Inflated Key Metrics For Wall Street And A Pedophile Hellscape For Kids – Hindenburg Research

• Roblox is a $27 billion online gaming platform headquartered in San Mateo, CA. The company was incorporated in 2004 and is led by founder and CEO David Baszucki.
• The company has reported net losses every quarter since becoming a public company, with last twelve months (LTM) losses totaling $1.07 billion. Its stock trades at 8.6x sales, a 57% premium to gaming peers, pricing in expectations of rapid future growth and profitability.
• Insiders have cashed out $1.7 billion in stock since the company’s 2021 direct listing. In the last 12 months, insiders have sold ~$150 million in stock, including ~$115 million by CEO Baszucki personally.
• Since Roblox isn’t profitable, its stock price (and, in turn, insiders’ ability to dump hundreds of millions of dollars of stock) is reliant on the growth metrics it presents to Wall Street.
• Our research indicates that Roblox is lying to investors, regulators, and advertisers about the number of “people” on its platform, inflating the key metric by 25-42%+. We also show how engagement hours, another key metric, is inflated by an estimated 100%+.
• Since prior to going public, Roblox has reported the number of “people” on its platform in dozens of official investor communications. Among many examples, Roblox wrote in a 2022 quarterly report, “there are over 54.1 million people coming to Roblox every day”.
• Our findings show that the company’s reported number of “people” regularly matches Roblox’s reported Daily Active Users (DAUs).
• But DAUs, according to Roblox’s own disclosures, “are not a measure of unique individuals accessing Roblox” because they can include numerous accounts run by a single person, such as alternate or bot accounts.
• Given these definitions, we believe Roblox intentionally conflates “people” with DAUs, consistently inflating the reported number of people on its platform.
• In 2023, Roblox told the SEC it is “unable to identify if a user has multiple accounts”. The company’s response to the SEC appears to be a flat out lie.
• Multiple former employees told us that Roblox does internally track single users with multiple accounts, referring to the process as ‘de-alting’.
• Interviews reveal Roblox effectively has two sets of books for counting users: one for internal business decisions, in which multiple accounts are ‘de-alted’, and one used by the finance team that reports higher metrics to investors.
• “If that number (DAUs) is not de-alted, I think the actual one would be like anywhere between 30 to 20 percent lower”, a former data scientist told us.
• Roblox forums detail how users regularly have dozens of alternate accounts to “farm” for goods on Roblox, avert bans and increase their follower counts, among other reasons.
• In addition to alternate accounts, bots are rampant on the platform. For example, Roblox’s 7^th most popular game, Adopt Me!, has garnered over 83,000 Change.org signatures to remove it from the platform due to extensive “botting” that “breaks” Roblox.
• Roblox’s 2^nd most visited game, Blox Fruits, was dominated by traffic from Vietnam, where we found numerous Facebook groups, including 5 with 50,000 to 117,000 members each, advertising and soliciting tools to run 20+ Roblox bot tabs at a time.
• A former data scientist told us that activity in Vietnam “inflated a lot of our numbers. Like crazy, insane, in terms of engagement, DAU(s)”.
• In addition to inflating the reported number of “people” on its platform, we also suspect Roblox massively inflates a second key metric, “engagement hours”. The company reported an extraordinary 2.4 average hours of engagement per day per user in 2023.
• This level of engagement is 58% higher than the average time spent by U.S. 8-12 year olds playing all mobile games (including tablet), according to a 2021 survey, and 26%-166% more time than leading social media platforms such as YouTube, TikTok and Instagram.
• To better understand the company’s reported engagement, we hired a technical consultant that monitored the top ~7,200 Roblox games across ~2.1 million Roblox servers, collecting 297.7 million rows of real-time player data.
• The data suggests that Roblox could be massively overstating the true level of user engagement across its platform: our review of an average of 30.4 million unique daily users found they spent just ~22 minutes in games per day.
• Further analysis of play times showed numerous games in which obvious bot accounts remained in-game for more than 24 hours straight. Our representative sample flagged millions of ‘zombie’ engagement hours that can majorly skew Roblox’s reported “average” engagement.
• Roblox incentivizes developers to create ‘AFK’ (Away From Keyboard) games that artificially inflate engagement by tying developer pay in part to engagement. Web forums detail developer strategies for creating features that encourage bots and zombie engagement.
• We think Roblox can and should report its estimated de-alted and de-botted metrics so that investors, advertisers, and regulators can be better informed about the actual number of “people” on the platform, and their genuine level of engagement.
• Beyond inflated key user metrics, our in-game research revealed an X-rated pedophile hellscape, exposing children to grooming, pornography, violent content and extremely abusive speech.
• Roblox is compromising child safety in order to report growth to investors, per our interview with a former senior product designer: “If you’re limiting users’ engagement, it’s hurting your metrics…in a lot of cases, the leadership doesn’t want that.”
• For the second quarter of 2024, in a push toward profitability, Roblox reported a 2% year-over-year decline in its trust and safety expenses.
• Core to the problem is that Roblox’s social media features allow pedophiles to efficiently target hundreds of children, with no up-front screening to prevent them from joining the platform.
• For example, in 2018, prior to Roblox going public, a 29-year-old was caught by police with 175 hours of video footage of him grooming and engaging in explicit behavior with 150 minors using online platforms, namely Roblox.
• Media and non-profit exposés from 2020 to July 2024 revealed digital strip clubs, red light districts, sex parties and child predators lurking on Roblox. The National Center on Sexual Exploitation in 2024 labeled Roblox “a tool for sexual predators, a threat for childrens’ safety”.
• Numerous criminal indictments from 2019-2024 allege that sexual predators groomed children in-game, ranging from 8-14 years old, then kidnapped, raped or traded sexual content with them.
• Following years of scandals, we performed our own checks to see if the platform had cleaned up its act. As a test, we attempted to set up an account under the name ‘Jeffrey Epstein’…only to see the name was taken, along with 900+ variations.
• Many were Jeffrey Epstein fan accounts, including “JeffEpsteinSupporter” which had earned multiple badges for spending time in kid’s games. Other Jeff Epstein accounts had the usernames “@igruum_minors” (I groom minors), and “@RavpeTinyK1dsJE” (rape tiny kids).
• We attempted to set up a Roblox account under the name of another notorious pedophile to see if Roblox had any up-front pedophile screening: Earl Brian Bradley was indicted on 471 charges of molesting, raping and exploiting 103 children. The username was taken, along with multiple variants like earlbrianbradley69.
• After we found a username, we listed our age as “under 13” to see if children are being exposed to adult content. By merely plugging ‘adult’ into the Roblox search bar, we found a group called “Adult Studios” with 3,334 members openly trading child pornography and soliciting sexual acts from minors.
• We tracked some of the members of “Adult Studios” and easily found 38 Roblox groups – one with 103,000 members – openly soliciting sexual favors and trading child pornography.
• The chatrooms trading in child pornography had no age restrictions. Roblox reports that 21% of its users are under the age of 9, a number that is likely underestimated given that Roblox has no age verification aside from users seeking 17+ experiences.
• Registered as a child, we were also able to access games like “Escape to Epstein Island” and “Diddy Party”. We found over 600 “Diddy” games, including “Survive Diddy” and “Run From Diddy Simulator”.
• Since September 2nd, 2024, third-party monitor ‘Moderation For Dummies’ has reported ~12,400 erotic roleplay accounts on Roblox. These include everything from “rape/forceful sex fetishes” to underage users “willing to do anything for Robux”.
• Users seeking sexual experiences on Roblox are so pervasive that there are thousands of Roblox sex videos on porn sites, inviting users of unknown ages to make explicit content on the platform.
• We tested out Roblox’s experiences to see what else kids were being exposed to. We quickly encountered images of male genitalia and hate speech in Roblox’s “school simulator” game, which had registered 28.9 million visits with no age restrictions.
• Despite the company’s mission “to connect a billion users with optimism and civility”, we found games such as “Beat Up Homeless Outside 7/11 Simulator”, which had 1 million visits and 15,000 favorites before being removed from Roblox.
• Nonetheless, Roblox users identifying as 9 years old and up can still beat up homeless people in “Beat Up People Outside of 7/11” with over 900,000 visits.
• In the game “Beat Up The Pregnant”, users hacked pregnant women to death in a Wal-Mart parking lot with machetes or killed them with frying pans or a selection of guns.
• We played “(GUNS) Work at a Hospital” where users can go on a hospital shooting rampage. The game has ~1.6 million visits and remains on the platform with no age restrictions. The game’s thumbnail is a picture of a terrified pregnant woman.
• “LGBTQ+ Vibes” is a game available to all ages that has accumulated over 40.6 million visits and over 224,000 favorites. Users regularly described lewd sex acts while others used hateful slurs.
• “Palestine And Israel Hangout” allows kids of all ages to purchase bombs and knives and attack each other. This game has ~13 million visits and ~7,200 favorites and remains on the platform.
• Posing as a child in Roblox’s “therapy” experience, our therapist introduced himself as a “rapper with only one p”. We were advised to run away from home and that he would come pick us up so we could move into his basement in exchange for paying rent with our body.
• Some games seem to encourage illicit interactions, like “Public Bathroom Simulator Vibe” and “XYZ Club Vibe” with 31 million collective visits. Both are available to users who self-identify as 9+ years old, who can simulate sex in bathrooms wearing skimpy outfits.
• Other Roblox users have identified issues of simulated rape, naked users, and rampant in-game sexual harassment.
• Despite Roblox’s claims of “best in the world” content moderation, our interviews with moderators show safety was largely outsourced to Asian call centers. Moderators described being paid $12 a day to review countless instances of child grooming and bullying with a limited ability to keep perpetrators off the platform permanently.
• Compounding all of the above issues, Roblox faces saturation in its top markets like the U.S. and Europe. It is now attempting to keep the appearance of growth alive by adding loss-generating users in markets like Asia, per a former employee. Profitability has plummeted despite reporting higher user metrics.
• The conversion rate of new daily active users to paying users has been in steady decline since 2020. Roblox is now hoping to drive incremental growth by pitching advertisers that ~79.5 million “people” spend an average of 2.4 hours per day on the platform.
• As noted earlier, we suspect these metrics are wildly inflated and that the platform poses major reputational risks for advertisers. For instance, we found Instagram ads in the same school simulator game with Nazi hate speech and photos of male genitalia.
• Overall, we think Roblox has adopted the Silicon Valley approach of ‘growth at all costs’, whether by misleading or outright lying to investors about its key metrics or by opening its platform to dangerous predators and illicit content unsuitable for children.

Initial Disclosure: After extensive research, we have taken a short position in shares of Roblox Corporation (NYSE:RBLX). This report represents our opinion, and we encourage every reader to do their own due diligence. Please see our full disclaimer at the bottom of the report.

Background: A $27 Billion NYSE-Listed Children’s Social Gaming Platform Headquartered In Silicon Valley

Roblox is a $27 billion online gaming platform headquartered in San Mateo, CA. The company was incorporated in 2004 and is led by founder and CEO David Baszucki.

