Roblox Corporation (RBLX) Q3 2021 Earnings Call Transcript

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Roblox Corporation (NYSE:RBLX)
Q3 2021 Earnings Call
Nov 09, 2021, 8:30 a.m. ET

Contents:

  • Prepared Remarks
  • Questions and Answers
  • Call Participants

Prepared Remarks:

Operator

Ladies and gentlemen, thank you for standing by, and welcome to the Roblox Q3 2021 earnings Q&A. [Operator instructions] Please be advised that today’s conference is being recorded. [Operator instructions] I’ll now hand the conference over to your speaker today, Anna Yen, head of investor relations. Thank you.

Please go ahead, ma’am.

Anna YenHead of Investor Relations

Good morning, everyone, and thank you for joining our Q&A session to discuss Roblox’s third quarter 2021 results. With me today is Roblox CEO, David Baszucki; and CFO, Mike Guthrie. Before we start, I want to remind everyone that yesterday after market close, we published a shareholder letter and earnings results on our investor relations website at ir.roblox.com. Since the letter provides a lot of details, we will make some brief opening remarks and reserve the rest of the time for your questions.

[Operator instructions] We’ll do our best to take as many questions as possible. On today’s call, we may be making forward-looking statements, including, but not limited to, statements regarding our future financial performance, business strategies, plans, and new platform features; development of new technologies and developer tools; investment in the developer community and our talent; payments to developers; our ability to bring new music, recording artists and brands to the platform; the success of events on platform; investments in international growth; the development of the metaverse; investor day; and October financial performance and operating metrics. Any statements that refer to expectations, projections or other characterizations of future events, including financial projections, future market conditions or the impact of COVID-19 on our business and the economy as a whole is a forward-looking statement based on assumptions today. Actual results may differ materially from those expressed in these forward-looking statements, and we make no obligation to update our disclosures.

For more information about factors that may cause actual results to differ materially from forward-looking statements, please refer to the press release we issued yesterday, as well as risks described in our filings with the SEC, including our quarterly report on Form 10-Q filed for the fiscal quarter ended June 30, 2021, and other filings and reports we may make with the SEC from time to time. We will also discuss certain non-GAAP financial measures. These measures should not be considered in isolation from or as a substitute for financial information prepared in accordance with GAAP. Reconciliations between GAAP and non-GAAP metrics for our reported results can be found in our press release issued yesterday, as well as in our supplemental materials, copies of which can be found on our investor relations website.

Finally, this call is being webcast and will be archived on our website shortly afterwards. With that, I’ll turn the call over to David. 

David BaszuckiChief Executive Officer

Thank you, Anna, and good morning to both our Roblox shareholders, as well as the whole Roblox community around the world. We wish you all well. We hope you’re all coming out of COVID and getting back to normal as much as possible, and we look forward to answering your questions today where we’ll talk about our Q3 results, as well as the month of October, which we’ve also shared. I do highlight that in a week from now, on November 16, we have a live streaming investor day at, I believe, 8 a.m.

Pacific Time, where we’ll be spending several hours diving into our product stack across the company. With that, we welcome your questions and look forward to speaking with you today. Thank you.

Anna YenHead of Investor Relations

Operator, we’re ready to take questions.

Questions & Answers:

Operator

[Operator instructions] Your first question will come from the line of Alexia Quadrani with J.P. Morgan. Please go ahead with your question.

David KarnovskyJ.P. Morgan — Analyst

Thank you. This is David Karnovsky on for Alexia. Following the outage, can you say what user trends look like on the platform? Did you see an immediate recovery in engagement and spend? And then maybe related to this, can you just remind us of a typical monthly cadence in Q4? How does November compare to October? And then kind of how much of a ramp do you historically see with the holiday period?

