Q2 2024 DoubleDown Interactive Co Ltd Earnings Call

August 12, 2024

Lisa: Good afternoon, and welcome to Double Down's Interactive Earnings Conference Call for the second quarter ending on June 30th, 2024. My name is Lisa, and I will be your operator for this afternoon.

Operator: Good afternoon, and welcome to Double Down's Interactive Earnings Conference Call for the second quarter ending on June 30th, 2024. My name is Lisa, and I will be your operator for this afternoon.

Lisa: Prior to this call, Double Down issued its financial results for the second quarter of 2024 in a press release, a copy of which has been furnished in a report on form 6K filed with the SEC and is available in the investor relations section of the company's website at www.doubledowninteractive.com. You can find the link to the Investor Relations section at the top of the homepage. Joining us on today's call are Double Down CEO Mr. In Kim and its CFO, Mr. Joe Sigrist.

Operator: Prior to this call, Double Down issued its financial results for the second quarter of 2024 in the press, a copy of which has been furnished in a report on Form 6K filed with the SEC and is available in the Investor Relations section of the company's website at www.investor.com. DoubleDownInteractive.com [inaudible] You can find the link to the Investor Relations section at the top of the home page. Joining us on today's call are Double Down CEO Mr. In Kim and its CFO, Mr. Joe Sigrist.

in the name of Joseph Sigrist, in the name of Joseph Sigrist.

Speaker Change: Good afternoon and welcome to Double Down's Interactive Earnings Conference Call for the second quarter ending in June.

Lisa: 30, 2024. My name is Lisa and I will be your operator for this afternoon. Prior to this call, Double Down issued its financial results for the second quarter of 2024 in a press release, a copy of which has been furnished in a report.

Lisa: on Form 6K filed with SEC and is available in the Investor Relations section of the company's website at www.doubledowninteractive.com. You can find the link to the Investor Relations section at the top of the homepage.

Speaker Change: Joining us on today's call are Double Down CEO, Mr. In Kim, and its CFO, Mr. Joe Sigrist. Following their remarks, we will open the call for questions.

Lisa: Following their remarks, we will open the call for questions. Before management begins its formal remarks, we need to remind everyone that some of management's comments today will be forward-looking statements within the meaning of Section 27A of the Securities Act of 1933, as amended, and Section 21E of the Security Exchange Act of 1934, as amended. And the company hereby claims the protection of the safe harbor provisions of the Private Securities Litigation Reform Act of 1995.

Operator: Following their remarks, we will open the call for questions. Before management begins its formal remarks, we need to remind everyone that some of management's comments today will be forward-looking statements within the meaning of Section 27A of the Securities Act of 1933, as amended, and Section 21E of the Security Exchange Act of 1934, and the company hereby claims the protection of the safe harbor provisions of the Private Securities Litigation Reform Act of 1995.

Speaker Change: Before management begins their formal remarks, we need to remind everyone that some of management's comments today will be forward-looking statements within the meaning of Section 27A of the Securities Act of 1933, as amended.

Lisa: Forward-looking statements are statements about future events and include expectations and projections not present or historical facts and can be identified by the use of words such as may, might, will, expect, assume, believe, intend, estimate, continue, should, anticipate, and other similar terms. Forward-looking statements include, but are not limited to, those regarding the company's future plans, mergers, and acquisition strategy, strategic and financial objectives, expected performance, and financial outlook. Forward-looking statements are subject to numerous risks and uncertainty that can cause actual results to differ materially and adversely from what the company expects. Therefore, you should exercise caution in interpreting and relying on these.

Speaker Change: and Section 21E of the Security Exchange Act of 1934, as amended. And the company hereby claims the protection of the safe harbor provisions of the Private Securities Litigation Reform Act of 1995.

In Kim: The company refers you to Double Down's annual report on Form 20-F, filed with the SEC on March 28, 2024, and other SEC filings for more detailed discussion of the risks that could impact future operating results and financial conditions. These forward-looking statements are made only as of the date of this call. The company does not undertake and expressly disclaims any obligation to update or alter the forward-looking statements, whether as a result of new information, future events, or otherwise, except as required by law.

Operator: Forward-looking statements are statements about future events and include expectations and projections, not present or hysterical facts, and can be identified by the use of words such as may, might, will, expect, and may not. Also, assume, believe, intend, estimate, continue, should, anticipate, and other similar terms. Forward-looking statements include, but are not limited to, those regarding the company's future plans, mergers, and acquisition strategy, strategic and financial objectives, expected performance, and financial outlook. Forward-looking statements are subject to numerous risks and uncertainties that can cause actual results to differ materially and adversely from what the company expects. Therefore, you should exercise caution in interpreting and relying on this.

Speaker Change: Forward-looking statements are statements about future events and include expectations and projections not present or historical facts.

Speaker Change: and can be identified by the use of words such as made.

Speaker Change: might, will, expect, assume, believe, intend, estimate, continue, should, anticipate, and other similar terms.

Speaker Change: Forward-looking statements include, and are not limited to, those regarding the company's future plans, mergers, and acquisition strategy, strategic and financial objectives, expected performance, and financial outlook.

Speaker Change: Forward-looking statements are subject to numerous risks and uncertainties that can cause actual results to differ materially and adversely from what the company expects. Therefore, you should exercise caution in interpreting and relying on them.

Operator: The company refers you to Double Down's annual report on Form 20-F, filed with the SEC on March 28, 2024, and other SEC filings for more detailed discussion of the risks that could impact future operating results and financial conditions. These forward-looking statements are made only as of the date of this call. The company does not undertake and expressly disclaims any obligation to update or alter the forward-looking statement, whether as a result of new information, future events, or otherwise, except as required by law.

Speaker Change: The company refers you to Double Down's annual report on Form 20-F.

Speaker Change: filed with SEC March 28, 2024, and other SEC filings for more detailed discussion of the risks that could impact future operating results and financial conditions.

Speaker Change: These forward-looking statements are made only as of the date of this call. The company does not undertake and expressly disclaims any obligation to update or alter the forward-looking statements, whether as a result of new information.

In Kim: During the call, management will discuss non-GAAP measures that are believed by management to be useful in evaluating the company's operating performance. However, these measures should not be considered superior to, in isolation, or as a substitute for the financial results prepared in accordance with GAAP. A full reconciliation of these measures to the most directly comparable GAAP measure is available in the earnings release and in the Form 6K filed with the SEC prior to this call.

Operator: During the call, management will discuss non-GAAP measures that are believed by management to be useful in evaluating the company's operating performance. However, these measures should not be considered superior to, in isolation, or as a substitute for the financial results prepared in accordance with GAAP.

Speaker Change: future events or otherwise except as required by law.

Speaker Change: During the call, management will discuss non-GAAP measures, which are believed by management to be useful in evaluating the company's operating performance.

Speaker Change: These measures should not be considered superior to, in isolation, or as a substitute for the financial results prepared in accordance with GAAP.

Speaker Change: A full reconciliation of these measures to the most directly comparable gap measure is available in the earnings release and in the form 6K filed with SEC prior to this call.

In Kim: I would like to remind everyone that this call is being recorded and will be made available for replay via a link in the investor relations section of Double Down's website. It's now my pleasure to turn the call over to Double Down's CEO, and Kim, you may begin. Thank you, Richard.

Operator: A full reconciliation of these measures to the most directly comparable GAAP measure is available in the earnings release and in the Form 6K filed with the SEC prior to this call. I would like to remind everyone that this call is being recorded and will be made available for replay via a link in the investor relations section of Double Down's website. It's now my pleasure to turn the call over to Double Down's CEO, In Kook Kim. You may begin. Thank you, Risa. Good afternoon, everyone.

Speaker Change: I would like to remind everyone that this call has been recorded and will be made available for replay via a link in the investor relations section of Double Down's website. It's now my pleasure to turn the call over to Double Down's CEO, and Kim, you may begin.

In Kim: Good afternoon, everyone. Thank you for joining us on our 2024 second quarter earnings call. This afternoon, we reported total Q2 revenue of $88.2 million, comprised of $80.3 million generated by our social casino free-to-play games and $7.9 million dollars generated by SuperNation, our iGaming business. Q2 was the third consecutive quarter of year-over-year revenue growth for our free-to-play social casino business, as it was up 7% compared to Q2 2020. Our social casino revenue growth reflects our ability to gain market share and outperform the industry, as Eiler and Credit Gaming recently reported an estimated year-over-year overall top-line decline for the social casino segment at large.

In Kim: Thank you for joining us on our 2024 second quarter earnings call. This afternoon, we reported total Q2 revenue of $88.2 million, comprised of $80.3 million generated by our social casino free-to-play games and $7.9 million dollars generated by SuperNation, our iGaming business. Q2 was the third consecutive quarter of year-over-year revenue growth for our free-to-play social casino business, as it was up 7% compared to Q2 2020. Our social casino revenue growth reflects our ability to gain market share and outperform the industry, as Eiler and Credit Gaming recently reported an estimated year-over-year overall top-line decline for the social casino segment at large.

Kim: Thank you, Risa.

Kim: Good afternoon, everyone. Thank you for joining us on our 2024 Second Quarter Earnings Call.

In Kim: Importantly, our top line growth is being achieved within our criteria of consistently converting revenue to profit and cash flow. Adjusted EBITDA for the second quarter rose 34% year-over-year to $37 million, and cash flow from operations was $34.4 million.