Per its Q2 2024 quarterly report, Roblox had 79.5 million average daily active users (“DAUs”) in over 190 countries, across its 5.3 million “active experiences” – a term Roblox uses to describe games, social hangouts, and other events that include online concerts, sports and fashion shows.

The majority of Roblox users are children: 21% of players are under 9 years old, 21% are from 9-12 years old, 16% are between 13 and 16 years old and 41% are older than 17 years old, according to Roblox´s 2023 annual report.

Roblox’s most popular games as of this writing are Blox Fruits, a pirate adventure game, and Brookhaven, a roleplaying game where users can create their own houses and explore a city.

One draw for Roblox versus other gaming platforms is that it gives players the ability to communicate and interact with other players, adding a social dynamic.

Roblox is a “free to use” platform that generates almost all of its revenue from the sale of its self-described virtual currency called Robux, which can then be used to purchase virtual items in-game.

Robux can be purchased through app stores or under Roblox’s premium membership, and can also be traded and donated amongst users.

Users can also earn Robux by creating Roblox experiences and charging others for in-game items, enabling game developers to monetize their creations.

The U.S. is Roblox’s most lucrative market. As of the end of 2023, just 22% of Roblox´s daily active users (DAUs) were located in the U.S. or Canada, but the U.S. alone accounted for 60% of consolidated 2023 revenues.

Roblox went public on the NYSE via a direct listing on March 10^th, 2021, and has a current market capitalization of ~$27 billion.

Bull Case: Rapidly Growing Metaverse With 48 Billion Hours Of Yet To Be Monetized Engagement

The Growth Story Has Attracted Well-Known Technology Investors Like Cathie Wood’s ARK Invest

Roblox’s investor story has centered around its rapid user growth, with the company’s average DAU count reaching 68.4 million in 2023, up from 56 million in 2022, representing a ~22% increase in the period. For the second quarter of 2024, Roblox reported continued growth, with average DAUs during the period of 79.5 million. (Pg. 6)

Roblox’s daily active user growth has driven its revenue, which grew to ~$2.8 billion in 2023, up from ~$2.2 billion in 2022, representing a 26% increase in the period.

Part of Roblox’s bull case is its devoted developer community creating new games for users. At the end of 2023, Roblox reported over 5 million developers and creators earning Robux on the platform. (Pg. 10) As of Q1 2024, Roblox reported over 18,000 developers and creators had earned enough Robux to be eligible for its Developer Exchange Program, which allows developers to exchange Robux for real money. (Pg. 38)

During its August 2024 earnings call, Roblox’s CEO said it expected to grow DAUs to 1 billion in the long term, a number representing more than 12.5% of earth’s current total population.(1) (Pg. 1)

During its latest investor day, Roblox told investors that 80% of its reported engagement hours had yet to be monetized, providing a growth opportunity via advertising and partnerships. CFO Michael Guthrie told investors:

“We really have a fantastic opportunity when we start monetizing a lot of those hours today, which really are lying fallow.”

In an August 2024 research note, a JP Morgan analyst again highlighted the potential to monetize the remaining 80% of hours via advertising and in-game commerce.

Roblox’s growth trajectory has drawn in popular investors like Cathie Wood, whose ARK Funds hold a combined ~$560 million in Roblox stock, comprising around 4.75% of net assets across its funds, per FactSet and independent aggregator StockCircle.

As of October 2nd, 2024, 18 sell-side analysts had a “Buy” rating on Roblox shares, 11 had a “Hold” rating, and only two had a “Sell” rating, per Bloomberg.

Fundamentals: Roblox Has Reported Net Losses Every Quarter Since Becoming A Public Company, With Last Twelve Months (LTM) Losses Totaling $1.07 Billion

Roblox Trades At ~8.6x Sales, A 57% Premium to Gaming Peers

The market has priced in substantial implied growth for Roblox. When compared to established peers in the gaming industry like Electronic Arts, Take-Two Interactive and Nintendo, Roblox trades at a 57% premium on a Price to Sales basis, per FactSet.

Company	Enterprise Value (in millions)	Price to Sales
Roblox Inc.	26,602	8.55
Take-Two Interactive	29,308	4.84
Electronic Arts	37,051	5.26
Nintendo ADR	54,540	6.26
RBLX Premium		57%

Unlike peers such as Nintendo and Electronic Arts, which are largely profitable, Roblox has generated net losses every single quarter since its public listing, with losses recently accelerating. Roblox reported $2.6 billion in losses over the last three years alone.

The company has reported an accumulated deficit of $3.5 billion to date. (Pg. 6)

Roblox paid out $963 million in dilutive share-based compensation over the last 12 months, enabling it to report positive free cash flow despite the growing net losses. But even on this basis the stock is expensive—Roblox trades at 61x estimated 2024 free cash flow, per FactSet. (Pg. 11, Pg, F-9, Pg. 11)

Red Flag: Roblox Insiders Have Dumped ~$1.7 Billion in Stock Since The Company’s 2021 Direct Listing

Over The Last 12 Months Insiders Have Sold ~$150 Million In Stock

Roblox’s insiders and private equity backers don’t seem to be waiting around for the 1 billion DAU target – or even profitability – to cash in. Together, they have dumped ~27.8 million shares worth ~$1.7 billion since the company’s 2021 public listing, according to insider sales data aggregated by FactSet. Roblox CEO David Baszucki has sold ~9.8 million shares worth ~$526 million since the company’s 2021 public listing.

Over the last 12 months, Roblox insiders have sold ~3.8 million shares worth ~$150 million. CEO David Baszucki alone has sold ~2.8 million shares worth ~$115 million, according to FactSet.

Insider	Net Proceeds
CEO David Baszucki	$114,586,000
Rest of RBLX Insiders	$35,560,115
Total	$150,146,115

Red Flag: 3 Senior Executives Have Resigned From Roblox In Roughly The Past Year, Most Notably Its CFO Who Has Been With The Company Since 2018

Executive churn can be a red flag indicating that a company may be having internal strife or difficulty retaining talent in its top ranks.

Roblox has lost three senior executives in roughly the past year, most notably its CFO Michael Guthrie, whose planned departure was announced on August 1^st, 2024. He has been with the company since 2018 and played a key role in its public listing in 2021, according to Reuters.

Senior Executive	Role	Date of Resignation
Barbara Messing	Chief Marketing & Communications Officer	October 5, 2023 (1)
Daniel Sturman	Chief Technology Officer	February 13, 2024 (1)
Michael Guthrie	Chief Financial Officer	August 1, 2024 (1)

Part I: We Believe Roblox Has Been Lying About The Number Of People On Its Platform

Our Findings Indicate Roblox Has Overstated The Metric By 25%-42% Or More

We Also Suspect Another Key Metric, Engagement Hours, Is Inflated By Over 100%

Since Roblox isn’t profitable, its stock price (and, in turn, insiders’ ability to sell hundreds of millions of dollars’ worth of stock) is reliant on the key metrics it presents to Wall Street on a quarterly basis.

These metrics include the company’s statements to investors, regulators, and advertisers about the number of people on its platform, along with the hours they have engaged with Roblox. These serve as evidence of Roblox’s future growth trajectory, and have become arguably just as material as the company’s periodic financials.

As we show further in Part III, Roblox’s core U.S. market, which accounted for 60% of consolidated 2023 revenues, is showing signs of saturation. To keep its growth story alive, our findings show that Roblox has reported pumped up user metrics while expanding in unprofitable overseas markets, fueling surging losses.

Interviews with former employees, our own technical analysis and a review of company disclosures indicate that Roblox has kept two sets of books for counting its users, which we estimate has led to the company consistently overstating the amount of people on its platform by 25% to 42% or more. We also estimate engagement hours are overstated by over 100%.

Background: Roblox’s Two Most Critical Key Performance Indicators Are Daily Active Users (DAUs) And Engagement Hours

Both Indicate That Roblox Is On A Solid Growth Trajectory, Per Its Most Recent Quarter

Roblox has encouraged Wall Street to focus on two key non-financial metrics, stating in its latest annual report:

“We view DAUs as a critical measure of our user engagement, and adding, maintaining, and engaging users has been and will continue to be necessary to our continued growth.” (Pg. 32)

Similarly, total hours engaged on the platform, another key metric, is cited as “an indicator of the user engagement” in the company’s 2023 annual report.

During Roblox’s 2023 investor day, CEO David Baszucki highlighted the tie between the two key indicators and bookings growth, saying:

“We’re going to talk about growth…how growth in DAUs and hours (engaged) leads to bookings growth”.

At the same investor day, Roblox described how 80% of its reported engagement hours had yet to be monetized, representing a growth opportunity.

As an example of the importance of DAUs and engagement hours for Roblox, in Roblox’s most recent investor-facing presentation for Q2 2024, “DAUs” (a term it uses interchangeably with the word “people”, as we will show below) and “hours engaged” were presented on the first slide of the deck, alongside revenue and bookings.

Wall Street analysts have also fixated on DAU and hours engaged growth. Consensus estimates forecast that daily active users will grow from 68.4 million in 2023 to 94 million in 2025, per Bloomberg. Consensus estimates forecast users will go from spending 60 billion hours on the platform in 2023 to 83.9 billion hours by 2025, per Bloomberg.

This, in turn, is forecasted to drive annual bookings up 39%, from $3.52 billion in 2023 to $4.89 billion in 2025, per Bloomberg.

Former Senior Product Designer Speaking About User Metric Growth At Roblox In 2022: “Every Time It Drops A Little, Every Month, And People Were Just, There Was Anxiety And Panic”

A former senior product designer described the pressure to maintain user metric growth. For example, they told us that in 2022, the company started to see its growth metrics decline:

“Every time it drops a little, every month, and people were just, there was anxiety and panic.”

Since Prior To Going Public, Roblox Has Reported The Number Of “People” On Its Platform In Dozens Of Official Investor Communications

Our Findings Show That Roblox’s Reported Number Of “People” Regularly Matches Its Reported Daily Active Users (DAUs)

Roblox has commonly used “people” to refer to its reported DAU number, giving investors the impression that each DAU is a unique person. In its 2020 registration statement, the company told the SEC and investors:

“An average of 36.2 million people from around the world come to Roblox every day to connect with friends.”

That number of “people” was the same number Roblox had reported as DAUs—36.2 million—in its same registration statement. (Pg. 104) (Pg. 106)

In its 2021 annual report, Roblox told the SEC and investors:

“Today, an average of 49.5 million people from around the world come to Roblox every day to connect with friends.”

That number of “people” was the same number Roblox had reported as DAUs – 49.5 million – in its 2021 Q4 press release.

Following its Q1, 2022 report, an article authored by Roblox’s Chief Product Officer wrote:

“As of the first quarter of this year, there are over 54.1 million people coming to Roblox every day”.

That number of “people” was the same number Roblox had reported as DAUs – 54.1 million – in its corresponding quarterly report. (Pg. 29)

Other references to DAUs as “people” include Roblox’s 2022 and 2023 investor day discussions. (1,2) These references to “people” match or approximate the number of reported DAUs at the time of the statements. (1,2)

The interchangeable use of DAUs and “people” continued in 2024, when CEO Baszucki told analysts during the company’s Q1 earnings call:

“In Q1, our DAUs came in at over 77 million daily people on our platform with year-on-year growth of 17%.”

