Q2 2021 Roblox Corp Earnings Call

An investment strategy and plan development of new technologies investment and in payments developers, our ability to bring new brands music and reporting artist platform investments in international growth. The development of the members the outcome of any litigation and the success.

Yes.

And plans for recent acquisitions.

Any statement that refers to expectations projections or other characterizations of future events, including financial projections future market conditioning condition or the impact of Covid on our business and on the economy as a whole is a forward looking statement and based on assumptions today actual results may differ.

Materially from those expressed in these forward looking statements and we make no obligation to update our disclosures for.

For more information about factors that may cause actual results to differ materially from forward looking statements. Please refer to the press release, we issued yesterday as well as risks described in our filings with the SEC, including in our quarterly report on Form 10-Q filed for the fiscal quarter ended March 32020.

<unk> and other filings and reports, we make with the SEC from time to time.

We will also discuss certain non-GAAP financial measures. These measures should not be considered in isolation from or as a substitute for financial information prepared in accordance with GAAP reconciliations between GAAP and non-GAAP metrics for our reported results can be found in our press release issued yesterday as well as in our supplemental.

Copies of which can be found on our investors relations website.

Finally, this call is being webcast and will be archived on our website shortly after.

With that I'll turn the call over to David.

With Mike.

And then I will chime in later.

Just before we hand, it over to Mike welcome everyone to our Q2 call.

Reaching out to everyone out there and your families in the midst of a lingering COVID-19 situation, we hope you're all doing well.

For us a year ago, we rhythm.

Walk down the <unk>.

First quarter, when we started to see a little light at the end of the tunnel, we're extremely proud and excited with our results Mike is going to kick it off and then I'll follow up with some comments.

Thanks, Dave.

Good morning yesterday, we published for Q2 numbers and we also published a key metrics for the month of July. So you can see how we're doing.

We started the third quarter.

So just.

Everyone understands and will also be publishing August metrics.

Alright.

The second week of September so look for those.

An update.

Order in Q3.

Secondly, we want to go over.

There's still bookings versus revenue.

Completely understand that it's confusing.

Bookings the vessels.

The value of robust virtual currency purchases in the quarter.

And then.

Revenue is taking into account the deferred revenue as a result of those bookings will be recognized.

Our bookings generate over 23 months.

The average life of repair and those numbers can change with the LIFO payer will change over time, and we'll adjust our deferrals as a result of that we see.

Certain things in the press comparing our revenue number to our bookings number and it causes a little bit confusing.

But just for clarity bookings in the quarter were $665.5 million.

And revenue GAAP revenue was 400 and.

The $454.1 million and that was up about 127% year over year that bookings number was up 35% year over year. So anyway, sometimes in the analyst models people call bookings and sometimes people are referring to it as revenue.

I believe if I look at all the models I believe at the analyst meeting.

Bookings in all of our models some of them refer to that as revenue. If there is any confusion feel free to ask questions on the call and we will go through with everybody. The other thing we wanted to get out is that.

People are going through their models.

We had $52 million accrual in the quarter.

Four.

The settlement with <unk>.

With some of the labels and publishers the music industry and so if youre doing adjusted.

EBITDA or cash flow numbers, just to make sure that you understand that accrual was in there and we believe that's onetime in nature.

And so I just want to make sure that that is.

Properly accounted for in your model. So if there's any questions feel free to ask us about that overall.

We ended the second quarter and a really strong here.

A COVID-19 obviously.

For this quarter.

Continuing to grow the business.

It started out pretty strong with July so looking forward to talking more and before we jump into questions I'm going to turn it back to Dave Yes, just a couple of highlights looking at our core.

User base once again very proud with our 2090% <unk> growth year on year, specifically because of the building.

Lapping super locked down quarter in Q2, a year ago.

Jumping to a bit of the vision, we shared with all of you over the last six to nine months about the future growth vectors for roadblocks. One thing we're really excited about is our growth.

Growth, we have past, having the majority of people on our platform. The <unk> the <unk>, which is a huge benchmark for us and in Q2, we saw 46% 13.

<unk> growth year on year, which is a great bellwether for where we're growing internationally in Q2 second big thing part of our vision of really bringing the whole world together, we saw 42% <unk> growth outside of the U S and Canada, which we think is spectacular.

And we've also seen in response to this a broadening and acceleration of the diversity of content on our platform, which has been very satisfying as well in Q2 last year, 58% of the robust were coming from the top 10 experiences.

