Roblox is in play: can it deal with blockers and courts and increase revenues

On December 3, Russian authorities banned access to the game platform Roblox. They also want to block it in Kazakhstan. Access to the platform has already been banned in Oman, Qatar, China, Bahrain and Turkey.

The common complaint in all countries is the same - Roblox does not provide an adequate level of safety for children. There have been cases of harassment, cyberbullying and sexual exploitation in the platform's chat rooms. In the US, the platform has faced not only private lawsuits, but also legal claims from the authorities of four states - Florida, Texas, Kentucky and Louisiana. Texas Attorney General Ken Paxton accused the company of exposing children to sexualized abuse and exploitation, the Texas Tribune reports.

At the same time, the platform has become very popular over the past few years. In August this year, YouTube announced that the number of views of Roblox-related videos had surpassed one trillion. At its peak third quarter this year, an average of more than 150 million users, mostly under the age of 17, logged into Roblox every day. That's equivalent to the audience for the Super Bowl if it were held every day, Barron's calculated.

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Most of all, Roblox looks like the dream of Meta head Mark Zuckerberg about meta universes coming true. This is not one game, but many 3D spaces: from simulators to shooters and social worlds, players can move between "worlds", communicate with each other online and earn money.

Roblox was created in 2004 by developers David Bazooki and Eric Cassel. Bazooki had been working on educational software since the late 80s and created Interactive Physics simulator for modeling the phenomena of the physical world, such as, for example, the collision of two cars. These developments formed the basis of the Roblox universe. Essentially, it's a platform that allows users to create games themselves using Roblox Studio software tools. "It's like YouTube, only for games," Barron's writes.

Games are developed by independent studios and authors, often minors. All of them are conditionally free. The basis of the Roblox economy is its own "currency" Robux. Players use it to buy virtual goods for their avatars and to speed up progress in games. You can exchange fiat currency for Robux and back at unofficial intermediary services with a commission, on the company's website and via the App Store or Google Play.

On average, developers earn about 20-25% of their games' merchandise sales in cash. In the 12 months through and including the third quarter of 2025, each of Roblox's top 1,000 creators earned $1.1 million, up 40% year-over-year, according to an October report from Goldman Sachs. Among them is 23-year-old Zander Brumbaugh. His games, which he started releasing before graduating from high school, have already been played more than 500 million times, this year he earned $1 million on the platform. Another hit on the platform is the game Grow a Garden, its creator - an anonymous teenager.

For Generation Z and Alpha users, Roblox is not only a game, but also a space for socializing with friends. In September, the platform launched the beta version of Moments, which offers to share short clips of the highlights of the game. This makes the platform even more akin to a social network, and also allows for user engagement - in its Q3 2025 report, the company said that more than 30% of players join games through the Moments feed.

Until recently, creating a Roblox account was very simple. All that was required was a unique username and password. But lawsuits and pressure from regulators in various countries forced the company to strengthen security measures. As of November 18, Roblox made the age verification process more complicated.

Now, to get access to chat in the game, you have to pass a biometric check. The system is implemented in Australia, New Zealand and the Netherlands, the company writes. In the rest of the world, where there is a chat function in the game, checks will appear in January 2026.

The flow of messages on the platform is huge: in the first quarter alone, Roblox content filters processed an average of 6.1 billion text messages per day and 1.1 billion hours of voice chats, writes Barron's. Filtering such a flood of data is simply technically difficult.

The company has implemented AI for text and voice to address security concerns. The system will separate chats by age group, Roblox said in a press release. After users pass an age verification, they will be placed in their age group: under 9, 9 to 12, 13 to 15, 16 to 17, 18 to 20, or over 21. Everyone will be able to socialize with players their own age and with people in similar age groups. Playing without age verification is possible, but users will not be able to communicate with anyone.

However, this is not a panacea, as these age estimation systems are not 100% accurate. Besides, these restrictions can be circumvented. One Roblox player told Oninvest on condition of anonymity that in Russia, for example, where voice chat was available only for users 13+, it was possible to illegally buy an "adult" account.

