S-1 can be found here: https://www.sec.gov/Archives/edgar/data/1315098/000119312520…
Summary: Roblox seems to have the same benefit/risk analysis as companies like PTON/ETSY where the business is growing gangbusters as a result of COVID, but unsure if trends will stick. Being a gaming/social platform with the majority of its users being under 13 also is a risk due to the fickle nature of the category and user demographics.
Roblox, started in 2004, is a social gaming platform where developers (over 7 million) create 3D digital worlds for players (average 36 million daily) to play and interact. The majority of its users are under 13, with a growing segment in 17-24. These are estimates due to COPPA, which inhibit complete data collection on its users.
The 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 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
Stats from prior 8 quarters (someone better with tables can maybe repost this with a better format, table is on page 106 of S-1)
Revenue: 96 – 107 - 116 - 127 - 138 - 157 - 190 – 242
Average sequential growth: 14% (10% pre-pandemic)
Average YoY growth: 62% (56% pre-pandemic, including 43% 4Q19 and 46% 1Q20)
3Q20 YoY growth: 91%
Now the good part and why I’m taking a look at the company, bookings is the equivalent of prepaid gift cards (they are non-refundable), and is recognized to revenue over 23 months (page 113-114)
Bookings: 142 – 150 – 165 – 236 – 250 – 494 – 496
Average sequential growth: 23% (13% pre-pandemic)
Average YoY growth: 94% (45% pre-pandemic, including acceleration 66% 4Q19 and 76% 1Q20)
3Q20 YoY growth: 200% (as in 3x prior year)
Basically, since bookings doubled in the last 2 quarters, revenue is guaranteed to be growing close to 100% over the next year even if bookings remain flat.
A few more user statistics
Daily Average Users: 14 – 16 – 17 – 18 – 19 – 24 – 33 – 36
Average sequential growth: 15% (12% pre-pandemic)
Average YoY growth: 70% (36% 4Q19 and 50% 1Q20 so was already accelerating)
3Q20 YoY growth: 100%
Bookings per user hovered around $9-$10 pre-pandemic, and was $14.81 and $13.73 the last two quarters
I was not able to find any retention/cohort data in the S-1, but given they amortize bookings over 23 months, the average user probably sticks around on the platform about 2 years so around 4% average churn per cohort.
The company did just introduce Roblox Premium, which is a subscription service. However I’m skeptical this affects retention in any way since most users will probably just choose between the subscription service or one off credit purchases depending on their usage pattern.
The company is still losing money on a GAAP basis, but is already generating significant free cash flow ($35m in 2018, $15m in 2019, and $293m so far in 2020)
Haven’t dived too deep into management yet, figure I would catch up over time listening to calls and making a judgment then.
Overall, the demographics of the user base gives me a little bit of heartburn, but the guaranteed revenue growth seems to counteract this a bit.
The category (gaming/social) is also prone to change of tastes so is also a big risk imo, but the two sided nature of the platform and content being completely user generated does alleviate this a bit.
I am guessing going forward the DAU and bookings numbers will drive the stock price.
I will keep an eye on this after the IPO. Hope this is helpful to some of you.