Roblox Looks to Capture Network Effects From AI, Metaverse Headsets

The metaverse, creator economy and artificial intelligence (AI) are among the 21st century’s biggest trends.

And video game developer Roblox, which enjoyed its first-ever quarter with over $1 billion in bookings, finds itself at the intersection of all three.

This, as Roblox announced its fourth-quarter and full-year 2023 financial and operational results on Wednesday (Feb. 7), before market open.

“We finished 2023 with another strong quarter of growth as we continue to drive innovation and new experiences across the Roblox platform. We enter 2024 with even more conviction of being able to achieve our long-term goal of attracting over 1 billion daily active users with optimism and civility. We continue to benefit from the strong network effects in content, social connection, and communication, as well as our investments in immersive experiences, advertising, and AI,” Roblox founder and CEO David Baszucki told investors. “Our growth continues to be the result of innovation in across our platform.”

“We ended the year with our strongest rate of quarterly bookings growth in two years and delivered our first quarter of $1 billion in bookings,” added Roblox CFO Michael Guthrie.

Bookings were $1.12 billion, up 25% year over year.

Read more: Roblox Launches Creator Subscriptions as Gaming Companies Drive Recurring Revenue

Per the company’s financial materials, bookings are generated from sales of virtual currency, which can ultimately be converted to virtual items on the Roblox Platform. Sales of virtual currency reflected as bookings include one-time purchases or monthly subscriptions purchased via payment processors or through prepaid cards.

Average monthly unique payers on Roblox were 15.9 million, up 18% year over year, and the average bookings per monthly unique payer was $23.65, up 6% year over year.

As for the payment modalities behind those bookings?

“Prepaid cards, wherever we can leverage those around the world, have made enormous progress over the past year,” executives told investors.

In the past fiscal year, Roblox’s stock rose 60.6%, while the S&P 500 Information Technology Sector Index rose 56.4%. Those numbers are compared to the benchmark S&P 500 Index, which rose 24.2% for fiscal year 2023.

The company’s stock is up over 10% Wednesday, as of reporting, on the strength of the results which beat consensus expectations on top and bottom line. Roblox executives indicated that they believe they can maintain 20% year-over-year topline growth through 2027.

Capturing the Network Effects of Disruptive Technologies

In the most recent Q4, Roblox became available on the Meta Quest VR headset as well as Sony Playstation, and during the Q&A portion of the earnings call, many investors pressed Roblox about the recent launch of the Apple Vision Pro mixed-reality (MR) headset.

“We are really proud to be on Quest with Meta,” said Roblox executives when asked about the Apple Vision headset. “The Vision Pro is an interesting candidate, and there are others out there as well. Looking out into the future … things may go beyond VR [virtual reality] into AR [augmented reality] and MR as these platforms become more prevalent.”

Users spent 15.5 billion hours engaged on Roblox, up 21% year-over-year, and a number that executives said they expect to continue growing as lifetime installs on new AR/VR/MR devices grow.

See also: The 216 Million Reasons Why Mango, LensCrafters and Worldline Are Betting on the Metaverse

As for AI, the AI opportunity at Roblox is “manifest everywhere,” CEO Baszucki told investors, emphasizing that “we’ve been working behind the scenes on this for many, many years.”

“Our own AI model is powering real-time chat translation allowing people around the world to communicate with people who are chatting in a different language … we’re also seeing more penetration on voice chat,” he added.

“We continue to roll out more AI on real-time image, voice, and chat moderation, making our whole safety platform much more efficient,” said Baszucki.

Executives also indicated that they expect to scale Roblox’s brand-related microtransaction and advertising business over time as more companies invest in building presence on Roblox, but declined to break out the numbers for the ongoing advertising initiative.

The video game platform is looking to grow and expand its audience beyond the under-13 age demographic it was founded on.

“Older users tend to monetize better, cohorted by time spent on the platform,” Roblox’s CFO said. “A slow and steady improvement in the core technology has allowed our developer communities to build better stuff … [which has] naturally attracted an older audience.”