer | ☐ | |||||||||||||||||
Non-accelerated filer | ☒ | Smaller reporting company | ☐ | |||||||||||||||||
Emerging growth company | ☒ |
Page | |||||||||||||
PART I. | |||||||||||||
Item 1. | |||||||||||||
Item 2. | |||||||||||||
Item 3. | |||||||||||||
Item 4. | |||||||||||||
PART II. | |||||||||||||
Item 1. | |||||||||||||
Item 1A. | |||||||||||||
Item 2. | |||||||||||||
Item 3. | |||||||||||||
Item 4. | |||||||||||||
Item 5. | |||||||||||||
Item 6. | |||||||||||||
•our ability to successfully execute our business and growth strategy, including our potential to scale and grow our international users, developers, and creators;
•the sufficiency of our cash and cash equivalents to meet our liquidity needs;
•the demand for our platform in general;
•our ability to retain and increase our number of users, developers, and creators;
•the impact of the easing of restrictions related to the COVID-19 pandemic, including on our users’, developers’, and creators’ usage and spending habits;
•challenges associated with our return to office plans;
•our beliefs about and objectives for future operations;
•our ability to attract and retain employees and key personnel and maintain our corporate culture;
•future acquisitions or investments;
•the ability for developers to build, launch, scale, and monetize experiences for users;
•our expectations regarding our ability to generate revenue from our users;
•our ability to convert users into developers and creators;
•our expectations regarding new target demographics;
•the functionality and economics of our platform on mobile operating systems;
•our ability to continue to provide a safe and civil online environment, particularly for children;
•our ability to develop and protect our brand;
•our ability to maintain the security and availability of our platform;
•our business model and expectations and management of future growth, including expansion in international markets and expenditures associated with such growth;
•our ability to compete with existing and new competitors;
•our expectations regarding outstanding litigation and legal and regulatory matters;
•our expectations regarding the effects of existing and developing laws and regulations, including with respect to privacy, data protection, online safety, and the regulation of Robux as a security, both in the U.S. and internationally, including how such laws and regulations may interfere with user, developer, and creator access to our platform and experiences;
•Tencent’s ability to successfully publish and operate Luobolesi in China;
•our expectations surrounding Robux as an attractive virtual currency and incentives to reinvest Robux in the platform;
•the impact of foreign currency exchange rates on results of operations;
•economic, seasonal, and industry trends;
•our expectations regarding new accounting standards;
•our ability to remediate a previously identified material weakness in our internal controls over financial reporting;
•our estimates related to stock-based compensation expenses;
•the increased expenses associated with being a public company.
We calculate total hours engaged as the aggregate of user session lengths in a given period. We determine this length of time using internal company systems that track user activity on our platform, and aggregate discrete activities into a user session.
As of | ||||||||
March 31, 2021 | December 31, 2020 | |||||||
Assets | ||||||||
Current assets: | ||||||||
Cash and cash equivalents | $ | 1,600,530 | $ | 893,943 | ||||
Accounts receivable—net of allowances | 233,781 | 246,986 | ||||||
Prepaid expenses and other current assets | 29,135 | 26,274 | ||||||
Deferred cost of revenue, current portion | 309,388 | 256,928 | ||||||
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Total current assets | 2,172,834 | 1,424,131 | ||||||
Property and equipment—net | 209,794 | 206,415 | ||||||
Operating lease right-of-use assets | 205,117 | — | ||||||
Deferred cost of revenue, long-term | 123,595 | 113,793 | ||||||
Intangible assets, net | 40,202 | 42,326 | ||||||
Goodwill | 59,568 | 59,568 | ||||||
Other assets | 4,969 | 1,567 | ||||||
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Total assets | $ | 2,816,079 | $ | 1,847,800 | ||||
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Liabilities, Convertible Preferred Stock, and Stockholders’ Equity (Deficit) | ||||||||
Current liabilities: | ||||||||
Accounts payable | $ | 8,269 | $ | 12,012 | ||||
Accrued expenses and other current liabilities | 122,285 | 65,392 | ||||||
Developer exchange liability | 84,337 | 80,912 | ||||||
Deferred revenue—current portion | 1,295,464 | 1,070,230 | ||||||
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Total current liabilities | 1,510,355 | 1,228,546 | ||||||
Deferred revenue—net of current portion | 528,904 | 484,699 | ||||||
Operating lease liabilities | 184,721 | — | ||||||
Other long-term liabilities | 505 | 22,109 | ||||||
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Total liabilities | 2,224,485 | 1,735,354 | ||||||
Commitments and contingencies (Note 11) | ||||||||
Convertible Preferred Stock | ||||||||
Convertible preferred stock, Series A, B, C, D, D-1, E, F, and G $0.0001 par value, zero and 349,522 shares authorized as of March 31, 2021, and December 31, 2020, respectively; zero and 337,235 shares issued and outstanding as of March 31, 2021, and December 31, 2020, respectively; aggregate liquidation preference of zero and $335,654 as of March 31, 2021, and December 31, 2020, respectively | — | 344,827 | ||||||
Stockholders’ Equity (Deficit) | ||||||||
Preferred stock; $0.0001 par value per share; 100,000 and zero shares authorized as of March 31, 2021 and December 31, 2020, respectively; zero shares issued and outstanding as of March 31, 2021 and December 31, 2020 | — | — | ||||||
Common stock, $0.0001 par value; 5,000,000 and 740,000 authorized as of March 31, 2021, and December 31, 2020, respectively, 568,894 and 201,327 shares issued and outstanding as of March 31, 2021, and December 31, and 2020, respectively; Class A common stock—4,935,000 and 675,000 shares authorized as of March 31, 2021, and December 31, 2020, respectively; 515,307 and 144,039 shares issued and outstanding as of March 31, 2021, and December 31, 2020, respectively; Class B common stock—65,000 shares authorized as of March 31, 2021, and December 31, 2020, respectively, 53,587 and 57,287 shares issued and outstanding as of March 31, 2021, and December 31, 2020, respectively | 57 | 20 | ||||||
Additional paid-in capital | 1,199,833 | 239,792 | ||||||
Accumulated other comprehensive income | 90 | 90 | ||||||
Accumulated deficit | (626,507 | ) | (492,290 | ) | ||||
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Total Roblox Corporation stockholders’ equity (deficit) | 573,473 | (252,388 | ) | |||||
Noncontrolling interests | 18,121 | 20,007 | ||||||
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Total stockholders’ equity (deficit) | 591,594 | (232,381 | ) | |||||
Total liabilities, convertible preferred stock, and stockholders’ equity (deficit) | $ | 2,816,079 | $ | 1,847,800 | ||||
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As of | |||||||||||
September 30, 2021 | December 31, 2020 | ||||||||||
Assets | |||||||||||
Current assets: | |||||||||||
Cash and cash equivalents | $ | 1,925,559 | $ | 893,943 | |||||||
Accounts receivable—net of allowances | 168,762 | 246,986 | |||||||||
Prepaid expenses and other current assets | 37,667 | 26,274 | |||||||||
Deferred cost of revenue, current portion | 379,611 | 256,928 | |||||||||
Total current assets | 2,511,599 | 1,424,131 | |||||||||
Property and equipment—net | 227,330 | 206,415 | |||||||||
Operating lease right-of-use assets | 220,404 | — | |||||||||
Deferred cost of revenue, long-term | 125,643 | 113,793 | |||||||||
Intangible assets, net | 63,478 | 42,326 | |||||||||
Goodwill | 118,071 | 59,568 | |||||||||
Other assets | 5,755 | 1,567 | |||||||||
Total assets | $ | 3,272,280 | $ | 1,847,800 | |||||||
Liabilities, Convertible Preferred Stock, and Stockholders’ Equity (Deficit) | |||||||||||
Current liabilities: | |||||||||||
Accounts payable | $ | 20,733 | $ | 12,012 | |||||||
Accrued expenses and other current liabilities | 157,916 | 65,392 | |||||||||
Developer exchange liability | 117,756 | 80,912 | |||||||||
Deferred revenue—current portion | 1,621,186 | 1,070,230 | |||||||||
Total current liabilities | 1,917,591 | 1,228,546 | |||||||||
Deferred revenue—net of current portion | 550,118 | 484,699 | |||||||||
Operating lease liabilities | 196,447 | — | |||||||||
Other long-term liabilities | 2,293 | 22,109 | |||||||||
Total liabilities | 2,666,449 | 1,735,354 | |||||||||
Commitments and contingencies (Note 11) | 0 | 0 | |||||||||
Convertible Preferred Stock | |||||||||||
Convertible preferred stock, Series A, B, C, D, D-1, E, F, and G $0.0001 par value, zero and 349,522 shares authorized as of September 30, 2021, and December 31, 2020, respectively; zero and 337,235 shares issued and outstanding as of September 30, 2021, and December 31, 2020, respectively; aggregate liquidation preference of zero and $335,654 as of September 30, 2021, and December 31, 2020, respectively | — | 344,827 | |||||||||
Stockholders’ Equity (Deficit) | |||||||||||
Preferred stock; $0.0001 par value per share; 100,000 and zero shares authorized as of September 30, 2021 and December 31, 2020, respectively; zero shares issued and outstanding as of September 30, 2021 and December 31, 2020, respectively | — | — | |||||||||
Common stock, $0.0001 par value; 5,000,000 and 740,000 authorized as of September 30, 2021, and December 31, 2020, respectively, 578,471 and 201,327 shares issued and outstanding as of September 30, 2021, and December 31, 2020, respectively; Class A common stock—4,935,000 and 675,000 shares authorized as of September 30, 2021, and December 31, 2020, respectively; 527,134 and 144,039 shares issued and outstanding as of September 30, 2021, and December 31, 2020, respectively; Class B common stock—65,000 shares authorized as of September 30, 2021, and December 31, 2020, respectively, 51,337 and 57,287 shares issued and outstanding as of September 30, 2021, and December 31, 2020, respectively | 58 | 20 | |||||||||
Additional paid-in capital | 1,434,190 | 239,792 | |||||||||
Accumulated other comprehensive income | 112 | 90 | |||||||||
Accumulated deficit | (840,643) | (492,290) | |||||||||
Total Roblox Corporation stockholders’ equity (deficit) | 593,717 | (252,388) | |||||||||
Noncontrolling interests | 12,114 | 20,007 | |||||||||
Total stockholders’ equity (deficit) | 605,831 | (232,381) | |||||||||
Total liabilities, convertible preferred stock, and stockholders’ equity (deficit) | $ | 3,272,280 | $ | 1,847,800 |
Three Months Ended March 31, | ||||||||
2021 | 2020 | |||||||
Revenue | $ | 386,976 | $ | 161,570 | ||||
Cost and expenses: | ||||||||
Cost of revenue(1) | 97,937 | 41,793 | ||||||
Developer exchange fees | 118,938 | 44,499 | ||||||
Infrastructure and trust & safety | 94,136 | 52,620 | ||||||
Research and development | 96,644 | 49,409 | ||||||
General and administrative | 94,375 | 30,558 | ||||||
Sales and marketing | 20,002 | 15,657 | ||||||
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Total cost and expenses | 522,032 | 234,536 | ||||||
Loss from operations | (135,056 | ) | (72,966 | ) | ||||
Interest income | 5 | 1,247 | ||||||
Other expense, net | (1,050 | ) | (3,157 | ) | ||||
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Loss before provision for income taxes | (136,101 | ) | (74,876 | ) | ||||
Provision for income taxes | 2 | 1 | ||||||
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Consolidated net loss | (136,103 | ) | (74,877 | ) | ||||
Net loss attributable to the noncontrolling interest | (1,886 | ) | (498 | ) | ||||
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Net loss attributable to common stockholders | $ | (134,217 | ) | $ | (74,379 | ) | ||
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Net loss per share attributable to common stockholders, basic and diluted | $ | (0.46 | ) | $ | (0.44 | ) | ||
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Weighted-average shares used in computing net loss per share attributable to common stockholders—basic and diluted | 291,074 | 169,542 | ||||||
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Three Months Ended September 30, | Nine Months Ended September 30, | ||||||||||||||||||||||
2021 | 2020 | 2021 | 2020 | ||||||||||||||||||||
Revenue | $ | 509,336 | $ | 251,914 | $ | 1,350,412 | $ | 613,876 | |||||||||||||||
Cost and expenses: | |||||||||||||||||||||||
Cost of revenue(1) | 130,015 | 65,818 | 344,882 | 161,280 | |||||||||||||||||||
Developer exchange fees | 129,952 | 85,475 | 378,604 | 215,026 | |||||||||||||||||||
Infrastructure and trust & safety | 117,387 | 71,405 | 320,509 | 185,878 | |||||||||||||||||||
Research and development | 138,245 | 51,708 | 359,637 | 141,366 | |||||||||||||||||||
General and administrative | 51,584 | 16,168 | 243,637 | 65,433 | |||||||||||||||||||
Sales and marketing | 19,599 | 12,858 | 58,591 | 42,423 | |||||||||||||||||||
Total cost and expenses | 586,782 | 303,432 | 1,705,860 | 811,406 | |||||||||||||||||||
Loss from operations | (77,446) | (51,518) | (355,448) | (197,530) | |||||||||||||||||||
Interest income | 28 | 217 | 59 | 1,758 | |||||||||||||||||||
Other income/(expense), net | (770) | 1,306 | (1,810) | (1,357) | |||||||||||||||||||
Loss before provision for income taxes | (78,188) | (49,995) | (357,199) | (197,129) | |||||||||||||||||||
Provision for/(benefit from) income taxes | (998) | 19 | (976) | 25 | |||||||||||||||||||
Consolidated net loss | (77,190) | (50,014) | (356,223) | (197,154) | |||||||||||||||||||
Net loss attributable to the noncontrolling interest | (3,188) | (1,401) | (7,870) | (2,641) | |||||||||||||||||||
Net loss attributable to common stockholders | $ | (74,002) | $ | (48,613) | $ | (348,353) | $ | (194,513) | |||||||||||||||
Net loss per share attributable to common stockholders, basic and diluted | $ | (0.13) | $ | (0.26) | $ | (0.73) | $ | (1.09) | |||||||||||||||
Weighted-average shares used in computing net loss per share attributable to common stockholders—basic and diluted | 575,932 | 183,454 | 480,357 | 177,771 |
