Roblox files to go public amid gaming surge

The unicorn children's gaming platform reports rapid growth thanks to stay-at-home orders

Roblox, the children's video game company, has filed to go public in what is expected to be a multi-billion dollar debut, riding a pandemic wave that has turbocharged demand for online gaming among all ages. 

Roblox, a hugely popular gaming platform where children can build their own worlds using Lego-like bricks, is not a single game but a free-to-access service of different digital activities. They range from virtual doodling to slick gaming titles made by professional creators. 

The platform blurs the boundaries between competitive gaming and social networks, with children turning to Roblox not merely to play games but also to talk to and spend time together. Although the company has seen some scandals linked to cybersex parties and Nazi recruitment, the NSPCC children's charity gives the platform an overall rating of "good". 

In documents published by the US Securities and Exchange Commission on Thursday, the California-based company said it had experienced "rapid growth" as a result of global stay-at-home orders, with daily active users growing from 17 million in 2019 to 31 million in September 2020. 

However Roblox, which is used by more than half of all British ten-year-olds, acknowledged it would be a challenge to sustain that growth. 

"We do not expect these activity levels to be sustained, and in future periods we expect growth rates for our revenue to decline, and we may not experience any growth in bookings or our user base during periods where we are comparing against COVID-19 impacted periods," the company said in its filing. 

Like many high-profile tech public offerings, Roblox has not yet achieved profitability. The company lost $203.2 million in the first nine months of this year with no immediate expectations for that to change. 

Instead, Roblox said: “We expect our costs and expenses to increase in future periods as we intend to continue to make significant investments to grow our business.” 

Because Roblox's users do not pay to access the platform, instead the company makes the majority of its revenues through its Roblox Premium subscription service and in-game purchases of its virtual "Robux" currency which can be used to buy virtual pets or accessories for their avatars. 

Robux money can also be used to access games and experiences made by third-party developers. This part of the business has seen significant growth. The company said it had seven million active developers, with its developer and creator pool earning $209.2 million (£157.6 million) in the first three quarters of 2020 - up from $72.2 million (£54.4 million) in the same period of 2019.

The pandemic has also seen the company host free special events, including four 10-minute live sets by viral sensation and "Old Town Road" singer Lil Nas X. Collectively the concerts were viewed more than 33 million times.

Roblox's filing follows in the footsteps of Airbnb and DoorDash, all of which have tried to squeeze in a stock market launch before the end of the year.