Roblox’s official mission “to connect a billion people” is referenced in at least 22 SEC filings from 2022-2024.

In other communications, it seems to reference this goal in terms of DAUs. On August 9^th, 2023, the company filed a letter to shareholders stating that it was confident it could “grow to support one billion DAUs.” (Pg. 1) A year later, in an article authored by Roblox’s CEO and published on September 6^th, 2024 the company said it is on its “path to 1 billion daily active users”.

Contradicting Its Filings And Repeated Public Statements By Its Executive Team, Regulatory Disclosures Show That DAUs “Are Not A Measure Of Unique Individuals Accessing Roblox”

In Other Words, When Roblox Says “People” It Does Not Actually Mean People

At risk of insulting the intelligence of our readers, here is the definition of the word “person” from the dictionary:

Despite the company clearly leading investors to believe that the DAUs are the same as the number of individual people on its platform, Roblox offers a starkly different definition in its own SEC filings, where it writes that DAUs “are not a measure of unique individuals accessing Roblox”.

Instead, it notes that DAUs may include multiple accounts run by the same individuals and fraudulent accounts created by bots to inflate user activity.

Roblox further writes that DAU metrics have been determined “using internal data” and that its collection methodologies “require significant judgment and are also susceptible to algorithm or other technical errors”. Importantly, Roblox adds that the critical investor metrics “have not been validated by an independent third party”. (1, 2)

There Are ~6.5 Billion Registered Roblox Accounts, A Number Approaching Earth’s Population, Per Data Tracker RoMonitor

Clearly, There Are Numerous “Alt” And/Or Bot Accounts Reflected In Roblox’s Metrics, It Is Merely A Question Of How Many

Independent Roblox data monitor RoMonitor indicates there are 6.5 billion total registered Roblox accounts as of this writing, a number approaching Earth’s population.(2)

Per a former employee we spoke with on Roblox’s key U.S. market:

“We have more accounts registered to the U.S., multiple times over the population of the U.S.”

“People” Overstatement Method #1: Alternate Accounts

On Roblox, Setting Up And Regularly Using Multiple Accounts Is Common, Inflating The Reported Number Of “People” On The Platform

“Every Time We See A User Sign Up, There’s (A) 60% Chance That This Sign Up Is From An Alt (Account)” – Former Employee

There are many reasons Roblox players and developers create multiple accounts. Some of these are shared on Reddit forums (1,2):

• Players use their alternate account(s) so as not to risk their main account being banned – which may lead to the loss of Robux or other assets held in the main account.
• Players trade assets in alternate accounts so as not to risk their main account being compromised in an exchange – a commonly cited risk.
• Players add other players to games to speed up in-game rewards – often putting these players in games while automating their activity while “AFK” or “Away From Keyboard”.
• Players develop different online personas for different games by using alternate accounts.
• Developers create alternate accounts to vote for their games as a “favorite”.
• Developers create, test, and moderate games with different types of user accounts.

The result is inflation of users far beyond the actual number of humans on the platform.

The proliferation of alt accounts is widely understood in the Roblox user community. A year ago, a Redditor in the Roblox forum asked, “Do you have an alt account, and why?” Responses included:

1. “I have about 10 alts because why not.”
2. “I have like 400 accounts and I use about 30 of them just because I use many for storage and specific games or just wanting to max out stats again on a game.”
3. “I have a alt account cuz i don’t want to get my main to get banned after trash talking to kids”

One Redditor pondered, “I wonder if there’s only about 10 of us in all of Roblox & the rest are just our alts.”

In our own research, detailed below, we used emulators and game management programs to run 20-40 Roblox sessions from one computer simultaneously. 

Given that players and developers routinely use multiple accounts, consolidating alternate accounts would be critical to understanding the actual number of people on Roblox’s platform.

In 2023, Roblox Told The SEC It Didn’t Provide Data On Alternate Accounts Because It Is “Unable To Identify If A User Has Multiple Accounts”

In a 2023 response to an SEC comment letter requesting more information about its monthly active users, Roblox said it was “unable to identify if a user has multiple accounts and as a result cannot accurately estimate potential duplicate users.“

The Company’s Response To The SEC Appears To Be A Flat Out Lie:

Multiple Former Employees Told Us That Roblox Does Internally Track Single Users With Multiple Accounts, Referring To The Process As “De-Alting”

One former Roblox software engineer told us that like most companies that track usage, Roblox is able to identify users with multiple accounts:

“I have 10 accounts, right? Any given day I could be playing on multiple of them. On multiple devices. Those all get traced back to me. Roblox knows it’s me playing on all ten of those accounts.”

The former engineer described scenarios where players leave multiple accounts in games to earn various rewards – known as “farming”:

“If I have 10 alts (alternate accounts), because I’m farming Pet Simulator on 10 accounts and all of those are running a script on different virtual machines in my computer – they’re all still coming out of the same IP address. I made all 10 of those accounts. Their names are similar. Their account creation times are similar…I’m still one player, not 10.”

A different former employee confirmed this:

“There is some work in that to de-alt things and then a lot of times in the internal metrics, we do run de-alted calculations”.

A technical consultant we hired also indicated that Roblox’s claim that it can’t differentiate between users and people was surprising given the third-party analytics services used by the company. Roblox’s privacy policy shows it uses a slew of tracking and identity verification services including Google Analytics, Veriff, Persona, and Arkose Labs:

Roblox Effectively Has Two Sets of Books For Its Key User Metrics – One For Internal Business Decisions And One For Public Reporting To Investors, According To A Former Data Scientist

There Was Internal Strife Between The Divisions, But In The End, Finance Became “The Source Of Truth For The Company”

Former Data Scientist: “If That Number (DAUs) Is Not De-Alted, I Think The Actual One Would Be Like Anywhere Between 30 To 20 Percent Lower”

Our concerns about Roblox’s data were reinforced by what appears to be the company’s use of two sets of data – one used internally to understand the business and a second shared with Wall Street.

The de-alting process – in which DAUs are effectively reduced to create an estimate of actual people on the platform – results in a more accurate but lower DAU metric, according to a former data scientist:

“Let’s say if that number (DAUs) is not de-alted, I think the actual one would be like anywhere between 30 to 20% lower…”

In other words, the number of people on Roblox is inflated by 25% to 43% when the metric is not de-alted. Rather than the 79.5 million DAUs the company reported in Q2 2024, Roblox would be estimated to have closer to ~56-64 million actual “people” on its platform on any given day, based on the former data scientist’s estimates.

For context, Roblox employs data scientists across its business to understand the activity and spending patterns of its millions of users and to test the impact of various changes, according to the former employee:

“… if we don’t de-alt our numbers, (it) will kind of not make sense to our stakeholders and they will very much inflate our bias. So, when we look at things internally, we tend to look at de-alted numbers.“

While one might expect elimination of biased metrics to be reflected in investor-facing numbers, the same former employee explained that the finance group reports different numbers to investors:

“They hire their own data engineers. They hire their own reporting groups to own the pipeline, to report and calculate these numbers. So, basically, there are two processes to kind of go about creating these numbers. But finance is the one that ultimately gets reported to Wall Street and the CEO’s and C-Suite to rely (on).”

The former employee said there were discrepancies in “numbers and trend(s) and these top line metrics.” Around 2021 and 2022, there were efforts to resolve these discrepancies, but they were eventually abandoned due to pushback from finance:

“They (were) just like ‘give up and stop beating a dead horse’. And finance is the source of ‘truth’.”

Data science’s analysis and de-alting efforts were used for internal purposes only, the former employee said. Meanwhile, the group is largely shut off from the data used by finance:

“We make recommendations directionally for the company. So, as far as I know, the ‘grand truth’ in the end, whatever they report to the Street, comes from finance and finance kind of holds these data in privacy to some degree too…a lot of us don’t have access to those data.”

Roblox management recently indicated that the company does have visibility into the actual number of “people” on its platform but chooses not to report it to investors. During the company’s Q1 2024 earnings call, CEO Baszucki said:

“We continue to see the general number of people on our platform being very strong. We don’t report the number…”

Later on the same call, he implied the internal numbers differ from publicly-reported DAUs:

“…we also saw that in numbers — just internal numbers, which we generally refer to as general people on the platform versus DAUs”.

Nonetheless, as previously mentioned, during the same call, Baszucki told analysts that DAUs were people, continuing to conflate the metric with actual people:

“In Q1, our DAUs came in at over 77 million daily people on our platform with year-on-year growth of 17%.”

“People” Overstatement Method #2: Bots

Former Employees Described Bots On The Platform And An Internal Method To “De-Bot” Roblox’s DAUs

The former data scientist told us that Roblox also removed bots from its internal numbers:

“We do de-bot our (internal) numbers too. We do try our best to get rid of bots from our (internal) accounting.”

It was unclear whether the metrics reported by the finance team publicly included the de-botted metrics used internally. A Roblox developer questioned Roblox’s process of bot elimination:

“My assumption is that there probably are a lot of bots that occupy a good amount of the daily active users, because filtering through those things wouldn’t be incentivized by Roblox. Like they wouldn’t have a good reason to tell you they only have 20 million active users on a day-to-day basis. And, so, while they’re probably eliminating the easy ones, are they going the extra mile to eliminate the hard ones?”

A former developer said that most of the bots he encountered on the Roblox platform were looking to take advantage of the platform’s young user base:

“There was an issue with bots, but it was because the game is popular with children. There was scam bots where they basically join random games and send some scam in the chat with a link and (users) go to the link (which) promises you get free Robux if you input your username and password and whatnot.”

Example Of Bot Activity: One Of Roblox’s Most Popular Games, Adopt Me!, Garnered Over 83,000 Change.Org Signatures To Remove It From The Platform Due To “Botting” That “Breaks” Roblox

We found numerous examples of extensive bot activity on Roblox.

One of Roblox’s most popular games, ranked #7 out of all games by RoMonitor as of this writing, is called “Adopt Me!”, with 37.5 billion lifetime visits.

‘Adopt Me!’ has been repeatedly accused by Roblox players of using bots to boost its metrics. (1, 2, 3, 4) 

One change.org petition has received 83,211 signatures to remove “Adopt Me!” from the Roblox platform, alleging that the proliferation of bots on the game occasionally “breaks” the Roblox platform and that users must “stand up and fight (for) Roblox 24/7 uptime”.

Example Of Bot Activity: Roblox’s 2^nd Most Visited Game Is A Pirate Game Called Blox Fruits

Year-To-Date, ~37% Of Blox Fruits’ Web Traffic Is Dominated By Vietnam and The Philippines, With The United States Accounting For Just ~8%, According To Semrush Data

The 2^nd most played game on Roblox is Blox Fruits, per Romonitor, with 40.4 billion all time visits as of this writing.

