Roblox Corporation (RBLX) Earnings Call Transcript & Summary

Thank you, everyone, for joining today's fireside chat with Roblox's CFO, Mike Guthrie, with whom we going to discuss Roblox's growth strategy along with trends in interactive entertainment. My name is Mike Ng. I cover Roblox along with the interactive entertainment and Video publishers here at Goldman Sachs, and I'll be moderating our session. We have 40 minutes today, inclusive of audience Q&A. If you'd like to ask a question, you can submit your question through the webcast or you can e-mail me at [email protected], that's [email protected]. So first, Mike, I really want to thank you for all the time today, and I hope you're doing well. And I think I speak for everybody dialed in when I say we appreciate you making yourself available.

To start things off, would you mind providing the 3- to 5-year vision for Roblox, and talk about some of the key milestones that you expect to achieve over that time frame?

Yes. Thanks, Mike. Well, thanks for having us. And thanks to everyone for joining today. And as we probably all are at this point, we wish we were doing this either in person or I guess I wish we were doing it in Roblox, but I certainly wish we were doing it in person. 3 to 5 years from now, we -- Roblox has had a very interesting scaling up over the last 4 or 5 years, and it's really been driven by a constant investment in capabilities and software and infrastructure that we've turned over to an ever-increasing number of developers who build this amazing and incredible and engaging content. And that content flywheel has really driven the business over the last 4 or 5 years. And not that -- I hate to disappoint, but I do think that, that flywheel is far from over. And so I think generally, we're going to see a lot of the same. And how it will be manifested and is as follows, and I'll talk about what will be slightly different. One is we will keep growing around the world. So we've done a really good job in the last few years of expanding the business geographically. For a very long period of time, we were really concentrated in parts of the world really where people spoke English. So the U.S. and Canada, U.K., Scandinavia, where there's a high percentage of English speakers and Australia and New Zealand have been in the core market for quite a long time. And then we've also had a lot of growth in South America and Southeast Asia. Over the last couple of years, 3 years maybe, Western Europe and East Asia have become real growth drivers of the business. So our business in Germany and France and Italy, Spain, Japan, Korea have all really started to grow. I think generally, that's been driven by a couple of things: First, we did start to localize content and now our platform allows developers. When they publish, not only are they publishing to iOS, Android, desktop, et cetera, they're also able to translate into about 12 or 13 languages. So that's helpful. In addition, though, what we found is, in addition to localized content, develop users around the world like local content as well. So in Korea, as an example, a really high percentage of the top 10 experiences in Korea come from Korean developers. So they certainly like big global content, but they really, really -- there's an affinity for local content. And that trend is happening around the world and our DevRel team is making sure that we are growing developers and content around the world, and that tends to help us expand. So international growth, you're going to continue to see that happening. We like to say, if you look at the user bases in the core markets that I talked about, we have very good penetration of 9- to 12-year olds. That was the -- where this business was built. Over time, we both age down into under 9 and aged up into the over 13. And so in the core markets, generally, what you're going to see on users is it's going to be an aged up user. And in the international markets, it will be getting all of those markets or all those age demos up to where they are in the U.S., Canada, et cetera. So growing internationally, and we just talked about aging up. So aging up is the other really big one. And we're -- every quarter, we kind of give a little update on where we are in terms of hours of engagement and actually number of DAUs and how many are under the age of 13 and how many are over the age of 13. And if you look at that data over a fairly long period of time, you see a nice slow and steady increase in older users. And so we will continue to have -- we believe strongly, we'll continue to have that trend, and it will be driven a lot by our community of developers. We are seeing better and better content being produced by the dev community that -- some of that is fueled by their learnings and they're growing their businesses and they're hiring more people just like we are. And some of that is enabled by the fact that the tools and the infrastructure are just so much better than the content that they can build is better. But we've also done a few things that we think are compelling and interesting that have helped us to get older. Certainly, one of them is search and discovery. We had a thesis that -- we knew we had older users, and we knew we had aged up content, were those necessarily meeting each other. And so over the last year or so, we've worked really hard to improve the search algorithms such that older users were finding older content. We define aged up content as being an experience where half of the users are over the age of -- half or more are over the age of 13. That was about 10% to 12% of our top 1,000 experiences about a year ago. That number is now just under 30% -- 26%, 27% in that range. So that indicates to us that that's a proactive step that we've taken to push the aging up experience along and support our developers an aging of the platform. So those things are going to happen. In terms of functionality on the platform, I think really one of the bigger