Roblox online game service.
Lionel Bonaventure | AFP | Getty Images
Roblox has postponed plans to go public due to a U.S. Securities and Exchange Commission review of how the video game platform recognizes revenue in its finances, according to a note the company sent Thursday to employees.
The delay is a setback for one of the most anticipated US public market debuts in 2021. The company had said in a regulatory filing earlier this month that it aimed to list shares on the New York Stock Exchange in February.
Roblox’s valuation soared to $ 29.5 billion in a fundraising round earlier this month, more than seven times the $ 4 billion the company valued 11 months earlier, amid an increase of the popularity of video games during the COVID-19 pandemic.
The SEC has reservations about how Roblox recognizes revenue from the sale of its currency, Robux, on its platform, according to the note seen by Reuters.
Players use Robux in the game to buy a mix of durable goods that last a period of time and consumables that are used immediately. Roblox had tried to treat all revenue the same way and amortize it for the duration of its paying user accounts, which is about two years.
The SEC wants Roblox to be more specific and recognize revenue from consumable products as they are consumed, while lasting services will be recognized throughout the life of the Roblox user, the note said.
“By taking this accounting position, our revenue will really be a little higher, while reserves, DAUs (daily active users), commitment hours and cash flow will not change,” the founder and CEO wrote. David Baszucki in the note on personal Roblox, whom he referred to as “Robloxians.”
“However, it will take us a while to update this change in our financial statements,” he said.
A Roblox spokesman declined to comment.
This is not the first delay in enrollment plans. Roblox told employees in December that it had postponed the listing until 2021 as it worked with advisors to improve the process to benefit employees and investors. The company ended up switching gears and said it would appear to be made public through a direct listing rather than an initial public offering (IPO).
Roblox’s revenue, based on its previous definition of the metric, increased 68% to $ 588.7 million during the first nine months of 2020. The company reported a net loss attributable to common shareholders of 203, $ 2 million compared to $ 46.3 million the previous year.
Roblox, which is among the most popular gaming sites in the world for children and offers a large number of games on mobile devices and game consoles, said its daily active user base increased by 82% in 31.1 million in the nine months ended September 30 of the same period A year ago.
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