Q1 2022 Roblox Corp Earnings Call
Expectations of our business future financial results and strategy forward looking statements are subject to risks and uncertainties that could cause actual results to differ materially from those described in our forward looking statements and such risks are described in our risk factors included in our SEC filings, including our form <unk>.
10-K filed for the fiscal year ended December 31, 2021, you should not rely on our forward looking statements as predictions of future events, we disclaim any obligation to update forward looking statements, except as required by law. During this call. We will also discuss certain non-GAAP financial measures reconciliations between GAAP and non <unk>.
GAAP metrics for our reported results can be found in our press release issued yesterday as well as in our supplemental slides copies of which can be found on our investor Relations website. Finally, this call is being webcast and as a reminder for those participants you can enter your questions in the top right side of your screen. The webcast will be archived on our web site shortly after.
With that I'll turn the call over to Dave.
Welcome everyone and we welcome all of our investors and the rewards community.
I'm going to share a few notes before we dive in on the Q&A.
Especially for those who maybe didn't deeply read our shareholder letter reiterating on our growth daily active users were at 54 million for Q1, which was up 28% year over year and our highest ever.
And our hours of engagement.
22% booked.
Bookings were at 630 to 31 million for Q1, which was 3% below Q1 of 2021.
And I want to highlight we generated over 150 million of net cash and $100 million of free cash in Q1 March we believe with our most difficult lapping COVID-19.
And what is really exciting as all of the user gains generally we accrued during COVID-19.
<unk>.
That said, our as we expected really our bookings are highly correlated with hours of engagement and our hours have decreased in some cohorts as we've emerged from Covid are given an example, which is the USA nine through 12 cohort, which is an extremely dynamic part of our numbers and.
Pre Covid, we had 2 million via used in the nine through 12 cohorts spending less than 5 million hours per week.
In the middle of Covid that jumped to 3 million via use in that same nine through 12 cohort spending 10 million hours per week.
We emerged during COVID-19 with that same 3 million via used but now spending 8 million hours per week and once again. This is highly correlated bookings in our hours of engagement is partially explains our year on year bookings number for.
For those of you that read our GAAP results, you'll notice that we're going to move to.
Occurring in revenue with an average user lifetime moving from 23 to 25 months.
This will essentially increase the time, we've been or.
Smear out our revenue, but I want to highlight it could be interpreted as a sign of increased user.
Retention, which is very positive for us.
Have enormous headroom.
Even in the U S. Nine through 12 cohort because we we have a lot of room on our frequency there, we do not share our <unk> numbers right now but.
There is a lot of room there I also want to highlight that in our <unk> hundred 24 cohort in the core markets well lapping COVID-19.
We are still seeing solid growth numbers year on year.
And in Q1 in the quarter, we saw 6% year on year.
Internationally.
To highlight two countries. The first is India, which has enormous potential user activity.
We saw in Q1 of 'twenty, two India grow 160% relative to Q1 of 2021 under a million.
I use with a lot of headroom, there and then Japan, which is.
Our potential for enormous economic activity in Q1 of 'twenty. Two we saw growth of three relative to Q1 of 'twenty, one with 183000 VA use for that market is just in for information.
We continue to drive innovation up and down our stack.
A couple of innovations that I'll share with you that have emerged in Q1 that we've talked about include special delays are layered clothing and fashion system. Our age verification system that is working hand in hand with spatial boys.
We've introduced roadblocks cloud and the ability for developers to access.
And really the whole back end of their experience.
Through their own API, if they so choose.
We migrated to our own internal roadblocks translate system that has shown a better long term engagement growth than other translate providers, we've used from the cloud.
<unk> added a data center in India, which is part of the very rapid growth there and has decreased latency by 50% in India and we're in our first steps of artificial animation data in Roebuck studio now we continue to believe that part of.
The long term growth for our company is continuous innovation.
In addition to these we have many more in the pipeline.
We have shared in our shareholder letter.
The enormous opportunity for us to lean in on the efficient frontier on the economy and roadblocks and we are taking steps up and down our economy stack to nudge towards optimizing long term retention and engagement with the revenue.
Flowing through our system and the ability for our developers to build larger and larger teams as they recognize more economic activity a.
A few I'll highlight that are underway at roadblocks include both on game experience discovery and marketplace discovery.
We're well into projects there to balance long term engagement and retention with the monetization of the various experiences.
We're adding.
Validated accounts and including the ability for people to trust.