things that we're going to see is the emergence of voice on Roblox. So today, if you're a user and you spend time on Roblox, you communicate through a very filtered text chat. And while that's not a dynamic communications experience, it's a safe one, and so we've used it for quite a while. Many users, the experiences, play with your friends and talk on your iPhone or use another third-party communication app. We'd like to -- we're going to enable that on our platform and voice is going to be a really big part of communication and just making the experiences more life-like and more interesting and that will be manifested in a lot of areas. I think it will really have a lot of value when we start talking about music. Having better audio, just obviously makes the musical experience better. And having spatial audio means that the noise is in the crowd and the noises of your friends, and it just feels much more realistic and life-like. So I think that will be a big improvement and change in the platform. If I look out 3 to 5 years, two other things, I think that will be different and much bigger will be the emergence of brands. And -- well there was one other thing I was going to talk about the emergence of brands, and we'll talk about -- and education on the platform. So brands -- we're in an interesting position right now with brands. We've seen some really interesting brands who want to work with Roblox and build content on the platform. In the last few weeks and months, we've had everything from Gucci to Vans and even something like in the heights and Stranger Things, which are obviously traditional media promoting content on the platform. But in all of those cases, one way to look at our platform is that since we're used -- one way is user-generated content. The other way to look at it is, all of our creators are self-serve in a sense. They come onto the platform, they use our tools. They get smart. They use the information that we make available to them and they build great content, and it's in a self-serve way. And so our brands, whether it's a musician or somebody like literally a consumer brand, we would like to enable much more creation on the platform. And that will allow developers or brands to do the things that they find most engaging and interesting for their brands and for the audience that they're trying to reach. Gucci was an interesting example for us for a number of reasons. One is, it was an interesting brand to be on Roblox. I think probably there was a little bit of surprise. Some people would have said, maybe that wasn't the first brand they would have thought of on Roblox. And it turns out, we certainly had something like 60% to 65% of the traffic on the Gucci site was users over the age of, I think, 16 or 17. So it was even more aged up audience than we're used to. But what Gucci was also able to do was really act like a developer on the platform. They technically worked with some of our community to build the experience. It was beautifully done. They embedded a lot of great imagery that look like ads. They also built a fantastic store. And so they sold a lot of virtual items and made money just like a developer would make on Roblox. So users purchased Roblox, they bought virtual items. And we went through sort of very similar sharing of economics with Gucci as we would with a core developer. And that gave us an indication that brands found that valuable and interesting. And we -- I'd say the overall scale of those items was really pretty interesting. And then along the way, we also saw because we enabled trading on our platform, we saw really aggressive aftermarket of trading of these virtual items. So Gucci had both constantly available items and more limited items and some of those limited items traded really aggressively and the values moved up very quickly. So we learned an awful lot. But one of the things we really took away from that is the more we enable brands to be self-serve, the more brands we will have, that will track more users, there's more engagement. And Ultimately, we believe the users that purchased in Gucci, those are incremental. We believe many of those were incremental robots. They were users buying items that they wouldn't have otherwise purchase and the breadth of -- our ability to create a breadth of the brands that were on Roblox over the next 3 to 5 years, I think we'll be significant and quite a bit different than what you see today. And some of those brands will build permanent locations on Roblox that will just always be there, and they'll always be communicating with our user base. Music, I think will look a lot like -- we'll feel very similar to brands. So we'll see more launches in virtual concerts. But again, it will be this notion of -- I think really of them thinking of the artist as a brand. And then education is one that we've talked a lot about, and we will -- we'll have some more things to talk about in the next few weeks and months. But we think it's really logical that great educational content will be on Roblox. The question is how do you get from point A to point B? We would all -- if we were going to -- Dave, like I say, we're going to study Ancient Rome wouldn't it be great to go to Ancient Rome and just walk around rather than read about it or if you're going to dissect the frog in biology class, maybe we'll do it right here in Roblox, and we can look at the lungs in the heart and do everything here on the platform. It's logical to us that education is going to hold a productive part of Roblox. The question is, how do you get the content there and how do you build that? So we're going to make some announcements over the next few weeks and months that we think are exciting. I think it's a long -- it's definitely a long ball that we're playing in education, but it's just logical to me that you have great educational content on Roblox in the time window that you're -- that you've phrased in the question. So anyway, that's a quick answer.

