Roblox Files For IPO On NYSE


? Initial Public Offering

• CA-based video game platform Roblox Corporation has filed its S-1 registration documents targeting an IPO on NYSE before the end of this year. The company has not disclosed either the sum it’s planning to raise or its valuation. In October 2020, Roblox’s last-known potential valuation was rumored to be $8B

  • For comparison, In February 2020, Roblox was valued at $4B after raising $150m investments in Series G round

• Roblox offers Class A common stocks for the initial public offering, though the company stated it has two classes of authorized common stock — Class A and Class B, with the only difference in the number of voices per share. Class A is entitled to have 1 voice, while Class B is entitled to have 20 voices

• The IPO would result in a great return for multiple investors. According to TechCrunch: Altos Ventures is the principal stockholder having a 21.3% stake, Meritech Capital controls 10.3%, Index Ventures — 9.9%, Tiger Global — 7.3%, and First Round Capital — 6.3%

• Roblox is an operationally profitable business with high bookings growth, and we expect the rumored $8B as a probable valuation level at IPO. The valuation multiples in such a case would be 5.4x Bookings, 11.0x Revenue, and 27x Free cash flow

• One more interesting beneficiary is a usual suspect — Tenсent, which has entered into a Joint Venture with Roblox in February 2019. According to the partnership agreement, Tencent is to publish and operate the localized version of Roblox (named “Luobulesi”) in China. However, Tencent hasn’t received the publishing license yet. On the one hand, it is a great untapped potential for Roblox and could become a driver of the future share price increase. On the other hand, political tensions between the US and Chinese governments, as well as the established presence of Beijing-based local competitor Reworld decrease the chances of a successful Roblox launch in China

? Business Overview

• California-based game developer and publisher Roblox Corporation owns its own game engine Roblox Studio, which allows Roblox players to make their own and play others’ games on the platform. Players can also create, sell and buy virtual items for an in-game currency Robux. Players can obtain Robux by purchasing it with real currency, and from other players

• Game developers can advertise their games at Roblox game store. All adds run for 24 hours from their launch and cost from $0.625 to $3.75 based on the type of the add

• All players can buy in-game items, but only those who have Premium membership can sell them. Premium membership of 3 different levels requires monthly payments of $4.99, $9.99, and $19.99

• As of September 30, 2020, there are about 7 million active developers across more than 170 countries, who create games, including 1,050 developers that earned $10,000 or more, and nearly 250 developers who earned $100,000 or more

• In 2020 Roblox is planning to pay $250m to the platform’s developers in total, compared to $110m paid in 2019

• Approximately 68% of Roblox users are under 17 years, 62% of all users are from the USA, Canada, and Europe

• Being first launched on PC in 2006, Roblox has evolved to mobile in 2011 (iOS launch, Android in 2014) and console in 2016 (Xbox). While being present across multiple platforms, Roblox is primarily focused on mobile with 72% of users’ sign-ups, whereas PC stands for 25% and console — only 3% as of nine months ended Sep 30, 2020

? Financial Performance

• During the period of Q1-Q3 2020, Roblox reported $589m revenue, compared to $488.2m in FY 2019, and $312.7m in FY 2018

• Bookings, which include revenue that is yet to be counted, were $1.2B in the period of nine months of 2020, compared to $694.3m in FY 2019, and $499m in FY 2018

• Total cost and expenses in the first 3 quarters of 2020 were $794.9m, while in the FY 2019 they were $579.7m, and $409.4m in the FY 2018

• Approximately 34% of sales are coming from App Store, while Google Play contributes about 18%

• Roblox has surpassed $1.5b in player spending, with over $100m being spent only in May 2020 growing from $30m in the previous year

• In its financial statements, Roblox divides its revenue and bookings, with the latter contributing most to the company’s profits, usually exceeding revenue more than twice

? Previous Funding

• In February 2020, Roblox received $150m of Series G funding. Andreessen Horowitz led the round, with additional financing from Temasek, Tencent Holdings, Altos Ventures, Meritech Capital and Tiger Global Management

• In September 2018, Roblox raised $150m in a series F round led by Greylock Partners and Tiger Global, with participation from existing investors Altos Ventures, Index Ventures, Meritech Capital Partners and others

• In March 2017, the company secured $25m of Series E funding from Meritech Capital Partners and Index Ventures

• Before 2017, the company had raised about $10.76m in five financing rounds

?Previous Acquisition

• In October 2018, Roblox acquired California-based app performing startup PacketZoom for an undisclosed sum

? Roblox In Numbers

• 37 billion hours played since 2008

• 3 billion total engagement hours each month

• 5.2m peak concurrent users

• $241m paid to the community developers

? Product

• Roblox is an online gaming platform that allows people to create their own games and share them with others.

• The number of active users has increased from 115m in February 2020 to 164m in August 2020. Currently, the company has 31.1m daily active users, including 7m active developers, who have created more than 18m games within the platform at the time

• During 2020, the platform managed to attract 35 million new monthly active users

• As of August 2020, at least 20 Roblox games have been played more than one billion times, and at least 5,000 have been played more than one million times

• Each month, players spend about 3 billion hours on the platform. According to Sensor Tower Store Intelligence estimates, in June 2020 Roblox mobile lifetime player spending surpasses $1.5bn

• The number of monthly downloads had been increasing gradually since 2016, reaching its peak of 16.5m in July 2020. By the time of October 2020, the number of downloads per month was 13m, with an overall number of 448.5m

SOURCES: SEC.GOV