Roblox in 2025: Is the company a juggernaut in the making?
- Matt Wolodarsky
- 6 minutes ago
- 66 min read
Assessing my Roblox investment thesis 3 years later
Three years ago, I wrote in my original deep dive analysis of Roblox:
Roblox is one of those rare founders led technology companies with an awe-inspiring mission; innovation and transactional platform capabilities; and the most advanced ecosystem in a massive thematic that will change the nature of the economy, business and society. They check a lot of the "potential generational company" boxes.
- The Wealthy Owl, February 2022
While the stock price is up 38% three years later, Roblox’s execution has only increased my conviction - and my position size. Roblox is now the third largest position in my personal portfolio (after Palantir and Meta), and I'm more bullish than ever.
Over the past three years, I've tracked Roblox's evolution - some might even say obsessively, as my wife often does - monitoring key developments, earnings reports, and competitive shifts in the market.
For this post, I revisit my original thesis with fresh eyes, diving deep into Roblox’s performance across five key areas:
What I uncovered has only strengthened my confidence in the company’s long-term potential, and I’m excited to share the analysis with you.
1. Growth
At the annual Roblox Developer Conference (RDC) in September 2024, CEO David Baszucki redefined its market opportunity by announcing the company's ambition to capture 10% of the $180 billion global gaming content revenue. A curious move for a company that has a long history of defining itself as a co-experience platform, pointing out what it saw as a much bigger opportunity than the gaming market. With 3.4 billion people playing games around the world, aligning the company with an existing market is probably a much easier sell to investors than trying to convince them of a new category altogether. Especially in a world that has grown wary of the term "metaverse".
On its path to capturing 10% of gaming content revenue, Roblox expects to "reach approximately 300 million daily active users". The company believes that "about 80% of those people will come to Roblox to play together, with the rest coming to shop, consume entertainment, learn, or simply communicate with one another". Roblox continues to target 1 billion daily active users, so the 10% of the gaming market goal is thought of as a milestone on the road to becoming the world's next dominant platform (ala Meta) at the company's San Mateo headquarters.
I interpret this market growth roadmap as a two-pronged, self-reinforcing strategy:
Compete more aggressively in the video game market to win over more of the world's 3.4 billion gamers onto its platform.
Bring other verticals, such as fashion, music, sports, entertainment, education, and commerce, onto the platform.
There is real potential for a cross-pollination of gamers and non-gamers on Roblox discovering new experiences outside of what brought them to the platform in the first place. As more gamers join the platform to explore new titles, they’ll also engage socially with friends and discover real-world versions of digital items. They may even explore music and fashion experiences that pique their interest. Meanwhile, those coming to Roblox for fashion, sports, entertainment, or education provide game developers with access to a broader audience than the traditionally niche base of hardcore gamers.
Video game market opportunity
After a decade of significant growth and optimistic forecasts for continued expansion, the global video game market faced a contraction due to the impact of a pandemic.
However, it wasn't just a post-pandemic pullback that stagnated the video game market, as spending on other media categories such as books, music and digital video continued to grow.
As Matthew Ball, gaming and metaverse analyst, eloquently stated in his amazing State of Video Gaming in 2025 report:
With so much disruption, evolving gamer behaviors and foreign competition, video game companies MUST evolve or face extinction. There has been some real carnage over the last few years, including popular titles failing to cover production costs, scores of titles being cancelled, venture capital funding for video game content drying up, and multiple rounds of layoffs.
In his report, Matthew Ball poses a fundamental question that sheds light on Roblox's recent strategic adjustments aimed at capturing 10% of the $180 billion global gaming content revenue:
How can the video game industry return to growth, rather than just fight over the same players, hours, and spend (and at even higher costs)?
What might currently appear as the biggest threat to the gaming industries most prized asset - attention; could also be the solution. Roblox has emerged as a platform for hundreds of millions of people to spend time every month participating in user generated experiences on Roblox. Just look at how well the top 10 Roblox titles perform (only 30% of total Roblox hours) in terms of engagement hours versus some of the best titles in the industry.
Another way to appreciate the scale of Roblox relative to the overall gaming industry is to consider how it compares to the platform options gaming companies have traditionally published to:
Roblox has more direct monthly engagement hours than any other gaming-specific console or software platform (Source: Matthew Ball)
With 350-400 million active users each month, Roblox is already comparable in size to the entire AAA ecosystem (Source: Matthew Ball)
The rising dominance of Roblox as a platform for consuming people's attention explains why analysts are increasingly asking gaming executives on earnings calls about their plans to publish on Roblox.
When compared to leading content platforms, Roblox’s monthly engagement is remarkably high. With a user base similar to Disney+ and half the size of Netflix’s, Roblox generates nearly twice the engagement of Disney+ and about half that of Netflix, which relies on long viewing sessions from a smaller, paying audience.
I view Roblox as uniquely positioned at the crossroads of entertainment, social media, gaming, and content creation - bridging the gap between the high interactivity of traditional gaming and the time‐consuming draw of streaming platforms. Rather than locking viewers into long, passive sessions, it gives people the freedom to build, share, experiment, and connect in a way that keeps them genuinely involved. In my view, that sense of hands‐on participation is what drives higher engagement: users aren’t just watching content; they’re actively shaping and exploring it.
For game developers, this model delivers a built‐in advantage. It can boost total engagement hours without compromising the “high touch” interactivity that makes experiences so compelling. Each Roblox creation can be designed to let players customize and socialize in a deeply personal way. For game developers building on Roblox I believe they have an opportunity to capture a community as engaged as “hardcore” gamers, while also reaching the kind of time‐spent metrics normally associated with passive streaming services.
The recent launch of playable Spellbound and Cobra Kai experiences on Roblox is the perfect illustration of how Roblox merges the high interactivity of gaming with the long engagement draw of streaming services. Normally, people would watch these shows passively on Netflix, but now they can actively engage by exploring, playing, and socializing within the same narrative worlds. That shift from purely consuming content to participating in it taps directly into Roblox’s strength: it transforms viewers into co‐creators and community members, driving deeper involvement and longer sessions than traditional viewing alone could achieve.
Roblox is appealing to the more traditional game studios to bring their games, IP and talent to its platform. As outlined in its RDC 2024 paid access announcement, game developers on the platform will be able to monetize via paid access in real currency. While this move by Roblox blurs the lines between traditional game development and user-generated content platforms, studios can now grow users through Roblox's vast user base and further monetize their games at take rates consistent with other platforms.
While the market has remained stagnant the last few years, Roblox has existing and emerging strength in many of the engines expected to help reignite growth of the gaming industry, including user generated content, platforms & tools, an emerging social game service, AI and advertising.
Vertical opportunity
Roblox is not simply a gaming platform; it is a burgeoning cultural platform that is redefining how people interact with and consume culture. Roblox has made some massive strides in the last few years expanding some of the key verticals I outlined in my original deep dive.
Fashion and beauty
The phenomenal rise of Dress to Impress, has really set the standard for fashion experiences on Roblox. Released in November 2023 on Roblox, Dress to Impress (DTI) was developed by a loosely affiliated group of young programmers known only by their online handles. The game has rapidly risen to become one of the platform’s most popular experiences, with approximately 6.1 billion visits so far and a consistent 300,000+ concurrent daily players. About half of the game’s users are over 18. Its' simple yet competitive format, where players assemble outfits based on themes, has made it a cultural phenomenon, spawning viral trends (e.g., the “Pose 28” emote) on platforms like TikTok. DTIʼs collaborations with celebrities like Charli XCX and brands such as Lady Dior have helped lend further legitimacy to the dominant fashion experience on Roblox.
However, it's not just about Dress to Impress. Roblox has become a hub for digital fashion and beauty. The fashion and beauty sector on Roblox has experienced remarkable growth, becoming a central facet of user engagement and self-expression on the platform. This surge underscores the escalating importance of digital self-expression, particularly among Gen Z users. Notably, over half (56%) of Gen Z participants prioritize styling their avatars over their physical appearance, with 85% acknowledging the growing importance of digital fashion (https://cdn.buttercms.com/D5cYYxLSQuvPzIrrP7kq).
This vibrant environment has attracted numerous global fashion and beauty brands, including Gucci, Burberry, Carolina Herrera, Fenty Beauty, L'oreal, Tommy Hilfiger, Hugo Boss and H&M, many who have launched digital collections and immersive experiences on the platform.
These fashion and beauty brands are not just entering Roblox (and the broader metaverse) as a vanity project. Gen Z’s real-life fashion is increasingly influenced by their avatars, with 84% of them saying their physical style is at least ‘somewhat’ inspired by what their avatars and other avatars wear, up from 70% in the 2022 survey. Additionally, 54% state they are ‘very’ or ‘extremely inspired’ by their digital fashion choices” (2023 Digital Expression, Fashion & Beauty Trends Report).
The total addressable market (TAM) for digital fashion is already massive, with Morgan Stanley projecting virtual goods to grow to more than $50 billion in sales annually by 2030. In 2023, users purchased approximately 1.6 billion digital fashion items and accessories, reflecting a 15% increase from the previous year (http://corp.roblox.com/).
With the integration of In-Real-Life (IRL) commerce powered by Shopify today, the fashion and beauty vertical on Roblox is poised to grow even more. As the second brand to bring real-world e-commerce to Roblox, following Walmart, E.l.f Beauty launched a virtual kiosk within its existing E.l.f. UP! Roblox experience in July, 2024. This kiosk allows users to purchase real-world E.l.f. products, such as skincare items and branded apparel, while engaging in an immersive digital environment. As an emerging pattern for IRL commerce on Roblox, buyers also receive "virtual twins", digital versions of the purchased items, to use on their avatars within Roblox. This approach further integrates virtual and physical commerce.
Established brands will be monitoring early adopters closely. Brand recognition matters in the metaverse and it’s likely to impact IRL purchase consideration. 3 in 4 Gen Z say wearing digital fashions from a recognized brand is at least “somewhat” important to them, and 47% of survey respondents say it’s “very” or “extremely important.” Most (84%) also agree that after wearing or trying on a popular brand’s item virtually, they are at least “somewhat likely” to consider this brand in the physical world, including 50% who are “very” or “extremely likely” to do so (Source: D5cYYxLSQuvPzIrrP7kq).
Roblox and its content creators have collaborated with various celebrities (e.g., Heidi Klum, Paris Hilton, Karlie Kloss and Charli XCX) to lend credibility and attract new users who might otherwise engage with traditional social media platforms.
It goes much deeper than a few token celebrity activations. Roblox is building an entire ecosystem of digital fashion designers. For instance, partnerships with the Parsons School of Design and Dentsu/Bunka Fashion College in Japan have been created to cultivate digital fashion/beauty creators and promote career support in the rapidly expanding digital fashion market. These investments are paying off, with more than 11.5 million creators designing over 62 million virtual clothing and accessory items in 2022 (Source: corp.roblox.com).
The interplay between physical and digital fashion is intensifying, with brands swiftly integrating real-world designs into virtual platforms like Roblox. For example, Carolina Herrera's Resort 2024 collection was featured in Karlie Kloss' Fashion Klossette on Roblox, allowing users to experience runway designs digitally. Major fashion events have also been virtually recreated: L'Oréal's Paris Fashion Week runway appeared in Livetopia, and Gucci's Milan Fashion Week was showcased in Gucci Ancora. Conversely, digital creations are inspiring tangible products. The design of Carolina Herrera's Good Girl Blush perfume bottle was selected through community votes in collaboration with Fashion Klossette on Roblox, resulting in a limited-edition fragrance.
Fenty Beauty engaged Roblox users to co-create a new Gloss Bomb shade, with over a million votes cast for community-generated designs, leading to the release of the "Major Flex" lip gloss. These initiatives exemplify the growing synergy between virtual and physical commerce, where digital platforms not only replicate real-world fashion but also serve as incubators for new, community-driven products.