Three Months Ended March 31, | ||||||||
2021 | 2020 | |||||||
Consolidated Net loss | $ | (136,103 | ) | $ | (74,877 | ) | ||
Other comprehensive income/(loss): | ||||||||
Foreign currency translation adjustments | — | — | ||||||
Net change in unrealized gains (loss) on available-for-sale marketable securities, net of tax | — | 216 | ||||||
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Other comprehensive income/(loss), net of tax | — | 216 | ||||||
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Total comprehensive loss including noncontrolling interests | (136,103 | ) | (74,661 | ) | ||||
Less: net loss attributable to noncontrolling interests | (1,886 | ) | (498 | ) | ||||
Less: cumulative translation adjustments attributable to noncontrolling interests | — | — | ||||||
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Total comprehensive loss attributable to noncontrolling interests | (1,886 | ) | (498 | ) | ||||
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Total comprehensive loss attributable to common stockholders | $ | (134,217 | ) | $ | (74,163 | ) | ||
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Three Months Ended September 30, | Nine Months Ended September 30, | ||||||||||||||||||||||
2021 | 2020 | 2021 | 2020 | ||||||||||||||||||||
Consolidated Net loss | $ | (77,190) | $ | (50,014) | $ | (356,223) | $ | (197,154) | |||||||||||||||
Other comprehensive income/(loss): | |||||||||||||||||||||||
Foreign currency translation adjustments | (4) | 52 | 44 | 51 | |||||||||||||||||||
Net change in unrealized gains (loss) on available-for-sale marketable securities, net of tax | — | (78) | — | (19) | |||||||||||||||||||
Other comprehensive income/(loss), net of tax | (4) | (26) | 44 | 32 | |||||||||||||||||||
Total comprehensive loss including noncontrolling interests | (77,194) | (50,040) | (356,179) | (197,122) | |||||||||||||||||||
Less: net loss attributable to noncontrolling interests | (3,188) | (1,401) | (7,870) | (2,641) | |||||||||||||||||||
Less: cumulative translation adjustments attributable to noncontrolling interests | (2) | 26 | 22 | 26 | |||||||||||||||||||
Total comprehensive loss attributable to noncontrolling interests | (3,190) | (1,375) | (7,848) | (2,615) | |||||||||||||||||||
Total comprehensive loss attributable to common stockholders | $ | (74,004) | $ | (48,665) | $ | (348,331) | $ | (194,507) |
thousands)
Convertible Preferred Stock | Class A and Class B Common Stock | Additional Paid-In Capital | Accumulated Other Comprehensive (Loss) Income | Accumulated Deficit | Non- controlling Interest | Total Stockholders’ Deficit | ||||||||||||||||||||||||||||||
Shares | Amount | Shares | Amount | |||||||||||||||||||||||||||||||||
Balance at December 31, 2020 | 337,235 | $ | 344,827 | 201,327 | $ | 20 | $ | 239,792 | $ | 90 | $ | (492,290 | ) | $ | 20,007 | $ | (232,381 | ) | ||||||||||||||||||
Issuance of common stock upon exercises of stock options | — | — | 18,443 | 2 | 30,219 | — | — | — | 30,221 | |||||||||||||||||||||||||||
Issuance of Series H preferred stock, net | 11,889 | 534,286 | — | — | — | — | — | — | — | |||||||||||||||||||||||||||
Conversion of convertible preferred stock to common stock in connection with the direct listing | (349,124 | ) | (879,113 | ) | 349,124 | 35 | 879,078 | — | — | — | 879,113 | |||||||||||||||||||||||||
Stock- based compensation | — | — | — | — | 50,744 | — | — | — | 50,744 | |||||||||||||||||||||||||||
Other | — | — | — | — | — | — | — | — | — | |||||||||||||||||||||||||||
Cumulative translation adjustments | — | — | — | — | — | — | — | — | — | |||||||||||||||||||||||||||
Net loss | — | — | — | — | — | — | (134,217 | ) | (1,886 | ) | (136,103 | ) | ||||||||||||||||||||||||
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Balance at March 31, 2021 | — | — | 568,894 | $ | 57 | $ | 1,199,833 | $ | 90 | $ | (626,507 | ) | $ | 18,121 | $ | 591,594 | ||||||||||||||||||||
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Convertible Preferred Stock | Class A and Class B Common Stock | Additional Paid-In Capital | Accumulated Other Comprehensive (Loss) Income | Accumulated Deficit | Non- controlling Interest | Total Stockholders’ Deficit | |||||||||||||||||||||||||||||||||||||||||||||||
Shares | Amount | Shares | Amount | ||||||||||||||||||||||||||||||||||||||||||||||||||
Balance at June 30, 2021 | — | $ | — | 574,595 | $ | 57 | $ | 1,293,160 | $ | 114 | $ | (766,641) | $ | 15,349 | $ | 542,039 | |||||||||||||||||||||||||||||||||||||
Issuance of common stock upon exercises of stock options | — | — | 2,944 | 1 | 9,169 | — | — | (45) | 9,125 | ||||||||||||||||||||||||||||||||||||||||||||
Issuance of common stock in connection with the acquisition of a business | — | — | 487 | — | 31,274 | — | — | — | 31,274 | ||||||||||||||||||||||||||||||||||||||||||||
Issuance of common stock under Employee Stock Purchase Plan | — | — | 191 | — | 11,268 | — | — | — | 11,268 | ||||||||||||||||||||||||||||||||||||||||||||
Stock- based compensation | — | — | — | — | 89,319 | — | — | — | 89,319 | ||||||||||||||||||||||||||||||||||||||||||||
Release of restricted stock units | — | — | 254 | — | — | — | — | — | — | ||||||||||||||||||||||||||||||||||||||||||||
Others | — | — | — | — | — | — | — | — | — | ||||||||||||||||||||||||||||||||||||||||||||
Cumulative translation adjustments | — | — | — | — | — | (2) | — | (2) | (4) | ||||||||||||||||||||||||||||||||||||||||||||
Net loss | — | — | — | — | — | — | (74,002) | (3,188) | (77,190) | ||||||||||||||||||||||||||||||||||||||||||||
Balance at September 30, 2021 | — | — | 578,471 | $ | 58 | $ | 1,434,190 | $ | 112 | $ | (840,643) | $ | 12,114 | $ | 605,831 |
Convertible Preferred Stock | Class A and Class B Common Stock | Additional Paid-In Capital | Accumulated Other Comprehensive (Loss) Income | Accumulated Deficit | Non- controlling Interest | Total Stockholders’ Deficit | |||||||||||||||||||||||||||||||||||||||||||||||
Shares | Amount | Shares | Amount | ||||||||||||||||||||||||||||||||||||||||||||||||||
Balance at December 31, 2020 | 337,235 | $ | 344,827 | 201,327 | $ | 20 | $ | 239,792 | $ | 90 | $ | (492,290) | $ | 20,007 | $ | (232,381) | |||||||||||||||||||||||||||||||||||||
Issuance of common stock upon exercises of stock options | — | — | 27,083 | 3 | 51,056 | — | — | (45) | 51,014 | ||||||||||||||||||||||||||||||||||||||||||||
Issuance of common stock in connection with the acquisition of a business | — | — | 487 | — | 31,274 | — | — | — | 31,274 | ||||||||||||||||||||||||||||||||||||||||||||
Issuance of common stock under Employee Stock Purchase Plan | — | — | 191 | — | 11,268 | — | — | — | 11,268 | ||||||||||||||||||||||||||||||||||||||||||||
Issuance of Series H preferred stock, net | 11,889 | 534,286 | — | — | — | — | — | — | — | ||||||||||||||||||||||||||||||||||||||||||||
Conversion of convertible preferred stock to common stock in connection with the direct listing | (349,124) | (879,113) | 349,124 | 35 | 879,078 | — | — | — | 879,113 | ||||||||||||||||||||||||||||||||||||||||||||
Stock- based compensation | — | — | — | — | 221,722 | — | — | — | 221,722 | ||||||||||||||||||||||||||||||||||||||||||||
Release of restricted stock units | — | — | 258 | — | — | — | — | — | — | ||||||||||||||||||||||||||||||||||||||||||||
Others | — | — | 1 | — | — | — | — | — | — | ||||||||||||||||||||||||||||||||||||||||||||
Cumulative translation adjustments | — | — | — | — | — | 22 | — | 22 | 44 | ||||||||||||||||||||||||||||||||||||||||||||
Net loss | — | — | — | — | — | — | (348,353) | (7,870) | (356,223) | ||||||||||||||||||||||||||||||||||||||||||||
Balance at September 30, 2021 | — | — | 578,471 | $ | 58 | $ | 1,434,190 | $ | 112 | $ | (840,643) | $ | 12,114 | $ | 605,831 |
thousands)
Convertible Preferred Stock | Class A and Class B Common Stock | Additional Paid-In Capital | Accumulated Other Comprehensive (Loss) Income | Accumulated Deficit | Non- controlling Interest | Total Stockholders’ Deficit | ||||||||||||||||||||||||||||||
Shares | Amount | Shares | Amount | |||||||||||||||||||||||||||||||||
Balance at December 31, 2019 | 324,304 | $ | 187,191 | 166,768 | $ | 17 | $ | 101,671 | $ | 39 | $ | (239,036 | ) | $ | 24,360 | $ | (112,949 | ) | ||||||||||||||||||
Issuance of common stock upon exercises of stock options | — | — | 3,589 | — | 1,283 | — | — | — | 1,283 | |||||||||||||||||||||||||||
Issuance of Series G preferred stock | 23,645 | 149,669 | — | — | — | — | — | — | — | |||||||||||||||||||||||||||
Series D-1 warrants upon exercise of warrants for cash(1) | 1,574 | 8,225 | — | — | — | — | — | — | — | |||||||||||||||||||||||||||
Stock- based compensation | — | — | — | — | 42,257 | — | — | — | 42,257 | |||||||||||||||||||||||||||
Other | — | — | — | — | — | 216 | — | — | 216 | |||||||||||||||||||||||||||
Cumulative translation adjustments | — | — | — | — | — | — | — | — | — | |||||||||||||||||||||||||||
Net loss | — | — | — | — | — | — | (74,379 | ) | (498 | ) | (74,877 | ) | ||||||||||||||||||||||||
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| |||||||||||||||||||
Balance at March 31, 2020 | 349,523 | $ | 345,085 | 170,357 | $ | 17 | $ | 145,211 | $ | 255 | $ | (313,415 | ) | $ | 23,862 | $ | (144,070 | ) | ||||||||||||||||||
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|
|
Convertible Preferred Stock | Class A and Class B Common Stock | Additional Paid-In Capital | Accumulated Other Comprehensive (Loss) Income | Accumulated Deficit | Non- controlling Interest | Total Stockholders’ Deficit | |||||||||||||||||||||||||||||||||||||||||||||||
Shares | Amount | Shares | Amount | ||||||||||||||||||||||||||||||||||||||||||||||||||
Balance at June 30, 2020 | 349,523 | $ | 345,085 | 182,114 | $ | 18 | $ | 157,461 | $ | 97 | $ | (384,936) | $ | 23,120 | $ | (204,240) | |||||||||||||||||||||||||||||||||||||
Issuance of common stock upon exercises of stock options | — | — | 3,183 | 1 | 3,530 | — | — | — | 3,531 | ||||||||||||||||||||||||||||||||||||||||||||
Stock- based compensation | — | — | — | — | 13,296 | — | — | — | 13,296 | ||||||||||||||||||||||||||||||||||||||||||||
Other | — | — | — | — | — | (78) | — | — | (78) | ||||||||||||||||||||||||||||||||||||||||||||
Cumulative translation adjustments | — | — | — | — | — | 26 | — | 26 | 52 | ||||||||||||||||||||||||||||||||||||||||||||
Net loss | — | — | — | — | — | — | (48,613) | (1,401) | (50,014) | ||||||||||||||||||||||||||||||||||||||||||||
Balance at September 30, 2020 | 349,523 | $ | 345,085 | 185,297 | $ | 19 | $ | 174,287 | $ | 45 | $ | (433,549) | $ | 21,745 | $ | (237,453) |
Convertible Preferred Stock | Class A and Class B Common Stock | Additional Paid-In Capital | Accumulated Other Comprehensive (Loss) Income | Accumulated Deficit | Non- controlling Interest | Total Stockholders’ Deficit | |||||||||||||||||||||||||||||||||||||||||||||||
Shares | Amount | Shares | Amount | ||||||||||||||||||||||||||||||||||||||||||||||||||
Balance at December 31, 2019 | 324,304 | $ | 187,191 | 166,768 | $ | 17 | $ | 101,671 | $ | 39 | $ | (239,036) | $ | 24,360 | $ | (112,949) | |||||||||||||||||||||||||||||||||||||
Issuance of common stock upon exercises of stock options | — | — | 18,529 | 2 | 9,654 | — | — | — | 9,656 | ||||||||||||||||||||||||||||||||||||||||||||
Issuance of Series G preferred stock | 23,645 | 149,669 | — | — | — | — | — | — | — | ||||||||||||||||||||||||||||||||||||||||||||
Series D-1 warrants upon exercise of warrants for cash(1) | 1,574 | 8,225 | — | — | — | — | — | — | — | ||||||||||||||||||||||||||||||||||||||||||||
Stock- based compensation | — | — | — | — | 62,962 | — | — | — | 62,962 | ||||||||||||||||||||||||||||||||||||||||||||
Other | — | — | — | — | — | (19) | — | — | (19) | ||||||||||||||||||||||||||||||||||||||||||||
Cumulative translation adjustments | — | — | — | — | — | 25 | — | 26 | 51 | ||||||||||||||||||||||||||||||||||||||||||||
Net loss | — | — | — | — | — | — | (194,513) | (2,641) | (197,154) | ||||||||||||||||||||||||||||||||||||||||||||
Balance at September 30, 2020 | 349,523 | $ | 345,085 | 185,297 | $ | 19 | $ | 174,287 | $ | 45 | $ | (433,549) | $ | 21,745 | $ | (237,453) |
Three Months Ended March 31, | ||||||||
2021 | 2020 | |||||||
Cash flows from operating activities: | ||||||||
Consolidated net loss | $ | (136,103 | ) | $ | (74,877 | ) | ||
Adjustments to reconcile net loss including noncontrolling interests to net cash provided by (used in) operations: | ||||||||
Depreciation and amortization | 16,620 | 9,085 | ||||||
Stock-based compensation expense | 50,744 | 42,257 | ||||||
Change in fair value of warrants | — | 1,890 | ||||||
Other non-cash charges/(credits) | (52 | ) | 302 | |||||
Changes in operating assets and liabilities, net of effect of acquisitions: | ||||||||
Accounts receivable | 13,256 | 1,183 | ||||||
Accounts payable | (782 | ) | 669 | |||||
Prepaid expenses and other current assets | (10,967 | ) | (7,301 | ) | ||||
Operating lease right of use assets | (9,173 | ) | — | |||||
Other assets | (3,401 | ) | 902 | |||||
Developer exchange liability | 3,425 | (1,454 | ) | |||||
Accrued expenses and other current liabilities | 16,273 | 3,269 | ||||||
Other long-term liability | 304 | 1,713 | ||||||
Operating lease liabilities | 17,148 | — | ||||||
Deferred revenue | 269,439 | 88,769 | ||||||
Deferred cost of revenue | (62,262 | ) | (22,878 | ) | ||||
|
|
|
| |||||
Net cash provided by operating activities | 164,469 | 43,529 | ||||||
|
|
|
| |||||
Cash flows from investing activities: | ||||||||
Acquisition of property and equipment | (22,133 | ) | (8,921 | ) | ||||
Purchases of short-term investments | — | (5,991 | ) | |||||
Maturities of short-term investments | — | 21,000 | ||||||
Purchases of intangible assets | (256 | ) | — | |||||
|
|
|
| |||||
Net cash (used in)/provided by investing activities | (22,389 | ) | 6,088 | |||||
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|
|
| |||||
Cash flows from financing activities: | ||||||||
Proceeds from issuance of preferred stock for warrant exercises | — | 147 | ||||||
Proceeds from issuance of common stock | 30,221 | 1,282 | ||||||
Net proceeds from issuance of preferred stock | 534,286 | 149,669 | ||||||
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|
|
| |||||
