Roblox Corporation

Company Overview

Business Model: Roblox Corporation operates a free-to-use immersive platform for connection and communication, consisting of the Roblox Client (for exploring 3D experiences), Roblox Studio (a free toolset for developers and creators to build and operate experiences), and Roblox Cloud (services and infrastructure). The core value proposition is connecting millions of users daily to create, play, work, learn, and connect in user-generated experiences. Revenue is primarily generated through the sale of virtual currency, Robux, which users purchase to obtain virtual items or access virtual content. Roblox Corporation retains a portion of each Robux transaction, distributing the remainder to developers and creators. A small portion of users are payers, with the majority of users engaging for free. The company also generates revenue from advertising and licensing arrangements.

Market Position: Roblox Corporation's growth is driven by two mutually reinforcing network effects: user-generated content and social interaction. High-quality content attracts more users, which in turn incentivizes developers and creators due to greater engagement and monetization opportunities. The platform's social nature encourages organic growth as users invite friends. In 2024, Roblox Corporation had 82.9 million average daily active users (DAUs) across over 180 countries, with users spending 73.5 billion hours engaged on the platform. The company aims to increase penetration and engagement across all demographics and expand into new verticals like brand partnerships, education, and communication. It competes for user attention with global technology, entertainment, gaming, and social media companies, and for developers and creators with gaming and metaverse platforms.

Recent Strategic Developments:

• AI Integration: Roblox Corporation is investing significantly in AI tools to reduce friction for creators and developers, including Assistant (for common questions), Code Assist, Materials Generator (for complex materials), and Avatar Auto-Setup (for animating 3D avatar models). AI is also used in moderation systems and is expected to facilitate complex decision-making in Roblox Cloud.
• Platform Enhancements: Ongoing investments in high-fidelity avatars, more realistic experiences, and other social features.
• Communication Features: Expanded voice chat (for users aged 13+ in over 30 countries), avatar animation (mirroring user movements/facial expressions), and "Party" feature (allowing up to six friends to join and move between experiences together).
• Developer & Creator Incentives: Reduced the minimum Robux required to qualify for the Developer Exchange Program from 100,000 to 50,000 on January 31, 2022, and further to 30,000 on January 31, 2023, to incentivize content creation.
• Monetization Expansion: Actively working on User-Generated Content ("UGC") for all, dynamic price floors in the avatar marketplace, in-experience price optimization recommendations, higher revenue shares for paid access experiences, and a Creator Affiliate Program.
• Immersive Ads: Investing in immersive ads system designed to be native to experiences, providing new monetization for developers and commerce opportunities for brands.
• Gaming Market Expansion: Aiming to capture a greater percentage of global gaming revenue by expanding content into new genres like Shooter, Sports & Racing, and RPG experiences, leveraging its UGC approach, expressive avatars, social graph, and 3D communication.
• Return-to-Office Plan: Completed in summer 2024, requiring a subset of remote employees to work from the San Mateo headquarters three days a week.
• CFO Transition: Michael Guthrie, Chief Financial Officer, notified Roblox Corporation of his intent to resign, with his employment terminating upon the commencement of employment of the next CFO. He will serve as an advisor until March 1, 2025, or one month after his termination date.

Geographic Footprint: Roblox Corporation serves a global audience, with developers from over 170 countries and users spanning over 180 countries.

• Revenue Distribution (Year Ended December 31, 2024):
  • United States and Canada: 63%
  • Europe: 18%
  • Asia-Pacific (including Australia and New Zealand): 11%
  • Rest of world: 8%
• Approximately 79% of DAUs and 37% of revenue were derived from outside the U.S. and Canada region in 2024.
• Roblox Corporation operates data centers and regional edge data centers widely distributed across 23 cities in North America, Asia-Pacific, and Europe.
• International offices are leased in Canada, the United Kingdom, China, South Korea, and India.
• The platform was blocked in the Republic of Türkiye in August 2024, and Roblox Corporation is working with local authorities to resolve it.