Speaker Change: This afternoon, we reported total Q2 revenue of $88.2 million, comprised of $80.3 million.

Kim: generated by our Social Casino free-to-play games and 7.9 million dollars generated by SuperNation, our iGaming business.

Kim: Q2 was the third consecutive quarter of year-over-year revenue growth for our free-to-play social casino business.

Kim: as it was up 7% compared to Q2 2023.

Kim: Our social casino revenue growth reflects our ability to gain market share and outperform the industry, as Eiler and Credit Gaming recently reported, unestimated.

Speaker Change: Year over year, overall top line decline for the social casino segment at large.

Speaker Change: Importantly, our top-line growth is being achieved within our criteria of consistently converting revenue to profit and cash flow.

Speaker Change: Adjusted EBITDA for the second quarter rose 34% year-over-year to $37 million and cash flow from operations was $34.4 million.

In Kim: Double Down Casino continues to be the driver of our strong results as we again generated year-over-year increases in some of our most important KPIs, including ARPDAU, average monthly revenue per payer, and payer conversion rate. As we've previously discussed, we believe the recent growth of our social casino business is in part due to last year's release of new meta features for Double Down Casino. These features are consistent with our focus on player and payer retention, as we continue to deliver even more excitement to Double Down casino players.

Speaker Change: Double Down Casino continues to be the driver of our strong results as we again generated year-over-year increase in some of our most important KPIs including ARPDAU

Speaker Change: Average monthly revenue per payer and payer conversion rate.

Speaker Change: As we've previously discussed, we believe the recent growth of our social casino business is in part due to last year's release of new meta features for Double Down Casino.

Speaker Change: These features are consistent with our focus on player and payer retention as we continue to deliver even more excitement to Double Down Casino players.

In Kim: In this second quarter, the social casino business also benefited from our initiative to provide players with greater options to buy chips from, via the direct channel. Revenues from these efforts, which benefit our profitability, are beginning to ramp noticeably. In summary, our strategy for social casino is to continue enhancing the entertainment value of Double Down Casino while remaining disciplined in our user acquisition and R&D spend to drive strong profitability and free cash flow. Turning to SuperNation, Q2 was the second full quarter of our ownership of this iGaming business.

In Kim: In this second quarter, the social casino business also benefited from our initiative to provide players with greater options to buy chips from. Direct Channel, revenues from these efforts, which benefit our profitability, are beginning to ramp noticeably. In summary, our strategy for social casino is to continue enhancing the entertainment value of Double Down Casino while remaining disciplined in our user acquisition and R&D spend to drive strong profitability and free cash flow. Turning to SuperNation, Q2 was the second full quarter of our ownership of this iGaming business.

Speaker Change: In this second quarter, the social casino business also benefited from our initiative to provide players with greater options to buy chips from direct channels.

Speaker Change: Revenues from these efforts, which benefit our profitability, are beginning to ramp noticeably.

Speaker Change: In summary, our strategy for social casino is to continue enhancing.

Speaker Change: the entertainment value of Double Down Casino.

Speaker Change: while remaining disciplined in our user acquisition and R&D span to drive strong

In Kim: Revenues of $7.9 million per supernation in Q2 continued to be above our estimates of what the business's quarterly run rate was prior to our acquisition in late 2020. In Q2, we pulled back somewhat on player acquisition spending compared to Q1.

Speaker Change: profitability.

Speaker Change: and free cash flow.

Speaker Change: Turning to SuperNation, Q2 was the second full quarter of our ownership of this iGaming business.

In Kim: Revenues of $7.9 million per super nation in Q2 continued to be above our estimates of what the business quarterly run rate was prior to our acquisition in late 2022. In Q2, we pulled back somewhat on player acquisition compared to Q1.

Speaker Change: Revenues of 7.9 million dollars per supernation in Q2 continued to be above our estimates of what the business quarterly run rate was prior to our acquisition in late 2023.

Speaker Change: In Q2, we pulled back somewhat on player acquisition spending compared to Q1.

Joseph Sigrist: As we've gained more experience with the business, we are beginning to fine-tune our plans and efforts to scale Spurnage in this business. We believe we have many opportunities to leverage our core strengths, including our game developers, experts in game creation, and our marketing platform to scale Supernation profitably. And over the next several quarters, we expect to continue to find the investment sweet spot in the business to optimize both top line growth and cash flow generation.

In Kim: As we've gained more experience with the business, we are beginning to fine-tune our plans and efforts to scale Spurnage in this business. We believe we have many opportunities to leverage our course, including our game developers' expertise in game creation, and our marketing platform to scale SuperNation profitably. And over the next several quarters, we expect to continue to find the investment sweet spot in the business to optimize both top line growth and cash flow generation.

Speaker Change: As we gain more experience with the business, we are beginning to fine-tune our plans and efforts to scale Spur Nation.

Speaker Change: in this business.

Speaker Change: We believe we have many opportunities to leverage our core strengths.

Speaker Change: including our game developers' expertise.

Speaker Change: in game creation and our marketing platform to scale SuperNation profitably.

Speaker Change: and over the next several quarters we expect to continue to find the investment sweet spot in the business to optimize both top-line growth and cash flow generation.

Joseph Sigrist: The early progress we are having with SuperNation confirms our activities that we can leverage our core strengths and balance shape to further diversify our business into new gaming categories that have a highly addressable market opportunity. We are continuing to invest in new internally developed mobile games, including those we expect to launch in the second half of this year, with the commitment to undertake these efforts in a manner that creates additional value for shareholders, given our excellent financial foundation.

In Kim: The progress we are having with SuperNation confirms our thesis that we can leverage our core strengths and balance sheet to further diversify our business into new gaming categories that have a highly addressable market opportunity. We are continuing to invest in new internally developed mobile games, including those we expect to launch in the second half of this year, with the commitment to undertake these efforts in a manner that creates additional value for shareholders, given our excellent financial foundation.

Speaker Change: The only progress we are having with SuperNation confirms our activities that we can leverage our core strengths.

Speaker Change: and Balance Sheet to further diversify our business into new gaming categories that have a highly addressable market opportunity.

Speaker Change: We are continuing to invest.

Speaker Change: in New Internally Developed Mobile Games, including those we expect to launch in the second half of this year, with the commitment to undertake these efforts in a manner that creates additional value for shareholders.

Joseph Sigrist: We will continue to evaluate opportunities to expand into new markets, both organically and through M&A. Now I will turn it over to our CFO, Joseph Sigrist, to walk us through our financials before providing my closing remarks.

In Kim: We will continue to evaluate opportunities to expand into new markets, both organically and through M&A. Now I will turn it over to our CFO, Joseph Sigrist, to walk us through our financials before providing my closing remarks. Thank you, I.K., and good afternoon, everyone.

Speaker Change: given our excellent financial foundation.

Speaker Change: we will continue to evaluate opportunity.

Speaker Change: to expand into new markets, both organically and through M&A.

Joe Sigrist: Now, I will turn it over to our CFO, Joe Sigrist, to walk us through our financials report providing my closing remarks. Joe?

Joseph Sigrist: Thank you, I.K., and good afternoon, everyone. Our revenues for the second quarter of twenty twenty four were eighty eight point two million dollars and were comprised of eighty point three million dollars in revenues from our social casino free-to-play games and $7.9 million in revenues from SuperNation. This compares to total revenues from our social casino free-to-play games of $75.2 million last year. As I.K.

Joseph Sigrist: Our revenues for the second quarter of twenty twenty four were eighty eight point two million dollars and were comprised of eighty point three million dollars in revenues from our social casino free-to-play games and $7.9 million of revenues from SuperNation. This compares to total revenues from our social casino free-to-play games of $75.2 million last year. As I.K.

Joe Sigrist: Thank you IK and good afternoon everyone. Our revenues for the second quarter of 2024 were 88.2 million dollars and were comprised of 80.3 million dollars in revenues from our social casino free-to-play games and 7.9 million dollars of revenues from SuperNation.

Joe Sigrist: This compares to total revenues from our social casino free-to-play games.

Joseph Sigrist: As mentioned, Q2 social casino free-to-play revenue was up 7% year-over-year, which is in contrast to Eiler's recently published estimate of a Q2 year-over-year social casino industry top-line decline. Going forward, our goal is to continue to outperform the overall social casino market as we monitor and react to changes in the macroeconomic environment and overall consumer set-up. In the second quarter, several KPI metrics for our social casino business improved again compared to the year-ago period, including average revenue per daily active user, or ARPDAU, increased to $1.33 in Q2 2024 from $1.05 in Q2 2023, marking a 27% increase.

Joseph Sigrist: As mentioned, Q2 social casino free-to-play revenue was up 7% year-over-year, which is in contrast to Eiler's recently published estimate of a Q2 year-over-year social casino industry top-line decline. Going forward, our goal is to continue to outperform the overall social casino market as we monitor and react to changes in the macro economic environment and overall consumer setup. In the second quarter, several KPI metrics for our social casino business improved again compared to the year-ago period, including average revenue per daily active user, or ARPDAU, increased to $1.33 in Q2 2024 from $1.05 in Q2 2023, marking a 27% increase.

Joe Sigrist: of $75.2 million last year.

Speaker Change: As I.K. mentioned, Q2 social casino free-to-play revenue was up 7% year-over-year, which is in contrast to Eiler's recently published estimate of a Q2 year-over-year social casino industry top-line decline.