Net cash provided by financing activities | 564,507 | 151,098 | ||||||
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|
| |||||
Effect of exchange rate changes on cash and cash equivalents | — | (1 | ) | |||||
Net increase in cash and cash equivalents | 706,587 | 200,714 | ||||||
Cash and cash equivalents | ||||||||
Beginning of period | 893,943 | 301,493 | ||||||
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| |||||
End of period | $ | 1,600,530 | $ | 502,207 | ||||
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| |||||
Supplemental disclosure of cash flow information: | ||||||||
Cash paid for interest | — | — | ||||||
Cash paid for income taxes | — | — | ||||||
Supplemental disclosure of noncash investing and financing activities: | ||||||||
Property and equipment additions in accounts payable and accrued expenses | $ | 9,476 | $ | 20,988 | ||||
Conversion of convertible preferred stock to common stock upon direct listing | $ | 879,113 | — |
The accompanying notes are an integral part of these condensed consolidated financial statements. Nine Months Ended September 30 2021 2020 Cash flows from operating activities: Consolidated net loss $ (356,223) $ (197,154) Adjustments to reconcile net loss including noncontrolling interests to net cash provided by operations: Depreciation and amortization 53,439 30,232 Stock-based compensation expense 221,722 62,962 Change in fair value of warrants — 1,890 Operating lease non-cash expense 31,936 — Other non-cash charges/(credits) 1,137 1,271 Changes in operating assets and liabilities: Accounts receivable 77,086 (67,184) Accounts payable (230) 6,163 Prepaid expenses and other current assets (19,501) (3,549) Other assets (4,188) 1,359 Developer exchange liability 36,844 21,623 Accrued expenses and other current liabilities 38,098 10,430 Other long-term liability (1,022) 2,221 Operating lease liabilities (24,055) — Deferred revenue 616,375 630,870 Deferred cost of revenue (134,532) (155,798) Net cash provided by operating activities 536,886 345,336 Cash flows from investing activities: Acquisition of property and equipment (48,331) (52,262) Payments related to business combination, net of cash acquired (45,692) — Purchases of short-term investments — (5,991) Maturities of short-term investments — 54,000 Purchases of intangible assets (7,856) (451) Net cash used in investing activities (101,879) (4,704) Cash flows from financing activities: Proceeds from issuance of preferred stock for warrant exercises — 147 Proceeds from issuance of common stock 62,278 9,654 Net proceeds from issuance of preferred stock 534,286 149,669 Net cash provided by financing activities 596,564 159,470 Effect of exchange rate changes on cash and cash equivalents 45 51 Net increase in cash and cash equivalents 1,031,616 500,153 Cash and cash equivalents Beginning of period 893,943 301,493 End of period $ 1,925,559 $ 801,646 Supplemental disclosure of cash flow information: Cash paid for interest — — Cash paid for income taxes — — Supplemental disclosure of noncash investing and financing activities: Fair value of common stock and unregistered restricted stock units issued as consideration for business combination $ 31,274 $ — Property and equipment additions in accounts payable and accrued expenses $ 32,935 $ 23,482 Conversion of convertible preferred stock to common stock upon direct listing $ 879,113 $ —
Note
Note
36% and 35% for the three and nine months ended September 30, 2020, respectively. A second distribution channel processed 19% of our overall revenue transactions for each of the three and nine months ended September 30, 2021 and 19% and 18% for the three and nine months ended September 30, 2020, respectively.
•identifying the performance obligations in the contract;
•determining the transaction price;
•allocating the transaction price to performance obligations in the contract; and
•recognizing revenue when, or as, we satisfy performance obligations by transferring the promised services.
•Durable virtual items represent items which result in a persistent change to a users’ character or item set (e.g., virtual hat, pet, or house). These items are generally available to the customer to hold, use, or display for as long as they are on our Roblox Platform. We recognize revenue from the sale of durable virtual items ratably over the estimated period of time the items are available to the user which is estimated as the average lifetime of a paying user.
•Expected term—The expected term represents the period stock-based awards are expected to be outstanding. The expected term assumptions are determined based on the vesting terms, estimated exercise behavior, post-vesting cancellations and contractual lives of the awards.
•Risk-free interest rates—The risk-free interest rate is based on the implied yields in effect at the time of the grant of U.S. Treasury notes with terms approximately equal to the expected term of the award.
•Expected stock price volatility— Prior to the Direct Listing, the Company used the historical volatility of the stock price of similar publicly traded peer companies. After the completion of the Direct Listing the Company continues to use the historical volatility of the stock price of similar publicly traded peer companies since it has not established sufficient public trading history.
•Expected dividend yield—The Company utilized a dividend yield of zero, as it had no history or plan of declaring dividends on its common stock.
Note
We will cease being an emerging growth company on December 31, 2021, because our gross revenues for the nine months ended September 30, 2021, exceeded $1.07 billion.
In June 2016, the FASB issued ASU No. 2016-13, “Financial Instruments—Credit Losses (Topic 326): Measurement of Credit Losses on Financial Instruments” (“Topic 326”) which replaces the existing incurred loss impairment model with an expected credit loss model and requires a financial asset measured at amortized cost to be presented at the net amount expected to be collected. The guidance will be effective for the Company beginning January 1, 2023, and interim periods therein. Early adoption is permitted. The amendments in this update should be applied on a modified-retrospective basis by means of a cumulative-effect adjustment to the opening balance of retained earnings balance in the statement of financial position as of the date that the Company adopts the amendments. The Company is currently evaluating the effect that Topic 326 may have on its consolidated financial statements and related disclosures.
None
Three Months Ended March 31, | ||||||||||||||||
2021 | 2020 | |||||||||||||||
Amount | Percentage of Revenue | Amount | Percentage of Revenue | |||||||||||||
United States and Canada1 | $ | 264,508 | 68 | % | $ | 112,648 | 70 | % | ||||||||
Europe | 72,602 | 19 | 28,420 | 17 | ||||||||||||
Asia-Pacific, including Australia and New Zealand | 28,312 | 7 | 12,694 | 8 | ||||||||||||
Rest of world | 21,554 | 6 | 7,808 | 5 | ||||||||||||
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| |||||||||
Total | $ | 386,976 | 100 | % | $ | 161,570 | 100 | % | ||||||||
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|
|
Three Months Ended September 30, | |||||||||||||||||||||||
2021 | 2020 | ||||||||||||||||||||||
Amount | Percentage of Revenue | Amount | Percentage of Revenue | ||||||||||||||||||||
United States and Canada (1) | $ | 345,611 | 68 | % | $ | 173,872 | 69 | % | |||||||||||||||
Europe | 94,522 | 19 | 46,398 | 18 | |||||||||||||||||||
Asia-Pacific, including Australia and New Zealand | 37,529 | 7 | 19,060 | 8 | |||||||||||||||||||
Rest of world | 31,674 | 6 | 12,584 | 5 | |||||||||||||||||||
Total | $ | 509,336 | 100 | % | $ | 251,914 | 100 | % |
Nine Months Ended September 30, | |||||||||||||||||||||||
2021 | 2020 | ||||||||||||||||||||||
Amount | Percentage of Revenue | Amount | Percentage of Revenue | ||||||||||||||||||||
United States and Canada (1) | $ | 919,322 | 68 | % | $ | 426,289 | 69 | % | |||||||||||||||
Europe | 252,166 | 19 | 110,839 | 18 | |||||||||||||||||||
Asia-Pacific, including Australia and New Zealand | 98,891 | 7 | 47,017 | 8 | |||||||||||||||||||
Rest of world | 80,033 | 6 | 29,731 | 5 | |||||||||||||||||||
Total | $ | 1,350,412 | 100 | % | $ | 613,876 | 100 | % |
During the nine months ended September 30, 2021 and 2020, $835.2 million and $340.2 million, respectively, of revenue was recognized that was included in the current portion deferred revenue balance at the beginning of the periods.
The following table summarizes the impacts of adopting Topic 842 on the Company’s consolidated balance sheet as of December 31, 2020 (in thousands):
As Reported Balance as of December 31, 2020 | Adjustments due to Topic 842 | As Adjusted Balance as of January 1, 2021 | ||||||||||
Assets | ||||||||||||
Operating lease right-of-use assets | — | $ | 195,944 | $ | 195,944 | |||||||
Prepaid expenses and other current assets | 26,274 | (8,106 | ) | 18,168 | ||||||||
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|
|
|
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| |||||||
Total | $ | 26,274 | $ | 187,838 | $ | 214,112 | ||||||
|
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|
|
| |||||||
Liabilities | ||||||||||||
Accrued expenses and other current liabilities | $ | 65,392 | $ | (1,704 | ) | $ | 63,688 | |||||
Other long-term liabilities | 22,109 | (21,983 | ) | 126 | ||||||||
Operating lease liabilities—short-term | — | 32,162 | 32,162 | |||||||||
Operating lease liabilities—long-term | — | 179,363 | 179,363 | |||||||||
|
|
|
|
|
| |||||||
Total | $ | 87,501 | $ | 187,838 | $ | 275,339 | ||||||
|
|
|
|
|
|
As Reported Balance as of December 31, 2020 | Adjustments due to Topic 842 | As Adjusted Balance as of January 1, 2021 | |||||||||||||||
Assets | |||||||||||||||||
Operating lease right-of-use assets | — | $ | 195,944 | $ | 195,944 | ||||||||||||
Prepaid expenses and other current assets | 26,274 | (8,106) | 18,168 | ||||||||||||||
Total | $ | 26,274 | $ | 187,838 | $ | 214,112 | |||||||||||
Liabilities | |||||||||||||||||
Accrued expenses and other current liabilities | $ | 65,392 | $ | (1,704) | $ | 63,688 | |||||||||||
Other long-term liabilities | 22,109 | (21,983) | 126 | ||||||||||||||
Operating lease liabilities—short-term | — | 32,162 | 32,162 | ||||||||||||||
Operating lease liabilities—long-term | — | 179,363 | 179,363 | ||||||||||||||
Total | $ | 87,501 | $ | 187,838 | $ | 275,339 |
Remainder of 2021 | $ | 38,781 | ||
2022 | 52,658 | |||
2023 | 45,545 | |||
2024 | 36,504 | |||
2025 | 29,620 | |||
Thereafter | 54,340 | |||
|
| |||
Total lease payments | $ | 257,448 | ||
|
| |||
Less: interest(1) | 28,775 | |||
|
| |||
Present value of lease liabilities | $ | 228,673 | ||
|
|
|
Remainder of 2021 | $ | 12,988 | |||
2022 | 57,593 | ||||
2023 | 51,745 | ||||
2024 | 42,580 | ||||
2025 | 34,790 | ||||
Thereafter | 77,953 | ||||
Total lease payments | $ | 277,649 | |||
Less: interest(1) | 33,782 | ||||
Present value of lease liabilities | $ | 243,867 |
Weighted average remaining lease term | 5.67 | |||
Weighted average discount rate | 3.9 | % | ||
Cash paid for amounts included in the measurement of lease liabilities | $ | 12,641 | ||
Lease liabilities arising from obtaining new ROU assets | $ | 19,052 |
Weighted average remaining lease term | 6.02 | ||||
Weighted average discount rate | 4.0 | % | |||
Cash paid for amounts included in the measurement of lease liabilities(1) | $ | 38,975 | |||
Lease liabilities arising from obtaining new ROU assets | $ | 57,352 |
2021 | $ | 51,397 | |||
2022 | 54,477 | ||||
2023 | 47,915 | ||||
2024 | 38,970 | ||||
2025 | 32,223 | ||||
Thereafter | 55,882 | ||||
Total lease payments | $ | 280,864 | |||
Fair Value | ||||||||||||
December 31, | ||||||||||||
Financial Instrument | Fair Value Hierarchy | March 31, 2021 | December 31, 2020 | |||||||||
Financial Assets: | ||||||||||||
Money Market funds classified as cash equivalents | Level 1 | $ | 1,377,739 | $ | 310,392 |
Fair Value | ||||||||||||||||||||
As of | ||||||||||||||||||||
Financial Instrument | Fair Value Hierarchy | September 30, 2021 | December 31, 2020 | |||||||||||||||||
Financial Assets: | ||||||||||||||||||||
Money Market funds classified as cash equivalents | Level 1 | $ | 1,582,583 | $ | 310,392 |
Fair Value | |||||
Cash paid | $ | 46,285 | |||
Common stock issued | 22,744 | ||||
Replacement awards attributable to pre-acquisition service | 8,530 | ||||
Total purchase price | $ | 77,559 |
August 16, 2021 | |||||
Cash and cash equivalents | $ | 593 | |||
Goodwill | 58,503 | ||||
Identified intangible assets | 19,600 | ||||
Deferred tax liabilities | (999) | ||||
Accrued expenses and other current liabilities | (138) | ||||
Total purchase price | $ | 77,559 |
Carrying Amount | Estimated Useful Life (Years) | |||||||
Developed Technology | $ | 19,100 | 5 | |||||
Trade Name | 500 | 5 | ||||||
Total | $ | 19,600 |
Fair Value | ||||
Cash paid | $ | 45,998 | ||
Common stock issued | 35,203 | |||
Replacement awards attributable to pre-acquisition service | 5,493 | |||
|
| |||
Total purchase price | $ | 86,694 | ||
|
|
Fair Value | |||||
Cash paid | $ | 45,998 | |||
Common stock issued | 35,203 | ||||
Replacement awards attributable to pre-acquisition service | 5,493 | ||||
Total purchase price | $ | 86,694 |
December 11, 2020 | ||||
Cash and cash equivalents | $ | 5,080 | ||
Prepaid expenses and other current assets | 45 | |||
Goodwill | 59,568 | |||
Identified intangible asset—developed technology | 29,000 | |||
Deferred tax liabilities | (6,681 | ) | ||
Accrued expenses and other current liabilities | (318 | ) | ||
|
| |||
Total purchase price | $ | 86,694 | ||
|
|
December 11, 2020 | |||||
Cash and cash equivalents | $ | 5,080 | |||
Prepaid expenses and other current assets | 45 | ||||
Goodwill | 59,568 | ||||
Identified intangible asset—developed technology | 29,000 | ||||
Deferred tax liabilities | (6,681) | ||||
Accrued expenses and other current liabilities | (318) | ||||
Total purchase price | $ | 86,694 |
The Company expects to finalize the allocation of the purchase consideration as soon as practicable, pending finalization of income taxes. The Company currently expects to finalize this allocation during its fourth quarter ending December 31, 2021.