Financial Performance

Revenue Analysis

Profitability Metrics:

• Gross Margin: 52.1% (2024)
• Operating Margin: -29.5% (2024)
• Net Margin: -26.1% (2024)

Investment in Growth:

• R&D Expenditure: $1.44 billion (40% of revenue)
• Capital Expenditures: $0.18 billion
• Strategic Investments: Roblox Corporation made acquisitions of Speechly, Inc. (speech recognition software for voice moderation) in September 2023 for $10.1 million, Byfron Technologies, LLC (security and anti-cheat software) in October 2022 for $9.6 million, and Hamul, Inc. (platform for connecting gaming communities) in April 2022 for $19.3 million.

Business Segment Analysis

Roblox Corporation manages its business activities on a consolidated basis, resulting in a single operating and reportable segment. The Chief Executive Officer, as the chief operating decision maker, assesses performance and allocates resources based on consolidated net loss and other performance measures.

Capital Allocation Strategy

Shareholder Returns:

• Share Repurchases: None disclosed for the years ended December 31, 2024, 2023, and 2022.
• Dividend Payments: Roblox Corporation has never declared or paid cash dividends on its capital stock and currently intends to retain any future earnings to finance operations and expansion, not anticipating dividends in the foreseeable future.
• Future Capital Return Commitments: No specific future capital return commitments were disclosed.

Balance Sheet Position:

• Cash and Equivalents: $0.71 billion (as of December 31, 2024)
• Total Debt: $1.01 billion (as of December 31, 2024)
• Net Cash Position: -$0.29 billion (Net Debt as of December 31, 2024)
• Credit Rating: Not disclosed.
• Debt Maturity Profile: Roblox Corporation has $1.0 billion aggregate principal amount of 3.875% Senior Notes due 2030 (the "2030 Notes"). Contractual obligations related to the 2030 Notes include payments of $38.8 million each year from 2025 through 2029 and $1,019.4 million due in 2030. The company was in compliance with all covenants under the Indenture as of December 31, 2024.

Cash Flow Generation:

• Operating Cash Flow: $0.82 billion (2024)
• Free Cash Flow: $0.64 billion (2024)
• Cash Conversion Metrics: A substantial source of operating cash flow is deferred revenue, which is recognized over the estimated average lifetime of a paying user or as virtual items are consumed. The change in deferred revenue constitutes the vast majority of the reconciling difference from revenue to bookings.

Operational Excellence

Production & Service Model: Roblox Corporation operates a live services platform where users can create, play, work, learn, and connect. The platform is composed of three elements:

• Roblox Client: A free application for users to explore 3D immersive experiences. It provides intuitive camera and input controls tuned for various device form factors (mobile, tablet, desktop, game console, VR).
• Roblox Studio: A free toolset for developers and creators to build, publish, and operate 3D immersive experiences and other content. It supports collaborative editing, scripting with Roblox Luau, and AI tools (Assistant, Code Assist, Materials Generator, Avatar Auto-Setup).
• Roblox Cloud: Services and infrastructure powering the Client and Studio, designed for low-latency, responsive interactivity for millions of concurrent users. It automatically scales server instances based on user demand and stores persistent data for experiences.

Supply Chain Architecture: Key Suppliers & Partners:

• Cloud Infrastructure: Amazon Web Services (for high-speed databases, scalable object storage, message queuing services, and virtual cloud infrastructure).
• Payment Processors: Apple, Blackhawk, Google, Incomm, PayPal, Stripe, Microsoft, Sony's PlayStation Network, and Xsolla (for Robux purchases and prepaid cards).
• Hardware Components: Suppliers for network equipment and servers for data centers.