That was a really great overview and there's a lot in there from aging up and international expansion, the emergence brands, education, music. And I do want to explore those topics in a little bit more detail. Maybe starting out with aging up. I think that Roblox players tend to skew a little bit younger with approximately half of the user base under the age of 13. That said, as you mentioned, the over 13 cohort is certainly growing faster than the under 13. And the mix has certainly been becoming more diversified over time. And you've talked about some of the mechanisms that Roblox is using to facilitate this aging up. Could you talk a little bit more about those levers? And could you also talk a little bit more about the strategic advantages behind aging up the user base? Is this something that helps to improve spend per payer? Does it allow you to penetrate a larger user base? How do you and the rest of the team think about it?

Yes. I saw people that -- about 4 years ago, when I was just starting to talk to David about joining the company, the first time I went on Roblox, it looked pretty basic and pretty simple. And things looked a lot like LEGOs and the experiences were fairly simple, and there weren't that many people on any individual experience. And what I noticed that got me interested was just how many plays, cumulative plays each of these experiences it had. So that was a compelling and interesting fact to me. But over time, what has been really impressive, is to watch a company that -- where 80% of the people are engineers, continue to invest in making this platform better and better and better every day. And it's just like -- we all learned about compounding. Roblox is a case study in compounding and sustainable growth. We make those tools better every day. The developers get better every day. They go down a learning curve. We continue to put out better and better technology and infrastructure. We continue to innovate in our software and in our infrastructure and the content just keeps getting better. And when it gets better, the types of people that are building content, they tend to be older. So the modal developer on Roblox is somewhere between -- right around 20, 21, 22. So they're now able to build really interesting content. The Avatar is look drastically different and that's an area that you're going to see significant investment from us over the next few years. So that what UGC-Avatar can look like is increasingly better and more interesting. So that the whole investment in identity, which is so important to our user base, we can really enable that to get better and better and better. But over time, the experiences have just gotten so much more significantly complicated. The quality of them, well not yet AAA quality, it has gotten much, much better. The number of people that can be in an individual experience at the same time has gone up. The joint times have come down. It's just on and on and on. We just make these improvements every single year. And as a result, the content gets better and we just get slightly more edged up in the content over time. Some of that is users that just stay with us. They find things that continue to compel them as they go from 12 to 13 to 15 to 19 and others that just join us at that time. And I think also as we start thinking about things like brands and entertainment and music, those things are clear signals to users that the content is older and aged up. Voice is another one that just continues -- again, improves the experience dramatically and that pushes us towards an older user base. So I think it's an inexorable move and it's something that we've continued to take very seriously and invest in, and we'll keep making progress along that line and very, very confident that we'll just continue to age up the base.

Yes. And I've been certainly impressed by how the quality of the experiences have changed over time. it's not just role-playing games, you see tower defense games and intruders and action venture game. So I've definitely seen it first hand. You did talk about some of the investments that you guys have been making in terms of things like Avatar improvements and spatial audio. Just wondering if you could talk a little bit more about the investments that you're making into the product and engineering team to execute on your product road map? And could you share any updates about how you're executing against that road map today? And are there anything in particular, that you could share with us as it relates to new features or product improvements?

