Doubledown Interactive Stock

Good afternoon, and welcome to DoubleDown Interactive's Earnings Conference Call for the Second Quarter ended June 30, 2026. My name is Liz, and I will be your operator this afternoon. Prior to this call, DoubleDown issued its financial results for the second quarter of 2026 in a press release, a copy of which 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 DoubleDown's CEO, Mr. In Keuk Kim; and its CFO, Mr. Joe Sigrist. Following their remarks, we will open the call for questions. Before we begin, Joe Jaffoni, the company's Investor Relations adviser will make a brief introductory statement. Mr. Jaffoni?

Thank you, Liz. 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 Securities Exchange 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. 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 such similar terms. 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.

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. We refer you to DoubleDown's annual report on Form 20-F filed with the SEC on March 31, 2026, and other SEC filings for a more detailed discussion of the risks that could impact future operating results and financial condition. 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.

During today's call, management will discuss non-IFRS financial measures, which management believes 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. Full reconciliation of these measures to the most directly comparable IFRS measure is available in the earnings release issued this afternoon.

In addition, on April 29, 2026, DoubleDown issued a press release acknowledging the receipt of a nonbinding expression of interest from W Games, its controlling shareholder, to acquire all the outstanding DoubleDown common shares, including ADRs not currently owned by them at a price of $11.25 per ADS in cash.

As noted in that press release, the company has formed a special committee to evaluate and negotiate with a controlling shareholder and determine the next steps that would be in the best interest of the company and its unaffiliated shareholders. As a result of this ongoing process, the company has no additional updates or further comments to discuss on today's call. I would 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. Thank you for your patience with that. And it's now my pleasure to turn the call over to DoubleDown's CEO, IK Kim. Please go ahead.

Thank you, Joe. Good afternoon, everyone. We are delighted to be with you today to discuss DoubleDown Interactive Second Quarter 2026 results. Key highlights include delivering revenue consistency and resiliency as we execute on our growth and geographical diversification strategies marked by solid contributions across both social casino and iGaming, delivering a record contribution of over 50% of our total social casino revenue from direct-to-consumer payer activity and delivering another quarter of strong profitability and significant free cash flow generation. These results further reinforce our confidence in our business model as we drive operational excellence across our portfolio.

Let's start with the financial results. This afternoon we reported second quarter consolidated revenue of $94.3 million, up approximately 11% year-over-year. This top line growth helped drive second quarter adjusted EBITDA of $39.3 million, marking 17% year-over-year growth. In Q2, we extended our track record of driving a high conversion of revenue to profit and cash flow. Net cash flow from operations was $24.6 million in the quarter, up 25% from the same period 1 year ago. As a result, we generated a total of $71 million in net cash flow from operations for the first half of 2026. Our social casino segment remains the primary engine of DoubleDown's profit and cash flow generation. In the second quarter, social casino revenue grew 11.5% year-over-year to $77.3 million driven by the contribution from WHOW Games as well as the strong performance of the DoubleDown's traditional social casino business.

A key highlight this quarter is the continued growth of our direct-to-consumer, or DTC, component, a major contributor to our strong growth in profitability. In the second quarter, DTC accounted for 52% of total social casino revenue compared to just over 15% in the second quarter of 2025 and 44% in the first quarter of 2026.

At the same time, industry analysts at Adler and credit recently forecast that the global social casino market declined over 5% in 2026. That said, our focus continues to be on outperforming the overall market through precise execution of our product development initiatives around player and payer retention, optimization of marketing and LiveOps activity to maximize payer conversion and purchasing activity and continued maximization of the direct-to-consumer opportunity.

Turning to our iGaming business. SuprNation's Q2 2026 revenue was [ $17 million ], an increase of 10% year-over-year. Our newest iGaming casino title, Los Vegas, again contributed to the strong supernation results in the quarter. During the second quarter, the SuprNation team did an excellent job in managing around the recently introduced higher U.K. gambling tax rate through a combination of product changes, marketing adjustments and expense controls.

This allowed our iGaming business to effectively mitigate much of the impact of tax increase. Our second quarter results highlight how prudent targeted investments are uncovering growth opportunities, which is enabling DoubleDown to extend our long-term record of our strong profitability and cash flow generation. We are successfully integrating previous applications, while optimizing our core DoubleDown business. M&A remains a strategic priority as we continue to evaluate opportunities in online gaming and mobile entertainment that meet our criteria to enhance long-term shareholder value.

Now I will turn the call over to our CFO, Joe Sigrist, to walk us through the financials before providing my closing remarks. Joe?

Thank you, IK, and good afternoon, everyone. To review revenues for the second quarter of 2026 were $94.3 million. This compares to total company revenues of $84.8 million in the second quarter of 2025 and $94.1 million in Q1 of 2026. Our social casino segment grew 11.5% from the second quarter of 2025 to $77.3 million, reflecting the inclusion of revenue from WHOW Games, which we acquired in July of last year. iGaming revenues grew by $1.5 million or 10% year-over-year to $17 million.

Regarding our overall social casino KPIs, we previously mentioned that the metrics from WHOW Games are somewhat different from those of DoubleDown Casino, specifically WHOW Games experiences a higher payer conversion rate and lower average monthly revenue per payer.