The audience you would expect to see for Blox Fruits is primarily ‘U.S. and Canada’ and Europe-based users, given that 47% of Roblox’s reported DAUs in Q2 2024 were from those regions. (Pg. 30) Roblox’s Asia-Pacific region accounted for 26% of DAUs during the same period. (Pg. 30)

We analyzed Blox Fruits’ web domain using Semrush’s Geo Distribution tool, which shows from what countries/regions users visited Blox Fruits’ subdomain via mobile and desktop.

The Semrush data reveals that year-to-date, only ~8% of visitors to Blox Fruits’ subdomain hailed from the U.S., while ~13% visited from the Philippines and ~24% visited from Vietnam.

To better understand this unexpected web traffic split, we looked for Blox Fruits communities in Southeast Asia, expecting to find numerous users posting about how much they enjoy the game.

Example Of Bot Activity: We Found Numerous Vietnamese Facebook Groups, Including 5 With 50,000-117,000 Members, Advertising And Soliciting Tools To Run 20+ Roblox Tabs At A Time Via “Multi Blox” Bot Programs

Former Data Scientist: Activity In Vietnam “Inflated A Lot Of Our Numbers, Like Crazy, Insane, In Terms Of Engagement, DAU(s)”

We didn’t find a community of active and engaged Southeast Asian users discussing the Roblox games they loved to play. Instead, we identified numerous Facebook groups, including five with over 50,000 members, advertising and soliciting bot farm equipment such as Roblox “game tools” that run up to 40 Roblox tabs at once. (1,2,3,4,5)

The post below is from a group called “Virtual Money Farming Community” (translated from Vietnamese) with 62,000 members.

The group members described their use of emulators (e.g., LDPlayer or Bluestacks) or programs (e.g., Roblox Account Manager or MultiRoblox) to run 20+ Roblox tabs at once.

We tested this out ourselves and were easily able to simultaneously deploy 20 bots in the game Blox Fruits.

A former data scientist explained to us that by placing multiple players in games for hours at a time, Vietnamese bot operators can rapidly accrue game assets via “farming” activity, then sell the accounts or assets for U.S. dollars:

“It’s quite a bit of money in Vietnam. So these countries–they would find them more profitable to do this farming and sell these accounts to users in (the) U.S.”

The accounts or assets are then sold on various web markets such as eBay:

The bot farm activity in Vietnam caused Roblox’s metrics to surge, the former employee explained:

“Internally, there is awareness that a lot of this activity was happening in Vietnam when these sort of things occurred and that inflated a lot of our numbers. Like crazy, insane, in terms of engagement, DAU(s) and stuff like that.”

Example of Bot Activity: Former Employees And Roblox Users Detail Instances Of Hundreds of Obvious Bots

Another former employee explained that depending on a users’ internet speed and computer specifications, bot programs allow a single person to control an entire game lobby’s worth of Roblox accounts:

“People are not that creative. They’ll make saucy face one, saucy face two, saucy face three, saucy face four, saucy face fifty. And you go into a game and the entire game lobby has saucy face with numbers after it. It’s one person.”

For instance, one ‘X’ account flagged an example from earlier this year of a group of 500+ obvious spam bot accounts created using the screen name “LookatBio”, with most of those bio pages offering to sell fake followers and group members.

Our Video Compilation Of Roblox Conflating “People” With The Metric It Reports For “DAUs”

Beyond “People”, We Suspect Roblox Massively Inflates A 2^nd Key Metric: The Company Reported Extraordinary “Engagement Hours”, An Average 2.4 Hours Per Day In 2023

This Level Of Engagement Is 58% Higher Than Average Time Spent By U.S. 8-12 Year Olds Playing All Mobile Games, According To A 2021 Survey

Beyond signs of major DAU inflation, the second key metric we suspect is highly inflated is “engagement hours”.

Roblox reported an incredible 2.4 hours of average engagement per its 68.4 million DAUs in 2023.(3)

At 68.4 million DAUs in 2023, Roblox has a wide enough reach that one would expect its user base to look similar to national averages. This isn’t remotely the case.

In 2023, Roblox reported that 80% of its users played on mobile devices, with the rest playing on PC or console.

A nationally representative survey conducted by Common Sense in 2021 found that children between 8 to 12 years old reported spending an average of 1 hour and 31 minutes gaming per day on mobile devices (including tablets). (Pg. 17) The same survey found that on average, teenagers between 13 to 18 years old reported spending an average of 1 hour and 16 minutes gaming per day on mobile devices (including tablet). (Pg. 18)

This would mean that Roblox players are spending ~58% more time per day on the platform than kids aged 8 to 12 spend on all mobile gaming devices per day, and ~89% more time per day on the platform than teenagers aged 13 to 18 spend on all mobile gaming devices per day.

Roblox also seems to claim it has every major social media platform beat on hours of engagement. A Gallup Poll that surveyed 1,567 adolescents between June to July 2023 found that on average, adolescents reported spending 114 minutes on YouTube and 90 minutes on TikTok, followed by 54 minutes on Instagram.

This would mean that on average, Roblox reports its users are spending 26%-166% more time per day on the platform than leading social media platforms.

Given the data set, and our analysis below, we think Roblox’s actual daily engagement per player is likely in the range of peers, around 1 to 1.2 hours a day, in a best-case scenario.

To Better Understand Roblox’s Engagement On The Platform, We Hired A Technical Consultant That Monitored The Top ~7,200 Roblox Games Across ~2.1 Million Roblox Servers, Collecting 297.7 Million Rows Of Real-Time Player Data

To test Roblox’s user engagement claims, we hired technical consultants to design a system to monitor Roblox game servers over a 10-day period. The algorithm monitored discoverable Roblox games on the home page of the platform to mimic the average Roblox user’s experience.

Between June 14^th, 2024 and June 24^th, 2024, we monitored ~7,200 unique Roblox games across ~2.1 million unique game servers, with a resulting dataset of 297.7 million rows of real-time player data totaling 113.2 GB.

Using this data, we measured a sample of Roblox’s unique active players and their respective session lengths.(4)

The Data Suggested That Roblox Could Be Massively Overstating The True Level Of User Engagement Across Its Platform

Our Review Of An Average Of 30.4 Million Daily Users Found They Spent Just ~22 Minutes In Games

Since listing in 2021, Roblox has consistently reported its engagement hours per DAU in annual reports. It has remained relatively steady from 2.5 hours engaged per DAU in 2021 to 2.4 hours engaged per DAU in 2023.

For the June 14^th to June 24^th sample, we had a technical consultant analyze user session lengths to better understand Roblox’s outlier user engagement metrics. On average, the algorithm measured the platform’s top 50 games every 41 seconds, top 100 games every 68 seconds, top 1,000 games every 6.09 minutes, and all other games every 21.54 minutes.

The technical consultant was able to determine individual accounts because they carried unique account identifiers, which we refer to as token IDs. The average daily unique users identified in our analysis was 30.4 million. (5)

The analysis found each unique account playing an average of ~22 minutes per day.(6) (7)

While Roblox’s reported total hours engaged metric includes actions we could not measure like avatar personalization, game creation and chat, which would not be counted by in-game monitoring, the level of in-game engagement we observed is still strikingly below Roblox’s reported average engagement per DAU.(8)

Inflated User Engagement: Using The Same Data, We Observed A Small Sample Of Only 0.64% Of Users That Accounted For ~26% Of Total Hours Engaged, Indicating That Bots, Idle Users, And Other Abnormally Long Sessions Were Skewing The “Average” Hours Metric Higher

Data showed that abnormally long sessions skewed the averages significantly. While our tests showed that the average session per token ID was 22.3 minutes, these metrics may still have been substantially higher than a typical person using Roblox.

From June 14^th to June 24^th, the analysis found 48.1 million unique token IDs. Approximately 305,000, or 0.63% of the total tokens identified, had times on a server of 4.8 hours or longer.(9) This small portion of total unique token IDs collected each day accounted for a massive ~26% of all daily hours engaged in our data set.

What this seems to show is that Roblox’s choice to use an “average” engagement hour per DAU is not representative of typical human users, giving investors the incorrect impression that people playing on Roblox are vastly more engaged on the platform than they really are.

An Analysis Of Play Times Found Numerous Games In Which Obvious Bot Accounts Remained In-Game For More Than 24 Hours Straight

Our Sample Flagged Millions Of ‘Zombie’ Engagement Hours Across the Accounts We Sampled

A former employee explained that people putting alts and bots into games often use plugins and scripts to activate the “players” for hours or days with no human engagement required:

“I like to think of this as false engagement and abuse of the system. But, you know, it’s a form of engagement. They’re going to use that value that they gained from being in that game, clicking and running some scripted task.”

As a test, our analysis of Roblox play time turned up numerous games with substantial “engagement” by players, presumably bots or AFK (“away from keyboard”) accounts, who were logged into the games for at least 24 hours straight without interruption.

We reviewed a sample of accounts between June 14^th and June 24^th to see how many hours were accumulated from sessions that had been logged in for at least 24 hours straight, a likely indication that a zombie account rather than a person was engaging with the game.

The top games attracting obvious zombie activity from our test included “Creatures of Sonaria”, followed by “Sol’s RNG” and “Southwest Florida Beta”.

“Southwest Florida”, The Game With The 3^rd Highest Zombie Engagement Hours, Per Our Testing, Is Easy To Play AFK, According To A Roblox Influencer

By Using Third Party Apps, Users Can Leave Bots Running 24/7 To Collect In-Game Cash

In a video posted to YouTube, a gaming influencer called Mr. Gamer explained how players in the Roblox game “Southwest Florida” could earn thousands of in-game dollars while being AFK.

In “How To AFK GRIND in Southwest Florida 2024!”, Mr. Gamer describes using an app called Tiny Task to set up a macro that allows a player to make repetitive movements, assuring those players aren’t kicked off Roblox’s servers for inactivity:

“I mean this is so easy there’s only like 3 or 4 steps that you actually have to do,” the influencer explains. (0:05)

Users select an occupation and as long as they remain active in the game their player earns a per minute salary. Mr. Gamer summed up the process:

“It’s honestly such a good way to get money inside of Southwest Florida, especially if you want more cars and you want to get so much other stuff inside of the game.” (4:33)

In another example, a Roblox user boasted on a Reddit forum that by using 10 accounts operating for three straight days on a game called “Pet Simulator 99”, they were able to obtain a highly-coveted “Titanic Arcane Pyro Cat.”

This in-game farming can be monetized off Roblox, in the real world. We found “Titanic Arcane Pyro Cats” offered for sale on eBay for more than $275.

Roblox Incentivizes AFK Games That Artificially Inflate Its Engagement Hours By Tying Developer Pay In Part To Engagement

Web Forums Detail Developer Strategies For Creating Features That Encourage Bots And Zombie Engagement

Developers have a motivation to create AFK games. Keeping players in games – even if actual users are away from their computers – pays off, a developer we interviewed explained:

“Roblox, unlike other platforms, is kind of algorithmically driven and one of the factors that the algorithm looks at is how engaging an experience is, which is measured through playtime.”

