Net loss attributable to the noncontrolling interest

(934,141)

(503,480)

(257,691)

(9,775)

(11,829)

(4,437)

Net loss attributable to common stockholders

$ (924,366)

$ (491,651)

$ (253,254)

Net loss per share attributable to common stockholders, basic (in dollars per share)

$ (1.55)

$ (0.97)

$ (1.39)

Net loss per share attributable to common stockholders, diluted (in dollars per share)

$ (1.55)

$ (0.97)

$ (1.39)

Weighted-average shares used in computing net loss per share attributable to common stockholders—basic (in shares)

595,559,000

505,858,000

182,108,000

Weighted-average shares used in computing net loss per share attributable to common stockholders—diluted (in shares)

595,559,000

505,858,000

182,108,000

[1]	Depreciation of servers and infrastructure equipment included in infrastructure and trust & safety.

Consolidated Statements of Comprehensive Income/(Loss) - USD ($) $ in Thousands	12 Months Ended
	Dec. 31, 2022	Dec. 31, 2021	Dec. 31, 2020
Statement of Comprehensive Income [Abstract]
Consolidated net loss	$ (934,141)	$ (503,480)	$ (257,691)
Other comprehensive income/(loss), net of tax:
Foreign currency translation adjustments	1,287	(55)	168
Net change in unrealized gains (losses) on available-for-sale marketable securities	0	0	(33)
Other comprehensive income/(loss), net of tax	1,287	(55)	135
Total comprehensive loss, including noncontrolling interests	(932,854)	(503,535)	(257,556)
Less: net loss attributable to noncontrolling interests	(9,775)	(11,829)	(4,437)
Less: cumulative translation adjustments attributable to noncontrolling interests	678	(27)	84
Other comprehensive loss attributable to noncontrolling interests, net of tax	(9,097)	(11,856)	(4,353)
Total comprehensive loss attributable to common stockholders	$ (923,757)	$ (491,679)	$ (253,203)

Consolidated Statements of Convertible Preferred Stock and Stockholders' Equity/(Deficit) - USD ($)
shares in Thousands, $ in Thousands

Total

Series A Preferred Stock

Series D Preferred Stock

Convertible Preferred Stock

Series D One Warrants

Convertible Preferred Stock

Series G Preferred Stock

Convertible Preferred Stock

Series A Preferred Stock

Convertible Preferred Stock

Series D Preferred Stock

Convertible Preferred Stock

Series H Preferred Stock

Class A and Class B Common Stock

Series A Preferred Stock

Class A and Class B Common Stock

Series D Preferred Stock

Additional Paid-In Capital

Series A Preferred Stock

Additional Paid-In Capital

Series D Preferred Stock

Accumulated Other Comprehensive Income

Accumulated Deficit

Non- Controlling Interest

Beginning balance (in shares) at Dec. 31, 2019

324,304

Beginning balance at Dec. 31, 2019

$ 187,191

Increase (Decrease) in Temporary Equity [Roll Forward]

Issuance of preferred stock (in shares)

23,645

Issuance of preferred stock

$ 149,669

Issuance of Series D-1 warrants upon exercise of warrants for cash (in shares)

^[1]

1,573

Issuance of Series D-1 warrants upon exercise of warrants for cash

^[1]

$ 8,225

Conversion of preferred stock to common stock (in shares)

(11,642)

(645)

Conversion of preferred stock to common stock

$ (233)

$ (25)

Ending balance (in shares) at Dec. 31, 2020

337,235

Ending balance at Dec. 31, 2020

$ 344,827

Balance beginning (Shares) at Dec. 31, 2019

166,768

Balance beginning at Dec. 31, 2019

$ (112,949)

$ 17

$ 101,671

$ 39

$ (239,036)

$ 24,360

Increase (Decrease) in Stockholders' Equity [Roll Forward]

Issuance of common stock upon exercise of stock options and settlement of RSUs (in shares)

20,871

Issuance of common stock upon exercise of stock options and settlement of RSUs

15,158

$ 2

15,156

Issuance of common stock from asset purchase (in shares)

80

Issuance of common stock from asset purchase

$ 2,854

2,854

Issuance of common stock upon exercise of stock options (in shares)

20,590

Issuance of common stock in connection with the acquisition of a business (in shares)

933

Issuance of unregistered restricted stock awards in connection with the acquisition of a business

$ 35,203

35,203

Issuance of unregistered restricted stock awards granted in conjunction with a business combination (in shares)

388

Issuance of unregistered restricted stock awards granted in conjunction with a business combination

5,493

Conversion of convertible preferred stock to common stock in connection with the direct listing (in shares)

11,642

645

Conversion of convertible preferred stock to common stock in connection with the direct listing

$ 233

$ 25

$ 1

$ 232

$ 25

Stock-based compensation

79,158

Other

(33)

Cumulative translation adjustments

168

84

Balance ending (Shares) at Dec. 31, 2020

(257,691)

(253,254)

(4,437)

201,327

Balance ending at Dec. 31, 2020

$ (232,381)

$ 20

239,792

90

(492,290)

20,007

Increase (Decrease) in Temporary Equity [Roll Forward]

Issuance of preferred stock (in shares)

11,889

Issuance of preferred stock

$ 534,286

Conversion of preferred stock to common stock (in shares)

(349,124)

Conversion of preferred stock to common stock

$ (879,113)

Ending balance (in shares) at Dec. 31, 2021

0

Ending balance at Dec. 31, 2021

$ 0

Increase (Decrease) in Stockholders' Equity [Roll Forward]

Issuance of common stock upon exercise of stock options (in shares)

33,373

33,372

Issuance of common stock upon exercise of stock options

$ 65,242

$ 3

65,284

(45)

Issuance of common stock in connection with the acquisition of a business (in shares)

487

Issuance of unregistered restricted stock awards in connection with the acquisition of a business

31,274

Issuance of common stock under employee stock purchase plan (in shares)

191

Issuance of common stock under Employee Stock Purchase Plan

11,268

Conversion of convertible preferred stock to common stock in connection with the direct listing (in shares)

349,124

Conversion of convertible preferred stock to common stock in connection with the direct listing

879,113

$ 35

879,078

Stock-based compensation

341,942

Vesting of restricted stock units (in shares)

1,376

Others (in shares)

1

Other

0

Cumulative translation adjustments

(55)

(28)

(27)

Balance ending (Shares) at Dec. 31, 2021

(503,480)

(491,651)

(11,829)

585,878

Balance ending at Dec. 31, 2021

$ 592,923

$ 58

1,568,638

62

(983,941)

8,106

Ending balance (in shares) at Dec. 31, 2022

0

Ending balance at Dec. 31, 2022

$ 0

Increase (Decrease) in Stockholders' Equity [Roll Forward]

Issuance of common stock upon exercise of stock options (in shares)

9,615

Issuance of common stock upon exercise of stock options

$ 22,778

$ 1

22,777

0

Issuance of common stock in connection with the acquisition of a business (in shares)

385

Issuance of unregistered restricted stock awards in connection with the acquisition of a business

10,138

Issuance of common stock under employee stock purchase plan (in shares)

575

Issuance of common stock under Employee Stock Purchase Plan

22,702

Stock-based compensation

589,498

Vesting of restricted stock units (in shares)

8,169

Withholding taxes related to net share settlement of restricted stock units (in shares)

(3)

Withholding taxes related to net share settlement of restricted stock units

(150)

Others (in shares)

55

Other

0

Cumulative translation adjustments

1,287

609

678

Balance ending (Shares) at Dec. 31, 2022

(934,141)

(924,366)

(9,775)

604,674

Balance ending at Dec. 31, 2022

$ 305,035

$ 59

$ 2,213,603

$ 671

$ (1,908,307)

$ (991)

[1]	Exercise of warrants for gross proceeds of $0.1 million and a reclassification of warrant liability fair market value of $8.1 million as of the exercise date

Consolidated Statements of Convertible Preferred Stock and Stockholders' Equity/(Deficit) (Parenthetical) $ in Millions	12 Months Ended
	Dec. 31, 2020 USD ($)
Statement of Stockholders' Equity [Abstract]
Proceeds from exercise of warrants	$ 0.1
Reclassification of warrant liability fair market value	$ 8.1

Consolidated Statements of Cash Flows - USD ($) $ in Thousands	12 Months Ended
	Dec. 31, 2022	Dec. 31, 2021	Dec. 31, 2020
Cash flows from operating activities:
Consolidated net loss	$ (934,141)	$ (503,480)	$ (257,691)
Adjustments to reconcile net loss including noncontrolling interests to net cash, cash equivalents, and restricted cash provided by operations:
Depreciation and amortization	130,083	75,622	43,808
Stock-based compensation expense	589,498	341,942	79,158
Change in fair value of warrants	0	0	1,890
Operating lease non-cash expense	69,100	43,794	0
Other non-cash charges/(credits)	361	680	1,139
Amortization of debt issuance costs	1,261	216	0
Changes in operating assets and liabilities, net of effect of acquisitions:
Accounts receivable	(72,479)	(61,044)	(156,865)
Accounts payable	10,302	23,369	4,488
Prepaid expenses and other current assets	(33,769)	(13,593)	(4,826)
Other assets	(1,221)	(1,367)	1,373
Developer exchange liability	67,798	82,994	49,905
Accrued expenses and other current liabilities	19,560	58,809	30,906
Other long-term liability	10,159	(1,189)	(4,460)
Operating lease liabilities	(47,875)	(34,743)	0
Deferred revenue	662,378	819,927	965,919
Deferred cost of revenue	(101,719)	(172,828)	(230,404)
Net cash, cash equivalents, and restricted cash provided by operating activities	369,296	659,109	524,340
Cash flows from investing activities:
Acquisition of property and equipment	(426,163)	(93,273)	(104,153)
Payments related to business combination, net of cash acquired	(13,388)	(45,692)	(40,919)
Purchases of short-term investments	0	0	(5,991)
Maturities of short-term investments	0	0	63,000
Purchases of intangible assets	(1,500)	(7,856)	(8,967)
Net cash, cash equivalents, and restricted cash used in investing activities	(441,051)	(146,821)	(97,030)
Cash flows from financing activities:
Proceeds from issuance of preferred stock for warrant exercises	0	0	147
Proceeds from issuance of common stock	45,752	76,177	15,156
Payment of term license related obligations	(1,656)	0	0
Payment of withholding taxes related to net share settlement of restricted stock units	(150)	0	0
Net proceeds from issuance of preferred stock	0	534,286	149,669
Proceeds from 2030 Notes	0	990,000	0
Payment of debt issuance costs	(154)	(2,339)	0
Payments Related To Business Combination After Acquisition Date	(150)	0	0
Net cash, cash equivalents, and restricted cash provided by financing activities	43,642	1,598,124	164,972
Effect of exchange rate changes on cash, cash equivalents, and restricted cash	1,287	(55)	168
Net increase/(decrease) in cash, cash equivalents, and restricted cash	(26,826)	2,110,357	592,450
Cash, cash equivalents, and restricted cash
Beginning balance	3,004,300	893,943	301,493
Ending balance	2,977,474	3,004,300	893,943
Supplemental disclosure of cash flow information:
Cash paid for interest	38,965	0	0
Cash paid for income taxes	953	0	0
Supplemental disclosure of noncash investing and financing activities:
Property and equipment additions in accounts payable and accrued expenses	57,199	50,388	13,990
Fair value of common stock and unregistered restricted units issued as consideration for business combination	10,138	31,274	40,696
Fair value of common stock issued in exchange for intangible asset purchase	0	0	2,854
Conversion of convertible preferred stock to common stock upon direct listing	0	879,113	0
Unpaid debt issuance costs	$ 0	$ 154	$ 0

Overview and Summary of Significant Accounting Policies

12 Months Ended

Dec. 31, 2022

Accounting Policies [Abstract]

Overview and Summary of Significant Accounting Policies

Organization and Description of Business—Roblox Corporation (the “Company” or “Roblox”) was incorporated under the laws of the state of Delaware in March 2004. The Company operates a human co-experience platform (the “Roblox Platform” or “Platform”) where users interact with each other to explore and create immersive, user-generated, 3D experiences. Users are free to immerse themselves in experiences on the Roblox Platform and can acquire experience-specific enhancements or avatar items by using purchased Robux, our virtual currency. Any user can be a developer or creator on the Platform using Roblox Studio, a set of free software tools. Developers build the experiences that are published on Roblox and can earn Robux through microtransactions in their experiences, through engagement-based payouts, and by selling virtual items in the Roblox virtual economy.

Direct Listing—On March 10, 2021, the Company completed a direct listing of its Class A common stock (“Direct Listing”) on the New York Stock Exchange (“NYSE”). The Company incurred fees primarily related to financial advisory service, audit and legal expenses, in connection with the Direct Listing and recorded general and administrative expenses of $50.7 million during the first quarter of the fiscal year ended March 31, 2021. Immediately prior to the Direct Listing, all shares of outstanding convertible preferred stock were converted into an equivalent number of shares of Class A common stock.

Basis of Presentation and Summary of Significant Accounting Policies

Fiscal Year—The Company’s fiscal year ends on December 31. For example, references to fiscal 2022, 2021, and 2020 refer to the fiscal year ending December 31, 2022, December 31, 2021, and December 31, 2020, respectively.

Basis of Presentation—The accompanying consolidated financial statements have been prepared in accordance with generally accepted accounting principles in the United States (“U.S. GAAP”), and applicable rules and regulations of the Securities and Exchange Commission (“SEC”).

Principles of Consolidation—The consolidated financial statements include the accounts of the Company and subsidiaries over which the Company has control. All intercompany transactions and balances have been eliminated. The consolidated financial statements include 100% of the accounts of wholly owned and majority owned subsidiaries, and the ownership interest of minority investors is recorded as noncontrolling interest.

