Roblox postpones IPO over regulatory concerns

Roblox, a San Francisco-based gaming platform for kids and teens, has postponed its IPO due to regulatory concerns over how it recognizes revenue, according to Reuters.

Why it matters: Roblox is one of the most highly anticipated IPOs of 2021, having recently raised private funding at a $29.5 billion valuation, but this is its second setback in as many months.

• This setback relates to revenue generated by selling the platform's virtual currency, Robux, and means that Roblox will need to reconfigure its accounting methods.
• It was initially delayed by concerns that a first-day "pop" would disadvantage employee shareholders who intended to sell into the listing.

The bottom line: "Players use Robux in the game to buy a mix of durable goods which last for a period of time and consumable goods which are used immediately. Roblox had looked to treat all the revenue the same and amortize it over the duration of its paying user accounts, which is around two years. The SEC wants Roblox to be more specific and recognize revenue on consumable products as they are consumed, while the durable services will still be recognized over the life of the Roblox user." — Joshua Franklin, Reuters