Roblox CEO talks earnings, AI, & 'Grow a Garden' boost

Yahoo

5 days ago

Roblox (RBLX) shares surged 10% on Thursday after posting better-than-expected Q2 revenue, bookings, and daily active users and issuing a more robust full-year bookings outlook than had been anticipated. Roblox CEO Dave Baszucki tells Yahoo Finance Executive Editor Brian Sozzi about the big quarter, the viral success of "Grow a Garden," and how AI may impact his company and the gaming industry.
To watch more expert insights and analysis on the latest market action, check out more Opening Bid.
Question to you is this. How diversified is your revenue stream? Is it just being driven by by the likes of Grow a Garden?
Hey, thanks for having me on the program. You know, our vision of having over 10% of the gaming content market globally running on the platform. We saw saw additional signs of that. There's amazing opportunity for technical innovation on our platform and as you highlighted, this quarter we had a breakout hit with Grow a Garden that took um Roblox and really the platform to new world records. We had over 30 million people on Roblox at the same time a few weeks ago and Grow Garden uh said its place in the Guinness Book of World Records with having over 20 million people on the platform at the same time. That said, there's a lot of content diversity on the platform. There's five experiences on the platform right now with over 10 million daily active users. So there's a deep content stack and when we look at the quarter, even without Grow a Garden, our growth weight would have been significantly above the 20 to 25% we've hinted at to the street.
Dave, um, to get numbers like this at the at the bare minimum, you have to be taking eyeballs or time away for other things. When you sit around the table with your management team, like where do you think you're you're gaining people's time from? Where where are they coming from?
We have a vision that really the way games are created and consumed right now leaves a lot of room for technical innovation when when creators on Roblox make experiences, they run on every device, phone, tablets, computers, consoles. Uh, many of the games of those top five I made four of those top five were made in the last year which shows a lot of bubbling up and great new content. And within that really big gaming market which we've said we believe 10% can run on the platform, we're just nudging up against that 3%. So there's an enormous market of people who play games and we think opportunity to reinvent how they're created and how people interact with them.
How does a how does a viral hit come about?
We we about a year and a half ago, there's a fun metaphor. I love it that in my family, we have several gardeners actually, real physical gardeners and this breakout hit grow a garden is is trending on our platform. Metaphorically for for since we've been created, we've been trying to grow gardens on Roblox by offering great economics, great technology, and great search and discover. So when a creator makes a hit like grow a garden, people can find it. It can run everywhere around the world. It can be auto translated. In the case of grow a garden, we've been talking for a year and a half about making search and discovery more transparent, having developers see how those algorithms work. So when something really retains and it's new and unique, people can find it and play it.
Dave, these these viral games, uh, no pun intended, they sprout out of nowhere in some respects, uh, and they drive big results for your business. As you look out, I guess as you look into the platform today, are there some new names outside of these top five that you could point to that might be driving bigger numbers a year from now?
Yeah, we want to highlight uh experiences that would be ranked by either bookings or time number 11 through 100 are growing very rapidly as well. There's there's a very, very deep content bench beyond these experiences and also there's a lot of really open space on the platform in RPGs and sports and racing relative to the overall market as a whole. We're seeing more experiences in these categories. We we believe there's a lot of room amongst all ages and around the world to keep this growth going. For example, our over 13 growth in Q2 was 64% for DAUs. So there's a lot of areas for new experiences and for new people to play them.
Dave, uh I got a uh the Bank of America America team sent me a note uh just now and they said uh quote, your guidance is too conservative for this year. A high class problem to have, of course. Um, what are you seeing what did you see in July?
Uh, we we shared that July July is trending in a positive direction. I want to highlight we upped our guidance for Q3 based on what we've seen in Q2 and really shared a bigger year than we thought at the start of the year. So we're sticking with that guidance. There's um obviously been some viral hits in Q2, but long term, we're very bullish on this opportunity to reinvent the way gaming is created and consumed.
Dave, I think you're well versed to uh talk about this and we've talked about it uh in the past. Uh this is jobs day in America. We had a disappointing jobs, only 73,000 jobs created. Part of that, of course, is because of of tariffs and economic uncertainty, but AI is really starting to take take jobs, uh change how jobs are done. How do you think AI is going to impact the the role or how content is created?
Well, we're starting to share the economic report of the jobs being created by the ecosystem and there are thousands and thousands and thousands of jobs in the United States, game creation, production, art, design that are being created on the platform. So Roblox is really a net global job creator. These jobs are not in traditional places like Silicon Valley. They're in, you know, farming counties in Idaho and in all different parts of the country. So we are creating jobs and what we see on the platform right now is AI both accelerating um the types of games on our platform. We introduced generative 3D in the platform. We are leaders in using AI for safety and civility. Our voice model is being picked up by a lot of companies to help them keep voice safe on their platforms and generally we see AI as accelerating human capability of our creators rather than replacing them.
So you know, it will AI though, at some point do you think it takes the role or some of the coding roles out there?
I think it accelerates. I think we're going to see more diversity, more broad creations. When we think of AI on our platform, we think of it almost like moving from oil painting to digital um, you know, image tools and I think the same thing's going to happen with 3D creation. We're going to see higher res places, more interesting places, um and in Roblox games where we run generative AI, you and I are going to be able to create clothing or cars or houses just by talking about them. So we're also accelerating the creativity not just amongst the people who make games on Roblox, but for all of us.