Well, a shameless plug for our Investor Day on November 16. So I'll make that today. We're hoping to do it in person in Palo Alto. If you cannot make it, we will certainly make sure that you can access it remotely, but we really hope that we can do it in person. And that will give everybody a sense of the capabilities of the team and the top priorities for investment as we head into 2022 and beyond. So again, shameless plug for our Investor Day that's coming up. The hard part every year is prioritizing those investments that we think are going to have a long-term huge impact on the business. That's really -- there are things like trust and safety, which we know we have to do every year, and we want to get better and better. And then there are the discretionary things that we can focus on and improve that we believe will have really big benefits to the dev community and the user community and make life on Roblox just much, much better and more interesting and compelling. And that tends to be how we focus on them. It's more about something that's incredibly engaging rather than something that we think is absolutely monetizing. While we have an economy team, generally, the focus is on making better content or enabling better content and better engagement. Normally, that's the focus. That's -- so the hard part is prioritizing that every year as we are getting ready to go into planning and actually getting ready for our conference in the not-too-distant future. We're having a heck of a time narrowing it down to the top 10 things that we're focusing on and what are we going to communicate to people on November 15 and how do we talk through that and what are the impacts. So it's -- the list is very long. That's the hard part. The easy part is an unrelenting view towards innovation. And -- as a result, when we go through headcount numbers and as you and I were talking before, we started there now more people who joined Roblox since the quarantine started than before. So when we come back to the office, hopefully in the next few weeks or a couple of months, well more than half of the employees it will be their first day in our offices. So we're all going to wear big name tags. So we all know who we all are. So we continue to hire just world-class engineers. And that investment -- we're pretty unrelenting that 80% of the people that we hire every year are going to be in engineering and product development. We just -- we're -- we keep that balance because otherwise, are we really innovating? And are we really spending our capital in a way that will drive the most innovation for the platform and ultimately make the developers great and that they make the experience fantastic? Because, again, we don't build the content here. We build the platform. So the easy part of it is just keeping focused on recruiting and that ratio. Of course, recruiting great people and bringing them on and onboarding them and making them efficient and creating an environment where they can do great work, that's also incredibly difficult. But the laser focus on engineers as a percentage of the total is something that you well understand when you're in the G&A organization. We make it work and we support this big innovation machine. And we'll just keep doing that. There's no belief in our minds that there's leverage against that in the near term. Meaning, we just need -- we're only at 1,500 -- roughly 1,500 employees. We have to be in the many thousands to deliver on the ambitions of this platform. So that's the easier part. The other easier part around the model and around investments is investing in the dev community. I mean that's -- the thing that we've worked really hard on over the last few years is to grow the amount of dollars in the ecosystem and to make sure that, that growth rate is really high. In fact, it grows even faster than our bookings are growing. And so we've talked publicly about this. We intend to distribute about $0.5 billion to the dev community this year. That's a big number, stand-alone. But when you put it in the context of about 3 years ago, it was like $100 million, the rate of growth of that pool of capital is really significant and substantial. And that's what's allowed us to attract more and more and more great developers to build the content. We've -- getting to that $500 million, we've grown from just paying based on micro transactions to also paying developers out based on engagement. And that's been intelligent in our minds because it's helped -- even if you're one of the top monetizing developers, you also have a lot of engagement. So you're going to get paid again based on the engagement. And -- but if you're not a developer, who figured out how to monetize yet, and you're maybe in the longer tail of the content, a little bit of a signal that what you're working on is having an impact is really what engagement-based payouts are all about. And we clearly believe that's been encouraging. It's flattened the curve a little bit. It's been encouraging. It's helped us get more content, and we've seen overall concentration of dollars in time has actually reduced over the last year or so. So that's really healthy for the platform as well. So those 2 things, again, easy to make the focus and a little more complicated how we implement, but it really is about continuing to hire great people and then putting as much money in the pocket of the developers as we can judiciously over the next 4 or 5 years.

Great. That's a really fantastic segue. I want to talk more about that diversification of experiences that you mentioned as well as the developer relationships. In the last year, Roblox has made a tremendous amount of progress in diversifying the types of games on the platform. I think 37% of Roblox came from the top 10 experiences in the most recent quarter versus 58% a year ago. So could you talk a little bit about what's driving this diversification and experiences? Is it just more developers coming on to the platform? Is it the flywheel that you guys have talked about in the past. Could you just dive into that a little bit more?

