Roblox goes public so that it can build a bigger metaverse

The company behind the hit kids game Roblox is going public after soaring use during the pandemic. The company now has 31.1 million daily users who have spent an average of 2.6 hours per day in the game this year, according to Roblox’s prospectus.

Roblox has been around since 2004, but the game nearly doubled its daily users over the last nine months as it’s provided a social space where its players — mostly kids and teens — can hang out while stuck inside.

Roblox reported revenue of $588.7 million during the first nine months of 2020, a 68 percent increase over the same period in 2019. The company has spent a lot more money as it’s grown, though. Roblox reported losses of $203.2 million for the first nine months of 2020 — an increase so large that Roblox decided not to list the percentage jump from the prior year (it’s 339 percent, or more than quadruple the loss). Cost of revenue appears to have spiked as more people used the platform and Roblox began paying out more money to developers.

The title allows users to create experiences and games that they can then share with other people. That means there is no singular Roblox title that everyone is playing — you can jump in and pretend to be a bee, or work at a pizza place, or hang out at a resort. Roblox makes money when these games offer in-app purchases, and it gets a cut of sales of the in-app currency Robux. More than 18 million “experiences” have been created inside the game.

Roblox intends to increasingly turn its platform into a social space where players can have a variety of different experiences.

“In our vision, metaverse platforms will connect people from different life experiences with new and interesting ideas,” Roblox CEO David Baszucki wrote in the prospectus. “We believe these connections will help build empathy by safely immersing people in different perspectives, where they will hear diverse viewpoints. And someday, as the metaverse supports a broader range of positive educational and social experiences, we hope this can expand opportunities for all people around the world.”

Roblox’s IPO comes alongside a number of other startups that have rushed to go public after the chaos of the presidential election. Airbnb and DoorDash also filed to public over the past week. For Roblox, now appears to be a particularly auspicious time for it to go public — the company’s numbers look strong on the back of the pandemic. There’s no guarantee that’ll continue into the future, but Roblox has already started to preview how it plans to keep players’ interest in the months ahead.

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