Carrying Amount | ||||
Balance as of December 31, 2020 | $ | 59,568 | ||
Addition from acquisition | — | |||
|
| |||
Balance as of March 31, 2021 | $ | 59,568 | ||
|
|
Carrying Amount | |||||
Balance as of December 31, 2020 | $ | 59,568 | |||
Addition from acquisition | 58,503 | ||||
Balance as of September 30, 2021 | $ | 118,071 |
As of September 30, 2021 | |||||||||||
Gross Carrying Amount | Accumulated Amortization | Net Carrying Amount | |||||||||
Intangible assets with finite lives | |||||||||||
Developed Technology | $ | 62,059 | $ | (7,896) | $ | 54,163 | |||||
Assembled Workforce | 8,500 | (250) | 8,250 | ||||||||
Trade Name | 500 | (8) | 492 | ||||||||
Total Intangible Assets | $ | 71,059 | $ | (8,154) | $ | 62,905 |
As of December 31, 2020 | |||||||||||
Gross Carrying Amount | Accumulated Amortization | Net Carrying Amount | |||||||||
Intangible assets with finite lives | |||||||||||
Developed Technology | $ | 42,959 | $ | (1,206) | $ | 41,753 | |||||
Total Intangible Assets | $ | 42,959 | $ | (1,206) | $ | 41,753 |
Amortization expense was $2.1$2.7 million and immaterial$6.9 million for the three and nine months ended March 31,September 30, 2021, respectively and March 31, 2020, respectively.
was immaterial for each of the three and nine months ended September 30, 2020.
Remainder of 2021 | $ | 6,371 | ||
2022 | 8,495 | |||
2023 | 8,495 | |||
2024 | 8,401 | |||
2025 | 7,866 | |||
Thereafter | — | |||
|
| |||
Total remaining amortization | $ | 39,628 | ||
|
|
Remainder of 2021 $ 3,812 2022 15,249 2023 15,249 2024 14,196 2025 11,786 Thereafter 2,613 Total remaining amortization $ 62,905
As of, | ||||||||
March 31, 2021 | December 31, 2020 | |||||||
Prepaid Expenses | $ | 28,266 | $ | 17,606 | ||||
Other current assets | 869 | 8,668 | ||||||
|
|
|
| |||||
Total prepaid expenses and other current assets | $ | 29,135 | $ | 26,274 | ||||
|
|
|
|
As of, | |||||||||||
September 30, 2021 | December 31, 2020 | ||||||||||
Prepaid Expenses | $ | 35,480 | $ | 17,606 | |||||||
Other current assets | 2,187 | 8,668 | |||||||||
Total prepaid expenses and other current assets | $ | 37,667 | $ | 26,274 |
As of, | ||||||||
March 31, 2021 | December 31, 2020 | |||||||
Servers and related equipment | $ | 280,963 | $ | 264,994 | ||||
Computer hardware and software | 4,047 | 3,498 | ||||||
Furniture and fixtures | 162 | 162 | ||||||
Leasehold improvement | 27,924 | 27,437 | ||||||
Construction in progress | 1,165 | 294 | ||||||
|
|
|
| |||||
Total property and equipment | $ | 314,261 | $ | 296,385 | ||||
Less accumulated depreciation and amortization | (104,467 | ) | (89,970 | ) | ||||
|
|
|
| |||||
Property and equipment—net | $ | 209,794 | $ | 206,415 | ||||
|
|
|
|
As of, | |||||||||||
September 30, 2021 | December 31, 2020 | ||||||||||
Servers and related equipment | $ | 315,266 | $ | 264,994 | |||||||
Computer hardware and software | 6,923 | 3,498 | |||||||||
Furniture and fixtures | 162 | 162 | |||||||||
Leasehold improvement | 30,240 | 27,437 | |||||||||
Construction in progress | 9,893 | 294 | |||||||||
Total property and equipment | $ | 362,484 | $ | 296,385 | |||||||
Less accumulated depreciation and amortization | (135,154) | (89,970) | |||||||||
Property and equipment—net | $ | 227,330 | $ | 206,415 |
Depreciation expense was $14.5$16.3 million and $9.0$46.5 million for the three and nine months ended March 31,September 30, 2021, respectively and was $11.3 million and $30.0 million for the three and nine months ended September 30, 2020, respectively.
As of | ||||||||
March 31, 2021 | December 31, 2021 | |||||||
General accrued expenses | $ | 51,165 | $ | 41,699 | ||||
Short term operating lease liabilities | 43,952 | — | ||||||
Other current liabilities | 27,168 | 23,693 | ||||||
|
|
|
| |||||
Total accrued expenses and other current liabilities | $ | 122,285 | $ | 65,392 | ||||
|
|
|
|
As of, | |||||||||||
September 30, 2021 | December 31, 2020 | ||||||||||
General accrued expenses | $ | 74,631 | $ | 41,699 | |||||||
Short term operating lease liabilities | 47,420 | — | |||||||||
Other current liabilities | 35,865 | 23,693 | |||||||||
Total accrued expenses and other current liabilities | $ | 157,916 | $ | 65,392 |
Letters of Credit— The Company has issued letters of credit in connection with our operating leases. The Company has not drawn down from the letters of credit and had $9.9 million available in aggregate as of each of the periods ended March 31,September 30, 2021, and December 31, 2020.
Although the maximum amount of liability that may ultimately result from any of these matters cannot be predicted with absolute certainty and the ultimate resolution of one or more of these matters could ultimately have a material adverse effect on our operations.
The following table summarizes the convertible preferred stock outstanding immediately prior to the conversion into common stock, and the rights and preferences of the Company’s respective series preceding the Direct Listing in March 2021 (in thousands except per share data):
Series | Shares | Per share price at issuance | Per share conversion price | Aggregate Liquidation Preference | Carrying Value of Preferred | ||||||||||||||||||||||||||||||
Authorized | Outstanding | ||||||||||||||||||||||||||||||||||
A | 28,000 | 16,358 | $ | 0.02 | $ | 0.02 | $ | 327 | $ | 313 | |||||||||||||||||||||||||
B | 45,532 | 45,532 | $ | 0.03 | $ | 0.03 | 1,070 | 1,054 | |||||||||||||||||||||||||||
C | 95,290 | 95,290 | $ | 0.03 | $ | 0.03 | 2,935 | 4,150 | |||||||||||||||||||||||||||
D | 54,860 | 54,215 | $ | 0.04 | $ | 0.04 | 2,150 | 2,097 | |||||||||||||||||||||||||||
D-1 | 44,706 | 44,706 | $ | 0.09 | $ | 0.09 | 4,172 | 12,998 | |||||||||||||||||||||||||||
E | 24,340 | 24,340 | $ | 1.03 | $ | 1.03 | 25,000 | 24,906 | |||||||||||||||||||||||||||
F | 33,149 | 33,149 | $ | 4.53 | $ | 4.53 | 150,000 | 149,640 | |||||||||||||||||||||||||||
G | 23,645 | 23,645 | $ | 6.34 | $ | 6.34 | 150,000 | 149,669 | |||||||||||||||||||||||||||
H | 12,222 | 11,889 | $ | 45.0 | $ | 45.0 | 535,000 | 534,286 | |||||||||||||||||||||||||||
Total | 361,744 | 349,124 | $ | 870,654 | $ | 879,113 |
3.7
As of | ||||||||
March 31, 2021 | December 31, 2020 | |||||||
Stock options outstanding | 79,616 | 98,502 | ||||||
RSUs outstanding | 8,559 | 3,061 | ||||||
PSUs outstanding | 11,500 | — | ||||||
Shares available for issuance under Equity Incentive Plan | 58,893 | 15,448 | ||||||
2020 ESPP | 6,000 | — | ||||||
Stock Warrants outstanding | 324 | 324 | ||||||
Unregistered restricted stock awards outstanding | 356 | 388 | ||||||
Convertible Preferred Stock outstanding | — | 337,235 | ||||||
|
|
|
| |||||
Total | 165,248 | 454,958 |
As of | |||||||||||
September 30, 2021 | December 31, 2020 | ||||||||||
Stock options outstanding | 69,847 | 98,502 | |||||||||
RSUs outstanding | 10,844 | 3,061 | |||||||||
PSUs outstanding | 11,500 | — | |||||||||
Shares available for issuance under Equity Incentive Plan | 57,481 | 15,448 | |||||||||
2020 ESPP | 5,809 | — | |||||||||
Stock Warrants outstanding | 324 | 324 | |||||||||
Unregistered restricted stock awards outstanding | 500 | 388 | |||||||||
Convertible Preferred Stock outstanding | — | 337,235 | |||||||||
Total | 156,305 | 454,958 |
2020 Equity Incentive Plan
Employee Stock Purchase Plan
Three Months ended March 31, | ||||||||
2021 | 2020 | |||||||
Infrastructure and trust & safety | $ | 5,688 | $ | 2,804 | ||||
Research and development | 31,594 | 16,723 | ||||||
General and administrative | 11,247 | 18,432 | ||||||
Sales and marketing | 2,215 | 4,298 | ||||||
|
|
|
| |||||
Total stock-based compensation | $ | 50,744 | $ | 42,257 | ||||
|
|
|
|
Three Months Ended September 30, | Nine Months Ended September 30, | ||||||||||||||||||||||
2021 | 2020 | 2021 | 2020 | ||||||||||||||||||||
Infrastructure and trust & safety | $ | 8,597 | $ | 1,623 | $ | 22,082 | $ | 5,342 | |||||||||||||||
Research and development | 56,423 | 8,515 | 139,643 | 29,195 | |||||||||||||||||||
General and administrative | 20,963 | 2,437 | 51,139 | 22,741 | |||||||||||||||||||
Sales and marketing | 3,336 | 721 | 8,858 | 5,684 | |||||||||||||||||||
Total stock-based compensation | $ | 89,319 | $ | 13,296 | $ | 221,722 | $ | 62,962 |
Future
Options Outstanding | ||||||||||||||||
Number of Shares Subject to Options | Weighted- Average Exercise Price | Remaining Contractual Term (Years) | Aggregate Intrinsic Value | |||||||||||||
(in thousands) | (in thousands) | |||||||||||||||
Balances as of December 31, 2020 | 98,502 | $ | 2.55 | 7.76 | $ | 3,838,994 | ||||||||||
Granted | — | — | ||||||||||||||
Cancelled | (443 | ) | $ | 4.19 | ||||||||||||
Exercised | (18,443 | ) | $ | 1.64 | ||||||||||||
|
| |||||||||||||||
Balances as of March 31, 2021 | 79,616 | $ | 2.75 | 7.50 | $ | 4,942,769 | ||||||||||
|
| |||||||||||||||
Exercisable as of March 31, 2021 | 34,008 | $ | 1.39 | 6.47 | $ | 2,157,456 | ||||||||||
Vested and expected to vest at March 31, 2021 | 79,616 | $ | 2.75 | 7.50 | $ | 4,942,769 |
Options Outstanding | |||||||||||||||||||||||
Number of Shares Subject to Options | Weighted- Average Exercise Price | Remaining Contractual Term (Years) | Aggregate Intrinsic Value | ||||||||||||||||||||
(in thousands) | (in thousands) | ||||||||||||||||||||||
Balances as of December 31, 2020 | 98,502 | $ | 2.55 | 7.76 | $ | 3,838,994 | |||||||||||||||||
Granted | — | — | |||||||||||||||||||||
Cancelled | (1,572) | $ | 4.01 | ||||||||||||||||||||
Exercised | (27,083) | $ | 1.88 | ||||||||||||||||||||
Balances as of September 30, 2021 | 69,847 | $ | 2.77 | 7.19 | $ | 5,083,399 | |||||||||||||||||
Vested and exercisable as of September 30, 2021 | 37,102 | $ | 1.75 | 6.35 | $ | 2,738,124 | |||||||||||||||||
Vested and expected to vest at September 30, 2021 | 69,847 | $ | 2.77 | 7.19 | $ | 5,083,399 |
The following table summarizes the Company’s restricted stock units and unregistered restricted stock awards (unregistered RSAs) activity:
Restricted Stock Units | Restricted Stock Awards | |||||||||||||||
Number of Shares | Weighted- Average grant date fair value | Number of Shares | Weighted- Average grant date fair value | |||||||||||||
(in thousands) | (in thousands) | |||||||||||||||
Unvested as of December 31, 2020 | 3,061 | $ | 31.55 | 388 | $ | 37.75 | ||||||||||
Granted | 5,539 | $ | 76.99 | — | — | |||||||||||
Released | — | — | 32 | $ | 37.75 | |||||||||||
Cancelled | (41 | ) | $ | 5.21 | — | — | ||||||||||
|
|
|
|
|
|
|
| |||||||||
Unvested as of March 31, 2021 | 8,559 | $ | 61.08 | 356 | $ | 37.75 | ||||||||||
|
|
|
|
Restricted Stock Units | Restricted Stock Awards | ||||||||||||||||||||||
Number of Shares | Weighted- Average grant date fair value | Number of Shares | Weighted- Average grant date fair value | ||||||||||||||||||||
(in thousands) | (in thousands) | ||||||||||||||||||||||
Unvested as of December 31, 2020 | 3,061 | $ | 31.55 | 388 | $ | 37.75 | |||||||||||||||||
Granted | 8,284 | $ | 77.85 | 209 | $ | 81.67 | |||||||||||||||||
Released | (258) | $ | 59.59 | (97) | $ | 37.75 | |||||||||||||||||
Cancelled | (243) | $ | 60.82 | — | — | ||||||||||||||||||
Unvested as of September 30, 2021 | 10,844 | $ | 65.52 | 500 | $ | 56.10 |
Company Stock Price Hurdle | Number of RSUs Eligible to Vest | Performance Period Commencement Dates as Measured from the Effective Date | ||||||||
1. | $ | 165.00 | 750,000 | 2 years | ||||||
2. | $ | 200.00 | 750,000 | 3 years | ||||||
3. | $ | 235.00 | 2,000,000 | 4 years | ||||||
4. | $ | 270.00 | 2,000,000 | 5 years | ||||||
5. | $ | 305.00 | 2,000,000 | 5 years | ||||||
6. | $ | 340.00 | 2,000,000 | 5 years | ||||||
7. | $ | 375.00 | 2,000,000 | 5 years |
Company Stock Price Hurdle | Number of RSUs Eligible to Vest | Performance Period Commencement Dates as Measured from the Effective Date | |||||||||||||||
1 | $ | 165.00 | 750,000 | 2 years | |||||||||||||
2 | $ | 200.00 | 750,000 | 3 years | |||||||||||||
3 | $ | 235.00 | 2,000,000 | 4 years | |||||||||||||
4 | $ | 270.00 | 2,000,000 | 5 years | |||||||||||||
5 | $ | 305.00 | 2,000,000 | 5 years | |||||||||||||
6 | $ | 340.00 | 2,000,000 | 5 years | |||||||||||||
7 | $ | 375.00 | 2,000,000 | 5 years |
| ||
| ||
| ||
| ||
| ||
|
Three and Nine Months Ended | |||||||||||
September 30, 2021 | |||||||||||
Risk-free interest rate | 0.06% | - | 0.25% | ||||||||
Expected volatility | 46.97% | - | 56.91% | ||||||||
Dividend yield | —% | ||||||||||
Expected terms (in years) | 0.44 | - | 2.00 |
September 30, 2021, respectively.