David BaszuckiChief Executive Officer

Yes, this is Dave. I’ll lead with the outage, which was an event that we’re going to publish an analysis of publicly to share what happened, as well as all the steps we’re taking, to make sure such a thing doesn’t happen again. We were quite gratified to see the support of the Roblox community as we worked through it. And we’re also quite pleased to see when we came back live essentially no loss of users and continuation of our user trends.

I’ll pass over to Mike for any future comments.

Mike GuthrieChief Financial Officer

Yes. First week of November looks really good. It was basically a recovery back to where we had been. So we didn’t see — we were fortunate that we didn’t see any lasting impact on users.

So we were obviously happy to see that. As it relates to seasonality, Q4 is generally our biggest quarter, and it’s back-end loaded because of the holidays, so no great surprise. October and November, generally pretty similar. So that’s just sort of going back many, many years and looking at the two months.

We see a bunch of pickup, as you would expect, around Thanksgiving when people are home a little bit more. So yes, generally, I would say we had a good solid 27 days of October and good trends. And when we came back up, it looked like we — users came back with us in lockstep.

David KarnovskyJ.P. Morgan — Analyst

OK. And then with the platform now majority 13 plus per DAUs, I’m wondering if you would expect the percentage of experiences that qualify as aged up to move to that level over time. Meaning are you seeing developers sort of react to this mix and build more mature content? And then how much do you think that can accelerate with tools like voice chat or the rating system you previewed at RDC?

David BaszuckiChief Executive Officer

This is Dave. We’ve been building this platform for over 16 years, and one of the keys is that it’s powered by user-created content, millions of creators who make everything on Roblox. As we’ve grown up, too, as we’ve improved the quality of our personalized search and discovery, more and more — the people on our platform are finding amazing content that is very aligned with what they’re looking for. And our creator community is very responsive to the wants and needs of the player community.

Interesting, a year ago, approximately 10% of our top 1,000 experiences had more over 13 players than under. Recently, that number has gone to 28%. So 28% of the top 1,000 experiences are now more 13 plus. So the developer community is responding, creating amazing content for all ages, for people around the world, for interests.

There are niche-y pieces of content. There are very broad spectrum pieces of content. So what we wanted to see happening is happening.

David KarnovskyJ.P. Morgan — Analyst

Thank you. 

Operator

Your next question will come from the line of Mike Ng with Goldman Sachs. Please go ahead with your question.

Mike NgGoldman Sachs — Analyst

Hey, good morning. Thanks for the question. I just have two. First, with APAC and rest of world particularly strong from an engagement perspective, I was just wondering if you could talk a little bit about any initiatives that Roblox is executing against from an international expansion perspective and whether there are any experiences that particularly resonated with international users.

And then I have a quick follow-up. Thanks.

David BaszuckiChief Executive Officer

Yes. I’m going to kick that over to Mike first because we had a great Q3 in APAC highlighted by Japan. So maybe, Mike, if you want to speak to that? And then I’ll follow up with what we do to support international growth and acceleration.

Mike GuthrieChief Financial Officer

Yes, I don’t think we could point to any specific piece of content or pieces of content that were just dramatically different in Asia Pacific. Generally, we have a decent amount of overlap around the world. We are seeing increasingly — increasing amounts of affinity for local content in certain markets. So as developers are growing in and around Asia Pacific, as in the rest of the world, they will start building — or have started building content that is relevant globally and relevant in those local markets.

And so there’s no specific spike this quarter. I think this is a much longer-term trend that we’ve seen developing as the dev base has become more global. We’ll talk a little bit about this at the investor day next week, but it’s just a good solid compounding of the trends that we’ve been seeing of local content becoming more — or more content developed around the world and some of the affinity for local content increasing.

David BaszuckiChief Executive Officer

And then one thing that is — that drives our international growth is the extent to which we can dynamically and automatically translate experiences as they are created and the extent to which developers, if need be, supplement that with hand translation. And that technology is continuously improving both the quality of the translation, as well as the percentage of the experiences that, by default, have this on. So that is a contributing factor more in strategic international growth.