Yes. I do think it's content driven. And when the -- I'm going to start from the basics, most of the developers start off as users. They engage with the platform. They like the platform. They want to experiment. They want to try to build something. They have a creative bug and they want to fulfill that and Roblox is a great place to do that. And some small percentage of those that trialed ultimately are actually really good at it and can build interesting and compelling content. And so that has just spawned again, a very natural growth year after year after year in the number of developers all the way through the pipeline. We have -- when we look at our -- if you were to sit with our DevRel team, at the highest level of developer is people that are opening up studio, they're trying to build something and maybe they're building something that gets a little bit of engagement, not their engagement, somebody else on the platform plays. And then we look at things almost in order of magnitude growth in terms of engagement and dollars to sort of filter down how many developers we have at each level. But that focus and encouragement is what allows us to just build -- allows us to have more developers that are building better content and the fact that, that content is good and interesting and compelling, even with only about 5.5% of the users actually spending money in the platform in a given month, we've been able to drive really interesting and compelling economics such that we've been able to continue to grow the top line of the business and again, invest in more engineers and invest in more developers. So I think it really is -- we have a core value in the company called Respect the Community. And if you come to work every day thinking about the community, it helps you think about those things we need to invest in, so that these people can build their businesses on top of our platform. Many of them -- and many of these top developers, this is what they do. They're Roblox developers, they're building a company, they're very passionate about the platform. When we were in the office, when I first joined the company, we would have people come in for summer projects, we call them the incubators. And people will come in and we work on their experiences and then they would present to the whole company. At the time, the whole company was 300 people or something. But the sheer passion of these developers who have found this incredible social and creative outlet on Roblox was really tangible. And that's just grown year after year as we've compounded and brought more developers on the platform. So it's really nice to come in and build great stuff for them so that they can then turn around and build incredible content. And as they get more and more creative and our tools get better, our trust and safety gets better, we're able to accommodate users all around the world and of all ages. I think in the all ages one is -- that's the challenge of building a brand. Our ambition is a brand that spans 6 to 60. That's hard. We look at brands that we really respect that have done that like Disney, maybe Nike, Apple, there's not many. It's the rare company that's able to build a brand that spans those age demographics. And the reason that we can do that is because of the greater community. And the harder part today is getting older from that younger base, but we clearly are making progress. And it's all about what the debts are delivering. So it's really -- it's exciting to see and incredibly impressive.

And I would like to follow up on that, if I could. You mentioned that most developers start out as users. Is there a desire to attract a midsized studio to go and try to create an experience that competes with a AAA game? Or is that not the goal at all, right? And is the goal to create more experiences of niche and quirky content that is just additive of the overall pie? Said differently, if Roblox does really well, do they take share from a traditional video game publisher? Or is it additive to the ecosystem?

Well, given the number of users and the amount of money spent on certain experiences, I they might be quirky, but they're not niche. Some of these are really getting to be big. So these more organic homegrown devs that actually are becoming their own -- they are their own studios. They're hiring people and they're growing. That is what happened organically. And betting against the capabilities of the devs on our platform and how that grows and improves over time is losing that. I'm telling you they are impressive and they get better and better. And over time, we've just seen some absolutely incredible groups that are formed that are building incredible content. Having said all that, Roblox is an open platform. And we're definitely starting to see these, as you phrase them, professional developers, independent studios that maybe have 100 to 200 developers. They see the platform. They hear that the platform, yielded $500 million, will yield $500 million of revenue potential this year. It's starting to get interesting to them. And so some of them are clearly starting to really investigate and take the platform seriously. And they have built experiences that they've launched on the platform. So I think that's happening really organically. I would not bet on that. I think when we say it differently, you are going to see homegrown Roblox, devs and content has a big percentage of what's on the platform for a very, very, very long time. They are incredibly good at what they do, and there's a lot of them. Yet, we also would, of course, welcome developers who are more professional and have had success in other areas, building compelling content coming to the Roblox platform.

I wanted to talk a little bit more about the developer exchange fees. You talked a little bit about engagement-based payouts. My understanding is that those are paid based on the number of roadblocks premium subscriber engagement that happens on the platform. Could you talk a little bit more about the philosophy around developer exchange fees, how are you attracting and retaining quality developers on the platform? And as you raise those exchange fees, does it happen through engagement-based payouts or through changing the exchange rate?