With this in mind, overall social casino KPI highlights for the second quarter include the payer conversion rate, which is the percentage of players who pay within the social casino apps increased to 9.4% in Q2 2026 compared to 7.0% in Q2 2025. The average revenue per daily active user, or ARPDAU, of $1.42, up from $1.33 in Q2 2025 and an average monthly revenue per payer at $218 in Q2 2026, down from $286 in the prior year period.

In the second quarter of 2026, operating expenses were $57.8 million compared to $52.4 million in the second quarter of 2025. The increase primarily reflects the inclusion of WHOW Games expenses. Sales and marketing expenses for the second quarter of 2026 were $13.9 million compared to $13.1 million in the second quarter of 2025, which again did not include WHOW Games. Conversely, sales and marketing expenses in the second quarter were down from Q1 2026 primarily due to a reduction in player acquisition spending at SuprNation in light of the revised iGaming tax rate in the U.K.

Profit, excluding noncontrolling interest for the second quarter of 2026 increased 50% to $32.9 million or earnings per fully diluted common share of $13.27 or $0.66 per ADS in the second quarter of 2026 compared to profit for the interim period of $21.8 million or earnings per fully diluted common share of $8.82 or $0.44 per ADS in Q2 2025.

The increase primarily reflects higher revenue, the lower cost of revenue attributable to a higher proportion of DTC revenue and a higher unrealized gain on foreign currency, partially offset by higher overall operating expenses primarily due to the inclusion of WHOW Games and increased costs associated with revenue growth from SuprNation. Adjusted EBITDA for the second quarter of 2026 rose to $39.3 million compared to $33.5 million for the second quarter of 2025 and $38.2 million for Q1 2026.

Adjusted EBITDA margin was 41.6% for Q2 2026 as compared to 39.5% in Q2 2025 and 40.6% in Q1 2026. Net cash flows provided by operating activities in Q2 2026 were $24.6 million compared to $19.7 million in Q2 2025 due to higher profit and lower income tax paid. And as IK mentioned, net cash flows provided by operations were $71 million for the first half of 2026. Inclusive of Q2 2026 is meaningful cash generation. At quarter's end, we had $553.8 million in cash, cash equivalents and short-term investments with a net cash position of approximately $521.3 million or approximately $10.52 per ADS.

Now I'll turn the call back to IK for closing remarks.

Thank you, Joe. DoubleDown Interactive powered by our core social casino and iGaming businesses delivered another quarter of strong profitability and cash flow. Building on our solid first half of 2026, we remain committed to innovation and discipline high ROI investments and to drive DTC revenues which collectively optimize social casino margin.

Finally, our strong balance sheet and cash position provides us the financial flexibility to pursue strategic growth opportunities as well as additional value building initiatives and transactions for our shareholders. We are now happy to take your questions. Liz?

[Operator Instructions]

Our first question comes from Eric Handler with ROTH Capital.

This is Jack Weisberger on for Eric. I want to focus on iGaming. Is there anything in particular that drove down the quarter-over-quarter decline could have been related to user acquisition costs maybe the U.K. tax changes? Anything on that would be helpful.

Yes. Sure, Jack. That's fine. I mean essentially, Q2 was down very slightly -- essentially flat from Q1. And we certainly, in Q1, as IK earlier expressed, had to, as we started Q2, deal with the significant increase in the tax rate starting on April 1 in the U.K. And so we made certain product adjustments and marketing adjustments, as I think I mentioned, we spent significantly less in player acquisition investment in Q2 as we wanted to see how the various competitive larger competitors played out as they also dealt with the U.K. tax change. And so all that put together, kind of, moderated our -- certainly moderated our sequential growth in revenue. But at the same time, we're quite pleased with the impact on player retention and how we remain, I think, very cost conscious during the quarter, recognizing the increase in the tax rate. So that, as I think it was earlier mentioned, we were able to mitigate, at least on the expense side and certainly on the profit side, the impact of the tax increase.

That all makes sense. And then also on free cash flow. You had a nice year-over-year improvement in the first half. I know you mentioned some income tax timing or maybe there is some seasonality as well. Should we see more of a headwind due to that income tax timing year-over-year in 2H? How should we think about free cash flow for the year?

Yes. I mean Q2 generally is when we have tax payments due. So it really is, I guess, you could call it, seasonality. I mean we've seen this over the last few years that from a cash flow generation standpoint because of tax payment timing, Q2 tends to be kind of a low watermark when it comes to quarterly cash flow.

Our next question comes from Aaron Lee with Macaquarie.

I'm curious to hear more about the U.K. tax increase. Can you just talk a bit about how trends were post the tax increase as you layer on your mitigation? Has there been any change in how you're thinking about mitigation and maybe to tie it all together, how should we be thinking about the trajectory of SuprNation going forward in terms of both revenues and profits.

Yes. No, it's really important to understand that we're trying to balance with a significant change essentially increase in the cost of doing business in the U.K., trying to balance revenue growth with profit and with returns on the business that we purchased a few years ago. And so as we look over the last, well now, it's been what, 4.5 months since the tax increase occurred and since we're able to observe what -- again, some of our larger iGaming competitors are doing in the market, we feel like we've struck a good balance between revenue and profit, and we don't want to lose sight of the fact that we are going to still invest in acquiring players, but we're also going to make sure that we appropriately spend the money to get the returns that we need relative to that investment and make the right product adjustments, whether it be RTP, bonus rates, those kinds of things, to also, kind of, balance the revenue and profit equation.