American supermodel and entrepreneur Karlie Kloss, who began experimenting with pop experiences on Roblox in 2022, describes the transformational impact Roblox is having on the fashion industry:
“Digital fashion is transforming how people design, style, and share their creations with other people in an increasingly online world. And Roblox is transforming how digital fashion gets created and reaches its consumer, democratizing access to fashion design and self-expression. The top designers in the world with shows during Fashion Weeks will never reach that sort of distribution. That's what's so interesting here—the limitless potential and scale of this space to create and share. In the past, a fashion publication used to play that curation role, and I think still does, but the next generation is going other places for that influence, that taste-making.”
Music
Three years ago, music on Roblox was primarily a niche element, a background soundtrack and the occasional launch party or virtual concert. While major record labels were beginning to dip their toes into the metaverse, it was still very much an experimental, low investment approach.
It appears the music industry on Roblox is starting to accelerate with more clear strategic moves and evolved revenue models.
By 2023, major labels including Sony, Warner, and Universal recognized Roblox as a fertile ground for innovation, launching branded hubs like Universal’s Beat Galaxy and Warner’s Rhythm City that offered fans interactive spaces and live performance elements. This signaled a deeper commitment to creating ongoing, immersive music experiences on the platform, rather than the one-off events they had done historically.
While high profile concerts are still rare, Elton John and Coldplay have created expansive experiences on Roblox that combined live performances with interactive challenges and exclusive digital merchandise.
At the same time, the music industry began experimenting with evolved monetization models. In‑game music charts, “What’s Playing” features, and interactive audio tools allowed players to identify, like, and share tracks - turning every listen into a potential monetizable event. Meanwhile, the first scaled music product across the Roblox platform, Boombox, was launched by Universal Music (along with Republic Records and Styngr) in early 2024 allowing music labels to dynamically launch playlists and integrate them into Roblox experiences. Players can share and collectively enjoy music, with each instance of music playback being a monetizable event for the contributing labels and artists.
It's not just the major labels that are on the platform. Spotify got in on the act launching Spotify Island back in May 2022. Fans can explore interactive quests, listen to curated playlists, and unlock exclusive virtual merchandise. Spotify has added a producer Dashboard, Spotify Soundsphere for creating and sharing custom beats, and Soundwaves that let players ride musical waves. Roblox’s recent deal with DistroKid lets independent artists make their music available gratis for in‑game uses. Even kid-friendly brand KIDZ BOP has brought its niche music IP to Roblox.
While the music vertical on Roblox is experimenting and making inroads, it hasn’t yet achieved the everyday engagement levels that fashion enjoys on the platform. Three years ago, I hoped more artists would have an active presence - like virtual concerts - to establish Roblox as a true tastemaker in the music industry. However, technical, creative, licensing, and monetization challenges need to be tackled for music to attract new fans and deepen engagement with existing ones. As the music industry continues to innovate, I remain bullish that it will eventually become a more significant and meaningful vertical on Roblox.
Sports
When I wrote my original deep dive three years ago, sports did not even register for me. Perhaps it was my oversight, nevertheless sports content consumption on Roblox has exploded. Users spent more than 500 million hours in sports experiences in 2024, a year-over-year increase of 26%. Major sports leagues and IP holders have taken notice and are setting up shop big time. In the last couple of years alone, each of the NFL (NFL Universe Football), NHL (NHL Blast), NBA (NBA Playgrounds) and PGA have partnered with 3rd party developers to set up central hubs where their fans and Roblox players alike can connect and celebrate their favorite sport.
Other sports are taking notice. For the 2024 Paris Olympic Games, the IOC created an Olympic World on Roblox sponsored by Visa, and in 2023, the USTA created Champions of the Court, an Emirates and Ralph Lauren sponsored experience for the U.S. Open.
Roblox offers leagues and sport rights holders the opportunity to attract younger audiences and new ways to engage fans.
The average age of sports fans on Roblox is approximately 18 years old, with over 80% under 35. In contrast, 71% of TV sports viewers are over 35 (Sports on Roblox: Engaging the Next Generation of Sports Fans, 2025). Roblox presents a unique opportunity for brands, teams, leagues, and federations to rejuvenate their fan base and connect with the next generation in new ways.
The younger generation is increasingly inclined to consume sports content through digital and social media platforms. Less than half of Gen Z are watching sports highlight shows on linear TV. In fact, Gen Z is 23% more likely to watch highlights of games on social media weekly than to watch linear TV highlight shows (Source: Dentsu/X Overtime report). Roblox is enabling a unique opportunity for leagues, broadcasters and sponsors to connect with younger audiences in a way that aligns with their preferred methods of consuming sports content.
Driving has emerged as a sub-genre in the sports arena, and Driving Empire is Roblox’s flagship racing experiences, boasting over one billion visits and a highly engaged community. The game isn’t just popular with players; it’s also become a hotbed for brand activations. Its immersive, licensed vehicle roster now features real-world models from top car brands such as McLaren, Porsche, Audi, Jaguar, and Nissan. Recently, Driving Empire has partnered with Nascar to bring events like the DAYTONA 500 to the platform. Driving Empire has signed licensing agreements with several manufacturers and are reportedly in discussions with dozens more to expand their lineup further.
Entertainment
Imagine watching Stranger Things, but instead of just binging episodes, you step into Hawkins yourself, solving mysteries, battling Demogorgons, and earning exclusive virtual rewards.
As an increasing number of studios, distributors, and IP rights holders embrace Roblox, the way audiences engage with entertainment is clearly evolving. Roblox is in the early stages of transforming into an extension of traditional entertainment. It is not merely a companion to existing media but a destination where users actively participate in content rather than just consuming it.
Entertainment brands are recognizing this shift and embracing Roblox, and others, to create persistent, interactive fan experiences. No longer just a promotional tool, Roblox is emerging as an engagement-driven platform, offering studios new ways to extend their IP beyond the screen. However, while engagement is high, the monetization model for entertainment IPs on Roblox remains an open question. Despite nascent examples like Beetlejuice 2 allowing users to buy movie tickets inside Roblox, blending digital and real-world monetization, a scalable revenue model beyond traditional Roblox monetization remains elusive. The existing Roblox economy, built around virtual goods and microtransactions, may be sufficient, but the industry is still testing new ways to integrate direct monetization. One example of virtual goods and micro transactions is their recent partnership with Lionsgate to launch a new Roblox immersive movie store, which will allow players to purchase bundles featuring their favorite characters from movies such as Twilight, John Wick and Saw. For the entertainment industry to invest more significantly in Roblox and attract fans of their intellectual properties (IP) to the platform, I believe that generating substantial revenue through new monetization models will be essential.
Similar to the music industry, studios initially regarded Roblox as a marketing tool, launching limited-time activations connected to movie releases. Examples include a promotional game with themed avatar gear for Wonder Woman 1984, a temporary branded experience for Guardians of the Galaxy, and a Pixar event for Coco that featured interactive music-based gameplay.
Studios soon realized that users wanted more than fleeting promotions, they wanted living, breathing fan communities within Roblox. Major entertainment brands began building persistent, interactive worlds where fans could return and engage over time. An example of this is the game Miraculous Ladybug, a hit on Roblox that outperformed the TV show in engagement metrics, achieving over 200 million plays within just a few months.
With the success of these experiences, studios like Netflix, Paramount and Warner Bros. doubled down on Roblox as a long-term strategy:
Netflix Nextworld: A multi-franchise hub where users can explore universes from Stranger Things, One Piece, Rebel Moon and Jurassic World. In a nod to the future, there's also something known as the Streamship, a communal area for watching Netflix content. The company describes this "home base within Nextworld" as offering "social features" and hosting events like "premieres and viewing parties."
Warner Bros. & Paramount Expansions: Blockbuster's Teenage Mutant Ninja Turtles, Godzilla x Kong, and Beetlejuice 2 launched persistent experiences that keep fans engaged beyond the initial release. The Beetlejuice experience set new highs for major film activations on Roblox. [Beetlejuice] 'Escape the afterlife' saw 25.3M visitors in two months - surpassing other major film activations on Roblox during similar timeframes, including Despicable Me 4 (17M visits), KungFu Panda (16.9M) and Shrek (9.8M) (source: GEEIQ).
These persistent experiences indicate that entertainment companies are starting to see Roblox as a new kind of platform, part social network, part interactive content hub, part virtual marketplace.
The phrase “See it in theaters and play it on Roblox” may soon become a standard marketing line for major studios.
Investors should expect more growth in the entertainment industry on Roblox as the platform expands to 17+ content, attracting mature franchises like Saw X. In October 2023, the iconic horror franchise Saw promoted the release of its new movie “Saw X” with a Roblox activation for players over 17. Innovations in VR and AI-powered Non-Player-Characters (NPC) will make entertainment experiences on Roblox more immersive. Imagine chatting with an AI-powered Spider-Man or Darth Vader inside Roblox, responding dynamically to your questions and actions.
Entertainment is becoming less about passive consumptions and more about experiencing. Roblox is at the forefront of this transformation, where movies and TV shows become interactive playgrounds for fans.
Education
Educational experiences on Roblox have grown in popularity, reflecting a growing appetite for blending entertainment with meaningful learning. Fueled by Roblox’s substantial investments, including a $10 million educational content fund launched in 2021 and an additional $15 million commitment to its Community Fund for learning experiences in 2023, the platform has become home to a thriving library of educational games and interactive activities.
Established STEM organizations and respected educational institutions are increasingly turning to Roblox to deliver immersive learning experiences. For instance, Boston’s Museum of Science introduced Mission: Mars on Roblox, enabling students to apply engineering concepts through simulated space mission planning. Similarly, Project Lead The Way (PLTW), a leading educational provider serving over 12,000 schools nationwide, launched Pathogen Patrol in May 2023. This interactive game allows students to assume the role of white blood cells combating infections, reinforcing classroom biology lessons. Remarkably, Pathogen Patrol is being integrated into PLTW’s high school biomedical curriculum, reaching approximately 150,000 students.
Moreover, FIRST Robotics expanded its reach by debuting the RoboCo Sports League on Roblox in October 2023, allowing students to design and compete with virtual robots without needing physical equipment.
These examples underscore how educational entities view Roblox not merely as entertainment but as a credible, engaging teaching tool.
The growth trajectory for Roblox’s educational vertical appears especially promising. Roblox has publicly set a goal of reaching 100 million students with educational content by 2030, signaling significant corporate dedication. Roblox’s VP of Education emphasizes the company’s readiness to reward innovative developers who effectively leverage the platform’s robust physics and immersive 3D capabilities for deeper educational impact.
As more educational publishers, schools, and nonprofits recognize Roblox’s appeal, we can expect further expansion in interactive curricula, virtual field trips, and immersive STEM games. The blending of gaming and education positions Roblox to become a significant player within the global education market.
Several emerging verticals are worth monitoring for future growth:
Non-profits and social causes: Charities and nonprofits have recently moved into Roblox en masse – this is the fastest-growing vertical in virtual worlds (as ranked by GEEIQ). Numerous cause-driven organizations are investing in Roblox content, including the charity Comic Relief and Compassion International.
Healthcare and wellness: There are early signs of medical and wellness organizations leveraging Roblox to deliver health-related content. In 2022, Akili (maker of the first FDA-cleared game-based therapy) announced a partnership with Roblox to integrate its ADHD treatment game into Roblox. Wellness brand Alo Yoga create Alo Sanctuary on Roblox – a meditation and mindfulness experience launched in Feb 2022.
eSports: Although grassroots tournaments and professional esports organizations have a long-standing presence on the platform, Roblox has officially stepped into the esports scene with its Hunt event offering a $1M grand prize.
These new and established sectors turn to Roblox to connect with young audiences in their preferred spaces and to captivate them through interactive, immersive experiences.
User growth
When I wrote my original deep dive on Roblox in early 2022, daily active users (DAU) as of Q4 2021 was 49.4 million, up 35% year over year. At the time, there were lots of doubters that suggested growth was artificially driven by Covid quarantines and questioned whether Roblox could sustain their growth. Three and a quarter years later, and a compound annual grow rate of 23.3% (CAGR), the Roblox user growth story is no Covid mirage. With 97.8M DAU as of Q1 2025 and an ambition of 1B DAU, Roblox user growth is just getting started.
The two key vectors driving this growth is the aging up the Roblox user base, and geographic expansion.