Yes. Great question. We've always had a model in the company that we're going to have a fairly simple and focused areas of investment. And as those investments, we get more effective and efficient, our goal is to push more and more of the economics to the dev community, while always generating a profit. So it was -- cash in our business. This has never been a business where we philosophically, Dave and the founders, they didn't build something that -- the first billion is just going to be burned. But once it gets there, it's going to be great. It's never been that way. It's always been grown in a very sustainable way. And the idea was the investments that we'll make, the cost structure is fairly simple. We have payment processing fees that are just assumed as part of the business. And that is, especially in a mobile world, it's mostly Apple and Google. We can talk about that, those fees, but also credit card processing and prepaid cards and whatever. But that's just -- that's a given in the market, in the business. And if we can get efficiency there, we'll turn that over to the developers as well. But that's one thing that we invest in. The second thing we invest in, of course, is great engineers to build the platform. The third thing is the developers, and the fourth big thing is the infrastructure because we run our own infrastructure, about 30,000 servers around the world. We think that's the right way to go. We have to pay for that. And like I said, and we want to make money, and we're unapologetic about being economically sustainable. We just -- that's the way it works. And so developers on the Roblox platform get an awful lot, they give free software and free servers and free customer support and free content moderation, and you build your game once and you publish it everywhere. You translate into multiple languages. We do all the billings, we do all the collections. We do -- I mean, we do a lot for the developers. And so ultimately, as we've grown the business and become more efficient in some of these other areas, we're able to just grow that pie that the developers participate in. So that's an idea of $100 million that's gone to $500 million in a reasonably short amount of time. And if you -- I won't put out a number over the next few years, but it's going to be a lot higher than $500 million, right? Our ambitions are to keep growing that pool of capital to attract the developers, the developers can build their own great businesses on the platform. Because of the inherently good unit economics of the business, we've been in a situation where we've generated a lot of cash over time and find ourselves in a position now that we've gotten to scale. We're in very good scale. Lots of users, 4 billion hours of engagement for the first time last month, which is really exciting for us. Now we're seeing efficiencies. And even though our margins have been very high recently, we have this great opportunity to build a massively large platform. We're nowhere close to the number of -- we want to get to 1 billion users. And so that's the priority. And so -- we believe the best way to get there is to focus all of our resources on the devs and on great engineers. And so we're going to -- we talk about it all the time, but you're going to see us pushing more and more and more of the economics to those developers as we hire great folks. And even our core operating margins -- we have really good operating margins, really good cash flow margins. But now is not exactly the time to leverage our margins and our free cash flow. We have such an opportunity to still generate cash, but also just to keep investing to be the leaders in this emerging category. That's the approach we're clearly going to take. The form of it, to your question, -- we really like engagement base. So one way we look at what are we paying the -- what's going out the door to the developers. One is driving micro transactions, of course, and 2 is driving engagement, which -- look, engagement today is micro transactions down the road. And so we want to create broad sets of incentives for different things. And right now, we're really focused on ways to -- and we have some announcements coming, but really ways to take the engagement base piece of that and really supercharge out a little bit to get again, even more of the economics out to the devs. I do believe that -- I'm not going to go into too much detail, but I do believe that with some of the announcements you've seen recently that we will have the ability to maybe control our cost of goods a little bit more than we have in the past. But we'll be really judicious and careful about that. And so that might help us because those dollars are moving straight to the dev community. And so that will be part of what helps us get higher and higher numbers out to the developers. So the little continued cost efficiencies anywhere, including payment processing, and then more engagement base and continued ongoing micro transactions. We think ultimately, it forms a very nice basis. And if we look at how those costs have moved over time as a percentage of our bookings, other things are going to come down, like even our hiring -- we will see great leverage and super great people that we're hiring. Infrastructure, we're already seeing leverage as we scale the business, which is great. And so we have some flexibility to move margins down a little bit and push more into the debt. So it's going to be interesting and exciting, but we're lucky to be in a situation where we have such a good economic model that we can still be in cash generation position.

