RBLX

Good afternoon, everyone. This is Kate, and I will be your conference coordinator today. Welcome to Roblox Q1 2026 earnings Conference Call. After the speaker's remarks, there will be a question and answer session. If you would like to ask a question during that time, please Press Start and then the number one on your telephone keypad. We ask that you please limit yourself to one question and rejoin the queue if needed. I will turn the call over to Jaime Morris, Roblox Head of Investor Relations. Jamie?

Good afternoon, everyone. Thank you for joining us to discuss our Q1 2026 results. With me today is Roblox's Co-founder and CEO, David Baszucki, and our Chief Financial Officer, Naveen Chopra. Before we begin, I would like to remind you that our commentary today may include forward-looking statements which are subject to risks, uncertainties, and assumptions that could cause actual results to differ materially from those described in our forward-looking statements. A description of these risks, uncertainties, and assumptions are included in our SEC filings, including in our most recent reports on Form 10-K and Form 10-Q. You should not rely on our forward-looking statements as predictions of future events. We disclaim any obligation to update these statements except as required by law. During this call, we will also discuss certain non-GAAP financial measures.

Reconciliations between GAAP and non-GAAP metrics can be found in our shareholder letter and supplemental slides, which are available on our investor relations website. With that, I'll turn the call over to Dave.

Thank you. Good afternoon, and thank you for joining us today. We continue to make progress towards our target of capturing 10% of the global gaming content market on our platform and an even greater share of the U.S. market. In Q1, we had revenue of $1.4 billion, which grew 39% year-over-year. Bookings of $1.7 billion, which grew 43% year-over-year. I'll note that's roughly twice what we've shared with investors as our long-term growth trajectory. We generated $629 million in operating cash flow and $596 million in free cash flow, up 42% and 40% year-over-year, respectively. Monthly unique payers increased to 31 million, up 52% compared to a year ago.

We have strong payer growth in international markets and continued solid growth in the U.S. and Canada, up 19% year-over-year on a larger payer base. We also saw year-over-year user and engagement growth, DAUs of 132 million, up 35% year-over-year, and DAUs outside of the U.S. and Canada grew 40%. DAUs in the U.S. and Canada grew 17%. DAUs in Japan grew 96% year-on-year in Q1, and DAUs in India grew 84%. Hours of engaged were at 31 billion, up 43% year-over-year. Outside of U.S. and Canada, that number grew 50%. Hours in the U.S. and Canada grew 21%. Hours in Japan grew 101% year-on-year in Q1, and hours in India grew 91% year-on-year.

For our 18 and up numbers, as of Q1, over 18 users represent 26% of DAUs who have age checked. In the U.S., DAUs and hours for the 18 and up cohort grew over 40%, and within that, our 18 through 34 cohort grew over 50% faster than any other age cohort. Additionally, in the U.S., the 18 and over users on Roblox monetized over 50% higher than our under 18 users. As we expected, DAU growth, while very healthy at 35%, has declined from the roughly 70% growth rates we saw in the past two quarters. User acquisition and engagement was also impacted by our global rollout of age checks to access chat in January.

At Roblox, we're committed to setting the global standard for healthy, safe, and age-appropriate digital engagement, we're building a platform for all ages as part of the core vision to connect a billion users with optimism and civility. As part of this commitment in Q1, we became the 1st large online gaming platform to introduce age checks to access chat on a global basis. I want to also note Another major announcement in our plans to introduce age-based accounts, which leverage our age check technology, we expect this to roll out globally in June. I want to note because we've globally introduced age check, we've been able to introduce kids' accounts within our core app.

These proactive measures are setting a new industry benchmark, we've been incorporating really input from policy makers and regulators around the world. Note that not all of our users have age checked, even as the percentages continue to grow. In the United States, we're at 65% age checked. In Australia, where we started a bit earlier, we're at 70% age checked. This is always in addition to our robust text filtering technology that we're continuously improving and also our open source voice safety tech. We're now better able to understand the impact in the short term of age checking. For communication engagement, we have had a follow-on reduction in the percent of users communicating on our platform, just because people right now who have not age checked, we don't allow them to communicate.

In addition, along with age-checking, we've now banded communication, so we no longer allow adults to communicate with users under 16, even with our existing industry-leading filters and with no image sharing. We believe this reduction in comms does affect both people who have age-checked as well as those who have not, because those who have age-checked do have fewer people to communicate with. As we push towards 10% of gaming, we believe our discovery algorithms should be focused primarily on driving incremental long-term platform retention over short-term monetization, especially to grow our 18-and-up user base. We're implementing this transition now, and as we continue to adjust to local customs and regulations, we do foresee some restrictions of content to both non-age-checked users relative to their age range and also as part of region-specific content guidelines.

We believe as a result of age check also and reduced communication discovery that we've weighted more towards monetization, we have seen a reduction in App Store ratings, and we believe this may be contributing to a reduction in organic signups that typically flow from app stores. We believe the strategic upside of everything we're doing is significant and the right thing to do for the long-term health of the platform. Kids accounts and select accounts offer the long-term opportunity of increasing safety and civility, which in turn drives organic engagement growth in line with our mission to connect 1 billion users with optimism and civility. We're unique among large platforms in our focus on the safety of users who are under 13, especially given the reality that a large number of young people under the age of 13 have access to phones and to these other large platforms.

These platforms typically aren't designing safety systems for those under 13. However, as a result of this, we do expect to see continued short-term bookings headwinds as a result, and this will lead to a revision in our full year guidance. Naveen will discuss more in his remarks. Now to address the short-term friction, we are taking a number of actions across several key areas. Age checking is our vision of the future, and we believe this tech will continue to scale across the industry. We expect to see continued adoption by other companies in the gaming, social networking, social media, and AI chatbot spaces. Through the end of Q1, 51% of global Roblox DAUs have age checked. As we work to set the global standard in safety, full adoption of age check will take time.

We expect our new age-based account framework to drive an increase in age check penetration rates. We're focusing on additional means to drive our percent of users that have age checked to a level that long term we hope to bring above 90%, which then also unlocks our ability to significantly improve our native communication features. Communication engagement is fundamental to our user engagement and retention. Following global rollout of age checks to access chat, we do see new opportunities to enhance communication features and boost engagement through our higher confidence user age data. Over the next few months, we're going to be rolling out several enhancements designed to increase communication adoption and improve the chat experience on Roblox.

This includes global chat, which is going to allow players across multiple servers in the same game to communicate in a single shared room, which we believe will increase in-game chat density. We're also going to be integrating party chat directly into the in-game chat window, which we believe is going to remove the need for users to leave an experience to coordinate with friends. We plan to expand party chat between trusted friends when appropriate age and necessary parental consent is granted to include voice and avatar video. As of now, we're not sharing a ship date for this. We've also planned a system for preset messages that will enable all users to easily coordinate gameplay. Collectively, these investments, paired with our incentives for age check, will be engineered to drive on-platform communication beyond our pre-check levels and deepen user connection.

We continue also to evolve our discovery system. Last year, we enhanced really the discovery of long-tail content, we improved content diversity. We're now focusing on high-quality games with deeper long-term engagement, we're currently experimenting with enhanced discovery algorithms designed to optimize for 28-day retention and beyond. Some of our creators have already taken notice, as I tweeted this week. We're implementing changes on how to really create a market that levels the playing field for high-quality long-term experiences. We continue to see an acceleration of AI tool chain use by our top creators. Nearly half of the top 1,000 creators on Roblox now leverage either Roblox Assistant, which is our own AI entry point, or MCP Model Context Protocol to compress dev timelines.

