Roblox (Minutes): Incentive video ads have been launched, and adoption rate continues to grow

The following is compiled by Dolphin Research regarding$Roblox(RBLX.US) the Q2 2025 earnings call minutes, for earnings interpretation please refer to《Roblox: Blockbuster Assist, Returning to Ecosystem Breakthrough》

I. Review of Core Financial Information:

II. Detailed Content of the Earnings Call

2.1, Key Information from Executive Statements:

1. Overview of Financial Data:

(1) Key Performance:

◦ Revenue reached $1.1 billion, up 21% year-over-year.

◦ Bookings reached $1.4 billion, up 51% year-over-year, hitting a record high.

◦ Daily Active Users (DAU) reached 111.8 million, up 41% year-over-year, hitting a record high.

◦ User engagement hours reached 27.4 billion hours, up 58% year-over-year.

◦ Monthly unique paying users reached 23.4 million, up 42% year-over-year, hitting a record high.

◦ Added 4.6 million monthly unique paying users, hitting a record high.

◦ Average bookings per monthly unique paying user increased by 6%.

◦ Developer Exchange (DevEx) revenue reached $316.4 million, up 52% year-over-year, hitting a record high.

(2) Cash Flow and Liquidity:

◦ Generated nearly $1.4 billion in free cash flow over the past two years.

◦ Balance sheet holds nearly $4 billion in net liquidity.

◦ Opportunities for incremental operating leverage and cash flow generation exist.

(3) Fiscal Year and Future Guidance:

◦ Raised guidance for fiscal year 2025:

▪ Revenue guidance adjusted to grow 22% to 25% year-over-year.

▪ Bookings guidance adjusted to grow 34% to 37% year-over-year.

▪ At the high end, bookings will increase by $610 million or over 11% compared to previous annual guidance.

◦ Future Outlook:

▪ The company's goal is to capture 10% of the $180 billion global gaming content market.

▪ Third-quarter outlook: Conservative assumptions in guidance that recent viral content engagement and spending will return to baseline growth trends.

▪ Fourth-quarter outlook: Some uncertainty exists as most bookings are typically realized in the last days and weeks of the fourth quarter.

2. Detailed Analysis of DAU:

(1) Overall Performance: DAU reached 111.8 million in Q2 2025, up 41% year-over-year, with growth across all regions.

(2) By Age Group:

◦ DAU aged 13 and above grew 54% year-over-year.

◦ Over 64% of total DAU are now users aged 13 and above.

◦ Over 66% of total engagement hours come from users aged 13 and above, up 72% year-over-year.

(3) By Region:

◦ DAU in the US and Canada grew 21%.

◦ DAU in the Asia-Pacific region grew 76%.

◦ Highlights in bookings growth include: US and Canada bookings grew 43%; Asia-Pacific grew 75%; Japan over 50%, India over 90%, Philippines around 100%, South Korea over 120%, Indonesia over 150%.

◦ Highlights in engagement hours growth include: US and Canada grew 35%; Asia-Pacific grew 95%; Japan hours grew 61% year-over-year, Indonesia grew 170% year-over-year.

3. International Expansion Plans:

• The company will continue to focus on global infrastructure and network, including scalability, reliability, performance, and efficient operation capabilities.

• Benefits from AI will accelerate Roblox platform development, reduce creator friction, and enhance economic efficiency.

4. Ongoing Innovation and Business Rhythm:

(1) Platform Content and User Engagement:

◦ As of July, five experiences have over 10 million daily active users, four of which were launched in the past 12 months.

◦ Experience consumption on the platform grew 36% year-over-year, even excluding the massive success of the popular content Grow a Garden.

◦ Engagement hours for non-top ten experiences grew 47% year-over-year, with over half of experience consumption growth coming from non-top ten works.

(2) Creator Economy Development:

◦ In the past 12 months, 18 creators earned over $10 million on the platform.

◦ The top 1,000 creators averaged nearly $1 million in revenue on Roblox, while the top 10,000 creators averaged over $110,000.

