SEC review delays Roblox listing

Roblox has postponed plans to go public due to the US Securities and Exchange Commission’s scrutiny of how the video game platform recognizes revenue in its finances, according to a memo the company sent to employees.

The delay is a setback for one of the most anticipated debuts on the US public market in 2021. The company said in a regulatory filing earlier this month that it aims to list shares on the New York Stock Exchange. in February.

Roblox’s valuation soared to $ 29.5 billion in a fundraiser earlier this month, more than seven times the $ 4 billion valued by the company 11 months earlier, amid video game popularity skyrocket during the COVID-19 pandemic.

The SEC has reservations about how Roblox accounts for revenue from the sale of its currency, Robux, on its platform, according to the memo seen by Reuters.

Players use Robux in the game to purchase a mix of Durable Goods which last a certain time and Consumables which are used immediately. Roblox had sought to treat all income the same and amortize it over the life of its paid user accounts, which is roughly two years.

The SEC wants Roblox to be more specific and to recognize revenue on consumable products as they are consumed, while sustainable services will always be recognized throughout the life of the Roblox user, says the SEC. memo.

“By taking this accounting stance our revenues will actually be a bit higher, while bookings, DAUs (Daily Active Users), hours of engagement and cash flow will not change,” the founder wrote and Managing Director David Baszucki in the memo to Roblox staff, which he called “Robloxians”.

“It will take us some time, however, to update this change in our financial statements,” he said.

A Roblox spokesperson declined to comment.

This is not the first delay in enrollment plans. Roblox told employees in December that it had postponed the listing to 2021 because it was working with advisers to improve the process for the benefit of employees and investors. The company ended up changing gears and said it would look to go public through a direct listing instead of an initial public offering (IPO).

Roblox’s revenue – based on its earlier definition of the metric – jumped 68% to $ 588.7 million for the first nine months of 2020. The company reported a net loss attributable to common shareholders of 203, $ 2 million, up from $ 46.3 million a year earlier.

Roblox, which is among the world’s most popular children’s game sites and offers a host of games on mobile devices and game consoles, said its daily active user base has climbed 82% to 31.1 million during the nine months ended September 30 of the same period. one year ago.

Subscribe to CNBC on YouTube.