Net income.

Curve has flattened a bit as we have a wider array of content and that number is now 37% in Q2. This year, so lots of fun stuff with gateway to dive in with your questions and we'll turn it back to him.

Great.

Actually I'll turn it over to the operator, operator, you want answered.

Taking questions.

Yes at this time would you like to ask a question simply press Star one on your telephone keypad again star one to ask a question.

Our first question comes from the line of Alexia <unk> with Jpmorgan.

Oh, Hi, David Gronowski on for Alexia.

Start with the <unk>.

Acquisition.

Can you maybe discuss how you plan to integrate their platform roblox PUC roblox users unfiltered communities now and if so how do you see that impacting the overall experience and then how do you plan to maintain support.

Sort of the non robots communities that are on <unk>. Thanks.

Okay.

It really goes to a bit of our vision here and when we speak about roadblocks. We are an immersive three the meta versus platform company. There are complementary product categories deals is in what we might call. It the social communication and community platform area that we're really interested in.

These types of products work together.

See our people who play roblox use various apps, sometimes to hop from place to place and communicated outside of those out even though internally. We simultaneously are hard at work on immersive spatial audio for people who are getting <unk>.

We came across an amazing team. They are also extremely innovative in a lot of their ideas, whether it's building in this area of social communication platform.

Gives us the opportunity to open the way to experiment with the various ways. These classes of applications work together.

More to come on that in the future income future announcements, but it really gives us the opportunity to experiment with API and how these products work together.

Okay, and then I was just hoping you could expand on your shareholder letter commentary around robotics in China, So far.

What have you learned how are users engaging experiences there relative to what you might achieve a number of launch markets and just as a follow on how do you kind of evaluate the current or future regulatory risk in the market. Thank you.

Yes, a couple of things we've started to see that.

One is with this vision of a worldwide platform that simultaneously as compliant with local customers and the regulations and things like that we've seen a few things. One is we started to see amazing content come out of China and starts with the worldwide platform.

<unk> life Tobey.

Coming out of China, one of the top 12 experiences on Roblox, which is amazing. We are also seeing very great success with a lot of the U S global process going into China, which is also a bilateral network effect.

We're really excited about the traction we've seen in China with respect to just the initial user growth.

And especially in China education.

And important.

Learning to code.

Learning to create that we think there is amazing opportunities there to adapt and be beneficial there I just saw some stats in South Korea, which shows how well our platform is working and that the top 10 experiences in South Korea are somewhat different from the top 10 in the U S.

There's a lot of overlap with some of the very top U S experiences, but we can also see south Korea created experiences emerging into that top 10, and our system is working we're seeing both cultural affinity mixed with global hits.

We're very.

Excited with the growth we've seen in China, So far it has been.

Really gratifying to be live there on both iOS and Android coupled with our partner Tencent and a government license I think great opportunity and at the same time consistent with our values, we take a very long view in China.

Thank you.

Your next question comes from the line of Brian Nowak with Morgan Stanley.

Thanks for taking my questions I have two.

The first one is that in the second quarter. It looks like U S and Europe da use were down were down quarter over quarter, just talk to us about sort of what youre seeing in July and August in the U S and Europe do you use and sort of some of the drivers of that decline and then secondly kind of a bigger picture one on the competition for developers specifically the Hyatt.

Quality developers, Dave maybe talk to us about how you think about continuing to bring on and retain the highest quality developers for the ecosystem. In particular now that you have some some other social networks with large budgets and capability to <unk>.

Potentially offering developers, even higher take rates are higher and better economics et cetera.

Goodbye.

On <unk> and U S and Canada.

Year over year in Q2, they are up about 5% I think you are referring to engagement.

Which was down year over year so.

First of all the largest markets most users to begin with I think at the second quarter, it's pretty clear that as we wrap.

Referenced in anticipated when we went public as we talked about the only guidance we've ever given we expect of that during the second quarter.

Our modeling assumption was that covered until later in the second quarter.

Returning to normal curve.

Sign ups and retention and conversion and monetization.

That's.

Very similar to what happened in the second quarter and by the end of the second quarter June there was a lot of.

Quote unquote reopening.

Especially in the U S and Canada, and United Kingdom, and some of that's reflected in engagement.

Since I had and it was in 2019 on a year over year basis.

Flat to slightly down.

And now in July.

Some of the strength of the curriculum itself. So.

