Roblox (RBLX.US) Q2 conference call: The future goal is to capture 10% market share of the $180 billion global gaming content market.

Roblox (RBLX.US) held its 2025 second quarter financial report conference call. The company's second quarter revenue reached $11 billion, a year-on-year increase of 21%. Bookings reached $14 billion, a year-on-year increase of 51%, reaching a historic high. Daily Active Users (DAU) reached 1.118 billion, a year-on-year increase of 41%, reaching a historic high. User engagement reached 27.4 billion hours, a year-on-year increase of 58%. Monthly unique paying users reached 23.4 million, a year-on-year increase of 42%, reaching a historical high. There were 46 million new monthly unique paying users, reaching a historical high. The average booking amount for monthly unique paying users increased by 6%. Developer revenue (DevEx) reached $3.164 billion, a year-on-year increase of 52%, reaching a historical high. The company increased its 2025 fiscal year performance guidance, adjusting revenue guidance to a year-on-year increase of 22% to 25%. Bookings guidance adjusted to a year-on-year increase of 34% to 37%. At the high end, bookings are expected to exceed the previous annual guidance by $610 million, or over 11%. Looking ahead, the company aims to capture 10% of the $180 billion global gaming content market. In the third quarter outlook, it conservatively assumes that recent viral content engagement and spending levels will return to baseline growth trends. In the fourth quarter outlook, there is some uncertainty due to the majority of bookings typically occurring in the last few days and weeks of the fourth quarter. Q&A Analyst Questions Q: How is the platform coping with the significant surge in demand? In terms of Capital Expenditure (CapEx), how is the company balancing long-term development with platform capacity and scalability improvements? A: We are increasing the number of simultaneous online players to over 30 million, with "Grow a Garden" exceeding 20 million concurrent players within weeks, far surpassing any previous game record in the Guinness World Records. This shows that we are handling very large numbers. To absorb this high load, we have implemented a combination of bare-metal infrastructure and cloud provider burst mode optimization. This means that we can spin up a large number of cloud servers within four to eight hours and combine them with our continuously running bare-metal infrastructure. This hybrid approach is highly efficient and avoids high capital expenditures paid 24 hours a day, seven days a week to handle sudden loads. Q: Given that platform revenue distribution is skewed towards non-head developers, and onboarding and creation friction is reduced, how will this impact professional developers? Do you believe that Roblox can achieve faster growth rates in 2026 and beyond? A: We are moving forward along the path planned approximately six quarters ago, focusing on core technology, scaled technology, discovery mechanisms, economic systems, and LiveOps. We believe there is still a significant amount of technical reserves to fully realize the desired vision and accelerate the development of a range of experiences. Roblox's ultimate goal is to support a version that creators can build across any language and any device. This means providing an excellent experience from low-end 2GB Android phones to high-end gaming PCs and supporting diverse imagery beyond just the original Roblox imagery. We have not fully achieved this goal yet, so we are currently focusing on core technology, expecting to accelerate category expansion over time. Additionally, the economic system is continually being improved and adopted by more developers through more optimizations, dynamic pricing, and regional dynamic pricing. Q: Has a viral hit like "Grow a Garden" become a platform for promoting new developers? What do you think are the main driving factors behind the high turnover rate of the top experiences on the platform? A: When an experience reaches over 20 million concurrent users, the success of "Grow a Garden" has been widely spread in the developer community. With its asynchronous gameplay feature (gardens can grow even when not actively playing), it provides inspiration and a potential launchpad for new developers. With the platform introducing in-game AI features (including 3D generation and text generation), it has spawned a variety of new experiences, further driving developer growth. The high turnover rate of the top experiences reflects the continued vitality and innovation of the platform content. Currently, five experiences have daily active users (DAU) exceeding 10 million, with growth extending to the top 1000. The driving factors include platform technology, search and discovery mechanisms, and the economic system's support for different game genres (such as sports, racing, battles, RPGs). We aim to allocate more revenue to the creator community, making Roblox more advantageous in development efficiency, discovery, and monetization compared to traditional game stacks. Q: Regarding the recent viral explosion of popular content, what are the main factors contributing to it? Additionally, the Asia-Pacific region showed strong growth this quarter. Can you elaborate on the drivers of growth in this market? A: Attributing the