Risk Factors Update Summary

• Operating expenses are expected to significantly increase in future periods. Operating expenses increased from $491.7 million in 2021 to $924.4 million in 2022.
• Legal proceedings against the company, including a putative securities class action, may lead to substantial costs.
• Lack of comprehensive encryption may increase costs related to security incidents. This could result in higher incident response, legal fees, and reputational harm.
• Changes in tax laws could lead to fluctuations in tax obligations and effective tax rates.
• Federal net operating loss carryforwards increased from $2,382 million to $52.2 million, expiring in 2035.
• Introduction of new laws requiring value-added taxes could increase operational costs and impact business.
• Potential tax implications due to new tax laws and regulations could significantly impact financial conditions.
• State net operating loss carryforwards increased from $1,261 million to $1,261 million, expiring in 2024.
• The estimated paying user life increased from 23 months to 28 months. This change impacts revenue recognition.
• The dual-class stock structure concentrates voting control, limiting shareholder influence.
• Failure to address AI ethics issues could lead to brand harm, competitive issues, and legal liability.
• Increase in cybersecurity attacks since Russia invaded Ukraine may lead to heightened security risks.
• Potential liability if Section 230 of the CDA is repealed, amended, or modified by judicial determination.
• The revenue share paid to Apple and Google for Robux purchases could increase up to 30%.
• Increase in cybersecurity attacks since Russia invaded Ukraine may lead to heightened security risks.
• The U.S. Supreme Court cases may substantially change the protection for interactive computer services.
• The loss of any top developer could have a material impact on business operations.
• Foreign net operating loss carryforwards increased from $66 million to $58 million, expiring in 2024.
• Fluctuations in the U.S. dollar could impact the costs of purchasing Robux for users outside the U.S.
• Increased focus on tax compliance and potential tax liabilities in various jurisdictions.
• The top 50 experiences accounted for 48% of engagement hours in December 2023.
• Revenue from Robux sales through the Apple App Store decreased from 32% to 30%.
• Increased risks related to generative AI tools and potential copyright protection issues.
• Risks related to ownership of Class A common stock, including volatility and potential declines.
• The Digital Services Act imposes additional obligations impacting operations and financial results.
• Outages in May 2022 and October 2021 lasted approximately 12 hours and 3 days, respectively.
• Failure to attract and retain key personnel, including David Baszucki, could disrupt operations and harm the business.