Okay. Got it. That makes sense. And then with regard to marketing, especially with -- for SuprNation marketing, do you expect to stay at these reduced marketing levels? Or do you see opportunities to kind of increase that in the back half? And just any general thoughts on how you're thinking about marketing in the second half of the year would be helpful.

Yes. I mean if you look at our marketing spend over the last 2 quarters, it's really been fairly constant and we're -- as a company. And we see that being true for the rest of the year, at least, and we are looking, again, to kind of balance what we need to invest on our iGaming side versus on the social casino side and recognizing that we have to invest to acquire new players in both businesses.

And a lot of what we -- as I've mentioned in the past, what we do is make real -- literally real-time adjustments based on the ROIs that we are seeing from various markets with various agencies, et cetera, et cetera. But I do think that our, kind of, more recent run rate is pretty much where we're going to be for the rest of the year.

Our next question comes from Josh Nichols with B. Riley.

Yes. The direct-to-consumer crossing threshold stood out that's well in excess of where you thought it would be at this time of the year. Is there, I guess, a realistic ceiling in place or a point where you think some of those additional gains may stop dropping to the margin line? Or what's your expectation for where that could wind up by, say, year-end?

Josh, let me take the question. Our 50% [indiscernible] share is already an industry benchmark, but we see more room for further growth. Our consistent strategy is to mitigate -- migrate actually, migrate valued users step-by-step to our own platform, while maintaining a healthy balance across mobile app store by combining strong in-house DTC-related technology with real-time [indiscernible] features.

We are not just reducing fees, but deepening users trust. So we have been proactively investing in our DTC capabilities, particularly in owned channels, direct CRM and payment infrastructure, which allow us to communicate and transact with value players more efficiently outside of traditional platform constraints. We are not just reducing fees, but deepening user trust. I expect this focus on DTC integration to drive steady, incremental growth and sustain our leadership in the market.

No, thanks for the granularity there. Can you break out, you touched on it a little bit, but like what's the organic social casino growth if we strip out. While I know you did mention like ENK is projecting social casino revenue generally to be like down 5% this year, but also that you noted that you expect to outperform that. Are you currently trending in line with the industry expectations or a little bit better? Or how should we think about that?

Yes. I mean without quantifying it directly, I mean, listen, we're really quite happy with the first half of the year on the social casino side and -- where both on the traditional DoubleDown side as well as on the WOW side, we've pretty much been able to more than hold our own relative to what is a declining market, I'll say.

And so yes, I think, obviously, the market is contracting based on both what IK say, but also what some of our competitors have already publicly reported. But we have been able to do incrementally better, at least in the -- so far in the first half of the year.

That's good to hear. And then last question for me. I know you're not going to give any commentary on some of the reviews for the special committee, but is there anything you'd say about the timeline, is there a potential resolution expected before like the next earnings report?

Yes. As Joe mentioned upfront, we have nothing to report regarding the work of the special committee on the DUG proposal. The special committee is working diligently, and we certainly look forward to hearing from them when progress has been made. And certainly, we're committed, obviously, with the special committee to communicate any and all progress when it's appropriate.

Our next question comes from David Bain with Texas Capital Bank.

First, IK and Joe, great execution for the quarter. Maybe first to follow up on Aaron's question. As you saw in 2Q, the industry leader plan to curtail some spend in the back half in terms of promotions. And I'm just wondering if that's a sign that the industry generally is becoming more rational? Or is it reactive to some sort of new consumer indicator? and I know, Joe, you mentioned the run rate for you guys will likely stay the same, but just given the environment, could that be beneficial? And can you lean into that potentially in the back half to acquire users?

I'm sorry, Dave, you meant on the iGaming side or social casino side?

I'm sorry. No, on the social casino side, the social casino side.

Yes. I mean we've been spending within a certain fairly narrow range on the social casino side for, I think, quite some time. I think I mentioned on the last call that towards the end of Q1, we started to see ROAs -- our ROI on acquiring new players to be getting better. And so we leaned into it a bit. That mitigated a bit in -- as we got into the rest, Q2, and so we pulled back a bit. I mean, I don't think there's a huge variation from quarter-to-quarter in social casino, at least from our perspective in how we view what we do in acquiring new players because, as I said, it's all based on near real-time calculation of returns, right? For 3-, 7-, 21-day returns on acquiring new players, and that informs our spending.

I would say that I think in general, we've always prided ourselves in being quite disciplined in that. I won't compare us to competitors. But I will say that we've always been, I think, very judicious as it relates to acquiring new players, and we'll continue to be that way.

Okay. Great. And then a follow-up on the D2C comments. Obviously -- again, in social, obviously, you guys are higher than the high that has been reported in the past. I'm just wondering if you could speak to, sort of, any, sort of, balancing act with D2C in revenue growth. I mean, we've seen some check-siting smaller operators outperforming larger for the first time in a long time in social. And I was wondering if maybe that was -- some of that leaning into D2C by the bigger players? Or is it not -- are you not seeing any sort of revenue balancing that needs to occur at this point?

