Roblox CEO Says Growth Streak Isn’t Over

While Roblox CEO David Baszucki projects slower growth this year compared with earlier in the health crisis, the company is laying the foundation to attract users outside of its largely Generation Z base and to reach players in other countries.

Roblox is among the companies that prospered as the pandemic took hold and now are working to show investors they can stay relevant. Some of those businesses are bracing for a slowdown in spending when people return to dining out, traveling and engaging in other activities that have been limited.

“We’re in this for the long haul,” Mr. Baszucki, the 58-year-old Roblox co-founder whose stake was worth roughly $2.9 billion before the listing, said in an interview. “The engines that have been powering Roblox’s growth up to the pandemic, we see those continuing well into the future.”

Roblox, founded in 2004, operates a free online platform with tens of millions of multiplayer games that is accessible via computers, videogame consoles and mobile devices. The San Mateo, Calif., company generates revenue by selling digital currency called Robux that players use to buy in-game perks and accessories for their avatars.

Roblox said revenue last year jumped 82% from a year prior to $923.9 million, and it averaged 32.6 million daily active users, up from 17.6 million in 2019.

“I don’t think the growth we’ll see this year will be reflective of the long-term potential of the business,” said Doug Clinton, managing partner at investment and research firm Loup Ventures. The comparison to 2020 will be too difficult to beat, he said, though he’s bullish on Roblox’s prospects. “New experiences keep coming on the platform. Over the next two or years, bookings could grow by 20% to 30%.”

Roblox doesn’t make the social games on its platform and instead outsources that task to its own users, which include a mix of more than eight million hobbyists, aspiring professionals and established game-development studios. Last year, Roblox’s developers collectively earned about $329 million from sales of their creations, and more than 300 of them took home $100,000 or more, the company said.

Recently, Roblox added the ability for its developers also to receive payments based on the amount of time users spend in their games. Mr. Baszucki described the new arrangement as an example of how the company is working to make its platform appealing to more developers.

Roblox also is focused on improving the technology that powers its platform so developers can produce higher-quality games and, in turn, attract older players, Mr. Baszucki said. More than half of its users are under age 13, and about 80% of the company’s roughly 1,000 employees work in engineering and product development.

Extending its presence overseas is another way Roblox aims to grow over time, particularly in China, the world’s largest videogame market. Roblox recently obtained a license to publish and operate a localized version of its platform in China with its local partner, Tencent Holdings Ltd. , which holds a small stake in Roblox.

“There’s an amazing collection of game-creation talent in China and as Roblox goes live in China, more and more of those developers will be able to share their creations around the world and participate in the world-wide economy,” Mr. Baszucki said.

Roblox had planned to go public in a December IPO but changed course after huge first-day trading gains that month for Airbnb Inc. and DoorDash Inc. made it too hard for Roblox to determine the right initial price for its listing.

Mr. Baszucki said he has no regrets about taking a nontraditional path to going public. “We think the direct listing is very Roblox-authentic,” he said. Roblox didn’t raise any money in the direct listing, which enabled existing shareholders to sell their stock.

While Roblox’s popularity has translated into strong sales, the company isn’t profitable. Its net loss widened to $253.3 million in 2020 from $71 million a year earlier.

The pandemic has lifted the fortunes of other newly listed companies in the videogame industry. Unity Software Inc., a maker of game-creation software that went public in September, posted year-over-year revenue growth of 43% in 2020. Corsair Gaming Inc., a maker of videogame hardware, also went public in September and logged revenue of $1.7 billion last year, up from $1.1 billion in 2019.