Mike NgGoldman Sachs — Analyst

Great. Thank you for the thoughts. And I was just wondering if you could talk a little bit about the traction with brand experiences. You mentioned Vans World in the letter.

Are these brands participating on the platform in the same way that others do in a UGC or self-serve capacity? Or are brand experiences higher touch right now? And does that change over time? Thank you very much.

David BaszuckiChief Executive Officer

Yes. This is Dave. Long term, the vision for brands is the exact same as games or play experiences in that we imagine an ecosystem where there are thousands and thousands of these experiences. They are created in concert between brands and possibly creators and developer communities.

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But just as 16 years ago, games and play experiences were new on Roblox. This is relatively new for some of them. So there is some touch now. In our investor day next week, we’ll be sharing the parts of the road map we’re working on this year to make that as self-service as possible.

And that includes the creation, the way they deal with IP and assets, how they may, if they choose to, monetize. The high-level vision we have is just as print and just as video have been and continue to be interesting ways for brands to interact with their audience, immersive — is really immersive way for brands to interact with their audience. And as you noted with Vans World, which had over 40 million visits, people who visited Vans World were able to wear Vans, go skateboarding, check out the shop, see what new items Vans had for sale. So it’s a really immersive way for brands to connect with their fans.

Mike NgGoldman Sachs — Analyst

Great. Thank you, Dave. Thanks, Mike.

Anna YenHead of Investor Relations

We have one from the webcast. Thomas Rayner from Altamira. Can you discuss the monetization trends internationally versus Canada and U.S. year to date? You’ve invested a lot in localization.

And in back end, is monetization internationally growing faster than U.S. and Canada?

Mike GuthrieChief Financial Officer

Thanks, Thomas. I have to go back and look at the rate of change of monetization. I’d say, right now, we’re in the part of growth internationally where it’s very much driven by user growth. And over time, going back many years in our core markets, we’ve seen users — they retain on the platform, they spend a cumulative amount of time.

Some percentage of them convert and become payers. Once they become payers and are retained as payers, they tend to increase their spending levels. I think that’s happening faster now in international markets for a whole variety of reasons, primarily because you’ve just got a smarter creator base with better content. And so people are becoming payers faster and starting to increase their monetization faster.

Right now, again, we generally are looking at bookings growth as driven primarily by user engagement growth. We get the question a lot about the ratios between monetization per user. And I’ll just caution that when you have high bookings growth and high user growth, just the rate of change in the numerator and denominator can make numbers look like they’re going up or down. Generally, our trends with monetization over a very long period of time is that those payer cohorts tend to increase in monetization over a very long period of time.

So we go back to core markets like U.S. and Canada, we still have growth in our payer cohorts going all the way back to 2016, and we expect that we’re going to see the same behavior in international markets and particularly in Asia Pacific. When I look at the high, high growth markets in the quarter that we just completed, the really high growth markets were Southeast Asia; East Asia, which is mostly Japan and Korea; Western Europe, which we’ve been talking about a lot, France and Germany, Spain and others; and then Latin America. And so in some of those markets, you’ve got a very wealthy user base.

In other markets, you have slightly lower GDP per capita. So there’ll be a real mix. And I guess — I don’t know that we’ll be forecasting exactly that ratio for a while, but we’ll be looking a lot at users engagement and the result in bookings. And that’s really where we’re going to be focused.

Operator

Your next audio question will come from the line of Brandon Ross with LightShed Partners. Please go ahead with your question.

Brandon RossLightShed Partners — Analyst

Hi. Thanks for taking the questions. My first one, you highlighted the aging up and the number of experiences that are 13 plus. And I was curious if cultural events like Squid Games or — Squid Game that is, or Twenty One Pilots bring in even older users and whether those stick around.

And generally, how you thought about your aging up, do you think it’s going to be — or has it been so far just adjacent to your core demo? Or are you bringing in older users? And then I have a follow-up.