In addition to our own Roblox Assistant, our creators are using Claude Code, Cursor, Codex, and other third-party tools tightly with Roblox Studio. These technologies are being used to support creators on everything ranging from light assistance to fully vibe-coded content. We ultimately believe gaming is a much more complex space than the coding space, and really, we're driving to achieve iterative OODA loop-style programming because games are not just based on code but 3D assets, NPC AI, core gaming loops, and LiveOps, among others. We really want to get to the point where devs can have Roblox Studio working overnight on their game and come back in the morning and see those improvements. We really want to try to do a game creation, what tools like Codex, Cursor, and Claude Code are doing for coding, which is really radically accelerating speed.

We believe we're uniquely poised to innovate and solve this, given the integrated architecture we have from our cloud, to our engine, to our developer tools, to our native AI. In April, we call that the month that Roblox Studio went agentic. Creators can now engage in focused conversations with our Assistant about the design and implementation and test plan of new features. Assistant executes a plan now, launches a suite of building agents to test and really try to deliver new features with minimal creator engagement. We're also on the 3D side to complement coding, introducing new mesh and procedural model generation capabilities, which are going to allow creators to build richer worlds. We've introduced NPC, which is non-player character testing agents that can now navigate complex 3D worlds and execute gameplay actions as part of, really, game development.

The vision for NPCs, really, at Roblox goes beyond NPCs you might interact with in game or NPCs used for safety, and part of that vision is really for testing. We believe NPC testing agents can be part of a foundational model that we're building to really help creators iterate quickly on their games using NPCs in addition to humans for testing. All of this really is to enable small teams to produce super high-quality content very quickly. We do believe AI is going to fundamentally accelerate gaming, we are in a unique position to lead in this transformation. Yesterday, we shared on our blog our vision for the future of really integrated AI and gaming and the creation of photorealistic multiplayer gaming and creation that's easy for anyone to participate in. This is really our most ambitious technical innovation to date.

We call it the Roblox Reality Project, this patent-pending architecture integrates hyperscale multiplayer simulation with our current Roblox Cloud engine with photorealistic rendering and persistent world state into really a hybrid unified architecture built on our global edge cloud and infra. The goal of Roblox Reality is to really enable creators to construct interactive environments that are high fidelity and really drive this new technical frontier. The ultimate introduction of the first easy-to-use multiplayer photorealistic platform that we're uniquely poised to build. More details on the blog post if you want to read up on it. In general, on the AI side, just to wrap up, we have over 400 models running over 1.5 million inferences per second on-prem and on our cloud.

This is powering, in addition to creation and Roblox Reality, everything from discovery recommendations to communication safety, marketplace recommendations, and 3D generation. We're now investing in four in-house proprietary models. 40 generation NPC behavior, our just-shared video super upsampler initiative, and coding assistance and generation. Finally, we've announced several initiatives on our novel games initiatives. As we shared, there's a very large opportunity for us in the over 18 cohort. Over 18 represents 26% of the DAUs who have age checked. Once again, in the U.S., DAUs and hours within our 18 through 34 cohort grew over 50% year-over-year. Today, we announced an increase in the DevEx rate for age-checked 18 and up users in the U.S.

Starting on June 8th,creator earnings for in-game spend generated by age-checked 18 and up users in the U.S. will increase up to 37.8% from 26.6%. I wanna highlight what made this possible is age check. Games that to do this must meet our definition of novel games, which means they're gonna utilize our R15 Avatar framework. We're also now working with several well-known game studios to bring reimagined versions of their beloved mobile games to Roblox. More details on this in the coming months. We also have announced an internal jumpstart and incubator program to support internal existing creators with novel game creation. The initial response to this has been amazingly strong.

With our existing creators right now, with our white glove service, we have roughly 100 novel games being onboarded into the program. I recently tweeted in Q1 that we've delivered a large number of technical milestones that are all designed at enhancing realism and expanding creator capabilities in parallel with the longer-term Roblox Reality project. These are all designed to support high quality, immersive experiences that scale dynamically from 2Gb Android devices all the way up to high quality on a gaming PC. We've introduced our new R15 Plus Avatar framework with dynamic heads, and this provides a foundation for more lifelike avatars on the platforms, just like recently released Avatar Makeup.

Together with some of the deep tech like instance streaming, mesh streaming, texture streaming, server authority, and SLIM, these are updates that are removing the barriers that our creators have seen in creating more and more original experiences for older users. We're committed to the long view. Our confidence in the future of gaming on our platform has never been higher. With that, I return and turn the call over to Naveen.

Thanks, Dave. Good afternoon, everyone. I'm gonna share a few observations about Q1 and then discuss the changes to our guidance. With respect to Q1, as Dave highlighted, we saw strong top-line growth of 43% in bookings. I think that demonstrates the ability of our platform to grow at a very healthy rate without the benefit of viral hits. We also saw an improvement in content diversity. Games outside of the top 10 saw 43% growth in engagement, 41% growth in spending. As a group, those outside the top 10 games accounted for 65% of the growth in spending. We think this is a healthier level of concentration than what we've seen in the recent past. DAU did come in weaker than anticipated. We'll talk about that more in one minute.

Very importantly, I wanna point out that user metrics like engagement and monetization remained stable relative to the year ago period. Now, as Dave pointed out, we made a number of important safety-related changes to the platform, starting with the age gating of comms in January. You'll recall that on our last call, we noted that we expected some headwind to engagement and bookings as a result of the rollout of age checks. We now better understand what I call the second-order impacts of reduced comms engagement on things like word of mouth and organic content growth. Additionally, the monetization bias of our recommendation engine likely negatively impacted App Store ratings and ultimately signups. We do have additional safety features, including kids and select accounts rolling out later this year. Those have huge long-term benefits.

We've always viewed safety as a compounding moat for Roblox, and these features are an important ingredient to that. It does mean continued friction in the short term until we get the benefit of continued adoption of age checks, the planned updates to our comms features that Dave described, which we believe will improve chat vitality and chat density, and discovery enhancements that result in better content recommendations. As a result, we are lowering our guidance for full year top line growth to account for a continuation of the safety headwinds that we've experienced to date. Our revenue guidance for the full year will now be 20%-25%, and our full year guidance for bookings growth is 8%-12%. That guidance is based on the expectation that DAU will continue to contract between Q1 and Q2 and then return to sequential growth in Q3.

Consistent with our prior guidance, we do not assume any major viral hits in those numbers. The reduction in our bookings expectation will also impact margins this year. As you would expect, much of that is related to fixed cost deleveraging given the change in our bookings expectation. Roughly a quarter of the margin reduction relative to our prior guidance is related to the incremental investments we're making in AI and the 18 and over DevEx increase. Even though those investments are incremental to our prior margin expectations for this year, in future periods, we plan on them being funded by the capture of additional operating leverage. Even more importantly, we are highly enthusiastic about what they can unlock in terms of long-term growth, which of course continues to be our North Star.

With that, we'll open the line for questions.