Aging up
I wrote in 2022:
One of the biggest knocks against, and misperception of, Roblox as an investment is that their platform is age bound, specifically the belief that it will only ever appeal to kids under 13. While Roblox built its original audience mainly with a younger demographic, it has made great strides aging up. In recent months Roblox revealed that for the first time, more than half of its users were older than 13. The biggest factors in the aging up of Roblox users is that the experiences on Roblox have become more engaging, higher fidelity and more complex, appealing to users of all ages.
Since 2022, the aging up trend on Roblox has continued.
The over 13 audience is expanding even more rapidly than the under 13 audience.
Roblox has made a strong commitment to aging up its platform, stating in an important May 2023 blog post:
As we look to the future, we’re focused on working with our community to bring our vision of Roblox as a platform for all ages to life - Roblox CEO David Baszucki
You can see evidence of this vision coming to life based on 2023 data. Although this data is more than a year old, it appears reasonable to anticipate that the age distribution of Roblox users will continue to expand. In the same 2023 blog, Baszucki shared that the fastest-growing segment on Roblox in Q1 2023 was 17 - 24 year-olds, which saw 35% year-over-year growth in DAUs.
To support its transition to a platform for all ages, Roblox introduced new content categories, including a 17+ rating in 2023, allowing for more mature experiences with intense action and realistic themes. The platform also rolled out voice chat for verified 13+ users, making social interaction more engaging for teens and young adults. Roblox’s content library has also matured, with higher-fidelity games, first person shooter titles, horror experiences, and complex role-playing games that appeal to older audiences. Meanwhile, Roblox has hosted virtual concerts featuring popular artists like Elton John and Twenty One Pilots (whose fanbases include older teens and young adults). Mature brands like Gucci, Nike, and the NFL, have all built experiences that garner attention from college-age and adult communities (for example, the Gucci Garden experience in 2021 saw older players flocking to collect limited avatar items for resale). Such experiences can pull in new users who might be fans of those artists or brands but hadn’t tried Roblox before.
Roblox’s shift toward an older audience should persist, driven by two reinforcing tailwinds: demographic momentum and a self-reinforcing engagement and monetization loop.
Aging up on Roblox is a natural consequence of demographic momentum. Millions of children who joined the platform over the past decade are now teenagers or young adults, and instead of leaving, they are staying engaged. Roblox has successfully retained them by evolving its offerings - introducing age-appropriate content, improving social and communication features, and enhancing gameplay depth.
This retention is reflected in usage patterns. In Q4 2023, players over age 13 accounted for 9.3 billion hours of engagement, compared to 5.9 billion hours for users under 13. On a per-user basis, older users also log slightly longer play sessions: about 2.5 hours per day for 13+ players versus 2.2 hours for under-13 players on average. The longer they stay, the stronger the platform’s gravitational pull toward an older demographic.
As the user base matures, a powerful feedback loop ensures that aging-up continues to accelerate. Older users not only play longer but also spend more, which in turn drives more developer investment into content suited for them.
Roblox’s developer payout model rewards engagement and monetization, naturally aligning with this shift. Higher spending and more engagement from older users incentivize developers to create richer, more mature content. This attracts and retains even more older players, strengthening both engagement and monetization over time. Roblox’s CFO, Michael Guthrie, has confirmed that users over 13 monetize at higher rates, making this aging-up effect a structural growth driver for the platform.
Geographic expansion
The other vector to Roblox's growing market opportunity is geographic expansion. In 2022 I explained how Roblox was expanding beyond its US and Canadian roots. Roblox was well on its way to putting its geographic expansion playbook, powered by its dual network effects, to work. By localizing its vast library of experiences into the language of high-potential markets, it attracts organic local audiences, which then triggers the social network effect as players bring in their friends. At the core of this playbook is Roblox’s ability to localize at scale, leveraging automated translation and regional matchmaking to enhance in-game communication and engagement - driving immediate adoption in new markets.
The playbook has worked, with 16 languages supported on Roblox today from 10 three years ago, the regional distribution of DAUs is shifting from mature markets (US & Canada, Europe) to emerging markets (APAC, ROW). The APAC region, in particular, is seeing both strong absolute growth (year-over-year increase of 30% in Q4 2024) and an increasing share of total DAUs (increasing from 22.6% in 2021 to 26.2% in the most recent data), which indicates that Roblox’s expansion strategy in Asia is paying off. ROW (which includes Latin America, Middle East, and Africa) also remains an area of high growth potential.
In the last quarter, Roblox experienced a slowdown in Daily Active User (DAU) growth in the US, Canada, and Europe. This slowdown can be attributed to several key factors, including market saturation, as nearly half of Roblox's daily active users are from North America and Europe, indicating some limits to growth potential. Additionally, the younger user base, further constrains growth in these regions. Furthermore, regulatory issues, particularly safety concerns that have resulted in a ban in Turkey, have also impacted user numbers.
Aging up and geographic expansion are strong tailwinds for Roblox, but are they enough to lift Roblox to its stated goal of one billion daily active users? And, if not what will it take for Roblox to achieve this massive milestone? This is the crux of the issue in understanding whether Roblox will be a grand slam stock pick for the long run or if investors should temper their expectations.
What needs to happen for Roblox to reach its goal of 1 billion DAU?
Success in India and/or China: As two of the largest gaming markets in the world, one billion DAU does not happen without success in one or both of these markets. With over 670 million gamers playing in China as of 2024, and a projected 328 million players in India by 2029, these two markets will represent a TAM of one billion users soon. However, while China boasts the largest gaming market by sheer numbers and revenue, India presents a far more viable opportunity for Roblox. The platform's mobile-first nature aligns perfectly with India's dominant gaming habits, and rapid user growth (50%+ DAU increase in a recent quarter) suggests strong organic traction. More importantly, India lacks the regulatory hurdles that have plagued foreign gaming companies in China, where strict censorship, playtime restrictions, and foreign ownership rules forced Roblox to shut down its local version after just five months. While China could be a game-changer, the uncertainty of re-entry and high regulatory risk make scaling difficult. In contrast, India’s lower barriers to entry, rising digital adoption, and willingness to engage with user-generated content make it a much clearer path for Roblox to add tens (hundreds in the long term) of millions of DAUs.
Generative AI Empowering User-Generated Content (UGC): As I explained in my 2022 deep dive, Roblox relies on a content network effect to grow usage. It goes like this: More compelling content and experiences added to Roblox attracts more users onto Roblox. An expanding user base attracts more developers and creators to build on the platform. Since I first examined this virtuous feedback loop, a generational technology has come along to super power this loop. Advancements in generative AI are democratizing game development by enabling users without technical expertise to create complex games and assets. This shift can significantly boost the volume and diversity of content on platforms like Roblox, attracting a broader user base. If you think about the range of content creators in our society, such as artists, fashion designers, writers and storytellers, whose creativity will be unblocked as Roblox continues to hide the technical complexity; this content feedback loop will become even stronger. As AI lowers the barriers to creation, more users may become active contributors, enhancing engagement and retention.
Moving from platform to utility: Today, many bears would label Roblox as "just a gaming platform for young people", hindered by blocky graphics and kid-centric content. While there are bright spots (e.g., fashion, brand engagement, etc.) that point to a future much bigger than today's constraints, the bears aren't completely out to lunch. To reach one billion DAU, Roblox must evolve beyond its gaming platform roots into something more essential, more embedded, more every day. In other words, a utility. Just like YouTube evolved from "a place to watch funny videos" to a core part of how people learn, work, and are entertained, Roblox must evolve from "a place to play games" to a foundation for social interaction, entertainment, self-expression, learning, commerce, and productivity - across demographics. It’s about embedding Roblox into daily digital life - not just for 10-year-olds after school, but for 25-year-olds hanging out, 30-year-olds attending events, and 40-year-olds exploring immersive commerce. For Roblox to become a true utility that offers billions of all ages an immersive, concurrent, and persistent 3D layer on top of today's internet, it must advance its technology infrastructure, enhance visual fidelity, and diversify use cases.
Bring more mainstream IP onto Roblox: To reach 1 billion daily active users, Roblox can’t rely solely on grassroots creations and indie-style sandbox games - it must increasingly tap into the gravity of global entertainment franchises. Mainstream IP brings built-in audiences, credibility, and broader cultural relevance that can transform how users (and non-users) perceive the platform. Roblox has already seen early success here: brands like Nike, Gucci, Marvel, Major League Baseball, Sonic the Hedgehog, and Netflix’s Stranger Things have launched branded experiences or items within the platform. But these partnerships are still in their infancy. Roblox needs a larger, more integrated wave of IP-driven engagement to help it attract fans outside the traditional Roblox audiences, raise the content quality and storytelling standards, and to become the place where culture happens.
Adoption of Augmented Reality (AR) and Virtual Reality (VR): The widespread adoption of AR and VR technologies can transform how users interact with content on Roblox. By integrating immersive experiences, Roblox can offer more engaging environments, appealing to both existing users and new demographics seeking cutting-edge interactions. This heightened level of immersion can lead to increased user engagement and longer session durations, as players become more deeply involved in the virtual worlds. As AI becomes more integrated with AR/VR, Roblox is in a unique position to enable users to add 3D objects to AR/VR worlds through spoken word alone with its new 3D gen AI foundational model. As hardware becomes more affordable, the demand for AR and VR headsets is expected to surge, with projections indicating a market expansion to 22.9 million units by 2028 from an estimated 6.7 million units this year. With the right killer use case for AR/VR (read on to learn more about my view on what this should be for Roblox), these projections could prove too conservative. Meta alone aims to expand production capacity of its Ray-Ban Meta Smart glasses, in response to excessive demand, to 10 million units annually by the end of 2026 and is expected to release a commercially feasible version of its advanced AR Orion glasses by 2027. With numerous tech giants and startups, including Apple and Google, rumored to be launching their own versions of smart and/or AR glasses within the next year, this is a space to watch closely.
Achieving one billion daily users (DAU) is an extremely steep mountain to climb. To get there, Roblox must innovate and realize the immense optionality it is well positioned to capture. The next ten years will reveal whether Roblox can evolve from a hugely successful gaming platform into a truly ubiquitous utility.
Innovation and optionality
To maintain a premium valuation, Roblox must accelerate its user growth and sustain its premium revenue growth over the long term. This will take innovation in key areas such as visual fidelity, AI and infrastructure. Roblox must also pursue the significant and attractive optionality it is well-positioned to capture - particularly by expanding into new use cases that make it an indispensable utility for consumers.
Visual fidelity
For much of its history, Roblox was easy to overlook; its visuals were often described as primitive, and its aesthetic dismissed as merely a limitation of a kids’ game. This perception stemmed from the platform's guiding principle of accessibility, which allows anyone - even those without programming skills or a budget - to build and share a game. Consequently, many Roblox games exhibit lower graphic fidelity compared to titles on other platforms, as they are designed to run smoothly across a wide range of devices, including low-end phones. However, in the past two years, Roblox's visual fidelity has greatly improved while maintaining its accessibility principles.
Let’s take a closer look at the advancements in Roblox’s visual fidelity, the underlying technology investments, and how these upgrades could broaden the platform’s appeal—and monetization potential - going forward.
Innovation | Year | Visual Fidelity Impact |
Upgraded Material System | 2022 | Introduced realistic textures with materials like metal, wood, and grass showing gloss, bumps, and color variation. Created a more unified, less flat look across environments. |
Layered Clothing | 2022 | Enabled 3D clothing that fits any avatar, draping and layering like real garments. Greatly improved avatar realism and variety, without requiring rework by creators or heavy processing by users’ devices. |
Dynamic Animated Heads | 2022 | Added facial expressions such as blinking and mouth movement, bringing characters to life beyond the static look. |
Real-Time Facial Tracking | 2023 | Allowed users to animate their avatars' faces using their own expressions via camera. Enhanced social immersion and realism. |
Advanced Lighting | 2021–2022 | Introduced physically-based lighting, dynamic shadows, and global illumination. Elevated overall realism and depth in environments. |
Atmosphere & Effects | 2021–2022 | Added visual effects like clouds, fog, and sun rays. Enabled developers to simulate weather, time of day, and mood-enhancing ambiance. |
Avatar Bodies & Scalability | 2023 | Introduced higher-fidelity avatars with more anthropomorphic designs, smoother motion, and expanded customization options. |
Engine & Studio Improvements | 2022–2024 | Optimized performance (e.g., multi-threading, asset streaming) and enhanced creation tools, enabling larger, more detailed worlds to be built efficiently. |
While it still lags behind AAA games, Roblox has taken major strides toward richer, more immersive environments. These changes are already attracting an older audience - and it’s only the beginning.
