Roblox's Q3 2025 Earnings Call: Contradictions Emerge on Advertising/Monetization Strategy, Infrastructure, Genre Expansion, and AI Integration

Date of Call: October 30, 2025

Financials Results

• Revenue: $1.36B, up 48% YOY

Guidance:

• Expect continued healthy double-digit bookings growth in 2026, aided by tech rollouts in late Q1/early Q2 2026, though adoption timing and tough comps may affect the rate.
• Expect slight margin decline in 2026 due to higher DevEx rates, infrastructure and safety investments, and elevated comp & benefits; no YOY margin expansion expected in Q4 guidance.
• Incremental CapEx starts in Q4 2025 with similar levels planned in 2026; CapEx intensity forecasted lower than 2025 but elevated versus 2024.
• Advertising (rewarded video) is in limited rollout and not expected to be a major near-term contributor.

Business Commentary:

* Growth and Market Expansion: - Roblox reported DAUs of 151.5 million, up 70% year-on-year. - The company reached 3.2% of global gaming bookings, up from 2.3% last year. - This growth was driven by the platform's performance, discovery improvements, and investments in infrastructure.

• Revenue and Bookings Growth:
• Q3 revenue was $1.36 billion, up 48% year-on-year, and bookings were $1.92 billion, up 70% year-on-year.
• Strong growth was seen across regions, with notable increases in Japan (125%), India (46%), and Indonesia (804%).

• This was attributed to both new and existing experiences on the platform reaching significant daily active user milestones.

• Investment in Creators and AI Integration:

• Roblox announced an 8.5% increase in the DevEx rate, contributing to a new record of $427.9 million in DevEx during Q3, up 85%.
• The company highlighted its advancements in AI capabilities, with 400 AI systems now in use, driving safety, discovery, and creation.

• These investments support long-term genre expansion and creator ecosystem growth.

• Safety and Compliance Initiatives:

• Roblox adopted facial age estimation technology and raised the minimum age for restricted content to align with global standards.
• The company joined the AGA's Child Safety Coalition and plans to use AI for enhanced communication safety.
• These initiatives aim to maintain the platform's position as a leader in safety and civility, despite potential short-term headwinds.

Sentiment Analysis:

Overall Tone: Positive

• Management highlighted strong Q3 metrics: DAUs 151.5M (+70% YOY), hours 39.6B (+91% YOY), Q3 revenue $1.36B (+48% YOY) and bookings $1.92B (+70% YOY), and emphasized conviction in long-term growth while investing in AI, safety and infrastructure despite near-term margin pressure.

Q&A:

• Question from Matthew Cost (Morgan Stanley): When you think about what Cube is capable of, what will real-time content generation and what you're calling 4D content creation mean for Roblox experiences and for engagement over the next couple of years?
  Response: Cube enables real-time multiplayer content generation (complex objects, vehicles, NPCs) across devices, unlocking new gameplay and genre expansion; major multiplayer rollout expected in the next 1–2 quarters.

• Question from Brian Pitz (BMO Capital Markets): How do you think about the need to continue driving economics towards creators to help fend off competition from other UGC platforms that are offering attractive economics?
  Response: Creator economics are driven by DevEx rate plus platform scale, tools and user volume; Roblox will prudently increase creator returns while optimizing costs, safety and overall efficiency.

• Question from Eric Sheridan (Goldman Sachs): As older age cohorts scale as a percentage of the mix, what are the key learnings and how are you aligning investment priorities to sustain and stimulate that growth?
  Response: Viral hits attract older users; the technical roadmap (genre-support tech, avatar fidelity, AI) is being aligned to support traditional gaming genres and cross-device performance to capture older demographics.

• Question from Jason Bazinet (Citigroup): Is your shareholder letter language a soft way of saying you expect bookings growth below 20% in 2026?
  Response: No specific 2026 numbers provided; it's too early—there are tailwinds (momentum, upcoming tech) and potential headwinds (tough comps, safety rollouts); long-term objectives remain unchanged.

• Question from Cory Carpenter (JPMorgan): What are your early learnings on rewarded video and how big a priority will advertising be in 2026?
  Response: Advertising is a long-term opportunity; rewarded video is in limited rollout (140+ creators) and will be scaled cautiously to ensure creator/user experience and advertiser quality—not a near-term major contributor.

• Question from Kenneth Gawrelski (Wells Fargo): How are you pushing genre diversity via the recommendation engine and is concentration in certain genres a concern?
  Response: Discovery is being optimized for long-term ecosystem health and genre diversity through transparent signals, recommendation algorithms, sponsored tiles and curated picks to surface new creators and genres.

• Question from Benjamin Black (Deutsche Bank): With more experiences eclipsing 10M users, does Discovery get smarter, and why has engaged growth diverged from bookings growth recently?
  Response: Yes—Discovery will increasingly use rich 3D/time-based interaction data to improve recommendations; the engagement versus bookings divergence is primarily due to geographic mix shift toward lower-monetizing regions.