recent viral outbreak of popular content to a single or a few factors is difficult. We find that it is the result of hundreds of coordinated innovative measures. Roblox has a very broad technology stack covering aspects such as 3D engines, creator tools, search and discovery, multi-device applications, automatic translation, and more. Innovations and executions in all these areas have jointly contributed to the emergence of these viral contents. For example, the success of "Grow a Garden" is attributed to our recommendation algorithm, scale expansion facilitated by high-quality infrastructure, and Studio tools helping creators build quickly. In the Asia-Pacific region, strong growth is also a result of multiple factors working together. We have particularly focused on improving automatic translation quality, optimizing performance, and increasing server capacity in places like Singapore. Over the past year, infrastructure performance in the Asia-Pacific region has significantly improved and strengthened with scale expansion. Especially in Japan, breakthroughs in product translation quality have significantly driven growth in that region. Q: As the platform evolves into a more comprehensive ecosystem, how do you view its long-term monetization strategy? What are the differences and synergies between the business building module, advertising, and subscription models, and how will the future monetization mix evolve? A: We are building an ecosystem and platform where independent creators have a range of monetization tools to optimize their experience. We aim to provide the widest range of tool options, including free add-ons, virtual currency, paid access, ad-supported models, and physical goods sales. With the introduction of rewarded video ads, some developers will value their impact highly, while others may continue to use virtual economy models. Our philosophy is that the more it can drive category expansion, achieve original growth in user engagement and Daily Active Users (DAU), as long as the economic system is correct, monetization will naturally occur. It is noteworthy that some categories targeting older users typically have much higher monetization potential than Roblox's current levels. Therefore, as the platform expands into these age groups and gains market support, we expect to see higher monetization capabilities in those categories. We emphasize the essence of the flywheel effect, where all these monetization models are enhanced by continuous boosting of user engagement and participation in the short term. All the strategies and priorities the company has established in the past few years, as you have heard today, have brought significant breakthroughs and successes in user engagement, user growth, and our current business model's monetization. I firmly believe that with all of this accelerating, it will greatly facilitate the exploration and experimentation of other new monetization methods by the platform and our creators, further enriching and optimizing the economic vitality of the entire ecosystem. Q: Regarding the progress of the advertising partnership with Google, what is the specific implementation schedule? How do you prioritize and plan the rollout of advertising monetization opportunities? Additionally, is the company considering introducing other third-party ad demand sources? A: We have opened the window for creators to provide rewarded video ads and have rigorously verified it. We have closely monitored the performance of this product on iOS and Android devices, ensuring that it delivers the expected performance and scale even on low-memory devices. Through relentless effort, this feature is now officially launched. Our internal data shows that the adoption rate of rewarded videos is consistently strong, and although we have not disclosed specific scale, creators of all kinds are actively trying out this model. We are very excited about this growth opportunity and expect that as the platform becomes a part of 10% of the global gaming content market, ad monetization will naturally become a significant source of revenue for developers. As for bringing in more partners to meet advertising demand, this is definitely something we envision doing as our business continues to expand to further optimize the ad ecosystem. As Dave mentioned, we are still at a relatively early stage, although many creators have started integrating Google's ad functions, which is very encouraging. Currently, nearly 100 publishers have joined our advertising partnership program, demonstrating early good acceptance and potential. Therefore, we expect in the future, as the platform ecosystem matures and the advertising business deepens, there will be more progress and expansion in terms of third-party ad demand sources. Q: How does the new "Creator Rewards Program" change the incentive mechanism for creators compared to the past participation-based payment method? Will this program significantly increase DevEx payment amounts in the short term? Additionally, when will the company more actively promote "Sponsor Tiles" as a key business opportunity for discovery engines? A: The "Creator Rewards Program" is a crucial component of our systematized incentive mechanism. We aim to optimize the incentive mechanism to align with behaviors necessary for the long-term health of the platform. This