David BaszuckiChief Executive Officer

So great question. First, I want to highlight, right now, we don’t have any only 13-and-up experiences. We have 28% of the top 1,000 experiences having a majority of 13 plus, but those are still experiences that are open to all ages. We talked a lot about aging up.

We’re right in the middle of it, and we’re right in the middle of very solid growth in our 17- through 24-year-old cohort. The exciting thing about these — the older cohorts on our platform is there’s a lot of white space there. We’ve historically started with younger players. It’s been an amazing advantage to us because we’ve had to focus on being a civil and safe place.

And now we see growth in two areas. One is the existing Roblox player base is growing up with us. So that is a retention opportunity to bring them with us. But as you correctly note, we also bring other people in.

Squid Games, the concerts, both examples of events we believe most likely reach some new audience. In the case of Squid Games, looking for — and that’s singular, Squid Game, people looking for a place to experience that brand side-by-side, the awesome show, and so they came to Roblox where they could see that. So I do believe those things add to the retained people that come into our platform and stick with us and bring new older players to the platform. 

Mike GuthrieChief Financial Officer

Yes. So let me just quick add, we knew — we know that Gucci Garden had an older demo, for sure, in the month of September. It was quite a bit of an older demo. Each of these individual pieces of content, I think, contributes to an overall trend of broadening the aged demographic around the company.

So it’s a receptive market when you do something like Twenty One Pilots or Gucci Garden. But clearly, music is a good example where an artist that has an older following, it’s quite likely that they’re going to have an older following inside Roblox, and it’s going to attract some of those users. We have been tracking aged-up demos for years. And for a long time, 13 to 16 was our fastest-growing age demographic, and I think you used the word adjacent.

And that’s exactly what it was. It was adjacent to our core nine to 12 market, and it was our fastest-growing age cohort for quite a while. Today, the adjacency has continued. And right now, 17 to 24 is the fastest-growing age demographic on Roblox.

So I think it’s not any individual event or piece of content. I think it’s a combination of everything that’s going on, and then certain of these things are finding a big audience that has been contributing to, again, this broadening in age demos.

David BaszuckiChief Executive Officer

I just want to — one other thing on Squid Game. And implicit in what happened on our platform in various countries around the world where there’s a lot of attraction and attention about this, it highlights the velocity at which both the combination of our cloud tools, our development environment, and the creators on the platform are able to respond and create interesting and immersive content. And we weren’t talking months. We were talking days for functioning experiences that could go hand-in-hand with the TV series.

Brandon RossLightShed Partners — Analyst

Yeah. I want to stick with Squid Game for a second. And I know — I think you said earlier you might touch on this at the Analyst Day. But is there a way to directly link the brands in media companies to help them maximize the impact from this high velocity of UGC creation that’s going on around their business on the platform?

David BaszuckiChief Executive Officer

I think more and more — this is right. This was more an organic situation. More and more, I believe we will see intentional situation. A couple of days ago, for example, one of the top experiences on Roblox Jailbreak announced an intentional partnership with NASCAR, which is an awesome brand experience.

There’s already a great place on Roblox where people are driving cool vehicles around. And all of a sudden, we have NASCAR vehicles. So I do think, over time, we will see both organic experiences, as well as intentional experiences. Even though this one is organic, I don’t want to speak for Netflix, but I have seen quotes about their appreciation almost in a way that this media sensation in a way has manifested itself in other ways on Roblox.

Mike GuthrieChief Financial Officer

Yes, another — in intentional category, another thing we mentioned in the letter, again, with Netflix was Bakugan. So that’s another example of something that was quite intentional to stream that at full length that was sold on the platform.

Operator

Your next question will come from the line of Brian Nowak from Morgan Stanley. Please go ahead with your question.

Matt CostMorgan Stanley — Analyst

Hi, guys. It’s Matt on for Brian. I guess there have been some headlines in recent weeks about some smaller companies that are basically building ad businesses that help place ads inside of Roblox experiences. And I was wondering what your philosophical view is on those sort of avenues for brands to come to the platform and how you see them fitting into the broader branding and advertising opportunity in Roblox.