Yes. I mean to be honest-- I mean, it's a good question, right? To be honest, we've -- and IK mentioned this, right? Our growth in DTC, which has been quite dramatic, frankly, is not on the back of just giving more benefits. And we're very -- have always been very sensitive to not wanting to overly inflate our economy or be too generous in inappropriate way relative to the offers that we give and that includes in the incentives that we give for direct-to-consumer.

A lot of what we've done is, we think, in order to get the kind of growth that we've seen is to implement DTC really well and to reduce or even near eliminate the friction of the alternative pay pass, payment pass, if you will. And yes, there is some additional benefit to the payer, but it's nothing that we think has -- to directly answer your question, really impact -- negatively impacted our revenue.

Thank you. This concludes today's conference call. Thank you for joining us today. You may now disconnect.

Good afternoon, and welcome to DoubleDown Interactive's Earnings Conference Call for the First Quarter ended March 31, 2026. My name is Latif, and I will be your operator this afternoon. Prior to this call, DoubleDown issued its financial results for the first quarter of 2026 in a press release, a copy of which 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 DoubleDown's CEO, Mr. In Keuk Kim; and its CFO, Mr. Joe Sigrist. [Operator Instructions]

Before we begin, Joe Jaffoni, the company's Investor Relations adviser, will make a brief introductory statement. Mr. Jaffoni?

And thank you, Latif. And 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 Securities Exchange Act of 1934 as amended, and we hereby claim the protection of the safe harbor provision of the Private Securities Litigation Reform Act of 1995. Forward-looking statements are statements about future events and include expectations and projections, not present or historical facts and can be identified by use of the words such as may, might, will, expect, assume, believe, intend, estimate, continue, should, anticipate or other similar terms. 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.

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. We refer you to DoubleDown's annual report on Form 20-F filed with the SEC on March 31, 2026, and other SEC filings for a more detailed discussion of the risks that could impact future operating results and financial condition. 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.

During today's call, management will discuss non-IFRS financial measures, which management believes 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 financial results prepared in accordance with IFRS. A full reconciliation of these measures to the most directly comparable IFRS measures is available in the earnings release issued this afternoon. I would like to remind everyone that this call is being recorded and will be made available for replay via the link in the Investor Relations section on DoubleDown's website.

Thank you for your patience with that. And it's now my pleasure to turn the call over to DoubleDown's CEO, IK Kim. IK, please go ahead.

Thank you, Joe. Good afternoon, everyone. We are delighted to be with you today to discuss DoubleDown Interactive's first quarter 2026 results. Key highlights include overall financial results reflecting a solid start to 2026, the highest quarterly revenue at SuprNation since our acquisition of the business back in 2023, significant continued growth of our direct-to-consumer social casino revenue and another quarter of delivering consistent profitability and significant free cash flow. We believe these results validate our strategy and demonstrate our ability to drive operational excellence across our portfolio.

Let's start with the financial results. This afternoon, we reported first quarter consolidated revenue of $94.1 million, up nearly 13% year-over-year, along with adjusted EBITDA of $38.2 million, up 24% year-over-year. In Q1, we again delivered on our priority to drive a high conversion of revenue to profit and cash flow. Net cash flow from operations was $46.4 million in the quarter. We delivered this strong profit and cash flow results even as we invested in new player acquisition activities at SuprNation, specifically in support of its recently launched first iGaming brand, Los Vegas, which has met with a strong player response.

Our social casino segment remains the primary engine of DoubleDown's profit and cash flow generation. In the first quarter, social casino revenue grew 9.5% year-over-year to $76.9 million, driven by the contribution from WHOW Games, which was acquired in the third quarter of last year. The direct-to-consumer or DTC aspect of our social casino business remains a driving force behind our continued strong profitability. As mentioned on our last conference call, WHOW Games already benefits from a relatively large DTC component due to its strong web-based history. And over the last few quarters, we have made significant progress in ramping up DTC purchases within our flagship social casino DoubleDown Casino.

In the first quarter of 2026, this direct-to-consumer transition accelerated as the DTC component of DoubleDown Casino revenue exceeded 40%. As a result, DTC revenue in the first quarter was 44% of total social casino revenue, up sequentially from 33% in Q4 2025. We plan to remain focused on optimizing the contribution of DTC revenue as a percentage of our overall social casino revenue throughout 2026. Recognizing that the global social casino market is estimated to be in secular decline, our priorities in this business segment remain precise execution of our product development initiatives around player and player retention, focus on marketing and live ops activities to maximize payer conversion and purchasing activity and continued focus on the direct-to-consumer transition.

Turning to our iGaming business. SuprNation's Q1 2026 revenue was $17.2 million, an increase of 30% year-over-year and up 6% from Q4 2025. The recent introduction of our first iGaming casino title, Los Vegas contributed to the strong SuprNation results in the first quarter. Going forward, we look to leverage this early positive results as we continue to acquire new players through marketing and advertising investments. At SuprNation, we are also focused on continuing to find offsets to the recently introduced higher U.K. gambling tax rate through product adjustments such as reducing bonusing rates. I'm pleased to report the early results of this action to be positive.

