Roblox’s platform is made up of user-generated games, many created by children and teens, some of whom have made millions of dollars for themselves. About 54 percent of Roblox users are under the age of 13, according to the company.
In a virtually recreated version of the stock exchange in a screenshot shared Wednesday, employees gathered with their various avatars. A few held up posters saying, “We love Lil Nas X,” referring to the Atlanta rapper who climbed to fame via TikTok and graced Roblox with a in-game concert last November that pulled in more than 30 million viewers.
It is a glimpse of the metaverse, or a next version of the Internet that’s shared and active, Baszucki envisions, perhaps a confluence of music, games, films and more. And it’s one he thinks could continue growing, with the help of the $535 million Roblox raised in January and cash generated by the platform.
“We have a vision of the metaverse as a place where people come together to do things. And that could be having a virtual birthday party or that could mean studying ancient Roman history and going there with your friends,” he said. “Even though you’re not able to be there together.”
While rival Epic Games and its CEO Tim Sweeney are similarly gung ho on the metaverse, Roblox has features “that are relatively unique” to its competitors, mainly its millions of user-generated content provided by players and often quite young game developers, Baszucki said.
“I definitely saw that Roblox was a place where even if you were coming from nothing, you have this potential to blow up on the platform,” said 21-year-old Anne Shoemaker, CEO of her own company Fullflower Studio LLC, in California.
When Shoemaker was 18, she saw her peers make games within a few weeks that went viral and became financially lucrative through Roblox. She began to work on other developers’ games as a contractor and picked up lessons to incorporate in her own games. Today, she runs a company with 12 contractors and two full-time employees, and has made about half a million in revenue from January 2020 to now, she said.
“I have only seen profit going up,” Shoemaker said.
Roblox, founded in 2004, reported revenue of $924 million and an operating cash flow of $524 million for year ending in December. It is not yet profitable, reporting a net loss of $253 million in 2020, according to a Wednesday filing. It also showed losses of $97.2 million in 2018 and $86 million in 2019 in the filing. The company is based in San Mateo, California with just under a thousand employees.
Developers receive a 70 percent cut when users visit their games and spend Robux, the in-game currency that can cost real money to purchase, and there are other ways to earn as well.
Game developers earned $328.7 million in 2020, up 194 percent from a year earlier. Roblox reported that as part of its expenses.
Baszucki declined to comment on whether Roblox would ever change the rate at which developers are paid, but added that the company has grown more efficient at building data centers around the world and the “more cash flow that’s leftover, the more opportunity there is to share that with our developers.”
To grow more profitable, the company plans to expand its audience in countries like Germany, Brazil, Portugal, Russia and even China. Roblox has a joint venture in China with a subsidiary of Tencent, which plans to publish a localized version of Roblox for Chinese users. The company has listed the venture as a risk factor, as it could be hurt by U.S.-China politics.
“We’re hoping over time, more and more of our leading developers are coming from China. … There’s also a lot of really amazing content from our global developer base that we believe will do very well in China,” Baszucki said.
Another business risk for Roblox is unlike many other games, it’s aimed at children under the age of 13, and is often multiplayer, allowing users to interact with strangers online. That opens up the platform to a lot of responsibilities, including setting strong parental controls and giving parents education on how to use them.
“The foundation of our company is based on building a safe and civil society,” said Baszucki. “This will continue to be a key focus.”
Baszucki is also choosing not to take any cash or equity compensation over the next seven years and instead will be awarded based on Roblox hitting long-term stock price goals. He said he will donate the awards he receives to philanthropic causes he supports.
“I’m really bullish on what the company can build over the next seven years and beyond,” he explained. “My family and I were all interested in giving back.”
When asked whether Roblox had ambitions to grow into a tech giant like the FAANG (Facebook, Apple, Amazon, Netflix and Alphabet, formerly known as Google) stocks, Baszucki joked, “There’s no R in FAANG so we never could be a FAANG stock. But we have a really big vision for where we can go.”