The overall growth in the quarter was definitely driven by Asia Pacific and in.

And rest of World, which includes things like South America and.

Eastern Europe.

So anyway, so I think that.

Just to make sure that we get the trend is exactly right.

And then this is Dave chiming in on the take rates and just a little bit of our vision going forward.

Preventing years, we've been building this platform.

Supporting that with three major tenants one is driving innovation really participating in inventing and shepherding an <unk> in an innovative way and.

What got US here, so far in many many innovation and we have to keep having those in the pipeline and we're trying to scale that weren't nearly as we grow our employee base.

Last year at this time, we had 750 employees were over 200. This year at the same time. The second thing is historically, we've been a pure play for the last 15 years everything we do piles into making our platform better and we iterate that with 14 groups every single day and shifting to an interesting function.

<unk> and third we're in a really unique position with our foundation.

Ability safety and we're learning and we're growing from there and we think Thats a very positive place for people to come together of all ages and it's a great foundation to build a really big company on on the take rates.

In Q2, we are about.

Our engagement based payouts.

As you can see this.

We announced the hedging derivatives.

$9 million in debts in Q2, so that's on a great track.

In general we much prefer.

I think to creators systemically as part of the self service and UGC architecture as opposed to any hand, given grant program and that number is going to keep going up you can also see with how much cash we're generating when you look at the bookings cash flow type of accounting there is a.

A lot of room, there, we're not making any announcements on the increases to our developer rates, but generally we want to maximize the amount we're using for our employees and for our creativity as well as what's flowing through App developers.

And.

More to come there without any future announcements.

Got it and just to clarify that might come at it from a modeling perspective, so the July trends.

Trends Youre seeing are you seeing youre seeing U S and Europe da use up quarter over quarter or is that more driven by by rest of world. Just so we can understand for modeling.

I'll double check Brian I think it's driven by all regions.

Okay, great. Thanks.

Your next question comes from the line of Mike English Goldman Sachs.

Hey, good morning. Thanks, so much for the question you guys have made a ton of it.

Our progress in diversifying your experiences in aging up your user base.

Wondering if you could talk about a few of the drivers that have led to that and how that.

For instance, the durability of the business and then as a quick follow up I was just wondering if you could.

Preview some of the.

Takeaways that you would like the investment community to get from Europe invest.

Investor Day later this year. Thank you.

Kevin This is Dave I think what we're going to be showing at our Investor day.

As as much transparency as we can with respect to both what we're shipping right now as well as their future vision and hopefully give a glimpse into the architecture of the company and the architecture rebuilt to drive innovation. So look forward to some coverage hopefully of the whole product.

Stock went all the way from our apps on multiple platforms to our game engine to our developer tooling.

The technology, we use to make experiences run all around the world all the way into our platform and infer which allows us to run at high performance and high reliability at low cost we are hoping to show as much as we can and hence.

And all of these areas without at the same time announcing any public shifted so great stuff aging up.

Is something that we talk about we're actually in the middle of it and we've been talking about it for three or four years and a lot of the.

Visionary stuff, we put in place three or four years ago.

What's been driving this position now where over 50% of the people on our platform are over 13. The that includes offering personalized search and discovery and include increasing income portion of our <unk> engine.

And it includes also a lot of things that we've spoken about that haven't quite shift now we've given highlights that our avatar system. Another lock.

A lot of opportunity and is getting to a full UGC, which will radically increase the diversity of the types of avatars on our platform, which is super exciting we've enhanced that over time, we would expect.

Maybe for those of you more familiar with the movie industry not R rated but Pete.

<unk> type similarities in some of the experiences we do and we've also been very very hard at work with the philosophy that we're building a unified platform that is the space civil and educational for six year olds will be very interesting for 'twenty two year olds that goes all the way from our branding.

The performance of our App to the way people find content to the way we match people.

So it's actually something we're right in the middle of the amount of white space and the <unk> income.

Relative to our Tam is enormous because we've gotten to where we are very heavily on a very small sliver of the world population 90, 212 year old. So we think a lot of these early signs for 13 enough bode well for us.

Your next question will come from the line of Matthew Thornton maturing Securities.

Okay.

Hey, this is Anthony duplicity on for Matt. Thanks for taking the question guys wanted to ask about content expansion outside of gaming experiences can you talk about how the pipeline is evolving music artists and labels are there any is there any momentum with TV networks and online lending companies and then how it could be content expense will start to have an impact on financials.