The items, they are buying or from the real Nike or the real than we are.
In the midst of shortly releasing the ability for brands and developers to boost their experiences through discovery on our homepage and we started work on our immersive advertising system, which is really long term division we've had four.
Really a parallel economy.
That supports brands, bringing traffic to their experiences I want to highlight anything we do with advertising will be consistent with our values will be consistent with the ages on our platform will be consistent with all laws and regulations around advertising, but there is.
The enormous economic opportunity here.
And then just highlighting before we jump into the Q&A and you'll have to excuse my voice as I go through this.
We've got a lot more great brand experiences, including the NFL relaunched NFL tycoon.
Clear and Allo Yoga American Eagle and Chipotle, who all launched experiences on our platform.
On the music side.
We hope the Grammy week, we hosted the Brit Awards, we Elizabeth David Greta and with certainly we did in 2014 Golden virtual concert.
<unk>.
As your CEO I'm.
Phil.
Just wanted to highlight and closing the bullishness that we have within the company based on the ultimate size of this market.
We have a very healthy.
Okay.
Our developer.
And the stability that we really rest of our business.
The effects that drive our.
Growth.
So with that.
Okay.
Thank you Anna.
In order to ask a question.
On key pad.
And we'll pause for just.
Okay.
And we will take our first question.
Stifel. Your line is open.
Okay. Thanks, Hey, guys good morning.
Blatter, you discuss innovation.
Those that are currently in beta testing, specifically custom material bills and dynamic heads.
Testing in terms of how these initiatives.
Have impacted your Kpis and when do you expect to go live and then I have a follow up.
Yes, I'd customer cereals.
We're actually live with parts of subtle feature in that it affects the <unk>.
The overall look and feel of our of everything on roadblocks, one thing custom materials is going to allow us.
How is more diversity in the look and feel of experiences on roadblocks because right now roadblocks runs on a.
Physically based rendering paradigms there'll be different types of brick and different types of grass and developers will be able to customize that I think one long term roadblocks developer and I'm going to quote them for.
This quoting the developer rather than making my own statement said robots is doing God's work with custom materials. So I think our developer community is really accepting this.
Facial animation.
We're launching the beta in roadblocks studio and developers have access to that right now we're not sharing of data on the longer term launch.
As you can imagine we want that to be as soon as possible to get that into.
Hum.
More subtle long term effects rather than direct <unk>.
Got it Okay fair enough and then Mike the April bookings were up high single digits month.
Two months.
Setting COVID-19, aside which creates some distortion on the numbers.
Can you remind us historically, what the shape of <unk> bookings, it looks like and what Youre anticipating.
<unk> through May and June this year. Thanks.
Hey, Joe.
Our mind.
Comment on what the shape of the curve normally looks like normally April were very strong months for us is incredibly strong.
In 'twenty one it was one of the loss Super high year over year growth rates as Covid.
Last year was starting to wane and reopen so we had expected year over year growth to a bottom in April right now looks like it bottomed in March which is good so sequentially or year over year growth rates in April were better than they were in March.
Again year over year basis, I expect that to be true in may and again in June in terms of the overall shape of the curve normally April it is lower than April and then and then G&A is back up higher than May and really the opening of the summer season, where normal seasonality starts to kick in last year 'twenty one.
We didn't see the normal seasonal curves because they were buying from heavy COVID-19 period early in the year first three to four months to much more of a reopen period May June July through the summer. This year were open and so we expect more normal seasonality to take hold meaning we.
We do expect the summer to be strong vis vis where we are.
And in the spring and so we will see you will see that in June July August So we're glad to see the sequential improvement.
Back to that to continue.
And in May June and into the third quarter.
Thanks, guys.
Thanks.
And we will take our next question from Bernie Mcternan with Needham <unk> Company. Your line is open.
Great. Thanks for taking the questions maybe just to start just high level why is now the right time to be leaning into monetization and gives you. The what gives you the confidence that consumers are willing to spend more on ROE box right now.
Hey, I'll answer this.
I want to highlight earlier, what I said about.
Value is consistent and efficient frontier I'll, just I'll give you a highlight of the opportunity we have and I think this is more of it.
Okay.
We raise.
<unk> historically have made no.
Real difference and how we feature experiences.
The same long term retention, even if one of those experiences.
Monetizing tenex, which the other one does.
I think this is a more.
Two of highlighting experiences.
Historically consumers have.
<unk> to spend robust in rather than.
