7 September 2026 · Built from Roblox SEC filings held in the research folder — 10-Ks for FY2021–FY2025 (latest filed 11 Feb 2026), 10-Qs through the quarter ended 30 June 2026, the 2020 Form S-1, the 2022 and 2026 proxies, shareholder letters and current reports — together with independent primary sources for industry structure and regulation: court orders, state Attorney General releases, Ofcom, the European Commission, the FTC, the Australian eSafety Commissioner, and competitors' reported financials.
This is not a valuation and not a recommendation.
Of every dollar of bookings in FY2025, payment and distribution costs took 15.8¢ and developer exchange fees took 22.1¢, leaving 62.1¢ to run a platform that then consumed 17.0¢ in infrastructure and trust and safety, 23.1¢ in R&D and 12.1¢ in overhead and marketing. The result was a GAAP operating loss of $1,232.3M and free cash flow of $1,352.9M in the same year. Both numbers are real; the gap between them is a 27-month revenue-recognition schedule and $1,129.0M of stock compensation.
| What the business is | A hosted platform on which unpaid outside creators build the entire content library, and a proprietary currency — Robux — that is the only way value moves through it. |
|---|---|
| Industry | User-generated-content gaming platforms, inside a global games market of $213.9bn for 2026 (Newzoo, Aug 2026). FY2025 bookings were about 3.4% of that market (inferred). |
| How it makes money | Users buy Robux for roughly a cent each and spend them inside creator-built experiences. Roblox keeps the residual after the app stores and the creators are paid. |
| Unit of economics | One Robux spent. 15.8¢ of each booked dollar to payment and distribution, 22.1¢ to creators (FY2025 10-K, calculated). |
| What protects it | A creator base no cold-start rival has reproduced — 23,500+ creators paid $1,503.1M in FY2025 — plus 14m active experiences, a youth social graph, and moderation infrastructure regulation is turning into a barrier. |
| What drives earnings | Daily users; bookings per user, flat near $52 a year since FY2022; the creator share of bookings, rising every year; and the 27-month gap between cash collected and revenue reported. |
| What to watch | Quarterly bookings growth, age-check penetration (57% of users at 30 June 2026), and developer exchange fees as a share of bookings. |
| Cycle exposure | Low to macroeconomic cycles; high to two of its own — the virality of individual experiences, and the regulatory tightening of youth online safety. |
The problem Roblox solves is a supply problem, not a gaming problem. Games are expensive to make, and a studio that spends four years on one title gets one attempt at holding a child's attention. Roblox inverted that: it gives away the engine, the servers, the moderation, the payment rails and the audience, and lets anyone build. Over 14 million experiences were active at the end of FY2025, made by creators in more than 170 countries. Roblox writes almost none of the content its users come for.
What it sells is Robux, bought through the Apple App Store, Google Play, a console store, the web or a prepaid card at an average selling price of about one cent (FY2025 10-K). Those Robux are spent inside experiences on access passes, cosmetic items and upgrades — and the accounting for that spending is where the business becomes unusual.
A dollar a user spends is recorded first as bookings — cash sold. It is not revenue. Roblox recognises it ratably over the estimated average lifetime of a paying user, 27 months as of 31 December 2025. A dollar collected today therefore reaches the income statement in roughly one-cent slices across the next two and a quarter years. Deferred revenue stood at $6,505.9M at the end of FY2025, larger than the whole year's reported revenue.
Against that dollar, cost of revenue — defined in the filing as payment processing fees, sales tax and prepaid-card printing — took 15.8¢. This is where the platform toll sits: Roblox is obligated to pay up to 30% of user money to Apple and Google and around 30% to Microsoft and Sony, and 29% of FY2025 revenue came through the App Store with a further 15% through Google Play. Developer exchange fees, the cash actually paid out to creators, took 22.1¢. Infrastructure and trust and safety took 17.0¢, R&D 23.1¢, and everything else 12.1¢.
The creator's split has its own mechanics. When a Robux is spent on a virtual item the creator takes 30%, the distributing seller 40%, and Roblox 30%; a creator selling their own creation inside their own experience keeps 70%. Earned Robux convert back to dollars at a rate Roblox sets — $0.0035 from before the IPO until September 2025, then $0.0038, an 8.5% rise — with the qualification threshold cut from 100,000 earned Robux to 50,000 in 2022 and 30,000 in 2023.