Thanks.

Yes, So I love that you brought online learning starts internally, we have a very big decision around education on the roblox platform and it goes as you I think Mike hinted at way beyond learning computer because into learning all topics that goes on.

On to learning about history immersive Lee on way to learning the physics by jumping into the physics experiment. So we are hard at work to comment educational vertical segment.

More to come on that roblox.

Really when we think about the meta versus roblox as we do think of it as the utility when theres going to be a lot of use cases that we can't even imagine right now the beauty garden's experience experienced really for US. It was really interesting is not really a concert is not really a game, it's almost like going to Moma.

Im going to an art installation.

Yes.

It's really the first robotics experience my father really light.

Just the ability to go around and see what's going on there and that coupled with.

Netflix is stranger things experience on roblox, which is much more around letting.

Our fans participated in an experienced members so we rather than launching it.

Jump to our vision and our hopes for the future of music where for artists and musicians today, who are very creative and need to support their careers, primarily live concerts or recorded right now.

Those live concerts are wonderful.

But it's hard to get more than 20000 people over 50000 people into a live concert, whereas with Azithromycin launch Party. For example, we've been able to go well over 4 million in those numbers go higher.

We're very optimistic about our future musicians can use <unk> with my participation that feels very different than watching video. It's with other people. We are very optimistic of his third monetization area for musicians to interact with their fans.

And Anthony I did point out that in things like Gucci garden or monetizing today in very traditional ways as purchase of virtual goods.

The store as well.

Launched claims.

Thanks again.

Yes.

Users who purchase.

Millions of dollars in virtual items.

Our Canadian traditional forms of monetization in the future.

Obviously, you can imagine with the things that we can do with the brands to expand that and with the developer community as well.

Of course, thanks Pat.

Your next question comes from the line of drew Crum with Stifel.

Okay. Thanks, good morning, guys.

Mike Wonder if you could drill down a little bit further on the monetization of the Apple metric that you disclosed seem to flatten out in <unk> can you discuss some of the puts and takes on that metric.

Dave just to circle back on the brand partnerships music experiences can you talk about any observations you've made in terms of how thats impacted new user growth and what youre seeing in terms of retention slash engagement trends for that cohort.

Hey drew.

And three thoughts on on monetization.

One is as we talked earlier.

The clear flattening of content on roadblocks over the last year.

More experiences are part of the monetization engine. Some of those experiences are early on in their curve.

<unk> actually had them all.

Monetize and so it's not unusual.

Blocks.

You can model.

So through the experience curve and so as some of these.

These experiences on the platform for longer periods of time, the developers will learn better how to monetize and users will be more engaged and they will want to monetize.

The second thing is.

Is geographic.

Diversification of our paid so obviously when you look at growth anything specific in other parts of the world.

Again, some of those parts of the world.

Similar to slightly lower GDP per capita so might have.

Lower monetization in those parts of the World. You also have early payer coverage of those payer part payor cohort as they get older.

What we've seen over many many years on roblox payer coverage and to increase cumulative bookings quarter.

We're after quarter after quarter, we still have to go back to 2016 and looking at Q1 2016 are cohorts and accumulative.

Bookings.

Cohort and continuing to grow at a very consistent and healthy rate.

All of these.

Overall, my third comment on monetization is simply just be careful when you're comparing ratios.

Using that we can have very strong bookings very strong user growth and AD Falcon goes out consistent ratio if youre users are growing faster than your bookings.

That would need you to understand that in the future you got some really powerful tailings around bookings, but the users might be growing faster right. Now. Similarly, if you look at it just July.

Hours in India.

On a more than we expected to come out.

I happen to be looking at booking per hour I might look at that number as having gone down in July and I can tell you.

Kathy with ours, but when you get to the ratio.

If you just might have a little bit of movement back and forth. So.

Our debt ratios, we should just be careful.

Yes, Hey, this is Dave.

David just following up on the brand partner.

Excited about the brand partnerships.

At the same time, our core growth.

It was driven primarily by early well beyond the size of the user traffic were DNA word of mouth growth.

People talking to friends coming to the cloud.

Referred by a trend I think we.

We have a bit of envision starting.

That roblox ultimately is.

The platform that people will use every day to play too.

We are.

Together to communicate together to be together as the utility when they can't be together in person.

Some music.

And the concerts or an exciting way of possibly bringing people to the platform, but the retention by winning with friends.