Facility Network:

• Manufacturing: Not explicitly mentioned as a manufacturing operation, but Roblox Corporation owns and operates servers from data centers.
• Research & Development: R&D is conducted by over 1,800 employees in product and engineering functions (77% of total full-time employees as of December 31, 2024).
• Distribution: Roblox Cloud data centers and regional edge data centers are widely distributed across 23 cities in North America, Asia-Pacific, and Europe. The Roblox Cloud uses over 140,000 servers as of December 31, 2024.
• Office Facilities: Corporate headquarters in San Mateo, California (752,546 sq ft, leases expiring 2029-2035). Also leases 427,271 sq ft at prior headquarters (sub-leased 140,684 sq ft), with leases expiring 2027-2031. Additional international office space in Canada, the United Kingdom, China, South Korea, and India.

Operational Metrics:

• Average Daily Active Users (DAUs): 82.9 million (Year ended December 31, 2024)
• Hours Engaged: 73.5 billion (Year ended December 31, 2024)
• Average Hours Engaged per DAU per day: 2.4 hours (Year ended December 31, 2024)
• Average Experiences Explored per month: over 21 (Year ended December 31, 2024)
• Daily Unique Paying Users: approximately 1.0 million (Year ended December 31, 2024)
• Average Bookings per DAU (ABPDAU): $0.14 (Year ended December 31, 2024)
• Average Daily Bookings per Daily Unique Paying User: $11.48 (Year ended December 31, 2024)
• Developers and Creators in Developer Exchange Program: over 24,500 (as of December 31, 2024), with over 7,500 newly qualified in 2024.
• Developers and Creators who exchanged Robux for fiat currency: over 17,000 (Year ended December 31, 2024).
• Assets evaluated (images, audio, video): over 400 million (Year ended December 31, 2024), including automated reviews.
• Customer inquiries responded to: millions (Year ended December 31, 2024), with human response to actionable safety issues within 18 minutes on average.

Market Access & Customer Relationships

Go-to-Market Strategy: Roblox Corporation's go-to-market approach is driven by brand strength, organic adoption, and an influencer-based marketing strategy.

• Direct Sales: Not explicitly detailed as a direct sales force, but users directly purchase Robux through the Roblox Client and website.
• Channel Partners: Relies on third-party online distribution channels and payment processors such as Apple App Store, Google Play Store, Microsoft Xbox, Sony PlayStation, Amazon, Blackhawk, ePay, Incomm, PayPal, Stripe, and Xsolla.
• Digital Platforms: Online sales channels for Robux and a Creator Store for developers to sell Roblox Studio plugins and other assets.
• Affiliate Programs: Launched an Affiliate Program in 2024 for influencers and creators to earn a share of Robux from purchases made by users they direct to Roblox Corporation.
• Advertising: Offers sponsored experiences and items, and immersive ads for brands to reach audiences within Roblox experiences.

Customer Portfolio:

• User Base: 82.9 million average DAUs across over 180 countries (2024). Users are diversified across age, geography, platform, and gender. A significant percentage of users are children aged 5 and over.
• Developer & Creator Community: Millions of active developers and creators across more than 170 countries. Ranges from young students and hobbyists to full-time studios.
• Customer Concentration: For the year ended December 31, 2024, one distribution channel processed 30% of overall revenue transactions, and a second processed 16%.
• Strategic Partnerships: Works with leading brands for unique commerce opportunities and immersive ads.

Geographic Revenue Distribution:

• United States and Canada: 63% of total revenue (2024)
• Europe: 18% of total revenue (2024)
• Asia-Pacific, including Australia and New Zealand: 11% of total revenue (2024)
• Rest of world: 8% of total revenue (2024)

Competitive Intelligence

Market Structure & Dynamics

Industry Characteristics: The market for an immersive platform for connection and communication is new and evolving, characterized by rapid, complex, and disruptive changes in technology and user, developer, and creator demands. The widespread availability of 3D user-generated content online is relatively new, with an evolving regulatory framework.