Three Months Ended March 31, | ||||||||
2021 | 2020 | |||||||
Basic and diluted net loss per share | ||||||||
Numerator | ||||||||
Net loss | $ | (136,103 | ) | $ | (74,877 | ) | ||
Less: net loss attributable to noncontrolling interest | (1,886 | ) | (498 | ) | ||||
|
|
|
| |||||
Net loss attributable to common stockholders | $ | (134,217 | ) | $ | (74,379 | ) | ||
|
|
|
| |||||
Denominator | ||||||||
Weighted-average common shares used in per share computation, based and diluted | 291,074 | 169,542 | ||||||
|
|
|
| |||||
Net loss per share, basic and diluted | $ | (0.46 | ) | $ | (0.44 | ) | ||
|
|
|
|
Three Months Ended
September 30,Nine Months Ended September 30, 2021 2020 2021 2020 Basic and diluted net loss per share Numerator Net loss $ (77,190) $ (50,014) $ (356,223) $ (197,154) Less: net loss attributable to noncontrolling interest (3,188) (1,401) (7,870) (2,641) Net loss attributable to common stockholders $ (74,002) $ (48,613) $ (348,353) $ (194,513) Denominator Weighted-average common shares used in per share computation, basic and diluted 575,932 183,454 480,357 177,771 Net loss per share, basic and diluted $ (0.13) $ (0.26) $ (0.73) $ (1.09)
As of March 31, | ||||||||
2021 | 2020 | |||||||
Stock options outstanding | 79,616 | 100,339 | ||||||
RSUs outstanding | 8,559 | — | ||||||
Stock warrants outstanding | 324 | 260 | ||||||
Convertible Preferred Stock outstanding | — | 349,522 | ||||||
Unregistered restricted stock awards outstanding | 356 | — | ||||||
2020 ESPP | 770 | — | ||||||
|
|
|
| |||||
Total | 89,625 | 450,121 | ||||||
|
|
|
|
As of Three and Nine Months ended September 30, | |||||||||||
2021 | 2020 | ||||||||||
Stock options outstanding | 69,847 | 101,341 | |||||||||
RSUs outstanding | 10,844 | — | |||||||||
Stock warrants outstanding | 324 | 260 | |||||||||
Convertible Preferred Stock outstanding | — | 349,522 | |||||||||
Unregistered restricted stock awards outstanding | 500 | — | |||||||||
2020 ESPP | 678 | — | |||||||||
Total | 82,193 | 451,123 |
Platform.platformPlatform is powered by user-generated content and draws inspiration from gaming, entertainment, social media, and even toys. platform Platform consists of the Roblox Client, the Roblox Studio, and the Roblox Cloud. Roblox Client is the application that allows users to explore 3D digital worlds. Roblox Studio is the free toolset that allows developers and creators to build, publish, and operate 3D experiences and other content accessed with the Roblox Client. Roblox Cloud includes the services and infrastructure that power our human co-experience platform. platform Platform that enables shared experiences among billions of users. We are constantly improving the ways in which the Roblox Platform supports shared experiences, ranging from how these experiences are built by an engaged community of developers, to how they are enjoyed and safely accessed by users across the globe.User Metrics and Other Data.Operating Metric.”
Daily Active Users
Platform.
We believe that the growth in hours engaged on our platformPlatform reflects the increasing value of our platform.
Platform.
Three Months Ended March 31, | ||||||||
2021 | 2020 | |||||||
(dollars in thousands) | ||||||||
Bookings | $ | 652,277 | $ | 249,576 |
Three Months Ended September 30, | Nine Months Ended September 30, | ||||||||||||||||||||||
2021 | 2020 | 2021 | 2020 | ||||||||||||||||||||
(dollars in thousands) | (dollars in thousands) | ||||||||||||||||||||||
Bookings | $ | 637,833 | $ | 496,485 | $ | 1,955,590 | $ | 1,240,232 |
Three Months Ended March 31, | ||||||||
2021 | 2020 | |||||||
(dollars in thousands) | ||||||||
Reconciliation of revenue to bookings: | ||||||||
Revenue | $ | 386,976 | $ | 161,570 | ||||
Add (deduct): | ||||||||
Change in deferred revenue | 269,439 | 88,769 | ||||||
Other | (4,138 | ) | (763 | ) | ||||
|
|
|
| |||||
Bookings | $ | 652,277 | $ | 249,576 | ||||
|
|
|
|
Three Months Ended September 30, | Nine Months Ended September 30, | ||||||||||||||||||||||
2021 | 2020 | 2021 | 2020 | ||||||||||||||||||||
(dollars in thousands) | (dollars in thousands) | ||||||||||||||||||||||
Reconciliation of revenue to bookings: | |||||||||||||||||||||||
Revenue | $ | 509,336 | $ | 251,914 | $ | 1,350,412 | $ | 613,876 | |||||||||||||||
Add (deduct): | |||||||||||||||||||||||
Change in deferred revenue | 131,439 | 246,567 | 616,375 | 630,870 | |||||||||||||||||||
Other | (2,942) | (1,996) | (11,197) | (4,514) | |||||||||||||||||||
Bookings | $ | 637,833 | $ | 496,485 | $ | 1,955,590 | $ | 1,240,232 |
Three Months Ended March 31, | ||||||||
2021 | 2020 | |||||||
(dollars in thousands) | ||||||||
Free cash flow | $ | 142,080 | $ | 34,608 |
Nine Months Ended September 30, | |||||||||||
2021 | 2020 | ||||||||||
(dollars in thousands) | |||||||||||
Free cash flow | $ | 480,699 | $ | 292,623 |
Three Months Ended March 31, | ||||||||
2021 | 2020 | |||||||
(dollars in thousands) | ||||||||
Reconciliation of net cash from operating activities to free cash flow: | ||||||||
Net cash provided by operating activities | $ | 164,469 | $ | 43,529 | ||||
Add (deduct): | ||||||||
Acquisition of property and equipment | (22,133 | ) | (8,921 | ) | ||||
Purchases of intangible assets | (256 | ) | — | |||||
|
|
|
| |||||
Free cash flow | $ | 142,080 | $ | 34,608 | ||||
|
|
|
|
Nine Months Ended September 30, | |||||||||||
2021 | 2020 | ||||||||||
(dollars in thousands) | |||||||||||
Reconciliation of net cash from operating activities to free cash flow: | |||||||||||
Net cash provided by operating activities | $ | 536,886 | $ | 345,336 | |||||||
Add (deduct): | |||||||||||
Acquisition of property and equipment | (48,331) | (52,262) | |||||||||
Purchases of intangible assets | (7,856) | (451) | |||||||||
Free cash flow | $ | 480,699 | $ | 292,623 |
Three Months Ended September 30, | Nine Months Ended September 30, | ||||||||||||||||||||||
2021 | 2020 | 2021 | 2020 | ||||||||||||||||||||
(dollars in thousands) | (dollars in thousands) | ||||||||||||||||||||||
Adjusted EBITDA | $ | 135,672 | $ | 161,045 | $ | 505,917 | $ | 374,285 |
Three Months Ended September 30, | Nine Months Ended September 30, | ||||||||||||||||||||||
2021 | 2020 | 2021 | 2020 | ||||||||||||||||||||
(dollars in thousands) | (dollars in thousands) | ||||||||||||||||||||||
Reconciliation of consolidated net loss to adjusted EBITDA: | |||||||||||||||||||||||
Consolidated net loss | $ | (77,190) | $ | (50,014) | $ | (356,223) | $ | (197,154) | |||||||||||||||
Add: | |||||||||||||||||||||||
Interest income | (28) | (217) | (59) | (1,758) | |||||||||||||||||||
Other expense | 770 | (1,306) | 1,810 | 1,357 | |||||||||||||||||||
Provision (benefit) for income taxes | (998) | 19 | (976) | 25 | |||||||||||||||||||
Depreciation and amortization | 19,029 | 11,380 | 53,439 | 30,232 | |||||||||||||||||||
Stock-based compensation expense | 89,319 | 13,296 | 221,722 | 62,962 | |||||||||||||||||||
Change in fair value of warrants | — | — | — | 1,890 | |||||||||||||||||||
Accretion and amortization on marketable securities | — | 17 | — | — | |||||||||||||||||||
Change in deferred revenue | 131,439 | 246,567 | 616,375 | 630,870 | |||||||||||||||||||
Change in deferred cost of revenue | (26,669) | (60,356) | (134,532) | (155,798) | |||||||||||||||||||
Fees related to equity offering | — | 1,659 | 50,586 | 1,659 | |||||||||||||||||||
Fees related to certain legal settlements | — | — | 53,775 | — | |||||||||||||||||||
Adjusted EBITDA | $ | 135,672 | $ | 161,045 | $ | 505,917 | $ | 374,285 |
In the nine months ended September 30, 2021, and 2020, depreciation related to infrastructure and trust & safety was $43.6 million and $28.5 million, respectively.
In the nine months ended September 30, 2021 and 2020, stock-based compensation related to infrastructure and trust & safety was $22.1 million and $5.3 million, respectively.