With Rem following that so.

I don't.

It might be a little controversy, we don't need music events to grow this business enormously.

The large and we don't factor in that as a traffic source of business is growing organically, but they are a wonderful thing on top of our core organic growth and I think ultimately there's a vision, where these concerts and experiences will be more and more self service really.

Focused on building the tools and technologies, so just like games and experiences concerts that are built by a wide network of intermediaries and we also have a decision ultimately that theyre going on all the time just a display that is going on all the time right now.

Your next question will come from the line of Brandon Ross with <unk>.

Questions.

I have a big picture one to start.

One of the more interesting.

Now a <unk> company.

I wanted to get your perspective first will play out in the future.

Do you see a distributed.

At four one dominated by.

Forms like social media.

This book.

We will have.

Do you think.

Sure.

Real winners.

Okay. That's a wonderful question. It goes to what we've been doing for 15 years and I'll start with a couple of comments.

Big picture comments.

The technology is very complex and the technology to support.

Concert, where we all feel.

Feel like we are there we can talk to our friends in next to US we can wave across the stadium it feels photo realistic.

And there are 50000 people doing that that's a huge technological challenge and side by side. So that technological challenge I just wanted to put that out there and that is very exciting.

There is so much work to do and.

We're pretty far into this if we look back to second line.

This started a long time ago, so theres a lot of funds does dubuque.

Our focus for the last 15 years has been on innovation.

Invention and really shepherding is where we feel that <unk> is going to go whether it's when we have four people are now we have 200 people that will continue.

Sure.

And everything we do.

Piles into Medicaid.

So we do have this.

Roblox benefit of extreme focus we have now topped 100 people in that growth.

The other thing that we believe long term for embedded or utility.

Must be a civil and Facebook.

With that welcome six year olds and at the same time welcomed 30 year olds, who are working together. This is very complicated and takes I think it's much easier to start.

<unk> from that facility and safety.

And then open up the freedom than to try to reel it back in and go the other direction and so we really think thats, a wonderful opportunity for us as well.

As far as openness.

With our actual Mike.

Create and use as part of their net adverse experience, including the way our social community communication apps interacts with an immersive <unk> spatial audio app is very interesting because.

There is amazing opportunity per created creativity on that integration. So those are a few <unk> at how we view what we're doing for the last 15 years and will be for the next 15 years.

And then maybe just a follow up on <unk> and I saw that.

Voice and video are a big part of that and wanted to ask as you move from more.

A problem does that from shape.

The perspective, and how prepared are you for the explosion of those form of communication.

Roblox.

We've taken it is really our top priority.

Facility.

Whether it goes to how we filter.

As to whether it goes to.

Now of life issue minutes.

Yields.

Whether it goes to the ml that we use to filter is always been our top priority and doing this for voice and video ultimately is very complex. It's something we take very seriously, but we will come at it from that safety Foundation that we've always had.

On the audio side to clarify our belief is there are two classes of audio.

Gilded does.

Think of it as team audio.

So it's the audio maybe like a phone call really groups of players uses takes off around various experiences and I think we are in.

Terrific.

We haven't done anything with Gilead to say they will still not keep working with other platforms as well theres a lot of people from many many gaming communities on the gilded platform simultaneously, we have a vision of metals. The audio is what we shared with you. So that's what we.

Do at our company Holiday Party, it's what we've been prototyping internally, which is really true three D. Immersive audio we think these are going to complement each other in a wonderful way.

Thank you.

We will now take questions from the webcast audience.

Okay and the first question Jackie.

That's a trend.

<unk> and <unk> trend.

Between the OSI team.

Adam.

Let's get that one over to Mike, Yes, they are incredibly similar.

Short answer.

<unk>.

Sure engagement and monetization.

Under 13 really breaking events on frontline.

And the follow up to that.

In partnership with Gucci timeline.

This is a really great big question.

The demand is everywhere and when people participated in an immersive.

Three the environment is so important that we all wanted in our younger players one in our older players wanted everyone wants to represent themselves in developers in a way they feel proud of and we feel comfortable kicked out with shoes I wore how I cut my hair.

This all applies in the digital world as well.

<unk> two bought any closing here make.

Pretty glasses everything so building a system, where we can have a vibrant market where people can mix and match where clothing items work on Android habits are and where people can have anybody they want in any space they want super important to us.

It's really been part of the roblox since we started.