Competitive Positioning Matrix:

Direct Competitors

Primary Competitors:

• Global Technology Leaders: Amazon, Apple, Meta Platforms, Google, Microsoft, and Tencent.
• Global Entertainment Companies: Comcast, Disney, ViacomCBS, and Warner Bros Discovery.
• Global Gaming Companies: Activision Blizzard (now owned by Microsoft), Electronic Arts, Take-Two, Epic Games, Krafton, NetEase, and Valve.
• Online Content Platforms: Netflix, Spotify, and YouTube.
• Social Platforms: Facebook, TikTok, Instagram, WhatsApp, Pinterest, X (formerly known as Twitter), Reddit, Discord, and Snap.

Emerging Competitive Threats:

• New Entrants: The evolving market may attract new competitors.
• Disruptive Technologies: Continued growth of generative AI solutions affecting content creation and consumption of virtual goods.
• Alternative Solutions: Other interactive entertainment platforms and entertainment options.

Competitive Response Strategy: Roblox Corporation aims to compete by offering a variety of content, personalized user experiences, engaging social features, free and easy-to-use technology for developers, broad user reach, economic rewards system for creators, brand strength, reputation for innovation, and a developer/creator-centric culture. It continuously innovates the platform, including high-fidelity avatars, realistic experiences, AI tools, and diverse monetization opportunities.

Risk Assessment Framework

Strategic & Market Risks

Market Dynamics:

• Seasonality: Historically experiences higher bookings in Q4 due to holidays and higher engagement in June-August (Northern Hemisphere summer), with lower engagement in September-November. This makes financial results difficult to predict.
• Technology Disruption: Rapid, complex, and disruptive changes in technology and user demands in an evolving market. Failure to react quickly to new technology trends (e.g., generative AI) could harm the business.
• Customer Concentration: Dependence on a small portion of users for Robux purchases. If users reduce discretionary spending or switch to competitors, revenue will suffer.
• International Expansion: Risks include weaker spending in developing countries, difficulty enforcing contracts, higher costs, compliance with diverse laws, geopolitical events (e.g., Ukraine war, Middle East conflict, U.S.-China tensions), currency fluctuations, and challenges in recruiting/retaining international talent. The platform was blocked in the Republic of Türkiye in 2024.
• User Retention & Engagement: Risk of users decreasing engagement due to new/updated experiences, personalization issues, platform performance, removal of popular content, regulatory requirements (e.g., verifiable parental consent), or competition. Younger demographics may be less brand loyal.

Operational & Execution Risks

Supply Chain Vulnerabilities:

• Supplier Dependency: Reliance on suppliers for data center capacity and equipment components (e.g., servers, networking equipment). Disruptions or delays (e.g., due to increased AI demand, natural disasters, export/import controls) could limit capacity expansion or equipment replacement.
• Capacity Constraints: Demand on the platform exceeding technological infrastructure capabilities.
• Service Outages: Past outages (e.g., October 2024, May 2022, October 2021) and potential future disruptions due to natural disasters, cyber events, or infrastructure failures could harm reputation and financial results.
• Customer Support: Reliance on third-party service providers for customer support; failure to resolve issues quickly could impact user retention.

Financial & Regulatory Risks

Market & Financial Risks:

• Demand Volatility: User discretionary spending can be affected by economic conditions (inflation, recession).
• Foreign Exchange: Exposure to fluctuations in currency exchange rates, as 79% of DAUs and 37% of revenue are from outside the U.S. and Canada. No hedging strategies currently in place.
• Credit & Liquidity: History of net losses and expectation of continued losses. Need for additional capital for growth, which may not be available on acceptable terms. Cash balances at third-party financial institutions exceed FDIC insurance limits.
• Accounting Estimates: Reliance on significant judgment for critical accounting policies, such as the estimated average lifetime of a paying user (changed from 28 to 27 months in Q2 2024), which impacts revenue recognition. Inaccurate estimates could affect reported results.