(3) Technology and Product Innovation:

◦ Safety and Trust: Introduced trust connections and age estimation on the platform in July, expanded privacy tools and screen time management, and launched the open-source security toolkit RoGuard 1.0, aimed at protecting large language models.

◦ IP Licensing: Launched IP licensing manager and directory in July, collaborating with partners such as Lionsgate, Netflix, Sega, and Kodansha.

◦ Advertising and Brand Collaboration: Integrated reward videos with Google's efforts, currently in beta testing, and conducted multiple brand activation events with Travis Kelce, FIFA, Google Play, etc.

◦ AI Generation Technology: Released the next iteration of the Cube 3D generative base model, now live in Roblox real-time experiences, generating over 1 million 3D models.

(4) Genre Expansion:Initial progress in target genres such as RPG, sports and racing, and shooter games, with spending in these genres growing 66% from Q2 2024 to Q2 2025.

(5) Personnel Adjustments:COO Manuel Bronstein has decided to leave Roblox and will depart by the end of September. Naveen Chopra has assumed the role of CFO.

(6) Business Advancement Rhythm:The annual RDC developer conference will be held in September, showcasing a wide range of technologies and innovations.

2.2, Q&A Analyst Questions and Answers

Q: How is the platform addressing the current surge in demand? In terms of capital expenditure (CapEx), how does the company balance long-term development with enhancing platform capacity and resilience?

A:We are pushing the number of concurrent online players to over 30 million, with "Grow a Garden" surpassing 20 million concurrent users within weeks, far exceeding any previous Guinness World Record peak of 14 to 15 million for any game, demonstrating that we are handling very large numbers.

To absorb such high loads, we have adopted a combination of bare-metal infrastructure and cloud provider burst mode optimization. This means we can launch a large number of cloud servers within four to eight hours and combine them with our continuously running bare-metal infrastructure. This hybrid approach is very efficient, avoiding the need to pay high capital expenditures 24/7 to handle burst loads.

Q: Given the platform's revenue distribution tilting towards non-top developers, reduced onboarding and creation friction, how will this impact professional developers? Do you believe Roblox can achieve faster growth rates in 2026 and beyond?

A: We are progressing along the trajectory planned about six quarters ago, focusing oncore technology, scalable technology, discovery mechanisms, economic systems, and LiveOps. We firmly believe there is still a substantial reserve of technology sufficient to fully realize the desired vision and accelerate the development of a series of experiences. Roblox's ultimate goal is to support a single build version by creators that can run across any language and any device. This means providing excellent experiences from low-end 2GB Android phones to high-end gaming PCs, supporting diverse avatars rather than being limited to Roblox's original avatars.

We have not yet fully achieved this goal, so we are currently focusing on core technology, expecting this to accelerate category expansion over time. Meanwhile, the economic system continues to improve through more optimization, dynamic pricing, and regional dynamic pricing, being increasingly adopted by developers.

Q: Has viral hits like "Grow a Garden" become a promotional platform for new developers? How do you view the high turnover rate of top experiences on the platform, and what are the main driving factors behind it?

A: When an experience's concurrent users exceed 20 million, the success of "Grow a Garden" has been widely spread within the developer community. It is unique due to its asynchronous gameplay (gardens grow even during non-game time), providing inspiration and a potential launch platform for new developers.

With the introduction of in-game AI features (including 3D generation and text generation), a large number of new experiences will be spawned, further promoting developer growth. Regarding the high turnover rate of top experiences, this reflects the continuous vitality and innovation of platform content.Currently, five experiences have over 10 million daily active users (DAU), and growth has extended to the top 1,000.

Driving factors include platform technology, search and discovery mechanisms, and economic systems supporting different game types such assports, racing, combat, RPG. We aim to allocate more revenue to the creator community, making Roblox more advantageous in development efficiency, discovery, and monetization compared to traditional game stacks.

Q: What are the main factors contributing to the recent viral content explosion? Additionally, the Asia-Pacific region showed strong growth this quarter; please elaborate on the growth drivers in this market.