Roblox’s website confirms that developers are paid in part based on engagement hours. Discussions on web forums like Quora describe how to design games that can be played in absentia:

In essence, Roblox seems to be incentivizing developers to create AFK games, which artificially increases engagement in the games. Then, those inflated metrics are passed on to investors and advertisers as evidence of extraordinary human engagement.

Roblox Can And Should Report Its Internal Estimates Of De-Alted And De-Botted Metrics So Investors, Advertisers, And Regulators Can Be Better Informed On The Actual Number Of “People” On Roblox’s Platform

As noted earlier, we estimate that DAUs are inflated by at least 25%-42% based on estimates of the proliferation of “alt” accounts on Roblox. This estimate doesn’t factor in “bot” accounts, which we suspect further inflates DAUs substantially (given that there are entire thriving business ecosystems in Asia focused on running Roblox bots).

But beyond our estimates—Roblox could simply report their own internal de-alted and de-botted estimates on the actual number of people on the platform, and a thorough explanation of the methodology to arrive at the number.

It could also do the same for its claimed engagement hours—how much time is spent on the platform by actual people?

Part II – Our In-Game Roblox Research Revealed An X-Rated Pedophile Hellscape, Exposing Children To Grooming, Pornography, Violent Content And Extremely Abusive Speech

While conducting our research on the company’s key investor metrics, we explored Roblox’s metaverse.

We found Roblox to be an X-rated pedophile hellscape, replete with users attempting to groom our avatars, groups openly trading child pornography, widely accessible sex games, violent content and extremely abusive speech—all of which is open to young children and all while Roblox has cut content moderation spending to appease Wall Street and boost earnings.

We put together a brief video compilation of Roblox moderation failures:

Roblox Is Compromising The Safety Of Children On The Platform In Order To Report Growth To Investors, Per Our Interview With A Former Senior Product Designer

Roblox management faces a dilemma of choosing between better metrics or improved child safety, one former employee told us:

“You’re supposed to make sure that your users are safe and but then the downside is that, if you’re limiting users’ engagement, it’s hurting your metrics. It’s hurting the (daily) active users, the time spent on the platform, and in a lot of cases, the leadership doesn’t want that.”

There was pressure on employees to not implement changes that might cause users to leave the platform. Among the changes being considered was requiring under 13-year-old users to sign up with a parent’s approval and provide their parent’s email address, the former product designer told us.

Employees made a presentation to top management about why parental approval would enhance safety, but “it didn’t even get to the experiment phase and was disapproved”, they said, adding:

“You have to make a make a decision, right? You can keep your players safe, but then it would be less of them on the platform. Or you just let them do what they want to do. And then the numbers all look good and investors will be happy.”

We tested this. It took us mere seconds to set up an account as an under 13-year-old—all we needed was to enter our (fake) age, a username and a password.

The same former employee noted that once the company went public it became more difficult to implement increased safety measures:

“You maybe see it in the numbers going down or the profits going down. Then whether you like it or not, you kind of just have to reconsider your option(s), because once you’re a public company, you’re answering to all the investors.”

For The Second Quarter Of 2024, In A Push Toward Profitability, Roblox Reported A 2% Year-Over-Year Decline In Its Trust And Safety Expenses

At the company’s Analyst/Investor Day in November 2023, Roblox’s Chief Product Officer Manuel Bronstein claimed that safety and stability was “paramount” to the platform:

“As you know, safety and stability is core and paramount to what we do on Roblox.”

Since 2020, Roblox has spent a cumulative $2.3 billion on trust and safety, which included $878 million in 2023. (1,2,3,4)

But recently, the company has shared plans to wean off manual moderation and more fully embrace AI moderation capabilities. In November 2023, CEO David Baszucki stated that the company’s AI moderation has led to an increase in quality and a decrease in the cost of moderation:

“I think behind the scenes, I just want to highlight the efficiency that this is bringing us both on safety, on moderation. We’re moving many of our moderation pipelines, more and more to AI and this is simultaneously increasing quality as well as cost. And you can see that in our increased operating leverage.”

In its most recent Q2 2024, Roblox reported that its trust and safety expense declined 2% year-over-year, citing “AI efficiency” as the reason.

Core To The Problem Is That Roblox’s Social Media Features Allow Pedophiles To Efficiently Target Hundreds Of Children

Example: In 2018, Prior To Roblox Going Public, A 29-Year-Old Was Caught Sexually Harassing A Minor Near A School

Police Discovered 175 Hours Of Video Footage Of Him Grooming And Engaging In Explicit Behavior With 150 Minors Using Online Platforms, Namely Roblox

For years, Roblox’s platform has facilitated horrible things happening to children, resulting in periodic scandals through the company’s history.

Core to the issue is that Roblox has no up-front user screening, and social media features allow a single pedophile to target hundreds of children.(10) This has resulted in scores of instances of reported abuse, both on and offline.

For example, in November 2018, a 29-year-old paralegal was caught sexually harassing two minors outside a school. When police seized his devices, they discovered 175 hours of video footage of him contacting, grooming, and engaging in explicit behavior with 150 minors using online platforms, namely Roblox. In one instance, he offered a 10-year-old 400 Robux (worth approximately $5) to expose themselves on a webcam.

This Has Resulted In Years Of Continuous Roblox Child Safety Scandals

Media And Non-Profit Exposés From 2020 To July 2024 Revealed Strip Clubs, Red Light Districts, Digital Sex Parties And Child Predators Lurking On The Roblox Platform

Roblox’s lack of effective child safety features have resulted in years of scandal:

#1 August 2020: U.S. business magazine Fast Company chronicled digital sex-themed games published by player-developers on the Roblox platform, many of which were promoted and linked via third party websites such as the chat app Discord.

The article investigated a series of so-called “condo games” for which there were little to no effective age restrictions and where children could take part in simulated sex acts, play with digital sex toys or watch “thong-clad Roblox avatars twerking on stripper poles”.(11)

#2 August 2020: The Daily Mail reported that Roblox exposed children to the risk of sexual predators and may also be unsafe because of high levels of sexual and racist content, saying:

Roblox has a “dark underworld where underage kids participate in digital sex parties and send explicit content…Now there are concerns that children may be unsafe playing the popular game and could be prey for online predators.”

#3 September 2021: Rolling Stone alleged children were participating in sex-games on the Roblox platform, earning Robux currency for online lap dances and other sexual services.

Rolling Stone quoted a 16-year-old girl saying that payments to “dance on rich guys” ranged between 1,000 and 2,000 Robux, describing her clientele as “horny teens” or “older men pretending to be horny teens”.

#4 May 2023-April 2024: The National Center on Sexual Exploitation (“NCOSE”) included Roblox in its closely-watched “Dirty Dozen List”, “calling out twelve mainstream entities for facilitating, enabling, and even profiting from sexual abuse and exploitation”. It urged Roblox to take action to improve controls, moderation measures and parental oversight to protect children on the gaming platform.

In its notification letter dated May 1^st, 2023, the National Center on Sexual Exploitation bluntly told Roblox CEO Dave Baszucki:

“Extensive evidence suggests that Roblox has not sufficiently prioritized child protection and has struggled to implement safety practices commensurate with its growth – resulting in a proliferation of exploitative and harmful content and predatory behavior.” (1)

Roblox has again appeared on the 2024 list, with the NCOSE calling it “a tool for sexual predators, a threat for childrens’ safety”, adding:

“Instead of making any substantive changes after being placed on the 2023 Dirty Dozen List, Roblox launched a new product that provides predators with a new way to connect with kids”.

#5 July 2024: Bloomberg Businessweek published a report detailing the risks children face of being exposed to and groomed by anonymous pedophiles on the Roblox platform.

Bloomberg estimated that police in the U.S. have arrested at least two dozen suspects since 2018 for abducting or abusing children they met via Roblox.

Numerous Criminal Indictments From 2019-2024 Allege That Sexual Predators Groomed Children On Roblox, Ranging From 8-14 Years Old, And Kidnapped, Raped Or Traded Sexual Content With Them

We ran a search to see whether and how pedophiles were using Roblox to groom and rape children offline.

Our search was limited to the U.S. and was by no means exhaustive, identifying a small sample of what has been a years-long, persistent issue:

1. In 2019, police arrested a man for enticing children aged 10-12 into sending naked photos in exchange for the virtual gaming currency Robux. He was charged with 26 counts relating to child pornography and solicitation of a child.
2. In 2020, police arrested a registered sex offender for enticing an 8-year-old girl into sending him sexual content in exchange for Robux. Deputies found at least 20 videos of the minor on his iPad. He was charged with sexual exploitation of a child and trading in child pornography.
3. In 2021, police arrested a man who kidnapped and raped an 11-year-old girl he communicated with on Roblox, resulting in felony counts relating to kidnapping and unlawful sexual contact.
4. In 2021, police arrested a registered sex offender for enticing a 12-year-old boy into sending him sexually explicit content through Roblox. He was charged with solicitation of a child, failure to register as a sex offender, and grooming.
5. In 2022, police arrested a 41-year-old registered sex offender who drove from California to Pennsylvania to break into the home of and assault a 14-year-old girl he met on Roblox. He was charged with assault, unlawful sexual contact and corruption of a minor.
6. In 2022, police arrested a 33-year-old man who kidnapped and raped a 13-year-old girl he met on Roblox. He was charged with five felony counts ranging from statutory rape to child molestation.
7. In 2022, police arrested a man for kidnapping and sexually assaulting a child under the age of 12 that he met on Roblox. The family witnessed the kidnapping and chased after the suspect until their child was able to escape.
8. In 2022, police arrested a man who kidnapped and sexually assaulted a 14-year-old girl he met on Roblox.
9. In August 2024, police arrested a man who flew from Chile to California to meet a 14-year-old girl he met on Roblox who police said he intended to sexually assault.

Following Years Of Scandal, We Decided To Perform Our Own Checks to See If The Platform Had Cleaned Up Its Act

As A Test, We Attempted To Set Up An Account Under The Name Jeffrey Epstein…Only To See The Name Was Taken, Along with 900+ Variations

Example: One Account “JeffEpsteinSupporter” Had Earned Multiple Badges For Spending Time In Kids Games

Given the history of horrific things taking place on Roblox, we checked to see if things had improved. As one step, we attempted to set up an account under notorious child predator, “JeffreyEpstein” or “JeffEpstein”.

We found that the accounts were taken, along with over 900 variations on the username that included many apparent fans of Epstein.(12)

For example, Roblox account “JeffEpsteinSupporter” has earned multiple badges for spending time in kids´ games on the platform.

Another Jeff Epstein account has the username “@igruum_minors” (I groom minors):

Another username is a play on “rape tiny kids”:

We Attempted To Set Up An Account Under The Name Of Another Notorious Pedophile To See If Roblox Had Any Up-Front Pedophile Screening

Earl Brian Bradley Was Indicted On 471 Charges Of Molesting, Raping And Exploiting 103 Children

Roblox Showed The Username Was Taken, Along With Multiple Variants Like EarlBrianBradley69, Suggesting We Try Another Name Instead

We then decided to test creating an account under the name of another convicted and jailed pedophile to see if Roblox had any up-front screening.

Earl Brian Bradley, one of the most heinous pedophiles in the country, was indicted on allegations of raping and molesting hundreds of children.