Speaker Change: Going forward, our goal is to continue to outperform the overall social casino market as we monitor and react to changes in the macroeconomic environment and overall consumer sentiment.

Speaker Change: In the second quarter, several KPI metrics for our social casino business improved again compared to the year ago period.

Speaker Change: including average revenue per daily active user, or ARPDAU, increased to $1.33 in Q2 2024 from $1.05 in Q2 2023, marking a 27% increase.

Joseph Sigrist: Payer conversion ratio, which is the percentage of players who pay within the social casino app environment, increased to 6.7% in Q2 2024 compared to 6.0% in Q2 2023. And average monthly revenue per player increased 23% to $288 in Q2 2024 from $235 in Q2 2023. And average monthly revenue per payer increased 23% to $288 in Q2 2023 from $235 in Q2 2023. Operating expenses rose on a year-over-year basis to $52.0 million compared to $47.7 million in the second quarter of 2023.

Joseph Sigrist: Payer conversion ratio, which is the percentage of players who pay within the social casino app environment, increased to 6.7% in Q2 2024 compared to 6.0% in Q2 2023. Average monthly revenue per payer increased 23% to $288 in Q2 2024 from $235 in Q2 2023. Operating expenses rose on a year-over-year basis to $52.0 million compared to $47.7 million in the second quarter of 2023.

Speaker Change: Payer conversion ratio, which is the percentage of players who pay within the social casino app environment, increased to 6.7% in Q2 2024 compared to 6.0% in Q2 2023.

Speaker Change: And, average monthly revenue per payer increased 23% to $288 in Q2 2024 from $235 in Q2 2023.

Speaker Change: Operating expenses rose on a year-over-year basis to $52.0 million compared to $47.7 million in the second quarter of 2023.

Joseph Sigrist: Operating expenses for the 2024 second quarter include the operating expenses associated with our operation of SuperNation, which we did not own in Q2 of last year, and which were partially offset by lower sales and marketing and research and development expenses for our social casino operation. Sales and marketing expenses for the second quarter of 2024 were $11.1 million, a decline of 15% compared to Q2 2023 and down 25% on a quarterly sequential basis.

Speaker Change: Operating expenses for the 2024 second quarter include the operating expenses associated with our operation of Supernation, which we did not own in Q2 of last year.

Speaker Change: and which were partially offset by lower sales and marketing and research and development expenses for our social casino operations.

Speaker Change: Sales and marketing expenses for the second quarter of 2024 were $11.1 million, a decline of 15% compared to Q2 2023, and down 25% on a quarterly sequential basis.

Joseph Sigrist: In Q2, we began to fine-tune our approach to ramping up the top line of Supernation while at the same time managing this business to establish the foundation to generate consistent profitability and cash flow. Our sales and marketing costs focused on acquiring new social casino players continue to reflect our focus on spending to ensure we deliver the best return on this investment. For Q3, we anticipate that overall sales and marketing expenses will be in line with Q2 levels.

Joseph Sigrist: In Q2, we began to fine-tune our approach to ramping up the top line of Supernation while at the same time managing this business to establish the foundation to generate consistent profitability and cash flow. Our sales and marketing costs, focused on acquiring new social casino players, continue to reflect our focus on spending to ensure we deliver the best return on this investment. For Q3, we anticipate that overall sales and marketing expenses will be in line with Q2 levels.

Speaker Change: In Q2, we began to fine-tune our approach to ramping the top line of Supernation, while at the same time managing this business to establish the foundation to generate consistent profitability and cash flow.

Speaker Change: Our sales and marketing costs, focused on acquiring new social casino players, continue to reflect our focus on spending to ensure we deliver the best return on this investment.

Speaker Change: For Q3, we anticipate that overall sales and marketing expenses will be in line with Q2 levels.

Joseph Sigrist: Net income for the second quarter of 2024 was $33.3 million, or $13.39 per diluted share and $0.61 per ADS, compared to net income of $24.4 million, or $9.83 per diluted share and $0.49 per ADS, in the second quarter of 2024. Adjusted EBITDA for the second quarter of 2024 increased 34% to $37.0 million, compared to $27.6 million for the prior year quarter. Adjusted EBITDA margin was 41.9% for Q2 2024, representing a 520 basis point improvement from 36.7% in Q2 2024.

Joseph Sigrist: Net income for the second quarter of 2024 was $33.3 million, or $13.39 per diluted share and $0.61 per ADS, compared to net income of $24.4 million, or $9.83 per diluted share and $0.49 per ADS, in the second quarter of 2026. Adjusted EBITDA for the second quarter of 2024 increased 34% to $37.0 million, compared to $27.6 million for the prior year quarter. Adjusted EBITDA margin was 41.9% for Q2 2024, representing a 520 basis point improvement from 36.7% in Q2 of 2024. Net cash flows provided by operating activities for the second quarter of 2024, or $34.4 million, compared to net cash flows used in operating activities of $37.6 million in the second quarter of 2020.

Speaker Change: Net income for the second quarter of 2024 was

Speaker Change: $33.3 million or $13.39 per diluted share and $0.61 per ADS.

Speaker Change: compared to net income of $24.4 million or $9.83 per diluted share and $0.49 per ADS in the second quarter of 2023.

Speaker Change: Adjusted EBITDA for the second quarter of 2024 increased 34% to $37.0 million compared to $27.6 million for the prior year quarter.

Speaker Change: Adjusted EBITDA margin was 41.9% for Q2 2024, representing a 520 basis point improvement from 36.7% in Q2 of 2023.

Joseph Sigrist: Net cash flows provided by operating activities for the second quarter of 2024 were $34.4 million compared to net cash flows used in operating activities of $37.6 million in the second quarter of 2020. The increase is primarily due to higher net income and a lower deferred tax asset impact as well as the final payment of $95.25 million towards the Benson litigation settlement that occurred in the second quarter of last year. And finally, turning to our balance sheet, as of June 30th, 2024, we had $339 million in cash, cash equivalents, and short-term investments with a net cash position at quarter end, including the outstanding loan with our controlling shareholder W Games of approximately $303 million, or approximately $6.12 per ADF.

Speaker Change: Net cash flows provided by operating activities for the second quarter of 2024 were $34.4 million compared to net cash flows used in operating activities of $37.6 million in the second quarter of 2023.

Joseph Sigrist: The increase is primarily due to higher net income and a lower deferred tax asset impact, as well as the final payment of $95.25 million towards the Benson litigation settlement that occurred in the second quarter of last year.

Speaker Change: The increase is primarily due to higher net income and a lower deferred tax asset impact, as well as the final payment of $95.25 million towards the Benson litigation settlement that occurred in the second quarter of last year.

Joseph Sigrist: And finally, turning to our balance sheet, as of June 30th, 2024, we had $339 million in cash, cash equivalents, and short-term investments with a net cash position at quarter end, including the outstanding loan with our controlling shareholder W Games of approximately $303 million, or approximately $6.12 per ADF. While we had previously indicated that we intended to pay off loan amounts of approximately $35 million from our controlling shareholder in May, we made the decision to extend this loan for an additional two years at the same 4.6% interest rate of the original loan. That completes my financial summary. Now, I will turn the call over to IK for closing. Thank you, Joe.

Speaker Change: And finally, turning to our balance sheet, as of June 30, 2024, we had

Speaker Change: $339 million in cash, cash equivalents, and short-term investments.

Speaker Change: with a net cash position at quarter end, including the outstanding loan with our controlling shareholder, W Games, of approximately $303 million or approximately $6.12 per ADS.

Joseph Sigrist: While we had previously indicated that we intended to pay off loan amounts of approximately $35 million from our controlling shareholder in May, we made the decision to extend this loan for an additional two years at the same 4.6% interest rate of the original loan. That completes my financial summary. Now I will turn the call over to IK for closing.

Speaker Change: While we had previously indicated that we intended to pay off loan amounts of approximately $35 million from our controlling shareholder in May, we made the decision to instead

Speaker Change: and extend this loan for an additional two years at the same 4.6% interest rate of the original loans.

Speaker Change: That completes my financial summary. Now I will turn the call over to IK for closing remarks.

In Kim: The strong Q2 results in our core social casino business and the continued solid performance of our supernation iGaming business candidate, our operating performance momentum. Over the balance of this year, we will remain focused on driving further improvement in Double Down Casino through the continued introduction of new slot content, our ROI-based marketing strategy, and our ability to deliver real-time value to players through our live ops expertise. Our strategies to continue to drive higher player engagement and monetization will be undertaken in a manner that is consistent with our capital efficiency.

In Kim: Joe, the strong Q2 results in our core social casino business and the continuous solid performance of our supernation iGaming business attended our Operating Performance Momentum. Over the balance of this year, we will remain focused on driving further improvement in Double Down Casino through the continued introduction of new slot content. Our ROI-based marketing stand and our ability to deliver real-time value to players through our live operations expertise. Our strategies to continue to drive higher player engagement and monetization will be undertaken in a manner that is consistent with our capital efficiency.

IK: Thank you, Joe. The strong Q2 results in our core social casino business and the continued solid performance of our supernation iGaming business.

IK: extended our operating performance momentum.

IK: Over the balance of this year, we will remain focused on driving further improvement in Double Down Casino through the continued introduction of new slot content.

IK: our ROI-based marketing stand, and our ability to deliver real-time value to players through our LiveOps expertise.