And then just secondly, on closing the loop to maybe off-line transactions, it seems like there’s a big opportunity for people to interact with brands on Roblox and then make purchases of physical goods. So if a kid is playing with Hot Wheels in a Roblox game, they then go buy actual real-life Hot Wheels cars, can you talk about your thought process and your efforts to sort of maybe start to link that brand experience to off-line dollars?

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David BaszuckiChief Executive Officer

Yes, this is Dave. I’ll speak on the advertising first, and I’m going to go more long view on this rather than the specifics. The long view is we have focused primarily to date on the engagement and the satisfaction of our users more than monetization on the platform. And we have built systems, including our virtual economy and engagement-based payouts, that has already created a very rich and vibrant developer community with large businesses, some of our developers making tens of millions of dollars a year.

Advertising is an enormous opportunity. And at the same time, our vision for advertising is immersive. It’s native. It’s around high-quality experiences.

And over time, we’ll be working on rolling out the standards around this, how this is supported globally. We do think there’s an interesting and big future and at the same time, a very high-quality branded advertising-type future. So super, super optimistic about that. On your second question, I believe, about brands, maybe, Mike, you want to take that one?

Mike GuthrieChief Financial Officer

Yeah. We’re — we see the same exact opportunity, Matt, that you’re describing and are in the very earliest stages of talking to brands about that. For now, they’re promoting their brands directly with the user base. I think it’s logical to all of us that eventually you would have a user who is not only interacting with a brand in a virtual world or even buying virtual goods, using maybe Vans, again, as an example, maybe has Vans closing on their avatars and ultimately saying they would like to own those shoes or their shorts or those T-shirts.

And so we see it as well. And we ultimately do think, in fact, it’s a big experience — a big opportunity. Obviously, for the brand, it would take all of the returns of being on Roblox up to a different level. And so, yes, it’s — I don’t think there’s any doubt in the long run that’s where we’ll end up.

David BaszuckiChief Executive Officer

And maybe a first sign of this was our partnership with Chipotle, where this wasn’t a full-on buying your Vans shoes on Roblox, but there was a physical digital connection there. I just want to reiterate our outage was in no way affiliated with the popularity of that event.

Matt CostMorgan Stanley — Analyst

Great. Thank you.

Operator

Your next question comes from the line of Drew Crum with Stifel. Please go with your question.

Drew CrumStifel Financial Corp. — Analyst

OK. Thanks. Good morning, everyone. So given the recent developments in China, can you share any updated thoughts around the company’s strategy in this market? And then separately, I understand you’re saving more explanation around the cause of the outage for a later date.

If you’re willing, can you discuss how this influences or changes where you direct resources and investment spending going forward?

David BaszuckiChief Executive Officer

Yeah. First, I’ll go to China. We take a super long view in the company, and we have a vision of a platform that connects around the world where content created anywhere is able to be experienced by people anywhere. And we keep our head down around the world in all countries, including China there.

And we’re continuing to build out the system that makes that possible. And once again, we have a wonderful partnership in China with Tencent and remain diligent there. On the outage, I — what I will share is that what we saw in the outage is really the value that we have in respecting our community and a lot of highlighting around how big Roblox is a part of people’s lives and how they use it and depend on it to be together. So I think it’s fair to say as part of our analysis and then as we share what we’ll be doing to make sure this never happens again, there may be some adjustments, I think, minor.

We have an awesome team. I have complete confidence in the team, and we have an awesome infrastructure. There may be some adjustments that we take just to follow up on that analysis.

Operator

Your next question will come from the line of Matthew Thornton with Truist Securities. Please go ahead with your question.