Our first quarter results highlight how prudent targeted investments are uncovering growth opportunities while sustaining our track record of strong profitability and cash flow generation. We are successfully integrating acquisitions and optimizing our core DoubleDown business. M&A remains a strategic priority as we evaluate opportunities in online gaming and mobile entertainment to drive long-term shareholder value.

Now I will turn the call over to our CFO, Joe Sigrist, to walk us through the financials before providing my closing remarks. Joe?

Thank you, IK, and good afternoon, everyone. To review, revenues for the first quarter of 2026 were $94.1 million. This compares to total company revenues of $83.5 million in the first quarter of 2025. Our social casino segment grew approximately 9% from the first quarter of 2025 to $76.9 million, boosted by the inclusion of revenue from WHOW Games. As you'll recall, the WHOW Games acquisition closed in July of last year. iGaming revenues grew by $4 million or 30% year-over-year to $17.2 million and was up over $1 million from Q4 2025.

Regarding our overall social casino KPIs, we mentioned last quarter that the metrics from WHOW Games are somewhat different from those from DoubleDown Casino. Specifically, the WHOW Games business experiences a higher payer conversion rate and lower average monthly revenue per payer. With this in mind, overall social casino KPI highlights for the first quarter include the payer conversion rate, which is the percentage of players who pay within the social casino apps, increased to 9.7% in Q1 2026 compared to 6.9% in Q1 2025. The average revenue per daily active user or ARPDAU of $1.34, up from $1.29 in Q1 2025 and an average monthly revenue per payer at $207 in Q1 2026, down from $276 in the prior year period.

In the first quarter of 2026, operating expenses were $58.7 million compared to $53.9 million in the first quarter of 2025. The increase is primarily due to the addition of WHOW Games expenses. Sales and marketing expenses for the first quarter of 2026 were $17.4 million compared to $14.1 million in the first quarter of 2025, which again did not include WHOW Games. In addition, and as IK mentioned earlier, in Q1, we invested to acquire new players for SuprNation's recently announced fourth brand. And in the fourth quarter -- excuse me, in the first quarter, we also saw an opportunity to increase advertising investment in DoubleDown Casino based on recent positive ROI trends.

Profit, excluding noncontrolling interest for the first quarter of 2026 increased 48% to $35.4 million or earnings per fully diluted common share of $14.28 or $0.71 per American Depositary Share in the first quarter of 2026 compared to profit for the interim period of $23.8 million or earnings per fully diluted share of $9.62, $0.48 per ADS in Q1 of 2025. The increase primarily reflects higher revenue and higher unrealized gain on foreign currency, partially offset by higher overall operating expenses, which was primarily due to the inclusion of WHOW Games and increased costs associated with the revenue growth from SuprNation.

Adjusted EBITDA for the first quarter of 2026 rose to $38.2 million compared to $30.8 million for the first quarter of 2025 and $40.6 million for Q4 2025. Adjusted EBITDA margin was 40.6% for Q1 2026 as compared to 36.9% in Q1 2025 and 42.4% in Q4 2025. Net cash flows provided by operating activities in Q1 2026 were $46.4 million compared to $41.1 million in Q1 2025 due to higher profit and lower income tax paid. Inclusion of Q1 2026 meaningful cash generation, we had $533.4 million in cash, cash equivalents and short-term investments with a net cash position on March 31, 2026, of approximately $500 million or approximately $10.10 per ADS.

Now I'll turn the call back to IK for closing remarks.

Thank you, Joe. DoubleDown Interactive powered by our core social casino and iGaming segments delivered another quarter of strong profitability and cash flow. Building on this solid start to 2026, we remain committed to innovation and disciplined high ROI investments and to drive DTC revenues to optimize social casino margins. Finally, our strong balance sheet and cash position provide the flexibility to pursue strategic M&A, a core pillar of our strategy to enhance long-term shareholder value.

We are now happy to take your questions.

[Operator Instructions] Our first question comes from the line of David Bain of Texas Capital Bank.

Great. And I did read the press release where you're sort of not going to be answering too much around the DoubleU expression of interest. With that being stated, though, rather than asking about vote outcome potential or some of the nuances with that offer, is there any way you could help shareholders or potential ones or us just to review the process and kind of the structure, the related structure with it from here? Just any detail around that would be helpful, this independent committee, who may be on it, the timing of some of the voting logistics. Anything that you think you could share would be helpful.

Yes, Dave. I mean, it is really not possible to say anything more than what's already been publicly disclosed. As you know, we formed a special committee. The Board voted to form a special committee of independent disinterested directors just after receiving the proposal. And their objective is to review, evaluate and determine the next steps that would be in the interest of the company and its unaffiliated shareholders. Other than that, there's not anything else the company can comment on.

Okay. I understand. And then I guess, let me just ask 2 fundamental ones because that one I didn't get much. The incremental -- or the increased visibility into SuprNation EBITDA contribution this time around relative to last time. Are we seeing the endpoint on that inflection broadly this year? And are we sort of still breakeven with that business line?