Your first question comes from the line of Eric Sheridan with Goldman Sachs. Your line is open.

Thanks so much for taking the question. Maybe a two parter if I can. With respect to incenting the development out of the 18-plus community, I wanna know if you go a little bit deeper into what signal you were getting in terms of that type of content from developers, in terms of what it might mean for the long-term health and compounded growth longer term for the business. Second, with respect to the change on DevEx, maybe just help us better understand why that was the right number to move to in terms of higher DevEx. Thanks.

A great question. There's a big invention on Roblox a while back when we moved from a, you know, a platform without Robux and DevEx to DevEx. We saw immediately that the incentive of creating a closed loop ecosystem where Robux could be used by our users, devs could build interesting experiences, they could then cash those out, created a virtuous cycle really that's been somewhat of a machine driving Roblox ever since. We've seen massive organic behavior from that virtual economy. We've been very careful in increasing the creator DevEx rate over time, but we have slowly increased it as we did at RDC recently. The 18 and up market, now that we have age check, we can know quite accurately who's a real 18 and up player.

In addition, that market globally is roughly 80% of the global gaming market, which is somewhat astounding given our low actual penetration, although quickly growing penetration. Those users also, as we shared, monetize at 1.5x where we are today, and that's a big part of our future in addition to our existing U18 base. We know systems drive behavior. We wanna see novel games on our platform. We wanna make it very profitable for creators to make amazing content. We want them to trust our discovery systems will organically reward experiences with long-term retention. You know, this is just a continuation of Roblox being a systems company focusing on this big area we're moving towards.

Your next question comes from the line of Matthew Cost with Morgan Stanley. Your line is open.

Great. Thank you. Naveen, maybe if you could just dive one step deeper into the reduction in the guidance. I think you gave a lot of really helpful detail about the behavior of people related to age check. Is the entire guide down driven by the change in behavior versus February that you've observed because of age check, or are there other material factors that are worth calling out? That's question one. The second is just on Roblox Reality. Are there any increased cloud expenses or CapEx that you're expecting to support that going forward? Thank you.

Thanks, Matt. With respect to the guidance, or excuse me, the change in guidance, the way that I would characterize that, it is largely safety related. You know, there are a number of aspects to that as we spoke about. It's age checking. It has a follow-on impact to comms, and that affects both users that have age checks as well as those that have not. There's a number of things as Dave laid out that we're doing from a product perspective to reignite comms engagement on the platform. We do also believe that some of the dynamics that we saw around discovery being sort of more monetization biased than we would like, plays into that.

You know, content recommendations were probably not as optimal as we would like to see them. I'd say it's really the combination of those dynamics, but largely driven by what we're doing from a safety perspective. In terms of Roblox Reality, Dave, did you wanna comment on that? Yeah. First off, Roblox Reality will not be free. The type of technology we're showing here is gonna combine the Roblox hybrid engine and Roblox Cloud, which I think if you look into all of our financial statements, you can see we run at less than $0.01 per hour, roughly. Simultaneously, what we see as a future, we're building close to photoreal or photoreal experiences, especially when multiplayer is very difficult. Takes enormous production budgets.

Part of what Roblox is about is democratizing creation for everyone. We do believe this is the ultimate combination of both traditional three-D network multiplayer gaming engines like Roblox, which is somewhat unique given its cloud, with all of the future research we see in video models moving more and more towards real time. We have the opportunity to build a very Roblox-specific Video World Model that we call a super upsampler that can key both on video as well as three-D spatial information to do arguably what we believe is going to be a beautiful job of upsampling under developer control with developer prompts. I do want to highlight, we're right on the edge really in the whole AI space of running real-time photoreal video models 2K at 60 hertz, and that's why we say this is a up-and-coming project.

When we launch this will not be free. This will use cloud compute. We will have some kind of way of subscribing or paying for this. Because of that, I think we will offset the real-time inference side of it. On the training side, we may have additional things. I don't think we are fully showing them this year. Naveen may have a complement on that.

Yeah, just to put a finer point on the expense side of it. We have not changed our expectations for CapEx this year. We think that, you know, a lot of what we're doing in terms of landing GPUs in our data centers will cover what we intend to or what we're going to need this year. There is some cloud training that we will be doing. I mentioned that that is now factored into the updated margin guidance. As this technology continues to develop, you know, we will use a combination of cloud as well as our own data center capacity to execute both training, and as Dave said, inference will be something that will be funded by usage.

Your next question comes from the line of Ken Gawrelski with Wells Fargo. Your line is open.

Thank you. Two, if I may. Let me first, would you maybe, Naveen, just talk a little bit about what you've seen? I mean, I'm a little puzzled on a 90 days ago, the guidance of 22-26, and that you gave the first quarter guide, which you came near the high end. And now the guide is meaningfully cut for the full year. On the, again, I'm focused on the booking side. Could you just tell us, I mean, how much of this is, you know, impacts that you're seeing kind of already in the 2-2 period versus, you know, the expectation of, you know, of some of the changes that are rolling out in the June period?

Maybe secondly, for Dave, please, could you talk about, like, just philosophically, you know, the changes you're making in terms of what content can be discovered by younger users? You know, there's some, you know, changes that involve kind of embargoing of some content. How does it fit with your notion of, you know, democratizing, kind of publishing content and discovery? There's kind of it feels like a little bit of a tension between content safety and moderation and kind of democratizing the platform. Could you just talk about where you see the balance of those two things today?

Hey, Ken. Maybe I'll actually start on the first one and then hand it over to Dave. Look, we launched Age Check in January. As we said, we expected to see some headwind both in terms of hours and DAU. I think what we did not fully understand until we have now the benefit of 3-4 months of experience is how that impacts the platform more generally with respect to comms engagement and the knock-on impacts from that. I want to point out a couple of really important things. Number one, when we look at what has happened over the last few months, as I noted, engagement has actually remained quite strong, monetization has remained strong, and retention has remained strong.

What we have seen is challenges at the top of the funnel, i.e., new users coming in. The reality is, when we think about the rest of the year, we're not going to see the bookings impact of that right away, hence the performance in Q1. We do know that the fact that we had more signup headwind over the last few months is going to put pressure on bookings over the remainder of the year. However, when we start to get back to DAU, sequential DAU growth in Q3, given the strength of monetization and engagement, we feel confident that we will be able to drive the bookings growth that we're guiding to, which, you know, given the comps in the back half of the year, equates to something like relatively low single digits.

We're not trying to do something heroic in the back half of the year, and it is largely driven by return to DAU growth.

Hey, great question on democratizing really creation.Two metrics you can look at Roblox at over many of the past years. The 1st is total dollar value creators participate in. What's the size of DevEx every year? That's growing very rapidly. The 2nd is the growth rates of creator 1, 10, 100, and 1,000. Consistently the number goes up the total amount, and the growth rate of creator 1,000 is consistently faster than 100, 10, or 1. That's a metric to measure democratization. We believe, I believe that will continue. Relative to what we've done with kids accounts and select accounts, we believe we're striking a very good balance, and we have this ability to strike this a balance because we age check.

Other platforms that don't age check have a wide range of users, signing up at various ages. We know what age everyone is, and it more allows us to align the appropriate content with them. We are doing that with kids in select accounts. The corpus of that content is gonna be very, very, very large. It's gonna cover the significant proportion of what they play today, and it's gonna allow creators to participate in a UGC space for 16 and up to introduce innovative concepts and to allow us to be very careful with what content reaches under 16. I'm optimistic you're gonna continue to see that democratization.

