ROBLOX CEO David Baszucki Talks Earnings

**SPEAKER_1** (0:02)
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**Ed Ludlow** (0:09)
Grow a garden, 99 nights in the forest, still a brain rot, three games propelling Roblox to its highest level of daily active users. The company also posting nearly $2 billion in bookings in the third quarter, still shares of the company trading lower after the earnings. Let's talk through all of this with Dave Baszucki, founder, CEO of Roblox. And Dave, this growth, this real playing commitment comes at a cost, an infrastructure cost. And we see costs go up because of safety that you're enacting, but also the cloud compute. How would you start to monetize to make up for some of those costs?

**David Baszucki** (0:42)
Yeah, thanks for noting the amazing quarter we just had. Both bookings growth was up 70% year on year at 1.9 billion. And as you noted, our daily active users passed 150 million, which is up 70% year on year. In addition to those three games you mentioned, we had seven games on Roblox in the last quarter, passed 10 million daily active users. And a really healthy content ecosystem, five of those seven experiences were created in the last year. We've hit some really peak numbers. We had 45 million concurrent players all at the same time.
What we said on the earnings call is with all of this growth, which is cumulatively averaging 37% over the last two years, we are gonna be spending on infra. What we said is the continued decreases in cost for infra, we may slow that down a bit as we spend. But the final thing I wanna generate is the cash flow that we generated on the platform. We generated over 440 million of free cash flow in Q4.

**Caroline Hyde** (1:53)
Dave, looking forward then, how are you managing out some of the technology plays that you made, age verification technology, in a way that doesn't impact or slow the growth of both active users and the bookings?

**David Baszucki** (2:07)
We made a commitment a while back to what we believe will be the cold standard for safety on platforms like Roblox and throughout the industry. With new advances in AI, we're going to use facial age estimation to estimate the age of everyone on our platform. And in addition to the text filtering we do, the critical harms monitoring, the prevention of any image sharing, we're going to use that to help gait who communicates and who they communicate with. I was just in an executive staff meeting on Tuesday playing with the rollout of this product. It's really elegant and we of course want to highlight there may be some friction, but I'm really optimistic. This is the long-term good play for Roblox, which is really establishing the standard of how we believe safety and civility is going to run in the future.

**Ed Ludlow** (3:00)
And that, your CFO made the point, that's going to have long-term value for shareholders. You make it again, Dave. Talk to us therefore about the new technology, not just in safety, but also in how you build games and high fidelity feeling of a game. But some of these big winners that we've had, and we listened to them at the top, they are kind of more old school feeling in many ways, but they're the ones breaking records. Grow a garden, more classic and blocky. How do you compromise on that?

**David Baszucki** (3:26)
We've highlighted our vision of getting to 10% of all the global gaming content market running on Roblox. In this quarter, we passed 3%, so there's a lot of room to go. We have an enormous amount of new technology coming to support more diverse experiences, to support different types of avatars, to support competitive gaming in genres like racing or sports, to support role-playing games and other types. And we really do have a vision for genre expansion, but in a really future-looking way, and that when creators make experiences on Roblox, they run well either on low-end Android devices, like a 2GB Android phone, or on high-end gaming PCs, and they run around the world. So we're optimistic with the new technology, our economics and discovery, we're going to see a diversification of the types of experiences we see on our platform.

**Caroline Hyde** (4:23)
Dave, you want 10% of the gaming content market. That changed in the quarter. I saw layoffs at Amazon and Microsoft's gaming divisions. Electronic Arts elected to go private. The big publicly traded peer that you have, private with the Saudis. React with your interpretation of what that signals for the market you're trying to grow in.

**David Baszucki** (4:45)
Well, people estimate the global gaming market somewhere between 180 and 200 billion. What we've seen on Roblox is really a future forward optimistic look at gaming. We've seen new types of genres, given the Roblox platform, the ability to play with friends on different devices. You know, Dress to Impress last year was a whole new type of experience. People competing in a fashion show. Grow a garden, I'm really proud of, because hitting those top numbers, making new records for over 20 million concurrence, is literally a game you can play either while you're there or when you're not there. Your garden keeps growing when you're not playing. So I think the way to think about this is not just protecting about the history of gaming, but looking at a whole new types of games that are going to be built on platforms like Roblox and accelerated with AI as every game starts to have access to AI as well.