Use of Estimates—The preparation of consolidated financial statements in conformity with U.S. GAAP requires management to make estimates and assumptions that affect the amounts reported in the consolidated financial statements and accompanying notes. Significant estimates and assumptions reflected in the consolidated financial statements include, but are not limited to, the estimated period of time the virtual items are available to the user, which is estimated as the average lifetime of a paying user, and the estimated amount of consumable and durable virtual items purchased for which the Company lacks specific information that we use for revenue recognition, useful lives of property and equipment and intangible assets, fair value of assets and liabilities acquired through acquisitions, accrued liabilities (including accrued developer exchange fees), contingent liabilities, valuation of deferred tax assets and liabilities, stock-based compensation, the discount rate used in measuring our operating lease liabilities, the carrying value of operating lease right-of-use assets, and evaluation of recoverability of goodwill, intangible assets and long-lived assets. Management believes that the estimates, and judgments upon which they rely, are reasonable based upon information available to them at the time that these estimates and judgments are made. Actual results could differ from those estimates and any such differences may be material to the consolidated financial statements. To the extent that there are material differences between these estimates and actual results, the Company’s consolidated financial statements will be affected.

The COVID-19 pandemic has created, and may continue to create, significant uncertainty in macroeconomic conditions. The full extent to which the COVID-19 pandemic or recovery from the COVID-19 pandemic will directly or indirectly impact the global economy, the lasting social effects, and impact on the Company’s business, results of operations, and financial condition are highly uncertain and cannot be accurately predicted. As events continue to evolve and additional information becomes available, the Company’s estimates and assumptions may change materially in future periods.

Foreign Currency Transactions—The functional currency of the Company’s international subsidiaries is the U.S. dollar, with the exception of a Chinese subsidiary wholly owned by Roblox China Holding Corp., as discussed in Note 14, “Joint Venture” to the notes to these consolidated financial statements. We translate the financial statements of our non-U.S. dollar functional subsidiary to U.S. dollars using the period-end exchange rate for assets and liabilities and the average exchange rate for the period for revenues and expenses. The effects of foreign currency translation are included in stockholders’ equity/(deficit) as a component of accumulated other comprehensive income and periodic movements are summarized as a line item in the consolidated statements of comprehensive income.

We reflect foreign exchange transaction gains and losses resulting from the conversion of the transaction currency to the functional currency, which includes gains and losses from the remeasurement of assets and liabilities, as a component of other income (expense), net.

Stock Split—On January 31, 2020, the Company’s Board of Directors approved an amendment to its certificate of incorporation to effect a split of shares of the issued and outstanding common stock and convertible preferred stock at a 2-for-1 ratio. The stock split was approved by the Company’s stockholders and effected on January 31, 2020.

All issued and outstanding shares of common stock and convertible preferred stock, dividend rates, conversion rates, options to purchase common stock, exercise prices, and the related per-share amounts contained in these consolidated financial statements have been adjusted to reflect this stock split for all periods presented.

Segments—The Company operates as a single operating and reportable segment, which is at the consolidated entity level. The chief operating decision maker of the Company is its chief executive officer (“CEO”), who makes resource allocation decisions and assesses performance based on financial information presented on a consolidated basis.

Revenue Recognition

Revenue Recognition Policy

In accordance with ASC 606, Revenue from Contracts with Customers, revenue is recognized when control of the service is transferred to the customer. The amount of revenue recognized reflects the consideration that the Company expects to be entitled to in exchange for these services. To achieve the core principle of this standard, the Company determines revenue recognition by:

•identifying the contract, or contracts, with the customer;

•identifying the performance obligations in the contract;

•determining the transaction price;

•allocating the transaction price to performance obligations in the contract; and

•recognizing revenue when, or as, the Company satisfies performance obligations by transferring the promised services.

The Company derives substantially all of its revenue from the sale of virtual items on the Roblox Platform.

Roblox Platform

The Company operates the Roblox Platform as live services that allow users to play and socialize with others for free. Within the experience, however, users can purchase virtual currency (“Robux”) to obtain virtual items to enhance their social experience. Proceeds from the sale of Robux are initially recorded in deferred revenue and recognized as revenues as a user purchases and uses virtual items. The Company’s identified performance obligation is to provide users with the ability to acquire, use, and hold virtual items on the Roblox Platform over the estimated period of time the virtual items are available to the user or until the virtual items are consumed.

Users can purchase Robux as one-time purchases or through monthly subscriptions via payment processors or through prepaid cards. Payments from users are non-refundable and relate to non-cancellable contracts for a fixed price that specify Company’s obligations. Revenue is recorded net of taxes assessed by government authorities that are both imposed on and concurrent with specific revenue transactions between the Company and its users, and estimated chargebacks and refunds.

The satisfaction of Company’s performance obligation is dependent on the nature of the virtual item purchased and as a result, the Company categorizes its virtual items as either consumable or durable.

•Consumable virtual items represent items that can be consumed by a specific user action. Common characteristics of consumable virtual items may include items that are no longer displayed on the user’s inventory after a short period of time or do not provide the user any continuing benefit following consumption. For the sale of consumable virtual items, the Company recognizes revenue as the items are consumed.

•Durable virtual items represent items which result in a persistent change to a users’ character or item set (e.g., virtual hat, pet, or house). These items are generally available to the customer to hold, use, or display for as long as they are on the Roblox Platform. The Company recognizes revenue from the sale of durable virtual items ratably over the estimated period of time the items are available to the user which is estimated as the average lifetime of a paying user.

To separately account for consumable and durable virtual items, the Company specifically identifies each purchase for the majority of virtual items purchased on the Roblox Platform. For the remaining population, the Company estimates the amount of consumable and durable virtual items purchased based on data from specifically identified purchases and the expected behavior of the users within similar experiences. The estimation of consumable and durable virtual items purchased for the population of purchases not specifically identified requires management’s judgment as the Company evaluates and estimates the expected behavior of users in the population using information from known purchases in similar experiences.

The average lifetime of a paying user estimate is calculated based on historical monthly retention data for each user cohort to project future participation on the Roblox Platform. Determining the estimated average lifetime of a paying user requires management’s judgment as the Company analyzes the most recent trends in player cohort activity and other qualitative factors. The Company also considers results from prior analyses in determining the estimated average lifetime of a paying user. The Company believes this estimate is the best representation of the average life of the durable virtual items. The estimated paying user life was 28 months, 23 months, and 23 months as of December 31, 2022, 2021, and 2020, respectively.

As part of the process above, in the first quarter of 2022, the Company updated its estimated paying user life to 25 months, which was subsequently updated again to 28 months in the third quarter of 2022. Based on the carrying amount of deferred revenue and deferred cost of revenue as of December 31, 2021, these changes in estimates resulted in a decrease in revenue of $344.9 million and a decrease in cost of revenue of $79.3 million during the year ended December 31, 2022.

The Company offers prepaid cards through online and physical retailers, as well as on the Company website. The Company estimates expected breakage by taking into consideration historical patterns of redemption and escheatment laws as applicable.

Principal Agent Considerations

The Company evaluates the sales of Robux via third-party payment processors to determine whether its revenues should be reported gross or net of fees either retained by the payment processor or paid to the developers and creators (“Developer Exchange Fees”). The Company is the principal in the transaction with the end user as a result of controlling, hosting, and integrating the delivery of the virtual items to the end user. The Company records revenue gross as a principal and records fees paid to payment processors as a component of cost of revenue and fees paid to developers and creators as a component of developer exchange fees expense.

Other Revenue

Other revenue primarily consists of revenue from advertising, licenses, and royalties. The Company recognizes revenue based on the performance obligations of the underlying agreements, in an amount that reflects the consideration that the Company expects to be entitled to.

Cost of Revenue—Cost of revenue primarily consists of payment processing fees charged by various distribution channels.

Deferred Cost of Revenue—The Company defers contract costs that are direct and incremental to obtaining user contracts (i.e., sales of Robux). Deferred cost of revenue consists of payment processing fees charged by third-party payment processors. Payment processing fees are amortized over the estimated period of time the virtual items are available to the user on the Roblox Platform (based on the nature of the virtual item as either consumable or durable) in proportion to the revenue recognized. The Company classifies deferred cost of revenue as short-term or long-term based on when the Company expects to recognize the expense. Short-term and long-term deferred cost of revenue are included on the Company’s consolidated balance sheets. Deferred cost of revenue is periodically reviewed for impairment.

Concentration of Credit Risk and Significant Customers—Financial instruments that potentially subject the Company to concentrations of credit risk consist primarily of cash and cash equivalents and accounts receivables. Cash and cash equivalents are deposited with high quality financial institutions and may, at times, exceed federally insured limits. Management believes that the financial institutions that hold the Company’s deposits are financially creditworthy and, accordingly, minimal credit risk exists with respect to those balances. Generally, these deposits may be redeemed upon demand and, therefore, bear minimal interest rate risk.

The Company uses various distribution channels to collect and remit payments from users. As of December 31, 2022 and 2021, one distribution channel accounted for 37% and 35% of our accounts receivable, respectively, while a second distribution channel accounted for 19% of our accounts receivable as of both periods.

For the years ended December 31, 2022, 2021, and 2020, one distribution channel processed 32%, 35%, and 35% of our overall revenue transactions, respectively, and a second distribution channel processed 18%, 19%, and 19% of our overall revenue transactions, respectively.

Fair Value Hierarchy—Assets and liabilities recorded at fair value in the consolidated financial statements are categorized based upon the level of judgment associated with the inputs used to measure their fair value. Hierarchical levels, which are directly related to the amount of subjectivity, associated with the inputs to the valuation of these assets or liabilities are as follows:

Level 1—Inputs that are unadjusted, quoted prices in active markets for identical assets or liabilities at the measurement date.

Level 2—Inputs (other than quoted prices included in Level 1) that are either directly or indirectly observable for the asset or liability through correlation with market data at the measurement date and for the duration of the instrument’s anticipated life.

Level 3—Unobservable inputs that are supported by little or no market activity and that are significant to the fair value of the assets or liabilities and which reflect management’s best estimate of what market participants would use in pricing the asset or liability at the measurement date. Consideration is given to the risk inherent in the valuation technique and the risk inherent in the inputs to the model.

In determining fair value, the Company utilizes valuation techniques that maximize the use of observable inputs and minimize the use of unobservable inputs to the extent possible as well as considers counterparty credit risk in its assessment of fair value.

Cash, Cash Equivalents and Restricted Cash—Cash and cash equivalents primarily consisted of cash in hand and money market instruments with maturities of 90 days or less from the date of purchase.

We had no restricted cash balances as of December 31, 2022, and 2021.

Accounts Receivable and Related Allowance—Accounts receivable represent amounts due to us based on contractual obligations with our customers. Payments made by the Company’s users are collected by payment processors and remitted to the Company generally within 30 days of invoicing. The Company maintains allowances for potential credit losses when deemed necessary. The Company has not experienced any material credit losses to date. In cases where the Company is aware of circumstances that may impair a specific customer’s ability to meet its financial obligations, it records a specific allowance as a reduction to the accounts receivable balance to reduce it to its net realizable value. In addition, the Company holds a reserve for chargebacks and refunds based on historical data and current trends and projections. Specific allowances, chargeback, and refund reserves have not been material for any of the periods presented.

Property and Equipment—Net—Property and equipment are recorded at historical cost less accumulated depreciation and amortization. Depreciation and amortization are recorded on a straight line basis over the estimated useful lives of the respective assets. Repair and maintenance costs are expensed as incurred. The estimated useful life for each asset category is as follows:


Property and Equipment			Estimated Useful Life
Servers and related equipment			5 years
Computer hardware and software			2 - 5 years
Furniture and fixtures			2 years
Leasehold improvements			Shorter of 10 years or remaining lease term

Goodwill and Intangible Assets—Goodwill represents the excess of the purchase price over the fair value of net assets acquired in a business combination and is allocated to reporting units expected to benefit from the business combination. Goodwill is not amortized but rather tested for impairment annually in the fourth quarter, or more frequently if events or changes in circumstances indicate that goodwill may be impaired. When conducting our annual goodwill impairment assessment, we perform a quantitative evaluation by comparing the estimated fair value of our single reporting unit, determined using the Company’s market capitalization as of the testing date, to its carrying value. Goodwill impairment is recognized when the quantitative assessment results in the carrying value exceeding the fair value, in which case an impairment charge is recorded to the extent the carrying value exceeds the fair value. There were no impairment charges to goodwill during any of the periods presented.

Intangible assets with finite lives are carried at cost, less accumulated amortization. Intangible assets with finite lives are generally amortized on a straight-line basis over the estimated useful life of the respective asset, generally up to five years.

Business Combinations and Asset Acquisitions —To determine whether a transaction is accounted for as an asset acquisition or business combination, the Company applies a screen test to evaluate if substantially all of the fair value of the gross assets acquired is concentrated in a single identifiable asset or group of similar identifiable assets. If the screen test does not result in substantially all of the fair value concentrated in a single identifiable asset or group of similar identifiable assets, the Company performs a second test to evaluate whether the assets and activities transferred include inputs and substantive processes that together, significantly contribute to the ability to create outputs, which would constitute a business. If the result of the second test indicates that the acquired assets and activities constitute a business, the Company accounts for the transaction as a business combination.

For business combinations, the purchase consideration is allocated to the tangible assets acquired, liabilities assumed, and intangible assets acquired based on their respective estimated fair values. The excess of the fair value of purchase consideration over their fair values is recorded as goodwill. The Company’s estimates of fair value are based upon assumptions believed to be reasonable, but which are inherently uncertain and unpredictable, and as a result, actual results may differ from estimates. As a result, during the measurement period, which may be up to one year following the acquisition date, if new information is obtained about facts and circumstances that existed as of the acquisition date, the Company may record adjustments to the fair value of these assets and liabilities, with the corresponding offset to goodwill. Upon the conclusion of the measurement period or final determination of the values of assets acquired or liabilities assumed, whichever comes first, any subsequent adjustments are recorded within the accompanying consolidated statements of operations.