Research and development
(Expense), net
Three Months Ended March 31, | ||||||||
2021 | 2020 | |||||||
(dollars in thousands, except per share data) | ||||||||
Revenue | $ | 386,976 | $ | 161,570 | ||||
Cost and expenses: | ||||||||
Cost of revenue(1) | 97,937 | 41,793 | ||||||
Developer exchange fees | 118,938 | 44,499 | ||||||
Infrastructure and trust & safety(2) | 94,136 | 52,620 | ||||||
Research and development(2) | 96,644 | 49,409 | ||||||
General and administrative(2) | 94,375 | 30,558 | ||||||
Sales and marketing(2) | 20,002 | 15,657 | ||||||
|
|
|
| |||||
Total cost and expenses | 522,032 | 234,536 | ||||||
Loss from operations | (135,056 | ) | (72,966 | ) | ||||
Interest income | 5 | 1,247 | ||||||
Other expense, net | (1,050 | ) | (3,157 | ) | ||||
|
|
|
| |||||
Loss before provision for income taxes | (136,101 | ) | (74,876 | ) | ||||
Provision (benefit) for income taxes | 2 | 1 | ||||||
|
|
|
| |||||
Consolidated net loss | (136,103 | ) | (74,877 | ) | ||||
Net loss attributable to the noncontrolling interest(3) | (1,886 | ) | (498 | ) | ||||
|
|
|
| |||||
Net loss attributable to common stockholders | $ | (134,217 | ) | $ | (74,379 | ) | ||
|
|
|
| |||||
Net loss per share attributable to common stockholders, basic and | $ | (0.46 | ) | $ | (0.44 | ) | ||
|
|
|
| |||||
Weighted-average shares used in computing net loss per share attributable to common stockholders—basic and diluted(4) | 291,074 | 169,542 | ||||||
|
|
|
|
|
|
Three Months Ended March 31, | ||||||||
2021 | 2020 | |||||||
Infrastructure and trust & safety | $ | 5,688 | $ | 2,804 | ||||
Research and development | 31,594 | 16,723 | ||||||
General and administrative | 11,247 | 18,432 | ||||||
Sales and marketing | 2,215 | 4,298 | ||||||
|
|
|
| |||||
Total stock-based compensation | $ | 50,744 | $ | 42,257 | ||||
|
|
|
|
Three Months Ended September 30, 2021 | Nine Months Ended September 30, | ||||||||||||||||||||||
2021 | 2020 | 2021 | 2020 | ||||||||||||||||||||
(dollars in thousands, except per share data) | (dollars in thousands, except per share data) | ||||||||||||||||||||||
Revenue | $ | 509,336 | $ | 251,914 | $ | 1,350,412 | $ | 613,876 | |||||||||||||||
Cost and expenses: | |||||||||||||||||||||||
Cost of revenue(1) | 130,015 | 65,818 | 344,882 | 161,280 | |||||||||||||||||||
Developer exchange fees | 129,952 | 85,475 | 378,604 | 215,026 | |||||||||||||||||||
Infrastructure and trust & safety(2) | 117,387 | 71,405 | 320,509 | 185,878 | |||||||||||||||||||
Research and development(2) | 138,245 | 51,708 | 359,637 | 141,366 | |||||||||||||||||||
General and administrative(2) | 51,584 | 16,168 | 243,637 | 65,433 | |||||||||||||||||||
Sales and marketing(2) | 19,599 | 12,858 | 58,591 | 42,423 | |||||||||||||||||||
Total cost and expenses | 586,782 | 303,432 | 1,705,860 | 811,406 | |||||||||||||||||||
Loss from operations | (77,446) | (51,518) | (355,448) | (197,530) | |||||||||||||||||||
Interest income | 28 | 217 | 59 | 1,758 | |||||||||||||||||||
Other income/(expense), net | (770) | 1,306 | (1,810) | (1,357) | |||||||||||||||||||
Loss before provision for income taxes | (78,188) | (49,995) | (357,199) | (197,129) | |||||||||||||||||||
Provision for/(benefit from) for income taxes | (998) | 19 | (976) | 25 | |||||||||||||||||||
Consolidated net loss | (77,190) | (50,014) | (356,223) | (197,154) | |||||||||||||||||||
Net loss attributable to the noncontrolling interest(3) | (3,188) | (1,401) | (7,870) | (2,641) | |||||||||||||||||||
Net loss attributable to common stockholders | $ | (74,002) | $ | (48,613) | $ | (348,353) | $ | (194,513) | |||||||||||||||
Net loss per share attributable to common stockholders, basic and diluted(4) | $ | (0.13) | $ | (0.26) | $ | (0.73) | $ | (1.09) | |||||||||||||||
Weighted-average shares used in computing net loss per share attributable to common stockholders—basic and diluted(4) | 575,932 | 183,454 | 480,357 | 177,771 |
Three Months Ended September 30, 2021 | Nine Months Ended September 30, | ||||||||||||||||||||||
2021 | 2020 | 2021 | 2020 | ||||||||||||||||||||
Infrastructure and trust & safety | $ | 8,597 | $ | 1,623 | $ | 22,082 | $ | 5,342 | |||||||||||||||
Research and development | 56,423 | 8,515 | 139,643 | 29,195 | |||||||||||||||||||
General and administrative | 20,963 | 2,437 | 51,139 | 22,741 | |||||||||||||||||||
Sales and marketing | 3,336 | 721 | 8,858 | 5,684 | |||||||||||||||||||
Total stock-based compensation | $ | 89,319 | $ | 13,296 | $ | 221,722 | $ | 62,962 |
|
|
Three Months Ended March 31, | ||||||||
2021 | 2020 | |||||||
Revenue | 100 | % | 100 | % | ||||
Cost and expenses: | ||||||||
Cost of revenue | 25 | 26 | ||||||
Developer exchange fees | 31 | 28 | ||||||
Infrastructure and trust & safety | 24 | 33 | ||||||
Research and development | 25 | 31 | ||||||
General and administrative | 25 | 19 | ||||||
Sales and marketing | 5 | 10 | ||||||
|
|
|
| |||||
Total cost and expenses | 135 | 145 | ||||||
Loss from operations | (35 | ) | (45 | ) | ||||
Interest income | — | 1 | ||||||
Other expense, net | — | (2 | ) | |||||
|
|
|
| |||||
Loss before provision for income taxes | (35 | ) | (46 | ) | ||||
Provision (benefit) for income taxes | — | — | ||||||
|
|
|
| |||||
Consolidated net loss | (35 | ) | (46 | ) | ||||
Net loss attributable to the noncontrolling interest | — | — | ||||||
|
|
|
| |||||
Net loss attributable to common stockholders | (35% | ) | (46% | ) | ||||
|
|
|
|
Three Months Ended September 30, | Nine Months Ended September 30, | ||||||||||||||||||||||
2021 | 2020 | 2021 | 2020 | ||||||||||||||||||||
Revenue | 100 | % | 100 | % | 100 | % | 100 | % | |||||||||||||||
Cost and expenses: | |||||||||||||||||||||||
Cost of revenue | 26 | 26 | 26 | 26 | |||||||||||||||||||
Developer exchange fees | 26 | 34 | 28 | 35 | |||||||||||||||||||
Infrastructure and trust & safety | 23 | 28 | 24 | 30 | |||||||||||||||||||
Research and development | 27 | 21 | 27 | 23 | |||||||||||||||||||
General and administrative | 10 | 6 | 18 | 11 | |||||||||||||||||||
Sales and marketing | 3 | 5 | 3 | 7 | |||||||||||||||||||
Total cost and expenses | 115 | 120 | 126 | 132 | |||||||||||||||||||
Loss from operations | (15) | (20) | (26) | (32) | |||||||||||||||||||
Interest income | — | — | — | — | |||||||||||||||||||
Other income/(expense), net | — | — | — | — | |||||||||||||||||||
Loss before provision for income taxes | (15) | (20) | (26) | (32) | |||||||||||||||||||
Provision for/(benefit from) for income taxes | — | — | — | — | |||||||||||||||||||
Consolidated net loss | (15) | (20) | (26) | (32) | |||||||||||||||||||
Net loss attributable to the noncontrolling interest | — | (1) | — | — | |||||||||||||||||||
Net loss attributable to common stockholders | (15) | % | (19) | % | (26) | % | (32) | % |
Three Months Ended March 31, | 2021 to 2020 | |||||||||||||||
2021 | 2020 | Change | % Change | |||||||||||||
(dollars in thousands) | ||||||||||||||||
Revenue | $ | 386,976 | $ | 161,570 | $ | 225,406 | 140 | % |
Three Months Ended September 30, Nine Months Ended September 30, 2021 2020 % Change 2021 2020 % Change (dollars in thousands) (dollars in thousands) Revenue $ 509,336 $ 251,914 102 % $ 1,350,412 $ 613,876 120 %
Three Months Ended March 31, | 2021 to 2020 | |||||||||||||||
2021 | 2020 | Change | % Change | |||||||||||||
(dollars in thousands) | ||||||||||||||||
Cost of revenue | $ | 97,937 | $ | 41,793 | $ | 56,144 | 134 | % |
Three Months Ended September 30, | Nine Months Ended September 30, | ||||||||||||||||||||||||||||||||||
2021 | 2020 | % Change | 2021 | 2020 | % Change | ||||||||||||||||||||||||||||||
(dollars in thousands) | (dollars in thousands) | ||||||||||||||||||||||||||||||||||
Cost of revenue | $ | 130,015 | $ | 65,818 | 98 | % | $ | 344,882 | $ | 161,280 | 114 | % |
Three Months Ended March 31, | 2021 to 2020 | |||||||||||||||
2021 | 2020 | Change | % Change | |||||||||||||
(dollars in thousands) | ||||||||||||||||
Developer exchange fees | $ | 118,938 | $ | 44,499 | $ | 74,439 | 167 | % |
Three Months Ended September 30, | Nine Months Ended September 30, | ||||||||||||||||||||||||||||||||||
2021 | 2020 | % Change | 2021 | 2020 | % Change | ||||||||||||||||||||||||||||||
(dollars in thousands) | (dollars in thousands) | ||||||||||||||||||||||||||||||||||
Developer exchange fees | $ | 129,952 | $ | 85,475 | 52 | % | $ | 378,604 | $ | 215,026 | 76 | % |
Three Months Ended March 31, | 2021 to 2020 | |||||||||||||||
2021 | 2020 | Change | % Change | |||||||||||||
(dollars in thousands) | ||||||||||||||||
Infrastructure and trust & safety | $ | 94,136 | $ | 52,620 | $ | 41,516 | 79 | % |
Three Months Ended September 30, | Nine Months Ended September 30, | ||||||||||||||||||||||||||||||||||
2021 | 2020 | % Change | 2021 | 2020 | % Change | ||||||||||||||||||||||||||||||
(dollars in thousands) | (dollars in thousands) | ||||||||||||||||||||||||||||||||||
Infrastructure and trust & safety | $ | 117,387 | $ | 71,405 | 64 | % | $ | 320,509 | $ | 185,878 | 72 | % |
Research and development
Three Months Ended March 31, | 2021 to 2020 | |||||||||||||||
2021 | 2020 | Change | % Change | |||||||||||||
(dollars in thousands) | ||||||||||||||||
Research and development | $ | 96,644 | $ | 49,409 | $ | 47,235 | 96 | % |
Research and developmenttrust & safety expenses increased $47.2$134.6 million, or 96%72%, for the threenine months ended March 31,September 30, 2021 compared to the threenine months ended March 31,September 30, 2020. The increase is primarily due to an increase of $44.1$61.6 million related to our data center and technical infrastructure expenses associated with providing the Platform to our users as well as depreciation of our servers and infrastructure equipment and an increase of $40.5 million in customer service and moderation costs to support the growth in users and increased traffic to our Platform. Personnel costs increased $28.9 million to support increased headcount and include a $16.7 million increase in stock-based compensation expense.
Three Months Ended September 30, | Nine Months Ended September 30, | ||||||||||||||||||||||||||||||||||
2021 | 2020 | % Change | 2021 | 2020 | % Change | ||||||||||||||||||||||||||||||
(dollars in thousands) | (dollars in thousands) | ||||||||||||||||||||||||||||||||||
Research and development | $ | 138,245 | $ | 51,708 | 167 | % | $ | 359,637 | $ | 141,366 | 154 | % |
Platform. Depreciation increased by $8.0 million, driven by $6.9 million of intangible assets from acquisitions.
Three Months Ended March 31, | 2021 to 2020 | |||||||||||||||
2021 | 2020 | Change | % Change | |||||||||||||
(dollars in thousands) | ||||||||||||||||
General and administrative | $ | 94,375 | $ | 30,558 | $ | 63,817 | 209 | % |
Three Months Ended September 30, | Nine Months Ended September 30, | ||||||||||||||||||||||||||||||||||
2021 | 2020 | % Change | 2021 | 2020 | % Change | ||||||||||||||||||||||||||||||
(dollars in thousands) | (dollars in thousands) | ||||||||||||||||||||||||||||||||||
General and Administrative | $ | 51,584 | $ | 16,168 | 219 | % | $ | 243,637 | $ | 65,433 | 272 | % |
SalesListing and marketing
Three Months Ended March 31, | 2021 to 2020 | |||||||||||||||
2021 | 2020 | Change | % Change | |||||||||||||
(dollars in thousands) | ||||||||||||||||
Sales and marketing | $ | 20,002 | $ | 15,657 | $ | 4,345 | 28 | % |
Sales and marketing expenses increased $4.3 million, or 28%, for the three months ended March 31, 2021 compared to the three months ended March 31, 2020. This increase is primarily due to an increase of $3.7 million in personnel costs, which includes $2.6$4.9 million in employer taxes associated with equity transactions conducted by our service providers in connection with theour Direct Listing. The
Three Months Ended September 30, | Nine Months Ended September 30, | ||||||||||||||||||||||||||||||||||
2021 | 2020 | % Change | 2021 | 2020 | % Change | ||||||||||||||||||||||||||||||
(dollars in thousands) | (dollars in thousands) | ||||||||||||||||||||||||||||||||||
Sales and marketing | $ | 19,599 | $ | 12,858 | 52 | % | $ | 58,591 | $ | 42,423 | 38 | % |
Interest income, other expense,income/(expense), net, and provision (benefit) for income taxes
Three Months Ended March 31, | 2021 to 2020 | |||||||||||||||
2021 | 2020 | Change | % Change | |||||||||||||
(dollars in thousands) | ||||||||||||||||
Interest income | $ | 5 | $ | 1,247 | $ | (1,242 | ) | (100 | )% | |||||||
Other expense, net | $ | (1,050 | ) | $ | (3,157 | ) | $ | 2,107 | (67 | )% | ||||||
Provision (benefit) for income taxes | $ | 2 | $ | 1 | $ | 1 | 100 | % |
Three Months Ended September 30, | Nine Months Ended September 30, | ||||||||||||||||||||||||||||||||||
2021 | 2020 | % Change | 2021 | 2020 | % Change | ||||||||||||||||||||||||||||||
(dollars in thousands) | (dollars in thousands) | ||||||||||||||||||||||||||||||||||
Interest income | $ | 28 | $ | 217 | (87) | % | $ | 59 | $ | 1,758 | (97) | % | |||||||||||||||||||||||
Other income/(expense), net | $ | (770) | $ | 1,306 | (159) | % | $ | (1,810) | $ | (1,357) | 33 | % | |||||||||||||||||||||||
Provision for/(benefit from) for income taxes | $ | (998) | $ | 19 | (5,353) | % | $ | (976) | $ | 25 | (4,004) | % |
for each of the three and nine months ended September 30, 201 compared to the same periods in the prior year is primarily driven by the tax impact of assets acquired on Guided acquisition.
Three Months Ended March 31, | ||||||||
2021 | 2020 | |||||||
(dollars in thousands) | ||||||||
Net cash flow provided by (used in): | ||||||||
Net cash provided by operating activities | $ | 164,469 | $ | 43,529 | ||||
Net cash used in investing activities | $ | (22,389 | ) | $ | 6,088 | |||
Net cash provided by financing activities | $ | 564,507 | $ | 151,098 |
Nine Months Ended September 30, 2021 2020 (dollars in thousands) Net cash flow provided by (used in): Net cash provided by operating activities 536,886 345,336 Net cash (used in)/provided by investing activities (101,879) (4,704) Net cash provided by financing activities 596,564 159,470
the accounts receivable balance due to lower period end bookings in September 2021 compared to December 2020.
Contractual Obligations and Commitments
March 31,September 30, 2021, we had cash and cash equivalents of $1.6$1.9 billion. Our investment policy and strategy are focused on the preservation of capital and supporting our liquidity requirements. We do not enter into investments for trading or speculative purposes. Our money market instruments have very low interest rate risk because of their short- term maturities, and we do not believe an immediate 10% increase or decrease in interest rates would have a material effect on the fair market value of our portfolio. We therefore do not expect our operating results or cash flows to be materially affected by a sudden change in market interest rates.
March 31,September 30, 2021. The term “disclosure controls and procedures,” as defined in Rules 13a-15(e) and 15d15(e) under the Securities Exchange Act of 1934, as amended, or the Exchange Act, means controls and other procedures of a company that are designed to ensure that information required to be disclosed by a company in the reports that it files or submits under the Exchange Act is recorded, processed, summarized and reported, within the time periods specified in the SEC’s rules and forms.March 31,September 30, 2021, our CEO and CFO concluded that, as of such date, our disclosure controls and procedures were not effective as a result of athe material weakness in our internal control over financial reporting.reporting identified below in the section entitled “Previously Reported Material Weakness.” A material weakness is a deficiency, or a combination of deficiencies, in internal control over financial reporting such that there is a reasonable possibility that a material misstatement of our annual or interim financial statements will not be prevented or detected on a timely basis.
