Roblox Q2 FY26 earnings call RBLX

Roblox has made significant progress in age-checking all users and limiting chat to age-verified individuals, with global age-check penetration reaching 57%. This initiative has seen strong adoption in key markets, such as the U.S. and U.K. at 70%, and U.S. under 18 at 75%. The company believes accurate age data, combined with age-banded communication and new comms products, amplifies its conviction in the platform's long-term growth potential by enhancing safety and user experience.

Roblox strategically shifted its discovery algorithms to focus on long-term retention, which has impacted monetization, particularly in the U.S. under 13 cohort. This change prioritizes quality, stickier engagement games over those emphasizing short-term monetization, leading to a lower frequency of impressions for the latter. While this caused a greater-than-anticipated short-term monetization shortfall in Q2, internal testing suggests the benefits of higher retention will ultimately outweigh these near-term impacts, compounding into future growth.

The platform is experiencing increased content diversification, with the share of hours accounted for by the top 10 games decreasing from 30% three years ago to approximately 20% today. This indicates a broader range of engaging content. New user sign-up activity improved throughout Q2, benefiting from seasonality and the reinstatement of Roblox in Russia, while retention of existing users remained stable, and engagement hours met expectations.

Roblox is actively targeting the 18 and over market, which constitutes 80% of the $200 billion global gaming market. The U.S. 18 and up cohort now represents nearly one-third of age-checked daily active users, with the U.S. 18 to 34 cohort showing strong growth of approximately 40% year-on-year in both DAUs and hours. The company believes it can replicate its success with under 18 users in this older demographic by improving product-market fit and leveraging paid acquisition.

The company is expanding the types of games supported on its platform, including the announcement of 'Roblox Reality' to bring photorealistic multiplayer experiences to the masses. Simultaneously, Roblox is doubling down on support for 2D tooling and gameplay, ranging from puzzle games to strategy, which it had previously held back on. This dual focus aims to broaden the spectrum of possible experiences on Roblox, from hyper-realistic 3D to diverse 2D formats.

Roblox is integrating 'Moments,' a short-form video feed, into its homepage for 16 and up users, currently testing in Canada, New Zealand, and Singapore. This feed will expand to include influencer video and live gameplay, with early tests showing substantial gains in user retention. Additionally, the company is committed to building high-quality integrated voice, video, and text communication, with 'In-Experience Friend Chat' deploying in Q3, aiming to provide safer and more immersive connections.

Roblox announced 'Build,' an extension of its vision for everyone to be a game builder, leveraging generative AI models to create a conversational interface. This tool allows users to describe and shape playable experiences in minutes, fully integrated with Roblox Studio. Already live in New Zealand, Build is seeing a large volume of creations, fulfilling the company's goal of accelerating game creation and empowering a broader base of creators.