UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

WASHINGTON, DC 20549

FORM 10-Q 

(Mark One)

☒ QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

For the quarterly period ended September 30, 2023

OR

☐ TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

For the transition period from

Commission File Number: 001-39763

Roblox Corporation

(Exact Name of Registrant as Specified in its Charter)

Delaware	20-0991664
(State or other jurisdiction of incorporation or organization)	(I.R.S. Employer Identification No.)

970 Park Place

San Mateo, California, 94403

(Address of principal executive offices and Zip Code)

(888) 858-2569

(Registrant’s telephone number, including area code)

Securities registered pursuant to Section 12(b) of the Act:

Title of each class	Trading Symbol(s)	Name of each exchange on which registered
Class A Common Stock, $0.0001 par value	RBLX	The New York Stock Exchange

Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days.     Yes  ☒    No  ☐

Indicate by check mark whether the registrant has submitted electronically every Interactive Data File required to be submitted pursuant to Rule 405 of Regulation S-T (§232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit such files).     Yes  ☒    No  ☐

Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, smaller reporting company, or an emerging growth company. See the definitions of “large accelerated filer,” “accelerated filer,” “smaller reporting company,” and “emerging growth company” in Rule 12b-2 of the Exchange Act.

Large accelerated filer	☒	Accelerated filer	☐
Non-accelerated filer	☐	Smaller reporting company	☐
Emerging growth company	☐

If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act.  ☐

Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act).     Yes  ☐    No  ☒

As of November 1, 2023, the registrant had 573,650,725 shares of Class A common stock and 50,086,273 of Class B common stock, each with a par value of $0.0001 per share, outstanding.

Table of Contents

Special Note Regarding Forward-Looking Statements
Special Note Regarding Operating Metrics
		Page
PART I.	FINANCIAL INFORMATION
Item 1.	Financial Statements (Unaudited)	6
	Condensed Consolidated Balance Sheets	6
	Condensed Consolidated Statements of Operations	7
	Condensed Consolidated Statements of Comprehensive Income/(Loss)	8
	Condensed Consolidated Statements of Stockholders’ Equity	9
	Condensed Consolidated Statements of Cash Flows	11
	Notes to Unaudited Condensed Consolidated Financial Statements	12
Item 2.	Management’s Discussion and Analysis of Financial Condition and Results of Operations	31
Item 3.	Quantitative and Qualitative Disclosures About Market Risk	49
Item 4.	Controls and Procedures	50
PART II.	OTHER INFORMATION
Item 1.	Legal Proceedings	51
Item 1A.	Risk Factors	51
Item 2.	Unregistered Sales of Equity Securities and Use of Proceeds	93
Item 3.	Defaults Upon Senior Securities	93
Item 4.	Mine Safety Disclosures	93
Item 5.	Other Information	93
Item 6.	Exhibits	94
Signatures		95

i

SPECIAL NOTE REGARDING FORWARD-LOOKING STATEMENTS

This Quarterly Report on Form 10-Q contains forward-looking statements within the meaning of the federal securities laws, which statements involve substantial risks and uncertainties. Forward-looking statements generally relate to future events or our future financial or operating performance. In some cases, you can identify forward-looking statements because they contain words such as “expect,” “anticipate,” “should,” “believe,” “hope,” “target,” “project,” “plan,” “goals,” “estimate,” “potential,” “predict,” “may,” “will,” “might,” “could,” “would,” “intend,” “shall,” “contemplate,” “opportunity,” or “continue” or the negative of these words or other similar terms or expressions that concern our expectations, strategy, plans, or intentions. Forward-looking statements contained in this Quarterly Report on Form 10-Q include, but are not limited to, statements about:

•our expectations regarding future financial performance, including but not limited to our expectations regarding revenue, cost of revenue, changes in estimated paying user life, operating expenses, operating losses, operating leverage, and our key metrics, and our ability to achieve and maintain future profitability;

•our ability to successfully execute our business and growth strategy, including our potential to scale and grow our international users, developers, and creators and our ability to create new revenue opportunities;

•the sufficiency of our cash and cash equivalents to meet our liquidity needs;

•economic, seasonal, and industry trends;

•the functionality and economics of our platform on operating systems and through distribution channels and software application stores;

•the demand for our platform in general;

•our ability to retain and increase our number of users, developers, and creators;

•the impact of the COVID-19 pandemic and the easing of restrictions related to the COVID-19 pandemic, including on our users’, developers’, and creators’ usage and spending habits;

•the impact of inflation and global economic conditions on our operations;

•challenges associated with our future of work and return to office plans;

•our ability to develop enhancements to our platform, and bring them to market in a timely manner;

•our beliefs about and objectives for future operations;

•our ability to attract and retain employees and key personnel and maintain our corporate culture;

•future acquisitions or investments, including infrastructure investments to increase capacity;

•the ability for developers to build, launch, scale, and monetize experiences for users, including experiences for users who are 17 and older;

•our expectations regarding our ability to generate revenue from our users;

•our ability to convert users into developers and creators;

•our expectations regarding new target demographics;

•our ability to continue to provide a safe and civil online environment, particularly for children;

•our ability to develop and protect our brand;

•our ability to maintain the security and availability of our platform;

•our ability to detect and minimize unauthorized use of our platform;

•the impact of disruption in supply chains on our ability to expand or increase the capacity of the platform or replace defective equipment;

•our business model and expectations and management of future growth, including for headcount growth rate, expansion in international markets, and expenditures associated with such growth;

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•our ability to compete with existing and new competitors;

•our expectations regarding outstanding litigation and legal and regulatory matters;

•our expectations regarding the effects of existing and developing laws and regulations, including with respect to privacy, data protection, online safety, and the regulation of Robux as a security, both in the U.S. and internationally, including how such laws and regulations may interfere with user, developer and creator access to our platform and experiences;

•our expectations surrounding Robux as an attractive virtual currency;

•our goal to increase developer and creator earnings as much as possible;

•the impact of geopolitical events, including the war in Ukraine, Hamas’ attack against Israel and the ensuing war, and their impacts on economies globally;

•our expectations regarding new accounting standards;

•our ability to achieve and maintain effective control over financial reporting;

•the impact of foreign currency exchange rates and rising interest rates on results of operations;

•our estimates related to stock-based compensation expenses;

•generating sufficient cash to service our debt and other obligations that apply to our indebtedness; and

•the increased expenses associated with being a public company.

We caution you that the foregoing list may not contain all of the forward-looking statements made in this Quarterly Report on Form 10-Q.

You should not rely upon forward-looking statements as predictions of future events. We have based the forward-looking statements contained in this Quarterly Report on Form 10-Q primarily on our current expectations and projections about future events and trends that we believe may affect our business, financial condition, results of operations and prospects. The outcome of the events described in these forward-looking statements is subject to risks, uncertainties and other factors, including those described in the section titled “Risk Factors” and elsewhere in this Quarterly Report on Form 10-Q. Moreover, we operate in a very competitive and rapidly changing environment. New risks and uncertainties emerge from time to time and it is not possible for us to predict all risks and uncertainties that could have an impact on the forward-looking statements contained in this Quarterly Report on Form 10-Q. We cannot assure you that the results, events and circumstances reflected in the forward-looking statements will be achieved or occur, and actual results, events or circumstances could differ materially from those described in the forward-looking statements.

Neither we nor any other person assumes responsibility for the accuracy and completeness of any of these forward-looking statements. Moreover, the forward-looking statements made in this Quarterly Report on Form 10-Q relate only to events as of the date on which the statements are made. We undertake no obligation to update any forward-looking statements made in this Quarterly Report on Form 10-Q to reflect events or circumstances after the date of this Quarterly Report on Form 10-Q or to reflect new information or the occurrence of unanticipated events, except as required by law. We may not actually achieve the plans, intentions or expectations disclosed in our forward-looking statements and you should not place undue reliance on our forward-looking statements. Our forward-looking statements do not reflect the potential impact of any future acquisitions, mergers, dispositions, joint ventures or investments we may make.

2

SPECIAL NOTE REGARDING OPERATING METRICS

We manage our business by tracking several operating metrics, including average daily active users (“DAUs”), hours engaged, bookings, average bookings per DAU (“ABPDAU”), average new and returning monthly unique payers, monthly repurchase rate, and average bookings per monthly unique payer. As a management team, we believe each of these operating metrics provides useful information to investors and others. For information concerning these metrics as measured by us, see “Management’s Discussion and Analysis of Financial Condition and Results of Operations.”