Previously Reported Material Weakness
Although
•We have a history of net losses and we may not be able to achieve or maintain profitability in the future.
•Our financial condition and results of operations will fluctuate from quarter to quarter, which makes them difficult to predict and they may not fully reflect the underlying performance of our business.
•Our business is affected by seasonal demands, and our quarterly operations results fluctuate as a result.
•The global COVID-19 outbreak has significantly affected our business and operations.
•We depend on effectively operating with mobile operating systems, hardware, and networks that we do not control; changes to any of these or our platformPlatform may significantly harm our user retention, growth, engagement, and monetization, or require us to change our data collection and privacy, data security, and data protection practices, business models, operations, practices, advertising activities or application content, which could restrict our ability to maintain our platformPlatform through these systems, hardware, and networks and would adversely impact our business.
•Our ability 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.
•If our business becomes constrained by changing legal and regulatory requirements, 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.
•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. The loss of one or more of our senior management team or key personnel, in particular our Founder, President and CEO, David Baszucki, would significantly harm our business.
•We have identified a material weakness in our internal control over financial reporting which resulted in our restatement of our financial statements for the years ended December 31, 2018 and December 31, 2019. In the future we may identify additional 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.
•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 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.
•expand the number of developers, creators, and users on our platform;
•expand the types of experiences that our developers can build for users;
•continue to provide, and be viewed as being able to provide, a safe and civil environment for all users;
•maintain the security and reliability of our platform;
•provide access to our platformPlatform for users in areas where access to the internet is challenged;
•comply with country and region-specific regulatory environments with respect to privacy, data security, data protection, intellectual property, child protection and other requirements;
•attract highly qualified talent, and train, motivate and manage our highly-qualified personnel;
•manage growth of our business, headcount and operations effectively;
•provide excellent customer experience and customer support for our developers, creators, and users;
•successfully compete against established companies and new market entrants offering a multitude of interactive entertainment offerings; and
•increase global awareness of our brand.
Our financial condition and results of operations will fluctuate from quarter to quarter, which makes them difficult to predict and they may not fully reflect the underlying performance of our business.
•our ability to retain and grow our developer base and encourage them to continue developing experiences on our platform;
•the ability of newer experiences to monetize as effectively as more established experiences;
•the development and introduction of new or redesigned features on our platformPlatform or our competitors’ platforms;
•seasonal fluctuations in user engagement on our platform;
•our pricing model;
•increases in marketing, sales, and other operating expenses that we may incur to grow and expand our operations and to remain competitive;
•our ability to successfully expand internationally and penetrate key demographics;
•the ability to monetize our users in certain geographic markets;
•system failures or actual or perceived breaches of data security or privacy, and the costs associated with such failures, breaches and remediations;
•inaccessibility of our platform,Platform, or certain features within our platform, due to third-party actions;
•increase in stock-based compensation expense (including with respect to the CEO Long-Term Performance Award described herein);
•our ability to effectively incentivize our workforce and developers;
•adverse litigation judgments, settlements, or other litigation and dispute-related costs;
•changes in the legislative or regulatory environment, including with respect to privacy, data security and data protection, consumer protection, and user-uploaded content, or enforcement by government regulators, including fines, orders, or consent decrees;
•fluctuations in currency exchange rates and changes in the proportion of our revenue, bookings and expenses denominated in foreign currencies;
•fluctuations in the market values of our portfolio investments and interest rates or impairments of any assets on our balance sheet;
•changes in our effective tax rate;
•changes in accounting standards, policies, guidance, interpretations, or principles; and
•changes in domestic and global business or macroeconomic conditions.
Our business is affected by seasonal demands, and our quarterly operations results fluctuate as a result.
We announced our “return to office” plan, which includes shifting to a hybrid model where employees can work from home up to two days a week, that we intend to commence towards the beginning of the first quarter of 2022.
•governmental, business, and individuals’ actions that have been and continue to be taken in response to the pandemic;
•the availability of and cost to access the capital markets;
•the availability of effective vaccines and the speed at which they can be administered to the public;
•interruptions related to our infrastructure and partners.
ill, and adjusting to the reopening of society and return to office plans.
We depend on effectively operating with mobile operating systems, hardware, and networks that we do not control; changes to any of these or our platformPlatform may significantly harm our user retention, growth, engagement, and monetization, or require us to change our data collection and privacy, data security, and data protection practices, business models, operations, practices, advertising activities, or application content, which could restrict our ability to maintain our platformPlatform through these systems, hardware and networks and would adversely impact our business.
The owners and operators of these mobile application platforms, primarily Apple and Google, each have approval authority over our platform’s deployment on their systems and offer consumers products that compete with ours. Additionally, mobile devices are manufactured by a wide array of companies. Those companies have no obligation to test the interoperability of new mobile devices with our platform application and may produce new products that are incompatible with or not optimal for our platform. We have no control over these operating systems, application stores, or hardware, and any changes to these systems or hardware that degrade our platform’s functionality, or give preferential treatment to competitive products, could significantly harm our platform usage on mobile devices. An operating system provider or application store could also limit or discontinue our access to its operating system or store if it establishes more favorable relationships with one or more of our competitors, launches a competing product itself, or it otherwise determines that it is in its business interests to do so. Our competitors that control the operating systems and related hardware our application runs on could make interoperability of our platform with those mobile operating systems more difficult or display their competitive offerings more prominently than ours. Additionally, our competitors that control the standards for the application stores for their operating systems could make our platform application, or certain features of our platform, inaccessible for a potentially significant period of time. We plan to continue to introduce new technologies on our platform regularly and have experienced that it takes time to optimize such technologies to function with these operating systems, hardware, and standards, impacting the popularity of our new technologies and features, and we expect this trend to continue.
Moreover, our platform requires high-bandwidth data capabilities. If the costs of data usage increase or access to cellular networks is limited, our user retention, growth, and engagement may be significantly harmed. Additionally, to deliver high-quality video and other content over mobile cellular networks, our platform must work well with a range of mobile technologies, systems, networks, regulations, and standards that we do not control. In particular, any future changes to the iOS or Android operating systems or application stores may impact the accessibility, speed, functionality, and other performance aspects of our platform, and result in issues in the future from time to time. In addition, the proposal or adoption of any laws, regulations, or initiatives that adversely affect the growth, popularity, or use of the internet, including laws governing internet neutrality, could decrease the demand for our platform and increase our cost of doing 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 operations through the Apple App Store and Google Play Store, we are obligated to pay 30% of any money paid by users to purchase Robux to Apple and Google and this amount could be increased. These costs are expected to remain a significant operating expense for the foreseeable future. If the amount these platform providers charge increases, it could have a material impact on our ability to pay developers and our results of operations. The providers of an operating system or application store may also change its fee structure, add fees associated with access to and use of its operating system, alter how its customers are able to advertise on their operating system, change how the personal or other information of its users is made available to application developers on their operating system, limit the use of personal information for advertising purposes or restrict how end-users can share information on their operating system or across other platforms.
Restrictions on our ability to collect, process, and use data as desired could negatively impact our ability to leverage data about the experiences our developers create. This in turn could impact our resource planning and feature development planning for our platform. Similarly, at any time, these operating system providers or application stores can change their policies on how we operate on their operating system or in their application stores by, for example, applying content moderation for applications and advertising or imposing technical or code requirements. Actions by operating system providers or application stores such as the Apple App Store and the Google Play Store may affect the manner in which we collect, process and use data from end-user devices. Accordingly, future changes implemented by Apple or Google could adversely impact our revenue. In addition, these operating systems and application stores could change
their business models and could, for example, increase application store fees, which could have an adverse impact on our business. There are currently litigation and governmental inquiries over the application store fees, and Apple or Google could modify their platform in response to litigation and inquiries in a manner that may harm us.
Each provider of these operating systems and stores has broad discretion to change and interpret its terms of service and policies with respect to our platformPlatform and those changes may be unfavorable to us and our developers’, creators’, and users’ use of our platform.Platform. If we were to violate, or an operating system provider or application store believes that we have violated, its terms of service or policies, that operating system provider or application store could limit or discontinue our access to its operating system or store. In some cases these requirements may not be clear or our interpretation of the requirements may not align with the interpretation of the operating system provider or application store, which could lead to inconsistent enforcement of these terms of service or policies against us, and could also result in the operating system provider or application store limiting or discontinuing access to its operating system or store. Any limitation on or discontinuation of our access to any third-party platform or application store could adversely affect our business, financial condition or results of operations.
prevent, all or substantially all inappropriate content from appearing on our platform,Platform, parents and children will lose their trust in the safety of our platform,Platform, which would harm our overall acceptance by these audiences and would likely result in significantly reduced revenue, bookings, profitability, and ultimately, our ability to continue to successfully operate our platform.
Platform.
To the extent we rely on consent for processing personal data under the GDPR, consent or authorization from the holder of parental responsibility is required in certain cases for the processing of personal data of children under the age of 16, and member states may enact laws that lower that age to 13. If we were found to be in breach of the GDPR, the potential penalties we might face could have a material adverse impact on our business, financial condition, results of operations, and cash flows.
Our business depends on a strong brand and if events occur that damage our reputation and brand, we may be unable to maintain and grow the number of developers, creators, and users on our platform.
Platform.
Our reputation and brand could also be negatively affected by the actions of users that are hostile, inappropriate or illegal, whether on or off our platform.Platform. In addition, users, developers or creators may become dissatisfied with our billing or payment policies, our handling of personal data or other aspects of our platform.Platform. If we fail to adequately address these or other user, developer, or creator complaints, negative publicity about us or our platformPlatform could diminish confidence in and the use of our platform.Platform. Maintaining, protecting, and enhancing our reputation and brand may require us to make substantial investments, and these investments may not be successful. Our reputation and brand are also important to attracting and retaining highly qualified employees. If we fail to successfully promote and maintain our reputation and brand or if we incur significant expenses in this effort, our business and financial results may be adversely affected.
Our data centers are vulnerable to damage or interruption from a variety of sources, including earthquakes, floods, fires, power loss, system failures, computer viruses, physical or electronic break-ins, human error or interference (including by disgruntled employees, former employees or consultants), and other catastrophic events. Our data centers may also be subject to local administrative actions, changes to legal or permitting requirements and litigation that could stop, limit or delay operations. Despite a reliability program focused on anticipating and solving issues that may impact the availability of our platformPlatform 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, hacking event or act of terrorism, a decision to close the facilities without adequate notice or other unanticipated problems at our data centers could result in interruptions or delays on our platform,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.
New features or enhancements and changes to the existing features of our platformPlatform, such as spatial voice and age verification could fail to attain sufficient market acceptance for many reasons, including:
•defects, errors, or failures;
•negative publicity about performance or effectiveness;
•introduction or anticipated introduction of competing products by competitors.
The loss of David Baszucki, our Founder, President and CEO or one or more of our senior management team or key personnel, or our failure to attract new or replacement members of our senior management team or other key personnel in the future, could significantly harm our business.
If we are unable to successfully grow our user base, compete effectively with other platforms, and further monetize our platform,Platform, our business will suffer.
•our user growth outpaces our ability to monetize our users, including if our user growth occurs in markets that are not profitable;
•we fail to establish an international base of our developers, creators, and users;
•we fail to provide the tools and education to our developers and creators to enable them to monetize their experiences;
•we do not develop and establish the social features of our platform,Platform, allowing it to more broadly serve the entertainment, education, and business markets;
•we fail to increase penetration and engagement across all age demographics;
•users reduce their purchases of Robux on our platform;Platform; or
•the experiences on our platformPlatform do not maintain or gain popularity.
Platform.
Our user metrics and other estimates are subject to inherent challenges in measurement, and real or perceived inaccuracies in those metrics may significantly harm and negatively affect our reputation and our business.
unauthorized, fraudulent, or illegal use of Robux or other digital goods on our platform.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. However, there can be no assurance that our efforts to prevent or minimize these unauthorized, fraudulent, or illegal transactions will be successful.
•broader and more established relationships with users, developers, and creators;
•greater resources to make acquisitions and enter into strategic partnerships;
•lower labor and research and development costs;
•larger and more mature intellectual property portfolios; and
•substantially greater financial, technical, and other resources.
near- and medium-term profitability may be lower than it would be if our strategy were to maximize near- and medium-term profitability. We expect to continue making significant expenditures to grow our platformPlatform and develop new features, integrations, capabilities, and enhancements to our platformPlatform for the benefit of our developers, creators, and users. Such expenditures may not result in improved business results or profitability over the long-term. If we are ultimately unable to achieve or improve profitability at the level or during the time frame anticipated by securities or industry analysts, investors and our stockholders, the trading price of our Class A common stock may decline.
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.
in the reports that we will file with the Securities and Exchange Commission, or the SEC, is recorded, processed, summarized, and reported within the time periods specified in SEC rules and forms and that information required to be disclosed in reports under the Exchange Act is accumulated and communicated to our principal executive and financial officers. We are also continuing to improve our internal control over financial reporting. In order to maintain and improve the effectiveness of our disclosure controls and procedures and internal control over financial reporting, we have expended, and anticipate that we will continue to expend, significant resources, including accounting-related costs and significant management oversight.
to support our requirements, any incident affecting their infrastructure that may be caused by fire, flood, severe storm, earthquake or other natural disasters, power loss, telecommunications failures, cyber-attacks, terrorist or other attacks, and other similar events beyond our control, could adversely affect our cloud-native platform.Platform. Any disruption of or interference with our use of AWS could impair our ability to deliver our platformPlatform reliably to our developers, creators, and users.
Further, We incur significant costs in an effort to detect and prevent security breaches and other security-related incidents, including those to secure our platformproduct development, test, evaluation, and deployment activities, and we expect our costs will increase as we make improvements to our systems and processes to prevent future breaches and incidents. From time to time, we do identify product vulnerabilities, including through our bug bounty program. 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.
We and our service providers may be unable to anticipate these techniques, react, remediate or otherwise address any security vulnerability, breach or other security incident in a timely manner, or implement adequate preventative measures.
publicity. Additionally, we contract with certain third parties to store and process certain data for us, including our distribution channels, and these third parties face similar risks of actual and potential security breaches, which could present similar risks to our business, reputation, financial condition, and results of operations.
Further, such insurance may not continue to be available to us in the future on economically reasonable terms, or at all, and insurers may deny us coverage as to any future claim. The successful assertion of one or more large claims against us that exceed available insurance coverage, or the occurrence of changes in our insurance policies, including premium increases or the imposition of large deductible or co-insurance requirements, could have a material adverse effect on our business, including our financial condition, operating results, and reputation.
