RBLX, Roblox Corporation
Roblox is an immersive gaming and creation platform that offers people millions of ways to be together, inviting its community to explore, create, and share endless unique experiences.
Read top to bottom, the owner's questions in the order an owner asks them: what the business is, whether the record holds, whether it survives and is any good, and what you would be paying. New to the questions? Start with the Method.
The business in brief
read the 10-K →What this business is and what moves its needle, drawn from its own SEC filings. The lens to bring to the numbers below, not the answer.
- What it is
- A software business, earning high margins on code once it is written.
- Situation
- Unprofitable growth. no operating profit yet, judge it on revenue growth, gross-margin trajectory, cash burn and runway, never on an earnings multiple. Distress / turnaround. thin interest coverage or cash-burning operations against real debt, the first questions are liquidity and the maturity wall, not growth.
- What moves the needle
- Retention and the cost of growth. What decides it: whether customers expand rather than churn, how much of revenue is spent winning the next one, and whether software's gross margin holds as it scales. On its own account, the filing leans hardest on concentrated dependence, set against the numbers in what the filing emphasizes, below.
- Is it a good business?
- Return on capital has rarely cleared the cost of capital (median −247%, above 15% in 0 of 3 years). The steadier read is owner earnings: roughly 18% of revenue reaches owners as cash, consistently. This is price-taker territory, where the balance sheet and the cycle matter more than any multiple; the 10-K is where you look.
No model wrote a word of this. Every line is arithmetic on the company's filings, shown in full in the sections below; the judgment is yours.
The record, 2019–2025
realized figures from each filing, no estimates| 2019’19 | 2020’20 | 2021’21 | 2022’22 | 2023’23 | 2024’24 | 2025’25 | TTMTTMMar 2026 | |
|---|---|---|---|---|---|---|---|---|
| RevenueRevenue | $508M | $924M | $1.9B | $2.2B | $2.8B | $3.6B | $4.9B | $5.3B |
| Gross marginGross mgn | 76% | 74% | 74% | 75% | 77% | 78% | 78% | 78% |
| Operating marginOp. mgn | −15.0% | −28.8% | −25.8% | −41.5% | −45.0% | −29.5% | −25.2% | −24.0% |
| Net incomeNet inc. | ($71M) | ($253M) | ($492M) | ($924M) | ($1.2B) | ($935M) | ($1.1B) | ($1.1B) |
| EPS (diluted)EPS | $-0.16 | $-0.50 | $-0.97 | $-1.55 | $-1.87 | $-1.44 | $-1.54 | $-1.54 |
| Owner earningsOwner earn. | $16M | $420M | $566M | ($57M) | $138M | $643M | $1.4B | $1.5B |
| Owner earnings marginOE mgn | 3.1% | 45.5% | 29.5% | −2.6% | 4.9% | 17.8% | 27.7% | 28.8% |
| ROICROIC | — | — | — | — | -247% | -163% | -534% | -399% |
| Cash & investmentsCash+inv | — | $894M | $3.0B | $3.0B | $3.2B | $4.0B | $5.5B | $6.2B |
| Net debt / (cash)Net debt | — | ($894M) | ($2.0B) | ($2.0B) | ($2.2B) | ($3.0B) | ($4.6B) | ($5.2B) |
| Book value / shareBVPS | $-0.25 | $-0.50 | $1.16 | $0.51 | $0.12 | $0.34 | $0.57 | $0.61 |
Owner’s Scorecard
Will it survive?
- Can it pay its interest? -29.7×Does not cover its interestOperating income ($1.2B) ÷ interest expense $41M
A full year of operating profit didn't cover the interest bill. This is the zombie zone: the business depends on refinancing, asset sales, or forbearance to service its debt.
- Debt against an operating lossTotal debt $993M · operating income ($1.2B)
There's debt but no operating profit to measure it against, understand that combination before anything else about the company.
- Debt, net of cash +$2.1BNet cashCash $1.2B + ST investments $1.8B − debt $993M
Cash and short-term investments exceed every dollar of debt by $2.1B, on net the company owes nothing, and can act from strength when others can't. It also holds $2.5B in longer-dated marketable securities; counting those, it sits at net cash of $4.6B. Net debt is the leverage figure that matters; the gross ratio above ignores the cash already set against it. Strategic or illiquid investments aren't counted here.