Thanks, Ken.

Your next- Operator, next question.

Your next question comes from the line of Cory Carpenter with JP Morgan. Your line is open.

Hey, guys. Thanks for the question. I have two that are related. Naveen, you mentioned a few times now, expectations return to DAU growth in 3Q. You know, I understand it's a seasonally strong quarter, you're also rolling age-based accounts out in June. Maybe just talk a bit about what's giving you the confidence in the return to DAU growth that quarter. Probably on a related point, could you just elaborate a bit on the changes you're making to address some of the communications friction points you've seen and what the timeline of rolling those out is? Thank you.

Thanks, Cory. I'll hit the first part, and then I'll let Dave talk about some of the changes we're making on the product side. Look, the reason that we are speaking to DAU growth in Q3 are a few things. Number one, as you pointed out, it is a seasonally strong quarter, so we expect to continue to get some tailwind from that. Number two, we will have a number of the product changes that Dave's gonna touch on in a second rolled out by that point in time. Number three, to your sort of speculation around the impact of kids and select accounts during that period of time, we don't expect that to be as dramatic as what we did in January with respect to comms.

What I mean by that is when we started age-gating access to comms, it was a binary experience for our users. They lost complete access to comms. As we've spoken about, you know, that had a number of knock-on impacts in terms of overall sort of vitality on the platform, sentiment, App Store ratings, et cetera. What we're doing with kids and select accounts, you know, will have some impact, so it's not sort of immaterial. However, it's not as big a change because kids are gonna come in or people who have not age checked, they will still have access to 20,000 games that represents more than 97% of the engagement on the platform from those cohorts. It's not nearly as sort of drastic of a change as what we saw with age-gating comms.

That's kind of how we're thinking about the impact of all this stuff over the next couple quarters. Dave, you wanna touch on the comms roadmap?

Absolutely. Some of these things are in the pipeline and live in experiment. I believe global chat is actually live in an experimental mode with a subset of our users right now. I do wanna highlight, this is a way to give that feeling of chat density, even if a subset of people are not age checked and not on comms, because this will allow people playing the same experience to connect with people close by in a separate server. Also, with preset messages, this is a way to support what is very common in Roblox games, which is gameplay coordination, not necessarily full-on chat, that we believe can safely be used across age bands. This is in the hopper pretty soon.

The bigger initiative is really to move party chat fully natively within experience, arguably played on second device, a lot of the common functionality that friends use when playing Roblox, either text channel or voice channel side by side. We're not giving a date on this right now, but this is, I would say the third top priority for our comms roadmap.

Thanks, Cory. Operator, next question.

Your next question comes from the line of Jason Bazinet with Citi. Your line is open.

I just had a quick question on the over 18 sort of DevEx incentives you're giving. What have you learned in terms of when you roll out incentives like this and the developer community responds, and then the users respond to the developer community? How long does that gestation period take? I know it's a difficult question-

Well, we

Sort of frame. Yeah.

It's a great question. This is a board-level discussion prior to doing DevEx at all, where there was a time where Roblox was a hobby for many. As part of that hobby, there was no way to make a living on Roblox, much less create a studio that makes $10 million or $20 million or $50 million. What we have seen over time is the second we introduced DevEx and Robux, the quality of the experiences on Roblox got much greater much more quickly because creators were able to make that a full-time job, dedicate their life to that. That's why we've evolved to the point where we literally have thousands and thousands of people who make their living on Roblox. The other thing we've seen over time is we have continuously made incremental updates to the DevEx rate.

It started very low. It's climbed. We introduced it at RDC. We have a fair amount of anecdotal evidence that when creators can trust, they will make a certain amount of revenue from their experience, they will commensurately put more effort into the creation of quality experiences. It's really been part of the Roblox history. We've seen it time and time again pay off in higher quality content that creators can trust to build.

Thanks, Jason. Operator, next question.

Your next question comes from the line of Andrew Marok with Raymond James. Your line is open.

Hi. Thanks for taking my question. I was wondering if you could give a little bit more detail on the shift in discovery algorithms that you had mentioned in the prepared remarks, going from some of the shorter term monetization factors to the longer term health factors. How does that maybe evidence from a user perspective, and how does that maybe encourage that increased chat density over time? Thank you.

Yeah. I would say from a user perspective, this is something I believe our creators and ourselves, and me included, can intuitively, literally see on our homepage, which is the quality of, and the types of experiences and the ratings they may show. Our creators have noticed this. We've made great leaps in discovery in using ML to predict many factors for each user-game pair in the whole system. Now that we've developed this capability and this muscle, if you will, we have analyzed where we are and the potential for 18 and up and made the determination we really wanna drive the user growth of that 18 and up segment, even if we are slightly less weighting short-term monetization. We can see it intuitively, and I would say our creators have noticed as well.

Our creators welcome it because they want to really invest in long-term retaining high-quality properties, and it's somewhat frustrating for them when they might see, you know, a shorter term monetization type game that really isn't going to be around for a long time. I would say both intuitively as well as systemically, we believe it's the right thing to do.

Thanks, Andrew. Operator, next question.

Your next question comes from the line of Omar Dessouky with Bank of America. Your line is open.

Hi. Thanks for taking the question. I wanted to point out that I think in the third quarter of 2025, your European and U.S. daily active users were about 60 million. In the first quarter, it's 51 million. I think you've characterized in the past that the kind of the viral surge of the third quarter was a big user acquisition event and that a lot of your users look the same. I wanted to know if you would still kind of consider that as, you know, a high water mark that you can get back to, you know, if you simply get through these growing pains, you know, that you talked about today, or if in fact that, you know, the retention that you thought you had, you know, will not materialize.

Hey, Omar. It's Naveen. I'll take that. First of all, just to put into context some of what you're seeing with respect to the DAU trend, for Europe and U.S., don't forget that there's roughly, I think, 4 million DAU that came out due to the Russia block. That's an important thing just to note. That being said, with respect to call it the broader question, you know, we expect that we will return to DAU growth as we get through some of the safety friction on the platform. What we've said in the past is that the users that we acquired through viral games last year had similar retention characteristics to, you know, call it the platform at large. That, I think, continues to be true.

As I mentioned a few minutes ago, when we've looked at what has happened over the last few months, sort of the nature of this friction, retention has remained strong. The reason that DAU have come in weaker than we expected is largely top of funnel sign-ups, which we believe is related to what we've seen in terms of comms friction and how that's been reflected in organic growth through the app stores.

Thanks, Omar. Operator, we'll take one more question.

Your next question comes from the line of Ryan Peet with BMO Capital Markets. Your line is open.

Hey, this is David Lustberg on for Ryan. Thanks for taking the question. Dave, you talked about working with some well-known studios to bring their mobile games into the Roblox ecosystem. You know, on the conversation of higher DevEx for, you know, certain things like over 18 cohorts, can you talk about your expectation for how the revenue share with some of those creators might compare to the broader mix shift, revenue share on the platform? Thank you.