While these metrics are based on what we believe to be reasonable estimates of our user base for the applicable period of measurement, there are inherent challenges in measuring how our platform is used. These metrics are determined by using internal data gathered on an analytics platform that we developed and operate and have not been validated by an independent third party. This platform tracks user account and session activity. If we fail to maintain an effective analytics platform, our metrics calculations may be inaccurate. These metrics are also determined by certain demographic data provided to us by the user, such as age or gender. If our users provide us with incorrect or incomplete information, then our estimates may be inaccurate.

We believe that these metrics are reasonable estimates of our user base for the applicable period of measurement, and that the methodologies we employ and update from time-to-time to create these metrics are reasonable bases to identify trends in user behavior. Because we update the methodologies we employ to create metrics, our current period metrics may not be comparable to those in prior periods. For example, in the first quarter of 2023, we revised the methodology we use to calculate average monthly unique payers for payers who purchased prepaid cards through one of our specified distributors; the impact to average new and returning monthly unique payers and average bookings per monthly unique payer in periods prior to the first quarter of 2023 was not significant (specifically, on a quarterly basis, previously reported average unique payers would have been up to 1% higher and average bookings per unique payer would have been up to 1% lower under the new methodology). Finally, the accuracy of our metrics may be affected by certain factors relating to user activity and systems and our ability to identify and detect attempts to replicate legitimate user activity, often referred to as botting. See the sections titled “Risk Factors—Our user metrics and other estimates are subject to inherent challenges in measurement, and real or perceived inaccuracies in those metrics may significantly harm and negatively affect our reputation and our business.”

DAUs

We define a DAU as a user who has logged in and visited Roblox through our website or application on a unique registered account on a given calendar day. If a registered, logged in user visits Roblox more than once within a 24-hour period that spans two calendar days, that user is counted as a DAU only for the first calendar day. We believe this method better reflects global engagement on the platform compared to a method based purely on a calendar-day cutoff. DAUs for a specified period is the average of the DAUs for each day during that period. As an example, DAUs for the month of September would be an average of DAUs during that 30 day period.

Other companies, including companies in our industry, may calculate DAUs differently.

We track DAUs as an indicator of the size of the audience engaged on our platform. DAUs are also broken out by geographic region to help us understand the global engagement on our platform.

The geographic location data collected is based on the IP address associated with the account when an account is initially registered on Roblox. The IP address may not always accurately reflect a user’s actual location at the time they engaged with our platform. We do not collect the geographic location of our Xbox users, which are grouped into Rest of World DAUs for the purposes of our reporting. The platform data collected is based on the platform associated with the account when an account is initially registered on Roblox. The demographic data collected is self-reported to us and may not always accurately represent the actual attributes of the user.

Because DAUs measure account activity and an individual user may actively use our platform within a particular day on multiple accounts for which that individual registered, our DAUs are not a measure of unique individuals accessing Roblox. Additionally, if undetected, fraud and unauthorized access to our platform may contribute, from time to time, to an overstatement of DAUs. In many cases, fraudulent accounts are created by bots to inflate user activity for a particular developer’s content on our platform, thus making the developer’s experience or other content appear more popular than it really is. We strive to detect and minimize fraud and unauthorized access to our platform. See the sections titled “Risk Factors—Our user metrics and other estimates are subject to inherent challenges in measurement, and real or perceived inaccuracies in those metrics may significantly harm and negatively affect our reputation and our business” and “Risk Factors—Some developers, creators, and users on our Platform may make unauthorized, fraudulent, or illegal use of Robux and other digital goods or experiences on our Platform, including through unauthorized third-party websites or “cheating” programs.”

3

Hours Engaged

We define hours engaged as the time spent by our users on the platform, which includes time spent in experiences (which refer to the titles that have been created by developers) and within platform features such as chat and avatar personalization. We calculate total hours engaged as the aggregate of user session lengths in a given period. We determine this length of time using internal company systems that track user activity on our platform, and aggregate discrete activities into a user session. We track hours engaged as an indicator of the user engagement on our platform. Hours engaged are also broken out by geographic region to help us understand the global engagement on our platform.

We continuously strive to detect and minimize unauthorized use of our platform, including, but not limited to, botting. As we continue to improve our ability to detect and deter unauthorized use of our Platform, we may see a minor impact to our overall hours engaged as our efforts to reduce botting become more successful.

Bookings

Bookings represent the sales activity in a given period without giving effect to certain non-cash adjustments, as detailed below. Substantially all of our bookings are generated from sales of virtual currency, which can 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. Bookings are initially recorded in deferred revenue and recognized as revenues over the estimated period of time the virtual items purchased with the virtual currency are available on the Roblox Platform (estimated to be the average lifetime of a paying user) or as the virtual items purchased with the virtual currency are consumed. Bookings also include an insignificant amount from advertising and licensing arrangements.

We believe bookings provide a timelier indication of trends in our operating results that are not necessarily reflected in our revenue as a result of the fact that we recognize the majority of revenue over the estimated average lifetime of a paying user, which was 28 months as of September 30, 2023. The change in deferred revenue constitutes the vast majority of the reconciling difference from revenue to bookings. By removing these non-cash adjustments, we are able to measure and monitor our business performance based on the timing of actual transactions with our users and the cash that is generated from these transactions. Over the long-term, the factors impacting our revenue and bookings trends are the same. However, in the short-term, there are factors that may cause revenue and bookings trends to differ.

We use this non-GAAP financial information to evaluate our ongoing operations and for internal planning and forecasting purposes. We believe that this non-GAAP financial information may be helpful to investors because it provides consistency and comparability with past financial performance. However, non-GAAP financial measures have limitations in their usefulness to investors because they have no standardized meaning prescribed by GAAP and are not prepared under any comprehensive set of accounting rules or principles. In addition, other companies, including companies in our industry, may calculate similarly titled non-GAAP financial measures differently or may use other measures to evaluate their performance, all of which could reduce the usefulness of our non-GAAP financial information as a tool for comparison. As a result, our non-GAAP financial information is presented for supplemental informational purposes only and should not be considered in isolation from, or as a substitute for financial information presented in accordance with GAAP.

Bookings are also broken out by geographic region based on the billing country of our payers, to help us understand the global engagement and monetization on our platform. The billing address may not always accurately reflect a payer’s actual location at the time of their purchase.

ABPDAU

We define ABPDAU as bookings in a given period divided by the DAUs for such period. We primarily use ABPDAU as a way to understand how we are monetizing across all of our users through the sale of virtual currency and subscriptions.

Average New and Returning Monthly Unique Payers and Monthly Repurchase Rate

We define new monthly unique payers as user accounts that made their first purchase on the platform, or via redemption of prepaid cards, during a given month. Average new monthly unique payers for a specified period is the average of the new monthly unique payers for each month during that period. Because we do not always have the data necessary to link an individual who has paid under multiple user accounts, an individual may be counted as multiple new monthly unique payers.

4

We define returning monthly unique payers as user accounts that have made a purchase on the platform, or via redemption of prepaid cards, in the current month and in any prior month. Average returning monthly unique payers for a specified period is the average of the returning monthly unique payers for each month during that period. Because we do not always have the data necessary to link an individual who has paid under multiple user accounts, an individual may be counted as multiple returning monthly unique payers.

We define monthly repurchase rate as the returning monthly unique payers in the current month, divided by the sum of the prior month’s new monthly unique payers and returning monthly unique payers. Average monthly repurchase rate for a specified period is the average of the monthly repurchase rates for each month during that period.

Average Bookings per Monthly Unique Payer

We define average bookings per monthly unique payer as bookings in the specified period divided by the average monthly unique payers for the same specified period.