What’s Next for Roblox Visuals: Dynamic Worlds, Realism, and Creativity for All
In the next couple of years, a series of updates will make games look more realistic, feel more immersive, and give creators powerful new tools - all while staying accessible across devices and easy to use, even for beginners:
Lighting & Shadows: Better by Default, Smarter Across Devices
Future Lighting Becomes the New Standard: New projects will use Roblox’s best lighting mode by default, with easier settings to get great results fast.
Source: https://devforum.roblox.com/t/let-there-be-unified-light-unified-lighting-enters-studio-beta/3401512
Lighting That Scales Across Devices: New systems will bring realistic shadows, light rays, and reflection. More lifelike visuals for everyone, no matter the device. Source: https://devforum.roblox.com/t/creator-roadmap-fall-2024-update/3442521https://devforum.roblox.com/t/rdc-2023-ama-with-dan-and-manuel-graphics-ux-immersive-ads/2600096/68
Physics & Environments: Worlds That React and Feel Real
Better Water Physics: Revamped water with real waves, floating, and object interaction. Source: https://devforum.roblox.com/t/creator-roadmap-fall-2024-update/3442521
Smarter Terrain Tools: New tools to quickly build massive landscapes — like mountains and lakes. Source: https://devforum.roblox.com/t/creator-roadmap-summer-2024-update/3282283
Avatars & Expression: Characters That Feel Alive
Physics-Based Avatars: New system for more natural movement and better interaction with the world. Characters will move and fall like real people. Source: https://devforum.roblox.com/t/studio-beta-avatar-joint-upgrade-enabling-physically-simulated-characters/3266099
Realistic Avatar Accessories: Creators can use advanced materials for textures, reflections, and bumps. Avatars and UGC items will look more polished and realistic. Source: https://devforum.roblox.com/t/ama-ugc-and-marketplace-with-staff-september-2024/3135980/84
Real-Time World Building: Games That Evolve as You Play
Live Editing of Shapes & Images: New tools let developers generate or change 3D shapes and images during gameplay.
Real-Time Cutting & Combining Shapes: Developers and players will be able to cut, combine, and reshape 3D meshes during gameplay using Constructive Solid Geometry (CSG). Supports things like destructible worlds and player-built creations. Source: https://devforum.roblox.com/t/creator-roadmap-fall-2024-update/3442521
As Roblox adds more lifelike visuals it becomes better positioned to attract teens, adults, and professional developers who expect modern graphics on par with other game engines.
This shift opens the door to premium, higher-production-value experiences, such as realistic open-worlds, detailed simulations, and immersive virtual events. These types of experiences appeal to older audiences who are more likely to pay for access, customization, and subscriptions, helping boost average revenue per user (ARPU). Better graphics also make Roblox a more compelling space for brands, advertisers, and studios, who can now build immersive experiences that look polished and on-brand.
As Roblox “ages up,” these enhancements support a virtuous cycle: better visuals attract older users and experienced creators, which leads to more sophisticated content, deeper engagement, and stronger monetization - all while keeping the platform accessible to younger audiences.
Artificial Intelligence
Roblox is making parallel AI bets by applying AI across multiple facets of its platform. It has over 250 AI models live on its platform today. One AI model analyzes voice chat in real time and screens for bad language, helping Roblox live up to its promise of civility.
At its 2024 annual developer conference, Roblox announced its most ambitious AI model ever - an open-source 3D foundational model to create 3D objects and scenes on Roblox. Recently, Roblox open-sourced the first release for this model, named Cube 3D, to make it available for use by anyone on or off the Roblox platform. They are investing for a world where developers will give their users new ways to create by enabling AI in their experiences, putting the power of AI in the hands of more than 85 million daily active users as part of their gameplay. Roblox will also make Cube 3D available to developers for experience creation. Developers will be able to quickly explore and implement new creative quickly, dramatically increasing creator productivity on their platform.
The potential of their Cube 3D model is one of the most compelling aspects of the Roblox investing thesis. With Cube 3D, Roblox will apply AI to their content network effect by empowering anyone, even those without technical skills, to easily create on their platform. As a platform that thrives on user generated content, AI is a huge unlock for their business. As more social media influencers, artists, fashion designers, storytellers and even casual users can create and express themselves in seconds, the platform’s experiences and digital assets grow, attracting more users. An expanding user base, in turn, draws more developers and creators, creating a powerful virtuous cycle that is hard for competitors to replicate.
Competitors will face significant challenges in developing comparable 3D generative AI models. Roblox is uniquely positioned to create AI models tailored for the 3D and immersive web. It has a cornered resource in its vast, user-generated ecosystem of 3D content and real-time interactions between users and immersive worlds. This unique dataset gives Roblox a significant advantage in training AI models for content generation, personalized experiences, and game mechanics, fueling AI-driven innovation on its platform.
Infrastructure
Roblox is pursuing an ambitious vision to create an immersive, concurrent, and persistent 3D layer connecting a billion people. This entails a metaverse-like platform where users can seamlessly engage in rich 3D experiences (games, social hangouts, virtual commerce, education, etc.) that are always available and can host massive simultaneous participation. Achieving this vision requires significant investments in Roblox’s technical infrastructure, including cloud and edge computing, AI/ML, and networking. Below I analyze how Roblox is building out its infrastructure to enable new use cases, while scaling toward 1 billion daily active users (DAUs) and improving its financial efficiency (e.g. gross margins).
Roblox has built its own global cloud infrastructure, primarily running on private, co-located data centers complemented by public cloud for burst capacity. After a 73-hour outage in 2021, Roblox accelerated infrastructure expansion and redundancy. In 2022, the company spent over $400 million on infrastructure By late 2023, Roblox’s infrastructure ran on nearly 145,000 servers – a three-fold increase in two years – hosted primarily on-premises in Roblox’s private cloud.
To ensure low-latency, “always-on” experiences worldwide, Roblox also deploys edge Points-of-Presence (PoPs) around the globe. These edge data centers handle traffic routing, content delivery, and game server hosting closer to users. According to CEO David Baszucki, Roblox continuously improves “the speed at which people can connect to Roblox experiences” by rolling out new edge data centers and optimizing app performance globally. In Roblox’s architecture, core data centers house central services (e.g. databases), while PoPs serve as regional hubs servicing all of the incoming traffic into Roblox and hosting multiplayer game servers on Roblox’s backbone network. This design lets any player anywhere in the world interact on the unified Roblox platform. The payoff is a single global community – any user can join any experience – which reinforces the idea of one persistent “3D layer” rather than siloed regional servers.
Supporting millions of concurrent users in a persistent 3D world demands extreme reliability. Over the last couple of years Roblox has re-architected and invested to be an "always on" platform so that maintenance or outages in one region should not take down the whole service.
Roblox has demonstrated the ability to host increasingly large concurrent experiences as well. In 2024, the company committed to enabling developers to “host a high-performance, 100-player open world, sports or battle royale-type game on Roblox and have it run on 2 GB RAM devices anywhere in the world at good frame rates". This reflects improvements in the engine and networking to support large player counts in a single instance while still accommodating low-end hardware. It’s a step toward the kind of massive, shared experiences (concerts, global events, etc.) that a true metaverse vision entails.
Delivering a smooth, real-time 3D experience to hundreds of millions of users is as much a networking challenge as a compute one. Roblox has invested in custom networking protocols and infrastructure to minimize latency and maximize concurrency. Roblox maintains its own backbone network linking data centers and edge POPs, and peers with internet service providers globally to improve user connectivity. This private backbone allows Roblox to route traffic efficiently and mitigate internet congestion issues for players.
Crucially, Roblox’s network investments also enable new types of experiences. For example, better latency and synchronization allow for more fast-twitch and large-scale multiplayer games on the platform (such as battle royale modes or live concerts with complex interactions). Much of Roblox's appeal is its persistent world concept with large numbers of players concurrently – where changes in a virtual environment remain (i.e., they don't shut down between play session) and are globally visible. Roblox's network investments (edge PoPs, cellular infra, active-active data centers, and dynamic compute) are core enablers of this persistent world behavior. All of these networking feats position Roblox as an always-on, stateful, and socially rich 3D space, which will help unlock massive opportunity in commerce, social, entertainment and education.
These infrastructure upgrade while necessary, have come at a significant cost. Below are Roblox's estimated infrastructure CapEx over its public company life, based on total CapEx figures, management commentary and YoY changes they guide for. Roblox management is transitioning from the peak of their infrastructure investment phase to now focus on reaping economies of scale.
Year | Estimated Infrastructure CapEx | Notes |
2021 | ~$200 million (estimated) | Infrastructure ramp-up year, following Roblox’s March 2021 public listing. Heavy investments began in response to the platform's rapid DAU growth and to mitigate risks after a major outage in October 2021 (which lasted ~73 hours). Roblox started building toward more resilient infrastructure and expanding its private cloud capacity. |
2022 | ~$400 million (estimated) | Peak investment year. Major build-out of private cloud infrastructure, including the flagship Ashburn, VA data center. Focus on scalability, redundancy (active-active), and latency reduction through more edge deployments. Most of total CapEx was allocated to infrastructure. |
2023 | ~$338 million (estimated) | Moderation phase. Infrastructure investments continued (especially around cellular architecture and server efficiency), but intensity reduced compared to 2022. Roblox began preparing for a more scalable and fault-tolerant platform to support long-term ambitions (e.g., 1 billion DAU). |
2024 | ~$181 million (estimated) | CapEx cut ~50% YoY. Company moved into a “scale & optimize” phase. With most large infrastructure projects completed, focus shifted to increasing margins and free cash flow. Management signaled lower CapEx needs going forward due to earlier overprovisioning and architectural maturity. |
"That is both the combination of the operating leverage that we talked about as well as a significant reduction in capital expenditures now that our infrastructure, second data center are all in place. So we're through a CapEx cycle."
- Roblox CFO Michael Guthrie, Q4, 2024 earnings call
This improvement reflects how Roblox has optimized its infrastructure to scale more cost-effectively as engagement hours grow. Further reinforcing this focus, Max Ross, VP of Engineering, highlighted in a July 2024 blog post that Roblox’s Infrastructure Group is centered around availability, cost-to-serve, and productivity, explaining that “Everything we do aims to advance one or some combination of those three things.” Collectively, these statements demonstrate Roblox’s strategic evolution from building out its infrastructure to now capitalizing on scale and efficiency, positioning the company for long-term growth with improving margins.
Roblox’s heavy investments in cloud infrastructure, edge computing, AI/ML, and its robust engineering culture are transforming the platform into a rich, always-on 3D universe. This infrastructure not only supports the massive concurrency seen in today’s games but also unlocks diversified use cases (social, commerce, and advertising) that will drive Roblox’s next phase of growth.
Optionality
Social
One of the most powerful areas of optionality for Roblox is its potential to evolve from a gaming platform into a true daily social platform for hundreds of millions — and eventually, a billion users. Gaming will always remain foundational to Roblox’s identity. But increasingly, it’s clear that users aren’t just coming to play specific games; they’re coming to hang out, connect with friends, and experience shared moments in immersive virtual spaces.
Early features like Connect and Party illustrate this shift. Connect, Roblox’s avatar-based calling experience, allows users to reach out to friends using real names and enter a shared 3D environment for conversation. Party enables users aged 9 and above to seamlessly group up, discover, and join experiences together. By blending familiar real-world communication habits — voice calls, group chats, spontaneous meetups — with rich, user-created virtual worlds, Roblox is beginning to create a platform where your avatar, your social circle, and an endless ecosystem of content all live together. It’s no longer just about gaming together; it’s about being together, whenever you want — whether that's attending virtual concerts, shared events, or simply hanging out in immersive social spaces.