IK: Our strategies to continue to drive higher player engagement and monetization will be undertaken in a manner that is consistent with our capital efficiency discipline.

In Kim: In addition, we expect our efforts to increase direct consumer payment volumes, whereby double down casino players have an expanded number of options to purchase chips beyond the app stores, will continue to benefit our already strong margins going forward. As we discussed today, as we gain more operational experience with our supernation, we expect to make additional progress on fine-tuning our new player acquisition strategies so that we can both grow the player base in the UK and Sweden, while also focusing on setting the foundation for this business to deliver consistent, positive cashflow contributions in the near and long term.

IK: In addition, we expect our efforts to increase direct consumer payment volumes, whereby double-down casino players have an expanded number of options to purchase chips.

IK: Beyond the app stores, we'll continue to benefit our already strong margins going forward.

In Kim: As we discussed today, as we gain more operational experience with our supernation, we expect to make additional progress on fine-tuning our new player acquisition strategies so that we can both grow the player base in the UK and Sweden while also focusing on setting the foundation for this business to deliver consistent positive cash flow contributions in the near and long term. Finally, I will highlight that the consistency with which we generate attractive free cash flow and our strong balance sheets provides us with financial flexibility to continue to pursue growth by exploring opportunities in adjacent gaming categories through our in-house development efforts and through potential M&A opportunities. We are now happy to take your questions. Lisa?

IK: As we have discussed today, as we gain more operational experience with our supernation business.

IK: We expect to make additional progress on fine-tuning our new player acquisition strategies.

IK: so that we can both grow the player base in the UK and Sweden while also focusing on setting the foundation for this business to deliver consistent, positive cash flow contributions in the near and long term.

In Kim: Finally, I will highlight that the consistency with which we generate attractive free cash flow and our strong balance sheets provides us with financial flexibility to continue to pursue growth by exploring opportunities in adjacent gaming categories through our in-house development efforts and through potential M&A opportunities. We are now happy to take your questions, Lisa.

IK: Finally, I will highlight that the consistency with which we generate attractive free cash flow and our strong balance sheet

IK: provides us with

IK: Financial flexibility to continue to pursue growth by exploring opportunities in adjacent gaming categories through our in-house development efforts and through potential M&A opportunities.

Operator: Thank you. If you would like to ask a question, please press star 11 on your remote control and wait for your name to be announced. To withdraw your question, you can press star 11 again.

Lisa: Thank you. If you would like to ask a question, please press star 11 on your telephone and wait for your name to be announced. To withdraw your question, you can press star 11 again. Please stand by for our Q&A session to begin. One moment. Our first question for today will be from David Bain of B Riley. Your line is open.

IK: We are now happy to take your questions.

IK: Lisa

Speaker Change: Thank you. If you would like to ask a question, please press star 11 on your telephone.

Lisa: And wait for your name to be announced. To withdraw your question, you can press star 1 1 again.

Operator: Please stand by for our Q&A. Our first question for today will be coming from David Bain of B Reilly. Your line is open. Hello. Hi, Dave. Oh, sorry. I didn't know what happened there.

Lisa: Please stand by for our Q&A session to begin. One moment, please.

Speaker Change: Our first question for today will be coming from David Bain of B Riley. Your line is open.

David Bain: Hi Dave. Oh, sorry. I didn't know what had happened there.

Speaker Change: Hello?

David Bain: Anyway, thanks, Joe. First, I really do want to acknowledge an excellent 2Q execution that was really well done. My first question would be on EBITDA margins. I know you went through a lot of this, but obviously several hundred basis points better than we had anticipated. I'm trying to think about the near and long-term go forward. You mentioned the downtick in sales and marketing is likely to be maintained in the 3Q. Percentage of

David Bain: Anyway, thanks, Joe. First, I really do want to acknowledge an excellent 2Q execution. That was really well done.

David Bain: Hi, Gabe.

Gabe: Oh, sorry. I didn't know what happened there. Anyway, thanks Joe.

David Bain: First, I really do want to acknowledge an excellent 2Q execution, that was really well done. My first question...

David Bain: My first question would be on EBITDA margins. I know you went through a lot of this, but obviously, several hundred basis points better than we had anticipated. I'm trying to think about the near and long-term on going forward. You mentioned the downtick in sales and marketing is likely to be maintained in the 3Q. So, one percent of revenue. In 2Q, that's a likely level sustained beyond 3Q. And then IK mentioned D2C having a positive impact in 2Q. Maybe if there's anything more as a percentage of revenue, what D2C transactions were, if you can compare it to quarter to quarter, frame it in any way that you can. That'd be really helpful.

David Bain: would be uneven on margins. I know you went through a lot of this but obviously several hundred basis points better than we had anticipated. I'm trying to think about that.

Speaker Change: near and long-term go forward. You mentioned, you know, the downtick in sales and marketing are likely maintained in the 3Q. So one, I mean, percentage of revenue

David Bain: In 2Q, that's a likely level sustained beyond 3Q. And then IK mentioned D2C having a positive impact in 2Q. Maybe if there's anything more, as a percentage of revenue, what D2C transactions were, if you can compare it to quarter-to-quarter, frame it in any way that you can. That'd be really helpful.

Speaker Change: In 2Q, that's a likely level sustained beyond 3Q, and then I.K. mentioned D to C having a positive impact.

Speaker Change: in 2Q. Maybe if there's anything more, you know, as a percentage of revenue, what D2C transactions were, you know, if you can compare it to quarter to quarter, frame it in any way that you can, that would be really helpful.

Joseph Sigrist: Uh, sure. I appreciate the comments and the questions. As far as EBITDA margins are concerned, we've had a couple of recent quarters with over 40%, as you know, and I think that, to a certain extent, it's been driven by the efficiency in spend that we have always shown, but more recently, especially because, as you mentioned, sales and marketing is something we've been very focused on in being very, very mindful of the ROI associated with, especially the social casino business.

Joseph Sigrist: Sure, I appreciate it. The comments and the questions, as far as even margins are concerned, we've had a couple of recent quarters with over 40%, as you know, and I think that, to a certain extent, it's been driven by the efficiency in spend that we have always shown but more recently, especially because, as you mentioned, sales and marketing is something we've been very focused on, being very, very mindful of the ROI associated with, especially the social casino business

Speaker Change: Sure, appreciate.

Speaker Change: the comments and the questions. As far as EBITDA margins, we've had now a couple more recent quarters over 40 percent as you know and

Speaker Change: I think that, to a certain extent, it's been driven by the efficiency in spend that we have always shown, but more recently, especially because, as you mentioned, sales and marketing is something we've been very focused on in

Speaker Change: being very, very mindful of the ROI associated with, especially, the social casino business.

Joseph Sigrist: I do believe, as I mentioned, that on an absolute dollar basis, Q3 marketing spend will be pretty consistent with where we ended up in Q2. From an end-of-the-year standpoint, as I.K. As mentioned, we are looking to launch a new organically developed game later in the year, and so that might create an uptick in the absolute amount of spend on marketing towards the end of the year. But from a Q3 perspective, we think Q2 and Q3 look pretty much the same.

Joseph Sigrist: I do believe, as I mentioned, that on an absolute dollars basis, Q3 marketing spin will be pretty consistent with where we ended up in Q2. From an end-of-the-year standpoint, as I.K. As mentioned, we are looking to launch a new organically developed game later in the year, and so that might create an uptick in the absolute amount of spend on marketing towards the end of the year. But from a Q3 perspective, we think Q2 and Q3 look pretty much the same.

Speaker Change: I do believe, as I mentioned, that on an absolute dollars basis, Q3 marketing spend will be pretty consistent with where we ended up in Q2.

Speaker Change: from

Speaker Change: end-of-the-year standpoint, as I.K. mentioned, we are

I.K.: We are looking to launch a new organically developed game later in the year and so that might create an uptick in the absolute amount of spend in marketing towards the end of the year.

I.K.: But from a Q3 perspective, we think Q2 and Q3 look pretty much the same.

Joseph Sigrist: As far as direct-to-consumer, as we've said, well, we've said two things, I think, pretty consistently over the last couple of quarters. One, it's early days for us. We really just started with it as a focus. And two, it is a big focus of ours this year, in 2024. And with that in mind, we have made good progress in the last couple of quarters. But I can't quantify it yet for you because, frankly, it is still early days. But it has made somewhat of an impact, and certainly, we look to have it be even more impactful over the rest of the year and certainly into 2025.

I.K.: As far as direct-to-consumer, as we've said, well, we've said two things, I think, pretty consistently over the last couple of quarters. One, it's early days for us. We really just started with it as a focus. And two, it is a big focus of ours.

I.K.: in this year, in 2024. And with that in mind, we have made, you know, good progress.

I.K.: in

I.K.: you know, last couple of quarters. I can't quantify it yet for you because, frankly, it is still early days, but it has made

I.K.: somewhat of an impact and certainly look to have it, you know, be even more impactful over, you know, the rest of the year and certainly into 2025.

Joseph Sigrist: Okay, awesome. And then my follow-up would be, I know you guys are gaining share relative to the industry, and you mentioned an industry publication that's calling the social casino industry slightly down. And one reason they cited was the concept of sweepstakes maybe taking away from social casino. Can you offer any big picture as it relates to the industry or any specifics around that in particular that you're seeing?