5

PART I—FINANCIAL INFORMATION

Item 1. Financial Statements (unaudited)

ROBLOX CORPORATION

CONDENSED CONSOLIDATED BALANCE SHEETS

(in thousands, except par values)

(unaudited)

	As of
	September 30, 2023		December 31, 2022
Assets
Current assets:
Cash and cash equivalents	$	580,049	$	2,977,474
Short-term investments	1,576,293		—
Accounts receivable—net of allowances	285,315		379,353
Prepaid expenses and other current assets	65,004		61,641
Deferred cost of revenue, current portion	462,795		420,136
Total current assets	2,969,456		3,838,604
Long-term investments	959,260		—
Property and equipment—net	709,382		592,346
Operating lease right-of-use assets	662,379		526,030
Deferred cost of revenue, long-term	244,547		225,132
Intangible assets, net	56,794		54,717
Goodwill	141,800		134,335
Other assets	10,512		4,323
Total assets	$	5,754,130	$	5,375,487
Liabilities and Stockholders’ equity
Current liabilities:
Accounts payable	$	86,781	$	71,182
Accrued expenses and other current liabilities	260,395		236,006
Developer exchange liability	239,428		231,704
Deferred revenue—current portion	2,208,531		1,941,943
Total current liabilities	2,795,135		2,480,835
Deferred revenue—net of current portion	1,188,815		1,095,291
Operating lease liabilities	629,756		494,590
Long-term debt, net	1,004,666		988,984
Other long-term liabilities	15,904		10,752
Total liabilities	5,634,276		5,070,452
Commitments and contingencies (Note 10)
Stockholders’ equity
Common stock, $0.0001 par value; 5,000,000 authorized as of September 30, 2023 and December 31, 2022, 623,588 and 604,674 shares issued and outstanding as of September 30, 2023 and December 31, 2022, respectively; Class A common stock—4,935,000 shares authorized as of September 30, 2023 and December 31, 2022, 573,502 and 553,337 shares issued and outstanding as of September 30, 2023 and December 31, 2022, respectively; Class B common stock—65,000 shares authorized as of September 30, 2023 and December 31, 2022, 50,086 and 51,337 shares issued and outstanding as of September 30, 2023 and December 31, 2022, respectively	60		59
Additional paid-in capital	2,878,160		2,213,603
Accumulated other comprehensive income/(loss)	(15,879)		671
Accumulated deficit	(2,736,555)		(1,908,307)
Total Roblox Corporation Stockholders’ equity	125,786		306,026
Noncontrolling interests	(5,932)		(991)
Total Stockholders’ equity	119,854		305,035
Total Liabilities and Stockholders’ equity	$	5,754,130	$	5,375,487

The accompanying notes are an integral part of these condensed consolidated financial statements.

6

ROBLOX CORPORATION

CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS

(in thousands, except per share amounts)

(unaudited)

	Three Months Ended				Nine Months Ended
	September 30,				September 30,
	2023		2022		2023		2022
Revenue	$	713,225	$	517,707	$	2,049,335	$	1,646,048
Cost and expenses:
Cost of revenue(1)	163,581		126,437		477,451		405,226
Developer exchange fees	170,719		151,470		519,002		441,740
Infrastructure and trust & safety	218,968		190,986		655,051		490,576
Research and development	321,613		235,551		912,469		625,070
General and administrative	97,508		81,165		291,279		217,613
Sales and marketing	40,874		32,105		97,957		87,708
Total cost and expenses	1,013,263		817,714		2,953,209		2,267,933
Loss from operations	(300,038)		(300,007)		(903,874)		(621,885)
Interest income	36,442		12,764		102,288		17,206
Interest expense	(10,268)		(10,005)		(30,409)		(29,895)
Other income/(expense), net	(4,262)		(4,302)		(1,425)		(7,732)
Loss before income taxes	(278,126)		(301,550)		(833,420)		(642,306)
Provision for/(benefit from) income taxes	682		352		177		350
Consolidated net loss	(278,808)		(301,902)		(833,597)		(642,656)
Net loss attributable to noncontrolling interests	(1,650)		(4,104)		(5,349)		(8,216)
Net loss attributable to common stockholders	$	(277,158)	$	(297,798)	$	(828,248)	$	(634,440)
Net loss per share attributable to common stockholders, basic and diluted	$	(0.45)	$	(0.50)	$	(1.35)	$	(1.07)
Weighted-average shares used in computing net loss per share attributable to common stockholders—basic and diluted	619,350		597,779		612,938		593,452

(1)Depreciation of servers and infrastructure equipment included in infrastructure and trust & safety.

The accompanying notes are an integral part of these condensed consolidated financial statements.

7

ROBLOX CORPORATION

CONDENSED CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME/(LOSS)

(in thousands)

(unaudited)

	Three Months Ended				Nine Months Ended
	September 30,				September 30,
	2023		2022		2023		2022
Consolidated net loss	$	(278,808)	$	(301,902)	$	(833,597)	$	(642,656)
Other comprehensive income/(loss), net of tax:
Foreign currency translation adjustments	(506)		1,064		301		1,921
Net change in unrealized gains (losses) on available-for-sale marketable securities	(1,263)		—		(16,443)		—
Other comprehensive income/(loss), net of tax	(1,769)		1,064		(16,142)		1,921
Total comprehensive loss, including noncontrolling interests	(280,577)		(300,838)		(849,739)		(640,735)
Less: net loss attributable to noncontrolling interests	(1,650)		(4,104)		(5,349)		(8,216)
Less: cumulative translation adjustments attributable to noncontrolling interests	15		475		408		986
Other comprehensive loss attributable to noncontrolling interests, net of tax	(1,635)		(3,629)		(4,941)		(7,230)
Total comprehensive loss attributable to common stockholders	$	(278,942)	$	(297,209)	$	(844,798)	$	(633,505)

The accompanying notes are an integral part of these condensed consolidated financial statements.

8

ROBLOX CORPORATION

CONDENSED CONSOLIDATED STATEMENTS OF STOCKHOLDERS’ EQUITY

(in thousands)

(unaudited)

Three Months Ended September 30, 2023

	Class A and Class B Common Stock			Additional Paid-In Capital		Accumulated Other Comprehensive Income/(Loss)		Accumulated Deficit		Non- Controlling Interest		Total Stockholders’ Equity
	Shares	Amount
Balance at June 30, 2023	616,301	$	60	$	2,641,929	$	(14,095)	$	(2,459,397)	$	(4,297)	$	164,200
Issuance of common stock upon exercise of stock options	3,047	—		6,501		—		—		—		6,501
Issuance of common stock under Employee Stock Purchase Plan	426	—		9,708		—		—		—		9,708
Vesting of restricted stock units	3,814	—		—		—		—		—		—
Stock-based compensation expense	—	—		220,022		—		—		—		220,022
Other comprehensive income/(loss)	—	—		—		(1,784)		—		15		(1,769)
Net loss	—	—		—		—		(277,158)		(1,650)		(278,808)
Balance at September 30, 2023	623,588	$	60	$	2,878,160	$	(15,879)	$	(2,736,555)	$	(5,932)	$	119,854

Nine Months Ended September 30, 2023

	Class A and Class B Common Stock			Additional Paid-In Capital		Accumulated Other Comprehensive Income/(Loss)		Accumulated Deficit		Non- Controlling Interest		Total Stockholders’ Equity
	Shares	Amount
Balance at December 31, 2022	604,674	$	59	$	2,213,603	$	671	$	(1,908,307)	$	(991)	$	305,035
Issuance of common stock upon exercise of stock options	7,618	1		17,640		—		—		—		17,641
Issuance of common stock under Employee Stock Purchase Plan	1,065	—		29,629		—		—		—		29,629
Vesting of restricted stock units	10,231	—		—		—		—		—		—
Stock-based compensation expense	—	—		617,288		—		—		—		617,288
Other comprehensive income/(loss)	—	—		—		(16,550)		—		408		(16,142)
Net loss	—	—		—		—		(828,248)		(5,349)		(833,597)
Balance at September 30, 2023	623,588	$	60	$	2,878,160	$	(15,879)	$	(2,736,555)	$	(5,932)	$	119,854

The accompanying notes are an integral part of these condensed consolidated financial statements.