differs from the old participation-based payment model, which may create suboptimal incentives. The new system aims to better reward creators who bring natural traffic to the platform and virally spread new users, encouraging them to attract new users through social activities to drive the platform's continued healthy growth. In terms of discovery mechanisms, our goal is to promote the long-term health of the platform, benefiting users, creators, and the entire ecosystem. Therefore, we cautiously reward discovery behaviors and increase transparency so that creators can understand the incentive mechanisms in their dashboards. Regarding "Sponsor Tiles," we believe it has tremendous long-term potential. It provides an economically efficient way for creators to acquire game traffic and is an effective way to purchase traffic within the Roblox platform to launch new experiences. We are actively optimizing and better positioning the "Sponsor Tiles" feature. In terms of the financial impact of the "Creator Rewards Program," transitioning from the previous participation-based system to the new framework in the short term will not have any substantial impact on the income statement. We expect that over time, by sharing significant incremental revenue with creators through the Creator Rewards Program, they will enhance the overall strategy of the business, sharing more revenue with creators while gaining operational leverage in other parts of the business. Q: How did new user acquisition go this quarter, and what was the role of "Grow a Garden" in it and its sustainability? Additionally, could you introduce the age structure of new players, and whether the viral hit content has successfully attracted older audiences? A: Our vision is to create a platform for users of all ages globally, not just focusing on increasing the age of users. Data shows that the proportion of users 13 years and above among total users continues to grow, with this group showing steady growth. Since "Dress to Impress," we have seen experiences that are highly attractive to users aged 13 and even 17 and above. Like the popularity of "Dress to Impress" in college classrooms, "Grow a Garden" has also successfully attracted users of different age groups. Its universal appeal helps attract older users to the platform. There is still significant room for growth in the 17 and above user group. Interestingly, the recent two super-viral hit games - "Dress to Impress" (fashion category) and "Grow a Garden" (gardening category) - are not typical game types, demonstrating both platform creativity and the potential for more traditional game types in the future. "Grow a Garden" has certainly brought new users, which is why we have rebuilt the "Creator Rewards" to incentivize such creators. In some aspects, "Grow a Garden" is slightly different from the overall platform user base. We observed that the age of "Grow a Garden" users is slightly higher than the platform average, representing an attractive audience expansion. Although still in the early stages, there are already signs indicating very sustainable engagement levels. It is currently one of the most popular and highest retention social games on our platform. User engagement playing games with friends is typically 1.5 to 2 times higher than non-cooperative players, indicating its high stickiness. The game has also effectively utilized LiveOps, such as the Travis Kelsey event. Therefore, "Grow a Garden" has the potential to become a perennial favorite. While we assume it will normalize, we are very optimistic about its intrinsic elements and long-term sustainability. Q: In addition to social virality, did "Grow a Garden's" amazing user growth rate benefit from algorithmic optimizations? Can this successful model be replicated in other works? A: After the launch of "Grow a Garden," its discovery through the recommendation system is algorithm-based and fundamentally replicable. The system is based on estimating the long-term value of each individual user, not just short-term but also for the next year or even longer. We are working to predict the long-term value of any experience for any user and combine it with a wide range of factors. Continuous improvement of the recommendation mechanism is key to its replicability. By increasing transparency and sharing more signals with creators, we have created an environment where creators who meet these signals can build amazing, fun, and satisfying experiences. Therefore, this successful model is repeatable and inherent to the platform. Additionally, historical data shows that social asynchronous games involving gardening and planting on other platforms also maintain good stickiness. Q: How does the company retain new users entering Roblox for the first time through "Grow a Garden" and guide them to explore other experiences? A: We believe that the more time users spend on the platform, the more new experiences they will discover. This is the success of "Grow a Garden," which has brought tremendous user engagement. Data shows that about three-quarters of daily active users in "Grow a Garden" also participate in at least one other experience. This organic discovery mechanism, utilizing all platform features that Dave described, has been proven to be very effective. "Grow a Garden" is a successful example of this strategy.