RBLX (Trans): GenAI won't solve 3D online multiplayer issues
The following is Dolphin Research's compiled transcript of the $Roblox(RBLX.US) Q4 2025 earnings call: 'Apps crashing? Roblox: a closed-loop ecosystem that Genie can't break'.
I. Results highlights
1. Q4 2025
• Revenue: $1.4bn (+43% YoY)
• Bookings: $2.2bn (+63% YoY)
• DAU: +69% YoY
• Engagement hours: 35bn hours (+88% YoY)
• Monthly paying users: nearly 37mn, close to doubling YoY
• DevEx (developer payouts): $477mn (+70% YoY)
2. FY2025
• Revenue growth: +36%
• Bookings growth: +55% (well above the initial 19%–21% guide)
• Total creator revenue: >$1.5bn (first time above this mark)
• Avg. revenue for top 1,000 creators: $1.3mn (+50% YoY)
3. Regional growth (Q4)
• U.S. & Canada: +41% YoY; paying users +34%
• APAC: +96% YoY
•- Japan: +60% YoY
•- India: +10% YoY
•- Indonesia: >+700% YoY
4. 2026 guidance
• Bookings growth: +22%–26%
• Margins: roughly flat at the high end of the guide, slightly down at the low end
• FCF growth: ~26% (midpoint)
• Capex: slightly higher (continuing to deploy GPUs into owned data centers)
II. Call details
2.1 Key management remarks
1) Business performance and milestones
2025 was a landmark year for Roblox. The platform hit a record peak concurrent users of 45mn in Aug., setting a new high. Individual titles also set records, for example 'Steal a Brainrot' peaked at 25.4mn concurrent users in Sep. Progress in search and discovery drove long-tail engagement and Bookings growth.
2) Share and growth ambition
Roblox currently holds ~3.4% of the ~$200bn global game content market and targets 10%. In the U.S., internal goals are even more ambitious. Management said platform health is the best it has ever been, and they are confident in sustaining >20% long-term growth.
3) 18+ user opportunity
Age verification shows the 18+ opportunity is larger than previously thought. In the U.S., this cohort grew >50% YoY, and monetizes ~40% better than younger users. The company is optimizing the platform to scale high-monetizing genres popular with younger users (FPS, RPG, sports, racing).
4) Tech advantage and vertical integration
Roblox’s edge is full-stack vertical integration from cloud to engine, tools, client, discovery, economy, and safety, vs. the industry’s typical stitching of separate cloud, engines, and social/comm tools. It also owns massive high-fidelity AI training data, capturing the equivalent of ~30,000 years of human interactions daily.
5) Key tech innovations
The company is rolling out several core innovations:
• Cloud-native streaming: automatic 2D/3D asset streaming with LOD support
• SLIM tech: dynamic asset synthesis to optimize performance across devices
• Authoritative native servers: critical for competitive gameplay
• Custom matchmaking: creators can optimize for latency, age, or social graph
• Avatar system expansion: full rollout in 1H26, with higher fidelity and more joints
6) AI strategy and applications
Roblox is running 400+ AI models internally:
• Cube 3D: recently extended to 4D functional/interactive simulation
• Facial tracking: for avatar facial animation
• Voice safety: open-sourced as part of the ROOST alliance
• Text filters: continuously updated; considered among the best globally
• Text and voice translation: enabling one-time publish, multi-language chat
• 4D Generation: users can create new objects via prompts
• World models: in-house team building models for creation and integration with Roblox Moments
AI also boosts discovery: in Q4, AI drove double-digit growth in the number of unique experiences shown in 'For You' recommendations. In 2025, users engaged with 24+ unique experiences per month on Avg., up double digits vs. 2024.
7) Safety and age verification
Roblox views safety as a core edge and aims to lead the industry in online safety and civility. Key initiatives include:
• Facial age estimation: global rollout completed in Jan. 2026; 45% DAU penetration
• Pass-based age verification in Australia, New Zealand, and the Netherlands: ~60% of DAU verified
• Matchmaking optimized by age and skill
• Continuous age estimation: augmenting facial signals with gameplay mode, social graph, and economic activity
• Advanced safety models such as Roblox Sentinel and Roblox Guard
The company believes age verification enables safe service across all ages, a long-term strategic opportunity many platforms have not yet addressed.
8) Ads
Ads are expected to grow healthily in 2026 but remain early and not yet a major revenue contributor. The company is building ad products and integrations carefully, expanding inventory with creators, and ensuring the business is built the right way. Given platform scale and engagement, the long-term opportunity is compelling.
9) China strategy
Roblox continues a strong partnership with Tencent and sees significant opportunity in China. The company has reframed its China approach: if it enters, it will use segregated data deployments. Its infrastructure is uniquely designed for abstraction and multi-site deployment.
10) Guidance
Because it is difficult to predict beyond Dec. (when 2025 guidance was set, 'Steal a Brainrot' and 'Grow a Garden' had not launched), the company is providing detailed 2026 guidance, and from 2027 will guide quarterly only. This reflects platform dynamics: viral hits are hard to predict, but overall platform health underpins guidance.
III. Q&A
Q1. Can you detail drivers of the annual Bookings outlook, your visibility into content timing/launches, and the latest on 18+ and AI-driven gameplay?
A: We track many internal leading indicators correlated with system health. These include content diversity, distribution, velocity, and coverage across ages and genres, and they all look healthy. In Q4 we saw rising diversity. As noted in the shareholder letter, experiences outside the top 10 grew faster than in Q3 on both engagement and Bookings, with similar trends early in 2026. We like the breadth and freshness.
Even without hits as large as 'Grow a Garden' or 'Steal a Brainrot', new titles are growing well, reinforcing confidence in platform strength. I also mentioned 2025 user quality, when there was concern that high growth might be low quality. But Q3/Q4 cohorts behaved like core users in engagement, spend, and retention.