Building this daily social layer requires more than just features — it requires strong social gravity. Roblox is reinforcing its social graph through tools like contact importers, friend recommendations, and persistent identities. By strengthening how users connect, Roblox taps into a powerful network effect: friends bring friends, and friends keep friends active.
This social layer is already showing measurable impact. According to Roblox, sessions where users play with friends last nearly 1.9× longer, and users who form friendships early are significantly more likely to stay engaged over time. Voice chat features are also increasing session frequency, deepening user habits. Social connection drives stickiness - and stickiness drives monetization, whether through longer play sessions, avatar customization spending, or increased participation in premium events.
Roblox’s broader platform strengths amplify this opportunity. Its user-generated content ecosystem ensures a constantly refreshed world of interest-driven spaces, making social engagement endlessly renewable. Its platform-agnostic approach - running on low-end phones as easily as high-end PCs - allows it to expand its social graph globally without the friction of expensive hardware, supported by seamless cross-device play across mobile, console, PC, and VR.
Avatars sit at the center of this social evolution. On Roblox, avatars aren’t just cosmetic; they are expressions of identity that make digital interactions feel more human. Over the last few years, Roblox has heavily invested in making avatars more expressive and customizable - from dynamic heads and real-time facial tracking to diverse appearance options, emotes, and body language mirroring. Looking ahead, Roblox has hinted at generative AI tools that could let users create custom avatar bodies or hairstyles simply by describing them. This deepens the emotional attachment users feel toward their digital selves - and by extension, toward the Roblox platform itself.
The optionality Roblox holds is no longer speculative — the foundation is firmly in place. The question is whether Roblox can fully lean into these emerging behaviors, connecting users beyond gameplay and weaving social interaction seamlessly into the broader experience. If it succeeds, Roblox could become the default immersive social platform for Gen Alpha and Gen Z — just as Facebook was for Millennials — but even more deeply integrated into users’ daily engagement, entertainment, communication, and identity expression.
To accelerate this shift, I’d like to see Roblox experiment with a decoupled version of its Connect experience. By offering Connect as a lightweight, standalone-feeling mode within the main app, Roblox could lower onboarding friction, reshape public perception, and give new users a social-first entry point. If Connect proves sticky, Roblox could later spin it into a separate app — unlocking even faster growth and helping drive the next wave of mainstream adoption.
Of course, Roblox would need to carefully balance this social-first expansion with preserving its core gaming identity — ensuring that one amplifies, rather than erodes, the other. But the potential is enormous: to build not just a gaming platform, but the next generation’s daily digital life.
In Real Life (IRL) Commerce
At RDC 2024, Roblox announced a partnership with Shopify to enable creators and brands to sell physical goods directly inside Roblox experiences. While there has been some initial IRL commerce experimentation on Roblox with partners such as Walmart, E.L.F, Fandago and Warner Brothers, the Shopify integration is still in a closed beta that is expected to become widely available to all Shopify merchants in Q2 2025.
Roblox’s move into real-world commerce marks a pivotal test: can a platform built on gaming and social interaction also become a meaningful shopping destination?
Several structural forces will determine if Roblox is successful in expanding into real-world commerce.
Demographics and Purchasing Power: A Platform Maturing with Its Users
At its core, Roblox’s e-commerce opportunity is a bet on demographic evolution. The platform’s user base, once concentrated among children and early teens, is steadily aging up. As of early 2025, users aged 17–24 represent a significant share of the 58% of Roblox users over 13. This cohort brings something critical that younger users often lack - independent purchasing power.
The platform already commands extraordinary engagement — users spend an average of 2.4 hours per day on Roblox, outpacing platforms like YouTube and TikTok. As this engagement is carried into late adolescence and early adulthood, the conditions for successful commerce improve substantially.
In the meantime, however, Roblox must navigate the parental trust barrier. Younger users' transactions still often require parental approval, making features like clear parental controls, spending limits, and trusted brand partnerships essential to maintaining credibility in this early phase.
Thus, Roblox’s demographic trend is a tailwind - but one that needs careful short-term management to reach its full commercial potential.
Context of Use: Why Commerce Must Be a Native Behavior
Unlike platforms designed for passive content consumption (e.g., Instagram, TikTok), Roblox is a highly active environment. Users log in to play, create, and socialize — not explicitly to shop.
This creates both risk and opportunity. Passive browsing can easily accommodate impulse purchases; active environments demand that commerce be tightly integrated into the experience itself.
Roblox's early experiments suggest it understands this dynamic. Pilots like the E.l.f. Cosmetics campaign - where buying a physical hoodie unlocked an exclusive avatar item - made shopping an extension of play and identity, not a separate task.
Going forward, success will hinge on making commerce feel incidental to discovery rather than disruptive. If Roblox can position shopping as a natural output of exploration — akin to finding a rare item in a game - it could create a shopping behavior that feels entirely native to the metaverse context.
Creator Incentives: The Necessary Alignment
Roblox’s economy is built around creators. Its most vibrant ecosystems - from roleplay games to fashion showcases - are driven by independent developers.
Introducing real-world commerce adds complexity: creators might prefer users to spend Robux on gamepasses and avatar items, where creators share directly in the revenue, rather than on physical goods where the benefit is less clear.
Thus, the success of e-commerce integration depends heavily on aligning incentives. Roblox must design systems where creators either:
Share meaningfully in the revenue from physical product sales, or
Gain indirect benefits (such as sponsorships, boosted experience discovery, or bonuses tied to commerce-driven engagement).
Without such alignment, commerce could become siloed, with only a handful of branded experiences hosting shopping opportunities - limiting scale.
In a positive scenario, however, Roblox could unlock a networked commerce effect, where creators actively design experiences with commerce in mind, organically expanding the volume and variety of goods sold.
Technical Execution: Frictionless or Forgotten
Technical infrastructure will also play a decisive role. Early pilots using Shopify’s checkout and Walmart’s APIs suggest Roblox is prioritizing seamlessness. But the challenges remain substantial:
Cross-device functionality must be intuitive (e.g., console-based purchases must not feel cumbersome).
Privacy and security must be uncompromising, especially given the platform’s youth demographics.
Global reach will require partnerships beyond Shopify and Walmart to serve markets like India (Flipkart), Latin America (MercadoLibre), and others.
If commerce is even modestly harder than the frictionless mobile e-commerce users are accustomed to elsewhere, conversion rates will suffer. Roblox must match or exceed the ease of platforms like TikTok Shop to compete for users’ transactional attention.
Several risks could derail the effort:
Demographic mismatch: If younger users remain the dominant cohort, real-world shopping may never achieve scale.
Misaligned incentives: If creators resist embedding commerce, the number of shoppable experiences may stay limited.
Poor user experience: If checkout feels slow, clunky, or unsafe, users will revert to more familiar platforms.
Parental resistance: Concerns over real-world purchases initiated in-game could create regulatory scrutiny or brand risk.
Despite these risks, Roblox possesses fundamental advantages:
Engagement depth: 2.4 hours per day of active engagement is rare among digital platforms.
Behavioral fit: Roblox users already spend heavily on avatar customization and digital identity - an adjacent behavior to physical self-expression.
Brand momentum: Companies from Walmart to Nike are increasingly experimenting with Roblox activations, attracted by both engagement and cultural cachet.
E-commerce on Roblox isn’t just a monetization experiment, it’s a test of whether a participatory platform can evolve into a commerce layer, where play and purchase naturally coexist.
The opportunity is real, but not inevitable. Execution - not just vision - will determine whether Roblox can turn hours of engagement into real-world economic activity.
If it succeeds, Roblox won’t just be where users spend time. It will be where they shop.
Advertising
Roblox is quietly laying the foundation for what could become a billion-dollar advertising business. Since late 2024, the company has made a series of strategic moves to unlock brand demand: partnering with WPP to educate agencies, integrating with Google Ad Manager and AdMob to enable programmatic access, and bringing on third-party verification partners like Integral Ad Science, DoubleVerify, Kantar, and Nielsen. The infrastructure is now in place. In Roblox’s Q1 2025 earnings call, CEO Dave Baszucki confirmed that integration with Google is “underway,” while CFO Mike Guthrie noted that while advertising isn’t yet a material line of business, “we’ll break it out when the number really moves the needle.”
But there are signs that needle is starting to move.
In April, Roblox launched Rewarded Video ads - 15-second, opt-in placements where users receive in-game perks in exchange for watching brand content. Early tests have shown completion rates of 80–90%, suggesting users are receptive and that the format is commanding premium CPMs. These ads are now live in eligible experiences, giving developers an entirely new monetization path. Crucially, this revenue bypasses the 30% platform tax on Robux transactions, making it far more attractive to both Roblox and its creators from a margin perspective.
And Roblox isn’t just testing one format. Its ad product surface already includes static billboards, portal ads, and immersive in-game activations, each suited to different campaign goals and brand types. This format flexibility, paired with a massive and demographically unique audience, is rare in digital media.
That audience remains one of Roblox’s biggest competitive advantages. Of the 97.8 million daily active users and 21.7 billion hours engaged, Gen Z and Gen Alpha make up the majority of that base - two segments that are increasingly difficult to reach through traditional social platforms, TV, or even newer channels like TikTok.
Institutional interest is growing too. Morgan Stanley estimates Roblox’s immersive ad opportunity could reach ~$1.2 billion by 2026 (Source: Sherwood News, also cited in secondary outlets like MarketWatch) - a figure that reflects the seriousness with which advertisers and analysts now view the channel. While Roblox hasn’t disclosed advertising revenue yet, its growing ecosystem of partners, formats, and brands demonstrates the business is well beyond the experimental phase.
Another key accelerant is Roblox’s creator economy. Developers now have an incentive to place ads inside their experiences, because they can directly benefit from the revenue those ads generate. That alignment is important. It gives Roblox a path to scale inventory across thousands of top-performing experiences without producing a single piece of content itself, unlocking leverage few platforms can match.
Still, risks remain. New child-safety legislation, such as COPPA 2.0 and KOSA, could introduce stricter rules for targeting or require verified parental opt-ins for underage users. Roblox has taken preemptive steps to mitigate this, limiting ads to users aged 13+ and keeping placements opt-in by default. There’s also the question of long-term user experience. If ad density increases too fast, it could impact engagement or retention - something management appears aware of, as they’ve emphasized a cautious, user-first rollout.
The bottom line: Roblox has cleared the structural hurdles - programmatic demand, brand safety, and developer alignment. With advertisers already experimenting at scale and the ad stack fully operational, this business is no longer just a promising side quest. If Roblox continues to execute and regulatory pressure remains manageable, advertising is on track to become a high-margin, billion-dollar contributor to the company’s bottom line within the next two years.
Roblox has consistently delivered on ambitious infrastructure and product initiatives, including successfully migrating critical workloads to its own global cloud infrastructure, launching generative AI-powered tools that radically streamline creation, and forging strategic business development partnerships with Google and leading brands to scale immersive advertising. This proven ability to execute strengthens investor confidence in Roblox’s capability to capitalize on its vast optionality ahead.
Platform Health
Platform health is the foundation of Roblox’s long-term durability. While metrics like DAUs, hours engaged, and bookings grab headlines, they’re lagging indicators. The underlying health of the platform, especially user safety and creator economics, determines whether those metrics are sustainable over time.
For Roblox, platform health means two things:
A safe and trusted environment for users
A thriving, well-incentivized creator ecosystem
If either side weakens, the whole flywheel slows.
Safety drives retention, trust, and regulatory resilience
Roblox’s continued growth - particularly among younger demographics and global markets - is closely tied to maintaining robust platform safety. Safety isn't merely about regulatory compliance; it's foundational to user retention, parental trust, strategic partnerships, and long-term monetization. Failures in safety can quickly translate into financial risks, user churn, loss of brand credibility, or costly regulatory penalties under laws like COPPA in the U.S. or the EU’s Digital Services Act.