9

ROBLOX CORPORATION

CONDENSED CONSOLIDATED STATEMENTS OF STOCKHOLDERS’ EQUITY

(in thousands)

(unaudited)

Three Months Ended September 30, 2022

	Class A and Class B Common Stock			Additional Paid-In Capital		Accumulated Other Comprehensive Income/(Loss)		Accumulated Deficit		Non- Controlling Interest		Total Stockholders’ Equity
	Shares	Amount
Balance at June 30, 2022	596,622	$	59	$	1,867,204	$	408	$	(1,320,583)	$	4,505	$	551,593
Issuance of common stock upon exercise of stock options	1,820	—		4,020		—		—		—		4,020
Issuance of common stock under Employee Stock Purchase Plan	240	—		8,459		—		—		—		8,459
Vesting of restricted stock units	1,959	—		—		—		—		—		—
Stock-based compensation expense	—	—		161,359		—		—		—		161,359
Other comprehensive income/(loss)	—	—		—		589		—		475		1,064
Net loss	—	—		—		—		(297,798)		(4,104)		(301,902)
Balance at September 30, 2022	600,641	$	59	$	2,041,042	$	997	$	(1,618,381)	$	876	$	424,593

Nine Months Ended September 30, 2022

	Class A and Class B Common Stock			Additional Paid-In Capital		Accumulated Other Comprehensive Income/(Loss)		Accumulated Deficit		Non- Controlling Interest		Total Stockholders’ Equity
	Shares	Amount
Balance at December 31, 2021	585,878	$	58	$	1,568,638	$	62	$	(983,941)	$	8,106	$	592,923
Issuance of common stock upon exercise of stock options	8,176	1		19,672		—		—		—		19,673
Issuance of common stock from acquisition of a business	385	—		10,138		—		—		—		10,138
Issuance of common stock under Employee Stock Purchase Plan	575	—		22,702		—		—		—		22,702
Vesting of restricted stock units	5,575	—		—		—		—		—		—
Withholding taxes related to net share settlement of restricted stock units	(3)	—		(150)		—		—		—		(150)
Stock-based compensation expense	—	—		420,042		—		—		—		420,042
Other	55	—		—		—		—		—		—
Other comprehensive income/(loss)	—	—		—		935		—		986		1,921
Net loss	—	—		—		—		(634,440)		(8,216)		(642,656)
Balance at September 30, 2022	600,641	$	59	$	2,041,042	$	997	$	(1,618,381)	$	876	$	424,593

The accompanying notes are an integral part of these condensed consolidated financial statements.

10

ROBLOX CORPORATION

CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS

(in thousands)

(unaudited)

	Nine Months Ended September 30,
	2023		2022
Cash flows from operating activities:
Consolidated net loss	$	(833,597)	$	(642,656)
Adjustments to reconcile net loss including noncontrolling interests to net cash and cash equivalents provided by operations:
Depreciation and amortization	153,611		87,545
Stock-based compensation expense	617,288		420,042
Operating lease non-cash expense	70,801		49,115
(Accretion)/amortization on marketable securities, net	(52,219)		—
Amortization of debt issuance costs	982		940
Impairment expense, (gain)/loss on investment and other asset sales, and other, net	7,747		(34)
Changes in operating assets and liabilities, net of effect of acquisitions:
Accounts receivable	93,174		119,948
Accounts payable	3,855		(8,331)
Prepaid expenses and other current assets	(1,861)		(42,604)
Other assets	(6,189)		498
Developer exchange liability	7,724		4,461
Accrued expenses and other current liabilities	(2,599)		6,982
Other long-term liability	4,971		(579)
Operating lease liabilities	(46,837)		(32,989)
Deferred revenue	360,098		336,928
Deferred cost of revenue	(62,074)		(49,189)
Net cash and cash equivalents provided by operating activities	314,875		250,077
Cash flows from investing activities:
Acquisition of property and equipment	(255,470)		(268,958)
Payments related to business combination, net of cash acquired	(3,859)		(6,165)
Purchases of intangible assets	(13,500)		(1,500)
Purchases of investments	(3,803,911)		—
Maturities of investments	956,010		—
Sales of investments	346,766		—
Net cash and cash equivalents used in investing activities	(2,773,964)		(276,623)
Cash flows from financing activities:
Proceeds from issuance of common stock	47,316		42,706
Payment of withholding taxes related to net share settlement of restricted stock units	—		(150)
Proceeds from debt issuances	14,700		—
Payment of debt issuance costs	—		(154)
Payments related to business combination, after acquisition date	(750)		(150)
Payment of term license related obligations	—		(420)
Net cash and cash equivalents provided by financing activities	61,266		41,832
Effect of exchange rate changes on cash and cash equivalents	398		1,921
Net increase/(decrease) in cash and cash equivalents	(2,397,425)		17,207
Cash and cash equivalents
Beginning of period	2,977,474		3,004,300
End of period	$	580,049	$	3,021,507
Supplemental disclosure of noncash investing and financing activities:
Property and equipment additions in accounts payable and accrued expenses and other liabilities	$	62,248	$	111,121
Fair value of common stock and unregistered restricted stock units issued as consideration for business combination	—		$	10,138

The accompanying notes are an integral part of these condensed consolidated financial statements.

11

Roblox Corporation

Notes to Unaudited Condensed Consolidated Financial Statements

1. Organization and Description of Business

Description of Business

Roblox Corporation (the “Company” or “Roblox”) was incorporated under the laws of the state of Delaware in March 2004. The Company operates a human co-experience platform (the “Roblox Platform” or “Platform”) where users interact with each other to explore and create immersive, user-generated, 3D experiences. Users are free to immerse themselves in experiences on the Roblox Platform and can acquire experience-specific enhancements or avatar items by using purchased Robux, our virtual currency. Any user can be a developer or creator on the Platform using Roblox Studio, a set of free software tools. Developers build the experiences that are published on Roblox and can earn Robux through microtransactions in their experiences, through engagement-based payouts, and by selling virtual items in the Roblox virtual economy.

2. Basis of Presentation and Summary of Significant Accounting Policies

Fiscal Year

The Company’s fiscal year ends on December 31. For example, references to fiscal year 2023 and 2022 refer to the fiscal year ending December 31, 2023 and December 31, 2022, respectively.

Basis of Presentation

The accompanying unaudited condensed consolidated financial statements have been prepared in accordance with generally accepted accounting principles in the United States (“U.S. GAAP”), and applicable rules and regulations of the Securities and Exchange Commission (“SEC”), regarding interim financial reporting. Accordingly, they do not include all disclosures normally required in annual consolidated financial statements prepared in accordance with U.S. GAAP. Therefore, these unaudited condensed consolidated financial statements should be read in conjunction with the audited consolidated financial statements and notes included in the Company’s Annual Report on Form 10-K for the year ended December 31, 2022, which was filed with the SEC on February 28, 2023.

In the Company’s opinion, the information contained herein reflects all adjustments necessary for a fair presentation of the Company’s results of operations, financial position, cash flows, and stockholders’ equity. All such adjustments are of a normal, recurring nature. The results of operations for the three and nine months ended September 30, 2023 shown in this report are not necessarily indicative of the results to be expected for the full year ending December 31, 2023 or any other interim period.

For a discussion of the Company’s significant accounting policies, refer to the headers “Developer Exchange Fees Expense” and “Short-Term and Long-Term Investments” below, as well as the significant accounting policies as described in the Company’s consolidated financial statements and related notes included in the Company’s Annual Report on Form 10-K for the year ended December 31, 2022, which was filed with the SEC on February 28, 2023.

Principles of Consolidation

The condensed consolidated financial statements include the accounts of the Company and subsidiaries over which the Company has control. All intercompany transactions and balances have been eliminated. The condensed consolidated financial statements include 100% of the accounts of wholly owned and majority owned subsidiaries, and the ownership interest of minority investors is recorded as noncontrolling interest.

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Use of Estimates

The preparation of condensed consolidated financial statements in conformity with U.S. GAAP requires management to make estimates and assumptions that affect the amounts reported in the condensed consolidated financial statements and accompanying notes. Significant estimates and assumptions reflected in the condensed consolidated financial statements include, but are not limited to, the estimated period of time the virtual items are available to the user, which is estimated as the average lifetime of a paying user, and the estimated amount of consumable and durable virtual items purchased for which the Company lacks specific information that is used for revenue recognition, useful lives of property and equipment and intangible assets, fair value of assets and liabilities acquired through acquisitions, accrued liabilities (including accrued developer exchange fees), contingent liabilities, valuation of deferred tax assets and liabilities, stock-based compensation expense, the discount rate used in measuring our operating lease liabilities, the carrying value of operating lease right-of-use assets, evaluation of recoverability of goodwill, intangible assets and long-lived assets, and as necessary, estimates of fair value to measure impairment losses. Management believes that the estimates, and judgments upon which they rely, are reasonable based upon information available to them at the time that these estimates and judgments are made. Actual results could differ from those estimates and any such differences may be material to the condensed consolidated financial statements. To the extent that there are material differences between these estimates and actual results, the Company’s condensed consolidated financial statements will be affected.

