If you’ve got your own kids, or nephews or nieces, then you’ve most likely heard of the craze around the hit mobile gaming world that operates in the metaverse, called “Roblox”.
Run by the synonymous Roblox Corp (NYSE: RBLX), the company allows developers to build virtual worlds on its platform and then charge users for extras when playing within them.
Having first gone public via a direct listing in only March of this year, Roblox has demonstrated to investors that it has created an extremely sticky ecosystem which has proved a hit for younger users.
In fact, more than 1,250 developers generated at least US$10,000 in sales last year through virtual sales on Roblox games.
Earlier this week Roblox came out with its first earnings report as a publicly-listed company. The numbers were as impressive as the worlds its users play in.
Despite things starting to open up more in the US and the UK, revenue growth in the first quarter was an astounding 140% year-on-year as sales hit US$387 million for the first three months of the year (see below).
That pace of growth has continued to pick up from Q2 2020. Even more impressively, average daily active users (DAUs) hit 42.1 million as at the end of the period – up 79% year-on-year.
Interestingly, Roblox saw blockbuster expansion in the number of over-13s playing the game, showing investors that users may be staying with the platform through their formative years.
The number of DAUs that were over-13 during the quarter numbered 20.5 million, which was up 111% year-on-year (see below).
In contrast, the number of DAUs under-13 was higher at 21.3 million but growth of this cohort “only” came in at 60% year-on-year.
For long-term investors, the key questions will be whether Roblox can continue to make more money off its young audience and whether its platform has true staying power with a generation that could move on to the next “hot” thing.
Source: Roblox Q1 2021 earnings presentation
Disclaimer: ProsperUs Head of Content Tim Phillips doesn’t own shares in any companies mentioned.
Tim, based in Singapore but from Hong Kong, caught the investing bug as a teenager and is a passionate advocate of responsible long-term investing as a great way to build wealth.
He has worked in various content roles at Schroders and the Motley Fool, with a focus on Asian stocks, but believes in buying great businesses – wherever they may be. He is also a certified SGX Academy Trainer.
In his spare time, Tim enjoys running after his two young sons, playing football and practicing yoga.