Roblox earnings: ‘There’s a lot to like here,’ Ava Labs president says

Ava Labs President John Wu joins Yahoo Finance Live to discuss Roblox earnings, daily active users, immersion in the metaverse, users participating in building games, and blockchain as a service.

Video transcript

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- Roblox is surging this morning. Look at that, 26%, after the gaming company saw bookings and daily active users accelerate in the fourth quarter. It's CEO called 2022 a year of innovation. Ava Labs President John Wu joins us now to do a deeper dive into the report. Bookings going up. The company also seeing more older users, and by older, I mean like over 16, so not super old, John. But what do you think what do you think is working for Roblox? Because it's seen some more weakness as of late.

JOHN WU: Hi, Julie, well, first as an operator of a Web3 company and as a former hedge fund manager, there's a lot to like here, the unique business model, the Web3 parallels, and as you said, the investments from 2022 are starting to pay off in the form of monetization. So it was a young demographic, 2/3 of the users of the 60 million [INAUDIBLE] plus were basically under the age of 17. And I think 50% is 13 or under.

So in order to capture more value from these users, you need to give them experiences, both from a developer's perspective as well as a user's perspective and brands. And they've been investing in research and innovation and partnerships with big brands in order to age up, to get the monetization. That's why you saw bookings grow 17% year over year in the fourth quarter, and amazing January numbers of, I think it was, close to 22% bookings growth.

- John, I was thinking the other night, where is this company in 10 years? It was hard for me to wrap my head around, what are they doing 10 years from now? I look at a, let's say, Electronic Arts and they have the Madden brand, and that brand is plastered all over broadcast TV, in various football fields. But what does the future look like for Roblox?

JOHN WU: So Roblox is trying to distance itself more and more from a gaming, innovative and gaming company, to more of a metaverse company, with experiences immersed in communications as the CEO and CFO mentioned many times on the earnings call. I think in 10 years, what you'll see is more similar to what a Web3 crypto ecosystem is like. Right now it does have a lot of the ethos of a Web3 company.

It's community led. It has community governance. But it's not community owned. A lot of the parallels to the crypto world is that in the crypto world though, the assets are really owned and custody by the users. And the value capture, both in creation as well as destroying a value and exchanging a value, can easily be moved around an economic model through a token. And that's what Robux really is. It is a token.

But it's a closed loop system. And the users can't really take it and the monetary exchange rate is controlled by the company, Robux. So it's 2/3 of the way there but it's not really Web3 and in 10 years I see moving more and more towards that.

- So how do you get Avalanche on Roblox then?

JOHN WU: Well, what Roblox can do-- well, there are very similar parallels here. So 2/3 of their users are under 17, and lot of the users of all Ava Labs and Avalanche is actually over 17. So there is like natural demographic. We can help them age up. That's their goal.

Avalanche is a permissionless blockchain. It has what we call app chains, which is, we can provide a blockchain as a service. If you take a lot of the gaming on Roblox and put some of that into what we call subnet or blockchain of the service, blockchain out of a box, you can start that process of opening it up and allowing that roll box someday to be fungible with other tokens and other Web3 related stuff out there.

- What I also find interesting about Roblox, John, is my kids are on it. I have a 10 and 13-year-old. And as opposed to some of the other gaming companies, there is this coding component, right? They see new games coming to the platform all the time. It sort of has gotten them interested in wanting to code as well. What do you think about this sort of Roblox native generation, if you will? How sticky is that going to be to Sozzi's point, 10 years from now?

JOHN WU: I think this is the way the world is moving forward. I have a 13-year-old as well. And I can see already, like, you are a creator as well as a user. And this generation of children, they want to do both. I mean, the 1,000th game on Roblox, actually, the developers there make salaries of over $30,000 and these are young kids. So that's a nice healthy summer job, if you will, for some of these kids. And they get to learn how to code.

That's literally what this ecosystem is about at Roblox as well as Web3. It's a creator as well as a user platform. The stakeholders overlap. And over time, it's educational because you're learning to code. But even better, you get to be part of the governing body and help be part of this community.

I know when I was a kid, you know, Brian and Brad, you probably had the same thing. You'll come home on your bus, and all of a sudden, you know Johnny says, let's go play football in my back yard. You drop your bags and you run to John's backyard. Today, Julie, your kids, my kids, they come home, and they say I'll meet you in XYZ game on Roblox. And then that's their community.

- Luckily, they're still going outside a little bit, luckily.

JOHN WU: --change in culture.

- Yeah, we were trying to get outside all we could, honestly. Can't complain there. Look while we've got you, so given the involvement that this generation has and the ease of usability that they will kind of perceive annexed to this experience years from now, what is the timeline that you would place on the natural state of just building some of these games on a blockchain like Avalanche?

JOHN WU: So, I think right now a lot of the actual transactions and the gaming play will be offchain. But it's the assets, the avatars, that Roblox called, as well as the in-game items and possibly the marketplaces for the advertising, the limited scarcity products that will be on the blockchain for now until processing and compute power improves. But if there is one blockchain out there that can do a lot of this, and we are working with a lot of gaming companies, it's all over Ava Labs and Avalanche.

So I think the timing of this is literally in the next-- it's already happening. It's slowly happening. Triple A publishers are developing use cases on blockchains, especially on Ava Labs, Avalanche. And it's going to continue to grow. But full deployment will be a long time.

- Critical mass by when though?

JOHN WU: I mean, I think that's a tough question . I think probably like five, six years from now.

- OK.

- All right, John Wu, as the fellow parent of a 13-year-old, good luck to you. Ava Labs President, John Wu. Thanks a lot for your time.