There's amazing opportunity there.

Right.

We've got a lot of questions about China.

If I can.

What.

Our response.

GAAP earnings.

Comment.

Okay.

Yes.

One of the reasons that Tencent and roblox was so excited about going into China is how focused parents and kids are indications.

Indications and how focused they are on learning to code on participating in creation and that trend has been very very powerful to us. The other thread that has been very powerful to us is country by country.

We're building a distributed worldwide platform that is policy aware in software from the rules and regulations of any country.

As.

A country has a certain set of laws, we will abide by that developers are also very understanding that the content. They create will country by country either be applicable or not we have a very long term view in China, a lot of the <unk> to play on Roadblock is both educational as well.

So beyond.

Beyond gaming.

Our response is really no responses to keep doing exactly what we've been doing we have a 10 year vision. There we know it's going to be big and interesting and we're in this unique position with our Tencent partnership.

With license live on iOS live on Android and bilateral network effects are great global content going into China, as well as greater China content starting to hit.

So the world market, so our responses to keep doing.

Okay.

Okay.

And that comes from our plan.

Can you provide color I am looking at creative circle.

Bookings growth over the next couple of years, obviously, there is going to catch up and build on the platform.

All right.

Wholesale trading.

So we've been really clear.

And in our discussions around investments that we have a real focus the first is hiring the best.

Engineers in the world.

And then great product professionals through roadblocks, and we will continue to focus on that the company is laser focused on recruiting and growing.

Around about 1300 employees today, which is fantastic, but our ambitions require a significantly larger.

Yes.

Professionals working at the company.

Second thing is to increase investments in cleaner can visa developer community of robots and continue to share a greater percentage of the economics with them over time both of those.

In fact, our circuit.

Back in Q faster and more prolific product releases.

With him to drive more content is going to drive higher bookings so.

Generally we view our business as having the kinds of tasks.

Cash flow margin.

1 billion to invest is relatively unconstrained and we're very fortunate to be in that situation.

Produce.

A lot of operating cash flow and even though we continue to invest in the infrastructure.

Around the world on robots.

In India that we talked about in the letter we've still been able to do over the long run and generate a lot of free cash flow.

We have the ability to invest more aggressively because ultimately what we reached at the end of the 1 billion users.

Hi, $40 million.

All of these areas.

Essentially 1 billion hours of engagement every day on the platform.

Obviously much smaller number today, so we will continue to invest.

A heavy rate.

We believe ultimately the bookings will support that but we've developed a lot of flexibility in terms of margin and we view that as really fortunate unfortunate outcome of our business model and ultimately we're trying to get to.

Our angles of growth and scale.

Quickly as we can so those are the multiples that.

That will be investment yes.

Dave Chiming in roofing on what Mike said, there kudos to our core platform and infrastructure build.

Such an amazingly high performance.

Low cost high reliability.

Work around the World we've got over 24.

Data centers now we've got four in China. We've got three primary zone. It's really that is all money that we are able to funnel back to employee growth and our developer ecosystem.

Okay.

Okay.

And the next question capital.

Great July month can you talk about the underlying drivers as.

As a pro forma.

Okay.

Mortgage income.

September last year.

But the trends by Covid.

Tactical backlog score in terms of DAU and MAU.

Yes, I think the second question first.

He analogy in this business.

That would be the summer peak in July August people start going back to school in September. It is back to school. So sequentially. Typically August is it is lower than July and September is that this profile.

I work I would work.

Very carefully.

At year over year growth rate in this business now we're starting to come back to a more normal seasonality, which means I think year over year data is insightful.

And I think we're also comparing Angela.

Application and beliefs.

And certainly that's embedded in our financial expectations.

That notwithstanding delta variant.

Schools are opening in September hopefully.

The reopening that's what we all personally and Thats, what we are expecting so I think those normal curve.

Will prevail in the third quarter and in the fourth quarter again, a typical seasonality we talked about this before is that October is usually I picked up from September and November eventually you get to start of the holiday and thank the GAAP.

December is always very outsized in terms of that month.

That hasn't changed and that's very normal and we've talked about that before and I think that's what we'll see in the back half of <unk>.

This year the pricing.

What do we attribute the triangle in July.

Yes.

We were very happy to report monthly metrics, it's a great way for everyone to keep.

For the business.

Don't change very much month to month.

We have been.

I've been the CFO of the company for going on for years, and we've been talking about international growth and aging of the platform and making those investments.