Change in Accounting Estimate

In the first quarter of 2022, we updated our estimated paying user life from 23 months to 25 months, which was subsequently updated again to 28 months in the third quarter of 2022. Based on the carrying amount of deferred revenue and deferred cost of revenue as of June 30, 2022, the third quarter of 2022 change in estimated paying user life resulted in a decrease in revenue of $111.0 million and a decrease in cost of revenue of $25.5 million during the three months ended September 30, 2022.

Based on the carrying amount of deferred revenue and deferred cost of revenue as of December 31, 2021, both changes in estimated paying user lives during 2022 resulted in a decrease in revenue of $329.7 million and a decrease in cost of revenue of $76.4 million during the nine months ended September 30, 2022. The estimated paying user life for the three and nine months ended September 30, 2023 was 28 months.

Refer to the heading “Basis of Presentation and Summary of Significant Accounting Policies — Revenue Recognition Policy” as described in the Company’s consolidated financial statements and related notes included in the Company’s Annual Report on Form 10-K for the year ended December 31, 2022, which was filed with the SEC on February 28, 2023, for a complete discussion on the Company’s revenue recognition policies.

Developer Exchange Fees Expense

The Company has established an incentive program for developers and creators to build and operate virtual experiences within the Roblox environment. Developers and creators can earn Robux through the sale of access to their experiences and enhancements in their experiences, the sale of content and tools between developers through the Studio Marketplace, and the sale of items to users through the Avatar Marketplace. Developers can also earn Robux through our engagement-based reward program that rewards developers based on the number of hours spent in their experiences by Roblox Premium subscribers. Under certain conditions, and in compliance with applicable law, these developers and creators are eligible to receive a cash payout based on the amount of accumulated earned Robux through our Developer Exchange Program. In order to be qualified for our Developer Exchange Program and eligible to exchange earned Robux for real-world currency, developers and creators must meet certain conditions, such as having earned the minimum amount of Robux required to qualify for the program, a verified developer account, and an account in good standing. On January 31, 2022, we reduced the minimum amount of earned Robux required to qualify for the program from 100,000 Robux to 50,000 Robux and subsequently on January 31, 2023, we further reduced the minimum requirement from 50,000 Robux to 30,000 Robux.

The Company recognizes the expense associated with the Developer Exchange Program as Robux are earned by developers and creators that are qualified and registered in the Developer Exchange Program.

13

Short-Term and Long-Term Investments

Realized gains and losses for all investments are determined using the specific-identification method and are reflected as a component of other income/(expense), net in the condensed consolidated statements of operations.

Debt Securities

Short-term and long-term investments include corporate debt securities, commercial paper, U.S. Treasury securities, U.S. agency securities, foreign government securities, and certificates of deposits. Based on our intentions, all debt investments are classified as available-for-sale and are reported at fair value with unrealized gains and losses recorded as a separate component of other comprehensive income, net of tax. The Company determines the appropriate classification of its investments as short-term or long-term at the time of purchase and reevaluates such determination at each reporting period based on their respective maturity dates and the Company’s reasonable expectation with regard to those investments (e.g. expectations of future sales or redemptions).

For debt securities in an unrealized loss position, we first consider whether we intend to or it is more likely than not that we will be required to sell the individual security prior to recovery of its amortized cost basis and if so, we adjust the carrying value of security down to its fair value, with the amount of the write-down recorded as a realized loss within other income/(expense), net.

Otherwise, we determine whether a decline in fair value is attributable to a partial or full credit loss by reviewing factors such as the extent to which the fair value is less than the amortized cost basis, changes in interest rates since the purchase of the security, the financial condition of the issuer, including changes in credit ratings, the remaining payment terms of the security, as well as any adverse conditions specifically related to the security, the issuer’s industry or its geographic area. If a credit loss exists, we adjust the carrying value by recording expense within other income/(expense), net equal to the amount of the credit loss, with such amount limited to the amount of the unrealized loss. Subsequent recoveries of fair value originally attributed to a credit loss are subsequently recognized as income within other income/(expense), net. Finally, any unrealized loss not deemed to be attributable to a credit loss is recognized as component of other comprehensive income/(loss), net of tax.

For purposes of identifying and measuring credit losses, the Company excludes any related accrued interest from both the fair value and amortized cost basis of the investment. Accrued interest receivable, net of the allowance for credit losses (if any), is recorded as a component of prepaid expenses and other current assets in our condensed consolidated financial statements.

The Company’s investment policy limits the amount of credit exposure in its portfolio by imposing credit rating minimums and limiting purchases by security type and sector.

Equity Securities with Readily Determinable Fair Value

Short-term investments include mutual fund investments related to the Company’s nonqualified deferred compensation plan, which are held in a rabbi trust. The Company classifies these investments as trading securities as the rabbi trust actively manages the asset allocation to match the participants’ hypothetical fund allocations. The Company considers investments held in the rabbi trust to be restricted given their withdrawal and general use is legally restricted.

All equity investments are reported at fair value, with unrealized gains and losses recorded within other income/(expense), net in our condensed consolidated statement of operations.

Recent Accounting Pronouncements

Accounting Pronouncements Recently Adopted

In October 2021, the Financial Accounting Standards Board (“FASB”) issued Accounting Standards Update (“ASU”) 2021-08, “Business Combinations (Topic 805): Accounting for Contract Assets and Contract Liabilities from Contracts with Customers”. Under ASU 2021-08, an acquirer must recognize and measure contract assets and contract liabilities acquired in a business combination in accordance with Topic 606, as if it had originated the contracts. Prior to this ASU, an acquirer generally recognized contract assets acquired and contract liabilities assumed that arose from contracts with customers at fair value on the acquisition date. The Company adopted the ASU on January 1, 2023 and the adoption did not have a material impact on the Company’s condensed consolidated financial statements.

Recent Accounting Pronouncements Not Yet Adopted

The Company is in the process of reviewing all issued, but not yet effective, accounting pronouncements and does not believe the future adoption of any such accounting pronouncements will cause a material impact on its condensed consolidated financial statements.

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3. Revenue from Contracts with Customers

Disaggregation of Revenue

The following table summarizes revenue by region based on the billing country of users (in thousands, except percentages):

	Three Months Ended September 30,
	2023				2022
	Amount		Percentage of Revenue		Amount		Percentage of Revenue
United States and Canada (1)	$	458,563	65	%	$	341,519	66	%
Europe	128,412		18		92,347		18
Asia-Pacific, including Australia and New Zealand	73,772		10		48,573		9
Rest of world	52,478		7		35,268		7
Total	$	713,225	100	%	$	517,707	100	%

	Nine Months Ended September 30,
	2023				2022
	Amount		Percentage of Revenue		Amount		Percentage of Revenue
United States and Canada (1)	$	1,323,849	65	%	$	1,088,535	66	%
Europe	370,474		18		299,860		18
Asia-Pacific, including Australia and New Zealand	208,002		10		147,568		9
Rest of world	147,010		7		110,085		7
Total	$	2,049,335	100	%	$	1,646,048	100	%

(1)The Company’s revenues in the United States were 60% of total revenue for each of the three and nine months ended September 30, 2023, respectively, and 62% for each of the three and nine months ended September 30, 2022.

No individual country, other than the United States, exceeded 10% of the Company’s total revenue for any period presented.

Durable virtual items accounted for 92% and 89% of Roblox Platform revenue for the three months ended September 30, 2023 and 2022, respectively, and 91% and 90% for the nine months ended September 30, 2023 and 2022, respectively. Consumable virtual items accounted for 8% and 11% of Roblox Platform revenue for the three months ended September 30, 2023 and 2022, respectively, and 9% and 10% for the nine months ended September 30, 2023 and 2022, respectively.

Deferred Revenue

The Company receives payments from its users based on the payment terms established in its contracts. Such payments are initially recorded to deferred revenue and are recognized into revenue as the Company satisfies its performance obligations. The aggregate amount of revenue allocated to unsatisfied performance obligations is included in our deferred revenue balances.

The increase in deferred revenue for the nine months ended September 30, 2023 was driven by sales during the period exceeding revenue recognized from the satisfaction of our performance obligations, which includes the revenue recognized during the period that was included in the current portion of deferred revenue at the beginning of the period. During the nine months ended September 30, 2023, we recognized $1,537.9 million of revenue that was included in the current deferred revenue balance as of December 31, 2022.