New.
Ways of trying to pull more money out of consumers I would say the same is true of our catalog experience, which there is a lot of room for optimization optimization.
One thing we're doing in our catalog.
That is what I'll dive in a little bit more deeply.
We're moving our catalog to be 100% user generated and that include clothing bodies and faces, but the second part of what we're doing in our catalog is enhancing the trading efficiency.
Really the dynamic nature of our catalog. So we have a range of free items and rare item.
This is historically has been something robots has done very well with roadblocks related items.
And we've been doing this for over 10 years and the roadblocks economy.
Gotten to the point, where we have items that trade for 20000 U S dollars or $2 million robust as they become rare we want to add that level of fun and dynamic nature to our catalog. This is actually something or our community wants is a more opportunity too.
Really work in that kind of trading economy. So.
Everything we do for our economy.
Consistent with engagement first but it is we believe an opportunity to realize the efficient frontier.
Understood.
Then moving on to advertising acknowledging that it's still early days in thinking through the opportunity.
As you think about what advertising is going to look like on a roadblock is it possible to have the performance marketing piece on advertising. In addition to brand marketing and then.
If there is performance with that call to action only be based on.
Experiences within the robot, some anniversary or goods as well or could it be translate to the real world as well.
Yeah.
Yes, I will.
I don't want to speculate on any data or any times.
I do want to highlight that.
Everything we do.
His values consistent and within advertising guidelines.
And appropriate for the various ages.
One can imagine.
Advertising units.
Pierre as in game Billboards in game teleports.
That all developers on robust can choose to use. So this creates a dynamic AD server rather than with <unk> image or video pre roll. These are in game three units.
You can imagine brands using these units to bring traffic to their own brand experience.
We've highlighted in the past brands like vans and Nike has build brand experiences we would never claim that they would use this form of advertising that these are the types of break.
Are hanging out in brand experiences you can imagine a wide range of activities within those experiences that includes acquiring virtual item just like in the physical world that can include drops that can include limited numbers of those items that are community.
Would be interested in acquiring that can include items related to starz celebrities athletes that are community would like to acquire virtually and then I think longer term that gets into the virtual item is tied with a physical item either through traditional shopping or <unk>.
Possibly in the future.
Those virtual items are bought those virtual items can go off our platform wrapped in an FTE.
<unk> is really the equivalent of the earning and redeeming the physical item. So I think it goes way beyond performance into.
Sure.
Whole lifecycle of a fan with the brand and wanting to earn part of that brand virtually or physically.
Understood. Thanks for taking the questions.
Yeah.
And we will take our next question from Eric Sheridan with Goldman Sachs. Your line is open.
Thanks for taking the question I want to come back to the topic you raised in the shareholder letter around the innovation and user safety can we get a better sense of how we should be thinking about spend behind user safety in 2022, and a wider lens of how you think about spending on user safety beyond 2022, and then maybe one quick follow up would be you call out example.
With our user safety drives continued momentum on the platform from our position from the outside looking into the company how should we be thinking about user safety as driving sort of narratives and momentum around the broader platform you tried to adults for the longer term it measure it in terms of business performance. Thanks, so much.
Yes, I think we should nuance this and that.
And user safety, we would imagine.
As user growth continues as engagement continues as the various ways people use roadblocks, whether it's expanding to learning education working school.
Concerts.
We believe safety and stability as a competitive advantage.
And something that consumers will just assume is there.
So in a way it's a.
It's a hidden function that we believe consumers will expect.
And it's almost think of it in reverse as we said very very high targets for all of our internal safety and stability metrics because we believe we've done enforce the expanded growth on the platform.
We're doing a lot of work in AML, we're doing a lot of work in recognizing bad behavior automatically very a lot of work in our ways of detecting.
Sure.
Both bad content is that conversation I think these are things that we view as a foundation of the company and supporters.
Really our reputation and the fact that robotics is saved in civil environment.
That's how we view them as accelerators of long term growth.
Rather than maybe the more traditional metrics of what is our retention or what is our hours per user.
And Eric it's Mike in terms of modeling I think in the short term modeling it in a consistent percentage of bookings is probably a decent assumption.
It's not an area, where we are looking for great amounts of operating leverage we're looking for are high quality.
And safety and breakthroughs for the user base, having said that as Dave mentioned.
It may make the platform better and you can argue they actually make monetization easier and better.
People like that in a safe and simple environment. So.
