After delaying plans to go public, video game company Roblox Corp. now that it will take a direct listing of its shares on March 10, a move that comes at a time of increased demand for home entertainment and online social experiences.
Based in San Mateo, California, Roblox originally planned an IPO last year, but paused after company officials decided that Airbnb’s strong trading debuts Inc.
and DoorDash Inc.
made it too difficult to determine the right price for its shares.
In January, Roblox announced a change of course and said it had opted for a direct listing. It also said it raised more than half a billion dollars at a valuation of $ 29.5 billion for the company, a seven-fold increase from a round of funding less than a year earlier.
However, Roblox’s listing plans hit another issue earlier this month when the Securities and Exchange Commission called for changes to the way it booked sales of virtual currencies called Robux. The company said those issues have since been addressed.
Founded in 2004, Roblox makes a free online platform with tens of millions of games. The company’s user base soared through the pandemic as home orders caused more people to spend time online. It had nearly 33 million daily active users last year, up from about 18 million the year before.
One of the defining features of Roblox is that it outsources game development to its players. Those players, mostly teens and young teens, in turn, produce their own hits and earn a majority of the revenue their works generate.
Roblox is one of a small number of companies such as Spotify Technology SA and Slack Technologies Inc.
who have pursued direct quotations to enter public markets. With direct listings, companies can save a large chunk of the money paid to investment banks in a traditional IPO, but they don’t raise money in the process. Roblox shares are traded on the New York Stock Exchange under the symbol RBLX.
With the offer, Roblox is slated to become the latest video game company to hit the market in recent months. Others include game hardware maker Corsair Gaming Inc.,
game software tool provider Unity Software Inc. and mobile games developer Playtika Holding Corp.
Roblox, which plans to host a virtual investor day Friday, also announced its fourth quarter and full year earnings. The company said sales grew 82% to $ 923.9 million last year, while bookings more than doubled to about $ 1.9 billion. Cash flow from operations was $ 524 million last year, compared to $ 99.2 million in 2019.
Still, Roblox is not profitable, saying in its SEC filing that it posted a net loss of $ 253.3 million in 2020, up from $ 71 million in 2019, due to increased spending related to its information technology infrastructure, security, sales and marketing and research and development.
Roblox also said in the filing that its CEO, David Baszucki, will waive any cash and stock compensation from the company’s direct listing. Instead, Mr. Baszucki, who co-founded the company and remains the largest shareholder, will be eligible for long-term performance-based equity compensation that he wants to donate for philanthropic purposes, the filing shows.
If Roblox’s stock trades at $ 165 per share or higher two years after listing, Mr. Baszucki will receive 750,000 restricted stock units, according to the filing. If stock trades at $ 375 or higher five years after listing, he will receive two million restricted stock units.
Write to Sarah E. Needleman at [email protected]
Corrections and reinforcements
Roblox said its bookings will more than double to approximately $ 1.9 billion by 2020. An earlier version of this article incorrectly said that net entries, a statistic that precludes deferral, have increased to this amount.
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