Hey, we do everything linear, we do everything as a system. I believe it's safe to say, looking around the world, we've never cut a custom revenue shared deal. Like, we've had lots of discussions in the past about accelerators and deaccelerators and all of that, but DevEx is consistent across everyone. The benefit of raising it for 18 plus is those studios we're working with are gonna get that as part of it. One of the most attractive things to the studios we're working with, whether they are traditionally a mobile game creator or a PC game creator, is there's something very unique about the Roblox architecture in that it is the same build, the same game, whether it's PC tablet, console, or PC.

It's dynamically scaling with a lot of the tech we mentioned, whether it's SLIM, streaming textures, streaming mesh. There is the ability to unify a single build for both of those platforms, which is very attractive to a lot of the studios we talk to. Okay. I'm getting the cue, we're gonna wrap up here. I appreciate all of your questions and feedback. I'll kick it back to Naveen to see, Naveen, if you have any closing remarks.

No, I just wanna thank everyone for joining us this afternoon, and we look forward to speaking to you next quarter.

This concludes today's Conference Call. You may now disconnect.

Good afternoon, everyone. This is Tiffany, and I will be your conference coordinator today. Welcome to Roblox Corporation's Fourth Quarter and Full Year 2025 Earnings Call. All lines are on mute. After the speakers' opening remarks, if you would like to ask a question, during that time, simply press star then the number one on your telephone keypad. Now I would turn the call over to Jamie Morris, Roblox Corporation's head of investor relations. Jamie, thank you.

Good afternoon, everyone. I'm very happy to be here for my first earnings call at Roblox Corporation. Thank you for joining us to discuss our Q4 and full year 2025 results. With me today is Roblox Corporation's Co-Founder and CEO, David Baszucki, and our Chief Financial Officer, Naveen Chopra. Before we begin, I would like to remind you that our commentary today may include forward-looking statements which are subject to risks, uncertainties, and assumptions that could cause actual results to differ materially from those described in our forward-looking statements. A description of these risks, uncertainties, and assumptions are included in our SEC filings, including our most recent reports on Form 10-Ks and Form 10-Q. You should not rely on our forward-looking statements as predictions of future events, and we disclaim any obligation to update these statements except as required by law. During this call, we will also discuss certain non-GAAP financial measures. Reconciliations between GAAP and non-GAAP metrics can be found in our shareholder letter and supplemental slides, which are available on our Investor Relations website. With that, I will turn the call over to Dave.

Thank you, and good afternoon, and thank you all for joining us today. One year ago, we shared our goal of growing year-on-year bookings at 19% to 21%. We talked about our goal of capturing 10% of the $200 billion global gaming content market on Roblox Corporation. The results we are sharing today for Q4 and the full year 2025 demonstrate the incredible progress we have made. In 2025, we significantly exceeded our guidance both on revenue, where we grew by 36%, and on bookings, where we grew by 55% year-on-year. We saw the emergence of viral hits that broke concurrency records at a platform peak in August 2025. We hit 45 million concurrents on Roblox Corporation. We saw new records for individual games on Roblox Corporation, including in September 2025, Steel of Brain Rot peaked at 25.4 million concurrent players at the same time. We saw strong engagement and bookings growth across a long tail of content driven in part by search and discovery advancements, and we made great progress on the technical end of underpinnings of our platform that drives genre expansion. We took safety a step further in just the last two months, rolling out facial age estimation across our platform, and we are unique in large platforms with over 100 million DAUs. In doing this, we completed the global rollout in January. Today, we continue to be bullish about our future. We are at about 3.4% of the global gaming content market. As you know, we are aiming for 10%, and internally, we have even more ambitious goals for the US market. Now diving into Q4, where we delivered another quarter of outperformance, Q4 revenue was $1.4 billion, up 43% year-on-year. And our Q4 bookings were at $2.2 billion, which is up 63% year-on-year. We saw strong growth across all regions, US and Canada grew 41% year-on-year, APAC grew 96% year-on-year, with a couple of key strength points. Japan at 160% year-on-year, India 110% year-on-year, and Indonesia at over 700% year-on-year. On DAUs in Q4, we saw growth at 69% year-on-year, really strong growth across all regions. And our engagement hours in Q4 of last year were at 35 billion hours, that's up over 88% year-on-year. Quarterly, monthly unique payers were nearly 37 million, which is close to a double from a year ago and up sequentially, and this was strong across the globe, US and Canada up 34% year-on-year. In Q4, DevEx was at $477 million, which was up 70% year-on-year. This increase in DevEx reflects our 8.5% increase rate in September, and for 2025, creators earned over $1.5 billion for the first time. If we take a look at our top thousand creators, they earned an average of $1.3 million, which is up over 50% compared to a year ago. Our results reinforce our conviction in our long-term vision. We believe the future of gaming is part of a bigger vision around human co-experience. Our mission is to connect a billion people every day with optimism and stability, and we remain bullish about this vision. In the shareholder letter, we outlined some areas of innovation and investment we believe will fuel growth in 2026 and beyond. First, we introduced the concept of novel game expansion, which is how we talk about expansion in the genres and footprint to our older audiences. You will note now that we are age-checking all users who participate in communication on our platform, we have been able to find a really bigger growth opportunity in the 18 demographic than previously assumed. We estimate our 18 and over cohort is growing at over 50%, and this cohort monetizes 40% higher than younger cohorts. We are optimizing our platform technically to facilitate growth of high-monetizing genres popular with older users, such as shooters, RPGs, and sports and racing. And we believe our technical opportunity on the platform is enormous. When we look at the gaming industry as a whole, in a sense, there is enormous room for advancement. Right now, typically, where we are going with our platform is a focus on vertical integration from cloud to engine to tooling, to our clients on many devices to discovery economy and safety. As opposed to what typically and often happens in the gaming industry as in a bespoke way putting together different cloud, different engine, different social communication. We have an enormous amount of high-fidelity AI training data. That we will share more with you, and you can watch on our main X as far as what we are doing with it. And we are pushing the notion for studios that the exact same game and experience should run very well and at high performance on low-end two-gigabyte Android. And at the same time, blossom into high res on a PC or console. And that includes running on every language or most languages with auto translation as well. Our stack from top to bottom is multiplayer. And we run that extremely efficiently in our own data centers. And, of course, we auto scale. And we believe for cost, it is very important to run the majority of your world on your own bare metal but be able to burst in the cloud. Finally, we will talk more about our advances in safety that are built in. A couple of highlights on critical innovations we are introducing to support genre expansion. We have now are in the middle of a full cloud rollout of native streaming of both 2D and 3D with various LODs. We are doing that automatically in our cloud. We have introduced Slim, which is our nickname for dynamically compositing very complex assets in our cloud and delivering those at various levels of detail for performance on all devices. We have announced that we are bringing native server which is very necessary and popular in competitive gaming, and we have rolled out custom matchmaking, which our creators can use to optimize either latency, age, or social connection. In the first half of this year, stay tuned. We are doing a complete release of an expansion of our Avatar system, including higher fidelity and more articulation. And finally, really, we have seen over the last few years the definition of what is a game expands. The more infra and platform technology we provide, the more we see experiences that are not typically thought of as a game. For example, dress to impress and grow a garden, and we are sharing more and more the AI tech we are building on top of our enormous data to continue this expansion with the use of AI. This week, we launched 4D generation, which allows experiences to include creation of new objects simply by users prompting and creating by AI. We shared earlier our vision on using our training data to create higher and higher quality NPCs. We are now working on photo upsampling in our cloud on both 2D and 3D for higher photorealism. And we shared really yesterday the work we are doing on our internal world model as a service and as a service that could be used both for creation by walking around and painting potential worlds, as well as something we look forward to potentially integrating with Roblox Corporation moments. In addition to this AI future, AI is really driving creation, safety, discovery, translation, in addition to these potential areas of user growth on our platform. Every day, we capture roughly 30,000 years of human interaction data on Roblox Corporation in a PII and privacy-compliant way. We are actively using this data to develop and train AI models that continue to bring our vision to life. I want to highlight that we are internally now running over 400 AI models. This includes, of course, cube 3D, which is recently expanded to do 4D or functional interactive type simulation. We have our own facial tracking client-side model that we use for avatar facial animation. Our voice safety model has been open-sourced and is open-sourced with part of the Roosk consortium. Our text filter is constantly updated, and we believe one of the best, if not the best in the world. Our text and voice translations are supporting publish once. And chat in multiple languages. And, of course, we highlighted our internal world model team and our internal NPC efforts as well. We see a future of creation in Roblox Corporation Studio, that is enhanced not just by cogen, and not just by experience gen, but ultimately agentic iteration and testing in our cloud once again powered by our 4D foundational and 3D foundational cube models. Some other AI highlights, and then I will turn it over to Naveen. In discovery, AI has been driving personalization. In Q4, AI drove a double-digit increase in the number of unique experiences that are surfaced in our recommended for you algorithm. In 2025, on average, users engage with over 24 unique experiences per month. This is up double digits from 2024. And I want to note we have done this all relatively by sharing with our creators the factors we use for discovery. Of course, critically, in safety, we have been using AI not just for our voice model, but with state-of-the-art models like Roblox Corporation Sentinel and Roblox Corporation Guard. And I want to highlight in safety the continued focus on our goal to lead the world in online gaming safety and stability. We shared a few months ago what we believe is the gold standard. We continue to innovate in this direction. Of course, no image sharing on Roblox Corporation. Of course, monitoring text for critical harms. But in addition, moving to the estimation of age of everyone on our platform, and the use in how we support chat. In Q4, we started a global rollout of age verification for access to communication in the US, Australia, New Zealand, and the Netherlands. I am pleased to report adoption has been strong with approximately 60% of DAUs age-checked in these markets. We completed our global rollout in '26, and as of January, we have achieved 45% penetration of global DAUs. We are bullish about continued adoption with Australia, New Zealand, and as a model, we are also rapidly enhancing our platform to make both age check adoption and to improve its reliability. And then kind of a fun full circle here. That as part of our age estimation release, we are really going up and down our system. We have enhanced our matchmaking to cluster users based on their age and skill level. We are moving to continuous age estimation, which will use additional signals such as play patterns, the social graph, economic activities to supplement facial age estimation. And over the coming months, we have more product launches, including always continuous refinement of our text and voice filters. We are ambitious, and we believe these types of enhancements really give us the opportunity to enable even higher level of engagements than what we saw prior to our age check rollout. From a commercial and financial standpoint, our flywheel continues to accelerate. We believe having all ages on our platform is a long-term strategic opportunity that many other platforms are not confronting as they claim 13 and up users. We are seeing the growth we saw in 2025 in combination with fixed cost discipline to reinvest in our creators and our infrastructure all really with an eye to fueling continued growth and long-term margin expansion. We are excited about the innovations we are developing and executing across all areas of our platform, which we believe will ensure our ability to continue to deliver on our long-term vision and deliver growth over a multiyear period. With that, I will turn it over to Naveen.