In the short run I would say it will be relatively similar as a percentage of bookings is what you've seen in the last few quarters.
If there is leverage there, it's because topline just put a little bit faster.
Overall.
As an area of focus for aggregate dollars. This one is high on the list.
I'm not going to say anything contradictory to what Mike said, but a big part of what our safety and stability team is doing is as we automate tasks that human moderators in human reviewers do.
Without making any forward looking prediction on that one can imagine our safety and stability system actually becomes more efficient and so we are both not claiming any long term increases in efficiency.
Simultaneously seeing great gains internally on our ability to automate asset human moderators do.
Great. Thanks for the color.
And we will take our next question from David Karnofsky with J P. Morgan Your line is open.
Alright. Thank you David in the shareholder letter you noted some changes to product functionality to drive higher frequency and retention to that nine to 12 year old cohort of U S. Users, maybe just walk through.
Some of these updates are and then are you are already seeing the effects of that in your Q1 U S. Canada and you figure or is the increase there kind of more from anything up.
Yes.
Yes. This one is.
Tricky, because we do not share numbers until you cannot discern RDA <unk> frequency.
We've historically not just through COVID-19, but over the last three or four years made gains in these frequency numbers and at the same time.
There's many more people on our platform monthly than there are daily frequency goes up and down the snack. It goes all the way from what is the.
It might seem counterintuitive, but what is the raw launch time of our mobile App. What is the raw launch time of getting into an experience that influences how quickly can someone get into game.
We have made gains technically so that if youre in the middle of the roadblocks experience on your mobile phone patch switch out to some other app and then come back in you don't lose your context longer term, we believe anything around improving that.
Digit roadblocks.
Spontaneous communication medium for shorter conversation.
Maintaining context with friends, who will drive that frequency and we're I guess I am personally optimistic we have a lot of headroom there.
Yes, and then just.
David on the question about the breakout between age demos.
In the U S and nine to 12.
When COVID-19 started with the highest rate of penetration within the nine to 12 age demo higher than 13 anything 13, plus and so when Covid started we had the highest number of users.
Mediately increase their frequency.
Really overnight lots of hours and subsequently lots of associated bookings.
In 13 to 16 and 17 to 24.
Similar dynamics, but on a much lower rate of market penetration and so in those markets.
We add more consistent growth and frequency and bookings than we had in nine to 12, where you jump up very very quickly and then depending on where we were with lockdowns.
Numbers by Bob up and as we reopen.
Users are still growing but the frequency just changes as people go back to school.
In the older age demos again, we're getting.
Higher percentage of new users based on the base in which we started so those age demos today are.
Caught backup with peak basically, whereas the nine to 12 is still below.
We assume over time as we again continue to add users in nine to 12 and get higher levels of penetration and its frequency improves based on product changes and other things and just lapping these incredibly high pay the frequency in COVID-19 that will return to growth throughout.
U S.
Okay, and then Mike maybe just one on margins I wanted to see if there's any framework you'd be willing to provide for the balance of the year.
Just given normal seasonality should we assume.
Some positive operating leverage as you kind of get into your heavier bookings quarter.
Yes, good question.
Pre COVID-19 as a private company, we would routinely at the in the low double digits of EBITDA margins and very high free cash flow margins and it was.
Simple company was self financing and we generate a lot of free cash as this is a private company over $1 billion.
And as we saw the step function in topline during Covid. Obviously, you saw a lot of operating leverage really across.
All cost areas and roblox, when we went from that low double digit maybe mid teens EBITDA rates too low thirties.
And at that time, we felt a key opportunity to keep investing in the business we were not.
Is not our goal to maintain margins at 30%.
So we continue to invest in hiring great people, we certainly continue to invest in our developer community.
Trust and safety and infrastructure. So we continue to make investments for the long run to build the platform today, we come into the market with $3 billion of cash so we're incredibly liquid.
And the question is.
Should we continue to invest in the business for the long run.
Should we try to manage our margin we are not going to test anyone's comfort levels on liquidity. There is a very liquid business, but in the short run I don't think were that focused on.
Trying to maintain very high P&L margin if it happens that's fine.
But right now the investments that we're making we see very high returns on in the long run.
We're very liquid so we are going to be much more focused on doing the things that we think add value and will let we'll let margins play out again bookings growth a little bit faster that will be beneficial to margins, but I don't think we want to let that constrain investment, especially in hiring the debt community Trust and safety and infrastructure because the unit economics of this business have always been there.