Matthew ThorntonTruist Securities — Analyst

Hey, good morning, David, Mike, and Anna. I guess just, first, around subscription. Is subscription accretive to engagement and retention? And given some of the app stores, the fact that they’ve lowered the take rate on subscription, thus the unit economics get better for you guys, is there opportunity to maybe drive up subscription or accelerate subscription in the mix, thus being able to return more dollars to developers? So a little bit of a win-win there. I’ll start there.

And then I’ve got one follow-up.

Mike GuthrieChief Financial Officer

Just a quick answer. Subscription is accretive to retention and to monetization. There’s no doubt about that.

David BaszuckiChief Executive Officer

And then I’ll riff on the second part. We have great partners with both Apple and Google and all of our other partners, Microsoft, that provide roots for people to be on our platform and support monetization. We, as much as possible, would like to move money to our creator community. And I think as any changes occur on any of these platforms and as those rates change, we would take that opportunity if made available to us to move more of that virtual economy through our company to the creator community.

So long term, yes, if those app store rates happen to change, we’ll move the majority of it to our creator community and provide them even greater economic benefit.

Matthew ThorntonTruist Securities — Analyst

Great. And then maybe just a quick follow-up. I guess maybe a two-part housekeeping question. Can you remind us — Mike, you talked about November recovering post outage and being off to a solid start.

Can you kind of remind us normal seasonality November and December? And then you guys did three small acquisitions in the quarter. I guess, anything you could say just kind of what kind of contribution those would have been to bookings? Thanks, guys.

Mike GuthrieChief Financial Officer

Yes. Maybe the second question first. Very exciting and strategic transactions. We’re pleased to have some great people on the team that came in with those transactions and entrepreneurs who had started really interesting businesses, and it’s great to have them at Roblox.

They contributed $0 to the bookings of the company. So it was really IP and capabilities and people, and we’re delighted with all the transactions. In terms of November, as I said earlier, November and October are pretty similar. One fewer day in November, obviously.

But — and I’d have to look at the weekend. If I was trying to forecast the number, we always do a little bit more on the weekends. And then obviously, around the Thanksgiving holiday, that’s a big bump-up for us in the month of November. You can look at last year’s data, October, November were pretty similar and December was not quite double the October, November numbers but pretty close and probably 80% higher or something like that.

So we have a big, big back end in Q4 with December, and that’s just been true forever.

Operator

Your next question will come from the line of Clark Lampen with BTIG. Please go with your question.

Clark LampenBTIG — Analyst

Hi. Good morning. I have a tech-related question first. You guys talked about infrastructure expansion to reduce latency at RDC.

I’m curious if you could help us think about, one, how much spend might accelerate over the next few years and whether something like ITS could scale as you keep growing due to AI. And second, what sort of relationship or elasticity exists between user growth and latency reductions or gross add or retention standpoint? And separately, Dave, I think nearly everything on your list of five-year goals was checked off with the exception of the President mentioning your avatar on camera and I guess a push on the toys sold item. You still got some time on both of those, but I’m curious whether you started drawing up the next version of the list and whether you might share with us what item or items are sitting at the top now.

David BaszuckiChief Executive Officer

Thank you. Great question. And that is the list that I’ve been presenting every year at our Roblox Developer Conference that started four years ago with a set of 10 predictions that, amazingly, many of them have come through, including over 1 million concurrency in the Roblox place, more creators outside the world than in. There are a couple of ones, as you know, we might not hit, including the President mentioning their Roblox avatar live, but we still have about 11 months.

So we’ll see what we can do there. Getting to infrastructure, a couple of things. We’ve architected Roblox to reduce latency even in an avatar interaction between a player in Germany and a player in Japan. And underlying that tech is a hybrid distributed physics system where some of what you’re seeing is happening local on your machine, including your avatar motion.

And then some of it’s happening in the cloud, and then we’re time-slicing it along with the player that’s remote. So at its core, we’ve really worked to reduce that latency. Now the way we’ve accelerated that is we have many, many data centers all around the world. We have one in Poland.

