Roblox Corp has postponed plans to go public because of the US Securities and Exchange Commission's scrutiny of how the video game platform recognises revenue in its finances.
The delay is a setback for one of the most eagerly-anticipated US public market debuts of 2021. The company had said in a regulatory filing earlier this month that it was aiming to list shares on the New York Stock Exchange in February.
Roblox's valuation skyrocketed to $29.5 billion in a fundraising round earlier this month, more than seven times the $4 billion the company was valued at 11 months earlier, amid a surge in the popularity of video games during the Covid-19 pandemic.
But the SEC has reservations over the way in which Roblox recognises revenue from the sale of its currency, Robux, on its platform, according to a memo the company sent to employees on Thursday.
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 gradually write it off over the duration of its paying user accounts, which is around two years.
The SEC wants Roblox to be more specific and recognise revenue on consumable products as they are consumed, while the durable services will still be recognised over the life of the Roblox user, the memo said.
"By adopting that accounting position, our revenue will actually be a bit higher, while bookings, DAUs (daily active users), hours of engagement, and cash flow will not change," founder and chief executive David Baszucki said in the memo to staff.
"It will, however, take us some time to update this change in our financial statements," he said.
This is not the first delay to the listing plans. Roblox told employees in December it had put the listing off until 2021 as it worked with advisers to improve the process to benefit employees and investors. The company ended up switching 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 compared with $46.3 million a year earlier.
Roblox, which is among the world's most popular gaming sites for children and offers a host of games across mobile devices and games consoles, said its daily active user base soared 82% to 31.1 million in the nine months up to the end of September last year, compared to the same period a year before.