<unk> strong and if we needed to dial back some investment we certainly could do that I don't think thats really the posture that we're taking right now we see this as a great opportunity to keep investing.
Thank you.
And we will take our next question from Brian Nowak with Morgan Stanley . Your line is open.
Great. Thanks for taking my questions.
The first one just around sort of the shape of the year into next year I think in the in the fourth quarter letter you sort of add some commentary about as you go throughout the course of the year.
It's become a normal.
Growth rates of your bookings and user should get closer than that.
Right for the year is sort of a good indicator for 'twenty. Three can you just talk to US about is that still the way youre thinking about the shape of the year in 'twenty, three and sort of puts and takes of where you could.
Over perform of reps may face more challenges around bookings and user commentary from last quarter is the first one.
And the second one.
The developer fees as a percentage of bookings it did increase a bit in the quarter and maybe Mike you. Just answered. This question and then the last one but just talk to us about.
How youre thinking about developer fees philosophically, how is the mix changing and how should we think about developer fee deleverage for the year. Thanks.
Yes, Thanks, Brian .
Overall.
But again, we came into the year, we thought we would bottom in April in terms of year over year growth rate of bookings.
Again last year bookings were very high in <unk>.
<unk> 21, and it was the last over the last big quarter before the economy started to reopen.
People started to go outside again, so we saw in May June and July actually declines.
Much less year over year growth, a year ago and actual declines in our.
Users in the U S in bookings coming from the U S. Even as we're growing internationally. So this year I think we have we have the opposite impact we're already open and we think normal seasonality will return and so what we had hoped to see is that we will have sequential improvements in the year over year growth rate of bookings.
<unk>.
We thought April will be the bottom it turns out I think maybe March was at the bottom which is great April was a little bit better than March we suspect that may will be a little bit better and that will continue shrink that gap between user growth numbers and the rate of bookings growth and that's our expectation.
Especially as we go through the summer.
Now its user growth continues really really strong then we'll we'll close we'll close the gap, but not going to necessarily catch up with that number but that's fine as long as we are improving sequentially and the comparisons are in fact getting easier.
That's really what we're looking for is that fine and again this time last year.
Actually had almost negative seasonality from what you would expect this year, we expect much more normal seasonality. So that's that's.
Good setup for us for <unk>.
<unk> continued improve growth year over year growth as we go from April May June et cetera.
And then.
Before too long, we will have this sort of COVID-19.
Hopefully you've covered distortions out of the numbers on a year over year basis.
On desk fees.
<unk>.
We're making investments in the Dev community, we have both are normal.
Rates of take from transactions as well as engagement based payouts in the last year, plus we really leaned into engagement base. We think there have been some real benefits from that and again I don't I don't think of the debt community as a place where we see short term operating leverage we see an opportunity to keep investing in an incredible.
The developer community.
What we want is developers feeling like they can continue to invest in robots and build so it's not an area in which we see.
We're going after leverage we're still we've talked several quarters ago about moving into the 25% of bookings range. I think we were at 23%. This past quarter. So we're in a very comfortable range right now and so I don't I think thats a good way to model. It out if you will.
I want to highlight that with the current place our developer fees or we see more and more big organic brands coming to the platform the sonic experience on roadblocks.
<unk> was highly organic and not an experience where we go out and.
Really push for that to happen respond if I experience once again highly organics so.
This goes to our vision of having an economy.
That will be migrate from individual hobbyist to small company and two we will pass.
I believe we already have 800 person studio working on our platform to VC funded studios now working on our platform to brands, creating experiences on our platform organically, which is a.
It's kind of a validation of our developer fee structure.
Got it thank you both very helpful.
And we'll take our next question from Omar <unk> with Bank of America. Your line is open.
Hi, Thanks, so much for taking my question I have two of them.
One on layer clothing, and one on your development strategy and philosophy.
So in terms of layer clothing.
Essentially released it in March and more fully in April has adoption been ahead already.
Kingstone technology, how much time does that need to spend it production or what milestones does it need to reach before you feel confident about releasing.
UGC apps.
And have your learnings on layered clothing to date cause.
You pull in or push out when you might release, those two derivative technologies versus your thinking as of late.
Okay last year and I'll follow up with my second question after your answer.
Yes sure.
And maybe a little bit of internally, what you had here at the company and that is.
<unk>.
I personally believe that as we move to user created bodies and head.