Joseph Sigrist: And then my follow-up would be, I know you guys are gaining share relative to the industry, and you mentioned an industry publication that's calling the social casino industry slightly down. And one reason they cited was the concept of sweepstakes, maybe taking from social casino. Can you offer any big picture as it relates to the industry or any specifics around that in particular that you're seeing? You know, it's a little difficult for us to comment on what's going on with our peers because what we see is what's happening in our business.

Speaker Change: Okay, awesome. And then my follow-up would be I know you guys are gaining share relative to the industry and you mentioned

Speaker Change: In industry, uh, uh...

Speaker Change: publication that's calling the social casino industry slightly down, and one reason they cited was the concept of sweepstakes maybe taking from social casino. Can you offer any big picture as it relates to the industry or any specifics around that in particular that you're seeing?

Joseph Sigrist: You know, it's a little difficult for us to comment on what's going on with our peers because what we see is what's happening in our business. And we're obviously very, very happy with where, especially Double Down Casino, is right now. And we've done a lot, as I mentioned, in the investment in meta features and in continuing to bring great new content to our players. And all of that, we think, has created an environment where Double Down Casino is even more entertaining than ever.

Speaker Change: You know it's a little difficult for us to comment on what's going on with our peers because what we see is

Joseph Sigrist: And we're obviously very, very happy with where, especially Double Down Casino is right now. And we've done a lot, as Ike mentioned, in the investment in meta features and in continuing to bring great new content to our players. And all of that, we think, has created an environment where Double Down Casino is even more entertaining than ever. And it makes our players want to play, and our payers want to pay as they have been.

Speaker Change: What's happening in our business and we're obviously very very happy with where

Speaker Change: especially Double Down Casino is right now, and we've done a lot, as Ike mentioned, in the investment in meta features and in continuing to bring great new content to our players.

Speaker Change: And all of that, we think, has...

Joseph Sigrist: And it makes our players want to play, and our payers want to pay as much as, you know, they have been. So, you know, I can't comment on what might be happening around us because, you know, we're very focused on running our business and continuing to be successful within the social casino market.

Speaker Change: created an environment where the Blanc Casino is even more entertaining than ever and it makes our players want to play and our payers want to pay.

Joseph Sigrist: So, I can't comment on what might be happening around us because we're very focused on running our business and continuing to be successful within the social casino market. Awesome. All right. Thanks again, guys. Thanks, Dave. And our next question today will be coming from Greg Gibas of Northland Securities. Your line is open.

Speaker Change: as they have been. So, you know, I can't comment on what might be happening around us because, you know, we're very focused on running our business and continuing to be successful within the social casino market.

David Bain: Awesome. All right. Thanks again, guys.

Speaker Change: Awesome. All right. Thanks again guys.

Lisa: Thank you. One moment for the next question, and our next question today will be coming from Greg Gibas of Northland Securities. Your line is open.

Dave: Thanks, Dave.

Speaker Change: Thank you. One moment for the next question.

Speaker Change: And our next question today will be coming from Greg.

Speaker Change: Gibbous of Northland Securities, your line is open.

Gregory Gibas: Great, thanks. Good afternoon, IK and Joe. Thanks for taking the questions. Congratulations on the nice results.

Greg Gibbous: Great. Thanks. Good afternoon, I.K. and Joe. Thanks for taking the questions. Congrats on the nice results. You know, appreciate the color on the cost dynamics and everything there.

Gregory Gibas: You know, appreciate the color on the cost dynamics and everything there. You know, if I could, what do you maybe believe is driving the upside with SuperNation? You noted the last couple of quarters have been ahead of your expectations. You know, maybe what you attribute that to. And, you know, what is maybe fair in terms of estimated run rate expectations going forward?

Greg Gibbous: You know, if I could, what do you maybe believe is driving the upside with Supernation? You noted the last couple quarters have been ahead of your expectations. You know, maybe what you attribute that to and, you know, what is maybe fair in terms of estimated run rate expectations going forward?

Joseph Sigrist: Thanks, Greg. Yeah, I mean, we certainly have seen their business ramp since we bought them, and, you know, this, this quarter we just announced, being the second full quarter that we've been operating the business. We believe that our investment in additional marketing has really helped. And you know, when we started operating the business, we realized that there was definitely an opportunity to invest more in marketing and still get a very positive ROI with that incremental spend.

Joseph Sigrist: Thanks, Greg. Yeah, I mean, we certainly have seen their business ramp since we bought them and, and, you know, this last quarter we just announced, being the second full quarter, that we've been operating the business. We believe that our investment in additional marketing has really helped, and when we started operating the business, we realized that there was definitely an opportunity to invest more in marketing and still get a very positive ROI with that incremental spend.

Speaker Change: Thanks Greg. Yeah, I mean we certainly have seen their business ramp since we bought them and and you know this this quarter we just announced being the second full quarter that we

Speaker Change: that we've been operating the business, we believe that our investment in additional marketing has really helped and you know when we

Speaker Change: When we started operating the business, we realized that there was definitely opportunity to invest more in marketing and still get a very positive ROI with that incremental spend.

Joseph Sigrist: And from that standpoint, again, in Sweden and the UK, which are their two main markets, we're excited to, you know, be spending money to acquire new players. Obviously, the dynamics are much different, and KPIs are much different than our social casino business. But as we learn more about the iGaming business and work with our partners at Supernation, you know, I think you can expect us to continue to lean into that marketing spend, acquire new players, and then layer on top the things that we've talked about as far as Synergies in the past, which is game development, technology platform, and live operations and the things that we do well from our social casino legacy.

Joseph Sigrist: From that standpoint, again, in Sweden and the UK, which are their two main markets, we're excited to be spending money to acquire new players. Obviously, the dynamics are much different, and KPIs are much different than our social casino business, but as we learn more about the iGaming business and work with our partners at SuperNation, I think you can expect us to continue to lean into that marketing spend, acquire new players, and then layer on top the things that we've talked about as far as synergies in the past, which are game development, the technology platform, live operations Great, that's very helpful.

Speaker Change: And from that standpoint, again, in Sweden and the UK, which are their two main markets.

Speaker Change: We're excited to you know to be spending money to acquire new players

Speaker Change: Obviously, the dynamics are much different and KPIs are much different than our social casino business, but as we learn more about the iGaming business and work with our partners

Speaker Change: at Supernation, you know, I think you can expect us to continue to lean into that marketing spin, acquire new players, and then layer on top the things that we've talked about as far as, you know,

Speaker Change: synergies in the past which is game development, technology platform, and you know live ops and the things that we do well from our social casino legacy.

Gregory Gibas: Great, that's helpful. Um, and you know, if I could follow up, you know, just within the social casino, you know, nice to see the growth there. And, you know, especially considering the aforementioned sweepstakes, games are kind of maybe pressuring some peers. You know, you know, you know, the meta features that you think are kind of driving growth there. And I wanted to just follow up and see kind of what's working well, in terms of what you've implemented and what's kind of showing a strong consumer response.

Joseph Sigrist: And, you know, if I could follow up, you know, just within social casino, you know, nice to see the growth there. And, you know, especially considering the aforementioned sweepstakes, games kind of maybe pressuring some peers, you know, the meta features that you think are kind of driving growth there. And I wanted to just follow up and see kind of what's working well, in terms of what you've implemented, and what's kind of showing a strong consumer response. Hi, Greg, this is IK. How are you?

Speaker Change: Great, that's helpful. And, you know, if I could follow up, you know, just within social casino, you know, nice to see the growth there and, you know, especially considering the aforementioned sweepstakes.

Speaker Change: James kind of maybe pressuring some peers, you know, you know, the meta features that you think are kind of driving growth there and wanted to just follow up and see kind of what's working well, in terms of what you've implemented and what's kind of showing the strong consumer response.

In Kim: Hi Greg, this is IK. How are you?

In Kim: Yeah, let me start. Yeah. You know, DBC has been one of the pioneers in the social casino space for over 14 years. We actually focused on providing our players with lots of fun elements through slot content and meta content. However, as we introduced more features and benefits for those users in recent years, the content flow and economy became very complicated.

Speaker Change: Hi Greg, this is IK. How are you? Let me start first. You know, DBC has been one of the pioneers in the future of casino space for a long time.

In Kim: Yeah, let me start first. You know, DBC has been one of the pioneers in the social casino space for over 14 years. We actually focused on providing our players with lots of fun elements through slot content and content. However, as we introduced more features and benefits for those users in recent years, the content flow and economy became very complicated. So last year we started to reflect on it and reform many flows and features from the user experience.

Speaker Change: over 14 years. We actually focused on providing our players with lots of fun elements through slot content and meta.

In Kim: So last year, we started to reflect on it and reform many flows and features in the user experience. At the same time, it enabled us to provide attractive retention meta features. Those meta features are reward features like luck or flame power, wonder cards, et cetera, as we described last quarter.

Speaker Change: content.

Speaker Change: However, as we introduce more features

Speaker Change: and benefits for those users in recent years. The content flow and economy became very complicated, so last year we started to refactor it and reformed many flows and features from the user experience.

In Kim: At the same time, it enabled us to provide attractive retention meta features. Those meta features are reward features like luck or flame power, wonder cards, et cetera, as we described last quarter. So as users play more, those could help slot playing users. We will continue to experiment with fun retention features like Mission Pass, Windfall, Welcome Back, and so on. So, I hope this helps.

Speaker Change: Baptiste.

Speaker Change: at the same time.

