Q3 2025 DoubleDown Interactive Co Ltd Earnings Call
Speaker #1: Prior to this call, DoubleDown issued its financial results for the third quarter of 2025 in a press release: a copy of which is available in the Advanced Relations section of the company's website at www.doubledowninteractive.com.
Speaker #1: You can find the link to the investor relations section at the top of the homepage. Joining us on today's call are DoubleDown CEO, Mr. In Cook Kim, and its CEO, Mr. Joe Sigrist.
Speaker #1: Following their remarks, we will open the call for questions. Before we company's investor relations advisor, will make a brief introductory statement.
Speaker #2: Thank you, Daniel. Before management begins their formal remarks, we need to remind everyone that some of management's comments today will be forward-looking statements within their meaning begin, Joe Jaffoni, the of Section 27A of the Securities Act of 1933, as amended, and Section 21E of the Securities Act of 1934, as amended, and we hereby claim the protection of the safe harbor provisions of the private securities litigation reform act of 1995.
Speaker #2: 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, or other similar terms.
Speaker #2: Forward-looking statements include and are not limited to those regarding the company's future plans, merger and acquisition strategy, strategic and financial objectives, expected performance and financial outlook.
Speaker #2: Forward-looking statements are subject to numerous risks and uncertainties that could cause actual results to differ materially and adversely from what the company expects. Therefore, you should exercise caution in interpreting and relying on them.
Speaker #2: We refer you to DoubleDown's annual report on Form 20F filed with the SEC on April 21st, 2025, and other SEC filings for more detailed discussion of the risks that could impact future operating results and financial condition.
Speaker #2: These forward-looking statements are made only as of the date of today's 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.
Speaker #2: As noted in this afternoon's press release, beginning with the 2024 fourth quarter, DoubleDown is reporting its financial results and accordance with IFRS. As such, the financial results for the 2025 third quarter reflect IFRS as do the comparable period for 2024.
Speaker #2: Previously, the company reported its financial results in accordance with GAAP accounting standards. The change to IFRS aligns DoubleDown's financial reporting with the financial reporting standards of its controlling shareholder in Korea.
Speaker #2: During today's call, management will discuss non-IFRS financial 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 IFRS.
Speaker #2: A full reconciliation of these measures to the directly most directly comparable IFRS measure is available in the earnings release issued this afternoon. I'd like to remind everyone that today's call is being recorded and will be made available for replay via a link in the investor relations section of DoubleDown's website.
Speaker #2: It's now my pleasure to turn the call over to DoubleDown's CEO, In Kim. Please go ahead.
Speaker #3: Thank you, Joe. Good afternoon, everyone. We are delighted to be with you today to discuss our strong 2025 third quarter results: the continued growth of SuperNation.
Speaker #3: Initial results from our newest acquisition, Wow Games, and other recent initiatives intended to enhance shareholder value. Let's start with the quarterly results. This afternoon, we reported third quarter consolidated 95.8 million dollars and adjusted EBITDA of 37.5 million dollars.
Speaker #3: Q3 revenue was comprised of 79.6 million dollars generated by social casino operations, and 16.2 million dollars generated by SuperNation, our iGaming business. In Q3, we again delivered on our key operating priority of driving a high conversion of revenue to profit and cash flow.
Speaker #3: Cash flow from operations was 33.4 million dollars, bringing our total for the first nine months of 2025 to 94.1 million dollars. And we are delivering these profits and cash flow results even as we continue to invest in the business and prudently increase marketing spending to acquire new players at SuperNation.
Speaker #3: Our flagship DoubleDown Casino app continues to be the engine of profit and cash flow generation for the company. Monetization metrics for the third quarter reflected this performance with ARPUDAO at 1 dollar and 39 cents, up from 1 dollar and 30 cents in Q3 of 2024, and from 1 dollar and 33 cents in Q2 of 2025.
Speaker #3: The payer conversion rate also rose during the quarter to 7.8 percent, up from both Q3 2024 and Q2 2025 levels. We continue to develop innovative enhancements to DoubleDown Casino, including with upcoming releases of a new slot lobby for our mobile app and a new link JEPA system.