The Company accounts for a transaction as an asset acquisition when substantially all of the fair value of the gross assets acquired is concentrated in a single identifiable asset or group of similar identifiable assets, or otherwise does not meet the definition of a business. Asset acquisition-related costs are capitalized as part of the asset or assets acquired.

Software Development Costs—The Company incurs costs related to developing the Roblox Platform and related support systems. The Company capitalizes development costs when preliminary development efforts are successfully completed, management has authorized and committed project funding, and it is probable that the project will be completed and the software will be used as intended. Development costs meeting the Company’s capitalization criteria were not material during the periods presented.

Impairment of Long-Lived Assets—The Company periodically evaluates the carrying value of long-lived assets to be held and used when indicators of impairment exist. The carrying value of a long-lived asset to be held and used is considered impaired when the estimated separately identifiable undiscounted cash flows expected to result from the use of the asset and its eventual disposition are less than the carrying value of the asset. In that event, an impairment loss is recognized based on the amount by which the carrying value exceeds the fair value of the long-lived asset.

Significant judgment is required to estimate the amount and timing of future cash flows and the relative risk of achieving those cash flows. Assumptions and estimates about future values and remaining useful lives are complex and often subjective. They can be affected by a variety of factors, including external factors such as industry and economic trends, and internal factors such as changes in the Company’s business strategy and internal forecasts.

There were no impairment charges of long-lived assets recorded during any of the periods presented.

Developer Exchange Fees Expense—The Company has established an incentive program for developers and creators to build and operate virtual worlds within the Roblox environment. Developers and creators may charge other users virtual currency to participate in their world. Under certain conditions as outlined in the Developer Exchange Program agreement with developers and creators, and in compliance with applicable law, these developers and creators can receive a cash payout based on the amount of accumulated earned Robux. The Company recognizes the expense as Robux are earned by qualified developers.

Infrastructure and Trust & Safety Expense—Infrastructure and trust & safety expense consists primarily of expenses related to the operation of our data centers and technical infrastructure in order to deliver our Platform to our users and are expensed as incurred. Infrastructure expenses also include personnel costs and allocated overhead for employees and team members whose primary responsibilities relate to supporting our infrastructure and trust & safety initiatives.

Research and Development Cost— Research and development costs consist primarily of personnel costs and allocated overhead and are expensed as incurred.

Stock-Based Compensation Expense—The Company measures and recognizes stock-based compensation expense for all stock-based awards, including stock options, unregistered restricted stock awards (“RSAs”), restricted stock units (“RSUs”) and performance stock units (“PSUs”) granted to employees, directors, and non-employees, and stock purchase rights granted under the 2020 ESPP to employees, based on the estimated grant date fair value of the awards.

The fair value of each stock option and stock purchase right granted is estimated using the Black-Scholes option-pricing model and is recognized as compensation expense on a straight-line basis over the requisite service period of the awards. The Black-Scholes option pricing model requires certain subjective inputs and assumptions, including the fair value of the Company’s Class A common stock, the expected term, risk-free interest rates, expected stock price volatility, and expected dividend yield of our Class A common stock. The assumptions used to determine the fair value of the option awards represent management’s best estimates. These estimates involve inherent uncertainties and the application of management’s judgment. These assumptions and estimates are as follows:

•Fair value of Class A common stock— Prior to the Direct Listing, the fair value of the shares of Class A common stock underlying the stock options and RSUs has historically been determined by the Company’s Board of Directors along with management as there was no public market for the underlying common stock. The Company’s Board of Directors along with management determined the fair value of the Company’s common stock by considering a number of objective and subjective factors including: contemporaneous third-party valuations of its common stock, the valuation of comparable companies, sales of the Company’s common and convertible preferred stock to outside investors in arms-length transactions, the Company’s operating and financial performance, the lack of marketability, and the general and industry specific economic outlook, amongst other factors. After the completion of the Direct listing, the fair value of the Company’s Class A common stock is determined based on the NYSE closing price on the date of grant.

•Expected term—The expected term represents the period stock-based awards are expected to be outstanding. The expected term assumptions are determined based on the vesting terms, estimated exercise behavior, post-vesting cancellations and contractual lives of the awards.

•Risk-free interest rates—The risk-free interest rate is based on the implied yields in effect at the time of the grant of U.S. Treasury notes with terms approximately equal to the expected term of the award.

•Expected stock price volatility— Prior to the Direct Listing, the Company used the historical volatility of the Class A common stock price of similar publicly-traded peer companies. After the completion of the Direct Listing, the Company continues to use the historical volatility of the stock price of similar publicly traded peer companies since it has not established sufficient public trading history.

•Expected dividend yield—The Company utilizes a dividend yield of zero, as it has no history or plan of declaring dividends on its common stock.

RSUs granted by the Company prior to March 2021 vest upon the satisfaction of both a service-based vesting condition, which is typically four years, and a liquidity event-related performance vesting condition. The liquidity event-related performance vesting condition was satisfied on March 2, 2021 (the “Effective Date”) and the Company recorded a cumulative stock-based compensation expense as of the Direct Listing date for those RSUs for which the service-based vesting condition has been satisfied. Stock-based compensation related to the remaining service-based period after the liquidity event-related performance vesting condition was satisfied is recorded over the remaining requisite service period using the accelerated attribution method. For RSUs granted subsequent to the Direct Listing, we recognize stock-based compensation expense based on grant date fair value on a straight-line basis over the requisite service period for the entire award. The grant date fair value of our Class A common stock associated with our RSUs granted subsequent to the Direct Listing is determined based on the NYSE closing price on the date of grant.

In February 2021, the Leadership Development and Compensation Committee of the Company’s Board of Directors granted the CEO a Long-Term Performance Award (“CEO Long-Term Performance Award”), an RSU award that includes a service and a market condition. The fair value of the CEO Long-Term Performance Award was determined using a Monte Carlo simulation model. The fair value of the common stock underlying the award was determined by the Company’s Board of Directors along with management by considering a number of objective and subjective factors. The Company estimated the expected term based on the time period from the valuation date to the end of the performance period. The risk-free interest rate is based on the U.S. Treasury yield curve in effect at the time of grant for zero-coupon U.S. Treasury notes. The expected volatility is derived from the historical stock volatility of selected peers over a period equivalent to the expected term of the CEO Long-Term Performance Award. The associated stock-based compensation is recorded over the derived service period, using the accelerated attribution method. If the stock price goals are met sooner than the derived service period, the Company will adjust the stock-based compensation expense to reflect the cumulative expense associated with the vested portion of the CEO Long-Term Performance Award. Provided that David Baszucki continues to be the CEO of the Company, stock-based compensation expense is recognized over the derived service period, regardless of whether the stock price goals are achieved.

The Company records forfeitures when they occur for all stock-based awards.

Advertising Expense—Costs for advertising are primarily expensed as incurred and are included in sales and marketing expense in our consolidated statement of operations. Advertising costs totaled $36.2 million, $26.8 million, and $25.7 million for the years ended December 31, 2022, 2021, and 2020 respectively.

Basic and Diluted Net Loss Per Common Share—For the year ended December 31, 2020, basic and diluted net loss per share attributable to common stockholders is computed in conformity with the two-class method required for participating securities. The Company considers all series of its convertible preferred stock to be participating securities as the holders of such stock have the right to receive nonforfeitable dividends on a pari passu basis in the event that a dividend is paid on common stock. Under the two-class method, the net loss attributable to common stockholders is not allocated to the convertible preferred stock as the preferred stockholders do not have a contractual obligation to share in the Company’s losses.

For all years presented, basic net loss per share is computed by dividing net loss attributable to common stockholders by the weighted-average number of shares of common stock outstanding during the period. Diluted net loss per share is computed by giving effect to all potentially dilutive common stock equivalents to the extent they are dilutive. For purposes of this calculation, convertible preferred stock, stock options, RSAs, convertible preferred stock warrants, and common stock warrants, as applicable, are considered to be common stock equivalents but have been excluded from the calculation of diluted net loss per share attributable to common stockholders as their effect is anti-dilutive for all periods presented.

Income Taxes—The Company accounts for income taxes using the asset and liability method. Deferred income taxes are recognized by applying enacted statutory tax rates applicable to future years to differences between the consolidated financial statement carrying amounts of existing assets and liabilities and their respective tax bases and operating loss and tax credit carryforwards. The effect on deferred tax assets and liabilities of a change in tax rates is recognized in the statement of operations in the period that includes the enactment date. The measurement of deferred tax assets is reduced, if necessary, by a valuation allowance for any tax benefit for which the future realization is uncertain.

The tax effects of a position are recognized only if it is more likely than not to be sustained based solely on its technical merits as of the reporting date. The Company considers many factors when evaluating and estimating its tax positions and tax benefits, which may require periodic adjustments.

Leases—Effective January 1, 2021, the Company adopted Accounting Standards Update (“ASU”) No. 2016-02, “Leases (Topic 842)” along with all subsequent ASU clarifications and improvements that are applicable to the Company on January 1, 2021 utilizing the modified retrospective transition method, which requires a cumulative-effect adjustment, if any, to the opening balance of retained earnings to be recognized on the date of adoption with prior periods not restated.

The Company leases facilities under non-cancelable operating lease agreements. These leases have varying terms up to 12 years and contain leasehold improvement incentives, rent holidays and escalation clauses. In addition, some of these leases have renewal options for up to five years after expiration of the initial term. The Company determines if an arrangement contains a lease at inception. The Company determines if a contract contains a lease based on whether we have the right to obtain substantially all of the economic benefits from the use of an identified asset and whether we have the right to direct the use of an identified asset in exchange for consideration.

Operating lease right-of-use (“ROU”) assets represent our right to use an underlying asset for the lease term. Operating lease liabilities represent our obligation to make lease payments arising from the lease at the commencement date and are recognized based on the present value of lease payments over the lease term at the lease commencement date. Operating lease ROU assets are recognized as the lease liability, adjusted for lease incentives received, initial direct costs and prepayments made.

In determining the present value of lease payments, the Company discounts future lease payments using its incremental borrowing rate (“IBR”) since the implicit rate in our various leases is unknown. The IBR represents the rate of interest the Company would have to pay to borrow on a collateralized basis over a similar term at an amount equal to the lease payments in a similar economic environment. The Company utilizes a market-based approach to estimate the IBR, which requires significant judgment. The Company primarily considers the current economic environment, lease term and currency in which the lease is denominated, as well as (i) yields on corporate bond with a credit rating similar to the Company; (ii) yields on our outstanding unsecured debt; and (iii) indicative pricing on both secured and unsecured debt received from potential lenders (if any). Certain lease agreements include options to renew or early terminate the lease, and we include such extension periods when it is reasonably certain that they will be exercised and include such periods beyond the early termination date when it is reasonably certain the early terminations will not be exercised.

Lease expense is recognized on a straight-line basis over the lease term.

Variable lease payments are expensed when the underlying uncertainty is resolved, which is generally when the obligation for those costs are incurred and are excluded from the measurement of the right-of-use assets and lease liabilities. Variable lease payments primarily include common-area maintenance, utilities, taxes or other operating costs, which are generally based on a percentage of actual expenses incurred or a fluctuating rate which is unknown at the inception of the contract.

Leases with an initial term of 12 months or less (“short-term leases”) are not recognized on the balance sheet. The Company recognizes lease expense for short-term leases on a straight-line basis over the lease term. The Company does not account for lease components (e.g., fixed payments including rent) separately from the non-lease components (e.g., common-area maintenance costs).

For the year ended December 31, 2020, rent expense totaled $42.9 million.

Recent Accounting Pronouncements

Accounting Pronouncements Recently Adopted

In June 2016, the FASB issued ASU 2016-13, “Financial Instruments-Credit Losses, Topic 326: Measurement of Credit Losses on Financial Instruments,” which requires a financial asset measured at amortized cost basis to be presented at the net amount expected to be collected, with further clarifications made more recently regarding the treatment of accrued interest, transfers between classifications for loans and debt securities, recoveries, and the option to irrevocably elect the fair value option (on an instrument-by-instrument basis) for eligible financial assets at amortized costs. The new standard requires that an entity measure and recognize expected credit losses for financial assets held at amortized cost and replaces the incurred loss impairment methodology in prior U.S. GAAP with a methodology that requires consideration of a broader range of information to estimate credit losses. The Company adopted the guidance during the quarter ended September 30, 2021 on a modified retrospective basis as of January 1, 2021. The adoption of this standard did not result in any cumulative effect adjustment on the Company’s condensed consolidated financial statements upon adoption as of January 1, 2021.

In February 2016, the FASB issued ASU No. 2016-02, “Leases (Topic 842)”, which amends the existing accounting standards for leases. The new standard requires lessees to record an ROU asset and a corresponding lease liability on the balance sheet (with the exception of short-term leases). For lessees, leases will continue to be classified as either operating or financing in the income statement. The Company adopted the guidance on January 1, 2021 utilizing the modified retrospective transition method through a cumulative-effect adjustment at the beginning of the first quarter of 2021. The Company elected the package of practical expedients permitted under the transition guidance, which allowed the Company to carryforward its historical lease classification, assessment on whether a contract was or contains a lease, and initial direct costs for leases that existed prior to January 1, 2021. The Company also elected to combine its lease and non-lease components and not recognize ROU assets and lease liabilities for leases with an initial term of 12 months or less. The Company did not elect to apply the hindsight practical expedient when determining lease term and assessing impairment of ROU assets.

