Roblox Q3 Earnings Call Highlights

Key Points

• Strong engagement drove Q3 outperformance: Roblox reported 138 million daily active users, nearly 34 billion engagement hours, and bookings above the high end of guidance. Retention reached its highest level since 2021, while adult users grew rapidly and monetize at least 50% more than users under 18.
• AI is accelerating creation on the platform: AI-powered game development and asset uploads surged, with more than 80% of the top 100 games using AI in creation. Roblox plans a broader U.S. rollout of its Build tool in December and a global launch in 2027.
• Roblox is expanding distribution while increasing investment: Initiatives such as Roblox Everywhere and Universal Player aim to bring Roblox games and third-party titles to more platforms and app stores. However, the company expects fourth-quarter bookings to decline 10%–15% year over year as infrastructure and marketing spending rise.

Roblox NYSE: RBLX said third-quarter bookings exceeded the high end of its guidance, supported by stronger retention and engagement, while outlining a broad set of artificial intelligence, distribution and infrastructure initiatives intended to expand its reach among adult users and game creators.

Co-founder and CEO David Baszucki said the company continues to pursue a long-term goal of capturing 10% of the global gaming market and connecting 1 billion daily active users. He said Roblox estimates that about 20% of U.S. gaming revenue among users under 18 is already generated on its platform, and the company is now focused on replicating that position among users 18 and older.

Engagement and retention reach multiyear highs

Roblox reported 138 million daily active users in the third quarter, up 12% sequentially, and nearly 34 billion hours of engagement, up 17% from the prior quarter. Baszucki said seasonally adjusted platform retention reached its highest level since 2021.

The company said its daily active users and engagement hours have nearly doubled over the past three years compared with the third quarter of 2023. In the U.S., Roblox estimates that 30% of 13- to 17-year-olds use the platform daily, with more than 80% of that cohort having completed age checks.

For users 18 and older in the U.S., daily active users grew 18% year over year and 89% over two years, Baszucki said. He added that adult users monetize at least 50% more than users under 18.

Internationally, Roblox cited year-over-year daily active-user growth of 12% in France, 13% in Germany, 33% in Japan and 37% in India. Baszucki said fewer than 2% of the international population uses Roblox daily, leaving what he described as substantial room for expansion.

Chief Financial Officer Naveen Chopra said the outperformance in bookings was largely driven by retention and engagement, including continued improvements to the company’s recommendation algorithm. He said the system helped newer games, including Steal an Egg and Huss Valley, build audiences quickly. In the third quarter, 40% of the top 1,000 games by hours had launched during the preceding 90 days, according to Chopra.

AI tools drive increased creation activity

Baszucki emphasized the accelerating use of AI tools across the Roblox ecosystem. Daily asset uploads to Roblox Cloud tripled month over month, which he said serves as a proxy for increased creative activity. Game volume using AI grew 50% quarter over quarter, while estimated time spent with AI tools among top creators tripled since the second quarter.

More than 80% of the top 100 games ranked by hours used AI in their creation process during the last month, Baszucki said. Two titles created almost exclusively with AI reached the top 20 by concurrent players during the third quarter: Break and Steal an Egg and Huss Valley.

The company has tested Roblox Build, its AI-powered creation tool, with more than 500,000 users in New Zealand, Singapore, Serbia and Thailand. Baszucki said more than 70,000 games have been published using Build, with some already using advertising and generating revenue. Most Build users had not previously opened Roblox Studio, he said.

Roblox plans a broader U.S. rollout of Build in December and a global launch in 2027. Baszucki said the system behind Build will also support Roblox Studio Assistant, using multiple AI models for programming, 3D scene generation, audio and eventually avatars.

New distribution plans target creators and adult audiences

Roblox announced “Roblox Everywhere,” a framework that will allow games built on its platform to be distributed as standalone applications. In the first phase, expected in the first half of 2027, Roblox plans to curate and publish select games into major app stores. A second phase is intended to let creators generate a standalone application from their creator portal and submit it to their chosen app stores independently.

The company also described its “Universal Player” initiative, an AI-supported system designed to enable developers to bring existing PC, console and mobile games to Roblox. Baszucki said the system is intended to reduce the need for a full game rewrite and could enable creators to add Roblox platform features such as cross-device play, multiplayer, instant updates, safety systems, social features and the company’s economy tools.

Baszucki said Roblox respects intellectual property rights and seeks licensed content on the platform. He said the company intends for Universal Player to work both as a self-service option for intellectual-property owners and developers and through direct relationships with major studios.

Roblox is also developing Roblox Reality, which Baszucki said combines generative-video world models with a goal of enabling multiplayer photorealistic experiences. Early access is planned for the first half of 2027. Other planned initiatives include disconnected solo play and browser-based access through WebAssembly, initially in Google Chrome.

Fourth-quarter outlook includes bookings decline and higher investment

For the fourth quarter, Roblox expects bookings to decline 10% to 15% year over year. Chopra said the outlook assumes normal seasonal declines in daily active users from the third to fourth quarter and does not assume that recent breakout games, Halloween-related updates or near-term monetization improvements will persist.

The guidance includes a modest expected headwind from the release of Grand Theft Auto, though Chopra said Roblox has limited data to estimate the impact because the release targets a different demographic and is console-only. At the midpoint, the fourth-quarter outlook implies 26% annualized growth over the past two years, he said.

Chopra said the company expects higher infrastructure costs in the fourth quarter as it invests in AI initiatives including Build, Roblox Reality and Universal Player. Roblox also plans to increase marketing spending focused on users over 18, citing stronger retention, engagement and monetization among paid-user signups than organic signups.

Third-quarter margins benefited from stronger-than-expected bookings, while free cash flow exceeded expectations partly because about $140 million of capital expenditures shifted from the third quarter into the fourth quarter. Roblox expects $380 million in fourth-quarter capital expenditures and $468 million for the full year, at the low end of its initial expectations.

Chopra also said Roblox held about $5 billion in net cash and intends to prioritize investment in organic and strategic growth opportunities. The company has repurchased more than $400 million of stock over the last several quarters under its $3 billion authorization, he said.

About Roblox (NYSE:RBLX)

Roblox Corporation operates Roblox, an online platform where users can create, publish, and participate in interactive digital experiences. The platform supports a broad range of user-generated content, including games, social spaces, entertainment, educational activities, and virtual events.

Roblox provides development tools through Roblox Studio, enabling creators and developers to design experiences and build virtual items and environments. Users can customize avatars, communicate with others, and access content across computers, mobile devices, consoles, and other supported platforms.

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