Speaker #3: We also remain very focused on the direct-to-consumer social casino opportunity and DTC remains an important part of our growth strategy. In Q3, we increased the percentage of social casino revenue generated by DTC purchases as DTC revenue for DoubleDown Casino is now running at over 15 percent.
Speaker #3: We are also launching additional product changes within app purchase messaging to drive further growth of DTC revenue as a percentage of our overall social casino revenue.
Speaker #3: DTC not only helps to improve margins; it also enhances player engagement and retention. Our goal is to execute for a DTC percentage of social casino revenue of over 20 percent.
Speaker #3: As I mentioned a moment ago, we are complementing our strong free cash flow profile and financial positions through other initiatives intended to build new value for shareholders.
Speaker #3: Our commitment to building out our social casino business is highlighted by the July acquisition of Wow Games, a social casino operator based in Hamburg, Germany.
Speaker #3: We believe the growth potential in international social casino market is currently greater than in the United States, and we are working to leverage this investment for our shareholders.
Speaker #3: Turning to SuperNation, Q3 revenue of 16.2 million dollars yet again represented the highest quarterly performance of the business since our acquisition. It laid 2023 and grew 700,000 dollars on a quarterly concert basis.
Speaker #3: For perspective, SuperNation's quarterly revenue run rate has more than doubled since DoubleDown closed this acquisition as we continue to make steady positive progress on acquiring new players.
Speaker #3: Our investment in new player acquisition continues to generate strong returns, even as the number of new players increased. At this time, we believe that investment in player acquisition could drive further success and growth for SuperNation into 2026.
Speaker #3: We are also excited to share with you that our team has been working on a new first iGaming casino with a new name to be launched early next year.
Speaker #3: Our experience in owning and operating SuperNation over the last few quarters and our success with integrating its operations and driving very healthy levels of top-line growth reinforce our confidence that we can leverage our core strengths financial discipline and strong balance to further diversify our company by focusing on new gaming categories and underserved geographies.
Speaker #3: This priority is reflected in our acquisition of Wow Games, and our ongoing search for other acquisition targets that meet our criteria for expanding our operations into new markets while further diversifying our revenue and cash flow sources to create value for social.
Speaker #3: Shareholders, now I will turn it over to our CFO, Joe Sigrist, to walk us through our financials before providing my closing remarks. Joe.
Speaker #2: Thank you, IK, and good afternoon, everyone. As was mentioned earlier, beginning with the fourth quarter of 2024, we are now reporting our financial results in accordance with IFRS.
Speaker #2: And the comparisons of our Q3 2025 results to Q3 2024 results reflect that change for the prior year period under IFRS. The financial statement implications of switching to IFRS from GAAP are generally insignificant, with the biggest change being how our leases are treated, as some amounts are now included in depreciation and amortization under IFRS.
Speaker #2: This generally makes our reported adjusted EBITDA slightly higher. To review, revenues for the third quarter of 2025 were 95.8 million dollars, and were comprised of 79.6 million dollars in revenues from our social casino business and 16.2 million dollars of revenues from SuperNation.
Speaker #2: This compares to total company revenues of 83.0 million dollars in the third quarter of 2024. Our social casino segment grew nearly 6 percent from the third quarter of 2024 and nearly 15 percent sequentially as we realized initial contributions from the Wow Games transaction, which further increased our revenue in Europe specifically in Germany.
Speaker #2: The initial results from Wow Games are encouraging, and we are assessing their operations. We will include the impact on our social casino KPIs when we report our Q4 2025 results.
Speaker #2: iGaming revenues, more than doubled increasing 108 percent from the third quarter of 2024, and as IK stated, were up 700,000 dollars on a quarterly sequential basis.
Speaker #2: With our focus on leveraging our platform and driving free cash flow, we continue to generate strong monetization in the social casino business in Q3.
Speaker #2: Average revenue per daily active user, or ARPDAU, at $1.39 in Q3 2025 was up from $1.30 in Q3 2024. Pair conversion rate which is the percentage of players who pay within the social casino apps increased to 7.8 percent in Q3 2025 compared to 6.8 percent in Q3 2024, and average monthly revenue per payer continued to be strong at 272 dollars in Q3 2025, which is down just slightly from 281 dollars in the prior year period.