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4. Leases

On February 11, 2023, the Company executed a lease assignment as sub-lessee pursuant to which the Company will sublease approximately 179,496 square feet of office space in San Mateo, California for a lease term of approximately seven years (the “Sub-Lessee Agreement”). Concurrent with the execution of the Sub-Lessee Agreement, the Company executed a sublease as sub-lessor pursuant to which it will sublease a total of approximately 78,911 square feet of its San Mateo, California corporate headquarters (the “San Mateo Headquarters”) to the sub-lessee for a lease term of approximately four years (the “Sub-Lessor Agreement”).

The total lease payments under the Sub-Lessee Agreement are approximately $85.6 million over the lease term and the Company took possession of the assigned space in the second quarter of 2023. The total lease payments due to the Company under the Sub-Lessor Agreement are $22.2 million over the lease term and the Company provided possession to the sub-lessee to one of the floors in the second quarter of 2023 and the remaining floor in the third quarter of 2023.

As a result of the Sub-Lessor Agreement, the Company recognized a $7.0 million impairment loss within general and administrative expenses in its condensed consolidated financial statements during the nine months ended September 30, 2023, which included $4.8 million related to the San Mateo Headquarters’ operating lease right-of-use asset and $2.2 million related to property and equipment, net associated with the San Mateo Headquarters.

The Company took possession of additional office and data center leased space in the second quarter of 2023, with lease payments totaling $229.0 million – net of leasehold incentives – across lease terms ranging from approximately seven years to twelve years. The additional office space includes approximately 218,554 square feet.

Finally, the Company executed a data center lease agreement in the second quarter of 2023, with lease payments totaling $96.4 million over a seven year lease term. The Company expects to take possession of the leased space during the first quarter of 2024.

5. Cash Equivalents and Investments

The following is a summary of the Company’s cash equivalents and short-term and long-term investments (in thousands):

	As of September 30, 2023
	Amortized Cost		Gross Unrealized Gains		Gross Unrealized Losses		Fair Value		Cash Equivalents		Short-Term Investments		Long-Term Investments
Debt Securities
Level 1
Money market funds	$	458,435	$	—	$	—	$	458,435	$	458,435	$	—	$	—
U.S. Treasury securities	1,663,644		19		(10,181)		1,653,482		—		1,135,234		518,248
Subtotal	2,122,079		19		(10,181)		2,111,917		458,435		1,135,234		518,248
Level 2
U.S. agency securities	304,154		6		(623)		303,537		—		209,384		94,153
Foreign government securities	14,274		67		(161)		14,180		—		—		14,180
Commercial paper	178,314		—		—		178,314		—		178,314		—
Corporate debt securities	391,320		16		(5,586)		385,750		—		53,071		332,679
Subtotal	888,062		89		(6,370)		881,781		—		440,769		441,012
Total Debt Securities	$	3,010,141	$	108	$	(16,551)	$	2,993,698	$	458,435	$	1,576,003	$	959,260
Equity Securities
Level 1
Mutual funds (1)							$	290	$	—	$	290	$	—
Total Equity Securities							$	290	$	—	$	290	$	—
Total Investments	$	3,010,141	$	108	$	(16,551)	$	2,993,988	$	458,435	$	1,576,293	$	959,260

(1)The equity securities relate to the Company’s nonqualified deferred compensation plan and are held in a rabbi trust. Refer to Note 14, “Employee and Director Benefits”, to the notes to the condensed consolidated financial statements for more information.

16

	As of December 31, 2022
	Amortized Cost		Gross Unrealized Gains		Gross Unrealized Losses		Fair Value		Cash Equivalents		Short-Term Investments		Long-Term Investments
Debt Securities
Level 1
Money market funds	$	1,903,880	$	—	$	—	$	1,903,880	$	1,903,880	$	—	$	—
Total Investments	$	1,903,880	$	—	$	—	$	1,903,880	$	1,903,880	$	—	$	—

As of September 30, 2023, all of the Company’s short-term debt investments have contractual maturities of one year or less and all of the Company’s long-term debt investments have contractual maturities of between one and three years.

Changes in market interest rates, credit risk of borrowers and overall market liquidity, amongst other factors, may cause our short-term and long-term debt investments to fall below their amortized cost basis, resulting in unrealized losses. For those debt securities in an unrealized loss position as of September 30, 2023, the unrealized losses were primarily driven by increases in interest rates and the Company does not intend to sell, nor is it more likely than not it will be required to sell, such securities before recovering the amortized cost basis. There were no credit losses recognized during the three and nine months ended September 30, 2023.

The following table presents fair values and gross unrealized losses, aggregated by investment category and the length of time that individual securities have been in a continuous loss position (in thousands):

	As of September 30, 2023
	Less Than 12 Months				12 Months or Greater				Total
	Fair Value		Unrealized Losses		Fair Value		Unrealized Losses		Fair Value		Unrealized Losses
U.S. Treasury securities	$	1,293,384	$	(10,181)	$	—	$	—	$	1,293,384	$	(10,181)
U.S. agency securities	213,444		(623)		—		—		213,444		(623)
Foreign government securities	9,043		(161)		—		—		9,043		(161)
Corporate debt securities	375,457		(5,586)		—		—		375,457		(5,586)
Total	$	1,891,328	$	(16,551)	$	—	$	—	$	1,891,328	$	(16,551)

6. Acquisitions

Speechly, Inc.

On September 18, 2023 (the “Speechly Acquisition Date”), the Company acquired all outstanding equity interests of Speechly, Inc. and its wholly owned Finnish subsidiary Speechly Oy (together, “Speechly”). Speechly is a privately held company, that operates a speech recognition software focused on voice moderation. The acquisition has been accounted for as a business combination. The consideration totaled $10.1 million, which included (i) $4.8 million of cash paid on the Speechly Acquisition Date and (ii) $5.3 million of cash held back until certain post-acquisition conditions are satisfied.

The following table summarizes the Company’s preliminary allocation of the purchase consideration based on the fair value of assets acquired and liabilities assumed at the Speechly Acquisition Date (in thousands):

	September 18, 2023
Cash and cash equivalents	$	970
Other current assets acquired	111
Intangible assets, net
Developed technology, useful life of five years	2,800
Goodwill	7,536
Other current liabilities assumed	$	(1,117)
Other long-term liabilities assumed	(182)
Total purchase price	$	10,118

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Goodwill is attributable to the assembled workforce and anticipated synergies arising from the acquisition. The goodwill recognized is not expected to be deductible for income tax purposes.

Byfron Technologies, LLC Acquisition

On October 11, 2022 (the “Byfron Acquisition Date”), the Company acquired all outstanding equity interests of Byfron Technologies, LLC (“Byfron”), a privately-held company that operates a security and anti-cheat software for game publishers. The acquisition has been accounted for as a business combination. The consideration totaled $9.6 million, which included $2.0 million of cash to be held back for 18 months following the Byfron Acquisition Date. The aggregate purchase consideration comprised of the following (in thousands):

	Fair Value
Cash paid	$	7,603
Cash holdback	2,000
Total purchase price	$	9,603

In connection with the acquisition, the Company also entered into agreements with the Byfron founders, which provide them $9.6 million over a three year service period following the Byfron Acquisition Date, subject to their continued service with the Company during that period. The agreements were determined to primarily benefit the Company and were recognized separate from the business combination. The expense associated with these agreements is being recognized ratably over the requisite service period of three years as a component of research and development expense.

The following table summarizes the Company’s preliminary allocation of the purchase consideration based on the fair value of assets acquired and liabilities assumed at the Byfron Acquisition Date (in thousands):

	October 11, 2022
Cash and cash equivalents	$	380
Goodwill	3,882
Identified intangible assets	5,500
Other assets	169
Other current liabilities	(328)
Total purchase price	$	9,603

The following table presents details of the identifiable assets acquired (in thousands, except estimated useful life):

	Carrying Amount		Estimated Useful Life (Years)
Developed technology	$	5,500	5
Total	$	5,500

Goodwill is primarily attributable to the assembled workforce and anticipated synergies arising from the acquisition. The goodwill recorded in the acquisition is expected to be deductible for income tax purposes.