Speaker Change: It enabled us to provide attractive retention meta features. Those meta features are reward features like luck or flame power, wonder cards, etc. as we described last quarter. So as users play more, simply those could help slot playing users' retention.

In Kim: So as users play more, those could simply help slot playing users. We will continue to experiment with fun retention features like Mission Pass, Windfall, Welcome Back, and so on. So, hope this helps. Great. Yeah, that does.

Speaker Change: We will continue to experiment with fun retention features like Mission Pass, Windfall, Welcome Back, and so on. So hope this helps.

Gregory Gibas: Great. Yeah, that does. And it's good to hear that you're seeing success with them. Thanks.

Gregory Gibas: And good to hear that you're seeing success with them. Thanks. Thanks, Greg. Thank you. One moment for the next question. And our next question for the day will be coming from Aaron Lee of Macquarie. Your line is open. Hi, good afternoon.

Speaker Change: Thank you very much.

Speaker Change: Great. Yeah, that does. And good to hear that you're seeing success with them. Thanks.

Aaron Lee: Thank you. One moment for the next question. And our next question for the day will be coming from Aaron Lee of Macquarie. Your line is open.

Greg Gibbous: Thanks, Greg.

Speaker Change: Thank you. One moment for the next question.

Speaker Change: And our next question for the day will be coming from Aaron Lee of Macquarie. Your line is open.

Aaron Lee: Hi, good afternoon. Thanks for taking my question and congratulations on the quarter. So you talked about your balance sheet, it's still in great shape, net cash of $303 million. You talked about your Marine Corps focused on evaluating M&A. Where do you see the most opportunity for M&A? Is it within Social Casino, within iGaming, or diversifying into another adjacency?

Aaron Lee: Thanks for taking my question and congrats on the quarter. So you talked about your balance sheet, it's still in great shape, net cash of $303 million. You talked about your Marine Corps focused on evaluating M&A. Where do you see the most opportunity for M&A?

Joseph Sigrist: Thanks.

Aaron Lee: Hi, good afternoon. Thanks for taking my question and congrats on the quarter.

Aaron Lee: So you talked about your balance sheet. It's still in great shape, net cash of three into three million. You talked about you're really focused on evaluating M&A. Where do you see the most opportunity for M&A? Is it within social casino, within iGaming, or diversifying into another adjacency? Thanks.

Joseph Sigrist: Is it within Social Casino, within iGaming, or diversifying into another adjacency? Thanks. Yes. No, I'm just kidding.

Joseph Sigrist: Yes. No, I'm just kidding.

Joseph Sigrist: You know, we continue to look at opportunities across those categories and more in some of the more, I guess I'd call them, non-casino oriented mobile gaming categories. And certainly, there are categories, you know, Puzzle, Match 3, other categories that, you know, we obviously have been playing in in the past but which are still, you know, very large categories and categories which still have, you know, incredible power from a pair of players, from a pair of perspective.

Speaker Change: Yes, no, I'm just kidding.

Speaker Change: You know, we continue to look at opportunities across

Speaker Change: Those categories and more in some of the more, I guess I'd call them non-casino oriented mobile gaming categories.

Speaker Change: and and certainly there there are categories

Speaker Change: puzzle match three other categories that, you know, we obviously have been playing in in the past, but which are still, you know, very

Speaker Change: large categories and categories which still have, you know, incredible power from a pair

Lisa: Good afternoon, and welcome to Double Downs Interactive Earnings Conference Call for the second quarter ending in June 30, 2024. My name is Lisa, and I will be your operator for this afternoon. Prior to this call, Double Down issued its financial results for the second quarter of 2024 in a press release, a copy of which has been furnished in a report on Form 6K filed with SEC and is available in the Investor Relations section of the company's website at www.doubledowninteractive.com. You can find the links to the Investor Relations section at the top of the homepage.

Joseph Sigrist: So we really haven't crossed anything off the list. You know, when we announced that we were buying SuperNation, we said that we were excited about iGaming but certainly weren't turning ourselves into solely an iGaming company. And we're willing to look at, you know, areas that meet our criteria, which aren't just about what kind of a game it is but also a number of other factors that are consistent with what we're looking for from an efficiency standpoint.

Joseph Sigrist: So we really haven't crossed anything off the list. You know, when we announced that we were buying SuperNation, we said that we were excited about iGaming but certainly weren't turning ourselves into solely an iGaming company. And we're willing to look at areas that meet our criteria, which aren't just about what kind of a game it is but also a number of other factors that are consistent with what we're looking for from an efficiency standpoint.

Speaker Change: you know, a pair perspective. So

Speaker Change: We really haven't crossed anything off the list.

Speaker Change: You know, we obviously, when we announced that we were buying SuperNation, we said that we were excited about iGaming, but certainly aren't turning ourselves into solely an iGaming company.

Speaker Change: And we're willing to look at areas that meet our criteria, which aren't just about what kind of a game is it, but also a number of other factors that are consistent with what we're looking for from an efficiency standpoint.

Lisa: Joining us on today's call are Double Downs CEO, Mr. N. Cookin, and its CFO, Mr. Joe Sigrist. Following their remarks, we will open the call for questions.

Aaron Lee: That's great to hear. A quick follow-up. A competitor recently announced a licensing agreement with IGT to use some of their real-world content, which they expect to go live by the end of the year. I know you have an exclusive license for a large portion of IGT's content, which should insulate you, but can you comment on that at all and whether you see that having any impact on your business? Thanks.

Joseph Sigrist: Got it. That's great to hear. A quick follow-up, a competitor recently announced a licensing agreement with IGT to use some of their real world content, which they expect to go live by the end of the year. I know you have an exclusive license for a large portion of IGT content, which should insulate you. But can you comment on that at all? And whether you see that having any effect on your business? Thanks. Yes, I'm familiar with the announcement. We're familiar with

Speaker Change: Got it. That's great to hear.

Speaker Change: A quick follow-up, a competitor recently announced a licensing agreement with IGT to use some of their real-world content, which they expect to go live by the end of the year. I know you have an exclusive license for a large portion of IGT's content, which should insulate you, but can you comment on that at all and whether you see that having any effect on your business? Thanks.

Lisa: Before management begins their formal remarks, we need to remind everyone that some of management's comments today will be forward looking statements within the Meaning of Section 27A of the Securities Act of 1933 as amended and Section 21E of the Security Exchange Act of 1934 as amended. And the company hereby claims the protection of the safe harbor provisions of the Private Securities with the Gaysha Reform Act of 1995. Forward looking statements are statements about future events and include expectations and projections not present or hysterical facts and can be identified by the use of words such as may, might, will, expect, assume, believe, intend, estimate, continue, should, anticipate an other similar statement.

Joseph Sigrist: Yes, I'm familiar with the announcement. We're familiar with what our partner IGT has been doing. And, in fact, they've been looking for additional partners to license in the social casino category for several years. And, you know, the short answer is it doesn't affect our business at all.

Speaker Change: Yes, I'm familiar with the announcement. We're familiar with what our partner IGT has been doing and in fact they've been looking for additional partners to license.

Speaker Change: in the social casino category for

Speaker Change: for several years.

Joseph Sigrist: As you rightfully mentioned, Greg, the games, most of the games that we use, we have perpetual licenses and perpetual exclusive licenses to. In fact, as we've said in some of our filings, any game that we started to use from IGT prior to 2020, we do have a perpetual exclusive license to. And those are all of the kind of best IGT games that, frankly, our players love, you know, the Cleopatras and Golden Goddesses and Da Vinci Diamonds and games that we have taken after 22, new new games that we started to use.

Joseph Sigrist: As you rightfully mentioned, Greg, the games, most of the games that we use, we have perpetual licenses and perpetual exclusive licenses to. In fact, as we've said in some of our filings, any game that we started to use from IGT prior to 2020, we do have a perpetual exclusive license to. And those are all of the kind of the best IGT games that, frankly, our players love. You know, the Cleopatras and Golden Goddesses and Da Vinci Diamonds and games that we have taken after 22, new games that we started to use. We don't have an exclusive license to, but we still have a perpetual license to offer to our players.

Speaker Change: And, you know, the short answer is it doesn't affect our business at all. As you rightfully mentioned, Greg, the games...

Speaker Change: Most of the games that we use, we have perpetual license and perpetual exclusive license to.

Speaker Change: In fact, this

Speaker Change: As we

Speaker Change: said in some of our filings, any game that we started to use from IGT prior to 2020, we do have a perpetual exclusive license to, and those are all of the best IGT games that frankly are players love, you know, the Cleopatra's.

Lisa: Forward looking statements include and are not limited to those regarding the company's future plans, merges, and acquisition strategy, strategic and financial objectives, expected performance, and financial outlook. Forward looking statements are subject to numerous risks and uncertainties that can cause actual results to differ materially and adversely from what the company expects. Therefore, you should exercise caution in interpreting and relying on them. The company refers you to double downs and report on form 20F filed with the SEC March 28, 2024 and other SEC filings for more detailed discussion of the risks that could impact future operative results and financial conditions.

Speaker Change: Golden Goddesses, and Da Vinci Diamonds. And games that we have taken after 22, new games that we started to use. We don't have exclusive license to, but we still have a perpetual license.