For 2024, the company generated $3.6 billion in revenue, up 29% year-over-year, its consolidated net loss was $940.6 million, with an average daily active users (DAU) of 82.9 million. In 2025, Roblox expects to generate $4.83 billion to $4.9 billion in revenue, increase its net loss to $1.1 billion to $1.13 billion, and increase capital expenditures to $468 million, up $158 million from its previous forecast. Roblox will spend more, in part because of the need to invest in AI and security issues.

The platform's bans on the Middle Eastern, Asian and now Russian markets will have little impact on Roblox's financial results, says Alena Nikolaeva, portfolio manager at Astero Falcon, as the majority of purchases on the platform come from players in the US, Canada, Western Europe and Japan: "At the current stage, this is more of a reputational risk than a financial one. These are loud headlines, but the actual contribution of these regions has little impact on the platform's key metrics."

In Russia, the average revenue per user is many times lower than in the West, the share of paying users is minimal, and problems with foreign payment instruments have effectively cut off monetization as early as 2022-2023, she adds.

Much more significant risks for the company are legal and regulatory, says Nikolaeva - increased scrutiny from the authorities and lawsuits in the States could force the company to raise security costs. If Roblox loses the lawsuits, it could lead to large-scale penalties from regulators, which in turn could cause investors to panic, Barron's points out.

Following the release of its latest quarterly report on October 30, Roblox shares plummeted 15% in one day as the company reported a net loss of $257 million on revenue of $1.4 billion. So far, its stock is trading about 34% below pre-report levels.

Barron's writes that Roblox's financials may not fully reflect its potential. The company publishes bookings data, which is the total amount of money users have paid or committed to pay Roblox for virtual goods, including Robux. Investors see bookings as analogous to annual recurring revenue - an indicator of how much the business can scale, Nikolaeva says. But the company does not count these purchases in revenue all at once, but gradually, usually over a two-year period when users use what they've bought.

In 2024, bookings increased by almost a quarter to $4.4 billion. Roblox forecasts that total purchases on the platform will total $6.566 billion to $6.616 billion by the end of 2025, up 50-51% from a year earlier. By comparison, it forecasts more modest revenue growth of about 35% over the same period.

Roblox is trying to actively develop other sources of profit. Among them is advertising. So far, it has not monetized the audience to its full capacity, but according to Bloomberg Intelligence estimates cited by Nikolaeva, advertising could generate an additional 5-10% of revenue in the next two years.

In April, the company announced a partnership with Google - advertisers can buy rewarded video ads - displays of promotional videos lasting up to 30 seconds in games - through Google Ad Manager. Morgan Stanley analyst Matthew Kost noted in late November that such videos could bring Roblox up to $3 billion and over time increase overall profitability at the expense of sponsored blocks, writes Insider Monkey. Alyona Nikolaeva notes that now 67% of Roblox users are over the age of 13, and this is a "qualitative change." "Teenagers and young adults are better monetized and attract more advertisers," she believes.

In May, Roblox announced a collaboration with Shopify. The goal is to allow content creators and brands using Shopify to sell physical goods in Roblox without leaving the gaming platform. Along with the purchase, players will also receive virtual goods, such as "skins" - the images in which the avatar is present in the game. This will further "link" purchases and transactions within the platform, according to Goldman Sachs.

In addition to opening up new revenue streams, the company will potentially be able to reduce its tax burden. In the "Big Fine Law" signed by US President Donald Trump this summer, corporations were given back the ability to write off R&D expenses fully and immediately. In practice, however, they could not account for millions of dollars of such expenses because they were subject to the 15% minimum corporate tax imposed under previous President Joe Biden. But, as Bloomberg wrote last week, the U.S. administration is preparing to solve this problem, and the U.S. Finance Ministry may publish clarifications as early as this week.

For Roblox, this is not a radical change in the situation, but a positive factor, says Nikolaeva. The company is actively investing in infrastructure, AI, platform development and security, and the ability to take these expenses into account when calculating tax payments will soften the burden, she explains.

The company's shares have grown by 53% since the beginning of the year. Currently, 26 out of 38 analysts monitoring the company's securities give "Buy" or "Above Market" recommendations, 10 have "Hold" recommendations, and two more have "Sell" and "Below Market" recommendations. The average target price is $142.5, which implies a 61% upside to the December 12 close.

This article was AI-translated and verified by a human editor