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Hamul, Inc. Acquisition

On April 1, 2022 (the “Hamul Acquisition Date”), the Company acquired all outstanding equity interests of Hamul, Inc. (“Hamul”) a privately-held company that provides a platform for connecting gaming communities. The acquisition has been accounted for as a business combination. The fair value of the consideration transferred was $19.3 million, which consisted of $9.2 million paid in cash and 385,093 shares of Class A common stock with a fair value of $4.0 million. The aggregate purchase consideration was comprised of the following (in thousands):

	Fair Value
Cash paid	$	9,185
Common stock issued	4,009
Replacement awards attributable to pre-acquisition service	6,129
Total purchase price	$	19,323

In connection with the acquisition, the Company entered into a stock-based consideration revesting agreement with the Hamul founders. The portion of the fair value of the common stock associated with pre-acquisition service of the Hamul founders represented a component of the total purchase consideration, as presented above. The remaining fair value of $7.6 million of these issued shares was excluded from the purchase price. These shares, which are subject to the recipients’ continued service with the Company, are being recognized ratably as stock-based compensation expense as a component of research and development expense over the requisite service period of three years following the Hamul Acquisition Date.

The total purchase consideration was allocated to the tangible and intangible assets acquired, and liabilities assumed, based upon their respective fair values as of the date of the acquisition. Management determined the fair values based on a number of factors. The excess of the purchase price over the net assets acquired was recorded as goodwill. Goodwill is attributable to the assembled workforce and anticipated synergies arising from the acquisition. The goodwill recognized is not expected to be deductible for income tax purposes.

The following table summarizes the Company’s allocation of the purchase consideration based on the fair value of assets acquired and liabilities assumed at the Hamul Acquisition Date (in thousands):

	April 1, 2022
Cash and cash equivalents	$	3,020
Goodwill	12,382
Identified intangible assets	4,500
Deferred tax liabilities	(579)
Total purchase price	$	19,323

The following table presents details of the identifiable assets acquired (in thousands, except estimated useful life):

	Carrying Amount		Estimated Useful Life (Years)
Developed technology	$	4,500	5
Total	$	4,500

The acquisitions described above are not material to the Company for the periods presented and therefore pro forma information has not been presented.

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7. Goodwill and Intangible Assets

Goodwill

Goodwill is recorded when the purchase price of an acquisition exceeds the fair value of the net tangible and identified intangible assets acquired.

The following table represents the changes to goodwill during the nine months ended September 30, 2023 (in thousands):

	Carrying Amount
Balance as of December 31, 2022	$	134,335
Additions from acquisitions	7,536
Foreign currency translation adjustments	(71)
Balance as of September 30, 2023	$	141,800

There are no accumulated impairment losses for any period presented.

Intangible Assets

The following tables present details of the Company’s finite-lived intangible assets as of September 30, 2023 and December 31, 2022 (in thousands):

	As of September 30, 2023
	Gross Carrying Amount		Accumulated Amortization		Net Carrying Amount
Developed technology	$	75,333	$	(35,538)	$	39,795
Patents (1)	13,000		(325)		12,675
Assembled workforce	10,000		(6,541)		3,459
Trade name	500		(208)		292
Total intangible assets	$	98,833	$	(42,612)	$	56,221

(1)The estimated useful life of the acquired patents was 10 years as of the second quarter of 2023 acquisition date.

	As of December 31, 2022
	Gross Carrying Amount		Accumulated Amortization		Net Carrying Amount
Developed technology	$	72,059	$	(24,240)	$	47,819
Assembled workforce	10,000		(4,042)		5,958
Trade name	500		(133)		367
Total intangible assets	$	82,559	$	(28,415)	$	54,144

The above tables do not include $0.6 million of indefinite lived intangible assets as of September 30, 2023 and December 31, 2022.

Amortization expense related to our finite-lived intangible assets was $5.2 million and $14.2 million for the three and nine months ended September 30, 2023, respectively, and $4.2 million and $12.0 million for the three and nine months ended September 30, 2022, respectively.

Expected future amortization expenses related to the intangible assets as of September 30, 2023 are as follows (in thousands):

Year ending December 31:
Remainder of 2023	$	5,050
2024	18,729
2025	15,503
2026	6,468
2027	2,905
Thereafter	7,566
Total remaining amortization	$	56,221

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8. Other Balance Sheet Components

Prepaid expenses and other current assets

Prepaid expenses and other current assets consisted of the following (in thousands):

	As of
	September 30, 2023		December 31, 2022
Prepaid expenses	$	42,158	$	45,173
Accrued interest receivable	11,890		6,026
Other current assets	10,956		10,442
Total prepaid expenses and other current assets	$	65,004	$	61,641

Property and equipment, net

Property and equipment, net, consisted of the following (in thousands):

	As of
	September 30, 2023		December 31, 2022
Servers and related equipment and software	$	924,233	$	741,418
Computer hardware and software licenses	41,552		23,647
Furniture and fixtures	499		446
Leasehold improvements	96,568		69,311
Construction in progress	48,189		24,306
Total property and equipment	1,111,041		859,128
Less accumulated depreciation and amortization	(401,659)		(266,782)
Property and equipment—net	$	709,382	$	592,346

Construction in progress primarily relates to leasehold improvements for the Company’s leased office buildings and network equipment infrastructure to support the Company’s data centers.

Depreciation and amortization expense of property and equipment was $48.4 million and $139.4 million for the three and nine months ended September 30, 2023, respectively, and $29.8 million and $75.5 million for the three and nine months ended September 30, 2022, respectively.

Accrued expenses and other current liabilities

Accrued expenses and other current liabilities consisted of the following (in thousands):

	As of
	September 30, 2023		December 31, 2022
Accrued operating expenses	$	62,238	$	80,122
Short term operating lease liabilities	101,502		73,235
Accrued interest on the 2030 Notes	16,146		6,458
Taxes payable	53,667		49,361
Accrued compensation and other employee related liabilities	9,851		21,003
Other current liabilities	16,991		5,827
Total accrued expenses and other current liabilities	$	260,395	$	236,006

9. Debt

2030 Notes

On October 29, 2021, the Company issued $1.0 billion aggregate principal amount of its 3.875% Senior Notes due 2030 (the “2030 Notes”). The 2030 Notes mature on May 1, 2030. The 2030 Notes bear interest at a rate of 3.875% per annum. Interest on the 2030 Notes is payable semi-annually in arrears on May 1 and November 1 of each year, commencing on May 1, 2022.

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The aggregate proceeds from offering of the 2030 Notes were approximately $987.5 million, after deducting lenders costs and other issuance costs incurred by the Company. The issuance costs of $12.5 million are amortized into interest expense using the effective interest method over the term of the 2030 Notes.

The Company may voluntarily redeem the 2030 Notes, in whole or in part, under the following circumstances:

(1)at any time prior to November 1, 2024, the Company may on any one or more occasions redeem up to 40% of the aggregate principal amount of the 2030 Notes at a redemption price of 103.875% of the principal amount including accrued and unpaid interest, if any, with the net cash proceeds of certain equity offerings; provided that (1) at least 50% of the aggregate principal amount of 2030 Notes originally issued remains outstanding immediately after the occurrence of such redemption (excluding 2030 Notes held by the Company and its subsidiaries); and (2) the redemption occurs within 180 days of the date of the closing of such equity offerings.

(2)on or after November 1, 2024, the Company may redeem all or a part of the 2030 Notes at the following redemption prices (expressed as percentages of principal amount), plus accrued and unpaid interest, if any, to, but excluding, the applicable redemption date:

Year	Percentage
2024	101.938	%
2025	100.969	%
2026 and thereafter	100.000	%

(3)at any time prior to November 1, 2024, the Company may redeem all or a part of the 2030 Notes at a redemption price equal to 100% of the principal amount of 2030 Notes redeemed, including accrued and unpaid interest, if any, plus the applicable “make-whole” premium set forth in the indenture governing the 2030 Notes (the “Indenture”) as of the date of such redemption; and

(4)in connection with any tender offer for the 2030 Notes, including an offer to purchase (as defined in the Indenture), if holders of not less than 90% in aggregate principal amount of the outstanding 2030 Notes validly tender and do not withdraw such notes in such tender offer and the Company (or any third party making such a tender offer in lieu of the Company) purchases all of the 2030 Notes validly tendered and not withdrawn by such holders, the Company (or such third party) will have the right, upon not less than 10, but not more than 60 days’ prior notice, given not more than 30 days following such purchase date to the holders of the 2030 Notes and the trustee, to redeem all of the 2030 Notes that remain outstanding following such purchase at a redemption price equal to the price offered to each holder of 2030 Notes (excluding any early tender or incentive fee) in such tender offer plus to the extent not included in the tender offer payment, accrued and unpaid interest, if any.