The long term impact of that could be bigger than layered clothing, because ultimately who you are is your body in your head and Thats.
Under way right now.
We had really good adoption of layered clothing, I think roughly 30% of our daily actives are wearing it right now.
The blood bodies and hedges, we believe will be a much more.
Prime metrics, but my own personal.
Thing is it is just as big if not bigger.
And that is well underway and we've talked about it before we want to get that out as quickly as possible.
Okay. All right. So then it's more of a strategic question just to finish up.
Could you tell me why your strategy of developing new technologies like clear clothing to be compatible with previous generations of digital matter is difficult for competitors to replicate and how it might create barriers to entry as competition begins to competitors begin to launch their matter versus like platforms geared towards your similar courts.
Graphic.
Yes. This is a great question I want to highlight that long term when we view what makes roadblocks competitive it's a holistic collection of things did include.
The momentum in size of our very large creator community.
They include the quality of our development platform and tools that it includes the foundation, we have on safety and stability.
Clues the innovations, we're making right now, including UGC bodies, and UGC layered clothing, but it also includes our ability to continuously innovate and.
And release Big innovation over the next one to five years, just as we have over the last 15 years. So these are all part of.
What I believe makes roadblocks are extremely competitive, but ultimately it's our ability to innovate.
We have a unique stack that we vertically control all the way from our game engine to our cloud to our clients to our developer tools.
Operator really has a consistent hole.
So I think.
Our long term competitive advantage is much more a holistic mix of all of these.
And one could think of any of those as notes. We typically think more in terms of long term innovation as opposed to relying or depending on anything we might think of a move.
Basically innovation is moving forward in the the best way for roadblocks to get to 1 billion monthly actives is not to simply defend what we might think of as node is really to continue creating our vision of the meta versus which is.
Still very early and we feel we have a unique.
Handle on what thats going to be.
Okay. Thank you Dave.
Youre welcome.
We will take our next question from Brandon Ross with light shed partners. Your line is open.
Hi, Thanks for taking the questions a couple.
Earlier in answering I think it was David's question you spoke to the high ROI on your investment spend.
And I guess throughout the call on the letter.
You've spoken to a platform features that have rolled out.
For the past several quarters.
Is there any way for you to quantify or explain the impact of any of these features on engagement and monetization and will we see.
Some more tangible impact from the likes of voice and layered clothing.
As this year goes on.
And I have follow up.
Yes, I want to share.
What you're mentioning is something internally, we try to do as much as possible and I will highlight also.
Mike you can jump in if you won in the past through.
Through periods of rapid growth and just as we have rapid growth right now in many cohorts in many places around the world.
We've tried to analyze.
The contributors to that and analyze the last year of product releases and tried to create statistical correlation and we found that that's difficult to do I think with some of the <unk>.
Innovations that we have coming right now like Mike spatial audio.
We'll be able to measure the time that those yeah.
Users are engaged in audio communication, rather than text communication and I think that'll be a good signal.
Going forward for that so we will try going forward with some of these big innovations, whether it's spatial audio or avatar system.
Our translator system, our developer cloud to share as much as we can about.
What makes those users, possibly more engaged or possibly more routine generally when we find users that are more engaged and more routine.
That does contribute to the growth of the overall platform. So where we can we will try to share those metrics with you.
Yes, Brandon having said that.
<unk>.
Pick any point in time, a 345 year window of this business and look at the users.
The engagement and the bookings growth of the business and the platform.
The growth rates have been very significant.
Investment areas have been very consistent.
Investment Great Engineers, we have a product roadmap that we.
Sure.
Ushering in a category we make calls on what we think will make that better for our developers and our users and generally the output of that has been very high growth more users around the world.
And older age demographic more and more developers building great content.
Enormous amount of engagement.
And huge growth in the top line of the business. So.
Any specific decision.
Is meant to continue to advance things that we have very good proof of generated high rates of return over time and so.
Of course every time, we launch something we want it to be high return.
But generally the business and the business model that we have has fantastic unit economics, and so we're always trying to improve those.
And over a very long period of time the return dynamics here has been excellent. So we're going to continue to make those.
Those kinds of decisions based on a lot of historical good decision, making.
And in a lot of saturation, which we don't believe we had anywhere.
We're quite comfortable that those will generate high returns in the future.
I'll share a few just showed that metrics on layered clothing as of the end of March I believe over $200 million items have already been acquired by the players and people on our platform one voice we're rolling this out.
