Roblox, massive Tween gaming platform, goes public

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The company reported revenue of $ 589 million and operating cash flow of $ 345 million for the nine months ending September. It is not yet profitable, reporting a net loss of $ 203.2 million in the nine months ending September, according to the IPO filing.

If you’ve never heard of Roblox, it might be because you’re not a tween or parent of a child. The entire platform is made up of user-generated games, many of which were created by kids and teens who have made millions of dollars through the platform. About 75% of American children between the ages of 9 and 12 regularly play Roblox with friends, according to the company.

During the pandemic, kids flocked to Roblox to host virtual birthday parties and other in-game events that were no longer safe to hold in person. In July, gamers spent 3 billion hours playing Roblox, twice as many as in February.

On average, 36.2 million users log into the platform every day to play with friends. Of those users, 29% are between 9 and 12 years old and 25% are under 9 years old, according to the filing.

Roblox is also a big company. In October, it hit $ 2 billion in lifetime revenue alone from mobile gamers, according to Sensor Tower, which tracks mobile apps.

But Roblox has yet to find ways to make a profit, after reporting a history of net losses on the record, including $ 97.2 million in 2018 and $ 86 million in 2019.

Game developers, often young adults, earned $ 209.2 million for the nine months ending September, up 190% from the same period a year earlier. Roblox reported this as part of its spending.

The company revealed that only a small portion of its customers regularly spend money on games and that it does not have exclusive contracts with the game developers who use Roblox to create their games.

The warned in his filing that he may not be able to become profitable in the future, but he could charge more users for his subscription service, Roblox Premium, in order to increase his profits.

Roblox also said its business depends on its ability to “provide a safe online environment for children”. Roblox has made headlines when kids spend too much money without parental permission and when predators target kids using the platform.

Roblox said in an August blog post that it has a team of 1,600 moderators who monitor the platform for any inappropriate content and perform security reviews of all images, audio and video files there. human and machine scanning aid.

As an internet company, Roblox must also gain the attention of users, an area where it faces strong competition. In his file, he listed tech giants like Apple (AAPL) and Tencent (TCEHY), entertainment companies like Disney (DIS) and Netflix (NFLX), social media like Facebook (FB) and Snapchat (BREAK) and the Unity game creation platform as competitors.

It was a banner year for video games. The pandemic has resulted in an increase in cash flow and an improvement finances for Roblox and other gaming companies. Unity went public in September at $ 75 a share and closed at $ 116 on Thursday, a 55% increase. However, Unity saw a larger net loss in its first results last week.

Still, Roblox wrote that the pandemic could have long-term negative income effects if users cut spending due to global economic issues.

Another risk factor is Roblox’s joint venture in China with a subsidiary of Tencent, which plans to release a localized version of Roblox for Chinese users. This move could be affected by US-China policy, Roblox noted in its dossier.

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