Yes. Yes, great question. So as you know, we've been looking to get beyond breakeven even with SuprNation since we purchased them. And by the way, SuprNation had a very strong quarter. And so with Q1, not yet including the increased tax burden from the increase in the U.K., we saw that they actually were able to reach breakeven and even turn a bit of a profit. The tailwind of the growth of the business, the fourth brand that was recently launched, all were very positive.

Of course, the headwind now, if you will, starting April 1 is the increased U.K. tax amount. But as IK mentioned, some of the actions that we're taking have been, at least so far, early days looking good as it relates to trying to kind of mitigate some of the expenses on the business. And so it's a little too early to tell just based on the fact that we're only a little over a month into the new tax regimen, but we're still very focused on getting that business to be profitable and to grow the profit over time.

Okay. Awesome. And then if I could just have one more follow-up. Just -- and you did mention, Joe, the KPI nuances between WHOW and DDI, DoubleDown Interactive. But if you could bifurcate perhaps DTC growth or the mix with the 2. I mean we're getting here at like 44%. We were kind of 20-plus percent, I would think, by now, with DDI. Can we get -- can you help us like -- can we get to 50% plus? I'm trying to understand where we are inning-wise with DTC as a full company.

Well, I think as I believe IK mentioned, DDI traditional, if I can use that word, let's call it DoubleDown Casino, by itself was over 40% in Q1. So the growth essentially sequential from 33% DTC total in social casino last -- in Q4 to 44% in Q1. In one quarter, going from 33% to 44% was primarily based on the growth of DTC in DoubleDown Casino. It's a great question. How far can it go -- how far further can it go, both with traditional DDI as well as WHOW. It's hard to predict. I mean we've made incredible progress over the last 2 years. And it's hard to handicap it, but we're really pleased with the results so far.

Our next question comes from the line of Eric Handler of ROTH Capital.

I'm going to beat the horse to death here with the question on the DoubleU offer. But when you look at potential acquisitions, is that on hold for the moment until the offer has been evaluated? Or are you still actively looking for potential deals?

Yes. Thanks, Eric. Well, I mean from a operating the company perspective, the management team here at DoubleDown continues to operate business as usual. And so we are continuing not only to run the current businesses we have, but to evaluate and analyze M&A opportunities because that's certainly been a big part of what we've been focused on. And so it's a big part of our growth strategy. And so we're continuing to look at opportunities.

Okay. And then as a follow-up, so you did give a little bit of comment on the higher U.K. casino tax or iGaming tax. What are you doing to sort of mitigate the impact? Are you passing some of that along to the consumer? And what's happening to user acquisition costs with this in the last, I guess, 40 days?

Yes. So IK, if you'd like, I'll talk a little bit about CPI, user acquisition costs. If you want to talk a little bit about what we're doing to counteract the headwind of the tax increase, feel free. I mean as it relates to CPIs, there has been, I think, moderation in the expense. I don't know if it's been reduced significantly. But certainly, some of the increases that we saw not only in the iGaming space, but also in gaming as a whole, I'll say. I mentioned that we leaned in a bit more even on the social casino side with DoubleDown Casino in the last quarter. We're seeing some opportunities for us to spend more. And so that's been positive.

Relative to the situation with iGaming in the U.K., it's still very early days. We're very keen to continue to observe what our much larger competitors are doing in that space. But we certainly are being -- trying to be as flexible as we can because we are still, as I mentioned earlier, very focused on getting the profitability up on the iGaming business.

IK, do you want to talk a little bit about some of the things we're doing on SuprNation?

Yes. On the marketing operational side, we actually leveraged real-time data analytics to optimize user acquisition costs and enhance retention. And while we are mindful of the evolving regulatory and tax landscape in the U.K. side, we are seeing the decreasing CPI cost, but it will depend on the budget side. So our strategy is just to mitigate these headwinds through our portfolio expansion. And I think we are testing the -- ramping up right now. So it's early to say, but yes, it will go better.

Comes from the line of Aaron Lee of Macquarie.

Maybe to start just building off the earlier question on M&A. Can you just update us on what the M&A environment looks like today? Are you still seeing deals across your desk? And what's been the gating factor so far? Are these deals just too small to move the needle? Or are seller expectations misaligned? Any color on the M&A picture would be helpful.

Yes, sure, Aaron. Thanks a lot. Yes, I mean there are still deals out there. I mean it's clear that valuation expectations, as we've discussed in the past or the more recent past, are down, which as a buyer is good. And there are a number of deals that are also smaller, Aaron, to your point, which for us, we've been looking to continue to ratchet up. I mean our first deal with SuprNation spent $30 million, $40 million. Our next deal with WHOW spent $65 million and added something on the order of $40 million to $50 million in annual revenue. And so the next deal is also looking to be a step-up, we would expect. But it's hard to predict when that will happen. There are deals out there, and we're continuing to use our disciplined approach to analyzing them. And yes, we're on the look.

And I also wanted to ask about your comment about the opportunity you saw during the quarter to increase the advertising investment in DoubleDown Casino. Is there any more detail you can provide on what you saw in the market as you move through the quarter? And do you have visibility into whether those trends are sustainable in the coming quarters?