Regulatory & Compliance Risks:

• Industry Regulation: Subject to evolving and complex laws globally regarding online safety, content moderation, intellectual property, consumer protection, protection of minors (e.g., COPPA, GDPR, DSA, OSA, CCPA, CPRA, ADCA, LGPD, PIPL), use of AI, gambling (e.g., "loot boxes"), advertising (especially to minors), and data localization. Non-compliance can lead to significant fines (e.g., up to 6% of global annual revenues under DSA, up to £18 million or 10% of global revenues under OSA), litigation, and required changes to business practices.
• Export Controls: Subject to U.S. and foreign export control laws and trade sanctions (e.g., OFAC), limiting access to certain persons/countries. Compliance is challenging and non-compliance can lead to liability.
• Data Privacy: Extensive collection and storage of personal data subjects Roblox Corporation to complex and evolving privacy laws. Security breaches or perceived failures in data protection could lead to investigations, litigation, and reputational harm. Communications on the platform are not comprehensively encrypted.
• Legal Proceedings: Ongoing and potential future litigation related to content (e.g., copyright infringement, gambling allegations, child safety, misrepresentation of platform safety), advertising practices, and use of generative AI.

Geopolitical & External Risks

Geopolitical Exposure:

• Geographic Dependencies: Operations in over 180 countries expose Roblox Corporation to political and economic instability.
• Trade Relations: U.S.-China tensions and trade restrictions could harm the China joint venture (Roblox China Holding Corp.) and ability to operate in Chinese markets. Tencent Holdings, a partner in the China JV, was added to the U.S. DOD's 1260H List in January 2025.
• Sanctions & Export Controls: Compliance with sanctions (e.g., against Russia, Belarus) and export restrictions.
• Catastrophic Events: Natural disasters (fires, earthquakes, severe weather), pandemics (COVID-19 impact), geopolitical conflicts (Ukraine, Middle East), cyber-attacks, and power outages could disrupt operations.

Innovation & Technology Leadership

Research & Development Focus: Roblox Corporation heavily invests in R&D, with 77% of its 2,474 full-time employees dedicated to product and engineering functions as of December 31, 2024. Core Technology Areas:

• Immersive Experiences: High-fidelity avatars, more realistic experiences, and advanced 3D environments.
• AI Tools: Integration of AI in Roblox Studio (Assistant, Code Assist, Materials Generator, Avatar Auto-Setup) to reduce creation friction. AI is also used in moderation, personalization, and is expected to enhance non-player characters and automate player experiences in Roblox Cloud.
• Social Features: Enhancements to connection and communication, including voice chat, avatar animation, and the "Party" feature.
• Platform Performance: Continuous efforts to improve frame rates, increase stability, and enhance graphics quality across all supported devices.
• Game Fund Program: Funds certain developers upfront to develop new experience types for the platform.

Intellectual Property Portfolio:

• Patent Strategy: Owns over 180 U.S. patents (expiring 2025-2043) and has over 260 pending patent applications globally. Seeks to protect proprietary inventions.
• Trademark Strategy: Registered "Roblox," "Robux," and its corporate logo as trademarks in the U.S. and other jurisdictions, with over 460 trademark filings and 20+ applications globally.
• Trade Secrets & Know-how: Relies on trade secrets, proprietary know-how, and confidential information, protected by confidentiality and invention assignment agreements.
• Licensing Programs: Not explicitly detailed as a revenue-generating licensing program, but the China JV involves licensing the Roblox application and Studio to Tencent.
• IP Litigation: Subject to intellectual property disputes, including past claims from record companies and music publishers regarding infringing content.

Technology Partnerships:

• Amazon Web Services (AWS): Leverages AWS for a portion of its backend services, including high-speed databases, scalable object storage, and message queuing services.
• Tencent Holdings: Partner in the Roblox China Holding Corp. joint venture for developing, localizing, and licensing a Chinese version of Roblox Studio and Client.

Leadership & Governance

Executive Leadership Team

Leadership Continuity: The company depends on the continued services of its Founder, President, CEO, and Chair of the Board of Directors, David Baszucki, and other senior management. The loss of key personnel or inability to attract new talent could significantly harm the business. Succession planning and leadership development initiatives are not explicitly detailed.