In August 2018, the FASB issued ASU No. 2018-15, “Intangibles-Goodwill and Other-Internal-Use Software (Subtopic 350-40): Customer’s Accounting for Implementation Costs Incurred in a Cloud Computing Arrangement That Is a Service Contract,” which aligns the requirements for capitalizing implementation costs incurred in a hosting arrangement that is a service contract with the requirements for capitalizing implementation costs incurred to develop or obtain internal-use software. The new standard requires capitalized costs to be amortized on a straight-line basis generally over the term of the arrangement, and the financial statement presentation for these capitalized costs would be the same as that of the fees related to the hosting arrangements. This new guidance was effective for the Company beginning on January 1, 2021 and did not have a material impact on the Company’s consolidated financial statements.

In December 2019, the FASB issued ASU No. 2019-12, “Income Taxes (Topic 740): Simplifying the Accounting for Income Taxes”. The purpose of the ASU was to reduce complexity in the accounting standards for income taxes by removing certain exceptions as well as clarifying certain allocations. This update removed the exception to the incremental approach for intra period tax allocation when there is a loss from continuing operation and income or a gain from other items (for example, discontinued operations or other comprehensive income). This update also addresses the split recognition of franchise taxes that are partially based on income between income-based tax and non-income-based tax. The Company elected to adopt the ASU on January 1, 2021 and the adoption did not have a material impact on the Company’s consolidated financial statements.

Recent Accounting Pronouncements Not Yet Adopted

In October 2021, the FASB issued ASU 2021-08, “Business Combinations (Topic 805): Accounting for Contract Assets and Contract Liabilities from Contracts with Customers”. Under ASU 2021-08, an acquirer must recognize and measure contract assets and contract liabilities acquired in a business combination in accordance with Topic 606, as if it had originated the contracts. Prior to this ASU, an acquirer generally recognizes contract assets acquired and contract liabilities assumed that arose from contracts with customers at fair value on the acquisition date. This guidance is effective for interim and annual periods beginning after December 15, 2022, with early adoption permitted. The Company plans to adopt ASU 2021-08 on a prospective basis effective January 1, 2023. The Company will continue to evaluate the impact of this ASU, which will depend on the contract assets and liabilities acquired in future business combinations.

Revenue from Contracts with Customers

12 Months Ended

Dec. 31, 2022

Disaggregation of Revenue [Abstract]

Revenue from Contracts with Customers

Disaggregation of Revenue

The following table summarizes revenue by region based on the billing country of users (in thousands, except percentages):


	Year Ended December 31,
	2022				2021				2020
	Amount		Percentage of Revenue		Amount		Percentage of Revenue		Amount		Percentage of Revenue
United States and Canada (1)	$	1,465,955	66	%	$	1,298,938	68	%	$	638,354	69	%
Europe	404,431		18		357,656		19		168,303		18
Asia-Pacific, including Australia and New Zealand	204,261		8		145,464		7		70,530		8
Rest of world	150,405		7		117,123		6		46,698		5
Total	$	2,225,052	100	%	$	1,919,181	100	%	$	923,885	100	%

(1)The Company’s revenues in the U.S. were 62%, 63%, and 65% of consolidated revenues for each of the years ended December 31, 2022, 2021, and 2020, respectively.

No individual country, other than those disclosed above, exceeded 10% of the Company’s total revenue for any period presented.

Durable virtual items accounted for 90%, 89%, and 87% of Roblox Platform revenue in the years ended December 31, 2022, 2021, and 2020, respectively. Consumable virtual items accounted for 10%, 11%, and 13% of Roblox Platform revenue in the years ended December 31, 2022, 2021, and 2020, respectively.

Deferred Revenue

The Company receives payments from its users based on the payment terms established in its contracts. Such payments are initially recorded to deferred revenue and are recognized into revenue as the Company satisfies its performance obligations. The aggregate amount of revenue allocated to unsatisfied performance obligations is included in our deferred revenue balances.

The increase in the deferred revenue for the year ended December 31, 2022 was driven by sales during the period exceeding revenue recognized from the satisfaction our performance obligations, which includes the revenue recognized during the period that was included in the current portion deferred revenue balance at the beginning of the period.

The entire disclosure of revenue from contract with customer to transfer good or service and to transfer nonfinancial asset. Includes, but is not limited to, disaggregation of revenue, credit loss recognized from contract with customer, judgment and change in judgment related to contract with customer, and asset recognized from cost incurred to obtain or fulfill contract with customer. Excludes insurance and lease contracts.

Reference 1: http://www.xbrl.org/2003/role/disclosureRef
-Publisher FASB
-Name Accounting Standards Codification
-Topic 606
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Reference 2: http://www.xbrl.org/2003/role/disclosureRef
-Publisher FASB
-Name Accounting Standards Codification
-Topic 606
-SubTopic 10
-Section 50
-Paragraph 10
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Reference 3: http://www.xbrl.org/2003/role/disclosureRef
-Publisher FASB
-Name Accounting Standards Codification
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-SubTopic 10
-Section 50
-Paragraph 13
-Subparagraph (b)(2)
-URI https://asc.fasb.org/extlink&oid=126920106&loc=SL49130556-203045

Reference 4: http://www.xbrl.org/2003/role/disclosureRef
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-Name Accounting Standards Codification
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Reference 5: http://www.xbrl.org/2003/role/disclosureRef
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-Name Accounting Standards Codification
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Reference 6: http://www.xbrl.org/2003/role/disclosureRef
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Reference 7: http://www.xbrl.org/2003/role/disclosureRef
-Publisher FASB
-Name Accounting Standards Codification
-Topic 606
-SubTopic 10
-Section 50
-Paragraph 12
-Subparagraph (a)
-URI https://asc.fasb.org/extlink&oid=126920106&loc=SL49130554-203045

Reference 8: http://www.xbrl.org/2003/role/disclosureRef
-Publisher FASB
-Name Accounting Standards Codification
-Topic 606
-SubTopic 10
-Section 50
-Paragraph 12
-Subparagraph (d)
-URI https://asc.fasb.org/extlink&oid=126920106&loc=SL49130554-203045

Reference 9: http://www.xbrl.org/2003/role/disclosureRef
-Publisher FASB
-Name Accounting Standards Codification
-Topic 606
-SubTopic 10
-Section 50
-Paragraph 15
-URI https://asc.fasb.org/extlink&oid=126920106&loc=SL49130558-203045

Reference 10: http://www.xbrl.org/2003/role/disclosureRef
-Publisher FASB
-Name Accounting Standards Codification
-Topic 606
-SubTopic 10
-Section 50
-Paragraph 12
-Subparagraph (c)
-URI https://asc.fasb.org/extlink&oid=126920106&loc=SL49130554-203045

Leases

12 Months Ended

Dec. 31, 2022

Leases [Abstract]

Leases

The Company has operating leases for real estate and co-located data centers. The components of lease expense were as follows (in thousands):


	Year Ended December 31,
	2022		2021
Operating lease expense	$	90,933	$	53,442
Variable and short-term lease expense	$	11,586	$	3,860

As of December 31, 2022 and 2021, we had short-term operating lease liabilities totaling $73.2 million and $51.3 million, respectively, included within accrued expenses and other current liabilities on our consolidated balance sheets.

The following table presents future lease payments under the Company’s non-cancelable operating leases as of December 31, 2022 (in thousands):


Year ending December 31,
2023	$	63,226
2024	114,195
2025	103,100
2026	88,077
2027	66,767
Thereafter	303,844
Total lease payments	$	739,209
Less: imputed interest(1)	171,384
Present value of lease liabilities	$	567,825

(1)Calculated using each lease’s incremental borrowing rate.

In addition, the Company has executed operating leases for real estate and co-located data centers which have not commenced as of December 31, 2022. The non-cancellable lease payments for these leases totaled $354.5 million as of December 31, 2022, with lease terms ranging between 7 to 12 years.

Of the above amount, approximately $212.5 million pertains to a lease signed by the Company on March 10, 2022 for office space in San Mateo, California of approximately 218,554 square feet, with a term of approximately 12 years and two renewal options of 5 years each. The Company expects to obtain possession of the office space in the second quarter of 2023. In addition, the Company expects to receive $22.9 million in tenant improvement allowance for the office space.

The following table presents the weighted average remaining lease term and discount rates as of December 31, 2022 and December 31, 2021:


	As of December 31,
	2022		2021
Weighted average remaining lease term	7.8		5.8
Weighted average discount rate	5.5	%	4.0	%

Supplemental cash and noncash information related to operating leases is as follows (in thousands):


	Year Ended December 31,
	2022		2021
Cash paid for amounts included in the measurement of lease liabilities(1)	$	70,515	$	52,942
Lease liabilities arising from obtaining new right-of-use assets (noncash)	$	373,844	$	70,068

(1)The years ended December 31, 2022 and December 31, 2021 excludes $1.8 million and $9.1 million, respectively, of leasehold incentives received from the landlord.

Fair Value Measurements

12 Months Ended

Dec. 31, 2022

Fair Value Disclosures [Abstract]

Fair Value Measurements

Financial Assets

The composition of our financial assets measured at fair value on a recurring basis are set forth below (in thousands):


		Fair Value
	Fair Value Hierarchy	December 31,
Financial Instrument		2022		2021
Financial Assets:
Money market funds classified as cash equivalents	Level 1	$	1,903,880	$	2,853,055

Financial Liabilities

The Company’s financial liabilities that are not measured at fair value on a recurring basis consist of its 2030 Notes. Refer to Note 8, “Debt” to the Notes to Consolidated Financial Statements for more information.

As of December 31, 2022 and 2021, the estimated fair value of the 2030 Notes was approximately $788.2 million and $1,016.2 million, respectively, determined based on the trading price of the 2030 Notes on the last trading day of the reporting period in an inactive market, which represents a Level 2 input.

Business Combination and Asset Acquisition [Abstract]

The entire disclosure for the fair value of financial instruments (as defined), including financial assets and financial liabilities (collectively, as defined), and the measurements of those instruments as well as disclosures related to the fair value of non-financial assets and liabilities. Such disclosures about the financial instruments, assets, and liabilities would include: (1) the fair value of the required items together with their carrying amounts (as appropriate); (2) for items for which it is not practicable to estimate fair value, disclosure would include: (a) information pertinent to estimating fair value (including, carrying amount, effective interest rate, and maturity, and (b) the reasons why it is not practicable to estimate fair value; (3) significant concentrations of credit risk including: (a) information about the activity, region, or economic characteristics identifying a concentration, (b) the maximum amount of loss the entity is exposed to based on the gross fair value of the related item, (c) policy for requiring collateral or other security and information as to accessing such collateral or security, and (d) the nature and brief description of such collateral or security; (4) quantitative information about market risks and how such risks are managed; (5) for items measured on both a recurring and nonrecurring basis information regarding the inputs used to develop the fair value measurement; and (6) for items presented in the financial statement for which fair value measurement is elected: (a) information necessary to understand the reasons for the election, (b) discussion of the effect of fair value changes on earnings, (c) a description of [similar groups] items for which the election is made and the relation thereof to the balance sheet, the aggregate carrying value of items included in the balance sheet that are not eligible for the election; (7) all other required (as defined) and desired information.

+ References + Details

Acquisitions

12 Months Ended

Dec. 31, 2022

Acquisitions

Byfron Technologies, LLC Acquisition

On October 11, 2022 (the “Byfron Acquisition Date”), the Company acquired all outstanding equity interests of Byfron Technologies, LLC (“Byfron”), a privately-held company that operates a security and anti-cheat software for game publishers. The acquisition has been accounted for as a business combination. The consideration totaled $9.6 million, which included $2.0 million of cash to be held back for 18 months following the Byfron Acquisition Date. The aggregate purchase consideration comprised of the following (in thousands):



	Fair Value
Cash paid	$	7,603
Cash holdback	2,000
Total purchase price	$	9,603

In connection with the acquisition, the Company also entered into agreements with the Byfron founders, which provide them $9.6 million over a three year service period following the Byfron Acquisition Date, subject to their continued service with the Company during that period. The agreements were determined to primarily benefit the Company and were recognized separate from the business combination. The expense associated with these agreements will be recognized ratably over the requisite service period of three years as a component of research and development expense.

The following table summarizes the Company’s allocation of the purchase consideration based on the fair value of assets acquired and liabilities assumed at the Byfron Acquisition Date (in thousands):


	October 11, 2022
Cash and cash equivalents	$	380
Goodwill	3,882
Identified intangible assets	5,500
Other assets	169
Other current liabilities	$	(328)
Total purchase price	$	9,603

The following table presents details of the identifiable assets acquired (in thousands, except estimated useful life):


	Carrying Amount		Estimated Useful Life (Years)
Developed technology	$	5,500	5
Total	$	5,500

Goodwill is primarily attributable to the assembled workforce and anticipated synergies arising from the acquisition. The goodwill recorded in the acquisition is expected to be deductible for income tax purposes.

Hamul, Inc. Acquisition

On April 1, 2022 (“Hamul Acquisition Date”), the Company acquired all outstanding equity interests of Hamul, Inc. (“Hamul”) a privately-held company that provides a platform for connecting gaming communities. The acquisition has been accounted for as a business combination. The fair value of the consideration transferred was $19.3 million, which consisted of $9.2 million paid in cash and 385,093 shares of Class A common stock with a fair value of $4.0 million. The aggregate purchase consideration was comprised of the following (in thousands):



	Fair Value
Cash paid	$	9,185
Common stock issued	4,009
Replacement awards attributable to pre-acquisition service	6,129
Total purchase price	$	19,323

In connection with the acquisition, the Company entered into a stock-based consideration revesting agreement with the Hamul founders. The portion of the fair value of the common stock associated with pre-acquisition service of the Hamul founders represented a component of the total purchase consideration, as presented above. The remaining fair value of $7.6 million of these issued shares was excluded from the purchase price. These shares, which are subject to the recipients’ continued service with the Company, will be recognized ratably as stock-based compensation expense as a component of research and development expense over the requisite service period of 3 years following the Hamul Acquisition Date.