Historically, Roblox has faced criticism and scrutiny concerning platform safety, especially around protecting younger users. Despite past vulnerabilities and external critiques, sustained investments and iterative enhancements have significantly strengthened Roblox’s reputation over time. Independent assessments, such as evaluations by Bark’s chief parent officer Titania Jordan, commend Roblox’s commitment to safety, particularly when compared to platforms like Facebook, Instagram, or TikTok, noting that while not perfect, Roblox is substantially ahead in safeguarding younger users.
Roblox has implemented a sophisticated and multi-faceted safety infrastructure:
Human Moderation: Thousands of dedicated full-time moderators globally ensure proactive oversight and rapid response.
Advanced AI Moderation: Multimodal AI systems monitor text, voice, images, and 3D models, providing real-time moderation. This approach has led to measurable improvements, such as a 53% reduction in voice communication-related abuse reports per daily active user (DAU).
Communication Controls for Minors: Users under 13 face communication restrictions that limit interactions outside game environments to public broadcasts.
Enhanced Parental Controls: Parents have robust tools to remotely manage children’s accounts, including monitoring activities, setting spending and screen time limits, and controlling access to age-appropriate content.
Dynamic Civility: Customized moderation policies that account for different regions, age groups, and user contexts, ensuring culturally relevant and appropriate interactions.
Safety Partnerships: Collaborations with leading safety organizations and regulatory bodies enhance Roblox’s safety protocols, ensuring adherence to global best practices and proactive compliance.
Roblox’s proactive safety measures create significant strategic advantages, acting as a competitive moat by reducing regulatory, reputational, and operational risks. Effective moderation and civility frameworks minimize user churn, strengthen parental trust, and enhance the platform’s attractiveness for premium brand partnerships. As regulatory frameworks tighten globally, Roblox’s proactive compliance significantly mitigates potential legal and financial repercussions. Crucially, strong safety credentials make Roblox an attractive platform for educational partnerships and broader demographic adoption, expanding its market opportunities.
Roblox’s early and sustained emphasis on safety distinctly sets it apart from competitors like Meta, which struggle with retroactively addressing safety and civility issues within more open environments. Roblox’s foundational safety architecture provides a scalable and flexible platform for expansion into older demographics, allowing incremental enhancements to user expression without sacrificing core safety. This strategic flexibility presents a clear competitive edge as Roblox continues to broaden its user base and diversify into new, lucrative verticals beyond traditional gaming.
CEO David Baszucki emphasized Roblox’s ongoing commitment to safety in recent earnings remarks, highlighting initiatives such as enhanced parental controls, a comprehensive content labeling system, and advancements in AI-driven moderation technologies. These strategic safety investments underscore Roblox’s commitment to maintaining platform integrity and security as it targets continued global expansion and ambitious user growth objectives. Investors should view Roblox’s safety investments not just as cost centers but as foundational drivers of sustainable, scalable growth.
Creator economics fuel the content engine
Roblox’s long-term growth is tightly linked to the strength of its creator economy. As the platform expands its monetization tools, invests in AI-powered creation, and scales distribution, it’s positioning itself as one of the most compelling ecosystems for developers. When creators are empowered and fairly rewarded, they build more ambitious content, which drives engagement, monetization, and defensible network effects.
What follows is an in-depth look at the mechanics, momentum, risks, and strategic implications of Roblox’s creator economy—and why its long-term health is central to the company’s growth story.
Roblox isn’t just a game platform - it’s a vertically integrated content engine where creation, engagement, and monetization are all part of the same loop. That loop - the creator flywheel - is the foundation of Roblox’s strategic position, and its performance determines the long-term viability of the entire ecosystem.
At a high level, the dynamic is straightforward: creators build experiences, players engage with those experiences, Roblox monetizes that engagement, and creators are paid based on their contribution to the platform. The capital from that monetization is reinvested in better tools, higher-quality content, and stronger creator retention. It’s a classic virtuous cycle.
And the numbers suggest it’s working. In Q1 2025, Roblox paid out $281.6 million to creators via Developer Exchange (Roblox’s program that allows creators to convert the virtual currency Robux, which they earn from their games, avatar items, and other creations, into real-world money). This represented a 39% year-over-year increase, with more than 100 developers earned over $1 million in the last 12 months (Roblox IR). The company is on track to exceed $1 billion in total creator payouts this year. That’s not just a payout system—it’s a compelling platform incentive.
But sustaining this flywheel isn’t trivial. It depends on two critical transitions:
1. Incentives → More Creators (The Leverage Point)
This is where platform strategy is most impactful. If Roblox provides the right incentives—fair payouts, scalable tools, meaningful discovery—then more creators will build, and existing ones will double down. This increases content supply, improves experience quality, and drives user engagement. In other words, the leverage Roblox exerts over its creator base translates directly into platform strength.
Roblox is leaning into this handoff: engagement-based payouts now align creator success with user time; AI tooling accelerates content development; Premium subscription revenue is being shared to broaden incentive reach. These are textbook examples of platform leverage creating scale.
2. Engagement → Monetization (The Friction Point)
This is where strategy meets risk. Roblox’s engagement metrics are impressive—97.8 million DAUs, 21.7 billion engagement hours in Q1 2025—but engagement doesn’t guarantee monetization. If users play but don’t pay, the economics break down. Creator incentives shrink, content quality suffers, and platform value erodes.
The challenge here is less about scale and more about conversion. Roblox needs to help creators make money, not just draw traffic. That means supporting more effective monetization models—subscriptions, immersive ads, avatar-linked commerce—and ensuring the platform surfaces experiences that are optimized for spend.
What sets Roblox apart is its end-to-end control of the ecosystem. It owns the creation tools, the distribution layer, the monetization stack, and the economic engine underneath it all. That gives it the power—and the responsibility—to manage the system's throughput.
If it gets the leverage point right and fixes the friction point, Roblox becomes not just the home of user-generated content, but the default operating system for interactive, monetizable virtual experiences.
That’s the bet.
Recent Shifts & Investments
Roblox has expanded its monetization stack significantly over the past 24 months, enhancing its appeal to both top studios and long-tail creators.
Engagement-Based Payouts (EBP)
EBP rewards developers based on the share of Premium subscribers' time spent in their games. With DAUs reaching 97.8 million (+26% YoY) and 21.7 billion hours engaged (+30% YoY), the Premium time pool has grown considerably (Q4 CDN, Q1 2025).
Subscriptions & Marketplace
Developers can now offer in-experience subscriptions and earn 100% of revenue on Marketplace asset sales (creator-to-creator).
Immersive Ads
Roblox piloted 3D immersive ad formats with 100% revenue share to creators during early rollout. Long-term CPM-based revenue share is planned, but transparency concerns remain among devs.
Real-World Commerce
In Q1 2025, Roblox launched a Shopify integration enabling in-game commerce for physical goods. Early results are strong: Twin Atlas reported 90% of its merch sales now occur via Roblox (Business Insider, 2025).
AI-Powered Tooling
Generative assistants, templates, and automation tools are now helping emerging creators prototype faster. This shift has lowered the barrier to entry, particularly for the long tail and new AI-native creators.
Competitive Tension
The economics of creation on Roblox no longer exist in a vacuum. As the broader user-generated content (UGC) landscape matures, developers building on UGC platforms now compare not just toolsets, but outcomes. Where do they earn more? Where do they scale faster? Where is the risk lower? And increasingly - where do they own more of the upside?
That’s what makes this moment strategically significant for Roblox: its lead is still substantial, but the gravity it once held by default is now being tested by credible alternatives.
Fortnite Creative / UEFN has emerged as the most structurally similar competitor. Epic Games paid out $352 million to creators in 2024 through its engagement-based pool—roughly 40% of net revenue (VentureBeat, Jan 2025). It offers high-fidelity graphics and a large player base but lacks Roblox’s breadth of monetization channels or ease of onboarding.
Minecraft Marketplace is another heavyweight, though very different in structure. It’s tightly curated, with limited creator access and a 50% revenue share (before platform fees). Total creator earnings have reached ~$350 million since 2017—not insignificant, but spread thin over a longer time horizon.
Unity and App Stores (iOS/Android) offer creators more control and higher revenue shares—often 70–85%—but those benefits come with real trade-offs: developers must handle marketing, infrastructure, moderation, and customer acquisition independently. Higher margin, but also higher friction.
Rec Room, Horizon Worlds, and Core represent the “early-stage disruptor” category. Rec Room reportedly offers a 70%+ share to creators and has found product-market fit in VR and younger audiences. Horizon and Core are still building traction, but they point toward a broader wave of niche UGC platforms built on different assumptions.
Roblox’s differentiated advantage isn’t just scale—it’s integration. It owns the tools, the distribution, the economy, and increasingly, the commerce. That gives it pricing power and platform velocity most competitors can’t match. But it also makes the stakes higher. If Roblox gets its incentive design wrong—if creators feel underpaid, underexposed, or over-controlled—it doesn’t just lose content, it risks weakening the entire flywheel.
The company’s challenge now is to preserve its scale advantage while continuing to improve the economics and transparency for creators. Incentives aren’t just a cost center - they are Roblox’s moat. The platforms that win the UGC race will be the ones that convert creator loyalty into defensible, compounding growth.
Distribution & Discovery
Discovery is evolving from one of Roblox’s historical friction points into a potential strategic advantage. While tools and monetization drive the economics of the platform, discovery is what activates the content flywheel. Good content only creates value if it’s surfaced—and for Roblox, that makes discovery a foundational part of creator retention, content quality, and monetization.
Historically, Roblox’s discovery system leaned heavily on basic search, genre filters, and category placements. As a result, experiences that were already popular often crowded out newer or more experimental games. This "rich-get-richer" dynamic led to persistent frustration among mid-tier and long-tail developers who struggled to gain traction without paid promotion or viral luck.
That dynamic is starting to shift. Roblox is investing in personalization and discovery infrastructure to better match users with content they’ll actually enjoy—and to give newer developers a fighting chance at visibility. In Q4 2024, Roblox began rolling out AI-personalized home feeds, replacing the traditional static categories with algorithm-driven content tailored to individual preferences (Roblox Investor Letter, Q4 2024).
Despite these improvements, friction remains. Developers still face challenges understanding how the algorithm works or how to consistently gain visibility. There’s minimal feedback when experiences drop in ranking or disappear from feeds, and many creators still feel at the mercy of a black-box system.
Discovery is a force multiplier. It affects two core outcomes: the monetization potential of user engagement and the retention of mid-tier creators. Improving discovery doesn’t just make the experience better for users—it creates more sustainable economics for the platform by broadening the pool of successful creators.
Roblox is making visible progress in turning discovery from a drag into a driver. The pivot to AI-personalized feeds signals a serious attempt to modernize its distribution stack. If Roblox can deliver a system that balances personalization, equity, and transparency, it will convert what was once a platform tax into a competitive advantage—and further accelerate its content flywheel.
Creator Sentiment & Health Check
Roblox’s creator ecosystem is the engine room of the platform — a layered and dynamic economy that determines not just what gets built, but how sustainable the whole platform flywheel remains. If distribution and discovery decide what gets seen, creator economics decide who sticks around to create it.
At the top of this hierarchy are professional studios and experienced teams, responsible for many of Roblox’s most successful experiences. According to Roblox’s Q1 2025 results, over 100 developers earned more than $1 million in the past 12 months — a figure that highlights how far the platform has matured in enabling game development as a viable business (Roblox IR, May 2025).
Beneath that tier lies a layer of mid-tier professionals — solo developers and small teams earning enough to treat Roblox as a career, though not without volatility. In 2023, around 750 developers earned over $100,000, but this group is acutely sensitive to changes in algorithmic discovery, monetization policies, and shifts in player behavior.
At the base of the pyramid sit millions of hobbyists and long-tail creators. Most make little or no money and many churn out, but their contribution is essential to the platform’s creative diversity and surprise breakthroughs. A viral hit can emerge from anywhere — but the conditions for that emergence depend on low friction, fair payouts, and scalable tooling.
A newer and fast-growing frontier is the AI-powered creator class. With Roblox’s investments in generative tooling — including AI code suggestions and asset generation — a new layer of automation-first creators is beginning to take shape. This has the potential to dramatically increase supply and lower the skill ceiling, but it’s early. The impact will depend on how seamlessly these tools integrate into the wider creator workflows and monetization loops.