Speaker #2: Again, this last quarter's results are KPIs that exclude Wow Games. And the third quarter of 2025, operating expenses were 60.9 million dollars compared to 47.6 million dollars in the third quarter of 2024.
Speaker #2: The increase is primarily due to increased operating expenses related to SuperNation, driven by revenue growth, and the inclusion of operating expenses related to the addition of operations from Wow Games.
Speaker #2: Sales and marketing expenses for the third quarter of 2025 were 15.7 million dollars compared to 9.2 million dollars in the third quarter of 2024.
Speaker #2: In Q3, we continue to optimize spending to acquire new players for DoubleDown Casino, while increasing sales and marketing spending for SuperNation to focus on new player acquisition.
Speaker #2: And marketing expenses at Wow Games were included in our financial results for the first time. Profit excluding non-controlling interest for the third quarter of 2025 was 32.8 million dollars or 13 dollars and 21 cents per diluted share and 66 cents per ADS compared to profit excluding non-controlling interest of 25.0 million dollars or 10 dollars and 10 cents per diluted share and 51 cents per ADS in the third quarter of 2024.
Speaker #2: Adjusted EBITDA for the third quarter of 2025 was 37.5 million dollars compared to 36.5 million dollars for the third quarter of 2024 and 33.3 million dollars for Q2 2025.
Speaker #2: Adjusted EBITDA margin was 39.1 percent for Q3 2025 as compared to 44.0 percent in Q3 2024 and 39.5 percent in Q2 2025. Net cash flows provided by operating activities in Q3 2025 were 33.4 million dollars compared to 32.1 million dollars in Q3 2024 and 19.7 million dollars in Q2 2025.
Speaker #2: For the first nine months of 2025, net cash flows provided by operating activities were $94.1 million. We are on track to yet again generate over $100 million in free cash flow for the full year.
Speaker #2: And finally, turning to our balance sheet, as of September 30th, 2025, we had 439.2 million dollars in cash, cash equivalents, and short-term investments, with a net cash position at quarter-end of approximately 404 million dollars or approximately $8.14 per ADS.
Speaker #2: Our current cash position reflects the approximate 65 million dollar payment made in July for the Wow Games acquisition. Now I will turn the call back to IK for closing remarks.
Speaker #1: Thank you, Joe. In summary, DoubleDown Interactive is delivering strong cash flow from its two meaningful and exciting businesses: social casino and iGaming. Our strong balance sheet and cash position allow us to continue making disciplined investments in each of our businesses while continually evaluating new opportunities to enhance the growth of each.
Speaker #1: This includes investments through both organic means as we leverage the strengths of our talented teams and through our evaluation of potential future acquisitions. We are now happy to take your questions.
Speaker #1: Daniel?
Speaker #2: To ask a question, please press star 11 on your telephone. Wait for your name to be announced. To withdraw your question, please press star 11 again.
Speaker #2: Please stand by while we compile the Q&A roster. Our first question comes from Aaron Lee with Macquarie. Your line is open.
Speaker #3: Hey guys, thanks for taking my question. Maybe to start with SuperNation, you've driven really nice growth out of that asset over the last couple of quarters, and over 100% growth in Q3.
Speaker #3: Maybe share your thoughts on how you're thinking about the balance between investing for growth versus profitability from here? Thanks.
Speaker #4: Yeah, thanks, Aaron. You know, the reality is that we really believe that there was capacity in SuperNation's business to add users profitably.
Speaker #4: And as you know, we measure not only in our iGaming business but in the social casino business as well the ROI of all the cohorts that we acquire when we market to acquire new players.
Speaker #4: And, you know, the good news is adding new players to the SuperNation business continues to meet our targets for return on ad spend. As we go forward, we'll just continue to monitor that.
Speaker #4: And, you know, when and I think we've talked before that our essentially our payback period for acquiring new users is about six months. And, you know, as long as we're achieving or hopefully even beating that threshold, we'll continue to add players.
Speaker #4: But if not, we'll, you know, dial it back and spend less to acquire new players.
Speaker #3: Gotcha. Okay, that's helpful. And then on Wow Games, now that you've had some more time with that business and the team there, has anything changed in terms of how you think about the drivers of growth or the ramp timeline for that acquisition?