We attempted to set up an account under his name, but Roblox showed the username and multiple variants were already in use, suggesting we try another.

After We Found A Username, We Listed Our Age As Under-13 And Browsed To See If Children Are Exposed To Adult Content

By Plugging “Adult” Into The Roblox Search Bar We Found A Group Called “Adult Studios” With 3,334 Members Openly Trading Child Pornography And Soliciting Sexual Acts From Minors

To test Roblox’s content moderation, we created a new user and listed our age as under-13 to see whether younger users were protected from illicit content on the platform. Note that the process took mere seconds given that Roblox has no apparent approach to age verification for users claiming to be under 17.(13)

Using the Roblox search bar, we typed “Adult” to see what Roblox would filter out from a potentially harmful search. We found a group titled “Adult Studios” with 3,334 members as of May 2024.

On the “Adult Studios” group wall, users openly solicited sexual favors and nude pictures from others. In the example screenshot below, all the users are tagged as “🔞|Member” by Adult Studios group administrators, indicating that they are either underage or impersonating underage users in their solicitations.

We Tracked Some Of The Members Of “Adult Studios” And Easily Found 38 Roblox Groups – One With 103,000 Members – Openly Soliciting Sexual Favors And Trading Child Pornography

The Chatrooms Had No Age Restrictions — As A Reminder, Roblox Reports That 21% of Users Are Under The Age Of 9

We navigated through the profiles of “Adult Studios” group members and came across various groups titled “Content Deleted” followed by a seven digit number, signifying that Roblox moderators performed a moderation action for content that violated its Terms of Use but didn’t actually ban the groups themselves.

In these Roblox chat groups, we found thriving and active child exploitation marketplaces where users would lure in children by offering Robux, the platform’s in-game currency.

Since May 2024, we found at least 38 Roblox groups where users have openly solicited sexual favors and/or traded nude pictures amongst each other. (Note that we stopped searching after 38. There are many more.)

Ten of the groups have since been “locked” from users on the platform and rendered inactive. (1,2,3,4,5,6,7,8,9,10) This has not stopped other groups from emerging in their absence.(14)

The most egregious example of these groups is a 103,000 member group by the name of “( Content Deleted 19208 )” that has remained active on the platform despite previous moderation actions by Roblox.

The chatroom seems to have existed since 2009, per Roblox group ID info, indicating that it has potentially skirted effective moderation for 15 years.

We joined the group with an account we had created as an 8-year-old and found there were no restrictions on joining or posting in the group.

In another group, one member – claiming their “irl (in real life) age” was 14 – openly advertised selling nude pictures and videos for Robux, leaving emojis on their profile page to signify their Discord username for others to add them off-platform, easily bypassing Roblox’s “machine scanning” moderation.(15)

In Appendix A we detail more of our findings here.

Since September 2nd, 2024, Third-Party Data Aggregator Moderation For Dummies Has Observed And Reported ~12,400 Erotic Roleplay Roblox Accounts On The Platform

These Accounts Include Everything From “Rape/Forceful Sex Fetishes” To Underage Users “Willing To Do Anything For Robux”

Beyond serving as a thriving child exploitation marketplace, Roblox also has a large community that uses the platform for erotic roleplay.

Moderation for Dummies – a Twitter account operated by an individual sued by Roblox named Ruben Sim – describes itself as “helping Roblox mods (moderators) clean up the platform.”(16)

On September 2nd, 2024, the account announced lists of Roblox accounts “confirmed to be part of the erotic roleplay community” that “pose a serious risk to Roblox’s young players by exposing them to sexual and pornographic content.”

As of this writing, Moderation for Dummies’ list of erotic roleplay accounts on Roblox has reached a cumulative 12,397 users. Reasons provided for flagging the accounts range from “playing into rape/forceful sex fetishes” to users “willing to do anything for robux”.

Adults Seeking Sexual Experiences On Roblox Are So Pervasive That There Are Thousands Of Roblox Sex Videos On Porn Sites

Some Porn Videos Had Links To Roblox Usernames, With Descriptions And Comments Inviting Viewers To Engage In Sexual Acts In-Game With Other Users Of Unknown Ages

During our research, we noticed an account that had a somewhat cryptic invitation in its profile: “170k views on xv, add to be next”.

The Roblox account was linked to a corresponding account on porn site XVideos. The user specialized in developing Roblox porn and having in-game sex with other Roblox users of unknown ages.

Through this, we discovered an entire Roblox porn genre subculture, with the same site featuring thousands of “Roblox” porn videos.

Many of the videos appear to have been created in Roblox Studio, with one user commenting that “it can’t be detected by Roblox”.

The details in the videos feature mechanics native to the Roblox platform such as in-experience purchases, in-experience chats and animations.

Some of the pornographic videos also show a .rbxl file extension, indicating that the experience is made and hosted within Roblox.

We also came across multiple XVideos users that left their Roblox information in XVideos bios or posted comments, with some soliciting sexual acts in top Roblox games such as Brookhaven, the platform’s most visited experience available to “all ages”.

Our Roblox Experience #1: We Found A Lack Of Up-Front Moderation Of Roblox’s Game Experiences

Registered As A Child, We Were Able To Access Games Like “Escape to Epstein Island” And “Diddy Party”

We Found Over 600 “Diddy” Games, Including “Survive Diddy” And “Run From Diddy Simulator”

To test out the platform, we set up multiple accounts of various ages to see what content was accessible to children.

Using an account registered as a 9-year-old, we searched for games that reference Sean “Diddy” Combs, the hip hop mogul who was recently indicted for sex trafficking and charged with sexually abusing and exploiting women at parties he organized called “Freak Offs”.

Over 600 games showed up, including “Freaky Diddy Simulator” “Survive Diddy” and numerous others. Many were available to children.

Our 9-year-old account was also able to access “Escape to Epstein Island”. The game was relatively undeveloped, showing the availability of content with seemingly little to no up-front moderation.

Our Roblox Experience #2: Roblox Claims It Reviews “Every Single Image, Video, And Audio File Uploaded To Roblox”

We Quickly Encountered Images Of Male Genitalia And Obscene Speech In Roblox’s “School Simulator” Game

The Game Had Registered 28.9 Million Visits And 158,000 Favorites With No Age Restrictions (Meaning It Is Open For Users Under 9 Years Old, Which Account For 21% Of Roblox’s Userbase)

In response to an article on the inappropriate content on its platform, Roblox told the BBC in February 2022:

“We conduct a safety review of every single image, video, and audio file uploaded to Roblox, using a combination of human and machine detection.”

In September 2022, Roblox’s CTO Daniel Sturman claimed the company’s 3D content moderation was able to take swift action without a human reviewer, and touted it as “the best (content moderation) in the world”:

“(We) can understand the patterns behind behavior that is appropriate and not appropriate. It (is) something we’ve gotten very good at… the content appears on the platform (and is) gone in a matter of seconds…I think you’re going to find Roblox is the best in the world with this sort of 3D content moderation.”

Pursuant to this claim, Roblox’s Community Standards explicitly prohibits “content that depicts sexual activity.”

However, during our research we constantly found instances of Roblox users abusing Community Standards, bypassing the company’s “best in the world” in-game 3D content moderation.

For example, we came across the game “School Simulator” – an all-ages experience where players can socialize in the hallways and classrooms of a virtual school. The game was created on August 18th, 2021 and has registered ~28.9 million visits and ~158,600 favorites since its inception.   

Within minutes of joining the game, while we milled in the hallway, another player used a sign to display a series of pornographic images:

In the same game, we then entered a classroom where the following was written on a chalk board:

It was then erased and replaced with the following:

The game is open to all ages, including users under 9 years old, which account for 21% of Roblox’s global userbase, per the company’s latest annual report.

Our Roblox Experience #3: “Beat Up Homeless Outside 7/11 Simulator” Registered 1 Million Visits And 15,000 Favorites Before Being Removed From Roblox

Nonetheless, Roblox Users Identifying As 9-Years-Old And Up Can Still Beat Up Homeless People In “Beat Up People Outside Of 7/11”, With Over 900,000 Visits

We found numerous instances of violent content in which players are encouraged to attack vulnerable individuals, contrary to Roblox’s stated mission “to connect a billion users with optimism and civility.”

For example, we came across the game “Beat Up Homeless Outside 7/11 Simulator” with a game description that read “A homeless man has set out his tent outside 7/11(.) What will YOU do?”.

This game was created on November 21st, 2023 and had 1 million visits and ~15,000 favorites before Roblox placed the game under review. (1) The game’s age guidance cites “N/A” or no guidelines, which is treated by the Roblox platform as available for ages that self-identify as 13+, per Roblox’s parental controls.

The game featured a man dressed in rags standing outside of a 7/11 convenience store next to a sign that read: “HELP(.) PLEASE DONATE(.) IM HOMELESS(.)”

Players had the option to go into “Combat” mode in the game, allowing them to beat up the homeless person and other players, earning points for each kill. Players could spend Robux to buy virtual guns to murder the homeless person and other players.

The game was eventually deleted, but now the link goes to “Beat Up People Outside of 7/11 Simulator”. Roblox players identifying as 9-years-old and up can play and still beat up the homeless figure from the original game. Players also have the option of playing “Throw Bricks at Homeless People”.

Our Roblox Experience #4: We Played “Beat Up The Pregnant” Where Users Hacked Pregnant Women To Death In A Wal-Mart Parking Lot With Machetes, Or Killed Them With Frying Pans Or A Selection Of Guns

Early during our research, we came across the game “Beat Up the Pregnant”, in which players competed to murder as many pregnant women as possible in a Walmart parking lot.

The game, which has since been removed from the Roblox platform, gave players the option to hack pregnant women to death with a machete, shoot them with pistols or bayoneted AK-47s, or simply beat them to death with a frying pan as they scream. The game remained on the platform for several months.

Our Roblox Experience #5: We Played “(GUNS) Work at a Hospital RP” Which Allows Users To Buy Guns And Go On A Shooting Rampage In A Hospital

The Game Has Registered ~1.6 Million Visits With ~5,000 Favorites And Remains On The Platform With No Age Restrictions

The Game Thumbnail Features A Terrified Pregnant Woman In A Hospital

We came across another game called “(GUNS) Work at a Hospital RP!”, a role playing game that, for a couple dollars in Robux, lets users purchase a wide range of assault rifles to shoot hospital workers and visitors.

The thumbnail advertising the game features a terrified pregnant woman in a hospital.

The game has ~1.6 million visits and ~5,000 favorites as of this writing and is open to “all ages”, including users under 9 years old, which account for 21% of Roblox’s global userbase, per the company’s latest annual report.

Our Roblox Experience #6: “LGBTQ+ Vibes” Is A Game Available To All Ages That Has Accumulated Over ~40.6 Million Visits And Over ~224,000 Favorites

Users Regularly Described Lewd Sex Acts While Others Used Hateful Slurs

In the popular “LGBTQ+ Vibe” game, available to children of all ages, we regularly encountered both descriptions of lewd sex acts and a wave of hateful slurs.