Yes. No, good question. We were pleased to see that as IK, I think, also mentioned, the CPIs had looked a little better for us, a little lower in Q1. Now Q4 is always a pretty tough environment. So there's always a Q4 to Q1 improvement. But that, coupled with our -- I mean it's the ROI that's the most important, right? Can you monetize quickly in the new player acquisition, and we were able to see that. So not only was there good news on the CPI side, but we were also able to translate that into payer engagement. And so that's why we spent -- not a ton more, but a bit more.

And certainly, we're always glad to do that. As far as whether it's sustainable or not, it's very difficult to tell. But again, as we've talked in the past, we analyze the cohorts that we acquire -- new player cohorts that we acquire on a daily, weekly basis. And so we're always looking to lean into acquiring new players if we can.

[Operator Instructions] Our next question comes from the line of Josh Nichols of B. Riley.

Just to touch on the social casino business. We've seen some improvement there. What was the organic growth rate ex WHOW? I'm just curious how we should be thinking about that trajectory as we lap the WHOW acquisition in July and move into the second half?

Yes. I mean certainly, the -- as mentioned earlier, social casino is a very mature category, and it's estimated to be in secular decline. So there's no question that there's headwind when it comes to trying to grow the existing business, whether it be DoubleDown Casino or WHOW. But if you look at our results compared to what Eilers, for instance, estimates, we think we did more than hold our own in the first quarter.

But there's no question, given the maturity of this category, it's still incredibly cash generative and incredibly profitable. But given the maturity of the category, that's why our strategy is also focused on, well, optimizing profitability, as we've talked about through DTC and leaning into opportunities to grow as we can relative to acquiring new players when the ROI makes sense. And then obviously, as a company, looking for M&A opportunities to continue to expand the top line.

And last question for me. I mean there's been a couple of questions on, obviously. I wouldn't expect you to comment on the proposal itself, but anything you could say about the timing around forming a special committee or how long until the process could reach a decision?

Well, the special committee has been formed. I mean we sent out a press release a couple of weeks ago on that. And so they've been able to do their job. And as far as the process or the time line, it's not something that we have exposure to at the company.

Thank you. That does conclude the Q&A portion of our call and our conference for today. Thank you for participating. You may now disconnect.

Good afternoon, and welcome to DoubleDown Interactive's Earnings Conference Call for the Fourth Quarter Ended December 31, 2025. My name is Sherry, and I will be your operator this afternoon.

Prior to this call, DoubleDown issued its financial results for the fourth quarter of 2025 in a press release, a copy of which 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 home page.

Joining us on today's call are DoubleDown's CEO, Mr. In Keuk Kim; and its CFO, Mr. Joe Sigrist. Following their remarks, we will open the call for questions. Before we begin, Joe Jaffoni, the company's Investor Relations adviser will make a brief introductory statement.

Thank you, Sherry. 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 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.

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.

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.

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.

We refer you to DoubleDown's annual report on Form 20-F filed with the Securities and Exchange Commission on April 21, 2025, and other SEC filings for a more detailed discussion of the risks that could impact future operating results and financial condition.

These forward-looking statements are made only as of the date of today's call. The company does not undertake and expressly claims 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.

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. A full reconciliation of these measures to the most directly comparable IFRS measure is available in the earnings release issued this afternoon.

I'd 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 DoubleDown's website.

Thank you for your patience with that. And it's now my pleasure to turn the call over to DoubleDown's CEO, IK Kim. Go ahead, please.

Thank you, Joe. Good afternoon, everyone. We are delighted to be with you today to discuss our fourth quarter and full year 2025 results. Key highlights include continued year-over-year growth of SuprNation, the first full-quarter contribution from WHOW Games, the significant growth of our direct-to-consumer revenue stream and continued strong profitability from our business model.

We continue to demonstrate our ability to deliver strong adjusted EBITDA and drive high levels of cash flow, fundamental factors that we believe will contribute to increased shareholder value.

Let's start with the quarterly results. This afternoon, we reported fourth quarter consolidated revenue of $95.8 million, up 17% year-over-year and adjusted EBITDA of $40.6 million, up 16% year-over-year. In Q4, we again delivered on our operating priority to drive a high conversion of revenue to profit and cash flow.

Net cash flow from operations was $42.6 million in the quarter, bringing the total for full year 2025 to $136.8 million, and we continue to deliver this profit and cash flow results as we invested in new player acquisition activities at SuprNation.

Our Social Casino business continues to be the engine of profit and cash flow generation for the company. In the fourth quarter, Social Casino revenue grew 9% year-over-year to $79.7 million, driven by our first full-quarter of contribution from WHOW Games.

WHOW Games benefits from broad payer engagement, which, as you can see, is reflected in our strong Q4 total Social Casino payer conversion rate of 9.6%. This is up from a conversion rate of 6.9% in Q4 2024. Conversely, WHOW Games players on average spend less than those from the traditional DoubleDown Social Casino business, resulting in lower total Social Casino monthly average revenue per payer of $198 as compared to $282 in Q4 2025.

We have spent the last few months working closely with WHOW Games and see operational and product synergies between it and our traditional DoubleDown Social Casino business. In addition, while the overall social casino market has growth challenges, we see growth potential outside the United States and look to further leverage the WHOW Games acquisition, particularly in Europe.

