Founded in 2004, Roblox went public in March at a $45 billion valuation and has seen its shares surge more than 70% since then. But like much of the gaming world, its fortunes have ebbed and flowed as a result of the Covid pandemic.
Despite the loosening of many pandemic-related restrictions, which analysts had predicted would reduce the time people spent on video games, Roblox increased the number of average daily active users by 31% in the three months ended September from a year earlier to 47.3 million. The company said that people of all ages around the world spent 28% more hours on the site than a year earlier.
“We continue to see our growth grow globally,” said Craig Donato, chief business officer, in an interview, adding that 75% of the company’s growth has come from Asia. He acknowledged that in the wake of China tightening restrictions on online gaming for children, “there may be some strategic changes we need to make.”
Donato said the company was also bullish on its appeal to older audiences, particularly those who grew up playing Roblox. As those players age, they’ll see different types of games and be given more opportunities to play with other players of similar age. “We now have more users over 13 than under 13,” he said.
Roblox is one example of the so-called “metaverse,” a virtual playground in which users can live and play together. While Roblox has been promoting the idea of the metaverse for years, it may face competition from the newly named Meta Platforms Inc., formerly known as Facebook Inc., which has pivoted to focus on the concept. Donato said Roblox doesn’t see Facebook’s initiative as a rival, since Roblox equates the metaverse with the internet. “It’s a very broad concept,” he said.
Roblox also dealt with turmoil toward the end of last month as its service went down for three days due to what the company says was a “subtle bug.” The outage coincided with the opening of a virtual Chipotle Mexican Grill Inc. restaurant on Roblox, where the fast-food chain was set to offer $1 million in free burritos and other items, creating a surge in usage over the Halloween weekend.
Roblox said Monday that it’s in the process of “preparing a more detailed root cause analysis” of what went wrong and that it will address the outage next week during its investor day.
“Those 70 hours were difficult for our users and for the millions of Roblox creators, many of whom generate their primary source of income from Roblox,” the company said in a letter to shareholders. “We committed to compensating developers for their lost income and credited developer accounts accordingly.”
Through the first 27 days of October, average daily active users were 50.5 million, up 43% from a year earlier, Roblox said. Given the outage, actual average DAUs for the full month of October dropped to 47.1 million. Roblox said it estimates that lost bookings during the outage period was $25 million, plus $6 million of bookings it received during the outage for which it hadn’t compensated developers, for a total of $31 million. The company credited $6.8 million to developer accounts.
Roblox shares rose to a high of $104.11 in intraday trading Tuesday morning in New York. It was the biggest gain since March.
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