According to their most recent 10K (FY 2022 + FY 2021 data) their operational costs vs. revenue are:

    * 25% payment fees (google and apple app stores)
    * 28% developer exchange fees (they have to incentivize other people to build those games on their platform)
    * 31% (up from 24%) infrastructure (servers/cloud) and trust and safety
    * 39% (up from 28%) R&D
    * 13% (down from 16%) general and administrative
    * 5% (up from 4%) sales and marketing

In total that is 142% of revenue, up from 126% of revenue.

They'd have to slash the last 4 of those items by 70% to get to a +20% operating margin.

In FY2022 and averaged over the past 4 quarters revenue growth has fell back down to 15% (in FY2021 revenue more than doubled, which is likely where everyone felt that the gold rush was on).

If they could hold the last 4 of those items constant and grow topline revenue while letting payment fees and developer exchange fees grow with revenue it would take them ~8.5 years to get to a +20% operating margin.

It's kind of interesting how they pile trust and safety into infrastructure so that you can't tell if they're either underfunding trust and safety (freaking everyone out over their kids using the platform) or those T&S costs are exploding (indicating lack of scalability of T&S and making it even harder to achieve any kinds of operating margins). One very obvious problem with the idea of across-the-board 70% cuts in everything is that they likely can't do that in T&S.

Now the next problem is that their cash has dropped from $3.08B to $2.12B in the latest quarterly report, they have $1.65B in long term debt up from $1.39B a year earlier (although it looks like only $1B in an actual loan and the rest in capital leases, which is what has been growing). They have total assets of $5.6B and total liabilities of $5.4B (with Goodwill and intangibles of ~$200M) for effectively zero net equity.

They look pretty well doomed unless most of the company goes on a pretty severe diet.

And given the "higher for longer" interest rate environment they're not going to get any cheap financing bailouts to kick the can down the road.

This article is pretty funny:

https://www.fool.com/investing/2022/04/06/will-roblox-be-a-t...