A: It is difficult to attribute the recent viral content explosion to a single or few factors. We find that it is actually the result of hundreds of initiatives working together innovatively. Roblox has a very broad technology stack, covering 3D engines, creator tools, search and discovery, multi-device applications, and automatic translation, among others.

Innovations and executions in all these areas have collectively contributed to the emergence of these viral contents. Taking "Grow a Garden" as an example,its success is attributed to our recommendation algorithms, scale expansion brought by high-quality infrastructure, and Studio tools helping creators build quickly.

In the Asia-Pacific region, strong growth is also a reflection of multiple factors working together. We particularly focus on improving automatic translation quality, optimizing performance, and increasing server capacity in places like Singapore. Over the past year, infrastructure performance in the Asia-Pacific region has significantly improved and strengthened with scale expansion.Especially in Japan, breakthroughs in product translation quality have significantly driven growth in the region.

Q: As the platform evolves into a more comprehensive ecosystem, how do you view its long-term monetization strategy? What are the distinctions and synergies between commercial building blocks, advertising, and subscription models, and how will the future monetization mix evolve?

A: We are building an ecosystem and platform where independent creators have a range of monetization tools to optimize their experiences.We aim to provide the widest range of tool choices, including freemium, virtual currency, paid access, ad support, and physical goods sales.

With the introduction of reward video ads, some developers will highly value their worth, while others may continue using virtual economy models. Our philosophy is that the more category expansion is driven, achieving original growth in user engagement and daily active users (DAU), as long as the economic system is correct, monetization will naturally follow. It is worth noting that certain categories targeting older users typically have much higher monetization potential than Roblox's current level. Therefore, as platform content expands to these age groups and gains market support, we expect to see higher monetization potential in these categories.

We emphasize the nature of the flywheel effect, where all these monetization models are enhanced by continuously driving user growth and engagement in the short term. All strategies and priorities established by the company over the past few years, as you heard today, have brought significant breakthroughs and success in user engagement, user growth, and monetization under our current business model. I firmly believe that as all this continues to accelerate, it will greatly facilitate the platform and our creators to explore and try other new monetization methods, further enriching and optimizing the economic vitality of the entire ecosystem.

Q: What is the specific implementation timeline for the advertising collaboration progress with Google? How do you assess the priority and launch plan for advertising monetization opportunities? Additionally, is the company considering introducing other third-party ad demand sources?

A: We have opened the window for creators to provide incentive video ads and have rigorously verified this. We have been very meticulous in observing the performance of this product on iOS and Android devices, ensuring that even on low-memory devices, we can deliver the performance and scale we expect.After relentless efforts, this feature is now officially launched.

Our internal data shows,the adoption rate of incentive videos is continuously growing strongly, although we have not disclosed specific scale, various creators are actively trying this model. We are very excited about this growth opportunity and hope that as the platform becomes part of the global gaming content market's 10%, ad monetization will naturally become an important revenue source for some developers.

Regarding introducing more partners to meet ad demand, this is definitely something we envision doing as the business continues to expand, further optimizing the ad ecosystem. As Dave mentioned, we are still in a relatively early stage, although many creators have begun actively integrating with Google's ad features, which is very encouraging.

Currently, nearly 100 publishers have joined our ad collaboration program, demonstrating good initial acceptance and potential. Therefore, we expect more progress and expansion regarding third-party ad demand sources in the future as the platform ecosystem matures and the ad business deepens.

Q: How does the new "Creator Rewards Program" change the incentive mechanism for creators, and how does it differ from the previous engagement-based payment method? Will this program significantly increase DevEx payments in the short term? Additionally, when will the company more actively promote "Sponsored Tiles" as an important commercial opportunity for the discovery engine?

A: The "Creator Rewards Program" is a key component of our systematic incentive mechanism. We aim to optimize the incentive mechanism to align with behaviors needed for the platform's long-term healthy development. This differs from the old engagement-based payment model, which may produce undesirable incentives.