The total purchase consideration was allocated to the tangible and intangible assets acquired, and liabilities assumed, based upon their respective fair values as of the date of the acquisition. Management determined the preliminary fair values based on a number of factors. The excess of the purchase price over the net assets acquired was recorded as goodwill. Goodwill is attributable to the assembled workforce and anticipated synergies arising from the acquisition. The goodwill recognized is not expected to be deductible for income tax purposes.

The following table summarizes the Company’s preliminary allocation of the purchase consideration based on the fair value of assets acquired and liabilities assumed at the Hamul Acquisition Date (in thousands):


	April 1, 2022
Cash and cash equivalents	$	3,020
Goodwill	12,382
Identified intangible assets	4,500
Deferred tax liabilities	(579)
Total purchase price	$	19,323

The following table presents details of the identifiable assets acquired (in thousands, except estimated useful life):


	Carrying Amount		Estimated Useful Life (Years)
Developed technology	$	4,500	5
Total	$	4,500

Guilded Acquisition

On August 16, 2021 (the “Guilded Acquisition Date”), the Company acquired all outstanding equity interests of Guilded, Inc., (“Guilded”), a privately-held company that operates a communications platform for connecting gaming communities. The acquisition has been accounted for as a business combination. The fair value of the consideration transferred was $77.6 million, which consisted of $46.3 million paid in cash and 0.5 million shares of Roblox’s Class A common stock with a fair value of $31.3 million. The aggregate purchase consideration for Guilded was comprised of the following (in thousands):


	Fair Value
Cash paid	$	46,285
Roblox Class A common stock issued	22,744
Replacement awards attributable to pre-acquisition service	8,530
Total purchase price	$	77,559

The acquisition-related costs were not material and were recorded as general and administrative expenses in the Company’s consolidated statements of operations for the year ended December 31, 2021.

In connection with the acquisition, the Company entered into a stock-based consideration revesting agreement with the Guilded founder. The portion of the fair value of the common stock associated with pre-acquisition service of the Guilded founder represented a component of the total purchase consideration, as presented above. The remaining fair value of $8.5 million of these issued shares was excluded from the purchase price. These shares, which are subject to the recipients’ continued service with the Company, will be recognized ratably as stock-based compensation expense as a component of research and development expense over the requisite service period of 3 years.

The total purchase consideration of the Guilded acquisition was allocated to the tangible and intangible assets acquired, and liabilities assumed, based upon their respective fair values as of the date of the acquisition. Management determined the preliminary fair values based on a number of factors, including a valuation from an independent third-party valuation firm. The excess of the purchase price over the net assets acquired was recorded as goodwill. Goodwill is attributable to the assembled workforce and anticipated synergies arising from the acquisition. The goodwill recorded in the acquisition is not deductible for income tax purposes.

The following table summarizes the Company’s allocation of the purchase consideration based on the fair value of assets acquired and liabilities assumed at the Guilded Acquisition Date (in thousands):


	August 16, 2021
Cash and cash equivalents	$	593
Goodwill	58,503
Identified intangible assets	19,600
Deferred tax liabilities	(999)
Accrued expenses and other current liabilities	(138)
Total purchase price	$	77,559

The following table presents details of the identifiable intangible assets acquired at the Guilded Acquisition Date (in thousands, except estimated useful life):


	Carrying Amount		Estimated Useful Life (Years)
Developed technology	$	19,100	5
Trade name	500		5
Total	$	19,600

Other Acquisitions

During the year ended December 31, 2021, the Company completed two individually immaterial acquisitions. These transactions were accounted for as asset acquisitions as they did not meet the definition of a business. The acquired assets consisted entirely of assembled workforce and had a fair value of $8.5 million with an estimated useful life of 3 years. The aggregate purchase consideration consisted of $8.5 million, paid in cash.

Loom.ai Acquisition

On December 11, 2020, the Company acquired Loom.ai, a privately-held company specializing in real-time facial animation technology for 3D avatars using deep learning, computer vision and VFX. The acquisition has been accounted as a business combination. The acquisition date fair value of the consideration transferred was $86.7 million, which consisted of cash and 1.3 million shares of Roblox’s Class A common stock with a fair value of $40.7 million. The aggregate purchase consideration for Loom.ai was comprised of the following (in thousands):


	Fair Value
Cash paid	$	45,998
Common stock issued	35,203
Replacement awards attributable to pre-acquisition service	5,493
Total purchase price	$	86,694

Cash consideration included reimbursement of acquisition-related transaction costs of $0.8 million incurred by Loom.ai to execute the transaction. Additionally, the acquisition-related costs were not material and were recorded as general and administrative expenses in the Company’s consolidated statements of operations for the year ended December 31, 2020.

In connection with the acquisition, the Company entered into stock-based consideration revestment agreements with the Loom.ai founders. The portion of the fair value of the common stock associated with pre-acquisition service of Loom.ai founders represented a component of the total purchase consideration, as presented above. The remaining fair value of $9.2 million of these issued shares was excluded from the purchase price. These shares, which are subject to the recipients’ continued service with the Company, will be recognized ratably as stock-based compensation expense as a component of research and development expense over the requisite service period of 3 years.

The total purchase consideration of the Loom.ai acquisition was allocated to the tangible and intangible assets acquired, and liabilities assumed, based upon their respective fair values as of the date of the acquisition. Management determined the fair values based on a number of factors, including a valuation from an independent third-party valuation firm. The excess of the purchase price over the net assets acquired was recorded as goodwill. Goodwill is attributable to the assembled workforce and anticipated synergies arising from the acquisition. Of the total goodwill recorded in connection with the acquisition of Loom.ai, $6.7 million was deductible for tax purposes.

The following table summarizes the fair values of the assets acquired and liabilities assumed as of the acquisition date (in thousands):


	December 11, 2020
Cash and cash equivalents	$	5,080
Prepaid expenses and other current assets	45
Goodwill	59,568
Identified intangible asset - developed technology	29,000
Deferred tax liabilities	(6,681)
Accrued expenses and other current liabilities	(318)
Total purchase price	$	86,694

The identifiable intangible assets acquired consisted entirely of existing technology, which has a fair value of $29.0 million and an estimated remaining useful life of 5 years as of December 31, 2020.

Imbellus Acquisition

On November 30, 2020, the Company completed the acquisition of substantially all of the assets from Imbellus, Inc., a privately-held software company, which developed simulation-based cognitive assessments that measure human thought process. The asset acquisition consisted entirely of existing technology, which has a fair value of $11.7 million and an estimated remaining useful life of 5 years as of December 31, 2020. The purchase consideration consisted of 80,000 shares of Roblox’s Class A common stock, with a fair value of $2.9 million, and $8.8 million of cash including direct transaction costs.

Goodwill and Intangible Assets

12 Months Ended

Dec. 31, 2022

Goodwill and Intangible Assets Disclosure [Abstract]

Goodwill and Intangible Assets

Goodwill

Goodwill is recorded when the purchase price of an acquisition exceeds the fair value of the net tangible and identified intangible assets acquired.

The following table represents the changes to goodwill from December 31, 2020 to December 31, 2022 (in thousands):


	Carrying Amount
Balance as of December 31, 2020	$	59,568
Addition from acquisition	58,503
Balance as of December 31, 2021	$	118,071
Addition from acquisition	16,264
Balance as of December 31, 2022	$	134,335

There are no accumulated impairment losses for any period presented.

Intangible Assets

The following tables present details of the Company’s finite-lived intangible assets as of December 31, 2022 and December 31, 2021 (in thousands):


	As of December 31, 2022
	Gross Carrying Amount		Accumulated Amortization		Net Carrying Amount
Developed technology	$	72,059	$	(24,240)	$	47,819
Assembled workforce	10,000		(4,042)		5,958
Trade name	500		(133)		367
Total intangible assets	$	82,559	$	(28,415)	$	54,144


	As of December 31, 2021
	Gross Carrying Amount		Accumulated Amortization		Net Carrying Amount
Developed technology	$	62,059	$	(11,233)	$	50,826
Assembled workforce	8,500		(708)		7,792
Trade name	500		(25)		475
Total intangible assets	$	71,059	$	(11,966)	$	59,093

The above tables do not include $0.6 million of indefinite lived intangible assets as of December 31, 2022 and December 31, 2021.

As of December 31, 2022, the weighted-average remaining useful lives of our finite-lived intangible assets were 3.3 years for developed technology, 3.7 years for trade names, 1.8 years for assembled workforce, and 3.1 years in total, for all finite-lived intangible assets.

Amortization expense was $16.4 million, $10.8 million, and $1.1 million for the years ended December 31, 2022, 2021, and 2020, respectively.

Expected future amortization expenses related to the intangible assets as of December 31, 2022 were as follows (in thousands):


Year ending December 31,
2023	$	17,749
2024	16,696
2025	14,036
2026	4,613
2027	1,050
Thereafter	—
Total remaining amortization	$	54,144

Other Balance Sheet Components

12 Months Ended

Dec. 31, 2022

Other Balance Sheet Components [Abstract]

Other Balance Sheet Components

Prepaid expenses and other current assets

Prepaid expenses and other current assets consisted of the following (in thousands):


	As of December 31,
	2022		2021
Prepaid expenses	$	45,173	$	27,671
Other current assets	16,468		4,420
Total prepaid expenses and other current assets	$	61,641	$	32,091

Property and equipment, net

Property and equipment, net, consisted of the following (in thousands):


	As of December 31,
	2022		2021
Servers and related equipment and software	$	741,418	$	361,227
Computer hardware and software	23,647		16,154
Furniture and fixtures	446		179
Leasehold improvements	69,311		30,482
Construction in progress	24,306		16,837
Total property and equipment	859,128		424,879
Less: accumulated depreciation and amortization	(266,782)		(153,527)
Property and equipment—net	$	592,346	$	271,352

Construction in progress primarily relates to leasehold improvements for the Company’s leased office buildings and network equipment infrastructure to support the Company’s data centers.

Depreciation expense was $113.7 million, $64.9 million, and $42.7 million for years ended December 31, 2022, 2021, and 2020, respectively.

Accrued expenses and other current liabilities

Accrued expenses and other current liabilities consisted of the following (in thousands):


	As of December 31,
	2022		2021
Accrued operating expenses	$	80,122	$	56,134
Short term operating lease liabilities	73,235		51,303
Accrued interest on the 2030 Notes	6,458		6,781
Taxes payable	49,361		43,286
Accrued compensation and other employee related liabilities	21,003		14,511
Other current liability	5,827		8,754
Total accrued expenses and other current liabilities	$	236,006	$	180,769

Debt

12 Months Ended

Dec. 31, 2022

Debt Disclosure [Abstract]

Debt

2030 Notes

Long-term debt, net consisted of the following (in thousands):


	As of December 31,
	2022		2021
2030 Notes
Principal	$	1,000,000	$	1,000,000
Unamortized issuance costs	11,016		12,277
Net carrying amount	$	988,984	$	987,723

On October 29, 2021, the Company issued $1.0 billion aggregate principal amount of its 3.875% Senior Notes due 2030 (the “2030 Notes”). The 2030 Notes mature on May 1, 2030. The 2030 Notes bear interest at a rate of 3.875% per annum. Interest on the 2030 Notes is payable semi-annually in arrears on May 1 and November 1 of each year, commencing on May 1, 2022.

The aggregate proceeds from offering of the 2030 Notes were approximately $987.5 million, after deducting lenders costs and other issuance costs incurred by the Company. The issuance costs of $12.5 million are amortized into interest expense using the effective interest method over the term of the 2030 Notes.

The Company may voluntarily redeem the 2030 Notes, in whole or in part, under the following circumstances:

(1)at any time prior to November 1, 2024, the Company may on any one or more occasions redeem up to 40% of the aggregate principal amount of the 2030 Notes at a redemption price of 103.875% of the principal amount including accrued and unpaid interest, if any, with the net cash proceeds of certain equity offerings; provided that (1) at least 50% of the aggregate principal amount of 2030 Notes originally issued remains outstanding immediately after the occurrence of such redemption (excluding 2030 Notes held by the Company and its subsidiaries); and (2) the redemption occurs within 180 days of the date of the closing of such equity offerings.

(2)on or after November 1, 2024, the Company may redeem all or a part of the 2030 Notes at the following redemption prices (expressed as percentages of principal amount), plus accrued and unpaid interest, if any, to, but excluding, the applicable redemption date:


Year	Percentage
2024	101.938	%
2025	100.969	%
2026 and thereafter	100.000	%

(3)at any time prior to November 1, 2024, the Company may redeem all or a part of the 2030 Notes at a redemption price equal to 100% of the principal amount of 2030 Notes redeemed, including accrued and unpaid interest, if any, plus the applicable “make-whole” premium set forth in the indenture governing the 2030 Notes (the “Indenture”) as of the date of such redemption; and

(4)in connection with any tender offer for the 2030 Notes, including an offer to purchase, if holders of not less than 90% in aggregate principal amount of the outstanding 2030 Notes validly tender and do not withdraw such notes in such tender offer and the Company (or any third party making such a tender offer in lieu of the Company) purchases all of the 2030 Notes validly tendered and not withdrawn by such holders, the Company (or such third party) will have the right, upon not less than 10, but not more than 60 days’ prior notice, given not more than 30 days following such purchase date to the holders of the 2030 Notes and the trustee, to redeem all of the 2030 Notes that remain outstanding following such purchase at a redemption price equal to the price offered to each holder of 2030 Notes (excluding any early tender or incentive fee) in such tender offer plus to the extent not included in the tender offer payment, accrued and unpaid interest, if any.

In certain circumstances involving a change of control triggering event (as defined in the Indenture), the Company will be required to make an offer to repurchase all, or at the holder’s option, any part, of each holder’s 2030 Notes at 101% of the aggregate principal amount, plus accrued and unpaid interest, if any, to the applicable repurchase date.