The monetising base is far narrower than the user base. FY2025 averaged 127 million daily users generating 123.9 billion hours, but only about 1.8 million average daily paying users and average daily bookings per user of $0.15. Geography widens the gap: 82% of users sit outside the US and Canada and produce 39% of revenue. And the age composition has become harder to see — 54% of users were under 13 at the 2020 S-1 and 49% in the FY2021 10-K, while the FY2025 10-K gives no figure and states that age-demographic data was not reported for the fourth quarter of 2025 during the age-check transition. The metric that most determines regulatory exposure stopped being published in the year regulation began to bite.
New lines have been layered on — immersive advertising, a self-serve IP License Manager, the Creator Rewards Program, a $4.99 Roblox Plus subscription, age-tiered Kids and Select accounts. Their contribution is not yet visible: the FY2025 10-K calls advertising and licensing revenue "insignificant" and gives no dollar figure for either. Virtual items still carry essentially all the economics, of which 85% were durable in FY2025, down from 91% in each of the two prior years.
The industry sells discretionary hours of youth attention converted into small digital purchases. The chain has three stages — an operating-system layer that controls distribution, a platform layer that hosts and matches, and a creator layer that supplies content. The question that matters is which stage keeps the money, and the answer is not the middle.
Unity, the pure engine layer and the closest substitute for Roblox's technology, reported FY2025 revenue of $1,849.6M against a GAAP operating loss of $479.1M — a −25.9% margin (inferred). Take-Two lost $104.2M at the operating line in the year to March 2026. Snap, fifteen years into monetising youth attention, lost $170.7M in the June 2026 quarter. The companies that earn are those that own intellectual property and reach customers without renting distribution: Tencent at a 37.3% non-IFRS operating margin in FY2025 (inferred), NetEase at 31.8%, Krafton at 40.9%. No Western user-generated-content platform surveyed made a GAAP operating profit in its latest reported period.
The mechanism is a two-sided squeeze, and both sides are set by someone else. On distribution, Apple's standard commission is 30% with a 15% small-business rate, and the US position is unresolved — the Ninth Circuit affirmed the contempt finding against Apple in December 2025 but vacated the blanket ban on charging for external purchase links, and Apple's proposed 15/10/5% schedule filed in August 2026 still awaits district-court approval. Google's European, UK and US rates reset by settlement on 30 June 2026 to roughly 20–25% plus a 5% billing fee. The toll is falling, but a court is setting it.
On the creator side the floor is set by a competitor under no obligation to profit from it. Epic allocates 40% of eligible Fortnite net revenue to its Creative engagement pool and has been paying 100% of Sponsored Row revenue through end-2026. Roblox paid 22.1% of bookings in FY2025 and 23.3% in the June 2026 quarter — then raised effective creator earnings on age-checked adult US in-experience spending from 26.6% to 37.8% with effect from 8 June 2026. That is a 42% increase in the cash-out rate on the platform's most valuable cohort, conceded in a year of decelerating bookings.
Of four candidate barriers — engine, moderation, creator base, distribution — only two bind. The engine is not scarce; Unity licenses one to anyone and loses money doing it. Distribution is rented. Moderation infrastructure has become a real barrier precisely because regulators now demand it, and it costs $1,153.5M a year. The creator base is the asset with no substitute, and the evidence is the payout: $363M in a single quarter, against Epic's disclosure of more than $1bn paid to Fortnite Creative and UEFN creators cumulatively since 2023.
Nobody has cold-started a rival in five years. Epic's UEFN is the only entrant at scale, and it got there by extending a game that already had hundreds of millions of accounts — creator islands were 47% of Fortnite player hours in May 2026, up from 38%. Krafton's Overdare venture disclosed no user, revenue or creator metrics in its March 2026 results. For Rec Room, VRChat, Zepeto, The Sandbox and Decentraland, no primary source publishes user or payout figures at all. That absence is the finding: an entrant at scale would have numbers to publish.