Great. Well, we got several questions from the webcast. And we do have a few more minutes, so I wanted to get to them. First, could you talk a little bit more about your joint venture with Tencent in China in light of recent restrictions on gaming for children in the country. In what ways is the platform being developed to account for that regulatory uncertainty? And is there anything you can share about how the Roblox platform is viewed within China? Is it a game? Is it education? Does that matter?

Yes. Okay. A couple of thoughts. Tencent has been a great partner. They've been wonderful to work with. Incredibly talented. Huge footprint. Yes, just a wonderful partner. And the joint venture, we've had ups and downs over the last couple of years, and we deal with them as they come about. We're no less excited about the opportunity in China today than we were 3 weeks ago or 3 months ago or 3 years ago. We still see it as an absolutely massive opportunity, and we think we have a great partner. We have the right -- clearly have the right partner to help us build that. What we know today, we've always -- we've always said we will be -- we want to be global. We want to connect the world, not part of the world, we want to connect the world. And we're going to do it based on the laws and regulations in every country. We -- much of what -- our platform enables us to follow certain regulations in lots of different countries. So this isn't the first time that we've had to bake something into the platform. And it's still a little early. I mean, these -- it's just -- it's a little bit of a different situation than we're used to in the West. So what we are doing is we're staying very close to Tencent. We're -- their government relations folks are really helpful. They give us a lot of good insight. And we're going to keep moving this business forward for sure. We continue to see a lot of great content coming out of China developers. And there's just no reason for us not to continue to make that investment. We see no slowdown in that. We have a pretty active DevRel organization over in China, and we continue to try to find great local content in China that is popular on the global platform. And we've had a few really big success stories. So we're going to keep doing that. The second thing is that like here, we have aged up users and we have younger users. And so in the short run, it may just be that our user base is more edged up in China than it is in other parts of the world. But that's fine, and maybe that's an incredible challenge and a good case study for us to see how we can take a market that needs to be more aged up just because of regulatory. And then the last one is just really understanding the regulations and what they mean and how it ultimately gets implemented, again, I just would caution that we're really in the early stages, but we're totally and completely committed, of course, to operating in every country based on the local regulation. So -- yes, we've always talked about our platform as an educational platform, helping kids code, helping kids find an outlet for their creativity, developers. It's a huge priority in the rest of the world. It's a huge priority over in China. So that continues to be the way that we communicate with the government about the Roblox platform. And it's good that we're not adopting that now. We've had that conversation for the last 2 years, and the government knows well what our platform can do and who's using it.

And we had a couple of questions on the outlook for average bookings per daily active user. Could you -- so could you talk a little bit about your outlook there? How should we think about -- What are the drivers? And there's obviously a lot of things with aging up and international expansion that could affect that number. So your thoughts there would be great.

I -- if we have an internal target for bookings and we hit it, and we have an internal target for DAUs and we hit it. And the DAUs happen to grow faster than the bookings. I do not care if App Dow goes up or down or sideways day-to-day. It's early to look at that ratio just for the reason I just said, we have a bookings target, we love it. The denominator grows faster and what happened per user. Remember, we're adding Dows very quickly. And Dow's have a -- knock on wood when I say, is a fairly predictable thing that they go through. They start a certain number of them retain, the ones that retain, have an engagement curve that is reasonably predictable for us, the ones that engage a lot, end up converting into payers and the ones that start paying that have a somewhat predictable path to paying more. And those are those -- the sheer number of cohorts in different geographies are so many, that it's really, really hard we don't guide anyway, but I wouldn't guide too much on this number. I'm much, much, much more concerned with that we're growing bookings at a rate that seems like we're doing a good job and that we're growing users and hours at rates that seem like we're doing a good job or rather helping our developers do a great job out there. I do know that as we go into other countries that have lower just wealth, definitely, those users will ultimately be lower monetizing than the users we already have. But I just want to be really clear. We love all of our users. We love all of our payers. We love them all. We want them all to be on the platform. We are not going to turn them away because they monetize at a slightly lower rate than our existing users or payers. We just want more of them on the platform. So that will be our focus as a company to keep growing those metrics.