Unsurprisingly, the Roblox creator economy follows a power-law distribution. The top 0.01% of developers capture an estimated 30–40% of total earnings, while the median annual DevEx payout remains modest — approximately $1,645 as of late 2024 (Naavik, Sept 2024). This is growing steadily, but it still reflects structural concentration.
On one hand, many creators continue to praise Roblox’s reach, community, and creation tools — with several top studios publicly stating that “Roblox funds our team.” On the other, sentiment is growing more assertive. Creators have called out the mobile platform "double tax," limited monetization flexibility, and opaque payout logic, leading to advocacy movements like #RaiseDevEx. These aren’t fringe concerns — they represent a maturing creator class expecting greater transparency, fairness, and platform alignment.
For investors, the takeaway is simple: creators are Roblox’s supply chain. They are not just content producers — they are the renewable energy source for platform engagement, monetization, and differentiation.
When the creator economy works — with fair payouts, scalable tools, and robust discovery — it drives a positive loop of content, engagement, and revenue growth. But if Roblox fails to retain creators (especially mid-tier and long-tail ones), the content pool narrows, user experience suffers, and monetization becomes more brittle.
Roblox has shown it understands this. From engagement-based payouts to generative AI tools and Premium Sub revenue sharing, it's actively investing in creator retention and expansion. But trust and economics remain fragile. In an era where Fortnite UEFN, Minecraft Marketplace, and even standalone engines offer alternatives, Roblox’s ability to maintain a vibrant, sustainable creator economy is both a strategic moat — and a potential risk factor.
The creator economy isn’t just a community. It’s the platform’s infrastructure. And it's expanding in both breadth and depth. With over $1 billion in expected payouts this year, a growing middle class of developers, and new monetization channels coming online, Roblox is proving it can support not just a community—but an economy. That’s not easy to replicate.
Yes, challenges remain. Revenue share dynamics are still a sore spot, discovery friction hasn’t been fully solved, and payout systems could use more clarity. But what matters is trajectory—and Roblox is moving in the right direction. The platform is investing in transparency, rolling out AI tools to broaden access, and evolving monetization in ways that could meaningfully improve creator economics over time.
For investors, the takeaway is clear: Roblox’s long-term moat isn’t just its user base—it’s the compounding effect of a thriving, incentivized creator ecosystem. If the company can continue deepening that flywheel - through better incentives, broader participation, and scalable monetization - it won’t just maintain its lead. It will extend it.
And as this engine scales, it’s already showing up in the numbers - growth, margins, and cashflow that hint at what Roblox could become if it gets the flywheel turning at full speed.
4. Fundamentals and Valuation
To properly assess Roblox, we need to move from narrative to numbers.
Up to this point, we’ve examined Roblox’s strategic positioning — its platform model, creator economy, and potential to become a foundational layer of immersive social interaction. But ultimately, all strategy must translate into business fundamentals. The question isn’t just what Roblox could be, but what Roblox actually is today — and what it’s becoming.
This is where many investors lose discipline. The tech sector is particularly prone to “growth at all costs” thinking, where top-line expansion is treated as a proxy for success. But growth without improving unit economics, margin structure, and a path to sustainable profitability is just deferred risk.
Roblox is interesting because it’s somewhere in the middle: still early in monetization, still investing heavily — but beginning to show signs of operating leverage and financial maturity. The question now is whether the fundamentals are catching up with the ambition.
Let’s dig in — to revenue, margins, cost structure, and valuation — to understand whether Roblox’s financial foundation can support the scale of its vision.
The revenue curve that still bends upward
One of the first questions to ask when evaluating a high-growth business: Is the growth durable - and can it keep compounding?
For Roblox, the answer is increasingly yes.
This isn’t a one-time COVID beneficiary or a viral fad. It’s a global platform with structural tailwinds, early-stage monetization, and steadily expanding use cases. And the top line backs it up: since going public in 2021, Roblox has more than doubled its annual revenue — from $1.9 billion in 2021 to a run rate of over $3.8 billion as of Q1 2025. That’s not just growth - that’s resilience, especially in a market that’s grown skeptical of unprofitable tech.
DAUs have grown more than 5x since 2019, when they hovered around 17.6 million, to 97.8 million as of Q1 2025 (Roblox S-1, Roblox IR).
The average user now spends over 2.4 hours per day on the platform. That kind of habitual engagement puts Roblox in rarefied air, alongside platforms like TikTok and YouTube.
Even more compelling is the demographic shift. Over 60% of users are now 13 and older, up from around 40% just a few years ago (Roblox IR). That means higher spending power, better monetization potential, and longer retention curves. In short, the user base isn’t aging out — it’s growing up.
Despite the scale and depth of engagement, Roblox monetizes at just $0.06 per user hour, well below the $0.10/hour average for mobile gaming, and far below console/PC games which regularly monetize at $0.50/hour or more (Barron's).
"Roblox monetizes at six cents an hour; the average mobile game monetizes at 10 cents an hour. Your average console or PC game monetizes at 50 cents an hour, and some monetize up to a dollar an hour."— Gavin Baker, Barron’s (April 2025)
That gap is the opportunity. Even narrowing it could unlock 60–70% upside in per-hour monetization. And monetization is already improving - bookings per hour are up ~15% since 2019 (Roblox IR), and the share of paying users is rising — with 20.2 million monthly unique payers in Q1 2025, a 29% increase year-over-year (Roblox IR).
The monetization stack is still ramping:
Immersive 3D ads are rolling out across the platform
Avatar commerce and UGC-driven marketplaces are expanding
Premium virtual experiences are commanding greater spend per user
IRL commerce integrations (i.e. physical merchandise) are beginning to show up as part of Roblox’s longer-term revenue roadmap
Roblox doesn’t need more users to grow revenue - it needs to do more with the engagement it already owns. That’s operating leverage in action.
Roblox's push into adjacent verticals extends platform utility and increases monetization surface area:
Education: Interactive, gamified learning in classrooms
Entertainment: Virtual concerts, brand activations, fashion drops
Social & Communications: Early experiments in immersive group spaces, events, and real-time communication tools
This diversification broadens Roblox’s relevance and increases the probability it becomes a daily-use 3D platform, not just a game. As these use cases mature, they further support the long-term monetization narrative.
Roblox isn’t just growing — it’s growing with leverage and optionality.
Since IPO:
Revenue has more than doubled
DAUs have grown 5x
Monetization per hour is improving
New high-margin revenue streams are launching
And all of it has come with minimal sales & marketing spend. That’s rare.
Analysts are taking notice too: J.P. Morgan projects 40%+ FCF compounding through 2027, and Morgan Stanley sees margin expansion from both monetization and structural cost efficiencies.
This is the kind of revenue base long-term investors should want: durable, under-monetized, and expanding in scope. Next up? The bridge from top-line strength to bottom-line profitability.
The Profitability Inflection Point
Roblox’s top line has been on a tear — but the bottom line? That’s a more complicated story.
In 2024, Roblox reported a net loss of $935 million on $3.6 billion in revenue — a negative net margin of 26%. That’s a meaningful improvement from 2023, when losses hit $1.15 billion on $2.8 billion in revenue (Source: Roblox IR), but still reflects the lingering cost of years of aggressive investment.
What happened?
The short version: Roblox made a conscious bet on its future.
Over the past few years, the company ramped spending in nearly every category — infrastructure, trust & safety, R&D, developer tools, AI moderation, hybrid cloud — all in service of becoming a global platform, not just a successful game. These weren’t bad investments. They were necessary to support 100M+ daily users and to lay the groundwork for monetization across verticals. But they came fast, and they came heavy.
The result was strong top-line growth but no profitability. Unsurprisingly, the market penalized that.
But the investment phase may be peaking — and the signs are already showing.
Efficiency Is Finally Kicking In
In 2024, Roblox expanded adjusted EBITDA margin by 620bps (Source: Roblox Q4 2024 Shareholder Letter), reflecting both cost discipline and operating leverage. The company has begun to slow discretionary spend and is starting to reap the benefits of earlier infrastructure investments.
Three major areas stand out:
Hybrid Cloud Optimization: Roblox has invested in a custom hybrid cloud infrastructure that combines proprietary hardware with public cloud flexibility. This architecture is now helping reduce compute and storage costs per user — especially as Roblox containerizes simulation workloads and leverages AI inference locally.
AI-Powered Moderation: Moderating billions of user interactions daily is a massive cost center. But by integrating LLMs and AI-based pre-screening systems, Roblox is significantly reducing the human labor and infrastructure burden, with costs per hour of engagement starting to decline.
Containerized Linux game servers: Roblox has migrated to containerized Linux game servers, a major infrastructure upgrade that improves scalability, reduces hardware costs, and allows for more efficient allocation of compute resources across its global data centers.
Roblox’s infrastructure investments have played a central role in improving its operating leverage as the company shifts from a period of heavy CapEx to one of scale-driven efficiency. In the Q2 2024 earnings call, CFO Michael Guthrie underscored this transition, stating, “Operating leverage is really kind of the highlight... We've talked about getting our fixed cost down and getting leverage on our fixed cost that really falls into two buckets: Infrastructure, trust and safety.” A clear example of this can be seen in Roblox’s infrastructure efficiency gains, with the cost to serve per 1,000 hours dropping from approximately $12.75 in Q2 2023 to $9.61 in Q2 2024—a 25% reduction (Source: https://t.co/9OC2Jy6qZ9). That’s a big deal for a platform doing 73.5B engagement hours a year.
As Roblox scales, these fixed-cost systems should unlock further operating leverage.
The Cost Structure: Structural vs. Strategic
Nearly 49% of Roblox’s costs are structural, mostly in the form of developer payouts and app store fees:
Developer payouts are core to Roblox’s model. This is a feature, not a bug — it’s what incentivizes UGC at scale and underpins the entire ecosystem.
App store fees, however, are under pressure. Apple still takes 30% of every in-app transaction, a major drag on margins. But recent regulatory shifts are turning that headwind into a tailwind.
Thanks to the Epic v. Apple ruling, Roblox now has the ability to enable external payment link-outs. According to Morgan Stanley, if Roblox routes just 25% of payments off-platform, it could add ~430bps to EBITDA margin. If link-outs scale to 100%, that boost could hit a transformative 17%.
A More Profitable Revenue Mix - Starting with 3D Ads
Margins aren’t just a function of cost control — they’re a reflection of what kind of revenue a platform generates. And Roblox is evolving from a platform driven by user microtransactions into one increasingly powered by scalable, platform-level monetization.
Nowhere is that shift more evident — or more promising — than in immersive 3D advertising.
Why Ads Matter More Now?
Roblox launched immersive ads in late 2022 and began ramping aggressively in 2023–2024. This is not web-style banner spam or interruptive pre-roll. Roblox is building the infrastructure for an engaged, high-intent, and brand-safe ad network — and advertisers are buying in.
Why Ads are a High-Margin Business?
Immersive ads tick all the boxes of a high-margin revenue stream:
Low incremental cost: Once the ad tech and placement systems are in place, serving more impressions is nearly free. It’s software-style scaling.
Favorable economics: Roblox shares ad revenue with developers, but doesn’t incur the same platform fees (e.g., Apple’s 30%) or full developer payouts triggered by Robux sales. While exact rev share terms are undisclosed, Roblox retains more per dollar compared to traditional microtransactions.
Recurring potential: As brands sign longer-term campaigns and buy placements across multiple experiences, Roblox builds a more predictable and recurring revenue base — a key trait for improving both margins and investor confidence in cash flows.
Why It Could Be Big?
In Roblox’s Q1 2024 earnings call, CEO David Baszucki specifically called advertising one of Roblox’s "most promising new revenue opportunities." Analysts like J.P. Morgan and Morgan Stanley are modeling immersive ads as a multi-hundred-million-dollar annual business within the next few years, assuming moderate adoption and CPM growth.