This supports confidence over the next few quarters. Still, there is uncertainty 12 months out, which is why annual guidance is not ideal long term. We used a somewhat wider 2026 range to reflect that uncertainty. Importantly, we do not assume another viral hit of 'Grow a Garden' or 'Steal a Brainrot' scale; we are optimistic but cannot predict it, so it is not in the guide.
On AI, we are optimistic that AI will broaden the definition of games. Our mission is to connect 1bn people daily, in an optimistic and civil way, and 'connect' means bringing multiple people together to play, learn, and work.
Since listing, we have shared a vision of many people gathering in physically simulated environments to play. We are adding NPCs and human-like behavior, making worlds increasingly realistic and editable in real time. As shown on X yesterday, we are applying AI across the stack: 3D upsampling for richer scenes and training NPCs with 13bn hours of video and true 3D world data.
We highlighted breakthroughs from our internal world-model team, which blends video data with Roblox-native data to build world models. This can power creation and other use cases. One key point for our approach: we are building multiplayer platform tech with social systems that foster interaction. Most products today operate in video-generation space, not synchronized 3D multi-user cloud spaces.
We encourage investors to understand that distinction, cf. our recent posts on X. Even so, we remain optimistic about composing multiple AI components into the stack.
Q2. Over the last 12 months of discovery evolution, what opportunities do you see, and how does that align with strategy for the platform and for individual titles?
A: Discovery is hard to get right, and transparency matters. We avoid optimizing discovery for short-term gains, and instead focus on long-term value for users, platform health, and creator health. Short-term tuning often is not optimal for long-term enterprise value or ecosystem health. So we personalize to connect the right users with the right content for the long run.
The result is more quality content reaching more quality users, with greater portfolio diversity and new opportunities. Watch Moments in discovery, as browsing in-experience may increasingly complement discovery for many users. This is a long journey, and we will keep iterating.
Q3. Quarterly GPM was the second-highest since 2020. How much is from direct-pay migration, and any update there? Also, vis-à-vis AI competition from others, what differentiates Roblox?
A: Two factors drove the margin. First, as you suggested, we had COGS tailwinds. We continue to nudge users in-product to buy Robux on lower-cost platforms, which outperformed in Q4 and helped margins.
Second, stronger-than-expected Bookings expanded margins via fixed-cost leverage. Looking ahead, we still expect COGS rate to improve as more activity shifts to lower-cost platforms. It will not be linear, but it is a long-term margin lever.
On AI 'threats', we see the flip side: disruption we can drive as Roblox extends from games into the future of entertainment. A decade ago, many tried to make video interactive, which proved hard. Another angle is games expanding into entertainment.
We are confident in what we are building: cloud-based multiplayer tech that loads faster and can be consumed in smaller chunks. World models are interesting for walking and painting the world, blurring the lines between video, snapshots, and interactivity. We are building our own models, but the core remains the hard problem of synchronized 3D in the cloud and comms tech.
Q4. How should we think about SBC in 2026, and how does SBC flexibility support long-term strategic investment?
A: Internally we model SBC over wide multi-year stock-price ranges and run the business within comfort. We do consider these inputs and build multi-dimensional models. We take a long-term view. SBC may spike at times due to stock price, but we expect shareholder value creation to drive SBC down as a percent over time. Looking back, that has been the case. We monitor it, but focus more on operating results, through which dilution resolves.
Q5. Update on ads and 2026 contribution, and more color on the age-verification rollout?
A: We are excited and proud of how we rolled out age verification, and optimistic that it broadens our ability to serve all ages safely over the long term. We set an ambitious goal to ultimately make it frictionless, which surfaced many optimization opportunities. We are pleased with the rollout.
On ads, we expect healthy growth in 2026, but the business is still small and not a major revenue driver yet. As noted before, it will take time to scale. The long-term opportunity is compelling given scale and engagement, but we will build carefully: products, platform integrations, and inventory with creators.
Q6. Reports suggest Roblox may expand in China. Any comment? Also, on ages, if users skew younger than previously reported, does that imply slower aging of cohorts?
A: On China, we maintain a strong partnership with Tencent and see a large opportunity. If we re-enter, we would use segregated deployments. Our infrastructure is uniquely designed for abstraction and multi-site deployment.
On age verification and estimation, a few points. First, it highlights Roblox’s cultural scale. Verified ages skew a bit younger than self-reported, which actually underscores platform success. Two focal points: 18+ is growing >50% YoY in coverage, and our tech advantages to reach under-18s are the same ones we use for 18+ — vertical integration from cloud to app, discovery, and social graph. These advantages apply broadly. Crucially, tech keeps enabling more realistic experiences, so we remain confident in 18+ growth.
Q7. Penetration of age checks seems strong. Any behavior or engagement differences between verified and unverified users, and could this feel like a QoL upgrade for older users?
A: An example shows why we are excited. Deeper integration of age verification with social systems allows more precise matching across age groups. Most encouraging, age-banded matchmaking not only pairs older with younger users appropriately, but also matches efficiently within age cohorts. We see this as a long-term growth driver.
Hence we call it an industry benchmark. After our implementation, another major game company and a social platform announced similar moves. We believe this will become mainstream, and we are proud to be among the first large platforms to adopt it.
Q8. Q1 Bookings guide implies a >20% QoQ decline, one of the larger seasonal slowdowns. Any specific reason, or just conservatism?
A: I see it differently. This is a quarter without a major viral hit, and delivering 40%–44% top-line growth without one is a very strong signal of platform health. We said last quarter growth would slow as we lap a period of big viral titles, so this seasonality should not surprise. If anything, we should be excited about how the year is starting.
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