Board Composition: The Board of Directors is classified into three classes with staggered three-year terms. The Audit and Compliance Committee (ACC) is composed of independent board members with diverse expertise, including risk management, technology, and finance, and has engaged a cybersecurity advisor.

Human Capital Strategy

Workforce Composition:

• Total Employees: 2,474 full-time employees (as of December 31, 2024).
• Geographic Distribution: Over 100 full-time employees located outside of the U.S. (as of December 31, 2024).
• Skill Mix: Over 1,800 employees in product and engineering functions, accounting for approximately 77% of total full-time employees (as of December 31, 2024). Thousands of trust & safety agents globally.

Talent Management: Acquisition & Retention:

• Hiring Strategy: Focus on attracting and retaining key talent, especially in product and engineering, supported by brand, market position, reputation for innovation, and developer/creator-centric culture.
• Retention Metrics: Monitors turnover, time to fill open roles, and ratio of internally developed talent to external hires.
• Employee Value Proposition: Embraces four core values: Respect the Community, We are Responsible, Take the Long View, Get Stuff Done. Offers a 401(k) defined contribution retirement plan with matching contributions.

Diversity & Development:

• Diversity Metrics: Has established several affinity groups to promote fairness, belonging, and diversity, including groups for women, racial and ethnic minorities, and LGBTQIA+ individuals.
• Development Programs: Affinity groups offer networking, mentorships, and professional/personal development opportunities.
• Culture & Engagement: Focuses on incorporating core values into daily actions and promoting engaging, collaborative, and productive team environments (e.g., through the return-to-office plan).

Environmental & Social Impact

Environmental Commitments: No specific environmental commitments, emissions targets, carbon neutrality goals, or renewable energy strategies were explicitly disclosed in the filing.

Supply Chain Sustainability: No specific supply chain sustainability initiatives or responsible sourcing details were explicitly disclosed in the filing.

Social Impact Initiatives:

• Community Investment: Not explicitly detailed as philanthropic programs, but the mission is to connect a billion users with optimism and civility, strengthening social fabric and supporting economic growth.
• Product Impact: Focuses on creating a safe and civil online environment, particularly for children (aged 5 and over). This includes multi-layered moderation systems (text-filtering, voice moderation, content moderation, AI algorithms, human review teams), robust user reporting, parental controls (remote management, content maturity labels, screen time limits), and partnerships with child and internet safety organizations (WeProtect Global Alliance, Digital Wellness Lab, Family Online Safety Institute, UK Safer Internet Centre, Internet Matters, Internet Watch Foundation, kidSAFE, Association for United Kingdom Interactive Entertainment, Technology Coalition).

Business Cyclicality & Seasonality

Demand Patterns:

• Seasonal Trends: Historically, bookings are highest in the fourth quarter due to end-of-year holidays, which increase user time on the platform and prepaid Robux gift card spending. Higher engagement is typically seen in June, July, and August (Northern Hemisphere summer), with lower engagement in September, October, and November. Other holidays like Lunar New Year, Easter, and Ramadan also impact quarterly results.
• Economic Sensitivity: Macroeconomic conditions such as high inflation, recessionary or uncertain environments, and fluctuating foreign currency exchange rates can impact operations and consumer discretionary spending, potentially reducing demand for the platform.
• Industry Cycles: The market for interactive entertainment offerings is assumed to increase, but if it shrinks or grows slower than anticipated, it could affect revenue and bookings.

Planning & Forecasting: The timing of revenue recognition (over the estimated average lifetime of a paying user) means that changes in business may not be immediately reflected in operating results, making short-term forecasting challenging.

Regulatory Environment & Compliance

Regulatory Framework: Roblox Corporation is subject to a myriad of evolving and often uncertain U.S. federal and state and foreign laws and regulations.

