Roblox Corporation (NYSE:RBLX) Q4 2023 Earnings Call Transcript

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Operator: We will move next to the line of Bernie McTernan with Needham & Company. Please go ahead.

Bernie McTernan: Great. Thank you for taking the questions. Just two on bookings. First, the booking acceleration that happened in the US, just any thoughts in terms of what’s driving that? I remember last year, there were some thoughts that, there could have been some outperformance last year because of gift cards, so if that played through in a similar way. And then, 3 million new payers added in the quarter, where are those coming from just from a geo or age demographic perspective? And any shifts that are going on that are significant?

Mike Guthrie: Hey, Bernie. On the second question, no big geo shift. We’re seeing strong payer growth really everywhere. Part of the reason monetization has gone up is older users in places like US and Canada have grown at a really nice clip. And, as we said earlier, they monetize a little bit better. In terms of the question as why was bookings so strong in the fourth quarter, we like to think it’s growing our user base, they’re more engaged, the content continues to get better and better, the platform continues to scale. We were on a couple of new platforms in the fourth quarter, so that clearly had an impact. But overall, a lot of the things that continue to drive the growth of the business over a very long period of time.

David Baszucki: The math with 58%, right now, our DAU is over 13%. When we look at the overall market size of gaming, immersive communication and social connection, that 13 and over market, you can all do your own computation on the size of that TAM relative to the under 13 and that’s why growth there is so important to us.

Bernie McTernan: Understood. Thank you both.

Mike Guthrie: Thanks, Bernie.

Operator: Next, we’ll move to the line of Matthew Cost with Morgan Stanley. Please go ahead.

Matthew Cost: Hi, everyone. Thanks for taking the questions. I have two, probably both for Mike. So just on some of the expense lines for the certain infrastructure trust and safety, it got down to just a really high level of efficiency this quarter, 11% of bookings. I guess when you think about that internally, do you think about that figure on a per user basis, on a per hour basis, on a per dollar booking basis? And how do you think about where that can go over time? And then I have a follow-up. Thank you.

Mike Guthrie: I mean, how we look at on all of the above, ultimately, it’s cost to serve is the metric that we use and it’s the metric that the team owns, the infrastructure team owns, and so they’re working hard to drive that down. It is — like you said, it’s about 11% now. Ultimately, with higher efficiency, more use of artificial intelligence, we see that as a high single-digit number over the next few years. It’s been a good source of leverage recently, and we still think there’s more to do there.

Matthew Cost: Great. Thanks. And then, on the developer exchange fees, you gave some good color just a few minutes ago about sort of reinvesting any savings on the cost of revenue side into DevEx, so that’s clear. But just DevEx on its own, I think, was below 20% of bookings this quarter, very slightly for the first time in over two years. I guess anything you can say about the drivers there? And then, all else equal, do you expect it to still be a number that rises as a percentage of bookings even if nothing changes on the App Store fee side?

Mike Guthrie: Yeah, I mean, DevEx is almost exactly where it was this time last year in the fourth quarter. So, it was about 20% last fourth quarter, about 20% this fourth quarter, so I don’t see a major change. There is some seasonality in that number, but, overall, we always are looking to push more of the economics to the devs.

David Baszucki: Yeah. And hey, chiming in on what we shared six months ago on our Q2 2023 earnings call, the vision, we want to grow our bookings faster year-on-year than cost of goods, we want to grow our bookings faster than infra and certain other expenses, and we want to grow our bookings faster than personnel costs. That leaves two areas, both our bottom-line as well as our creators. And the more efficient we are with the first three things, the more we can look to possible future expansion on the last two margins, developers and our leverage.

Matthew Cost: Thank you. That’s really helpful. Appreciate it.

Mike Guthrie: I think we probably have time for one more call.

Operator: Thank you. Today’s final question comes from the line of Andrew Marok with Raymond James. Please go ahead.

Andrew Marok: Thanks for taking my question. Maybe to come back to a question that was touched on in a bit of a different way earlier in the call. I know it’s not necessarily an input for you guys rather than an output, but any particular drivers on the average bookings per DAU growth particularly looking at Europe and Rest of World, both of which were still pretty strong and both accelerated in 4Q?

Mike Guthrie: The longer payers are on the platform and users are on the platform, the more they tend to spend. We have a very nice mix of older and younger users. With older users growing around the world, they tend to spend a little bit more. And you can never underestimate the importance of great content on the platform, so that’s our developers building great stuff that people we are paying for. So, it really is a trend that’s been moving in the right direction for a while. And as I said earlier, our economy team have number of initiatives that they’re working on to continue to improve that number.

David Baszucki: Yeah. And complementing that on the economy team angle, there’s a lot of hygiene just on payment providers. I also want to highlight that on a biz dev since prepaid cards wherever we can around the world has also made enormous progress in the last year.

Mike Guthrie: Thanks, Andrew.

Andrew Marok: Great. Thank you.

Stefanie Notaney: Well, thank you for joining us today, and that’s a wrap.

David Baszucki: Thank you, everyone.

Operator: Thank you, everyone, for joining the Roblox fourth quarter and full year 2023 earnings conference call. Thank you for your participation. You may now disconnect.

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