Great. We're a couple of minutes over. So maybe I'll just ask one last question. Could you talk a little bit about some of the experiences that have been developed by real-world brands and content creators in more detail. You mentioned Gucci Gardens. What's the strategic path and monetization path for these experiences over the long run? Like what's the end goal here? Is this just something that helps age up and drive user engagement? Is there a big profit pool here? And then any closing remarks that you'd like to make would be appreciated.

Yes. Thanks, Mike. It's so early with brands that it's just kind of interesting. Like again, with Gucci, there were 4 or 5 things that went on, all of which seemed -- if I was on the brand side at Gucci, I'd think, oh, that was interesting. This many people showed up and they watch the video that was embedded inside. They visited different worlds and then they bought some items and they traded some items. And the sheer number of people and the same is true of in the heights and the same is true in vans and the same is true in a lot of the stuff that we've done with music so far with the launch party. So we're watching all of those really carefully. The short term is -- how do we get more of them onto the platform? How do we make it really easy for them to find developers to help them to build great content to decide whether it's something that they want to have up and maintain for months and months and months or years? Or is it episodic, doing it for this to promote the launch of the whatever -- and then take it down later, who knows? What we want to do is make sure that it's really easy for them. And I think for the brands themselves, my guess is, my belief is they are looking -- the size and scale of our platform has gotten such that they want to know how to reach those users. And they have traditional ways in other companies with more traditional sort of CPM-driven models to reach those users and there's nothing wrong with that. But those -- they do a lot of that already. This might be a completely different and engaging way. Like Vans is a great example. And it's not just because it's Vans. We could come up with a lot of different ideas, but they do have a skate park with Vans as a brand is amazing. It's fantastic. I mean it's going to draw a community that loves the close, loves the skate, loves their -- who their user is, right, who their marketing department believes they're trying to reach. And we're giving them a different way to reach that audience. It's not behind the paywall and it's just different. And so something that's more like live engagement, ongoing, a little bit of commerce, virtual commerce because wearing those items, that's obviously a connection that, that user is making with your brand. We feel like we just got an enormous amount of flexibility to figure out the right way. And when we do that, we know there's economics in there for the brands. We know there are economics in there for the developers that they work with, and we know there are economics with us. As I may have mentioned, I had a few calls today, but we worked with a studio the other day that's building animation. And they were thinking about -- they're traditional. They build stuff for theatrical release. But the -- what do you do? You spent all that time building a brand and then it has this sort of narrow window where it's enjoyed. And we had this long conversation about how do you turn an audience into a community. Those are the kinds of things that I think we really want to explore, because I thought Netflix has done an incredible job with Stranger Things because even that gets consumed because the way it gets consumed -- I'm a huge consumer of Netflix content. It gets consumed sometimes in a short period of time. So how do you take that passionate audience and make it a community? And I think we can help brands do that, not just media brands but also consumer brands. So -- that's what I -- that to me is one of the more exciting things that we're going to see over the next 3 to 5 years. And I think if we do it well, the preponderance of brands will yield really preponderance of content, and ultimately help us attract a broader group of users. And a lot of our developers are going to be very active in making these brands successful in what they've built. So that's exciting as well. So closing statements, not really. It's been exciting to be a public company. We continue to be unmatchably focused on taking the long view, incredibly excited about this category that's starting to emerge after years and years and years of being a little under the radar. Very excited about how fast we're recruiting and growing the team. Incredibly excited to get back to the office and see all of our coworkers and collaborate again. We're taking down more real estate here in San Mateo and -- yes, I think we're just incredibly enthusiastic about where this can go. This is a really fun business to be involved with, to be honest, and I think we're all having a good time.

Well, we're several minutes over. Mike, I want to say thank you so much. It's always a privilege being able to speak with you. I think I speak for everyone listening in, when I say this has been tremendously helpful and insightful, and we really appreciate your time.

Yes. Thanks a lot, Mike. I appreciate it. And I'll just -- everyone on the phone who is an investor. Hopefully, we'll open up soon, and we can do some one-off good old-fashioned one-on-one IR in the future. Until then, we'll stick with this, but we're getting close.

Thanks, Mike.

Take care.