Speaker #4: Yeah, you know, it seems like it's been a long time, but it was just the July when we closed the deal and, you know, there's still work for us to do to really dig in.
Speaker #4: But so far, so good. You know, we are, as I think iK mentioned, excited about the growth in the European social casino sector. And, you know, we want to lean into that as much as we can.
Speaker #4: Again, just as I mentioned with SuperNation, you know, it's all about the ROAS, the return on ad spend, as we acquire new players. And so that's first and foremost on our mind.
Speaker #4: And then secondly, it's about product, product development. So, slot games, how we could help them relative to potentially even bringing some of the slot games that we have in the other parts of our social casino business into their apps.
Speaker #4: And, you know, how we could help on the technology side and meta features. And so that's kind of a next level evaluation that we're making as we're always looking to improve the product as well.
Speaker #3: All All right. Got it, Joe. Appreciate the color. Thank you.
Speaker #4: Thanks, Aaron.
Speaker #2: Thank you. Our next question comes from Eric Handler with Roth Capital. Your line is open.
Speaker #1: Yep, thanks. Good afternoon. Thanks for the question. I just want to follow up on that last question with, wow. I mean, now that you've had it for two and a half months, I'm sort of wondering if you could maybe lay out the roadmap over the next six months of what you hope to achieve.
Speaker #4: Yeah, I think, as I mentioned to Aaron, we're looking really in the short term to determine how acquiring players can support the business with the product that they have.
Speaker #4: Because that's the quickest and perhaps simplest way to affect the business in the short term. And then secondarily, you know, we want to look at the product and some of the features and technology that we are interested in, you know, potentially leveraging from our traditional social casino business.
Speaker #4: And then I think, thirdly, one of the things that they've done a really good job on is, you know, kind of a build for third-party casino apps.
Speaker #4: So, I think, as we've discussed, they have a casino that they operate that is 100 percent supported with Mercure slots. And they work with Mercure directly.
Speaker #4: Mercure being the German slot machine manufacturer in that app. And so being able to lean into that and, in fact, perhaps do more with that with others is something that we're also looking at leveraging.
Speaker #3: That's helpful. Thanks. And then as a follow-up, you know, fully recognizing that there's a big difference between being shown acquisitions and being shown quality acquisitions, wonder if you could talk a little bit about your M&A pipeline at this point.
Speaker #3: And what you're seeing.
Speaker #4: Yeah. You know, I think the M&A pipeline continues to be busy. I mean, it's interesting, obviously, that there are gaming assets that are ones that we all know about or that have been around for a while.
Speaker #4: That are potential opportunities for us to integrate into our business. So that's on one end of the spectrum. And, you know, we continue to look at some of those.
Speaker #4: And then there are those that are newcomers, if you will. And that's across the board in all kinds of different genres of games. And we look at those.
Speaker #4: And so we're open for both ends of the spectrum. And, you know, we're looking at opportunities, again, both for games that we all know about and are familiar with that could be for sale as well as those that are up and comers.
Speaker #2: Thank you. Our next question comes from Josh Nichols with B. Riley. Your line is open.
Speaker #1: Yeah. Thanks for taking my question and good to see the progress. Just real quick, it looks like we're seeing potentially some stabilization in the social casino business.
Speaker #1: I didn't hear if you broke it out. What was the revenue contribution from Wow for the quarter?
Speaker #4: Yeah, we haven't broken it out. And we're not going to separate it since it's all integrated with our segment reporting for social casino. But it was consistent with what we had previously said was essentially the run rate of their business.
Speaker #4: So there was no real surprise there, from Wow's operations in the summer.
Speaker #1: Understood. And then there's been a lot of action that's being taken against these swing state comps. You've seen things in California. There's the ban that's going into effect for 2026 overall.
Speaker #1: I'm curious, historically, that had been pushing user acquisition costs higher. You're also seeing some potential action from Google on advertising. Has that started to alleviate some of the player acquisition costs?
Speaker #1: And is there an opportunity for you guys to deploy some additional capital to start growing that user base? Or are you not seeing much of an effect yet?
Speaker #4: Yeah, no, I appreciate you mentioning what's going on in the sweepstakes, categories. Obviously very interesting. I think it's a little early for it to have an, and you're right, by the way, we've said it's probably that probably the biggest impact on us that we can have perceived with the sweepstakes business is pressure, upward pressure on CPIs on advertising costs.