This game has over ~40.6 million visits and over ~224,000 favorites as of this writing and is open to all ages, including users under the age of 9 years old, which represent 21% of Roblox’s global userbase, per the company’s latest annual report.

Our Roblox Experience #7: “Palestine And Israel Hangout” Allows Kids Of All Ages To Purchase Bombs And Knives And Attack Each Other 

This Game Has Registered ~13 Million Visits And ~7,200 Favorites And Remains On The Platform

In addition to more traditional games, Roblox offers numerous “hang out” experiences that are intended to let players socialize and interact in different settings.

One of these is “Palestine فلسطين and Israel ישראל Hangout”, set in a park and playground, surrounded by Palestinian and Israeli flags. This game was created on October 1st, 2023 and has accumulated 13 million visits and ~7,200 favorites since inception.

This virtual demonstration allows players to equip custom message boards and signs, letting users talk with others about world events. Far from fostering peaceful dialogue, players are also able to purchase guns, swords and bombs to attack each other.

The game cites the possibility of “Mild/Occasional” violence, but is open to all ages, including users under 9 years old, which accounts for 21% of Roblox’s global userbase, according to the company’s annual report.

Our Roblox Experience #8: Posing As A Child In Roblox’s “Therapy” Experience, We Were Advised To Run Away From Home And Move Into Our Therapist’s Basement In Exchange For Paying Rent With Our Body

Many experiences on Roblox cater to users seeking emotional support and advice.

For example, in Roblox’s “Therapy” experience, players choose between receiving or providing therapy. This experience alone has ~63.5 million visits and ~290,000 favorites since its inception on December 18th, 2021. The game’s age guidance cites “N/A” or no guidelines, which is treated by the Roblox platform as available for ages that self-identify as 13+, per Roblox’s parental controls.

As soon as we laid down on the couch, another player appeared in a chair. We asked if he was a therapist, to which he replied that he was a “rapper with only one p.”

We said we were considering running away from home.

The ‘therapist’ advised us to do it: “Do it. Do it right now”.

When we asked where we would go, the therapist offered to let us live in his basement.

He said we could pay using our body.

He offered to pick us up: “I will drive my way to you and take you with me.”

The interaction underscores how quickly and easily it would be for vulnerable children to open themselves up to harassment, mockery, or even put into contact with a predator on the platform.

Our Roblox Experience #9: Some Games Seem To Encourage Illicit Interactions, Like “Public Bathroom Simulator Vibe” And “XYZ Club Vibe” With 31 Million Collective Visits

Both Are Available To Users Who Self-Identify As 9+ Years Old And Provide Opportunities To Simulate Sex In Bathrooms Wearing Skimpy Outfits

While illicit interactions can appear in any game, many games available to kids appeared designed to encourage sexual behavior.

In “XYZ Club Vibe”, users can wear skimpy outfits and simulate sex acts in semi-private bathroom areas. The game has over 6.9 million visits since inception in December 2022 and is available to users who self-identify as 9+ years old.

The other game, “Public Bathroom Simulator Vibe” has accumulated ~22.7 million visits and ~86,000 favorites since inception in November 2021 and is also available for users who self-identify as being aged 9 and up.

The game is set in a public bathroom with music and lighting, making it feel more like a nightclub, with Roblox users dancing for others in lewd outfits and grinding on each other.

This is by no means an exhaustive list. There are dozens of such experiences on Roblox, as seen in examples below:

Our Roblox Experience #10: “Public Swimming Pool | Vibe” Has Accumulated 16.7 Million Visits And ~46,000 Favorites And Is Open To Users Self-Identifying As Being Aged 9+

The Game Resembles A Night Club With Users Wearing Revealing Clothes Or No Clothing And Simulating Sex

Similar to Public Bathroom Simulator, we came across “Public Swimming Pool | Vibe”, a Roblox hangout experience that has accumulated 16.7 million visits and ~46,000 favorites since its inception in January 2022.

Set in a public swimming pool, the game resembles a nightclub with dim purple lighting and loud, bass-heavy music. We entered the game and walked into a changing room to find Roblox users dressed in revealing costumes simulating sexual acts.

The game is available to any user identifying as being aged 9 and up, with its only experience guideline citing “Crude humor (Mild)”.

Other Roblox Users Have Identified Issues Of Simulated Rape, Naked Users, And Rampant In-Game Sexual Harassment  

Beyond our own findings, numerous third parties have flagged Roblox as an unsafe environment for children, yet the issues persist.

A video posted to X (formerly Twitter) on May 7th, 2024 demonstrated an in-game rape, a function seemingly permitted by the experience via the animation wheel that appeared in-game. The female user repeated “please let me go” and screamed repeatedly as it unfolded.

Another video posted to X on April 27th, 2024 showed a Roblox user groping another user in-game:

Our Interviews With Roblox Moderators Show Safety Was Largely Outsourced To Asian Call Centers

Moderators Described Being Paid $12 A Day To Review Countless Instances Of Child Grooming And Bullying With A Limited Ability To Keep Perpetrators Off The Platform

With years of allegations of child predators proliferating on the Roblox platform, we hoped to find a well-resourced, in-house moderation team taking control of the situation. This was not the case.

We found that much of the moderation was outsourced to overseas call centers, presumably to cut costs. One former contractor told us that moderators earned around $12 a day in the Philippines.

When asked about the daily issues the moderators dealt with, one former Roblox moderation employee based in the Philippines told us that grooming, which involves trying to connect sexually with underage players, accounted for around 20% of the complaints the group fielded. They described typical comments users encountered on the platform:

“What’s your number? How old are you? Can we meet? And then – I have money. I could send you this money. Can we be a boyfriend and girlfriend? Can I call you love? Can I call you babe?”

The remaining issues involved scams, obscene comments, bullying, and sexual harassment. The former moderator summed up their opinion of the platform:

Former Moderator: 

“I can’t imagine why people (are) still using Roblox after all this kind of, you know, shit.  … That’s why (when) my niece asked me to download, even though I’m an employee of Roblox, I won’t tolerate you to play Roblox.” 

Interviewer:  

“You wouldn’t let a kid you know play Roblox?” 

Former Moderator: 

“No. I wouldn’t.”

Another Roblox moderation former employee based overseas told us that the system allowed users to block an offender, but it required multiple users to request to block the offender before they were temporarily banned on the platform.

The former moderator said that if Roblox had effective up-front controls, there wouldn’t be a need to moderate the flood of illicit content in the first place:

“Because all those complaints are not supposed to be coming in that much … if it (Roblox) actually (had) very strong safety measures that they were using, it wouldn’t get to that.”

We Set Up An Under-9 Account To See What Kids Had Access To By Default On The Platform

We Found Roblox’s Privacy And Parental Control Settings Ineffective, With Users Able To Set Up Their Own Parental Controls And Create Alternate Accounts To Bypass Content Restrictions

Roblox has safety features meant to make the platform safer for children, such as content filters that remove obscenities from chat and prevent users under 12 from sharing personal identifying information.

Parents can also enable parental controls to monitor their kid’s activity and restrict accounts from chatting with unknown individuals or from playing unapproved games.  When implemented effectively and rigorously monitored by parents, these protocols can make the environment significantly safer. However, we found that many of these settings are not implemented by default, and there are major loopholes.

To better understand safety features on the Roblox platform, we set up an under-9 account to observe default settings and understand the safety controls.

We found that our in-game text chat was set to “everyone” by default, meaning that any person in-game could communicate with our account. As shown earlier, it was under these circumstances that we encountered extreme hate speech, violent content, and illicit imagery.

Our default communication settings were set to allow only friends we added back to message our account outside of games. However, these could be toggled by the user in the absence of parental controls.

Furthermore, our under-9 account was able to set up its own parental controls, which allows accounts to change their allowed experiences to 13+ and disable spending restrictions on the platform.(17)

Despite how easy the bypass was, there was an even easier way to bypass parental controls: create an alternate account that self-identifies as 13+.

We logged out of our under-9 account and created a new user from the same device – this time over the age of 13, to ensure we weren’t restricted from experiences. The entire process took ~40 seconds with no hurdles. Roblox didn’t attempt to verify our age or seem to mind that we simply created a new account on the exact same device as an account for a child under 9.

Despite Roblox hosting a platform that says it engages ~40 million users under-16 on a daily basis, per 2023 filings, it appears their content restrictions and parental controls are easily bypassed and rendered ineffective.

Part 3: Roblox Is Approaching Saturation In Its Key Markets And Is Reaching For Growth In Unprofitable Regions

Beyond issues with inflated key metrics and exceptionally unsafe content for children, Roblox’s stock is priced as if it is poised for rapid growth and significant future profitability.

But our research shows Roblox is facing saturation in its highest profitability markets and is reaching for more users in less profitable regions to support its growth ‘story’.

Roblox Faces Saturation In Its Top Markets

It Is Now Attempting To Keep The Appearance Of Growth Alive By Adding Loss-Generating Users In Markets Like Asia, Per A Former Employee

Despite tens of millions of users playing Roblox every day, the platform generates revenue from just 1.2% of them, per its latest quarterly filings. Of Roblox´s 79.5 million daily active users (DAUs) in Q2 2024, just 983,000 were daily paying users.(18)

The U.S. and Canada region accounted for 62% of Roblox’s total bookings in its latest quarter. The same region had average quarterly bookings per DAU of $34.36, 285% higher than its second highest bookings market in Europe. ‘Asia’ and ‘Rest of World’ had average quarterly bookings per DAU of $5 and $3.84, respectively. (Pgs. 13, 15)

While the U.S., Canada and Europe accounted for ~82% of last quarter’s total bookings, Asia and what Roblox labels the “rest of world”, have been growing rapidly, now accounting for 53% of Daily Active Users. (Pg. 7)

A former Roblox data scientist told us that the company is potentially saturated in Tier 1 countries and is now relying on less lucrative markets to maintain growth:

“The biggest story for Roblox is that, are we potentially saturated in these Tier 1 countries where a lot of user(s) are embracing the platform and have positive contribution margin?  But then, are we out of profitable places to expand, and is the next phase of growth in user accounts actually helping Roblox being profitable?”

Prospects for profitability in markets with rapid user adoption appear to be bleak, the former employee added:

“My current fear is, there might be some countries that are more penetrated and therefore (have) less opportunity to see staggering growth. And other countries have less of an economy, GDP per capita, which support less on the contribution margin side but are seeing trends of growth like India, for example.”

Each new customer in lower GDP markets weighs on profitability, a former software engineer told us:

“If you’re going to India and the spend there is like $2.00 and you’re spending $5 on that user, it’s obvious you’re losing money. So, you have to figure out other ways to make money.”

Fundamentals: The Conversion Rate Of Daily Active Users To Paying Users Has Been In Steady Decline Since 2020

As mentioned above, Roblox has reported solid growth in both DAUs and paying users for the last five years. (Pgs. 7, 29) But digging deeper, our analysis shows that the conversion rate of reported DAUs to paying DAUs has been in steady decline for the last three years, indicating that conversion has actually worsened as of late.

