Roblox just printed a very strong set of results for the fourth quarter and full year 2023. Looking ahead, we believe that the core social flywheels of the platform remain intact, while a sharpened focus on improving profitability and burgeoning growth opportunities position Roblox for continued strength in 2024.
Brands investing in the platform should be encouraged by the continued growth in users, engagement and monetization while new advertising tools and e-commerce opportunities give brands new ways to extract value from activations on the platform. To learn why Supersocial can help your brand maximize value on the Roblox platform, get in touch with us here.
Here are five things that stood out to us in the results that position Roblox for a very strong 2024:
1) User Growth of 20% Might Continue in 2024
Roblox grew its daily active users (DAUs) at a 22.5% annual growth rate for 2021-23 and we believe that 20%+ growth in DAUs is sustainable for 2024. Roblox exited the fourth quarter of 2023 with 71.5 million DAU - a new record - and this could eclipse 85 million exiting 2024 at the current trajectory. And we still believe that the platform reaching 100 million DAU in the next few years is well within reach.
Source: Roblox company filings
For the full year 2023, 80% of Roblox’s DAU were from mobile platforms, up from 78% the prior year. Although Roblox is available on multiple devices including console, mobile and PC, mobile continues to account for the bulk of engagement by users.
For brands evaluating activation opportunities on the platform, the key over 13 demographic grew 29% in 2023, with DAU from that demo exceeding 41 million in the fourth quarter. Over 13 users represented 57.9% of total DAU in the fourth quarter, as the platform continues to age up and attract older users. This is notable as only users over 13 are exposed to advertisements on the platform.
2) Engagement Remains Robust
Engagement on Roblox remains robust and proves that the platform continues to have staying power, not just as a game experience platform but as a primary social network for gen z and gen alpha. Total hours spent on the platform reached new quarterly and annual records this past year. Fourth quarter hours engaged reached 15.5 billion, growing 21% year-over-year, while full-year 2023 hours eclipsed 60 billion, rising 22% vs. the prior year.
Source: Roblox company filings
Hours engaged continues to grow faster for over 13 users and this demographic continues to spend 2.5 hours per day on the platform, or 150 minutes per day. For comparison, users in the U.S. spend on average 33 minutes per day on Instagram, 49 minutes per day on YouTube and 54 minutes per day on TikTok, according to Statista. This means that Roblox’s daily engagement is about 3-5x larger than most social apps today.
Source: Roblox company filings, Statista
3) How Fast Will Profitability Improve in 2024?
Roblox’s improving profitability is important for brands as it can lend confidence to those investing on the platform that Roblox can execute on its product roadmap to keep delivering great activations for brand partners. Forthcoming exciting products for brands include an improved advertising technology stack, real world commerce and additional AI capabilities.
Source: Roblox company filings
Roblox’s adjusted Ebitda increased 21% in 2023 and the company’s guidance for 2024 suggests growth of 23-39% for 2024.
4) Advertising Opportunity Keeps Emerging
Roblox’s push into building a full-stack advertising network on the platform will continue in 2024 after efforts began in earnest in 2023. Although CFO Mike Guthrie confirmed that advertising is still not material to Roblox’s consolidated results, it’s a burgeoning opportunity and a great way for brands to interact and engage with Robloxians over 13.
Source: Roblox company filings
Roblox CEO Dave Baszucki confirmed that measurement tools are set to roll out in 2024 to help brands better attribute advertising on the platform.
5) E-Commerce Beckons
Although it wasn’t a focus on the quarterly earnings call, we remain excited about the burgeoning real-world commerce opportunity for brands activating on the Roblox platform. We believe that this could mark a significant inflection point for brand engagements on the Roblox platform, as activations shift from a focus on marketing metrics to one that could potentially be a core part of their sales channel.
Starting later this year and rolling out fully in 2025, brands will be able to connect in a whole new way by linking their real-world commerce sites to the Roblox platforms. Although we await details on the strategy and implementation, this is an exciting opportunity for brands activating on the platform to think more holistically about their Roblox and digital world strategies beyond marketing activations.
Looking for more insight? Check out our podcast where we dive deeper into Roblox’s results and our thoughts on the outlook for 2024.