Speaker #4: I think it's a little early given that California's ban just kicked in. And some of the other states' actions are early. But it's a little, it's a little too soon to determine if that's going to have an impact on lowering costs.
Speaker #4: But I think all in all, none of this can hurt. And we're obviously glad to see it.
Speaker #1: Appreciate it. Thanks.
Speaker #4: Thank you.
Speaker #2: Thank you. Our next question comes from David Bain with Texas Capital. Your line is open.
Speaker #1: Great. Thank you. I guess I would first ask about direct-to-consumer. I know you're at 15 percent in 2Q and you're over that in 3Q.
Speaker #1: And IK, you mentioned 20 percent is the goal. And if that's the case, I was wondering if you could put a timeframe on that.
Speaker #1: And then also, is that sort of like an interim goal? I'm just looking at the industry leader. Was it 31 percent in 3Q and they want to get to 40 percent over two years?
Speaker #1: So I'm just kind of wondering what your overall thought process is with D2C.
Speaker #4: Well, you know, let me answer the target question. And if IK, if you want to talk a little bit about what we're doing to even accelerate our results in D2C, I'll let you do that.
Speaker #4: But yeah, our— and I think I.K. mentioned that our goal is to exit Q4, exit this quarter with a run rate of over 20 percent.
Speaker #4: DTC. So we really think that it's possible to achieve something considerably higher than what we did over the last six months. And we've been doing some product work and we've been afforded, I think, based on what's happening in the industry as a whole, the ability to be more aggressive in messaging and in product and that kind of thing.
Speaker #4: IK, do you want to talk a little bit about?
Speaker #2: Yeah. For the broader D2C ecosystem, especially in terms of providing more flexibility in how developers can communicate with and transact direct with users, the recent direction of this platform is very helpful.
Speaker #2: At DDI, we've already been investing in our own D2C capabilities, particularly through our own channels and direct CRM strategies. We engage players more freely and cost-effectively outside of traditional platform constraints.
Speaker #2: Which opens up potential for margin expansion and improved lifetime value. We view this as a long-term tailwind for our business and for the industry at large.
Speaker #2: Thank you.
Speaker #1: Okay. No, that's helpful. So it sounds like there's no cap on that 20 percent either. This is by the end of the year and then you'll reassess from there.
Speaker #1: Was my take anyway. Well, maybe switching gears to SuperNation, unless you had something to add on that. I'll go to SuperNation. So I believe on the last call you cited the potential entry into new regions within Europe and into Canada.
Speaker #1: Maybe if you could provide us any sort of timeframes or ideas or kind of updates with that. And then IK, you also mentioned a new brand.
Speaker #1: I believe that by the end of the year, if you could expand on that as well, it would be helpful.
Speaker #2: Yeah. Let me start first about the first brand. From a marketing payback perspective, as Joe mentioned, our current operation consistently meets ROI targets. Making this investment a creative rather than dilutive to profitability for the future.
Speaker #2: Based on our experience, new brands help drive scalability and better ROI, and scaling remains the priority in the iGaming business. Looking at larger market peers, we believe that once we achieve a sufficient scale, SuperNation can start to deliver a profit margin of over two digits.
Speaker #2: To drive further revenue growth, we are about to launch our first brand, Las Vegas, sites in addition to our existing three, along with native apps.
Speaker #2: This initiative is expected to enhance retention and bring additional efficiencies within the SuperNation ecosystem. Hope this helps.
Speaker #1: Definitely helpful. And any update on geographic expansion?
Speaker #4: Dave, you know, I'd say that we still feel like there's low-hanging fruit relative to the markets we're already serving, given how low our market share is, and so we're continuing to evaluate new markets.
Speaker #4: It's a more long-term thing. And we have room to run with our existing markets. So I wouldn't put a timeframe on expansion, but we're always continuing to evaluate that.
Speaker #1: Great. Thanks, Joe. Thanks, IK.
Speaker #4: Thanks, Dave.
Speaker #2: Cheers. Thank you. This concludes our question and answer session. And today's conference call. Thank you for participating. You may now disconnect.