Roblox Earnings: Takeaways
While chatter on the "metaverse" decreased, users, developers and brands continue to show love for Roblox, which continues to show growth and gains
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Roblox reported earnings for Q4.2022 and full year 2022 plus January 2023 numbers. With 2023 starting with many questioning the emergence of the metaverse or the role virtual worlds play in the next era of the Internet, I continued to claim that we are at the very early stages of a transformation powered by new technologies and by human behavior, especially kids and youth.
Rising above the noise is Roblox, the era defining platform that over the past decade inspired millions of kids to learn to code, build games and grow businesses on its platform. The company released its recent earnings for the latest fourth quarter and full-year 2022, and I wanted to share a few takeaways looking at its business results and assess what they could mean for Roblox’s long term potential, looking at it from the lens of a developer on the platform.
In Assessing Roblox in the Long Term I stated that when assessing the long-term prospects of the platform with my hat on as the CEO of Supersocial, I’m looking at five pillars:
Content & Experiences
Daily Active Users
Let’s assess Roblox’s results through lens of these five pillars.
1) Developer Ecosystem
Over the past 10 years Roblox has nurtured a community of millions of developers and creators who’s built millions of games and experiences now used by millions of users globally. Ensuring that developers on the platform, small and large, can monetize and build a business that stands on its own is, and should be, a key priority for Roblox the company. In 2022 developers earned $623.9 million, an increase of 16% from the $538.3 million earned in 2021. Generating revenue is not the only thing that keeps developers loyal to the platform - they also make friends and many of them grew up as players on Roblox and gradually becoming builders. I continue to consistently argue that the passion and dedication of developers to the Roblox platform is one of the platform’s most important competitive advantages.
2) Content & Experiences
The diversity of content on the platform means that any of Roblox’s millions of daily users can find something that they are excited to play and invite their friends to play with them. The low friction of accessing content through one master app and the enormous library of content that’s available to users at any given moment continues to be a key pillar of Roblox’s flywheel.
The hours engaged KPI is a key parameter which shows the outcome of Roblox’s content flywheel but it’s the fact that Roblox has millions of loyal developers in the first place that are creating the massive content library which is at the core of that flywheel. As long as Roblox continues to have a committed community of developers, we will continue to see more and more content created and more and more hours of engagement.
Roblox also continues to push its technology forward and enable developers to create ever more impressive and expansive worlds for users to engage with, and earlier this week it announced its plans for integrating Generative AI in its game engine and development platform, which will help make virtual worlds on Roblox even more customizable. I was invited to chime in on the article written by Wired: “Raz-Fridman says he is excited about the code generation technology that Roblox has in the works, “Building in 3D is an incredible endeavor. If generative AI can accelerate the pace of development, that would be enormous.” And he expects it to become normal for developers to use AI to generate more aspects of games and control characters in the future. “By the end of the decade it’ll be so ingrained in everything we won’t even think of it as AI.”
3) Aged-Up Users
One of the key strategic pillars for Roblox’s growth, in driving the growth of both the number of daily users and bookings per user is the platform’s ability to retain users as they age up and acquire new age-up users (the reference is to users over age 13). In the past two years we have seen major growth of the over 13 demographic and late in 2022 was the first time that the platform had more users over 13 than users under 13.
In its recent reporting Roblox stated that the user group of 17-24 year-olds now stands at 33% of total users on the platform and they account for 23% of all hours engaged in the fourth quarter, both an all-time high. While we no longer see the staggering growth of the over 13 age group as in the four quarters during 2Q2020 → 1Q2021, it continued to grow, albeit at lower rates, in the following quarters.
The next two years will be pivotal for Roblox in proving that it can continue to not only dominate the under 13 age group (which is its core audience historically) but also, and perhaps more importantly, retain them as they age up and acquire new users in the over 13 age group who may not think of Roblox as they social platform of choice. Alongside that, Roblox will need to show that as the platform ages up, developers create content that meets the expectations and desires of the aged up users and on the back of hours engaged is able to monetize that audience more effectively, both in North America and world wide. Driving growth of in bookings per daily active users (ABPDAU) will be key to ensuring that the more professional developers are not only passionate about the platform but can also build a sustainable business around their passion.
Case in point - my company Supersocial, in partnership with NARS Cosmetics (the prestige beauty brand), launched NARS Color Quest to push the boundaries of self-expression on Roblox. Upon launch we’ve witnessed the enormous appetite for great content by the over 17 age group on the platform which strengthen my belief that in the next 18-24 months we will see more and more content created that attracts and engages aged-up users.
4) Daily Active Users
Everything that is happening on the Roblox platform ultimately needs to drive the growth of daily users (and bookings per user), and on that metric, Roblox continues to show consistent growth despite concerns of kids going back to school and the aftermath of the covid-related rush into screens and social platforms. Roblox is clearly not going anywhere and not only that school time doesn’t seem to interrupt usage, January 2023 numbers show an all-time high DAU of 65 million! (19% year-over-year growth). During 4Q2022, year over year growth in DAUs was healthy in all regions, especially Europe 24%, APAC 21%, and US/Canada 19%.
When it comes to paying users, monthly unique payers (MUPs) in 4Q2022 reached an all-time high of 13.4 million, an increase of nearly 14% compared to 4Q2021. Average bookings per monthly unique payer (ABPMUP was $22.31 in 4Q2022, a 3% increase year over year and the highest ever monthly payer monetization with the exception of 4Q2020, during COVID, when ABPMUP was just 1% higher.
5) Geographic Breakdown
While it is unclear how effective monetization per user is in international markets, Roblox continues to increase the diversity of where users come from. In 4Q2022 only 23% os users came from the US and Canada with 77% of users from other countries. We’ve seen this change happening gradually over the last 3 years while in 2020 about 33% of users came from North America.
I expect this trend to continue although it’s important that Roblox (1) maintains strong monetization of North American users (who likely account for more than 50% of bookings) while (2) increasing bookings per user from international markets, which is not a simple thing considering that of the top 10 most engaged countries on Roblox, 5 of them are developing economies (Brazil, Philippines, Mexico, Russia, Thailand).
The future of the Roblox platform is not without challenges but the consistent growth it’s showing across some of the most important indicators show that Roblox’s brightest days as a platform could still be ahead. With the integration of more advanced technologies which in turn will enable developers to create ever more engaging games, experiences and virtual worlds can ensure that Roblox remains the most important destination on the Internet for kids and youth and potentially for many more young adults around the world.
As a builder on the platform, I’m going to continue and keep a close look at the growth of Roblox’s developer ecosystem (numbers and developer payouts), the growth and stickiness of its user base (both under 13 and over 13), its global footprint (and how effectively Roblox monetizes outside North America), and the quality of content launched on the platform.
Our mission at Supersocial is to build virtual worlds that power creativity, foster inclusivity, and drive prosperity for people and businesses alike. As the leading full-service studio of premium virtual worlds we serve as the most trusted and innovative partner for the world’s greatest brands and IP owners who seek to enter the metaverse. You can reach me on email (email@example.com) and Linkedin.
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