Fundamentals: Roblox Is Now Expecting Advertising To Drive Incremental Growth, Pitching Advertisers By Claiming ~79.5 Million Users Spend 2.4 Hours Per Day On The Platform

As Noted Earlier, We Suspect These Metrics Are Wildly Inflated And That The Platform Poses Major Reputational Risks For Advertisers

For Instance, We Found Instagram Advertisements In The Same School Simulator Game That We Found Nazi Hate Speech And Photos Of Male Genitalia 

During its latest investor day, Roblox highlighted the potential to monetize non-paying hours, which represent 80% of total hours spent on the platform.

On the company’s latest earnings call, Roblox CEO David Baszucki highlighted advertising as a major opportunity for brands:

“Whether it’s for driving brand awareness, whether it’s for driving digital shopping, whether it’s for driving physical shopping we move more and more to — in addition to all the incredible brand engagements, a larger volume of just repeat day-on-day advertisers on top of the platform.”

On its website, Roblox promises advertisers the ability to forge “deep connections” with 79.5 million users and 2.4 hours daily on “the largest immersive platform”.

Besides appearing to blatantly overstate its userbase and engagement metrics, Roblox’s inability to moderate its platform from pedophilia or violent content poses major risks for any advertiser.

In one example, we found advertisements for Meta’s Instagram in the same all-ages “School Simulator” game that we found photos of male genitalia and hate speech.

In another example that probably bodes poorly for return on advertising dollars, the game Race Clicker had the longest “zombie” sessions in our sample, with two players remaining in the game for 50 hours straight. The game has a built-in feature that allows players to join the game in AFK or Away From Keyboard mode, according to a walkthrough video on YouTube.

We saw players in Race Clicker standing idly while staring at a Disney advertisement for the movie Inside Out 2.

Conclusion

“Move fast and break things”. “Fake it ´till you make it.” “Growth at all costs”. These oft-repeated Silicon Valley mantras encourage companies to take risks, shun the rules, and build something big.

In the absence of profitability, such companies rely on selling a growth story to investors (especially when insiders hope to dump hundreds of millions in stock). In many cases, this means diverting attention from the company’s traditional financial statements to key performance metrics, which investors believe will tell the growth story until a profitability switch can be flipped ‘on’.

In Roblox’s case, the company has misleadingly inflated the claimed number of “people” on its platform and their level of engagement for years. The company has chosen to not have its key metrics independently audited and has instead seemingly hand-picked inflated figures for investors that do not represent the business accurately and transparently.

At the same time, the company has cut moderation costs in an attempt to appease Wall Street, while endangering kids with a platform that exposes them to illicit content and facilitates pedophilia at scale.

We hope the company will answer several questions:

1. When Roblox tells investors, regulators, and advertisers the number of “people” on the platform, does it actually mean “people”? Or can that metric include multiple accounts run by the same person, such as alts and bots?
2. Does Roblox have de-alted or de-botted metrics that internal teams use for making decisions? Are these numbers different than the ones presented to investors?
3. Does Roblox’s metric for average engagement include engagement from potential alts or bots?
4. We found dozens of chat groups, available to children of all ages, that openly solicited sexual content. These included requests to trade child pornography and engage in sexual roleplay fantasies with children. We found over 600 experiences, many available to children, that referenced alleged sexual predator Sean ‘Diddy’ Combs, including “Freak Off” roleplay games. We found over 900 account variations of the name Jeffrey Epstein, including numerous fan accounts. We found explicit content in games available to children of all ages, include pictures of genitalia, abusive speech, and violence. We found numerous games available to children seemingly designed for engaging in sexual play. We encountered zero up-front screening that might keep pedophiles off the platform, and seemingly zero up-front moderation of experiences often available to children on the platform. Our question: Do you think Roblox has solved its pedophile problem? And if not, why did you cut moderation costs?
5. Does Roblox stand by its claim of having “best in the world” content moderation?

Appendix: More Suspected Pedophile Activity We Found On Roblox

Beyond our findings above, we found more troubling content on Roblox. This is by no means exhaustive, but we are adding this here in the hopes that Roblox and/or law enforcement can take action.

In one content deleted message board, a user called “13boytoy” solicited older women, another user “missywintry1” asked if they could “watch them make white liquid on call?.”

In another Roblox group, a user called “13_sean” seemed to solicit trading of nude underage pictures saying “ADD ME TO TRADE, 12-16 ONLY USING DC (Discord) ONLY!”.

A user called “HxngMommy” replied “dms (direct messages) open!~ girls onlyyy~ just a y0ung huge fvta ;)”. Fvta is being used in this manner to bypass Roblox moderation — futa is a type of Japanese pornography featuring women with male genitalia.

This group has since been locked.

Disclosure: We are short shares of Roblox Corporation (NYSE:RBLX)

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(1) In numerous filings, such as this April 2024 SEC filing, Roblox states that its “mission is to connect a billion people”. (Pg. 2) Based on the Q2 average of 79.5 million DAUs from a total of more than 6.09 billion registered accounts as of end of May 2024, per 3^rd party data monitor RoMonitor – an approximately 1.3% conversion rate – Roblox would need to register more than 76.6 billion accounts to achieve 1 billion DAUs, or approximately 9.63 registered accounts for every man, woman, and child on earth.

(2) RoMonitor appears to base their figure on the current UserID count, which is shown in multiple online sources through 2023. In July 2024, Roblox looks to have skipped about 850 million UserIDs in numerical order, suggesting the 7.4 billion metric reported by RoMonitor is too high. We believe 6.5 billion registered accounts is a more accurate estimate.

(3) Roblox says it measures user hours engaged as time spent across the platform, which includes time spent in experiences, avatar personalization and chat, per its 10-K.

(4) While the in-game data did not include areas like avatar customization and chat, a former Roblox engineer told us to expect 90% of activity to be in-game. Between that estimate and the fact that in-game experiences are the major draw of Roblox, we assumed in-game metrics would closely represent the amount of actual time users spent on Roblox.

(5) Around 36% of the unique daily token IDs we captured were only seen once in the daily data set and for very brief durations. When those single instance tokens weren’t removed, the data shows each token ID in game per day for around only 14 minutes, a much lower number than the estimated 22 minutes. We do not have access to Roblox’s internal DAU measurement methodology, so it is possible that Roblox counts these in its DAUs and user engagement, which should result in an even lower average engagement hours metric. To give Roblox the benefit of the doubt, we excluded these unique token IDs from our daily minutes per unique token ID calculation.

(6) Across all the unique user token IDs we sampled, we observed an average of ~11.3 million total hours played per day. Each token ID was unique to an individual account, per the consultant’s tests. To estimate total hours played per unique user, we used only token IDs associated with in-game sessions that we detected more than once, which was a daily average of 30.4 million unique token IDs. We then divided total average hours measured of 11.3 million by unique tokens sample by 30.4 million to arrive at 0.37 hours played per unique token ID, or ~22 minutes.

(7) Roblox said in its latest annual filing that around 85% of in-experience engagement came from its top 1,000 games. (Pg. 12)

(8) Roblox said in its second quarter 2024 report it had 20,000 developers in its “developer exchange” program where game developers are able to exchange the Robux they earn for real world currency. Assuming these programmers worked 40 hours a week, this would contribute less than 1% of Roblox’s total reported engagement hours (40 million engagement hours / 60 billion total engagement hours). The number of developers earning a full-time wage may be lower though—Roblox said in its June 2023 developer conference its #1000 creator earned $64,000 over the previous 12 months.

(9) This is double Roblox’s reported 144 minutes (2.4 hours) of engagement per day per DAU. We refer to these as “zombie” hours.

(10) There do not appear to be any background checks for any users, such as whether users are on the sex offender registry. Users who want to play 17+ experiences must provide government ID, but this seems to be focused on experiences and age-verification alone. The platform is wide open to users under 17 or pretending to be under 17.

(11) Condo Games are so-named because they take place in condominium-style digital buildings.

(12) Among the 900+ ‘Jeff Epstein’ accounts were the following: JeffEpsteinVictim (1), JeffEpsteinSupporter (1), jeffepsteinthebest (1), jeffepsteinlover12 (1), jeffepsteinthegoat (1), jeffepsteinisdadey (1), JeffEpsteinDidntHang (1), JeffEpsteinFan (1), JeffEpsteinDaGoat (1), Jeff Epstein (1), JeffEpsteinUnder18 (1), JeffEpsteinsCorpse (1), JeffEpsteinHanging (1), Jeffepsteinsprodigy (1), JeffEpsteinVisitor (1), WasOnJeffEpsteinList (1), JeffEpsteinWasRight (1), JeffEpsteinFanBoy (1) JeffEpsteinisaNeagar (1), JeffEpstein911Pt2 (1), JeffEpsteinPoundsAss (1), JeffEpstein with handle “@igruum_minors” (“I groom minors”) (1), JeffEpstein with handle “@RavpeTinyK1dsJE” (rape tiny kids) (1), jeffEPSTEIN with handle “@IVEbeenTOUCHEDxx” (1), Jeffepstein with handle “@igroomblackboys” (1)

(13) Users looking to play 17+ experiences and/or enroll in voice chat are required to verify their age with a government ID. Minors do not have a government ID, and parents are not required to verify the age of children. This leaves the door open to children self-certifying any age below 17, and adults being able to use the platform while pretending to be children.

(14) It appears that many Roblox groups also encourage users to join Discord and other chat apps. In this way, users can trade Robux on the platform then easily exchange illegal content on other apps. When Roblox does ban a chat group, other groups simply pop up and continue. For this reason, parents should be aware of the role other chat apps play in these child pornography marketplaces.

(15) Disk (“💿”) and ghost (“👻”) emojis on the Roblox platform appear to signify Discord and Snapchat, respectively. It is a primary way that Roblox users posting illicit content get other users to add them off the Roblox platform. The illicit content can then be shared elsewhere while users pay Robux on-platform.

(16) It should be noted that Roblox has actively taken steps to silence critics who point out safety deficiencies, like Ruben Sim. Sim runs a YouTube channel that has chronicled horrific content on Roblox for almost a decade. In one case, Sim found and shared allegations that one of Roblox’s professional developers may be a pedophile. The video exposing the possible pedophile garnered 1.4 million views. In others, Sim flagged suspected child exploitation content on Roblox. Instead of thanking Sim for help protecting vulnerable children on Roblox’s platform, in 2021, Roblox sued Sim for $1.6 million, alleging he incited a ‘cyber mob’ and off-platform threats. (1)

(17) To do this we created a new email – a variation of the name “burner account” — to see whether Roblox could detect if a child was setting up their own parental controls. Roblox promptly sent the parental controls verification to our new email and, following creation of a 4-digit pin, we were able to establish our own parental controls with no apparent hurdles.

(18) In a letter from May 9^th, 2023, the SEC rebukes Roblox for making scant mention in filings of the “small percentage” of its users who actually pay to play on the platform. In its 2022 annual filing, Roblox mentions “daily unique paying users” just twice compared to more than 60 mentions of DAUs. In 2023, daily unique paying users are mentioned seven times compared to around 60 mentions of DAUs.