Online game service Roblox.
Lionel Bonaventure | AFP | Getty Images
Roblox has plans to go public due to the U.S. Securities and Exchange Commission investigation into how the video game platform is recognizing revenue in its finances, according to a memo the company sent to employees on Thursday.
The delay is a setback to one of the most highly anticipated US public market debuts of 2021. The company had said in a regulatory filing earlier this month that it planned to list shares on the New York Stock Exchange in February.
Roblox’s valuation skyrocketed to $ 29.5 billion in a fundraising round earlier this month, more than seven times the $ 4 billion the company had valued 11 months earlier, amid a surge in video game popularity during the COVID 19 pandemic.
The SEC has reservations about how Roblox recognizes income from the sale of its currency, Robux, on its platform, the Reuters memo said.
Players use Robux in-game to purchase a mix of durable goods that will last for a specified time and consumables that will be used immediately. Roblox had tried to treat all earnings the same and write it off over the duration of its paying user accounts, which is about two years.
The SEC wants Roblox to be more specific and recognize revenues on consumables as they are consumed, while the sustainable services will still be recognized for the lifetime of the Roblox user, the memo said.
“By taking on that accounting position, our revenues will actually be a bit higher, while bookings, DAUs (daily active users), hours of engagement and cash flow won’t change,” founder and CEO David Baszucki wrote in the memo to Roblox. staff, whom he called “Robloxians”.
“However, it will take us some time to update this change in our financial statements,” he said.
A Roblox spokesman declined to comment.
This is not the first delay in listing plans. Roblox told employees in December that it had delayed the listing until 2021 as it worked with advisors to improve the process for the benefit of employees and investors. The company eventually shifted gears, saying it would aim to go through a direct listing rather than an initial public offering (IPO).
Roblox’s revenues – based on the earlier measure’s definition – increased 68% to $ 588.7 million in the first nine months of 2020. The company reported a net loss attributable to common shareholders of $ 203.2 million. compared to $ 46.3 million a year earlier.
Roblox, one of the world’s most popular children’s gaming sites and offering a large number of games on mobile devices and game consoles, said its daily active user base increased 82% to 31.1 million in the nine months ended September 30 from the same period. . a year ago.
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