Thank you, Dave, and good afternoon, everybody. Dave obviously shared a lot of the highlights from Spectacular 2025 and a strong end of the year in Q4. I am going to share a few reflections on the business based on what we have observed over the last few months. And then also share some additional color on our expectations for 2026. We have more conviction than ever in the ability for Roblox Corporation to grow in excess of 20%. Our platform is healthier than ever. In fact, if you look at Q4, we saw very strong growth rate, 63% growth in bookings, without the benefit of a big new viral hit. Our age check data, as Dave mentioned, showed that we have an even larger opportunity to grow with older audiences than previously imagined. That's especially true in the United States, where the 18 and over cohort on our platform is growing at more than 50%. We have an international business that is still relatively nascent and growing at close to triple-digit rates. And the pace of innovation in AI is a tremendous accelerant and has the potential to help us grow beyond gaming as we develop even deeper connections into communication, entertainment, and commerce. In addition to the tailwinds on the top line, all the ingredients for long-term margin expansion are in place. Now that margin expansion may not be linear, as you can see with investments that we are making in 2026. But in the long run, we expect to capture operating leverage from COGS infrastructure, and our fixed costs. So as I said, our conviction in the ability to drive very healthy top-line growth and bottom-line margin expansion continues to grow. Now at the same time, we have learned that it is difficult to predict exactly where this business will land twelve months out. I mean, if you look back at 2025, when Roblox Corporation set guidance, Steel of Brain Rot, and Grow a Garden had not even launched. And that's created a situation where the company has had to provide relatively conservative guidance. I do not think that's helpful to investors, and it's certainly not helpful to the day-to-day operation of our business. So we are going to get out of that cycle. We are going to give everyone a long runway. We are providing detailed guidance for 2026. But as we get into 2027, you will see us starting to guide one quarter at a time. So let's talk about 2026. We are expecting bookings growth of 22% to 26%. Those estimates are informed by the quality of the users that we saw come to our platform in 2025. It's informed by recent content trends that we have seen in early 2026. It reflects our confidence in the adoption of our age-checking technology, and a number of things that we have planned in our roadmap related to our economy, discovery capabilities, and many other features. Now importantly, our bookings guidance does not assume we would not be able to predict it, another viral hit of the magnitude of a Grow a Garden or a Steel of Brain Rot. Now when it comes to margins, we are expecting at the high end of our bookings guidance margins to be relatively flat year over year. At the low end of bookings, we are estimating a slight year-over-year decline in margin. That's driven by the increase in the DevEx rate that we announced last year, and we will see a full-year impact of that in 2026. It incorporates investments that we have talked about related to continued growth in users and engagement and also AI workloads. And we are also planning to invest more aggressively in safety marketing to better educate our users, parents, and other constituents about everything we are doing to ensure that Roblox Corporation remains a leader in online safety. And we are funding a decent chunk of those investments through operating leverage on COGS and fixed costs. Our guidance also implies another year of strong free cash flow growth. In fact, at the midpoint of our guidance range, we are estimating 26% year-over-year growth in free cash flow. That includes a slight uptick in CapEx spend relative to last year, as we are continuing to land GPUs in our own data centers and also navigating the recent inflation in memory prices. So overall, we see 2026 as another year of strong growth on top of a spectacular 2025. We are making investments in our creators, in our infrastructure, in our safety, all of which sets us up for future shareholder value creation in the form of long-term growth and margin expansion. With that, open the line for questions.

Thank you. At this time, if you would like to ask a question, press star. Then the number 1 on your telephone keypad. To withdraw your question, simply press 1 again. Once your line is open, we ask that you present all questions upfront to our speakers. We will pause for just a moment to compile the Q and A roster. We'll take our first question from the line of Kenneth Gawrelski with Wells Fargo. Please go ahead.