The 2030 Notes are unsecured obligations and the Indenture contains covenants limiting the Company and its subsidiaries’ ability to: (i) create certain liens and enter into sale and lease-back transactions; (ii) create, assume, incur or guarantee indebtedness; or (iii) consolidate or merge with or into, or sell or otherwise dispose of all of substantially all of the Company and its subsidiaries’ assets to another person. These covenants are subject to a number of limitations and exceptions set forth in the Indenture.

Interest expense recognized in the consolidated statements of operations related to the 2030 Notes was as follows (in thousands):


	Year Ended December 31,
	2022		2021
Contractual interest expense	$	38,642	$	6,781
Amortization of debt issuance costs	1,261		216
Total interest expense	$	39,903	$	6,997

The debt issuance costs for the 2030 Notes are amortized to interest expense over the term of the 2030 Notes using an annual effective interest rate of 4.05%.

As of December 31, 2022, the Company was in compliance with all of its covenants under the Indenture.

The entire disclosure for information about short-term and long-term debt arrangements, which includes amounts of borrowings under each line of credit, note payable, commercial paper issue, bonds indenture, debenture issue, own-share lending arrangements and any other contractual agreement to repay funds, and about the underlying arrangements, rationale for a classification as long-term, including repayment terms, interest rates, collateral provided, restrictions on use of assets and activities, whether or not in compliance with debt covenants, and other matters important to users of the financial statements, such as the effects of refinancing and noncompliance with debt covenants.

Reference 1: http://fasb.org/us-gaap/role/ref/legacyRef
-Publisher FASB
-Name Accounting Standards Codification
-Topic 470
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Reference 2: http://www.xbrl.org/2003/role/disclosureRef
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-Name Accounting Standards Codification
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-Section 50
-Paragraph 1B
-Subparagraph (h)
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Reference 3: http://www.xbrl.org/2003/role/disclosureRef
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Reference 4: http://www.xbrl.org/2003/role/disclosureRef
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Reference 5: http://www.xbrl.org/2003/role/disclosureRef
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Reference 7: http://www.xbrl.org/2003/role/disclosureRef
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Reference 8: http://www.xbrl.org/2003/role/disclosureRef
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Reference 11: http://www.xbrl.org/2003/role/disclosureRef
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Reference 12: http://www.xbrl.org/2003/role/disclosureRef
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-Name Accounting Standards Codification
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Reference 13: http://www.xbrl.org/2003/role/disclosureRef
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-Name Accounting Standards Codification
-Topic 470
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-Paragraph 1B
-Subparagraph (i)
-URI https://asc.fasb.org/extlink&oid=123466505&loc=SL123495323-112611

Commitments and Contingencies Disclosure [Abstract]

Commitments and Contingencies

12 Months Ended

Dec. 31, 2022

Commitments and Contingencies

Lease Commitments—The Company leases office facilities and space for data center operations under operating leases expiring in various years through 2035. Certain of these arrangements have free or escalating rent payment provisions and optional renewal clauses. All of the Company’s leases are accounted for as operating leases. Refer to Note 3, “Leases” to the Notes to Consolidated Financial Statements for more information.

Purchase Obligations—Non-cancellable contractual purchase obligations, primarily related to the Company’s data center hosting providers and software vendors, as of December 31, 2022, are as follows (in thousands):


	Year ending December 31,
	2023		2024		2025		2026		2027		Thereafter		Total
Purchase Obligations	$	225,707	$	7,073	$	1,366	$	201	$	56	$	—	$	234,403

2030 Notes—Future interest and principal payments related to the 2030 Notes, as of December 31, 2022, are as follows (in thousands):


	Year ending December 31,
	2023		2024		2025		2026		2027		Thereafter		Total
2030 Notes, including interest	$	38,750	$	38,750	$	38,750	$	38,750	$	38,750	$	1,096,870	$	1,290,620

Letters of Credit—The Company has letters of credit in connection with our operating leases which are not reflected in the Company’s consolidated balance sheets as of December 31, 2022 and 2021. The Company has not drawn down from the letters of credit and had $9.9 million available in aggregate as of December 31, 2022 and 2021.

Legal Proceedings—The Company is and, from time to time may in the future become, involved in legal proceedings, claims and litigation in the ordinary course of business.

As of December 31, 2022, the Company has accrued for immaterial losses related to those litigation matters that the Company believes to be probable and for which an amount of loss can be reasonably estimated. The Company considered the progress of these cases, the opinions and views of its legal counsel and outside advisors, its experience and settlements in similar cases, and other factors in arriving at the conclusion that a potential loss was probable. The Company cannot determine a reasonable estimate of the maximum possible loss or range of loss for all of these matters given that they are at various stages of the litigation process and each case is subject to the inherent uncertainties of litigation. The Company may incur substantial legal fees, which are expensed as incurred, in defending against these legal proceedings. The maximum amount of liability that may ultimately result from any of these matters cannot be predicted with absolute certainty and the ultimate resolution of one or more of these matters could ultimately have a material adverse effect on our operations.

Indemnification—In the ordinary course of business, the Company enters into agreements that may include indemnification provisions. Pursuant to such agreements, the Company may indemnify, hold harmless and defend an indemnified party for losses suffered or incurred by the indemnified party. Some of the provisions will limit losses to those arising from third-party actions. In some cases, the indemnification will continue after the termination of the agreement. The maximum potential amount of future payments the Company could be required to make under these provisions is not determinable. To date, the Company has not incurred material costs to defend lawsuits or settle claims related to these indemnification provisions.

The Company has also entered into indemnification agreements with its directors and officers that may require the Company to indemnify its directors and officers against liabilities that may arise by reason of their status or service as directors or officers to the fullest extent permitted by Delaware corporate law. To date, the Company has not incurred any material costs and have not accrued any liabilities related to such obligations. The Company also currently has directors’ and officers’ insurance.

Convertible Preferred Stock

12 Months Ended

Dec. 31, 2022

Convertible Preferred Stock [Abstract]

Convertible Preferred Stock

In January 2021, the Company issued 11,888,886 shares of Series H convertible preferred stock to certain institutional accredited investors in a private placement at a purchase price of $45.00 per share for aggregate net proceeds of approximately $534.3 million. There was no underwriter or placement agent used in connection with this sale.

The Company previously issued Series A, Series B, Series C, Series D, Series D-1, Series E, Series F, and Series G prior to 2021. In November 2020, pursuant to a conversion notice and an exchange agreement with entities affiliated with the Company’s Founder, President, CEO and Chair of the Company’s Board of Directors, all outstanding convertible preferred stock held by those entities were converted into our Class A common stock and thereafter all 57.3 million outstanding shares of Class A common stock held by those entities were exchanged for 57.3 million shares of Class B common stock. The rights of the holders of Class A common stock and Class B common stock are identical, except with respect to voting and conversion.

Immediately prior to the completion of the direct listing of the Company’s Class A common stock (the “Direct Listing”) on the New York Stock Exchange, all outstanding shares of the Company’s convertible preferred stock converted into an aggregate of 349,123,976 shares of Class A common stock.

The following table summarizes the convertible preferred stock outstanding immediately prior to the conversion into common stock, and the rights and preferences of the Company’s respective series preceding the Direct Listing in March 2021 (in thousands except per share data):


Series	Shares		Per share price at issuance		Per share conversion price		Aggregate Liquidation Preference		Carrying Value of Preferred
	Authorized	Outstanding
A	28,000	16,358	$	0.02	$	0.02	$	327	$	313
B	45,532	45,532	$	0.03	$	0.03	1,070		1,054
C	95,290	95,290	$	0.03	$	0.03	2,935		4,150
D	54,860	54,215	$	0.04	$	0.04	2,150		2,097
D-1	44,706	44,706	$	0.09	$	0.09	4,172		12,998
E	24,340	24,340	$	1.03	$	1.03	25,000		24,906
F	33,149	33,149	$	4.53	$	4.53	150,000		149,640
G	23,645	23,645	$	6.34	$	6.34	150,000		149,669
H	12,222	11,889	$	45.00	$	45.00	535,000		534,286
Total	361,744	349,124					$	870,654	$	879,113

The following table summarizes the convertible preferred stock outstanding prior to the conversion into common stock, and the rights and preferences of the Company’s respective series as of December 31, 2020 (in thousands except per share data):


Series	Shares		Per share price at issuance		Per share conversion price		Aggregate Liquidation Preference		Carrying Value of Preferred
	Authorized	Outstanding
A	28,000	16,358	$	0.02	$	0.02	$	327	$	313
B	45,532	45,532	$	0.03	$	0.03	1,070		1,054
C	95,290	95,290	$	0.03	$	0.03	2,935		4,150
D	54,860	54,215	$	0.04	$	0.04	2,150		2,097
D-1	44,706	44,706	$	0.09	$	0.09	4,172		12,998
E	24,340	24,340	$	1.03	$	1.03	25,000		24,906
F	33,149	33,149	$	4.53	$	4.53	150,000		149,640
G	23,645	23,645	$	6.34	$	6.34	150,000		149,669
Total	349,522	337,235					$	335,654	$	344,827

Stockholders' Equity (Deficit)

12 Months Ended

Dec. 31, 2022

Stockholders' Equity Note [Abstract]

Stockholders’ Equity (Deficit)

Preferred Stock —The amended and restated certificate of incorporation authorizes the issuance of 100.0 million shares of convertible preferred stock with a par value of $0.0001 per share.

Common Stock —The Company’s amended and restated certificate of incorporation authorizes the issuance of Class A common stock and Class B common stock. As of December 31, 2022, the Company is authorized to issue 4,935.0 million shares of Class A common stock and 65.0 million shares of Class B common stock. Holders of Class A common stock and Class B common stock are entitled to dividends on a pro rata basis, when, as, and if declared by the Company’s Board of Directors, subject to the rights of the holders of the Company’s convertible preferred stock. Holders of Class A common stock are entitled to one vote per share, and holders of Class B common stock are entitled to 20 votes per share. Each share of our Class B common stock is convertible into one share of our Class A common stock at any time and will convert automatically upon certain transfers and upon the earliest of (i) the date that is specified by the affirmative vote of the holders of two-thirds of the then-outstanding shares of Class B common stock, (ii) the date on which less than 30% of the Class B common stock that was outstanding on March 2, 2021 continues to remain outstanding, (iii) March 10, 2036, (iv) nine months after the death or permanent disability of Mr. David Baszucki, and (v) nine months after the date on which Mr. Baszucki no longer serves as our CEO or as a member of our Board of Directors. Class A common stock and Class B common stock are not redeemable at the option of the holder.

During the year ended December 31, 2021, 6.0 million shares of Class B common stock held by entities affiliated with Mr. Baszucki, Founder, President, CEO and Chair of our Board of Directors were converted to Class A common stock.

Class A and Class B common stock are referred to as common stock throughout the notes to the consolidated financial statements, unless otherwise noted.

The Company had reserved shares of common stock for future issuance as follows (in thousands):


	As of December 31,
	2022	2021	2020
Stock options outstanding	51,591	63,267	98,502
RSUs outstanding	30,322	14,684	3,061
CEO Long-Term Performance Award	11,500	11,500	—
2022 PSU Grants	415	—	—
2020 Equity Incentive Plan	59,945	52,811	15,448
2020 Employee Stock Purchase Plan	11,093	5,809	—
Stock warrants outstanding	264	324	324
RSAs outstanding	500	468	388
Conversion of convertible preferred stock	—	—	337,235
Total	165,630	148,863	454,958

The entire disclosure for shareholders' equity comprised of portions attributable to the parent entity and noncontrolling interest, including other comprehensive income. Includes, but is not limited to, balances of common stock, preferred stock, additional paid-in capital, other capital and retained earnings, accumulated balance for each classification of other comprehensive income and amount of comprehensive income.

Reference 1: http://fasb.org/us-gaap/role/ref/legacyRef
-Publisher FASB
-Name Accounting Standards Codification
-Topic 505
-URI https://asc.fasb.org/topic&trid=2208762

Reference 2: http://www.xbrl.org/2003/role/disclosureRef
-Publisher FASB
-Name Accounting Standards Codification
-Topic 505
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-Paragraph 13
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Share-Based Payment Arrangement [Abstract]

Stock-based Compensation

12 Months Ended

Dec. 31, 2022

Stock-based Compensation

2004 Incentive Stock Plan

In 2004, the Company approved the 2004 Incentive Stock Plan (the “2004 Plan”), under which the Board of Directors may grant incentive stock options to employees and nonstatutory stock options to employees, members of the Board of Directors and consultants of the Company and its subsidiaries.

Under the 2004 Plan, incentive stock options and nonstatutory stock options may be granted at a price not less than fair value and 85% of the fair value, respectively (110% of fair value for incentive stock options granted to holders of 10% or more of voting stock). Fair value is determined by the Board of Directors. Options are exercisable over periods not to exceed 10 years (five years for incentive stock options granted to holders of 10% or more of the voting stock) from the date of grant.

The 2004 Plan was terminated on the effective date of the 2017 Amended and Restated Equity Incentive Plan, and accordingly, no shares are available for issuance under the 2004 Plan. The 2004 Plan continues to govern outstanding awards granted thereunder.

2017 Amended and Restated Equity Incentive Plan

In 2017, the Company approved the 2017 Amended and Restated Equity Incentive Plan (the “2017 Plan”), under which the Board of Directors may grant incentive stock options to employees and nonstatutory stock options, stock appreciation rights, restricted stock, and RSUs, to employees, members of the Board of Directors and consultants of the Company and its subsidiaries.

Under the 2017 Plan, incentive stock options and nonstatutory stock options may be granted at a price not less than fair value (110% of fair value for options issued to holders of 10% or more of voting stock). Stock appreciation rights may be granted at a price not less than fair value. Fair value is determined by the Board of Directors. Options are exercisable over periods not to exceed 10 years (five years for incentive stock options granted to holders of 10% or more of the voting stock) from the date of grant.