Joseph Sigrist: We don't have an exclusive license to, but we still have a perpetual license to offer to our to our players. I guess I'd finally say that over the last. In the last few years, we've, as I think we've discussed many times in the past, really pivoted more towards content that we've developed ourselves internally, as well as content that we've licensed from our controlling shareholder, W. As a consequence, the amount of new content that we've taken from IGT has fallen quite a bit. And that adds to the lack of concern we have about what IGT has been doing more recently.

Joseph Sigrist: I guess I'd finally say that over the last few years. In a few years, we've, as I think we've discussed many times in the past, really pivoted more towards content that we've developed ourselves internally, as well as content that we've licensed from our controlling shareholder, WU. So as a consequence, the amount of new content that we've taken from IGT has fallen quite a bit. And that adds certainly to the lack of concern we have about what IGT has been doing more recently.

Speaker Change: to offer to our to our to our players. I guess I'd finally say that over the last

Speaker Change: few years, we've, we've, as I think we've discussed many times in the past.

Speaker Change: Really pivoted

Speaker Change: more towards

Speaker Change: content that we've developed ourselves internally, as well as content that we've licensed from our controlling shareholder, WU. So as a consequence, the amount of new content that we've taken from IGT

Lisa: These forward looking statements are made only as of the date of this call. The company does not undertake and expressly disclaims any obligation to update or alter the firm before looking statements, whether as a result of new information, future events or otherwise, except is required by law.

Speaker Change: has fallen quite a bit.

Speaker Change: and that adds to certainly the

Speaker Change: the lack of concern we have about what IGT has been doing more recently.

Lisa: During the call, management will discuss non-GAT measures, which are believed by management to be useful in evaluating the company's operating performance. These measures should not be considered superior to in isolation or as a substitute for the financial results prepared in accordance with GAT. A full reconciliation of these measures to the most directly comparable GAT measure is available in the earnings release and in the form 6K filed with SEC prior to this call.

Speaker Change: quarter

Lisa: And this does conclude today's Q&A session. It also concludes today's conference call. You may all disconnect, and thank you so much for joining us.

Operator: And this does, Sessions. It also concludes today's conference call. You may all disconnect, and thank you so much for joining us. Thank you, Lisa. Thanks, everyone.

Speaker Change: Thank you.

Speaker Change: And this does conclude today's webinar.

Speaker Change: Q&A session. It also concludes today's conference call. You may all disconnect and thank you so much for joining.

Lisa: Thank you, Lisa. Thanks, everyone.

Lisa: I would like to remind everyone that this call has been recorded and will be made available for replay via a link in the Investor Relations section of Double Downs website.

N. Cookin: It's now my pleasure to turn the call over to Double Downs CEO and Cook Kim, you may begin. Thank you, Risa. Good afternoon, everyone.

N. Cookin: Thank you for joining us on our 2020 second quarter onings call. This afternoon, we reported total Q2 revenue of $88.2 million, comprised of $18.3 million generated by our social casino free-to-play games and $7.9 million generated by Super Nation, our eye gaming business. Q2 was the third consecutive quarter of Euro year revenue growth for our free-to-play social casino business, as it was up 7% compared to Q2 2023. Our social casino revenue growth reflects our ability to gain market share and outperform the industry as either and credit gaming recently reported on estimated year-over-year overall top-line decline for the social casino segment at large.

N. Cookin: Importantly, our top-line growth is being achieved within our criteria of consistently converting revenue to profit and cash flow. Adjusted EBITDA for the second quarter rose 30% year-over-year to $37 million and cash flow from operations was $34.4 million. Double Downs' casino continues to be the driver of our strong results, as we again generated a year-over-year increase in some of our most important KPIs, including ARPDAU, average monthly revenue per payer and payer conversion rates.

N. Cookin: As we previously discussed, we believe the recent growth of our social casino business is in part due to last year's release of new meta features for Double Downs' casino. These features are consistent with our focus on player and payer retention as we continue to deliver even more excitement to Double Downs' casino players. In this second quarter, the social casino business also benefited from our initiative to provide players with greater options to buy chips from direct channels.

N. Cookin: Revenue is from this effort, which benefits our profitability are beginning to ramp noticeably. In summary, our strategy for social casino is to continue enhancing the entertainment value of Double Downs' casino, while remaining disappointed in our user acquisition and R&D span to drive strong profitability and free cash flow.

N. Cookin: Turning to supranation, Q2 was the second full quarter of our ownership of this eye-gaming business. Revenues of $7.9 million per supranation in Q2 continued to be above our estimates of what the business quarterly run rate was prior to our acquisition in late 2023. In Q2, we pulled back somewhat on player acquisition, standing compared to Q1. As we've gained more experience with the business, we are beginning to fine-tune our plans and efforts to scale supranation.

N. Cookin: In this business, we believe we have many opportunities to leverage our core strengths, including our game developers, expertise in game creation and our marketing platforms to scale supranation profitably. And over the next several quarters, we expect to continue to find the investment swift spot in the business to optimize both top-line growth and cash flow generation. The only progress we are having with supranation confirms our successes that we can leverage our core strengths and balance to further diversify our business into new gaming categories that have a highly addressable market opportunity.

N. Cookin: We are continuing to invest in new internally developed mobile games, including those we expect to launch in the second half of this year, with the commitment to undertake these efforts in a manner that creates additional value for shareholders.

N. Cookin: Given our excellent financial foundation, we will continue to evaluate opportunity to expand into new markets both organically and through M&A.

Joseph Sigrist: Now, I would turn it over to our CFO Joe's Secret to welcome through our financials for providing my closing remarks. Joe, thank you, IK, and good afternoon everyone. Our revenues for the second quarter of 2024 were 88.2 million dollars and were comprised of 80.3 million dollars in revenues from our social casino free-to-play games and 7.9 million dollars of revenues from supranation. This compares to total revenues from our social casino free-to-play games of 75.2 million dollars last year.

Joseph Sigrist: As I came mentioned, Q2's social casino free-to-play revenue was up 7 percent year-over-year, which is in contrast the eyelers recently published estimate of a Q2 year-over-year social casino industry top-line decline. Going forward, our goal is to continue to outperform the overall social casino market as we monitor and react to changes in the macro economic environment and overall consumer setting.

Joseph Sigrist: Amendment. In the second quarter, several KPI metrics for our social casino business improved again compared to the year-go period, including average revenue per daily active user or ARP Dow increased to $1.33 in Q2 2024 from $1.5 in Q2 2023, marking a 27% increase. Pay or conversion ratio, which is the percentage of players who pay within the social casino app environment increased to 6.7% in Q2 2024 compared to 6.0% in Q2 2023. And average monthly revenue per payer increased 23% to $288 in Q2 2024 from $235 in Q2 2023.

Joseph Sigrist: Operating expenses rose on a year-over-year basis to $52.0 million compared to $47.7 million in the second quarter of 2023. Operating expenses for the 2024 second quarter include the operating expenses associated with our operation of supernation, which we did not own in Q2 of last year. And which were partially offset by lower sales and marketing and research and development expenses for our social casino operations. Sales and marketing expenses for the second quarter of 2024 were $11.1 million, a decline of 15% compared to Q2 2023 and down 25% on a quarterly sequential basis.

Joseph Sigrist: In Q2, we began to fine tune our approach to ramping the top line of supernation. While at the same time managing this business to establish the foundation to generate consistent profitability and cash flow, our sales and marketing cost focused on acquiring new social casino players continue to reflect our focus on spending to ensure we deliver the best return on this investment. For Q3, we anticipate that overall sales and marketing expenses will be in line with Q2 levels.

Joseph Sigrist: Net income for the second quarter of 2024 was $33.3 million or $13.39 per deluded share and $61 per ADS compared to net income of $24.4 million or $9.83 per deluded share and $49 per ADS in the second quarter of 2023. Adjusted EBITDA for the second quarter of 2024 increased 34% to $37.0 million compared to $27.6 million for the prior year quarter. Adjusted EBITDA margin was 41.9% for Q2 2024, representing a 520 basis point improvement from 36.7% in Q2 of 20. 23.

Joseph Sigrist: Net cash flows provided by operating activities for the second quarter of 2024 or 34.4 million dollars compared to net cash flows used in operating activities of 37.6 million dollars in the second quarter of 2023. The increase is primarily due to higher net income and a lowered deferred tax asset impact as well as the final payment of 95.25 million dollars towards the Benson litigation settlement that occurred in the second quarter of last year.

Joseph Sigrist: And finally, turning to our balance sheet as of June 30, 2024, we had $339 million in cash, cash equivalence and short term investments with a net cash position at quarter end, including the outstanding loan with our controlling shareholder W games of approximately $303 million or approximately $6.12 per ad. Yes. While we had previously indicated that we intended to pay off loan amounts of approximately $35 million from our controlling shareholder in May, we made the decision to instead extend this loan for an additional two years at the same 4.6% interest rate of the original loans.

Joseph Sigrist: That completes my financial summary.

N. Cookin: Now I will turn the call over to IK for closing remarks.

N. Cookin: Thank you, Joe. The strong Q2 regional in our core social casino business and the continued solely performance of our Super Nation eye gaming business extended our operating performance momentum. Over the balance of this year, we will remain focused on driving further improvement in double down casino through the continued introduction of new slot content, our ROI based marketing spend and our ability to deliver real-time value to players through our live-ops expertise. Our strategies to continue to drive higher player engagement and monetization will be undertaken in a manner that is consistent with our capital efficiency this point.