Thank you very much for the opportunity to ask questions. Appreciate it. Two, if I may. First, maybe one, could you talk about do you give a little bit more color on, you know, the elements that inform your outlook for the bookings outlook for the year, I think it was it certainly has been a bit better than, you know, than feared. Could you talk about I know you are saying that you do not assume any big viral hit. But, like, how much visibility do you have kind of beyond the first quarter into content schedules and releases? And kind of what informs your conviction in that guidance? And then the second one, maybe just could you elaborate a little bit more on the you said the increased the better opportunity to target the 18 plus. And maybe within that kind of if you could please if you could please talk a little bit about, you know, the recent developments with Genie and AI gaming. Just how does that inform your view? And help hurt you know, how are you going to use AI to make the platform better for developers? Thank you.

Hey. It's Dave. I'll kick off a little on the first question, pass it over to Naveen, and then come back on the second question. You know, we have a lot of internal leading indicators. We can see that in the, you know, somewhat correlate to the health of our system. And part of that is content diversity, content distribution, content velocity, and types of content that are hitting different age ranges and genres. And we see a lot of health in that. So from just the high-level predictive view, that is one confidence-inspiring thing we would see. I'll hand it over to Naveen on more of the modeling and the makeup of our bookings forecast.

Yeah. Thanks, Dave. I mean, I'll really kind of put a finer point on what Dave said and then a little bit of what I said in my opening remarks. You know, the content dynamic that Dave mentioned, I mean, we saw both in Q4 sort of an increasing diversity of content. We noted in our shareholder letter that experiences outside of our top 10 are growing at an even faster rate than they were in Q3, and that's true both with respect to engagement and bookings. So that's something we really like to see just, you know, spreading the growth around, if you will. And we've continued to see similar trends in early 2026. And we like both the diversity of content, but also the freshness of the content. So there have been, you know, even not necessarily something as big as a Grow a Garden or Steel of Brain Rot, but there have been new titles come in that have grown in a healthy way, which, you know, gives us a lot of confidence in the power of the platform. I also mentioned the quality of the users that we saw in 2025. You know, there was some uncertainty in that period of very high growth. You know, are these sort of low-calorie users that are going to come in and disappear? But when we look at what has happened on the platform, the behavior of the new users that came to Roblox Corporation in Q3, Q4, you know, they largely look like our core users, and that's true when you think about, you know, how they engage, how they spend, how they retain. So that gives us confidence in, you know, how to think about the business over the next few quarters. You know? All that being said, there is still uncertainty trying to predict exactly where things are going to land twelve months out. That's the reason we do not think annual guidance is the right approach long term. We are using a slightly wider guidance range for 2026 than what we've used in the past, which kind of reflects some of that uncertainty. And then importantly, as I said, we are not building into our guidance an assumption of a massive viral hit the size of a Grow a Garden or a Steel of Brain Rot. We're optimistic that things like that will happen again, but we can't predict them, they're not built into our guidance.

Dave, you want to take the second question? Hey. And then just on the AI future, and I highlighted a little that we're optimistic we're going to see an expansion of the definition of really what is gaming, and AI is going to power that. I'll step back, though, to our mission, and our mission is to connect a billion people every day with optimism and civility. And I'll highlight the word connect, which means bring multiple people together to play, to learn, to work. And for the last really, since we've gone public, we've been sharing the visionary spec we've been building, which is many, many people coming together in physically simulated environments within games to play. We've started adding the notion of adding both NPCs as well as people to those environments, making those environments more and more photorealistic, and finally, making those environments one in which in real-time, people can create, modify, and change the environment. So we are staying with that stack, that spec, and we're, you know, as we showed on X yesterday, starting to use AI up and down the stack, upsampling, 3D to bring things more to life, training NPCs with the 13 billion hours of not just video data, but intrinsic 3D world data. And we highlighted yesterday our internal world model team what they've done using not just video data, but internal Roblox Corporation data to build internal world models that we think we can use both for creation and whatever. I will highlight one thing, and that's very important to the spec we're designing. We're building multiplayer platform technology. We're building stuff that brings people together. And a lot of the current work that you see out there is operating in video latent space, rather than synchronized 3D multiplayer cloud space. I would just cautiously highlight investors to understand the difference of that. You can read our recent tweet on X. That said, we continue to be optimistic about hybridizing and putting together many AI components to build the stack we're talking about.

Thank you. Your next question comes from the line of Eric Sheridan with Goldman Sachs. Please go ahead.

Thanks so much for taking the question and appreciate all the disclosure in the materials and especially the shift around the guidance philosophy. Dave, I have one for you. The journey you've been on with respect to discovery, on the platform over the last twelve months, what have been the key lessons you've learned about the opportunity that sits in front of you based on what you've learned about the evolution of discovery, and how does that align with your strategic priorities either for the platform or individual products as you look out over the next couple of years? Thanks so much.

Discovery is a really hard problem to do right. And we believe being transparent in it is very important. We're as much as possible trying to optimize discovery not for short-term gain, but for long-term gain. And that's both long-term gain in user engagement as well as long-term gain in platform health and creator health. And any efforts to optimize discovery in the short term may not be optimal for long-term enterprise value and the health of our system. So figuring out how to personalize discovery for every user in a way that connects great users with great content in the long term is what we've been focusing on. What we've seen as a result, as I mentioned, is more good content reaching more great users. An increased robustness in the diversity of our content mix, in a way that we believe is very, very healthy. And, also, future opportunities. So stay tuned with moments. We believe for many users, browsing in-game experiences will more and more be a complement to our discovery. It's a long-term journey, and we'll keep getting better at it.

Thanks so much.

Our next question comes from the line of Matthew Cost with Morgan Stanley. Please go ahead.

Great. Thanks so much for taking the questions. I have two, maybe for Naveen to start. I think the gross margins that you showed in the quarter were, I think, the second strongest that we can see going back even to 2020. I think it's the only time you did better. When we think about that improvement to gross margin, is that a function in the fourth quarter of a shift towards direct payments or any other moving pieces? And could you just give us an update on kind of the direct payment initiative? And then, a second one for Dave. If I could. I think the detail on the blog post that you've shared so far on the call about the work you're doing with AI and world models is incredibly helpful. And I want to put a finer point on the concerns that we've seen coming up in the market over the past week about the potential for, you know, disruption to your business from other, you know, advances from with AI coming from other companies out there in the space. And I wonder if you could respond to those concerns and, you know, what you see as the differentiating factor that protects Roblox Corporation. I think the commentary you made a moment ago about, you know, multiplayer versus non was really helpful, but if you could expand on that. Thank you so much.

Yeah. Hey, Matt. Thanks for the question. I'd really point to two things in relation to your question on gross margin in the quarter. One, as you hypothesized, we did get some tailwind from COGS. I think as we've spoken about in the past, we are doing a number of things in the product to try to steer the purchase of Robux to lower-cost platforms, and that honestly performed better than we anticipated in Q4. And that was very helpful from a margin perspective. The other source of margin expansion in the quarter was really bookings. Bookings came in also better than expected, which gave us powerful leverage against fixed costs. When we look forward, and I think I spoke about this in relation to 2026 margins, we do continue to expect improvement in COGS rates as we are able to shift more and more of the business to lower-cost platforms. You know, that's not going to be necessarily linear. There will be, you know, places and points in time we're able to be more or less aggressive on that. But in the long run, we do see that as a source of additional margin expansion in the business. Dave, on AI?