Very valued consistent and conservative way.
For validated users to start using our new validation system for those users.
That we've rolled this out to their averaging 20 minutes roughly.
Per daily activity using spatial audio.
Great and then just I was kind of comparing in my mind the approach that you've taken with outside IP holders with that of epic and it seems like you've really taken more of a hands off approach outside of maybe music, while epic has really.
To align themselves closely with some key IP, such as Disney and now Lego as a way to kind of widen the funnel wiser approach better and does it make sense to closely align with cheap CIP holders for Ya.
I think this is a really good question and this goes to the core of our roadblocks of vision and how we build a platform over 15 years ago. When we started our work on this category, what sometimes is referred to as user generated content or UGC internally.
We referred to as self service and self service is really difficult it's hard to build the platform.
Everything from a small individual hobby is all the way to as I just referred to Sonic.
The Hedgehog shows up on roadblock, its hard to build a platform where those things happen without a custom compiler accustomed build without a biz dev process without a lot of closed and they're working.
But we believe what we've seen in games and play will more and more move forward in brands in music and ultimately in constant.
<unk> on our platform. So this is a vision for us.
I don't want to comment on epic or Lego or what they're doing.
I personally believe there is enormous scalability and building a self service platform in all of these dimensions, a single unified platform, where ultimately a brand like Lego would build a lego experience on top of roadblocks.
More and more be able to present that as their unique experience. So this is more of the direction, we're going and we believe it's very very scalable and at the same time.
I think theres a lot of different ways that people have of looking at that.
Great. Thank you.
And we have time for one more question and that question will be from Clark Lampion with BT AIG. Your line is open.
Thanks, a lot I have two the first is on engagement, Dave I wanted to come back to what you had said about us nine to 12 cohort performance.
If we maybe go up a layer and think about the sort of two three I think it is hours that users are spending on platform right. Now do you expect that to sort of stabilize that kind of an above pre COVID-19 right.
Going forward and as we think about sort of bookings in hours over time as that does the incremental hour generation come from growth of the overall user base or do you see upside too.
Yeah.
The average user time spent on platform and then I got a follow up on the Opex.
Yes, I think I shared earlier Theres a lot of headroom in our one of our core cohorts, which is USAA nine through 12.
I would I would like to share is.
Internally there is room on the monthly active there's not.
Future and we have such a big portion of.
The nine to 12 year olds in the U S already on the platform, but theres room there.
There is a lot of room on frequency, which is R.
<unk>.
<unk> ratio.
And as I shared earlier that cohort is spending slightly less time as we've emerged from COVID-19 as they were within Covid I would say our focus will be on more of the Mou.
<unk> ratio, we believe that.
Correlated with retention, we believe that <unk>.
Will ultimately drive even bigger miu ratios and we believe that's where we're going to be heads.
Heads down a bit more than ours.
Especially in that cohort.
Just on Clark on hours per da you, we did see a trend obviously pre COVID-19 anywhere that certain level very high then during COVID-19 we went.
Very very high hours per DAU during Covid, we've come back down a little bit as we opening has started but so we're down below peak COVID-19 hours per day, but we are higher than we were our PVA is going into it and so as users come into robot spent a lot of time, even as you've been growing the user base.
<unk>.
There is an even higher level of overall engagement and that's really true around the world. So.
<unk> and.
All of our regions, we see the same behavior. So we do feel like we're starting at a as we've reopened it.
At an accelerated level beauty, where we were coming into the pandemic.
That's helpful. And then just on hiring Mike most of your employees are sort of engineering talent.
Tiring backdrop has gotten a lot more competitive I know in the past you've talked about wanting to increase head count pretty significantly versus sort of late 'twenty. One levels are you having any trouble in this market either finding talent or is it really kind of a byproduct of what we're seeing right now mainly higher cost per head inflation.
Yes, what you are seeing it is a competitive market and.
Everyone has seen.
Costs.
Of talented folks go up for sure.
Right now we're ahead of our internal plan, which is great.
Good first quarter in terms of recruiting.
We continue to feel like we're a fantastic place for talented engineers and product professionals and even those in the G&A functions to build their careers and.
We expect to continue to grow our talented staff and so far this year, where we're doing great against our against our targets.
Thanks, a lot.
Thanks.
Thank you for joining us today Abbie, that's a wrap for us.
Thank you and ladies and gentlemen. This concludes today's conference call. We thank you for your participation and you may now disconnect.
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