Independent data corroborates the position where it exists: Ofcom's 2025 children's media survey found Roblox reaching 61% of UK 8–14 year-olds in a month, the highest of any games app, in a population where 97% of 8–17s play online games and 53% spend money in them. The network-effect claim is supported. But the outside evidence on who wins points one way — the winners own both the intellectual property and the route to the customer, and so buy neither. Roblox owns neither. Its content belongs to creators it must keep paying more to retain, and its distribution belongs to platforms whose rates are being reset by litigation. What it owns is the marketplace in between, and that is a structurally thinner asset than the one the profitable comparables hold.
Acquisitions explain none of it. The four disclosed deals — Guilded at $77.6M, Hamul at $19.3M, Byfron at $9.6M and Speechly at $10.1M — total roughly $117M across five years, and Morpheus AI cost about $6M in net cash in June 2026. Reported growth is organic growth. The decomposition that matters is a different one: between cash collected and revenue reported.
| Quarter | Revenue ($M) | Revenue YoY | Bookings ($M) | Bookings YoY | Gap |
|---|---|---|---|---|---|
| Q3 2025 | 1,359.6 | +48% | 1,921.8 | +70% | −22pp |
| Q4 2025 | 1,415.0 | +43% | 2,222.3 | +63% | −20pp |
| Q1 2026 | 1,442.0 | +39% | 1,731.0 | +43% | −4pp |
| Q2 2026 | 1,469.0 | +36% | 1,557.0 | +8% | +28pp |
| Q3 2026 (guided) | 1,413–1,490 | +4% to +10% | 1,576–1,653 | −14% to −18% | +23pp |
Sources: quarterly shareholder letters and press releases; guidance from the release of 30 July 2026. The gap flipped sign in Q2 2026: reported revenue is still delivering bookings collected in 2024 and early 2025, while bookings describe what users are paying now. Any read of the revenue line is mechanically a read of the business as it stood two years ago.
Average daily users went from 17.6m in FY2019 to 127m in FY2025. The June 2026 quarter averaged 123m — up 10% year on year, but down from a peak of 151.5m in September 2025.
Deferred revenue rose $1,934.0M in FY2025 alone. That build is what lets reported revenue grow at four times the rate of bookings — and it reverses when bookings stop growing.
$51.29 in FY2022, $51.47 in FY2023, $52.70 in FY2024, $53.45 in FY2025 (calculated). Four years of essentially no monetisation gain per user means every dollar of growth has had to come from adding users or from timing.
Growth has come disproportionately from outside North America, where 82% of users generate 39% of revenue. Each user added in Asia-Pacific or the rest of the world lowers the average.
Daily users jumped from 111.8m to 151.5m and bookings from $1,437.6M to $1,921.8M in a single quarter, then fell in each of the three quarters since. The FY2025 10-K attributes part of the company's growth to "the virality of certain experiences"; no filing names a title, so attributing this step to one hit is (inferred).
Immersive ads run with Google, Amazon DSP, Liftoff and several exchanges, and a self-serve IP License Manager launched in late 2025 — yet the FY2025 10-K still calls advertising and licensing revenue "insignificant" and quantifies neither.
That ranking is visible in the guidance. Roblox cut its FY2026 bookings outlook from 22–26% growth in February 2026 to 8–12% in April, then withdrew full-year guidance entirely on 30 July 2026 and moved to quarterly guidance only.
Chart 1 — the unit metric through the current cycle. Quarterly bookings and average daily users. Sources: quarterly shareholder letters and press releases; Q3 2026 bookings plotted at the midpoint of the $1,576–1,653M guidance given 30 July 2026. Average daily users for Q4 2024 appear only as a chart image in the filings and are not extractable, hence the dashed segment. The quarterly bookings and revenue series sum exactly to the audited FY2024 and FY2025 totals.
Roblox has never reported a GAAP profit, and the loss has not narrowed as it has scaled: $495.1M of operating loss in FY2021 on $2.7bn of bookings, and $1,232.3M in FY2025 on $6.8bn. The two largest cost lines do not behave like fixed costs. Developer exchange fees are a variable toll that has risen every single year as a share of bookings, from 16.1% in FY2019 to 22.1% in FY2025. R&D at $1,567.7M absorbed 32% of FY2025 revenue and is dominated by people — stock compensation of $1,129.0M equalled 23% of revenue, with $764.1M of it inside R&D alone.