Yeah. I would hey. This is a great question. I would flip it and share how we think about it internally, which is an opportunity for disruption in the opposite direction. Which is an opportunity for the expansion of the Roblox Corporation vision beyond gaming into the future mix of what is entertainment and where does gaming end and where do other points begin. You know, ten years ago, a lot of people in the market used to talk about how is video going to get interactive, and there's been a lot of experiments on that that have been very difficult. But the other direction to think about is how does gaming expand and become part of entertainment. So I would say stay tuned on that. We feel what we're building, which is multiplayer technology that runs in the cloud, that more and more can load instantly, that more and more can be consumed in smaller bite-sized nuggets. More and more start to blur those two visions. World models are interesting. I would say not initially in many of the ways that I think many think, but we do think they have an opportunity for walking around and painting a world, for example, have a really interesting opportunity to think about where does video end and snapshots end and interactivity begin. And so we have developed our own models there, but the core of our technology will continue to be the very difficult problem of 3D cloud synchronization and building communication type technology.

Our next question comes from the line of Omar Dessouky with Bank of America. Please go ahead.

Hi. Thanks for taking my question. I wanted to ask more of a financial question. Specifically, how do you think about dilution stock-based compensation in 2026? With your stock price significantly down compared to last year, could you explain how having that stock-based comp flexibility is helping you make long-term strategic investments? For example, what investments besides headcount have a higher ROI that you would use that cash for? Thanks.

I'll go first, and then I'll hand it over to Naveen. You know, internally, we're always running a multiyear model on stock-based comp and dilution at a very, very wide range of stock prices. And running the business in a way we feel comfortable. So do think about these things and model many dimensions. I'll hand it over to Naveen.

Yeah. Not a ton to add to that, Omar, but, you know, number one, I would say we look at this at a pretty long-term horizon. I mean that both with respect to the share price and dilution. I mean, sure, dilution at various points in time might spike just because of what's going on with the stock price. But ultimately, we think we're going to create shareholder value and, you know, that will cause dilution to come down over time. If you look at what's happened over the last few years, that's definitely been the case. So some would pay attention to, but we're much more focused on the operating results of the business because dilution's going to get solved by that.

Thanks a lot.

Our next question comes from the line of Brian Pitz with BMO Capital Markets. Please go ahead.

Thanks for the questions. Maybe a quick update on your ramping advertising ambitions and how you're thinking about the potential growth contribution from advertising in 2026. And then any additional detail about the age verification rollout, which maybe was not as smooth as you hoped? Can you comment on specific challenges and adjustments the team has made to ensure a better transition? Thanks.

I'll go first. We sure do not think about it that way. We're very excited and proud of the way our age verification rollout has gone, and we're very optimistic that the result of it has been expanded thinking within our team on long-term how to be unique in being a platform that can have all ages on the platform, can monitor and help how communication happens on the platform. I'll say that we gave our internal teams an ambitious goal of rolling this out eventually with no friction. And I would say by doing this, we've found so many other opportunities for optimization that I'm very pleased and happy with the way the rollout's gone.

And then on advertising, you know, we expect our advertising business to show pretty healthy growth in 2026. That being said, it is still modest. It's not a major contributor to the top line as you've heard me say in the past. It is going to take some time to grow. I think the long-term opportunity is very given the scale and engagement of our platform. But it is going to take some time. And we are executing carefully with respect to building out those products, the integration of the technology in our platform, working with our creators to expand the amount of inventory, that is available and we're going to continue to be very methodical about that. To make sure we're building the business in the right way.

Our next question comes from the line of Cory Carpenter with JPMorgan. Please go ahead.

Hey. Thanks for the question. I had two. Maybe first, there's been some reports of interest in maybe building your presence in China. Anything you can comment on there in the type of opportunity that you see? And then just on the age of users, you know, framed it as the large opportunity. Given, in novel game experiences, given, you know, more younger users than previously reported. You know, the half glass empty view of that, of course, could be that younger users have been tougher to age up on the platform than you expected. So, you know, what's giving you the confidence to invest there that you can age up more with users?

I'll go first on China. We continue to be a great partner with Tencent, and we continue to see a huge opportunity in China. We've revamped the way we look at China. If we were to go live in China, we would do it in an air-gapped way. And we think our infrastructure is built and designed in a really unique way. We can abstract and deploy it in multiple places. On our, you know, a couple of things about age checking and getting detail on estimated age. The first thing is it highlights the level of cultural phenomena that Roblox Corporation has become. And so yes, age checks slightly younger than self-reported. But if anything, it highlights a success. I, you know, I look to a couple of things. First, over 50% growth year-on-year eighteen plus. Two, the platform and technical advantages we've used to get to where we are in 18 are exactly the same eighteen plus vertical integration all the way from cloud to apps to discovery to social graph and beyond, we believe, rather than saying, ultimately, the tech as well, supporting more and more realistic experiences. So I, I continue to be absolutely bullish on our eight and up opportunity.

Our next question comes from the line of Shweta Khajuria with Wolfe Research. Please go ahead.

Hi. This is Andrew from Shweta. Thanks for taking the question. Just kind of one on the age check rollout. You know, you talked a lot about the penetration that seems to be going well, but any change in behavior or engagement levels for those who have completed a check or if not yet. And then maybe when you think about the derivative impacts of paycheck, is it possible to think about how the older cohorts may be viewing this as a quality of life update, and that might be contributing to the engagement levels that you're seeing?

Yeah. I'll give one example on why excited about this, and that is the more we get into age check interacting with communication, the more we can more accurately match make different age bands together. That's one of the factors that makes me so optimistic is that age, you know, banding our matchmaking in ways that brings the average, you know, older user together as well as the average 15-year-old together. We believe can be a long-term growth aspect. So think this is going to become it's why we call it the gold standard, actually. And what we've seen after we did this is another very large gaming company announced they're going to do it. A communication platform announced. They're going to do it. We just see this as ultimately the way the world's going to work. We're proud to be one of the first big platforms to do it.

Our final question comes from the line of James Heeney with Jefferies. Please go ahead.

Yes. Great. Thanks, guys. Naveen, if we look at the Q1 bookings guide, it looks like a sequential decline greater than 20%, which I think would be one of your bigger sequential slowdowns. Is there anything you're calling out there specifically, or is it just kind of the conservatism that you called out? Anything specific and even maybe what you're seeing so far in Q1. Thanks.

Yeah. I mean, I guess I look at it pretty differently. You know, this is a quarter where we do not have at this point, a big new viral hit. And so, you know, to put up 40% to 44% top-line growth in the absence of that, I think we should all be very, very excited about what that says about the health of the platform. You know, we said last quarter, that as we started to move past this period of time with huge viral hits, that growth would slow. So I do not think anyone should be surprised by the sequential trend there. If anything, I think we should be really excited about what we're seeing early in the year. I'm going to turn it over to Dave to close that.

Hey. Thank you all for joining us on our call today, and we appreciate the really interesting and thoughtful questions. Thank you all, and we'll look forward to seeing you in a quarter.

This concludes today's conference call. Thank you for your participation. You may now disconnect.