The Company management calls Roblox an immersive platform.
The Company was founded in 2004 and secured its first seed funding in 2007.
Founder and CEO Dave Baszucki is considered to be a legend by industry insiders.
Because of the way revenue deferment works, bookings is the more applicable metric.
Bookings are mainly the value of the virtual currency that their users purchase on their platform.
Bookings for 2021 are roughly expected to be $2.5-$2.7 B.
Assuming a 30% growth, bookings for 2022 are expected to be roughly $3.4 B.
Shares outstanding are roughly 652 M.
They have $1.6 B of cash on the balance sheet.
Stock is trading at $83, a market cap of $54 B.
Per the above numbers, current valuation is 22X 2021 EV/sales and 15.4X 2022 EV/sales.
They also have 25-27% EBITDA margins and in the last quarter (1Q 21) had $142 M of FCF on a revenue base of $652 M, a FCF margin of 22%.
Growth drivers are increased user growth, expansion of geography especially China and increase of age range of user base.
They are also a great way to play the concept of metaverse.
Sales and Marketing (S&M) is only 3% of sales. They pay almost 20% of revenue to developers.
In terms of economics and business model, there are four cost buckets:
Payment ProcessingPersonnel (comprising of mainly engineers and product people - 80%)
money they share with the developers and the community, and on
Trust, safety and infrastructure.
They don’t have to spend a lot of money to drive user growth.
They are attracting brands to their platform and according to them the kind of advertising they will end up doing will be different from a CPM based advertising. According to them, this is a user base that’s hard to reach; especially in the digital world.
According to Dave, the advertising will be non-intrusive and more natural. They would like to believe that the size of the advertising opportunity would be equal to the level of engagement they have which was over 3.2 billion hours in the month of April.
Currently US is 60% of the bookings and Europe and Asia Pacific make up the remaining.
Key metrics will be DAUs (daily active users), hours engaged, bookings, and average bookings per daily active user.
DAU’s in Q1 21, were 42.1 M, up 79% year over year.
Total hours engaged in Q1 21 were up 98% Y/Y to 9.7 billion.
In terms of demographics, users above 13 years of age grew 111% and now account for 49% of total users.
They keep seeing continuation of trends wherein their user base becomes more global and older.
Average bookings per daily active user increased 46% Y/Y to $15.48.
Hours as well as bookings per Average user were also up triple digits.
Chief Product Officer Manual Bronstein worked as product person for Google Assistant and You Tube before.
Roblox has been compared to You Tube by Industry experts.