Cash tells a different story, and both are true. FY2025's $1,071.6M net loss became $1,796.4M of operating cash flow and $1,352.9M of free cash flow — roughly 20 cents of free cash on every booked dollar. The bridge is two items: the $1,934.0M increase in deferred revenue, which is cash received for revenue not yet recognised, and $1,129.0M of stock compensation, a real cost borne by shareholders through dilution rather than by the income statement in cash. Neither is operating leverage. The first is a growth artefact that unwinds; the second is a transfer.
| $M unless stated | FY2021 | FY2023 | FY2024 | FY2025 |
|---|---|---|---|---|
| Bookings | 2,725.7 | 3,520.8 | 4,369.1 | 6,788.4 |
| Revenue | 1,919.2 | 2,799.3 | 3,602.0 | 4,890.6 |
| Developer exchange fees, % of bookings | 19.7% | 21.0% | 21.1% | 22.1% |
| Loss from operations | (495.1) | (1,259.1) | (1,063.3) | (1,232.3) |
| Stock-based compensation | 341.9 | 868.0 | 1,015.8 | 1,129.0 |
| Free cash flow | 558.0 | 124.0 | 641.3 | 1,352.9 |
Two comparability breaks sit inside this table. First, the estimated average lifetime of a paying user — the divisor converting bookings into revenue — has been revised four times: 23 months through FY2021, 25 months from Q1 2022, 28 months from Q3 2022, and 27 months from 1 April 2024. The 2022 revision alone reduced FY2022 revenue by $344.9M; the 2024 revision raised FY2024 revenue by $98.0M. Revenue growth across these years is not a clean series. Second, "Adjusted EBITDA" was redefined in the FY2024 10-K: FY2023 was $431.7M on the indenture basis Roblox had been publishing and negative $170.7M on the new basis. The two are not a trend line and should not be drawn as one. Sources: FY2021, FY2023 and FY2025 10-Ks; percentages calculated.
Chart 2 — the two claims on a booked dollar. Developer exchange fees and free cash flow, both as a percentage of bookings. The creator line has risen in six of seven years and never fallen. The free-cash line is volatile because it absorbs the capex cycle and the timing of deferred revenue — it is not a margin. Sources: FY2021, FY2023, FY2025 10-Ks; percentages calculated.
Ranked by dollars over FY2021–FY2025, the largest claim on the business was not cash at all. Stock compensation of roughly $3,944M exceeded every cash use, and shares outstanding rose from 585.9m to 708.4m — 20.9% dilution, close to 5% a year. Capital expenditure came second at roughly $1,461M, on servers and data-centre capacity for a platform running more than 150,000 servers across 25 regional data centres. Third was the $1.0bn of 3.875% senior notes due 2030, issued in October 2021 and still outstanding in full — straight unsecured notes, not convertibles. Acquisitions totalled roughly $117M. Dividends and buybacks were zero for the whole period.
The ranking reveals a management team that funded growth by issuing equity to employees rather than spending cash, and treated the balance sheet as ballast rather than a tool. Roblox went public by direct listing in March 2021 and so raised nothing at the IPO; the notes have never been touched.
Two things post-date the FY2025 10-K. On 19 May 2026 the board authorised the company's first-ever repurchase — up to $3.0bn, with around $1bn intended over the following twelve months, the stated rationale being to "partially offset dilution from employee equity grants." Roblox bought 8.2m shares for about $380M in the June 2026 quarter, leaving $2.6bn authorised. And on 8 June 2026 the creator earnings rate on age-checked adult US spending rose from 26.6% to 37.8%. The first returns capital in the same year growth slowed; the second commits more of every future dollar to creators. Neither appears in any full-year figure yet reported.
Incentives point at the metrics the deferral mechanics most flatter. The founder and chief executive took no cash salary in 2025 and holds 100% of the Class B stock — twenty votes a share, 58.8% of total voting power, down from 65.9% in 2022. His original 2021 award vested only on share-price hurdles from $165 to $375; none was reached and the award was cancelled in March 2024. Its replacement, and the other named executives' awards, vest on cumulative bookings and Covenant Adjusted EBITDA margin — a bookings-based measure that adds the change in deferred revenue back to a GAAP loss. The targets are not disclosed.
Roblox is not a macroeconomic cyclical. Its purchases are small, discretionary and made largely by or for children, and nothing in the filings ties bookings to interest rates, input costs or capital spending elsewhere. It has two cycles of its own, and both are currently running against it.