- TightDSO 67 + DIO 0 − DPO 22 days
Days cash is tied up between paying suppliers and collecting from customers. Lower is better; a long cycle means growth itself eats cash. (Little or no inventory, a services / asset-light model, so the inventory leg is ~0.)
Is it a good business?
- Below averageNOPAT ($974M) ÷ invested capital $182M (debt + equity − cash)
The rate the business earns on the money tied up in it, Buffett's north star, because over time a stock tracks the ROIC beneath it. Above ~15% sustained hints at a moat; below ~8% the company may destroy value as it grows. Asset-light businesses (R&D expensed, little capital) read artificially high, pair this with Owner Earnings.
- Cash machineOwner Earnings $1.4B = operating cash $1.8B − capex $441M
What an owner could take out without starving the business. That's 28% of revenue. Treating stock comp as the real expense it is (less $1.1B of SBC) leaves $226M. Honest caveat: capex here blends maintenance and growth, so steady-state Owner Earnings may run higher (see capex vs. depreciation).
- Loss, but cash-generativeNet income ($1.1B) · cash from operations $1.8B
The company reported a net loss, so a conversion ratio isn't meaningful. What matters then is whether operations still threw off cash, here, they did.
How is the cash used?
- Not enough data
The filing data didn't include the inputs for this check.
- Investing or harvesting? 1.95×ExpandingCapex $441M ÷ depreciation $226M
Descriptive, not a grade. Above ~1× means investing faster than assets wear out (growth, or, sustained for years, today's earnings carrying less depreciation than tomorrow's will). Below means spending less than it's wearing out (efficiency, or a melting asset base). The ratio won't tell you which; the filings will.
Durability & moat, 2019–2025
A moat is a high return that doesn’t fade, reinvested at high returns. Here is what the record says, judgments, not another chart of the numbers.
- Profitable years 0 of 7
Lost money in 7 year(s), look at what happened there before trusting the average.
- Return on capital ≥ 15% 0 of 3 yrs
A moat shows up as a high return on invested capital that holds year after year, not one good vintage.
- Operating margin −15% (FY2019) → −25% (FY2025)
Margins slipped over the record, competition or costs are biting in.
- Reinvestment, incremental ROIC returns capital
The capital base barely grew: this business returns cash through dividends and buybacks rather than reinvesting. Judge it on the cash returned, not on compounding.
- Owner earnings growth +29%/yr
Free cash to owners grew about 29% a year over the record.
- Worst year 2023 · −45.0% op. margin
Operations went underwater in 2023, understand why before trusting the good years.
Solvent is not the same as cheap; growing is not the same as good. These are vital signs, not a verdict, the judgment is yours, and the filing is one click away.
How the cash was used, 2019–2025
Over the record, the business generated $4.7B of operating cash, and how management split it is, as Buffett insists, the job that matters most. Here it reads as a balanced allocator, splitting cash between the business, owners, and the balance sheet.
- Reinvested$1.6B · 35%
- Retained (debt / cash)$3.1B · 65%
It reinvested $1.6B (35%) back into the business and returned $0 (0%) to owners, $0 in dividends, $0 in buybacks.
Buybacks are gross of stock issued to employees; net of that, the real return to owners is lower (see Management & pay). And the mix alone doesn't grade management, what matters is the return earned on the dollars reinvested (see incremental ROIC in the durability report).
Management & pay
Two questions Buffett actually asks about pay: is stock compensation, a real expense, whatever the income statement pretends, quietly large, and is the top wildly out of line with the floor. He's no populist about it; he just wants pay that's rational and earned, and comp committees that aren't lapdogs.
- Stock-based compensation$1.1B
The slice of the business handed to employees in shares this year, 23% of revenue. Buffett's oldest accounting fight: this is compensation, compensation is an expense, real whether or not the headline earnings admit it. And note the trap, the cash-flow statement adds SBC back, so the operating cash, and the owner earnings drawn from it, are flattered by exactly this amount; counted as the cost it is, what an owner keeps is lower.
