Behind Roblox’ Unhinged Growth

[Music] This is Roblox Stuff. US-based UGC games publisher Super League has acquired another US-based Roblox platform game developer Supero for an undisclosed sum. The acquisition is part of Super League strategy to expand partnerships and scale branded worldbuilding capabilities for advertisers. Trans Media Hello. Together, the two companies have achieved over 390 million visits. We're in Roblox world and three billion advertising impressions across 49 Roblox games. This deal marks the second acquisition of Roblox related company in 2025 with the most recent prior deal being the acquisition of Brook Haven by Voldex in February 25. So, my takeaways, consolidation maybe has begun in the Roblox world and looks like the branded content is the way to monetize. We're having Roblox tomorrow on the podcast. Like actual Roblox is coming in and stay

tuned. Going to talk about this and more. Wait, let's be crystal clear here. This is an aqua hire at best. This is not an exit that VCs are looking for. This is not like them at strength getting these peak premiums. This is just basically an aqua hire. They had layoffs earlier and they they've been struggling and they are fans of friends of the podcast. Yeah, that's the reason why I feel like not a lot of VC money is going into Roblox games. I think Boldex has an investment from A6Z, so they're consolidator. There's GameFam that has investment from Play and I'm not sure about Super League. I'm sure they have good investors as well, but seems like most of these companies are not specifically VC backed from a Roblox standpoint. And I'm sure Roblox folks will talk about this. They just had their earnings report and they're continuing to crush it. They're on the same positive trend. Almost all of their major KPIs are up 25 30%. DAU has climbed up to like

97.8. DAUs by region. One of the stats that I saw was that US and Canada DAU was up 22%. So Crest we always talk about like are they just growing international like actually they are continuing to grow here. They had a major event called the hunt mega edition that was in Q1 that was like a you know one of the big draws for for folks over 13. Let's well we got to talk about that. That's always been the narrative for them is like are they going to be able to retain users as they start to age up on the platform. And so when you look at the under and over 13, which is how they choose to report it, the under13 has remained relatively stable. There's still some growth there, but most of their growth has come from the over 13 demo. And so that suggests to me that they're retaining users as they start to age up on the platform and their acquisition of users under 13 is pretty stable. I still think there's a

question about whether or not they're retaining users who are over 13 or whether or not they're able to acquire users who are over 13 who haven't had experiences with the Roblox platform. Don't think that's splitting hairs. I think that's really important if they're able to acquire users who are over 13. I think it's far more impressive than retaining users aging up. But still, I I just who is left to on this platform? Like where where do these DA coming from? Like they're about to hit 100 million DAU this summer. Remember summer, they're a seasonal business. There's a lot of seasonality because of the age demo they're in. This summer they're absolutely going to hit over 100 million DAU. We're talking about what is it half the kids in the US, you know, between some age demo or playing Roblox. I just it's a mind-blowing to me how big the impact is. And the reason we keep reporting on Roblox is because it's really important as a growth driver for this whole industry. When we've been talking about all these things which haven't really played out, whether it be crypto, whether it be AI isn't looking as good as we want it to be. Roblox is a bright spot and we need them to get

people into the gaming funnel, not just the Roblox funnel. So, I think this is something we should continue to keep track of. Yeah. Who's left? Turkeyy's left. The other thing that we talked about is that if Fortnite comes back into the marketplace, like how is that going to impact the age demo for Roblox? Like, how many of the Roblox people are going to go do the mobile version of Fortnite in the US? That could be a headwind for them potentially. And people forget like in that Epic v Apple case, they remember they had leaked DAU numbers by each platform and mobile for iOS and Android was a significant portion of their DAU. I think it was something around, you know, a fifth of their users. So when Tim took Fortnite off those mobile app stores, there was a huge financial hit and I would argue like strategy imperative that Epic took, like they had skin in the game when this happened. It wasn't as though that you know, oh, who who who plays Fortnite on a mobile phone? a ton of people do, particularly in this age demo. In one of the podcasts I was listening to, Tim said, you know, they basically were foregoing $300 million. That was the

revenue they had uh on mobile in the I think they were on one or two years before they were taken off. So, primarily they are not a mobile platform, but you're right like they did forego a lot. No, I was going to say like and we did research back then with Stan. I think I've said this in the podcast before is that it it was kind of the gateway drug to PC console, right, was mobile where people played it on mobile and it wasn't it was a terrible experience on mobile to be clear as it was on Switch, but then they upgraded them to PC console. That was kind of the increase the funnel by putting it on mobile. A couple other notes like stockbased compensation is another thing that's been a big narrative with Roblox. It's still up this quarter. Employees are still growing. They add another 100 headcount. Free cash flow, however, is way, way up. And remember, Roblox has some revenue recognition shenanigans based on how Roblox are depreciated. Again, they have a really great slide in their quarterly earnings where they explain how this happens in a beautiful graphic. But when we look at free cash

flow, which I think is a better metric right now, it's looking pretty positive. Like they got cash in the bank, which is great to see. They got money flowing. The other thing I want to point out from their transcript was two big growth drivers. So, one we've been talking about on the podcast, which has been ads. And so, one of the things that the CEO mentioned is that they're not going to talk about ads right now just because they feel like it's not big enough. So, at least that tells us something on how the ad units are doing. Remember, you can walk into a particular portal within Roblox or a particular experience and you get it transported to a sponsored ad location, whether you know, it could be vans, it could be whatever it, you know, whatever the sponsor wants. So, it'll be interesting to see, you know, quarter over quarter how this works. One of the other things that they attributed to growth was price discrimination. The nice word for this is price personalization. But they have two things that are really interesting on the platform. One is they have a price optimizer. So you can basically just put in prices into this little algorithm and it'll spit out new recommended prices. And the way the economics team at Roblox, which they do have, talked about

it is that what developers were doing previously is exactly what you would observe in a market, which is that people were looking at prices for other items in games. they were trying to set prices comparable to those. This algorithm just does that same process but a little bit more efficiently. And so they've been able to squeak up some of the average selling prices for some of the items. The other thing that they have is regional pricing. So they can do hey India is going to cost less than let's say the United States which is really important because they have a ton of tier 2 and tier three now. And the final thing that they're doing on the price side this economics team by the way is cranking right now is that they have price floors for items in their avatar marketplace. So rather than setting an individual price, what you're going to do is you're going to set a ratio above or below a price floor to set a particular item in the marketplace. And the reason this is really important particularly for avatars and cosmetic economies is that there's a lot of negative externalities. So for instance, if you make like a really cool, let's say, cosmetic, someone else, particularly in a UGC environment, is going to come in and make a very similar cosmetic. and

someone having another cosmetic that's extravagant as the one you have decreases the value of the cosmetic you have right there are these negative externalities which are not born so they implemented these price floors which are dynamic for each of the avatar slots and this is what we're looking at right now if you're on the YouTube version how they've set these price floors up so this economics team is cranking they're squeaking out a little bit more uh bookings per user keep the headcount for the econ team growing box. [Music]