• Industry-Specific Regulations:
  • Online Safety & Content Moderation: Laws like the UK's Online Safety Act (OSA) and the EU's Digital Services Act (DSA) impose new obligations, notice/transparency requirements, and advertising restrictions, with potential for substantial fines (up to 10% of global revenues for OSA, 6% for DSA). Australia's Online Safety Act of 2021 requires steps to prevent accounts for users under 16.
  • Protection of Minors: Children's Online Privacy Protection Act (COPPA) in the U.S. (requiring verifiable parental consent for children under 13), Article 8 of GDPR (parental consent for under 13-16), California Age-Appropriate Design Code Act (ADCA), and UK's Age Appropriate Design Code (AADC). New restrictions in Texas require verified parental consent for minors to purchase digital items.
  • Virtual Currencies & Gambling: Regulations on virtual currencies (like Robux), prepaid gift cards, and payment-related activities. Discussions exist on whether "loot boxes" and social casino-like experiences should be subject to higher regulation (e.g., Belgium, Netherlands, Australia). The U.S. CFPB is monitoring gaming marketplaces.
  • Advertising: Regulations on advertising, particularly to minors, which vary by jurisdiction.
  • AI Use: New and evolving laws like the EU's Artificial Intelligence Act (AI Act) and the Colorado AI Act impose regulatory obligations and prohibitions based on risk levels, with potential fines (up to €35 million or 7% of global turnover for AI Act).
• International Compliance: Multi-jurisdictional requirements, including data localization, local presence, and localized product offerings.
• Trade & Export Controls: Subject to U.S. Export Administration Regulations and OFAC trade and economic sanctions, which limit platform access in certain countries/territories (e.g., Cuba, Iran, North Korea, Syria, sanctioned regions of Ukraine).
• Legal Proceedings: Ongoing class action lawsuits (e.g., Colvin v. Roblox, Gentry v. Roblox) alleging minors used third-party virtual casinos to gamble Robux, misrepresentation of platform safety, and other claims. The company intends to vigorously defend itself.

Tax Strategy & Considerations

Tax Profile:

• Effective Tax Rate: The provision for income taxes was 0% of loss before income taxes for 2024, 2023, and 2022.
• Geographic Tax Planning: Maintains a full valuation allowance on federal, state, and certain foreign deferred tax assets due to a lack of U.S. earnings history, indicating uncertainty about future realization of tax benefits.
• Tax Reform Impact: Subject to changes in tax laws, such as digital services taxes enacted in Canada, the United Kingdom, and France, and proposed indirect tax reform in Brazil. California legislation in June 2024 limits the use of state net operating loss carryforwards and tax credits for tax years 2024-2027.
• Net Operating Losses (NOLs): As of December 31, 2024:
  • Federal NOL carryforwards: $2.38 billion (do not expire) and $10.7 million (expire starting 2037).
  • State NOL carryforwards: $1.43 billion (expire starting 2025).
  • Foreign NOL carryforwards: $64.8 million (expire starting 2025).
• Tax Credit Carryforwards: As of December 31, 2024, U.S. federal R&D tax credits of $304.7 million (expire starting 2030) and California R&D tax credits of $210.0 million (do not expire).
• Unrecognized Tax Benefits: Gross unrecognized tax benefits of $261.2 million as of December 31, 2024.

Insurance & Risk Transfer

Risk Management Framework: Roblox Corporation has an enterprise-wide information security program designed to identify, protect, detect, and respond to cybersecurity risks, integrated into its overall enterprise risk management systems. It maintains an incident response plan and conducts periodic risk assessments, testing, simulations, and tabletop exercises.

• Insurance Coverage: Maintains cyber and privacy insurance, as well as business interruption insurance, but coverage may not extend to all types of incidents or be sufficient to cover all costs.
• Risk Transfer Mechanisms: Not explicitly detailed beyond insurance. Contractually requires certain third-party service providers with access to sensitive data to implement and maintain appropriate security controls.