Video game platform company Roblox is to join the US stock market in a hotly anticipated listing. Its games are hugely popular with younger children and the business could be worth as much as $8 billion, including a potential $1 billion fundraise.

The excitement stems from Roblox’s unique business model where developers use its technology cloud-based platform to develop casual games in virtual 3-D worlds.

Over half of the company’s 36 million daily users are pre-teens with only 12% of its client base over the age of 25. 

The company earns revenue from the platform by selling a virtual currency called Robux that can be exchanged for virtual items to unlock features and experiences.

Discounts can be claimed by users purchasing Roblox Premium subscriptions which cost between $5 and $20 per month. Revenues are recognised over the average lifetime of users which is estimated to be 23 months.

This means that sales activity is measured by ‘bookings’ which are revenues not yet recognised, which grew 171% to $1.2 billion in the first nine months of 2020.

Over that period, Roblox generated $345 million operating cash flow from $589 million revenues according to the stock market flotation prospectus, and incurred a $203 million net loss. The first day of dealings has yet to be confirmed.

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