Graham’s defensive-investor test
1 of 5 metGraham gave the defensive investor seven numerical criteria in The Intelligent Investor. Here they are, run mechanically on the filings, his framework, not our verdict. Meeting them is a floor of safety, not a reason to buy; missing one is no veto, since many fine modern businesses fail his strictest liquidity tests by design. The worth is in seeing exactly where a company stands against the canon, every number sourced.
- Adequate size PassRevenue ≥ $2B · $4.9B
Big enough to weather a storm. Graham's 1972 floor was ~$100M of sales (≈ $700M today); we use a $2B revenue line as a conservative modern stand-in.
- Strong liquidity MissCurrent ratio ≥ 2× · 0.96×
Current assets at least twice current liabilities, near-term bills covered without touching the business. Strict by design: many cash-rich modern firms run leaner and miss it, holding their cushion in longer-dated securities.
- Conservative debt MissDebt ≤ working capital · $993M vs ($228M) WC
Graham's rule that borrowings not exceed net current assets. Capital-heavy and buyback-heavy firms routinely fail it, read it next to interest coverage, not alone.
- Earnings stability MissA profit every year (7-yr record) · 7 loss years
Graham wanted earnings in each of the past ten years, the stability a defensive owner leans on.
- Dividend record MissUninterrupted dividends · none paid
An unbroken dividend was Graham's mark of durability. He wanted twenty years; the filings show about ten, and a single suspension breaks the streak. Non-payers, many fine modern compounders, fall outside his defensive net by design.
- Earnings growth —Earnings +33% over the record · —
Earnings were negative early in the record, a growth rate isn't meaningful.
- Moderate price —P/E ≤ 15 and P/E × P/B ≤ 22.5 · decided by the price
Graham's valuation gate, the wall he kept between a sound business and a sound investment. Earnings are $-1.54/share and book value $0.57/share. Enter a price in “What the price implies” just below for the P/E, P/B, and whether it clears. But this is the rule Buffett outgrew: there's no hard P/E law, and a wonderful business can deserve a far richer multiple if the thesis holds, treat it as the bargain-hunter's floor, not a verdict on the price.
Graham would be the first to say a checklist is a starting point, not an answer. These are his defensive, bargain-hunter's tests, the cigar-butt lens. Buffett and Munger grew past it, paying fair prices for wonderful businesses; that lens lives in the moat and owner-earnings work above, and both still matter. Clearing Graham’s tests earns a closer look; failing them earns harder questions, not a dismissal.
What the price implies
reverse-DCFA price is the one input we don't pull, you bring it. Type today's close (read it off any broker or quote site) and see the owner-earnings growth you'd have to believe to justify it, set beside what Roblox Corporation has actually delivered. Nothing is stored; the number stays in your browser.
Enter a price above to run it.
Graham capped the multiple at 15×; Buffett and Munger let that rule go, a wonderful business can deserve 50× if the thesis holds. Read it as the bargain-hunter's floor, not a ceiling on good sense.
The discount rate is your interest rate, what a dollar years from now is worth today, anchored to the long-term Treasury yield (~4–5% today, plus whatever premium you want for risk). Drag it toward the risk-free rate and watch how much growth the price suddenly “needs”: interest rates are gravity on valuations.
Owner earnings $1.5B on 712M diluted shares; net cash $5.2B. This is a lens, not a price target, it says what you'd have to believe, not what the company is worth, and it runs on one year of (noisy) owner earnings at assumptions you can see and change.
What the filing emphasizes, FY2025
read the 10-K →Each year a 10-K must name what could go wrong, in the company's own words. Here are the ones Graham and Buffett would stop on, each set against the figure from the same filings that bears on it, anchored to a period you can find in the record above. We point; the judgment is yours.
- Concentrated dependenceRisk Factors
What the whole business leans on, a product, a platform, a partner. Concentration cuts both ways, and the filing is where management has to admit it.
“Our success depends, in part, on our ability to develop and commercialize our Platform without infringing, misappropriating, or otherwise violating the intellectual property rights of third parties.”
From the recordOwner-earnings margin at stake (TTM)29% - Debt terms & refinancingMD&A
The fine print behind the debt. Covenants and near-term maturities decide who is really in control when a year goes badly.