For the entire my entire here at the company, we're making progress on the from the entirety of the company and I think what you saw in July.

Possibly the settlement.

Little bit of.

The.

The Covid impact between June July I think.

Nothing happened in June and July and we get a little more questionable on the other hand, there are some of the other trends that are going on inside the business that I think drive growth and performance that it's hard to just.

Great.

Again.

Much more content on the platform a diversity of content on the platform users growing really fast in places like Asia Pacific and rest of world.

Some new players coming onto the platform. So we're early in our payer provider.

A lot of different things I think that are that are.

Its feed into the numbers and I would always caution people a month to month I'm not sure that the trend change dramatically unless there's a really big macro shock you should believe that we're doing the same things to grow the platform with an incredibly large market.

Okay.

Can we talk about now.

<unk> are we in that falloff on Makena sizable franchise revenue opportunity available naloxone to unity Unreal gaming.

Yes, I wanted to highlight and then I'll kick it over to Mike once we get our beliefs in systemwide investment, which means its self service, we have two ways that our developer community.

The first is on the robust economy the SEC.

On occasion based payout we are really proud with what the engagement based payouts system has done in that.

Over time, more and more developers down ranking 1000, plus are starting to make a living on our platform.

Without even thinking about it and this goes to hobbyists are new developers. So we really focus on the depth of that pipeline and getting people successful early on so they can make a decision to jump onto the platform we increases in Q2.

A lot of room to churn those knobs, even though we're not announcing anything as we look at where our cash is right now and we would always prefer to churn those norms rather than to any bank.

<unk> type investment programs, our top developers now whether they're organic on the robotics platform, where they're outside companies. The likes of companies that are coming on platform to build experiences is getting to be a pretty serious millions.

Millions of dollars a year larger and larger teams of VC backed team. So I think you can see say the future <unk> will continue to be UGC.

Really system base.

There is a lot of room, there I think that the amount we paid our term treated within two years is up by about buybacks.

That will continue.

Mike would you like to add on to that no I think.

First half of the year, it's about $249 million, we talked a little bit about where that will be on our last call and obviously its on track.

We remain laser focused on our investments in infrastructure.

Talent inside the company and the developer community.

And.

Outside of that actually we're really careful about that.

We really are quite programs.

The only other significant investments that youre going to see.

And our numbers are in the back half of the year.

We'll be a little bit around tenant improvements because we are growing quickly.

That's a good thing we've got it we've got.

Great campus Samsung Cathay.

Well located so we'll make some investments there but.

So we're incredibly careful about where we put our capital.

And I think I think we're in a really kind of a spike because of this business over the 15 years that have been.

<unk>.

Most of the cash that you see on the balance sheet to generate above it and so that gives us the flexibility to continue to invest at high rates and.

Historically, the investments have proven to be productive.

The business has been it's been a really great matched in terms of the financial model that will continue to be their home.

Kumar.

Glenn fraudulent credit card usage accounted for 5% and bookings.

Net benefit.

Holly on tackling internally.

We have a whole team that's focused on.

A fraud.

On the numbers.

Bounced around a little bit, but I don't I wouldnt assume that youre going to start.

Kicking up and causing us any significant.

Issues, but we're focused on absolutely.

We're.

Laser focus on making sure that Friday was it possibly can be.

Okay and then the last question is on.

On the top line can you talk about the traction.

Meanwhile vary.

Hum.

And higher quality content.

One.

Yes. This is Dave ill chime in so.

I think what Sophia is a great example.

Out of a team in Shanghai and.

They broke into the top 12, we have this vision both occurrence people onto our platform.

Right now growing into studios that are competitive with.

The top $5.10 to 2000 teams and roblox or being their talented they're out.

Creating non universities for programming talent, so they stand side by side and we're really proud that we've grown these internal studio.

The same time external studios, whether there'd be feedbacks.

Whether they are backed by other larger studios, we're seeing those as well so great traction China Shanghai.

Studio breaking into the top 12, umbriel blocks greater concern to them.

Okay.

All the time, we have today.

Any thoughts on like Obama, yes, it did.

Circling back wishing you and your friends your families the roadblocks communities.

Toward and save emergence from this COVID-19 situation.

Thank you drilling to support.

Alright.

Operator.

Thank you ladies and gentlemen. This concludes today's conference call you may now disconnect.

Okay.

Sure.

[music].

Yes.

Yes.