We have — we’re building one in India. We have one in Singapore. And whenever possible, we connect people together at their nearest data centers. These are high-performance, high-reliability data centers that we support and build at a very, very low cost.

And as you correctly note, given that we operate this infrastructure, there’s a lot of opportunities we have that we have not tapped yet to improve latency reduction. An example, we have an amazing collection of CDN vendors out there that distribute content. There could be a future where some of that content comes straight from our data centers. We have a lot of bandwidth around the world so that people who are connecting perhaps in Japan and need to hop over to Ashburn do it on our network rather than on the IP network to get a more high-speed and reliable connection.

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So underneath Roblox, there is a fairly substantial infrastructure cloud. We are close to 10 terabits of external bandwidth, which is just a sign of how solid our infrastructure is. And we have other things we’re looking at to reduce latency, as well as part of this cloud infra that we’ve built. But I appreciate the technical question. 

Operator

There are no further audio questions at this time.

Anna YenHead of Investor Relations

OK. We’re going to take some from our virtual listeners. First, the question is as Roblox grows and becomes mainstream for older audiences, how you prevent inappropriate content from the younger players?

David BaszuckiChief Executive Officer

Yes. We’re already doing this, and I see the metrics every week. They are already really good and they keep getting better and better. It’s really the top priority on the platform.

I feel we’re in a really good position in that we’re starting from a difficult place, which is create a civil society for people of all ages. And then as we bring more and more older players onto the platform, we’re carefully adding some amounts of freedom in certain situations while always respecting our core foundation of safety and stability. So it’s a top priority. We’re already doing it.

We already have a lot of older people on the platform. Over half of our people are over 13 plus. And so this is something we’re doing and we’ll continue to do better and better as we go.

Anna YenHead of Investor Relations

Thanks. The next question is from Eric Fong from Hitchwood. How do you view the offering of play to earn or play to own, which is popping up in blockchain-based games like Axie Infinity? Is this something you would consider as adoption over time?

David BaszuckiChief Executive Officer

Yes. We’re focused on social connection and engagement at Roblox. We’re focused on supporting people doing things together, whether it’s playing or learning or working, or experiencing entertainment. And our focus is on supporting that naturally and virally.

People want to come to our platform just to be with their friends. Speaking of game mechanics, we right now do not allow any experiences on Roblox to ultimately pay back Robux to the players. So we don’t have any plans to do that.

Anna YenHead of Investor Relations

The next question from Thomas Sawyer from Akana Capital. David, could you share your vision on retaining developers and creators? How are you looking at the developer and creator compensation in the future? And how is the general developer and creator feedback on the current status themes regarding how much they make out of experience and items?

David BaszuckiChief Executive Officer

Yes. So when we think about this creator community, we’ve evolved over the last 10-plus years from a thriving hobby community to the introduction of our virtual economy, to individuals starting to make a living on the platform, to larger and larger studios making tens of millions of dollars a year, to now in the news a fair amount of VC funding of Roblox Studios to grow and accelerate. So that progression is an indication of the health of the community. We focus primarily on growing user engagement and the quality of that experience to grow the platform.

As our platform has grown year by year, whether it’s developer No. 1, developer No. 10, developer 100, or developer 1,000, we’ve seen constant increases in their participation in the economy. And we’re hopeful and we expect that to continue going forward.

So the primary means of retention for developers on our platform is a thriving, growing ecosystem, larger opportunities for developers, existing developers being more and more economically successful, and more opportunities for new developers. So I think it’s fair to say our retention is based on the long view, quality, size of opportunity, opportunity for dev rather than specific retention mechanisms. And that long view also goes to the quality of our toolset. It goes to the search and discovery built in the platform.

It’s built into the 200 million-plus people already on the platform and ability to gain new audience. 

Mike GuthrieChief Financial Officer

Yes. And I mean I just would add, we’re — we’ve been so vocal about moving more and more of the economics of the developers. As we get efficiencies around the company and around the platform in any area of cost, we try to move that out to the developer. And the synergy between the growth in the platform and the payouts to developers have been fantastic.