In certain circumstances involving a change of control triggering event (as defined in the Indenture), the Company will be required to make an offer to repurchase all, or at the holder’s option, any part, of each holder’s 2030 Notes at a repurchase price equal to 101% of the principal amount, plus accrued and unpaid interest, if any, to the applicable repurchase date.

The 2030 Notes are unsecured obligations and the Indenture contains covenants limiting the Company and its subsidiaries’ ability to: (i) create certain liens and enter into sale and lease-back transactions; (ii) create, assume, incur or guarantee certain indebtedness; or (iii) consolidate or merge with or into, or sell or otherwise dispose of all of substantially all of the Company and its subsidiaries’ assets to another person. These covenants are subject to a number of limitations and exceptions set forth in the Indenture and non-compliance with these covenants may result in the accelerated repayment of the 2030 Notes and any accrued and unpaid interest.

As of September 30, 2023, the Company was in compliance with all of its covenants under the Indenture.

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The net carrying amount of the 2030 Notes, which is presented as a component of long-term debt in the Company’s condensed consolidated financial statements, was as follows (in thousands):

	As of
	September 30, 2023		December 31, 2022
2030 Notes
Principal	$	1,000,000	$	1,000,000
Unamortized issuance costs	(10,034)		(11,016)
Net carrying amount	$	989,966	$	988,984

Interest expense related to the 2030 Notes was as follows (in thousands):

	Three Months Ended September 30,				Nine Months Ended September 30,
	2023		2022		2023		2022
Contractual interest expense	$	9,688	$	9,688	$	29,063	$	28,956
Amortization of debt issuance costs	331		317		982		939
Total interest expense	$	10,019	$	10,005	$	30,045	$	29,895

The debt issuance costs for the 2030 Notes are amortized to interest expense over the term of the 2030 Notes using an annual effective interest rate of 4.05%.

As of September 30, 2023 and December 31, 2022, the estimated fair value of the 2030 Notes was approximately $803.6 million and $788.2 million, respectively, determined based on the trading price of the 2030 Notes on the last trading day of the reporting period in an inactive market, which represents a Level 2 input.

Joint Venture Financing

Refer to Note 15, “Joint Venture”, in the notes to the condensed consolidated financial statements for additional information on debt issued by the Company’s consolidated subsidiary, Roblox China Holding Corp.

10. Commitments and Contingencies

Lease Commitments—The Company leases office facilities and space for data center operations under operating leases expiring in various years through 2035. Certain of these arrangements have free or escalating rent payment provisions and optional renewal clauses. All of the Company’s leases are accounted for as operating leases. See Note 4, “Leases” in the notes to the condensed consolidated financial statements for additional information.

Purchase Obligations—Other purchase obligations primarily consist of contracts associated with data center and software vendors in the ordinary course of business. In June 2023, the Company executed an agreement which commits it to purchase hosting services over three annual periods beginning July 1, 2023. The minimum commitments total $450.0 million over the term of the agreement, with annual minimum commitments ranging from $145.0 million to $155.0 million. Outside of this agreement, there has been no material change in the Company’s purchase obligations during the nine months ended September 30, 2023, other than non-cancelable purchase commitments primarily related to data center and software vendors in the ordinary course of business.

Letters of Credit—The Company has letters of credit in connection with its operating leases which are not reflected in the Company’s condensed consolidated balance sheets as of September 30, 2023 and December 31, 2022. The Company has not drawn down from the letters of credit and had $11.8 million available in aggregate as of September 30, 2023.

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Legal Proceedings—The Company is and, from time to time may in the future become, involved in legal proceedings, claims and litigation in the ordinary course of business.

As of September 30, 2023, the Company has accrued for immaterial losses related to litigation matters that the Company believes to be probable and for which an amount of loss can be reasonably estimated. The Company considered the progress of these cases, the opinions and views of its legal counsel and outside advisors, its experience and settlements in similar cases, and other factors in arriving at the conclusion that a potential loss was probable. The Company cannot determine a reasonable estimate of the maximum possible loss or range of loss for all of these matters given that they are at various stages of the litigation process and each case is subject to the inherent uncertainties of litigation. The Company may incur substantial legal fees, which are expensed as incurred, in defending against these legal proceedings. The maximum amount of liability that may ultimately result from any of these matters cannot be predicted with absolute certainty and the ultimate resolution of one or more of these matters could ultimately have a material adverse effect on our operations.

Indemnification—In the ordinary course of business, the Company enters into agreements that may include indemnification provisions. Pursuant to such agreements, the Company may indemnify, hold harmless and defend an indemnified party for losses suffered or incurred by the indemnified party. Some of the provisions will limit losses to those arising from third-party actions. In some cases, the indemnification will continue after the termination of the agreement. The maximum potential amount of future payments the Company could be required to make under these provisions is not determinable. To date, the Company has not incurred material costs to defend lawsuits or settle claims related to these indemnification provisions.

The Company has also entered into indemnification agreements with its directors and officers that may require the Company to indemnify its directors and officers against liabilities that may arise by reason of their status or service as directors or officers to the fullest extent permitted by Delaware corporate law. To date, the Company has not incurred any material costs and has not accrued any liabilities related to such obligations. The Company also currently has directors’ and officers’ insurance.

11. Stockholders’ Equity

As of September 30, 2023, the Company had 4,935.0 million shares of Class A common stock authorized, with a par value of $0.0001 per share, 65.0 million shares of Class B common stock authorized, with a par value of $0.0001 per share, and 100.0 million shares of preferred stock authorized, with a par value of $0.0001 per share. Holders of Class A common stock are entitled to one vote per share. Holders of Class B common stock are entitled to 20 votes per share.

During the first quarter of 2023, 1.3 million shares of Class B common stock held by entities affiliated with Mr. Baszucki, Founder, President, CEO and Chair of our Board of Directors were converted to Class A common stock.

Class A and Class B common stock are referred to as common stock throughout the notes to the condensed consolidated financial statements, unless otherwise noted.

The Company had reserved shares of common stock for future issuance as follows (in thousands):

	As of
	September 30, 2023	December 31, 2022
Stock options outstanding	43,306	51,591
Restricted Stock Units (“RSUs”) outstanding	36,880	30,322
Performance Stock Units (“PSUs”)	990	415
CEO Long-Term Performance Award	11,500	11,500
2020 Equity Incentive Plan	73,481	59,945
2020 Employee Stock Purchase Plan	16,075	11,093
Stock warrants outstanding	264	264
Unregistered stock awards (“RSAs”) outstanding	276	500
Total	182,772	165,630

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12. Stock-Based Compensation Expense

The Company has three equity incentive plans: its 2004 Incentive Stock Plan (the “2004 Plan”), its 2017 Amended and Restated Equity Incentive Plan (the “2017 Plan”) and its 2020 Equity Incentive Plan (the “2020 Plan”). The Company’s stockholders approved the 2020 Plan in 2020, which became effective in connection with the Company’s March 10, 2021 direct listing of its Class A common stock (the “Direct Listing”). The 2017 Plan was terminated effective immediately prior to the direct listing in connection with the effectiveness of the Company’s 2020 Plan, and accordingly no shares are available for issuance under the 2017 Plan. The 2004 Plan was terminated on the effective date of the 2017 Plan, and accordingly no shares are available for issuance under the 2004 Plan. Any outstanding stock awards under the 2004 Plan and 2017 Plan remain outstanding, subject to the terms of the applicable plan and award agreements, until such shares are issued under those stock awards, by exercise of stock options or settlement of RSUs or until those stock awards become vested or expired by their terms.

Additionally, in 2020, the Company’s stockholders approved the 2020 Employee Stock Purchase Plan (the “2020 ESPP”), which became effective in connection with the Direct Listing.

Stock-based compensation expense

Stock-based compensation expense included in the condensed consolidated statements of operations was as follows (in thousands):

	Three Months Ended September 30,		Nine Months Ended September 30,
	2023	2022	2023	2022
Infrastructure and trust & safety