Critically, Roblox has all the components to scale this:
Massive and growing user base (nearly 100M DAUs)
Long session lengths (2.4+ hrs/day)
First-party data for targeting
Brand-safe, kid-and-teen-friendly environment
Native ad formats that don’t break immersion
This is what advertisers want. And this is what Roblox can monetize — at scale and with margin leverage.
A Quick Word on IRL Commerce
While still early, in-real-life (IRL) commerce — like branded physical merch or product tie-ins (e.g., Vans, Gucci, Nike) — reinforces Roblox’s brand equity and expands monetization outside the app store tax regime. Physical goods aren’t subject to Apple or Google’s fees, and when Roblox controls the storefront or licensing, margins can be attractive. Think of it as high-margin brand extension, not core revenue — for now.
As immersive ads and other platform-driven revenue lines grow, Roblox’s revenue mix shifts away from high-friction, high-payout Robux purchases and toward more scalable, defensible income streams. This shift won’t just help margins — it may also prompt the market to revalue Roblox more like a platform than a transactional game company.
Minimal Marketing, Maximum Leverage
Unlike most tech companies at this scale, Roblox spends very little on sales and marketing. Instead, it leans on network effects, creator incentives, and organic virality to grow DAUs and engagement.
That means any improvement in monetization or efficiency drops more cleanly to the bottom line than it would in a high-Customer Acquisition Cost business.
A Platform with Expanding Margins
Even with all these improvements, Roblox isn’t likely to hit SaaS-level margins — and that’s okay.
It has a structurally different model: higher payout ratios, infrastructure intensity, and ongoing content safety obligations.
In 2024, the company expanded its gross margin to 77.8%, up from 76.8% the prior year, and generated $641 million in free cash flow, translating to an FCF margin of 17.8%. That momentum accelerated in Q1 2025, with a 41.2% FCF margin — a sign of growing operational leverage and capital efficiency. While management hasn’t set formal margin targets, the trajectory suggests increasing confidence that Roblox’s years of heavy investment are starting to pay off.
If immersive ads, external payments, and greater infra efficiencies continue to ramp — and if infrastructure efficiency continues improving — Roblox can flip the narrative from “unprofitable growth” to “scalable economics.”
That’s when valuation multiples rerate. And that’s when investors stop asking if Roblox can be profitable — and start recognizing it as a platform evolving toward durable margin expansion.
Is Roblox’s Valuation Reasonable?
The best any tech investor can hope for when trying to assess valuation is to be in the ballpark. Not precise, not perfect—but plausible. At a $59 billion market cap (as of May 30, 2025), Roblox is no longer a speculative bet on the future. It’s priced like a company standing at the edge of a major transition—and being judged on whether it can pull it off.
To make sense of that valuation, it helps to look at a familiar precedent: Netflix circa 2015, during its pivotal push into international markets and original content.
Netflix faced years of skepticism. It posted negative free cash flow, ran up massive content costs, and was routinely questioned on the sustainability of its model. But investors who understood the flywheel—content → engagement → subscriptions → scale - recognized that the short-term pain was laying the foundation for long-term dominance.
Roblox is now approaching a similar moment. It’s evolving from a single-use gaming platform into something far more expansive: a digital operating system for immersive experiences, creators, advertisers, and brands. The question isn’t just how many users Roblox can attract—it’s whether it can unlock new, higher-margin revenue streams that scale with its growing global footprint.
Roblox’s Netflix Moment: Scaling Global Engagement
Roblox’s core business—user-generated games powered by Robux—remains healthy, but it's structurally constrained. Platform fees, developer payouts, and currency exchanges limit margin expansion. To earn its premium valuation, Roblox needs to prove the next layer of monetization is real - and scalable.
Here’s what’s emerging:
Immersive 3D advertising
Global expansion
Aging up the audience
In real-life commerce
Future verticals like social, education, and live events
Like Netflix then, Roblox is trading short-term profitability for long-term positioning. The results aren’t fully visible yet - but the logic is sound.
Let’s be honest: Roblox isn’t a cheap stock.
This is a company priced for future platform economics—not current performance. So, the central question is: Does it have enough leverage, scale, and monetization ahead to justify the premium?
That depends on whether the emerging layers, ads, subscriptions, branded commerce; can scale profitably. It’s not guaranteed. But early signs are encouraging - cost-to-serve is down, gross margins are improving, and new monetization streams are coming online.
Roblox is no longer a misunderstood niche play. It’s a platform in transition. The $59B price tag reflects a market that sees potential—but hasn’t yet seen proof.
The upside from here depends less on user growth and more on monetization efficiency, operating leverage, and platform breadth. Investors aren’t just betting on more DAUs—they’re betting Roblox becomes the foundational layer for a new kind of internet.
If that bet pays off, $59B could eventually look cheap. If it doesn’t, the stock is already pricing in a future that may never arrive.
5. Leadership
Roblox’s leadership has matured considerably over the past three years, balancing visionary ambition with operational discipline. As of mid-2025, the company exhibits many hallmarks of world-class technology leadership across four key dimensions: deep technical acumen, long-term orientation, willingness to make hard decisions, and a well-rounded, scalable executive bench.
Technical Leadership at the Top
David Baszucki (aka Builderman), Roblox’s CEO and original architect, is a technologist at heart with a background in electrical engineering and simulation software. Crucially, Baszucki hasn’t drifted into abstraction. He remains deeply engaged in product strategy—especially around generative AI, simulation infrastructure, and platform scalability. In 2025, he publicly described how Roblox is leveraging its vast corpus of 3D user-generated content to train multimodal generative models—part of a long-term vision to let anyone build entire games via natural language. That’s not marketing fluff; it’s technical conviction.
Supporting Baszucki is a team with serious engineering and product chops. Until his departure in May 2024, CTO Dan Sturman (ex-Google, Cloudera) played a foundational role in scaling Roblox’s infrastructure and engineering org during a period of hypergrowth. Upon stepping down, Sturman expressed confidence that he was leaving behind “one of the strongest technical teams in the industry”—and so far, the transition appears smooth, with leadership responsibilities distributed across a bench of senior engineering leaders. This includes Chief Product Officer Manuel Bronstein—formerly of Google Assistant and YouTube—who has helped sharpen Roblox’s product discipline across content safety, creator tools, and platform UX. Also key are Morgan McGuire (Chief Scientist, ex-NVIDIA) and Nick Tornow (VP of Engineering, ex-Twitter/Zynga), who continue to drive core engine and developer experience innovation.
Roblox’s engineering-led culture allows it to punch above its weight in technically demanding areas like real-time simulation, face-tracked avatars, and scalable creation tools. Compared to giants like Meta or Amazon, Roblox runs a leaner R&D operation—but one that chooses its bets carefully and executes them with tight product-technology alignment.
A Founder-Led Company — And That Still Matters
One reason Roblox’s leadership stands out—beyond its technical fluency—is that it remains founder-led. David Baszucki isn’t just a legacy figurehead; he’s a hands-on, deeply technical CEO with a clear product vision and decades-long conviction. That matters more than many investors realize.
Founder-led companies have historically outperformed their non-founder peers by a factor of 4, according to the Harvard Business Review.
And it’s not hard to see why: founders are often granted more leeway by boards, investors, and employees to play the long game, weather criticism, and make bold strategic pivots. It’s the kind of structural trust that lets leaders act with conviction—like doubling down on AI infrastructure despite short-term losses, or imposing a controversial return-to-office mandate in the name of execution speed.
Roblox may be a public company, but it still behaves like one led by a missionary founder. That’s not a throwaway detail—it’s a structural advantage that helps explain everything that follows.
Long-Term Orientation
Roblox’s leadership has made it clear: they are not optimizing for quarterly wins. Baszucki regularly frames Roblox not as a game company, but as a long-term infrastructure layer for digital co-experience. In early 2023, after a brutal year for tech stocks, he reiterated the company’s focus on reaching 1 billion daily users—a decades-out goal, but one that shapes everything from platform design to monetization pacing.
This mindset shows up in their actions. In 2022–2023, Roblox deliberately increased R&D and infrastructure investment despite widening losses, choosing to accelerate technical progress over appeasing short-term expectations. They launched AI-assisted developer tools knowing they were still rudimentary, because seeding the market matters. They rolled out immersive 3D ads not to drive instant revenue, but to future-proof monetization as the platform ages up. They expanded content eligibility to users 17+, a safety-intensive but strategic move to retain aging users and expand addressable TAM.
Importantly, Roblox stayed on offense during the 2022 tech downturn. While peers froze hiring, it onboarded leaders like Nick Tornow and Tian Lim to strengthen foundational capabilities. Roblox leadership never resorted to survival-mode rhetoric; instead, they consistently emphasized engagement growth, creator retention, and tooling velocity as core value drivers. That strategic consistency-built credibility. By early 2025, with revenue growth reaccelerating and sentiment improving, the long view appears to be paying off.
Willingness to Make Tough Decisions
Roblox leadership isn’t afraid to make hard or unpopular calls when needed. While the company avoided mass layoffs during the 2022–2023 tech purge, it made targeted cuts, such as trimming its overbuilt recruiting team and scaling back its China ambitions when regulatory headwinds proved persistent. These were pragmatic, not reactionary, moves.
Perhaps the clearest example of executive resolve was the return-to-office mandate issued in late 2023. After years of remote-first culture, Baszucki drew a line: relocate to HQ or transition out. The company offered severance packages and clear timelines, minimizing ambiguity. The rationale? In-person collaboration was essential to the company’s pace of innovation. It wasn’t a popular decision -but it was principled, decisive, and ultimately reinforced Roblox’s execution culture.
Leadership has also shown guts on product decisions. The decision to double down on immersive ads and AI tooling, even before proving ROI, reflects a bias toward bold, long-horizon bets.
Roblox doesn’t chase trends or follow the crowd. Its leadership has demonstrated that it will make tough calls when the mission demands it—tempered with clarity and internal consistency.
A Deep and Durable Leadership Bench
Since 2022, Roblox has expanded its executive team through a thoughtful mix of internal promotions and high-caliber external hires. Longtime leader Christina Wootton, promoted to Chief Partnerships Officer in 2023, provided valuable continuity until her planned departure in mid-2025. Her exit, like that of CBO Craig Donato and CTO Dan Sturman, has been orderly and well-communicated.
New additions like Arvind Chakravarthy (Chief People & Systems, ex-Google/Palantir), Tian Lim (VP Product, ex-Hulu/Google Play), and Desiree Fish (Chief Comms, ex-Tripadvisor) bring scale and domain expertise across key functions.
Importantly, leadership turnover has been low and transitions smooth. Roblox has built a team with complementary strengths—founder vision, technical depth, product scale, and operational maturity. It’s not just a founder-centric story; there’s a real bench. And that’s good news for long-term execution.
Roblox's leadership today combines the best of both worlds: visionary founder energy and seasoned operator discipline. The company is technically led, long-term aligned, unafraid to make unpopular moves, and backed by a deep and capable team. As Roblox pushes into its next phase, from kids’ gaming app to AI-enabled, immersive platform for communication, commerce, and entertainment; its leadership appears well-equipped to handle both the complexity and the ambition of the journey ahead.
Final Thoughts: Betting on the Next Digital Giant
Three years ago, I called Roblox a potential generational company. After revisiting every major pillar - user growth, vertical expansion, innovation, monetization leverage, and leadership—it’s clear the story is still unfolding, and the fundamentals are catching up to the vision.
This isn’t just a gaming company anymore. It’s a platform evolving into a persistent, immersive layer of the internet—one where people play, learn, shop, socialize, and express themselves. The scale of that ambition explains the $59B price tag. The pace of execution suggests it might still be early.
Of course, nothing is guaranteed. Roblox must prove it can scale new monetization streams, maintain platform trust, and keep its creator economy healthy. But if it succeeds, this won’t just be a high-engagement platform. It will be a digital utility—embedded in the daily lives of hundreds of millions.
I’m betting that the next great consumer internet company isn’t one that replaces social media or gaming. It’s one that fuses them—and then adds a few layers we haven’t even imagined yet.
Roblox, in my view, is building exactly that.
As with any investment decision you make it’s important to complete your own due diligence and assess if the investment matches your risk profile. Like any individual stock there is risk. You are entirely responsible for your own investment decisions.