It sits past a peak on every engagement measure. Daily users peaked at 151.5m in the September 2025 quarter and were 123m in June 2026, 18.8% below. Hours peaked at 39.6bn and were 29bn, 26.8% below. Bookings peaked at $2,222.3M in December 2025 and were $1,557M, 29.9% below. Some of that is seasonal — the September quarter carries school holidays, the December quarter gift spending — which is why the year-on-year view matters more: users were still up 10% and bookings up 8% in June 2026. But the guided decline for the September 2026 quarter is the first year-on-year fall in bookings the company has ever put in an outlook.
Margin sits at the opposite extreme. Free cash flow rose 66% year on year in the June 2026 quarter and adjusted EBITDA reached $152M against $18M. That divergence is the tell: record cash generation reported in the same quarter engagement fell for the third consecutive time. The September 2026 quarter is guided to free cash flow between negative $60M and positive $5M.
Age assurance changes the shape of the funnel. Roblox began requiring facial age estimation for chat in November 2025 and made it mandatory globally in January 2026, sorting users into six age bands and severing communication between minors and adults outside verified connections. Penetration reached 51% of daily users by March 2026 and 57% by June, with the US and Australia above 70% against a stated target of 90%.
Independent evidence says this is not a one-quarter adjustment. Ofcom's July 2026 report on age assurance found that services deploying age checks in July 2025 saw average daily visitors fall sharply while ten of seventeen non-compliant services saw traffic rise, and that the proportion of children encountering harmful content was unchanged. Friction lands on the compliant. Roblox is choosing to be compliant, in a market where the remaining 33 percentage points of penetration are the users least likely to complete a check.
| Indicator | Where it appears | Why it matters |
|---|---|---|
| Quarterly bookings growth and bookings per daily user | Quarterly shareholder letter, Roblox investor relations | Bookings lead reported revenue by roughly two years |
| Age-check penetration, % of daily users | Quarterly shareholder letter | The gap between 57% and the 90% target is where the remaining friction sits |
| Developer exchange fees as % of bookings | Income statement in each 10-Q and 10-K | Has risen every year since FY2019 |
| Hours per daily user | Derived from the shareholder letter | Fell about 4.5% YoY in June 2026 (calculated) — a thinning base, not merely a slower-growing one |
| State settlement accruals and unresolved suits | Contingencies note in each 10-Q | $91M accrued in H1 2026 with eleven states unresolved |
| The US external-purchase-link commission ruling | Epic v. Apple docket, N.D. California | Determines the distribution toll |
Cyclicality is covered above. What follows is what it does not capture — risks that compound, and questions the sources could not answer.
Roblox has settled with five states — Alabama for $12.2M, West Virginia for $11.08M, South Dakota for roughly $10M, Mississippi and Nevada undisclosed — and accrued $91M in H1 2026. The Alabama agreement contains a most-favoured-nation clause binding Roblox to give Alabama any better terms it later concedes elsewhere. Eleven states plus Los Angeles County remain unresolved, so each future settlement ratchets the settled ones backwards.
The JPML created MDL No. 3166 in December 2025, centralising 31 actions plus 48 tag-alongs before the Chief Judge of the Northern District of California; a tracker put the count near 182 by September 2026 — a secondary source, therefore indicative only. Consolidation converts individually survivable claims into a single event turning on one set of rulings on the Section 230 and First Amendment defences the whole docket depends on.
The European Commission designated Roblox a Very Large Online Platform on 31 August 2026, with systemic-risk obligations biting from around January 2027, while the Dutch competition authority runs a separate DSA investigation opened in January 2026 into minor safeguards and dark patterns in purchase flows. The UK Online Safety Act carries penalties up to 10% of worldwide revenue, and Ofcom has had Roblox in its named group of most-used children's services since March 2026. These are product-shaped risks more than fine-shaped ones: each remedy changes the funnel.
From 22 April 2026 the FTC's amended rule adds biometric identifiers to the personal information requiring verifiable parental consent — precisely what facial age estimation collects. The remedy Roblox is deploying to satisfy state attorneys general sits inside the category the federal rule now restricts.