In connection with the Direct Listing, the 2017 Plan was terminated effective immediately prior to the effectiveness of the 2020 Equity Incentive Plan, and accordingly, no shares are available for issuance under the 2017 Plan. The 2017 Plan continues to govern outstanding awards granted thereunder.

2020 Equity Incentive Plan

In 2020, the Company’s Board of Directors adopted, and its stockholders approved, the 2020 Equity Incentive Plan (the “2020 Plan”), which became effective on the business day immediately prior to the effective date of the registration statement for the Company’s Direct Listing. Under the 2020 Plan, the Board of Directors may grant incentive stock options to employees and stock appreciation rights, RSAs, and RSUs, performance units and performance shares to employees, members of the Board of Directors and consultants of the Company and its subsidiaries.

Under the 2020 Plan, incentive stock options, nonstatutory stock options, and stock appreciation rights may be granted at a price not less than 100% of the fair market value of the underlying common stock on the date of grant (110% of fair value for incentive stock options issued to holders of 10% or more of voting stock). Options and stock appreciation rights are exercisable over a period not to exceed 10 years (five years for incentive stock options granted to holders of 10% or more of the voting stock) from the date of grant.

Under the 2020 Plan, 60.0 million shares of Class A common stock were initially reserved for future issuance. The number of shares of our Class A common stock reserved for future issuance under our 2020 Plan automatically increases on January 1 of each year by the least of (i) 75,000,000 shares; (ii) five percent (5%) of the outstanding shares of all classes of the Company’s common stock as of December 31 of the preceding fiscal year; or (iii) a number of shares that may be determined by the Company’s Board of Directors. Stock-based awards under the 2020 Plan that expire or are forfeited, cancelled, or repurchased generally are returned to the pool of shares of Class A common stock available for issuance under the 2020 Plan. In addition, subject to the adjustment provisions of the 2020 Plan, the shares reserved for issuance under the 2020 Plan also includes (i) any shares that, as of the day immediately prior to the effective date of the registration statement, have been reserved but not issued pursuant to any awards granted under the 2017 Plan and are not subject to any awards thereunder and (ii) any shares subject to stock options, RSUs or similar awards granted under our 2017 Plan and 2004 Plan that, after the effective date of the registration statement, expire or otherwise terminate without having been exercised or issued in full, are tendered to or withheld by the Company for payment of an exercise price or for tax withholding obligations, or are forfeited to or repurchased by the Company due to failure to vest.

Employee Stock Purchase Plan

In 2020, the Company’s Board of Directors adopted, and its stockholders approved, the 2020 Employee Stock Purchase Plan (the “2020 ESPP”), which became effective in connection with the Direct Listing. The 2020 ESPP authorizes the issuance of shares of common stock pursuant to purchase rights granted to employees. At inception, 6.0 million shares of the Company’s Class A common stock were reserved for future issuance under the 2020 ESPP. The number of shares of our Class A common stock reserved for future issuance under our 2020 ESPP automatically increases on January 1 of each year by the least of (i) 15,000,000 shares; (ii) one percent (1%) of the outstanding shares of all classes of the Company’s common stock as of December 31 of the preceding fiscal year; or (iii) a number of shares that may be determined by the Company’s Board of Directors

The 2020 ESPP plan is a compensatory plan and includes two components: a component that allows the Company to make offerings intended to qualify under Section 423 of the Internal Revenue Code of 1986 (the “Code”) and a component that allows the Company to make offerings not intended to qualify under Section 423 of the Code. Subject to any limitations contained therein, the 2020 ESPP allows eligible employees to contribute (in the form of payroll deductions or otherwise to the extent permitted by the administrator) an amount established by the administrator from time to time in its discretion to purchase Class A common stock at a discounted price per share. The price at which Class A common stock is purchased under the 2020 ESPP is equal to 85% of the fair market value of a share of the Company’s Class A common stock on the enrollment date or exercise date, whichever is lower. Offering periods are generally 24 months long and begin on the first trading day on or after February 25 and August 25 of each year with each offering period having four purchase periods of approximately six months each.

Stock-based compensation expense

Stock-based compensation expense included in the consolidated statements of operations was as follows (in thousands):


	Year Ended December 31,
	2022		2021		2020
Infrastructure and trust & safety	$	56,197	$	35,255	$	7,396
Research and development	398,899		219,851		39,402
General and administrative	109,607		72,929		25,939
Sales and marketing	24,795		13,907		6,421
Total stock-based compensation	$	589,498	$	341,942	$	79,158

Stock Options

The following table presents the assumptions used in estimating the grant date fair value of our stock options, which were last granted during the year ended December 31, 2020:


			Year Ended December 31,
			2020
Risk-free interest rate			0.5% -1.8%
Expected volatility			35.4% - 39.8%
Dividend yield			—
Expected terms (in years)			7
Fair value of the underlying Class A common stock (per share)			$4.61 - $21.06

The following table summarizes the Company’s stock option activity (in thousands, except per option data and remaining contractual term):


	Options Outstanding
	Number of Shares Subject to Options	Weighted- Average Exercise Price (per Option)		Weighted-Average Remaining Contractual Term (Years)	Aggregate Intrinsic Value
Balances as of December 31, 2019	99,682	$	1.66
Granted	23,269	$	4.73
Cancelled, forfeited, and expired	(3,859)	$	2.39
Exercised	(20,590)	$	0.74
Balances as of December 31, 2020	98,502	$	2.55	7.76	$	3,838,994
Granted	—	$	—
Cancelled, forfeited, and expired	(1,862)	$	3.95
Exercised	(33,373)	$	1.95
Balances as of December 31, 2021	63,267	$	2.82	6.97	$	6,348,395
Granted	—	—
Cancelled, forfeited, and expired	(2,061)	$	4.06
Exercised	(9,615)	$	2.37
Balances as of December 31, 2022	51,591	$	2.85	6.00	$	1,321,183
Exercisable as of December 31, 2022	40,018	$	2.42	5.65	$	1,042,119
Vested and expected to vest at December 31, 2022	51,591	$	2.85	6.00	$	1,321,183

The weighted-average grant-date fair value of options granted for the year ended December 31, 2020 was $9.35. The aggregate intrinsic value of options exercised for the years ended December 31, 2022, 2021, and 2020 was $423.3 million, $2,548.3 million, and $189.5 million, respectively. Aggregate intrinsic value represents the difference between the exercise price of the options and the estimated fair value of the Company’s Class A common stock at the time of exercise. The aggregate grant-date fair value of options that vested during the years ended December 31, 2022, 2021, and 2020 was $64.1 million, $79.9 million, and $29.8 million, respectively.

As of December 31, 2022, the Company had $85.7 million of unrecognized stock-based compensation related to unvested options, which is expected to be recognized over a weighted-average remaining requisite service period of 1.7 years.

RSUs and RSAs

The following table summarizes the Company’s RSU and RSA activity (in thousands, except per share data):


	Restricted Stock Units			Unregistered Restricted Stock Awards
	Number of Shares	Weighted- Average Grant Date Value per Share		Number of Shares	Weighted- Average Grant Date Value per Share
Unvested as of December 31, 2019	30	$	3.35	—	—
Granted	3,061	$	31.55	388	$	37.75
Vested	(30)	$	3.35	—	—
Unvested as of December 31, 2020	3,061	$	31.55	388	$	37.75
Granted	13,382	$	78.92	209	$	81.67
Vested	(1,376)	$	38.46	(129)	$	37.75
Cancelled	(383)	$	52.78	—	—
Unvested as of December 31, 2021	14,684	$	68.03	468	$	57.37
Granted	25,540	$	41.09	298	$	46.00
Vested	(8,169)	$	57.65	(266)	$	53.67
Cancelled	(1,733)	$	57.58	—	—
Unvested as of December 31, 2022	30,322	$	48.73	500	$	52.55

As of December 31, 2022, the Company had $1,422.0 million of unrecognized stock-based compensation related to RSUs, which is expected to be recognized over the weighted-average remaining requisite service period of 2.9 years.

RSUs granted prior to our Direct Listing vest upon the satisfaction of both the service condition and a liquidity event-related performance vesting condition which was satisfied on the Effective Date. In the first quarter of 2021, we recorded cumulative stock-based compensation expense of $21.3 million related to all then-outstanding RSUs for which the service-based vesting condition had been satisfied. Stock-based compensation related to the remaining service-based period after the liquidity event-related performance vesting condition was satisfied is being recorded over the remaining requisite service period using the accelerated attribution method.

RSUs granted subsequent to our Direct Listing only have service conditions, which historically have been satisfied generally over four years. For grants made during and subsequent to July 2022, the service condition is satisfied generally over three years.

As of December 31, 2022, the Company had $13.2 million of unrecognized stock-based compensation related to RSAs, which is expected to be recognized over the weighted average remaining requisite service period of 1.8 years.

CEO Long-Term Performance Award

In February 2021, the Leadership Development and Compensation Committee granted the CEO Long-Term Performance Award under the 2017 Plan, which provides him the opportunity to earn a maximum number of 11,500,000 shares of Class A common stock. The CEO Long-Term Performance Award vests upon the satisfaction of a service condition and achievement of certain Class A common stock price targets (referred to as a “Company Stock Price Hurdle”), as described below.

The CEO Long-Term Performance Award is eligible to vest based on the Company’s stock price performance over various performance periods, with the first performance period beginning two years after the Effective Date and ending on the seventh anniversary of the Effective Date. The CEO Long-Term Performance Award is divided into seven performance periods that are eligible to vest based on the achievement of various Company Stock Price Hurdles, measured based on an average of our stock price over a consecutive 90-day trading period applicable to the performance period as set forth below. In addition, Mr. Baszucki must remain employed as our CEO through the date a Company Stock Price Hurdle is achieved in order to earn the RSUs that relate to the applicable Company Stock Price Hurdle.


	Company Stock Price Hurdle		Number of RSUs Eligible to Vest	Performance Period Commencement Dates as Measured from the Effective Date
1	$	165.00	750,000	2 years
2	$	200.00	750,000	3 years
3	$	235.00	2,000,000	4 years
4	$	270.00	2,000,000	5 years
5	$	305.00	2,000,000	5 years
6	$	340.00	2,000,000	5 years
7	$	375.00	2,000,000	5 years

If the Company Stock Price Hurdle fails to reach $165.00 prior to the seventh anniversary of the Effective Date, no portion of the CEO Long-Term Performance Award will vest. Further, any RSUs associated with a Company Stock Price Hurdle not achieved by the seventh anniversary of the Effective Date will terminate and be cancelled for no additional consideration to Mr. Baszucki. The Company Stock Price Hurdles and number of RSUs eligible to vest will be adjusted to reflect any stock splits, stock dividends, combinations, reorganizations, reclassifications, or similar events under the 2017 Plan. Each vested RSU under the CEO Long-Term Performance Award will be settled in a share of our Class A common stock on the next company quarterly settlement date occurring on or after the date on which the RSU vests, regardless of whether Mr. Baszucki remains the CEO as of such date. Company quarterly settlement dates for this purpose are February 20, May 20, August 20, and November 20.

The Company estimated the grant date fair value of the CEO Long-Term Performance Award using a model based on multiple stock price outcomes developed through the use of a Monte Carlo simulation that incorporates into the valuation the possibility that the Company Stock Price Hurdles may not be satisfied. A Monte Carlo simulation model requires use of various assumptions, including the underlying stock price, volatility, and the risk-free interest rate as of the valuation date, corresponding to the length of time remaining in the performance period, and expected dividend yield. The weighted-average grant date fair value of the CEO Long-Term Performance Award was estimated to be $20.19 per share, and the Company estimates that as of the grant date, it will recognize total stock-based compensation expense of approximately $232.2 million over the derived service period of each of the seven separate tranches which is between 3.45 – 5.38 years, using the accelerated attribution method. If the Company Stock Price Hurdles are met sooner than the derived service period, the stock-based compensation expense will be adjusted to reflect the cumulative expense associated with the vested award. The stock-based compensation expense will be recognized over the requisite service period if Mr. Baszucki provides service as the Company’s CEO, regardless of whether the Company Stock Price Hurdles are achieved.

The Company recorded $48.9 million and $42.0 million of stock-based compensation expense related to the CEO Long-Term Performance Award during the year ended December 31, 2022 and December 31, 2021, respectively, within general and administrative expenses. As of December 31, 2022, unrecognized stock-based compensation expense related to the CEO Long-Term Performance Award was $141.3 million which will be recognized over the remaining derived service period of each respective tranche.

PSUs

During 2022, the Company’s Board of Directors granted performance-based restricted stock unit awards (the “2022 PSU Grants”), to certain members of management. The target number of 2022 PSU Grants was 207,284. The number of shares that can be earned will range from 0% to 200% of the target number of shares, based on the Company’s stock price performance and achievement of certain stock price hurdles during the last quarter of the second year through the end of the third year of a three-year performance period (the “2022 PSU Grant Stock Price Hurdles”) and subject to continuous employment through such date.

The Company estimated the grant date fair value of the 2022 PSU Grants using a model based on multiple stock price outcomes developed through the use of a Monte Carlo simulation which incorporates into the valuation the possibility that the 2022 PSU Grant Stock Price Hurdles may not be satisfied. The grant date fair value of the 2022 PSU Grants was estimated to be $43.13 per share, and the Company estimates that it will recognize total stock-based compensation expense of approximately $8.9 million using the accelerated attribution method over the derived service period of each tranche which is equal to five measurement periods commencing with the last quarter of the second year and ending with the last quarter of the third year. If the 2022 PSU Grant Stock Price Hurdles are met sooner than the derived service period, the stock-based compensation expense will be adjusted to reflect the cumulative expense associated with the vested award. Stock-based compensation expense will be recognized over the requisite service period if the members of management continue to provide service to the Company, regardless of whether the 2022 PSU Grant Stock Price Hurdles are achieved.