N. Cookin: In addition, we've packed our efforts to increase direct consumer payment volumes whereby double down casino players have an expanded number of options to purchase chips. Beyond the app source, we'll continue to benefit our bloody strong margins going forward.

N. Cookin: As we have discussed today, as we gain more operational experience with our Super Nation business, we expect to make additional progress on fine tuning our new player execution strategies so that we can both grow the player base in the UK and Sweden while also focusing on setting the foundation or this business to deliver consistent positive cash flow contributions in the near and long Finally, I will highlight that the consistency with which we generate attractive free cash flow and our strong balance sheet provides us with financial flexibility to continue to pursue growth by exploring opportunities in adjacent gaming categories through our in-house development efforts and through potential MMA opportunities.

Lisa: We are now happy to take your questions Lisa.

Lisa: Thank you. If you would like to ask a question, please press star 1-1 on your telephone and wait for your name to be announced. To withdraw your question, you can press star 1-1 again.

Lisa: Please stand by for our Q&A session to begin. One moment please.

David Bain: Our first question for today will be coming from David Bain of Be Rally. Your line is open. Hello. Hi, Dave. Oh, sorry. I didn't know what happened there. Anyway, thanks Joe. First, I really do want to acknowledge an excellent 2QXQ execution. That was really well done.

Joseph Sigrist: My first question would be on even on margins. I know you went through a lot of this, but obviously several hundred basis points better than we had anticipated. I'm trying to think about the near and long term on Go Forward. You mentioned the down-tock in sales and marketing are likely maintained in the 3Q. So one percentage of revenue in 2Q, that's a likely level sustained beyond 3Q. Then IK mentioned D to C having a positive impact in 2Q.

Joseph Sigrist: Maybe if there's anything more as a percentage of revenue, what D to C transactions were, if you can compare it to quarter quarter frame in any way that you can, it would be really helpful. Sure. Appreciate the comments and the questions. As far as even on margins, we've had now a couple more recent quarters, over 40% as you know. I think that to a certain extent, it's been driven by the efficiency in spend that we have always shown, but more recently, especially because, as you mentioned, sales and marketing is something we've been very focused on in being very, very mindful of the social casino business.

Joseph Sigrist: I do believe, as I mentioned, that from an absolute dollar's basis, Q3 marketing spend will be pretty consistent with where we ended up in Q2. From the end of the year standpoint, as IK mentioned, we are looking to launch a new organically developed game later in the year, and so that might create an uptick in the absolute amount of spend in marketing towards the end of the year. But from a Q3 perspective, we think Q2 and Q3 look pretty much the same.

Joseph Sigrist: As far as direct to consumer, as we've said, what we said, two things I think, pretty consistently over the last couple of quarters. One, it's early days for us, we really just started with it as a focus and two, it is a big focus of ours in this year in 2024 and with that in mind we have made good progress in the last couple of quarters. I can't quantify it yet for you because frankly it is still early days, but it has made somewhat of an impact and certainly look to have it be even more impactful over the rest of the year and certainly into 2025. Okay, awesome.

David Bain: And then my follow-up would be I know you guys are gaining share relative to the industry and you mentioned an industry publication that's calling the social casino industry slightly down and one reason they cited was the concept of sweepstakes, maybe taking from social casino. Can you offer any big picture as it relates to the industry or any specifics around that in particular that you're seeing? You know, it's a little difficult for us to comment on what's going on with our peers because what we see is what's happening in our business and we're obviously very, very happy with where especially double down casino is right now.

David Bain: And we've done a lot as I came mentioned in the investment and meta features and in continuing to bring great new content to our players. And all of that we think has created an environment where double down casino is even more entertaining than ever and it makes our players want to play and our payers want to pay as they have been. So, you know, I can't comment on what might be happening around us because, you know, we're very focused on running our business and continuing to be successful with within the social casino market. Awesome. All right. Thanks again, guys. Thanks, Dave. Thank you. One moment for the next question.

Gregory Gibas: And our next question today will be coming from Greg. Give, give us of Northland securities. Your lines open. Great. Thanks. Good afternoon. I can't go. Thank you for taking the questions. Congrats on the nice result. You know, I appreciate the color. I'm not a cost dynamics and everything there.

N. Cookin: You know, if I could, what do you maybe believe is driving the upside with super nation? You know, did the last couple quarters have been ahead of your expectations, you know, maybe what would tribute that to and, you know, what is maybe fair in terms of estimated run rate expectations going forward. Thanks, Greg. Yeah, I mean, we certainly have seen their business ramp since we bought them and in, you know, this this quarter, we just announced being the second full quarter that we that we've been operating the business.

N. Cookin: We believe that our investment in additional marketing has really helped. And, you know, when we started operating the business, we realized that there was definitely opportunity to invest more in marketing and still get a very positive ROI with that incremental spend. And from that standpoint, again, in Sweden and the UK, which are their two main markets, we're excited to, you know, to be spending money to acquire new players. Obviously the dynamics are much different and KPIs are much different than our social casino business.

N. Cookin: But as we learn more about the eye gaming business and work with our partners at super nation. And, you know, I think you can expect us to continue to lean into that marketing spend acquire new players. And then layer on top the things that we've talked about as far as, you know, synergies in the past, which is game development, technology platform. And, you know, live ops and the things that we do well from our social casino lake. Thank you. Great. That's helpful.

N. Cookin: And, you know, if I could follow up, you know, just within social casino, you know, nice to see the growth there. And, you know, especially considering the aforementioned sweepstakes, it gains kind of maybe pressuring some peers. You know, you know, you know, you know, some meta features that you think are kind of driving growth there. And one of the just follow up and he kind of what's working well in terms of what you've implemented and what's kind of showing the strong passive response.

N. Cookin: Hi, Greg. This is IK. How are you? Yeah.

N. Cookin: Let me start first. Yeah. You know, DVD has been one of the pioneers in the social casino space for over 14 years. We actually focused on providing our players with lots of fun elements through flood content and meta contents. However, as we introduced more features and benefits for those users in recent years, the content flow and economy became very complicated. So, last year, we started to reflect on and reformed many flows and features from the user experience perspective.

N. Cookin: At the same time, it enabled us to provide attractive retention meta features. Those meta features are reword features like lock your playing power, wonder cards, et cetera, as we described last quarter. So, as users play more, simply, those could help slot playing users retention. We will continue to experiment with fun retention features like mission pass, meaningful web come back, and so on.

Gregory Gibas: So, hope this helps. Great yellow dots, Indra. Good to hear that you're seeing success with them. Thanks. Thanks, Greg. Thank you.

Aaron Lee: One moment for the next question. And our next question for the day will be coming from Aaron Lee of Macquarie. Your line is open. Hi, good afternoon. Thanks for taking my question and congrats on the quarter. So, you talked about your balance sheet. It's still in great shape. Net cash of three into three million. You talked about your marine focus on evaluating M&A. Where do you see the most opportunity for M&A? Is it within social casino, within eye gaming, or diversifying into another agency? Thanks.

N. Cookin: Yes, no, I'm just kidding. You know, we continue to look at opportunities across those categories and more, and some of the more, I guess I'd call them non-cicino-oriented mobile gaming categories. And certainly there are categories, you know, puzzle, match three other categories that, you know, we obviously have been playing in the past, but which are still, you know, very large categories and categories which still have an incredible power from a pair You know, a pair of perspectives.

N. Cookin: So we really haven't crossed anything off the list. You know, we obviously when we we announced that we were buying Super Nation, we said that we were excited about eye gaming, but certainly aren't turning ourselves into solely an eye gaming company. And we're willing to look at, you know, areas that meet our criteria, which aren't just about what kind of a game, you know, is it, but also a number of other factors that are consistent with what we're looking for from an efficiency standpoint.

N. Cookin: Got it. That's great to hear. That's quick follow up. Competitor recently announced a licensing agreement with IGT to use some of their real world content, which they expect to go live by the end of the year. I know you have an exclusive license for a large portion of IGT's content, which should which it insulate you, but can you comment on that at all and whether you see that having any impact on your business.

N. Cookin: Thanks. Yes, I'm familiar with the announcement. We're familiar with what our partner IGT has been doing. And in fact, they've been looking for additional partners to license in the social casino category for for several years. And the short answer is it doesn't affect our business at all. As you rightfully mentioned, Greg, most of the games that we use, we have perpetual license and perpetual exclusive license to, in fact, as we said in some of our filings, any game that we started to use from IGT prior to 2020, we do have a perpetual exclusive license to.

N. Cookin: And those are all of the kind of best IGT games that frankly our players love, the Cleopatra's and Golden Goddesses and the Vinci diamonds. And games that we have taken after 22 new games that we started to use, we don't have exclusive license to, but we still have a perpetual license to offer to our to our to our players. I guess I'd finally say that over the last few years, we've, as I think we've discussed many times in the past, really pivoted more towards content that we've developed ourselves internally, as well as content that we've licensed from our controlling shareholder WU.

N. Cookin: So as a consequence, the amount of new content that we've taken from IGT has fallen quite a bit. And that adds to certainly the lack of concern we have about what IGT has been doing more recently. Quarter. Thank you.

Lisa: And this does conclude today's Q&A session. It also includes today's conference call. You may all just connect and thank you so much for joining. Thank you Lisa. Thanks everyone. Okay.

David Bain: David Bain, Aaron Lee, David Bain, Aaron Lee, David Bain, Aaron Lee

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