• Question from Omar Dessouky (Bank of America): In a potentially tough comp year like 2026, why wouldn't Roblox use advertising more to smooth troughs and peaks in growth?
  Response: Roblox already uses modest paid acquisition and plans to prudently scale paid marketing in partnership with creators to augment organic virality, which remains the primary growth engine.

• Question from William Lampen (BTIG): Has developer (creator) growth held pace with user growth and what is the expected yield/payback on AI-oriented investments?
  Response: Creator ecosystem is broadening with a healthy top-1000 tail; some AI investments (discovery, economy) show near-term payback, while others require longer-term capex and deployment to realize benefits.

Contradiction Point 1

Advertising Strategy and Monetization

It highlights a shift in the company's approach to advertising and monetization, which could impact revenue projections and strategic focus.

What are your early learnings in rewarded video, and how significant is the planned push for 2026? - Cory Carpenter (JPMorgan)

2025Q3: Roblox is bullish about rewarded video long-term but cautious near-term. Over 140 creators are onboarded, and efforts are focused on ensuring engagement and monetization benefits for them and users. Advertisers are prioritized for quality experiences. - David Baszucki(CEO)

What are the key components of monetization, including commerce and advertising, and the platform's evolution? - Eric Sheridan (Goldman Sachs)

2025Q2: We are building an ecosystem with multiple monetization tools. Creators can optimize for different models like freemium, virtual currency, or ads. As engagement grows, we expect all monetization to pull through. - David Baszucki(CEO)

Contradiction Point 2

Infrastructure and Technology Investments

It involves conflicting statements about the company's infrastructure and technology investments, which are crucial for platform growth and sustainability.

How will Cube's real-time content generation and 4D content creation impact Roblox experiences and user engagement over the next couple of years? - Matthew Cost (Morgan Stanley)

2025Q3: The ultimate spec for Roblox should allow creators to decide everything from fun animate look and feel to photorealism, supporting 1 to 100,000 users simultaneously. Cube will soon enable real-time generation in experiences, which will enhance gameplay and interaction. - David Baszucki(CEO)

Can ecosystem changes and developer interest drive faster growth after 2026, and are there incremental frictions? - William Lampen (BTIG, LLC)

2025Q2: We are focused on technology improvements like platform performance, search, discovery, and economy. There is still tech in the pipeline to drive genre expansion. The economy is becoming more efficient with regionalized dynamic pricing. Overall, there's more tech to help accelerate growth. - David Baszucki(CEO)

Contradiction Point 3

Genre Expansion and Developer Growth

It involves the company's strategy and expectations regarding genre expansion and developer growth, which are crucial for the platform's sustainability and user engagement.

What will real-time content generation and 4D content creation mean for Roblox experiences and engagement over the next few years? - Matthew Cost (Morgan Stanley)

2025Q3: We are tracking all genres and focusing on RPG, sports, racing, and battle genres. Our strategy involves ensuring our tech supports these genres, improving economics for higher price experiences, and enhancing search and discovery. We aim for 10% of the gaming space to run on our platform, and partnerships are crucial for making this possible. - David Baszucki(CEO)

How might macroeconomic conditions affect Roblox's growth and innovation given the lack of historical data during downturns? - Jason Bazinet (Citigroup)

2025Q1: Our platform is accessible, and most users don't spend much. Innovation is key to growth, but it's not needed to power through macroeconomic issues. - David Baszucki(CEO)

Contradiction Point 4

Advertising and Revenue Strategy

It involves the company's approach to advertising and revenue generation, which are critical for sustaining growth and monetization.

Why wasn’t advertising mentioned as a potential tailwind for next year? What are your early learnings regarding rewarded video, and what is the planned scale of investment in 2026 - Cory Carpenter (JPMorgan)

2025Q3: Roblox is bullish about rewarded video long-term but cautious near-term. Over 140 creators are onboarded, and efforts are focused on ensuring engagement and monetization benefits for them and users. Advertisers are prioritized for quality experiences. - David Baszucki(CEO)

What is the current stage of consumer adoption for direct payment options, and will it become accretive to margins as adoption grows? - Matthew Cost (Morgan Stanley)

2025Q1: We are becoming more aware of the benefits of direct payment in terms of getting more Robux per player. Payments are easier, and payments are happening increasingly in the game from gift cards and credit cards. - David Baszucki(CEO)

Contradiction Point 5

AI Integration and Operational Efficiency

It involves the company's strategy and expectations regarding AI integration and operational efficiency, which are important for improving platform capabilities and user experience.

Has developer growth remained stable despite user growth, and does the AI focus deliver quicker returns on investment? - William Lampen (BTIG)

2025Q3: AI investments are showing benefits in discovery and economics, with longer-term rollouts planned for infrastructure. The company is optimistic about future creator growth and investment payoffs. - David Baszucki(CEO)

How will margins improve this year, and what impact will AI-powered tools have on creators and development? - Shweta Khajuria (Wolfe Research)

2025Q1: We've seen rapid margin improvement, with potential for continued improvement, but not at the same pace as previously. AI accelerates human potential, allowing creators to produce more and better work. We aim for full 3D scene creation, leading to greater creativity on the platform. - David Baszucki(CEO)