The new system aims to better reward creators who bring organic traffic and viral new users to the platform, encouraging them to attract new users through social activities, thereby promoting the platform's continuous healthy development.In terms of discovery mechanisms, our goal is to promote the platform's long-term health, benefiting users, creators, and the entire ecosystem. Therefore, we cautiously reward discovery behaviors and increase transparency, allowing creators to understand the reward mechanism in their analytics dashboard.

Regarding "Sponsored Tiles," we firmly believe it has great long-term potential. It provides creators with a cost-effective way to acquire game traffic and is an effective way to purchase traffic within the Roblox platform to launch new experiences. We are actively optimizing and better positioning the "Sponsored Tiles" feature.

Regarding the financial impact of the "Creator Rewards Program," transitioning from the previous engagement-based system to the new framework will not have any substantial impact on the income statement in the short term.We expect to share significant incremental revenue with developers through creator rewards over time. This is seen as part of our overall strategy, sharing more benefits with creators while gaining operational leverage in other parts of the business.

Q: How is the acquisition of new users this quarter, and what role did "Grow a Garden" play in it and its sustainability? Additionally, can you introduce the age structure of new players, and has viral popular content successfully attracted older audiences?

A: Our vision is to create a platform for users of all ages globally, not just focusing on increasing user age. Data shows that the proportion of users aged 13 and above in the total user base continues to grow, with this group showing robust growth.Since "Dress to Impress," we have seen experiences that are highly attractive to users aged 13 and even 17 and above.Just as "Dress to Impress" is popular in college classrooms, "Grow a Garden" has also successfully attracted users of different age groups. Its universal appeal helps attract older users to the platform.

We still have significant growth potential in the 17 and above user group.Interestingly, the recent two super viral popular games—"Dress to Impress" (fashion) and "Grow a Garden" (gardening)—are not typical game genres, showcasing the platform's creativity and hinting at the potential for more traditional game genres in the future. "Grow a Garden" certainly brought new users, which is why we are restructuring "Creator Rewards" to incentivize such creators.

"Grow a Garden" differs slightly from the overall platform user base in some aspects. We observe that,the user age of "Grow a Garden" is slightly higher than the platform average, representing an attractive audience expansion. Although still in the early stages, there are already signs of very sustainable engagement levels. It is currently one of the most popular and highest retention social games on our platform. Users who play games with friends typically have 1.5 to 2 times the engagement of non-cooperative players, showing high stickiness. The game also successfully utilized LiveOps, such as the Travis Kelsey event. Therefore, "Grow a Garden" has the potential to become an evergreen hit. While we cautiously assume it will normalize, we are very optimistic about its inherent elements and long-term sustainability.

Q: Besides social viral spread, has "Grow a Garden"'s astonishing user growth rate benefited from algorithm optimization? Is this successful model replicable in other works?

A: After "Grow a Garden" was launched, its discovery achieved by the recommendation system is algorithm-based and inherently replicable. The system is based on factors estimating the long-term value of each individual user, not just short-term, but for the next year or even longer. We are working to predict the long-term value of any experience for any user, combining a wide range of factors.

Continuous improvement of the recommendation mechanism is key to its replicability.By increasing transparency and sharing more signals with creators, we have created an environment where creators who meet these signals can build amazing, fun, and satisfying experiences. Therefore, this successful model is replicable and inherent to the platform. Additionally, historical data shows that social asynchronous games involving gardening and planting on other platforms can also maintain quite good stickiness.

Q: How does the company retain new users who first entered Roblox through "Grow a Garden" and guide them to explore other experiences?

A: We firmly believe that the more time users spend on the platform, the more new experiences they will discover. This is precisely the success of "Grow a Garden," which has brought tremendous user engagement. Data shows,about three-quarters of "Grow a Garden" daily active users also participate in at least one other experience. This organic discovery mechanism fully utilizes all platform features described by Dave and has proven very effective. "Grow a Garden" is a successful example of this strategy.

<End here>

Risk Disclosure and Statement of this Article:Dolphin Research Disclaimer and General Disclosure