The Company recorded $3.0 million of stock-based compensation expense related to the 2022 PSU Grants during the year ended December 31, 2022. As of December 31, 2022, unrecognized stock-based compensation expense related to the 2022 PSU grants was $5.9 million which will be recognized over the remaining derived service period of each of five tranches.

Employee Stock Purchase Plan

During the quarter ended March 31, 2022, the fair market value of the Company’s stock on the purchase date, February 25, 2022, was lower than the fair market value of the Company’s stock on the offering date of the first and second offering periods. As a result, the first and second offering periods were reset and the new lower price became the new offering price. Additionally, the plan also provides for a rollover feature that provides for an offering period to be rolled over to a new lower-priced offering if the offering price of the new offering period is less than that of the current offering period. Accordingly, the first and second offering periods rolled over to a new 24 months offering period. The reset was treated as a modification resulting in incremental expense totaling $4.7 million, which is being recognized over the remaining requisite service period as of the date of reset.

During the quarter ended September 30, 2022, the fair market value of the Company’s stock on the purchase date, August 25, 2022, was lower than the fair market value of the Company’s stock on the offering date. As a result, the offering period in effect was reset and the new lower price became the new offering price. Additionally, as discussed above, because the plan also provides for a rollover feature that provides for an offering period to be rolled over to a new lower-priced offering if the offering price of the new offering period is less than that of the current offering period, the offering rolled over to a new 24 months offering period. The reset was treated as a modification resulting in incremental expense totaling $5.1 million, which is being recognized over the remaining requisite service period as of the date of reset.

The following table presents the assumptions used in estimating the grant date fair value of purchase rights granted under the 2020 ESPP for the offerings made in the respective years including reset and rollover:


	Year Ended December 31,
	2022			2021
Risk-free interest rate	0.71%	-	3.35%	0.06%	-	0.25%
Expected volatility	54.16%	-	81.51%	46.97%	-	56.91%
Dividend yield	—%			—%
Expected terms (in years)	0.50	-	2.01	0.44	-	2.00

The Company recorded $25.7 million and $9.9 million of stock-based compensation expense related to the 2020 ESPP during the years ended December 31, 2022 and December 31, 2021, respectively.

Tender Offer

In March 2020, in connection with the Company’s sale of the Series G convertible preferred stock, the purchasers of the Series G convertible preferred stock conducted a tender offer to acquire approximately 31.1 million shares of Class A common stock and 24.0 million shares of convertible preferred stock from employees, former employees, and other existing investors. In connection with the tender offer, the Company waived any rights of first refusal or other transfer restrictions applicable to such shares. As a result of this transaction, we recorded a total of $35.2 million in stock-based compensation expense in the year ended December 31, 2020 for the difference between the price paid for shares held by our employees and former employee stockholders and the estimated fair market value on the date of the transaction.

Employee Benefit Plan	12 Months Ended
Employee Benefit Plan	Dec. 31, 2022
Retirement Benefits [Abstract]
Employee Benefit Plan	Employee Benefit PlanThe Company sponsors a 401(k) defined contribution retirement plan for eligible employees. Under the plan, the Company is required to make a safe harbor contribution of 100% on the first 3% of employee contributions and 50% of the next 2% for each employee, subject to a maximum total contribution mandated by the Internal Revenue Service (“IRS”). The Company made matching contributions in the amount of $14.6 million, $9.3 million, and $5.1 million for the years ended December 31, 2022, 2021, and 2020, respectively.

Joint Venture	12 Months Ended
Joint Venture	Dec. 31, 2022
Equity Method Investments and Joint Ventures [Abstract]
Joint Venture	Joint Venture In February 2019, the Company entered into a joint venture agreement with Songhua River Investment Limited (“Songhua”), an affiliate of Tencent Holdings Ltd. (“Tencent Holdings”), to create Roblox China Holding Corp. (in which Roblox holds a 51% ownership interest as it relates to the voting shares). Songhua contributed $50 million in capital in exchange for a 49% ownership interest in Roblox China Holding Corp. The business of the joint venture (either directly or indirectly through the joint venture’s wholly owned subsidiaries) is to engage in the (i) development, localization, and licensing of the Roblox application to Shenzhen Tencent Computer Systems Co., Ltd. for operation and publication as a game in China, and (ii) development, localization, and licensing to creators of a Chinese version of the Roblox Studio and to oversee relations with local Chinese developers. The joint venture is consolidated into the Company’s consolidated financial statements as the Company maintains a controlling financial interest through voting rights, while the minority member of the joint venture does not have substantive participating rights or veto rights. The Company classifies the 49% ownership interest held by Songhua as a noncontrolling interest on its consolidated balance sheet.

Income Taxes

12 Months Ended

Dec. 31, 2022

Income Tax Disclosure [Abstract]

Income Taxes

The Company is in a consolidated net loss position and no material income tax benefits or expense were recorded for the years ended December 31, 2022, 2021, and 2020.

The components of loss before income taxes were as follows (in thousands):


	Year Ended December 31,
	2022		2021		2020
Domestic	$	(916,592)	$	(472,141)	$	(244,395)
Foreign	(13,997)		(31,659)		(19,952)
	$	(930,589)	$	(503,800)	$	(264,347)

The components of the provision for/(benefit from) income taxes were as follows (in thousands):


	Year Ended December 31,
	2022		2021		2020
Current provision:
Federal	$	144	$	—	$	—
State	2,405		678		10
Foreign	1,582		—		25
Total current provision	4,131		678		35
Deferred provision:
Federal	(474)		(878)		(6,032)
State	(105)		(120)		(659)
Foreign	—		—		—
Total deferred provision	(579)		(998)		(6,691)
Provision for/(benefit from) income taxes	$	3,552	$	(320)	$	(6,656)

The provision for/(benefit from) income taxes differs from the amount estimated by applying the statutory income (loss) before taxes as follows:


	Year Ended December 31,
	2022		2021		2020
Federal tax (benefit) at statutory rate	21	%	21	%	21	%
State tax (benefit) at statutory rate, net of federal benefit	2		2		1
Research and development credits	2		10		3
Change in valuation allowance	(21)		(117)		(21)
Stock-based compensation	(4)		84		0
Foreign rate differential	0		0		(2)
Other	0		0		1
Provision for/(benefit from) income taxes	0	%	0	%	3	%

Deferred income taxes reflect the net tax effects of temporary differences between the carrying amounts of assets and liabilities for financial reporting purposes and the amounts used for income tax purposes. The following table presents the components of the Company’s deferred tax assets (liabilities) for the periods presented (in thousands):


	December 31,
	2022		2021		2020
Deferred tax assets:
Accrued expenses	$	13,593	$	11,466	$	5,781
Deferred revenue	198,130		107,221		35,026
Net operating loss carryforwards	490,309		505,668		76,509
Tax credit carryforwards	85,527		65,855		17,052
Stock-based compensation	28,238		35,368		3,891
Operating lease liabilities	130,688		56,897		—
Capitalized research and development	178,488		—		—
Interest	—		1,556		—
Other	1,988		1,369		766
Total gross deferred tax asset	1,126,961		785,400		139,025
Less: valuation allowance	(907,226)		(711,297)		(122,328)
Net deferred tax assets	219,735		74,103		16,697
Deferred tax liabilities:
Fixed assets	(92,009)		(13,889)		(10,934)
Intangible assets	(6,694)		(9,060)		(5,763)
Operating lease right-of-use assets	(121,032)		(51,154)		—
Total deferred tax liabilities	(219,735)		(74,103)		(16,697)
Net deferred taxes	$	0	$	0	$	0

We have not provided U.S. income taxes or foreign withholding taxes on the undistributed earnings of our profitable foreign subsidiaries because we intend to permanently reinvest such earnings in foreign operations. As of December 31, 2022 and December 31, 2021, the cumulative amount of earnings upon which income taxes have not been provided is not material.

The Company accounts for deferred taxes under ASC 740, Income Taxes, which requires a reduction of the carrying amounts of deferred tax assets by a valuation allowance if, based on available evidence, it is more likely than not that such assets will not be realized. Accordingly, the need to establish valuation allowances for deferred tax assets is assessed periodically based on the ASC 740 more-likely-than-not realization threshold criterion. This assessment considers matters such as future reversals of existing taxable temporary differences, projected future taxable income, tax-planning strategies and results of recent operations. The evaluation of the recoverability of the deferred tax assets requires that all positive and negative evidence is weighed to reach a conclusion that it is more likely than not that all or some portion of the deferred tax assets will not be realized. The weight given to the evidence is commensurate with the extent to which it can be objectively verified. Due to our lack of U.S. earnings history, the net U.S. deferred tax assets have been fully offset by a valuation allowance.

The Company’s valuation allowance increased by $195.9 million, $589.0 million, and $57.9 million, in the years ended December 31, 2022, December 31, 2021, and December 31, 2020, respectively.

As of December 31, 2022, we had federal net operating loss carryforwards of $2,026.6 million, which can be carried forward indefinitely, but are limited to 80% of taxable income, state net operating loss carryforwards of $893.0 million, which begin to expire in 2023, and foreign net operating loss carryforwards of $54.5 million, which begin to expire in 2024.

As of December 31, 2022, we had U.S. federal and California research and development tax credits of approximately $112.4 million and $76.3 million, respectively. The federal research and development credits begin to expire in 2030, while California credits do not expire.

Under Internal Revenue Code Section 382 (“Section 382”), an ownership change generally occurs if one or more stockholders or groups of stockholders who own at least 5% of our stock increase their ownership by more than 50 percentage points over their lowest ownership percentage within a rolling three-year period. Similar rules may apply under state tax laws. The Company did experience one or more ownership changes in financial periods ending on or before December 31, 2022. In this regard, the Company has determined that based on the timing of the ownership change and the corresponding Section 382 limitations, none of its net operating losses or other tax attributes appear to expire subject to such limitation.

A reconciliation of the beginning and ending amounts of unrecognized tax benefits is as follows (in thousands):


	As of December 31,
	2022		2021		2020
Unrecognized tax benefits at beginning of year	$	72,919	$	19,386	$	10,121
Increases related to current year tax positions	25,458		53,440		8,998
Increases related to prior year tax positions	865		93		481
Decreases related to prior year tax positions	(2,870)		—		(215)
Unrecognized tax benefits at end of year	$	96,372	$	72,919	$	19,386

We classify uncertain tax positions as non-current liabilities unless expected to be paid within one year or otherwise directly related to an existing deferred tax asset, in which case the uncertain tax position is recorded as an offset to the deferred tax asset on the consolidated balance sheet. As of December 31, 2022, we had gross unrecognized tax benefits of approximately $96.4 million, of which $1.1 million would impact income tax expense if recognized. As of December 31, 2021, we had gross unrecognized tax benefits of approximately $72.9 million. The Company does not anticipate any significant change within twelve months of this reporting date.

Our policy is to recognize interest and penalties related to income taxes as components of interest expense and other expense, respectively. The Company accrued interest and penalties of $0.2 million related to unrecognized tax benefits as of December 31, 2022. The Company did not accrue interest and penalties related to unrecognized tax benefits as of December 31, 2021, and December 31, 2020.

The Company is subject to taxation in the United States, various states, and foreign jurisdictions, for which the statutes of limitations have not expired. All jurisdictions and tax years currently remain open for examination. As of December 31, 2022, the Company was not under examination by the IRS or any state or foreign tax jurisdiction.

On January 1, 2022, a provision of the Tax Cuts and Jobs Act of 2017 eliminated the option to deduct research and development expenditures and instead requires taxpayers to amortize such costs over five years. This change did not have a significant impact to the Company's provision for income tax for the year ended December 31, 2022 as the Company has net operating loss carryforwards to offset the impact of the change and maintains a full valuation allowance against its deferred tax assets. Further, the Company does not anticipate this change to have a significant impact to the provision for income tax for the year ended December 31, 2023 and will continue to evaluate the impact on its business in future periods.

The entire disclosure for income taxes. Disclosures may include net deferred tax liability or asset recognized in an enterprise's statement of financial position, net change during the year in the total valuation allowance, approximate tax effect of each type of temporary difference and carryforward that gives rise to a significant portion of deferred tax liabilities and deferred tax assets, utilization of a tax carryback, and tax uncertainties information.

Reference 1: http://www.xbrl.org/2003/role/disclosureRef
-Publisher FASB
-Name Accounting Standards Codification
-Topic 740
-SubTopic 10
-Section 50
-Paragraph 21
-URI https://asc.fasb.org/extlink&oid=121826272&loc=d3e32857-109319

Reference 2: http://www.xbrl.org/2003/role/disclosureRef
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-Name Accounting Standards Codification
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-Section S99
-Paragraph 2
-Subparagraph (SAB Topic 11.C)
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Reference 3: http://www.xbrl.org/2003/role/disclosureRef
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Reference 4: http://www.xbrl.org/2003/role/disclosureRef
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Reference 5: http://www.xbrl.org/2003/role/disclosureRef
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Reference 6: http://www.xbrl.org/2003/role/disclosureRef
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-URI https://asc.fasb.org/extlink&oid=6424409&loc=d3e44925-109338

Reference 7: http://www.xbrl.org/2003/role/disclosureRef
-Publisher FASB
-Name Accounting Standards Codification
-Topic 740
-URI https://asc.fasb.org/topic&trid=2144680

Reference 8: http://www.xbrl.org/2003/role/disclosureRef
-Publisher FASB
-Name Accounting Standards Codification
-Topic 740
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-Section 50
-Paragraph 2
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Reference 9: http://www.xbrl.org/2003/role/disclosureRef
-Publisher FASB
-Name Accounting Standards Codification
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