“Accordingly, the Company presents Covenant Adjusted EBITDA calculated in accordance with "Consolidated EBITDA" as that term is defined in the Indenture, which is not calculated in accordance with GAAP and may not conform to the calculation of Adjusted EBITDA by other companies.”
From the recordBalance sheet (TTM)+$2.1B net cash · operating profit doesn't cover interest - Litigation & contingenciesBusiness
Claims an owner inherits. Most disclosure is boilerplate; this fires only on an actual matter, a named suit, a settlement, a contingency, a number.
“The DSA imposes significant penalties for non-compliance including fines of up to 6% of annual global revenues, in addition to the ability of civil society organizations and non-governmental organizations to lodge class action lawsuits.”
A judgment, not a number, weigh it against the filing yourself. - DilutionRisk Factors
Whether your slice quietly shrinks. New shares fund the company at the existing owner's expense.
“If we raise additional funds through future issuances of equity or convertible debt securities, our existing stockholders could suffer significant dilution, and any new equity securities we issue could have rights, preferences, and privileges superior to those of our Class A common stock.”
A judgment, not a number, weigh it against the filing yourself. - Cyclicality & demandRisk Factors
How the business behaves when the economy turns. A cyclical earns its keep across the whole cycle, not at the peak.
“Historically, our business has been highly seasonal, with the highest percentage of our bookings occurring in the fourth quarter when holidays permit our users to spend increased time on our Platform and lead to increased spend on prepaid gift cards, and we expect this trend to continue.”
From the recordWorst year on record−45.0% operating margin (FY2023) - Regulation & policyBusiness
Rules that can rewrite the economics, tariffs, antitrust, data, export controls.
“Under GDPR, fines up to 20 million Euros or up to 4% of the annual global revenues of the infringer, whichever is greater, can be imposed for violations.”
A judgment, not a number, weigh it against the filing yourself.
What changed, FY2025 vs FY2024
read the 10-K →Most of a 10-K is boilerplate carried over verbatim; the signal is in what's new. These lines appear this year and weren't there last, figure updates filtered out, so only the language shift remains.
- “As our safety teams continue to innovate and use advancements in technology to help users feel safe on our Platform, we expect to continue to implement Platform policy, product, technology, and other changes, including in anticipation of and in response to regulatory requirements and evolving guidan…”
- “The increase was primarily due to an increase of $68.5 million in personnel costs, which includes an increase of $33.9 million in stock-based compensation expense, primarily due to growth in headcount, an increase of $53.7 million in professional services-related expense primarily driven by legal fe…”
- “Following that assessment and effective April 1, 2024, the average lifetime of a paying user was estimated to be 27 months, a decrease compared to the previous estimate of 28 months, where it remained through December 31, 2025.”
- “Other income/(expense), net changed by $15.7 million for the year ended December 31, 2025 compared to the year ended December 31, 2024, primarily driven by changes in foreign currency exchange gains/(losses).”
- “There has been uncertainty as to whether a court would enforce such provisions, and the enforceability of similar choice of forum provisions in other companies' charter documents in Delaware has been challenged in legal proceedings; however, Nevada law (specifically, NRS 78.046) expressly permits th…”
Classic text analysis over the filing itself, no model wrote a word of this, and every quote is the company's own.
Peers, Enterprise software
The same industry, side by side on owner economics, compare, don't rank by a single number.● marks best in the group.
| Company | Revenue | Gross margin | Op. margin | ROIC | Owner earn. margin |
|---|---|---|---|---|---|
| SNAPSnap Inc. | $5.9B | 55% | -9.0% | -9% | 7% |
| CDNSCadence Design Systems, Inc. | $5.3B | 99% | 28.2% | 44% | 30% |
| RBLXRoblox Corporation | $4.9B | 78% | -25.2% | -534% | 28% |
| CRWDCrowdstrike Holdings, Inc. | $4.8B | 75% | -6.1% | — | 27% |
| PINSPinterest, Inc. | $4.2B | 80% | 7.6% | 8% | 30% |
| MTCHMatch Group, Inc. | $3.5B | 73% | 25.0% | 27% | 29% |
| DDOGDatadog, Inc. | $3.4B | 80% | -1.3% | -1% | 29% |
| TTDTrade Desk, Inc. | $2.9B | 79% | 20.3% | 22% | 27% |