Roblox is a fascinating company and while I don't have a position, The Motley Fool Money podcast had a bull vs bear comparison (start from 14.45), that may be useful for existing shareholders.
Note I had to paraphrase and there may be errors in my notes, beware.
Bull Case
-Gamer growth is good, average daily user reached 65 million, up 19% yoy and hours engaged reached 5 billion hours, up 19% yoy
-Growth of users in Q4 came from international (Europe 24%, APAC 21%) and in US and Canada (19% yoy), hours grew 29% in this same region.
-In Q4, 17 to 24 year olds accounted for 22% of all Daily active users in the quarter (up 31%), they also accounted for 23% of hours played in the quarter (up 32%), bookings in this age group up 34% (accounting for 22% of total bookings in the quarter)
-Older gamer groups account for at least 20% of bookings, hours engaged and daily active users and is growing.
-While it has high Stock based compensation and negative FCF, Cash Flow from Operations are positive for the past 13 quarters. Cash and Cash billion are roughly 3 billion dollars and only 1 billion in LT debt.
-Company has 5 billion in total liabilities. 1 billion is LT debt, roughly 3 billion comes from deferred revenue, so it really only has 2 billion in liabilities. The company can pay everything off and still have 1 billion in cash equivalent
-Company has plenty of digital real estate to continue their advertising push. Numerous artistes and companies continue to build experiences on Roblox
-AI can help company grow by improving NPC conversations, coding new experience, and new animations.
-AR and VR is early and Roblox continues to provide tools to bring both to the platform
Bear case
-Trends don't paint a rosy picture. Company announced they will not be providing monthly figures going forward and less transparency is not a good sign
-Roblox continues to spend on Trust and Safety up 39% last quarter, and given the serious damage a safety incident will cost the company, this cost will probably continue to rise.
-Users growth is slowing. DAU grew 19% in Q4 and this is the lowest growth rate ever, going back to 4Q 2019. On a sequential basis, it is flat compared to prior quarter
-Hours engaged actually fell sequentially (compared to prior quarter)
-Revenue grew yoy by 2%, which matches to the lowest growth quarter since Q42019, and that quarter was immediately prior quarter Q3 2022. So the last 2 quarters had the lowest growth rates ever, a far cry from the triple digit growth rates seen in 2021. This growth rate is lower than inflation
-Bookings rose in Q4but is still lower than anything seen in prior years.
-Average bookings per DAU is down 2% for the quarter, and is the 6th quarter of consecutive decline. It looks like each marginal user is worth less and less.
-Costs are going up, total costs grew by 24% in Q4, 12 times the revenue growth rate
-Operating loss in Q4 was 300 million, full year, loss 924 million. On a net income basis lost 290 million for the quarter, 934 million for the year. This isn't really just an accounting loss. While operating cashflow is positive 119 million for quarter and 370 million for the year, to get there, they had to back out stock based compensation (196 million for quarter and 589 million for year).
-Furthermore, even after backing out SBC, it doesn't cover capital spending, so FCF is negative. The negative FCF is a recent development as Q2 2022 was positive. So this is a company that is turning FCF negative
None of the above should be construed as financial or investment advice. Do your own due diligence as I will not be responsible for any loss/risk.
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