Scale is more important in the social media world than it is in many other corners of technology. A thriving social media site needs a wide user base, ideally one that's growing continually. Social media gaming portal operator Roblox (NYSE: RBLX) is quite the success on that score. Here's an important -- and impressive -- user count figure anyone interested in the company should track on the regular.
Bringing in the (Ro)bux
All social media operators keep a close eye on how many users are on their platform, although some have different ways of measuring this. Roblox's chosen metric is average daily active users (DAUs). Happily for the company and its investors, people have been flocking to the platform, especially of late. Witness the dramatic jump from the second to third quarters of 2024:
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| Period |
Revenue (in millions) |
Average DAUs | Total Hours Engaged |
|---|---|---|---|
| Fourth quarter 2023 | $749.9 | 71.5 | 15,500 |
| First quarter 2024 | $801.3 | 77.7 | 16,700 |
| Second quarter 2024 | $893.5 | 79.5 | 17,400 |
| Third quarter 2024 | $919.0 | 88.9 | 20,700 |
Source: Roblox.
All things being equal, more users mean greater engagement and -- critically -- more revenue. Sure enough, Roblox's top line has expanded thanks to that widening user base. The platform's in-game currency, Robux, is an increasingly hot item with these folks.
A virtuous circle
In the third-quarter 2024 shareholder letter, Roblox management explained, "Over time as content has improved and platform functionality has expanded, we have seen more users becoming payers and those payers, on average, increasing their purchase of Robux."
Roblox really has its finger on the zeitgeist. My own two elementary school-age children play often, and frequently in cooperation/competition with connected friends. So not only is the user base widening, it's also very young. Imagine a mass group of users playing (and spending) constantly not for weeks or months but for years. I think the growth story for Roblox is only just beginning, and we're going to see very long-tail growth for this company.
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Eric Volkman has no position in any of the stocks mentioned. The Motley Fool has positions in and recommends Roblox. The Motley Fool has a disclosure policy.
The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of Nasdaq, Inc.