So the quality of what the developers are able to produce has yielded such great economics. A few years ago, in the third quarter of 2019, the entire developer community earned $26 million. In 3Q of ’20, it was $85 million, and in 3Q of this year, it’s $130 million. So that’s five times in two years.

And so we’re thrilled with that kind of growth, and we’re just going to continue to put our heads down and work on ways, live the community to grow that number. And if you followed us from the time we did our listing — actually, if you followed us when we were a private company, we’ve talked intestinally about pushing more and more of the economics out to the community, and we will just continue to make progress against that every quarter. 

Anna YenHead of Investor Relations

Francisco Olivera from Arevilo Capital is asking, is there any particular acquisition strategy you’re targeting?

David BaszuckiChief Executive Officer

There is. And it’s a strategy that really goes to the basics and goes again to our long view vision, which is finding amazing groups of people and amazing technologies that we can generally integrate into our Roblox platform. We’re in an enviable position, I believe, where there’s a lot of growth available to our company with our — the current growth vectors we’ve shared with everyone, which is around the world, all ages and new interesting ways that people will interact on Roblox, learning, working, consuming entertainment. So that puts us in a position where everything we do focus is on the core platform.

So given the range of technologies on the platform, you can imagine the various areas we’re looking for amazing people and great technology complement.

Anna YenHead of Investor Relations

OK. I think we have maybe time for two more. One is from Peter Le Rumen from Sakura. Can you comment on the road map for education experiences? How is Imbellus being integrated into Roblox?

David BaszuckiChief Executive Officer

Yes. We’re going to share our educational road map at our investor day in a week, and Rebecca will be diving into that. We’re excited in that we’re going to be announcing some partnerships through our Roblox Community Fund where Roblox is being used not just to learn computer science but also to learn STEM, to learn creative, constructive ways of learning. And you’ll see some partnerships with some very notable educational institutes that we’ll be talking about.

On Imbellus, it’s an amazing group of people. And Imbellus technology was around helping us find especially creative and problem-solving type of people to join our company. And we’re using it right now live in production as we start to bring amazing people to Roblox.

Anna YenHead of Investor Relations

Then the last question comes from Dan Tseng from Engle Capital. Can you provide any learnings from your spatial voice test and what are key milestone that investors should look for as we move toward voice communication over time?

David BaszuckiChief Executive Officer

Yes. The learnings started well over a year ago when we — I guess, almost a year ago when we did a holiday party on Roblox. And in the midst of COVID, I was able to hang out with a bunch of the people and — at the bar in our holiday party. And it was a great connection.

I had missed it so much. We can see it now in the adoption of spatial voice among the experiences on Roblox as we carefully roll that out and open up the availability to the various customer base. We’ll talk more about this as well at our investor day, but we think this is a huge part of Roblox’ future, which is allowing people to come together in a natural way, especially in groups, especially at our Roblox company meeting, have impromptu conversations like they would in the real world and ultimately work, play and learn together. So more to come at investor day on this.

Anna YenHead of Investor Relations

That’s all the time we have for today.

David BaszuckiChief Executive Officer

Yes. Just once again, thank you all to our shareholders and to our Roblox community. We appreciate your support, and we look forward to seeing you in a week for our investor day. Thank you.

Anna YenHead of Investor Relations

That’s it, operator. Thanks.

Operator

[Operator signoff]

Duration: 44 minutes

Call participants:

Anna YenHead of Investor Relations

David BaszuckiChief Executive Officer

David KarnovskyJ.P. Morgan — Analyst

Mike GuthrieChief Financial Officer

Mike NgGoldman Sachs — Analyst

Brandon RossLightShed Partners — Analyst

Matt CostMorgan Stanley — Analyst

Drew CrumStifel Financial Corp. — Analyst

Matthew ThorntonTruist Securities — Analyst

Clark LampenBTIG — Analyst

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