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Roblox Had ‘Rapid’ Revenue Growth Due to COVID-19, Its IPO Filing Reveals, But Growing Losses Too

Online game platform Roblox filed to go public on Thursday, revealing explosive revenue growth but increasing losses as well as the COVID-19 pandemic boosted its business….

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Online game platform Roblox filed to go public on Thursday, revealing explosive revenue growth but increasing losses as well as the COVID-19 pandemic boosted its business.

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The San Mateo-based startup will follow Unity Technologies, another gaming company, in hitting the public markets this year. Unity, which makes video game software, went public in September. Its stock has since risen around 70 percent.

Before Roblox makes its public debut, let’s take a look at its funding history and valuation, and dive into its S-1 registration statement to go public.

Roblox is a platform where users can create their own games and play games made by others. It’s popular in the world of gaming, especially among younger users. In fact, Roblox said in its S-1 that 25 percent of its users are under the age of 9, and 29 percent are between the ages of 9 and 12.

The company recently made headlines for hosting its first virtual concert featuring a star born out of another app popular among kids and teens: Lil Nas X, who first found fame on video sharing app TikTok.

Roblox was founded in 2004. The company says on its website that 37 billion hours have been played on its platform since 2008 and it logs about 3 billion total engagement hours each month. About $241 million have been paid to community developers on its platform, per Roblox’s website.

The company has about 31.1 million daily active users, per the S-1.

Roblox reported more than $488 million in revenue for the year that ended on Dec. 21, 2019, up 56 percent from around $312.8 million in revenue it generated during the same period in the year prior.

More recently, the company reported $588.7 million in revenue for the first nine months of 2020, up 68 percent from $349.9 million in revenue it made during the same period last year.

The COVID-19 pandemic has evidently boosted Roblox’s numbers, as people have stayed home and turned to streaming, gaming, and other forms of home entertainment.

“We have experienced rapid growth in the three months ended June 30, 2020, September 30, 2020 and for a portion of the three months ended March 31, 2020, due in part to the COVID-19 pandemic given our users have been online more as a result of global COVID-19 shelter-in-place policies,” Roblox wrote.

Bookings increased 171 percent between the nine months ended Sept. 30, 2019 and the same period this year, the company said.

Still, the company does “not expect these activity levels to be sustained, and in future periods we expect growth rates for our revenue to decline, and we may not experience any growth in bookings or our user base during periods where we are comparing against COVID-19 impacted periods (i.e. the three months ended March 31, 2020, June 30, 2020, and September 30, 2020).”

That explosive growth appears to have caused losses to go up as well. Roblox’s consolidated net losses decreased from around $97.2 million in 2018 to around $86.1 million in 2019. But its consolidated net losses then grew again in the first nine months of 2020, from $46.3 million in the same period the year prior to $205.9 million.

So it looks like while Roblox was getting its losses under control pre-COVID, those losses accelerated with the pandemic: losses from operations increased more than 344 percent between the first nine months of last year and the same period in 2020.

Roblox first raised money in January 2005, with a $560,000 Series A. It raised funding steadily in the following years, landing a $1.1 million Series B in August 2006, a $2.9 million Series C in January 2008, a $2.2 million Series D in July 2009, and another $4 million in May 2011, according to Crunchbase data.

Roblox then didn’t raise money for several years, picking back up with a $25 million Series E in January 2017 led by Index Ventures and Meritech Capital Partners. The company didn’t start raising supergiant rounds (what we refer to as rounds larger than $100 million) until July 2018, with its $150 million Series F led by Greylock Partners and Tiger Global Management.

Most recently, the company raised a $150 million Series G led by Andreessen Horowitz in February. The Series G brought Roblox’s valuation to more $4 billion, per Crunchbase data.

Among the largest shareholders of Roblox are Altos Ventures, First Round Capital, Index Ventures, Meritech Capital Partners, and Tiger Global Management, according to the S-1.

Analysts and venture capitalists who spoke with Crunchbase News earlier this month said they expect to see a robust lineup of venture-backed companies going public in the final two months of 2020 and into early next. DoorDash last week filed to go public. Airbnb and Affirm earlier this week followed suit. Poshmark is also expected to file soon and Wish could drop its S-1 before the weekend.

  • See also: VCs Say IPO Pipeline Looks Robust And These Companies Could Still Go Public in 2020
  • Image courtesy of Roblox

    Source: https://news.crunchbase.com/news/what-to-know-leading-up-to-roblox-expected-ipo/

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    Crunchbase

    The Briefing: Fluence Raises $125M For Energy Storage, 23AndMe Gets $82.5M, And More

    Crunchbase News’ top picks of the news to stay current in the VC and startup world.

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    Here’s what you need to know today in startup and venture news, updated by the Crunchbase News staff throughout the day to keep you in the know.

    Subscribe to the Crunchbase DailyFluence gets $125M from Qatar’s sovereign wealth fund at $1B valuation

    Fluence, a joint venture between AES Corp. and Siemens that makes energy storage technology, said Wednesday that it has entered a deal with the Qatar Investment Authority to get $125 million from the sovereign wealth fund through a private placement transaction.

    The investment in Arlington, Virginia-based Fluence, which makes energy storage products for wind farms and other renewable providers, comes at a $1 billion valuation, according to the company. Fluence said it plans to use the proceeds to grow its product offerings and launch in more markets around the world. AES and Siemens will remain major shareholders in Fluence following the deal, each with an approximately 44 percent stake in the company, according to a funding announcement.

    Funding rounds

    Tech news

    • Apple loses copyright case against startup Corellium: A federal judge in Florida rejected Apple’s claims that security and virtualization startup Corellium had violated copyright law with its software, which helps researchers find bugs and security holes on Apple’s products.

