Introduction:

It was February 16th 2022, Roblox CEO Dave Baszuski just got off a video interview with CNBC where he was grilled for Roblox’s lackluster 2021 fourth quarter results. As Baszuski left the call, he took a moment to reflect back on everything that he had accomplished with Roblox since its humble beginnings as Dynablox in 1994, a physics engine designed for learning (Appendix 1). There are currently over 20 Million Unique Experiences on Roblox, 49.5 Million Daily Active Users (DAUS), 10.8 Billion yearly hours of engagement, and 1.9 Billion in yearly Roblox revenue.

Roblox is a unique gaming company with two parts: the Roblox Studio where game developers can easily create experiences (games, social events, shopping, music concerts, schooling) and Roblox Online Gaming platform where users can socialize and meet others while engaging in these experiences.

Although Baszuski was extremely pleased with his company’s results, investors had a different outlook coming out of the Covid-19 Pandemic. There was a growing concern that Roblox’s recent success was only temporary and that once in-person learning and activities got back into full-force, DAUS and Hours Engaged would begin to decline, taking Revenue and Cash Flow down with them. (Appendix 2)

Investor uncertainty over the last quarter (November 2021-January 2022) has pushed Roblox’s share price down 28% below their IPO and down 63% below their most recent high. (Appendix 3)

Given the investor concerns, Baszuski is considering whether or not Roblox should take a more aggressive approach to monetization in the coming year.
Specifically, where should Roblox invest their resources in order to regain investor confidence, and bolster Roblox’s bottom line.
As consultants, you have been brought in to investigate Roblox’s Historical Financial Statements and to present your analysis, recommendation, and implementation to Roblox’s board of directors.