Roblox has raised the cash-out rate or the effective share four times since 2022 and lowered it never, and the largest increase came in June 2026 during a slowdown rather than a boom. Creator supply is mobile, the competing pool is funded by a private company under no obligation to earn a return on it, and every point conceded is permanent. A cost line that only moves up sits directly against a monetisation curve that has not moved for four years.
Revenue currently grows four times faster than bookings because it is delivering the past. If bookings decline for several quarters, the same mechanism will report shrinking revenue long after bookings have stabilised. The company has not quantified this in either direction, and no filing gives the vintage composition of the deferred balance.
The founder's 58.8% voting position means shareholders cannot force a change of course, replace the board, or contest the undisclosed performance targets against which the executive team is paid. Where the operating metrics and the incentive metrics are chosen by the same person who cannot be outvoted, the ordinary correction mechanism for a strategy that stops working is absent.
Three questions would need answering before a thesis could be formed. First, what share of the September 2025 engagement step-up was attributable to individual viral experiences, since that determines whether the current decline is a normalisation or a deterioration. Second, what bookings level the platform settles at once age-check penetration reaches 90% and the funnel friction is fully absorbed. Third, whether developer exchange fees as a share of bookings can ever stop rising, given that the June 2026 increase was conceded during a slowdown rather than a boom.
This is a marketplace, not a games company. It sits between creators who own the content and app stores that own the distribution, and keeps what is left.
The economic engine is one Robux spent. Roughly 16 cents of every booked dollar goes to payment and distribution and 22 cents to creators, funding a platform that has never earned a GAAP profit while generating about 20 cents of free cash flow per booked dollar.
Growth has come from adding users, not monetising them better. Bookings per user have been flat near $52 a year since FY2022, so the deceleration in users is the deceleration in the business.
What could break the story is regulatory friction meeting a flat monetisation curve. Age assurance is reshaping the funnel while settlements ratchet and a competitor bids up the creator payout.
Watch bookings, not revenue. Reported revenue is a two-year echo of cash already collected; bookings, bookings per user and age-check penetration describe the business as it stands.
Company documents. Roblox Corporation annual reports on Form 10-K for FY2021 (filed 25 Feb 2022), FY2023 (21 Feb 2024) and FY2025 (11 Feb 2026); quarterly reports on Form 10-Q through the quarter ended 30 June 2026 (filed 30 July 2026); Form S-1 (19 Nov 2020); proxy statements DEF 14A of 4 Apr 2022 and 16 Apr 2026; quarterly shareholder letters and earnings releases 2024–2026; current reports on Form 8-K including the notes issuance of 29 Oct 2021 and the repurchase authorisation of 19 May 2026.
Independent sources. Ninth Circuit opinion in Epic v. Apple (No. 25-2935, 11 Dec 2025) and Apple's proposed link-out schedule (14 Aug 2026); Google Play service-fee schedule effective 30 June 2026; Epic Games developer documentation on Fortnite Creative engagement payout and Unreal Fest 2026 disclosures; Unity, Take-Two, Snap, Tencent, NetEase and Krafton reported results; Newzoo global games market data (Aug 2026); Ofcom, Children and Parents: Media Use and Attitudes (26 Jun 2025) and Report on the Use of Age Assurance (15 Jul 2026); European Commission VLOP designation (31 Aug 2026); ACM DSA investigation (30 Jan 2026); FTC amended COPPA rule (Fed. Reg., 22 Apr 2025, compliance 22 Apr 2026); Alabama, West Virginia and South Dakota Attorney General settlement announcements (Apr–Jul 2026); Texas Attorney General complaint (7 Nov 2025); JPML transfer order creating MDL No. 3166 (12 Dec 2025); Australian eSafety Commissioner enforceable undertaking (20 Aug 2026).
What post-dates the reported figures. The $3.0bn repurchase authorisation of 19 May 2026, the creator earnings increase effective 8 June 2026, the Kids and Select account launch of June 2026, the withdrawal of full-year guidance on 30 July 2026, and the EU VLOP designation of 31 August 2026 all fall after the FY2025 10-K. The most recent company figures here are for the quarter ended 30 June 2026.
Prepared 7 September 2026 for Kun Xia. Figures carry their source; conclusions reasoned from sourced facts are marked (inferred); items the sources could not settle are stated as such. Not a valuation and not a recommendation.