Platform.
developments, whether actual or perceived, may negatively affect user trust and engagement, harm our reputation and brands, require us to change our business practices in a manner adverse to our business, and adversely affect our business and financial results. 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.
•higher costs of doing business internationally, including costs incurred in complying with local regulations related to privacy, data security, data protection, content monitoring, preclusion, and removal, and online entertainment offerings, particularly as these rules apply to interactions with children, and establishing and maintaining office space for our international operations;
•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.;
•challenges inherent to efficiently recruiting and retaining talented and capable 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 rights in some countries;
•increased exposure to fluctuations in exchange rates between the U.S. dollar and foreign currencies in markets where we do business;
•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, and other similar trade protection regulations and measures;
•exposure to regional or global public health issues, such as the COVID-19 pandemic, 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;
•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 protection,security, content monitoring, preclusion, and removal, and industry-specific laws and regulations, localization of our services, including translation into foreign languages and associated expenses;
•the ability to monitor our platformPlatform 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 public perception of our platformPlatform 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;
•uncertainty regarding regulation, currency, tax, and operations resulting from the United Kingdom’s exit from the EU, or Brexit, on January 31, 2020 and possible disruptions in trade, the sale of our services and commerce, and movement of our people between the United Kingdom, EU, and other locations;
•natural disasters, acts of war, and terrorism, and resulting changes to laws and regulations, including changes oriented to protecting local businesses;
•difficulties in hiring highly qualified employees internationally and managing foreign operations; and
•regional economic and political conditions.
We may also incur increased operating expenses related to data security in China, including with respect to access to user data and confidential company information as well as any network interconnections and system integrations. Any unauthorized access to such data, networks, or systems, or the mere perception thereof, could have a significant negative impact on our reputation and lead to increased regulatory inquiry and oversight.
China. Any actions and policies adopted by the Chinese government, particularly with regard to intellectual property rights and internet restrictions for non-Chinese businesses, or any prolonged slowdown in China’s economy, could have an adverse effect on our business, results of operations and financial condition.
The relationship between China and the U.S. is subject to periodic tension. Relations may also be compromised if the U.S. pressures the Chinese government regarding its monetary, economic, or social policies. Changes in political conditions in China and changes in the state of China-U.S. relations are difficult to predict and could adversely affect the operations or financial condition of the China JV. In addition, because of our proposed involvement in the Chinese market, any deterioration in political or trade relations might cause a public perception in the U.S. or elsewhere that might cause our products to become less attractive. The Committee on Foreign Investment in the U.S. 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. We cannot predict what effect any further inquiry by the Committee on Foreign Investment in the U.S. into our relationship with Tencent and Tencent Holdings or changes in China-U.S. relations overall may have on our ability to effectively support the China JV or on the operations or success of the China JV.
acquired products, technology, and personnel, or accurately forecast the financial impact of an acquisition, including accounting charges which could be recognized as a current period expense. 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 platformPlatform 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.Platform. We may also incur unanticipated liabilities that we assume as a result of acquiring companies, including claims related to the acquired company, its offerings or technologies or potential violations of applicable law or industry rules and regulations arising from prior or ongoing acts or omissions by the acquired business that were not discovered during diligence. We will pay cash, incur debt, or issue equity securities to pay for any acquisitions, any of which could significantly harm our business. Selling equity to finance any such acquisition would also dilute our stockholders. Incurring debt would increase our fixed obligations and could also include covenants or other restrictions that would impede our ability to manage our operations.
For example, we have elected to early adopt the FASB issued Accounting Standards Codification, or Topic 842, which supersedes the lease accounting guidance in ASC 840, Leases. The adoption of this new guidance had a significant impact on our balance sheet as described in detail in Note 5 to our condensed consolidated financial statements included elsewhere in this Quarterly Report on Form 10-Q. Adoption of these types of accounting standards and any difficulties in implementing these pronouncements could cause us to fail to meet our financial reporting obligations, which could result in regulatory discipline and harm investors’ confidence in us.
Risks Related to Government Regulations
Platform.
them.
to rebuild our platformPlatform or the infrastructure for our platform.Platform. Numerous countries, including Germany, have regulations relating to this area and they may impose significant fines for failure to comply with certain content removal and disclosure obligations. Other countries, including Singapore, India, Turkey, Mexico, Australia, and the United Kingdom, have implemented or are considering similar legislation imposing penalties for failure to remove certain types of content. On the other hand, some users, developers, and creators may choose not to use our platformPlatform if we actively police content.
The increased use of interactive entertainment offerings like ours by consumers, including younger consumers, may prompt calls for more stringent consumer protection laws and regulations throughout the world that may impose additional burdens on companies such as ours making virtual currencies like Robux available for sale. Any such changes would require us to devote legal and other resources to address such regulation. For example, some existing laws regarding the regulation of currency, money transmitters and other financial institutions, and unclaimed property have been interpreted to cover virtual currencies, like Robux.
We are subject to the Foreign Corrupt Practices Act and similar anti-corruption, anti-bribery, and anti-money laundering, and non-compliance with such laws can subject us to criminal or civil liability and harm our business, financial condition and results of operations.
As we increase
As we increase our international sales and business, our risks under these laws may increase.
uploaded to and may continue to exist on our platformPlatform and have stated that they may seek damages for such infringement. For example, a number of entities who are members of the National Music Publishers Association (“NMPA”) claimed to own or control the rights to musical compositions, filed a lawsuit against us on June 9, 2021, or the NMPA Lawsuit, in the U.S. District Court for the Central District of California, where they alleged that we engaged in copyright infringement by having used certain musical compositions on our Platform without necessary licenses. The NMPA Lawsuit was dismissed with prejudice on September 20, 2021 pursuant to a settlement agreement wherein it was agreed with both the plaintiffs in the NMPA Lawsuit as well as other NMPA music publishers who opt-in to take part in the settlement agreement, that we would negotiate licenses to musical works owned or controlled by such publishers in good faith for the next six months. During this six month period, such publishers have agreed not to bring any lawsuit or make any claims against us related to copyright infringement for the use of the musical works owned or controlled by these publishers on our Platform. We vigorously dispute the claims of infringement butand could be subject to anadditional claims in the future. An adverse judgment against us in any litigation if asuch lawsuit were filed againstcould require us or be forced to settle any claims for an as-yetundetermined amount. Depending on how such claims are resolved, theamount which could have a material impact on us could be material.
our business, financial condition, or results of operations.
We have a number of issued patents. We have also filed a number of additional U.S. and foreign patent applications but these applications may not successfully result in issued patents. Any patent litigation against us may involve patent holding companies or other adverse patent owners that have no relevant product revenue, and therefore, our patents and patent applications may provide little or no deterrence as we would not be able to reach meaningful damages if we assert them against such entities or individuals. If a third party is able to obtain an injunction preventing us from accessing such third-party intellectual property rights, or if we cannot license or develop alternative technology for any infringing aspect of our business, we would be forced to limit or cease access to our platformPlatform or cease business activities related to such intellectual property. In addition, we may need to settle litigation and disputes on terms that are unfavorable to us. We may be required to make substantial payments for legal fees, settlement fees, damages, royalties, license or other fees in connection with a claimant securing a judgment against us. Although we carry general liability insurance, our insurance may not cover potential claims of this type or may not be adequate to cover all liability that may be imposed. We cannot predict the outcome of lawsuits and cannot ensure that the results of any such actions will not have an adverse effect on our business, financial condition, or results of operations. Any intellectual property claim asserted against us, or for which we are required to provide indemnification, may require us to do one or more of the following:
•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.
In addition, certain states have either passed or are debating laws that would create potential liability for moderating or removing certain user content. While we believe these laws are of dubious validity under the U.S. Constitution and in light of Section 230 of the CDA, they nevertheless present some risk to our content-moderation efforts going forward.
Even if the claims do not result in litigation or are resolved in our favor, these claims, and the time and resources necessary to resolve them, could divert the resources of our management and harm our business and operating results. Moreover, there could be public announcements of the results of hearings, motions or other interim proceedings or developments and if securities analysts or investors perceive these results to be negative, it could have a substantial adverse effect on the price of our Class A common stock. We expect that the occurrence of infringement claims is likely to grow as the market for our platformPlatform grows. Accordingly, our exposure to damages resulting from infringement claims could increase, and this could further exhaust our financial and management resources.
proprietary information, know-how and trade secrets or that has or may have developed intellectual property in connection with their engagement with us. Moreover, we cannot assure you that these agreements will be effective in controlling access to, distribution, use, misuse, misappropriation, reverse engineering, or disclosure of our proprietary information, know-how, and trade secrets. Further, these agreements may not prevent our competitors from independently developing technologies that are substantially equivalent or superior to our platform.Platform. 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.
•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;
•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 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 financial guidance or projections, any changes in those projections 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;
•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;
•other events or factors, including those resulting from war, incidents of terrorism, pandemics, including the COVID-19 pandemic, wildfires or power outages or responses to these events; and
•general economic conditions and slow or negative growth of our markets.
then-outstanding shares of Class B common stock, (ii) the date on which less than 30% of the Class B common stock that was outstanding on March 2, 2021, (iii) March 10, 2036, (iv) nine months after the death or permanent disability of Mr. Baszucki, and (v) nine months after the date that Mr. Baszucki no longer serves as our CEO or as a member of our board of directors. Future transfers of Class B common stock will generally result in those shares converting to Class A common stock, subject to limited exceptions.
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•upon the conversion of our Class A common stock and Class B common stock into a single class of common stock, our stockholders will only be able to take action at a meeting of stockholders and will not be able to take action by written consent for any matter;
•our amended and restated certificate of incorporation will not provide for cumulative voting;
•vacancies on our board of directors will be able to be filled only by our board of directors and not by stockholders;
•certain litigation against us can only be brought in Delaware;
•our amended and restated certificate of incorporation authorizes 100 million shares of undesignated preferred stock, the terms of which may be established and shares of which may be issued without further action by our stockholders; and
•advance notice procedures apply for stockholders to nominate candidates for election as directors or to bring matters before an annual meeting of stockholders.
•any action asserting a claim of breach of a fiduciary duty;
•any action asserting a claim against us arising under the Delaware General Corporation Law, our amended and restated certificate of incorporation or our amended and restated bylaws (as either may be amended from time to time); and
•any action asserting a claim against us that is governed by the internal affairs doctrine.
billion.
Since January 1,have issued the following unregistered securities:Preferred Stock IssuancesIn January 2021, we sold an aggregated of 11,888,886 shares of our Series H convertible preferred stock at a purchase price of $45.00 per share to 18 institutional accredited investors, for an aggregate purchase price of approximately $534.3 million.Option and RSU IssuancesFrom January 1, 2021 to March 2, 2021 (the date of the filing of our registration statement on Form S-8), we granted to our CEO a Long-Term Performance Award, an RSU award under our 2017 Plan, which would provide him the opportunity to earn a maximum number of 11,500,000 shares of Class A common stock.From January 1, 2021 to March 2, 2021 (the date of the filing of our registration statement on Form S-8), we issued and sold to our employees an aggregate of 89,682487,404 shares of our Class A common stock upon the exercisefor an aggregate fair value of stock options$31.3 million in connection with our acquisition of Guilded, a privately-held company, as consideration to certain accredited investors that were former equity holders of Guilded, of which 208,899 shares were issued to a key employee and are subject to certain time and service-based vesting conditions over a period of three years. These shares were issued pursuant to an exemption under our 2017 Plan at an exercise price of $3.35.None of the foregoing transactions involved any underwriters, underwriting discounts or commissions, or any public offering. We believe the offers, sales and issuances of the above securities were exempt from registration under the Securities Act (or Regulation D or Regulation S promulgated thereunder) by virtue of Section 4(a)(2) of the Securities Act because the issuance of securities to the recipients did not involve a public offering, or in reliance on Rule 701 because the transactions were pursuant to compensatory benefit plans or contracts relating to compensation1933, as provided under such rule. The recipients of the securities in each of these transactions represented their intentions to acquire the securities for investment only and not with a view to or for sale in connection with any distribution thereof, and appropriate legends were placed upon the stock certificates issued in these transactions. All recipients had adequate access, through their relationships with us, to information about us. The sales of these securities were made without any general solicitation or advertising.
Exhibit No. | Incorporated by Reference | |||||||||||||||||||||||||||||||
Description | Form | File No. | Exhibit | Filing Date | ||||||||||||||||||||||||||||
3.1 | 10-Q | 001-39763 | 3.1 | May 13, 2021 | ||||||||||||||||||||||||||||
3.2 | 10-Q | 001-39763 | 3.2 | May 13, 2021 | ||||||||||||||||||||||||||||
4.1 | S-1/A | 333-250204 | 4.1 | January 8, 2021 | ||||||||||||||||||||||||||||
4.2 | S-1/A | 333-250204 | 4.2 | January 8, 2021 | ||||||||||||||||||||||||||||
4.3 | S-1/A | 333-250204 | 4.3 | January 8, 2021 | ||||||||||||||||||||||||||||
4.4 | S-1/A | 333-250204 | 4.4 | January 8, 2021 | ||||||||||||||||||||||||||||
4.5 | 8-K | 001-39763 | 4.1 | October 29, 2021 | ||||||||||||||||||||||||||||
4.6 | 8-K | 001-39763 | 4.2 | October 29, 2021 | ||||||||||||||||||||||||||||
10.1 | S-1/A | 333-250204 | 10.3 | January 8, 2021 | ||||||||||||||||||||||||||||
10.2 | S-1/A | 333-250204 | 10.6 | January 8, 2021 | ||||||||||||||||||||||||||||
10.3 | S-1/A | 333-250204 | 10.9 | January 8, 2021 | ||||||||||||||||||||||||||||
31.1* | ||||||||||||||||||||||||||||||||
31.2* | ||||||||||||||||||||||||||||||||
32.1† |
XBRL Instance | ||||||
Inline XBRL Taxonomy Extension Schema Document. | ||||||
Inline XBRL Taxonomy Extension Calculation Linkbase Document. | ||||||
Inline XBRL Taxonomy Extension Definition Linkbase Document. | ||||||
Inline XBRL Taxonomy Extension Label Linkbase Document. | ||||||
Inline XBRL Taxonomy Extension Presentation Linkbase Document. |
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Roblox Corporation | ||||||||||||||
Date: | By: |
| /s/ Michael Guthrie |
Michael Guthrie | ||||||||||||||
Chief Financial Officer | ||||||||||||||
(Principal Financial Officer) |
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