    Illustration: Dom Guzman

    Stay up to date with recent funding rounds, acquisitions, and more with the Crunchbase Daily.

    Source: https://news.crunchbase.com/news/briefing-12-30-20/

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    Q&A: Next Coast Ventures’ Mike Smerklo Channels Early Beginnings With Andreessen, Horowitz Into Advice For Entrepreneurs

    Smerklo spoke about his journey, what his children really think he does for a living, and how he pays his knowledge forward to the next generation of entrepreneurs.

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    Mike Smerklo is an entrepreneur, investor and author, applying the decades worth of knowledge he has gained into helping other entrepreneurs reach their goals.

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    He’s had a lot of practice: The co-founder and managing director of Next Coast Ventures was recruited by Marc Andreessen and Ben Horowitz as one of the first employees of their startup, LoudCloud Systems.

    In 2003, Smerklo went to serve as CEO at ServiceSource, a cloud-based apps startup in San Francisco. Over the next 12 years, he grew the business from a 30-person operation into a successful 3,000-person publicly traded company with close to $300 million in revenue. In 2015, he co-founded another cloud-based company, NucleusGrowth.

    He also just came out with a book, “Mr. Monkey And Me,” which provides a look at the mental toughness and grit it takes to start, grow and operate a successful business.

    Smerklo spoke with Crunchbase News about his journey, what his children really think he does for a living, and how he pays his knowledge forward to the next generation of entrepreneurs.

    Note: This interview has been edited for length and clarity.

    Next Coast Ventures’ Mike Smerklo

    What was it like working with Marc Andreessen and Ben Horowitz?

    Smerklo: In my book, “Mr. Monkey And Me,” I talk about my time working with them. I learned so many lessons, but the most salient one was that life is too short to make small plans. The first step in working with the entrepreneurs was the most amazing part. We talked about building something big and meaningful. Marc talked to me about coming aboard. I wanted every advantage I could get, going from the board to hiring people. The experience is like meeting an NFL player. I thought, “Wow, this is what the big leagues look like.”

    What are some lessons you learned that you carried with you into your own company and then into investing?

    Smerklo: Ben said to me early on that a company’s first 25 employees are the most important. I didn’t understand it at the time—I thought that was pretty dismissive to Employee 26. However, the first 25 people are going to set the culture of the organization. After that, those first 25 in the organization are the ones hiring employees, and the founders are not involved in the process as much. Our ability to scale and have the same type of folks go from there changes, so you have to look at every aspect of the business and look at how those employees bring advantages.

    What do you see as the biggest mistake entrepreneurs make?

    Smerklo: There is a mental aspect to being an entrepreneur. One of biggest mistakes starting off is thinking your business is going to suddenly be an Airbnb–worth $100 billion and all of the founders have stories. It’s rare to get to that level, it takes a long time, there are ups and downs, and if you don’t have the right mental stance of how long and what it takes, you won’t get there. Entrepreneurship is underestimated. I watch “Shark Tank,” and that is what my kids think I do for a living.

    We are at an all-time high in the stock market, so valuations are at an all-time high, too, and getting a lot of publicity around it. All of this airtime is doing a disservice to the entrepreneur. Expectations have gotten out of whack in terms of time and valuations. Comparison is the thief of joy, if you get caught up in it.

    With everything that you’ve learned yourself, what kind of wisdom do you like to pass on?

    Smerklo: One of the things I am passionate about is self-care. Outside of practical business, that is a hard job because it is easy to get caught up and keep yourself sane. When people tell me they work 100 hours a week, I see some celebrate that, but not me. Self-care should be part of your routine. When someone is successful, they also have a horrific story, too–something that happened to them. Self-care and mental-care don’t get enough attention.

    Illustration: Dom Guzman

    Stay up to date with recent funding rounds, acquisitions, and more with the Crunchbase Daily.

    In 2003, Smerklo went to serve as CEO at ServiceSource, a cloud-based apps startup in San Francisco. Over the next 12 years, he grew the business from a 30-person operation into a successful 3,000-person publicly traded company with close to $300 million in revenue. In 2015, he co-founded another cloud-based company, NucleusGrowth.

    Source: https://news.crunchbase.com/news/next-coast-ventures-mike-smerklo/

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    Crunchbase

    The Briefing: Graphcore Raises $222M, DXY Closes On $500M, And More

    Crunchbase News’ top picks of the news to stay current in the VC and startup world.

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    Here’s what you need to know today in startup and venture news, updated by the Crunchbase News staff throughout the day to keep you in the know.

    Subscribe to the Crunchbase DailyGraphcore raises $222M for AI microprocessors

    Graphcore, a U.K.-based startup that develops a microprocessor designed specifically for artificial intelligence and machine-learning applications, has raised $222 million in a Series E funding round.

    Ontario Teachers’ Pension Plan led the financing, which reportedly sets a post-money valuation of $2.77 billion for the Bristol-based company.

    The latest round brings total funding to date for Graphcore, which was founded in 2016, to over $780 million.

    Funding rounds

    • China’s DXY lands $500M for online health: DXY, an online health care community for Chinese consumers and health care organizations, raised $500 million in a Series E round led by private equity firm Trustbridge Partners and joined by existing backer Tencent.

    Other news

    • Coinbase to suspend XRP trading: Coinbase said it will suspend trading of the cryptocurrency XRP, following a lawsuit from the U.S. Securities and Exchange Commission last week against Ripple, the company that developed it.

    Illustration: Dom Guzman

    Stay up to date with recent funding rounds, acquisitions, and more with the Crunchbase Daily.

    Source: https://news.crunchbase.com/news/briefing-12-29-20/

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