As discussed in the past, we have been working hard to increase the direct-to-consumer or DTC element of our Social Casino revenue. WHOW Games benefits from a relatively large DTC component due to its strong web-based history. And mostly importantly, we significantly ramped DTC purchases made in DoubleDown Casino in Q4.

During the quarter, we launched product features and introduced purchase offers, which focused on DTC. As a result, DTC revenue exceeded 30% of our total Social Casino revenue in the first (sic) [ fourth ] quarter. We plan to continue to optimize our Social Casino business to benefit from the DTC transition and are focused on driving further growth of DTC revenue as a percentage of our overall Social Casino revenue in 2026.

Turning to our iGaming business. SuprNation's Q4 2025 revenue was $16.1 million, up 78% year-over-year. For perspective, SuprNation's quarterly revenue run rate has more than doubled since DoubleDown closed this acquisition a little more than 2 years ago as we continue to make positive progress on acquiring new players while implementing product and operations improvements.

From an innovation perspective, we fully launched our first iGaming casino title called [ Wolf Sierra ] in the U.K. market and are now working to optimize its marketing strategy and operations as we look to ramp its player base and bring the brand to other markets.

You can see from our results that our prudent investments are continuing to provide growth opportunities and enhanced player engagement, resulting in strong profits and cash flow. We continue to demonstrate the ability to successfully integrate acquisitions while we innovate in our core business.

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

Thank you, IK, and good afternoon, everyone. To review, revenues for the fourth quarter of 2025 were $95.8 million and were comprised of $79.7 million in revenues from our Social Casino business and $16.1 million of revenues from SuprNation. This compares to total company revenues of $82.0 million in the fourth quarter of 2024.

Our Social Casino segment grew 9% from the fourth quarter of 2024 to the $79.7 million level as we realized our full first quarter of WHOW Game revenue.

iGaming revenues grew 78% year-over-year to $16.1 million and were essentially flat from Q3 2025 as we began moderating previously increases in spending to acquire new players.

As we have done since acquiring the business, we closely monitor the projected ROI of the marketing investment in SuprNation and make adjustments as appropriate based on these projections.

IK discussed the influence of WHOW Games on our overall Social Casino KPIs which have helped increase the payer conversion rate while reducing the average monthly revenue per payer in the fourth quarter of 2025 as compared to Q4 2024. One reason for this dynamic is the greater proportional use of Android mobile devices versus Apple devices in Europe as compared to the U.S. Specifically, the payer conversion rate, which is the percentage of players who pay within the Social Casino apps, increased to 9.6% in Q4 2025 compared to 6.9% in Q4 2024.

Average revenue per daily active user or ARPDAU of $1.35 was up from $1.30 in Q4 of 2025. And average monthly revenue per payer was $198 in Q4 2025, down from $282 the prior year period.

In the fourth quarter of 2025, operating expenses were $65.9 million compared to $47.8 million in the fourth quarter of 2024. The increase is primarily due to impairment loss recognized for SuprNation's goodwill and increased operating expenses from the addition of WHOW Games compared to the prior year period, partially offset by lower R&D expenses.

Sales and marketing expenses for the fourth quarter of 2025 were $16.5 million compared to $10.4 million in the fourth quarter of 2024. In Q4, we optimized spending to acquire new players for DoubleDown Casino, invested in advertising spending for SuprNation to focus on new player acquisition and absorb the full quarter of marketing expenses at WHOW Games for the first time.

Profit, excluding noncontrolling interest, for the fourth quarter of 2025 decreased 31% to $24.7 million or earnings per fully diluted common share of $9.72, $0.49 per ADS in the fourth quarter of 2025 compared to profit from the interim period of $35.7 million or earnings per fully diluted common share of $14.40, $0.72 per ADS in Q4 of 2024.

The decrease primarily reflects the impairment loss on SuprNation goodwill. Looking beyond the impairment charge, adjusted EBITDA for the fourth quarter of 2025 rose to $40.5 million compared to $35.3 million for the fourth quarter of 2024 and $37.5 million for Q3 2025. Adjusted EBITDA margin was 42.3% for Q4 2025 as compared to 42.8% in Q4 2024 and 39.1% in Q3 2025.

Net cash flows provided by operating activities in Q4 2025 were $42.6 million compared to $45.9 million in Q4 2024. And for all of 2025, despite a number of changes to our operations, we again generated significant free cash flow as net cash flows provided by operating activities were $136.8 million. With this meaningful generation of cash in 2025, we had $490 million in cash, cash equivalents and short-term investments with a net cash position at December 31, 2025, of approximately $455 million or approximately $9.19 per ADS.

Now I'll turn the call back to IK for closing remarks.

Thank you, Joe. DoubleDown Interactive is delivering strong profit and cash flow from our 2 meaningful and exciting businesses, Social Casino and iGaming. In 2026, we are continuing to innovate and enhance these businesses through product, live operations and marketing improvements. For example, we recently launched new Meta features in DoubleDown Casino, increasing the SuprNation which gamifies the player opportunities to increase their purchase motivation and we are continuing to generate ways for players to further take advantage of DTC purchase options, thereby allowing us to further expand Social Casino margins.

Our strong balance sheet and cash position allow us to make disciplined investments in each of our businesses while continually evaluating new opportunities to enhance the growth of each. This includes investments through both organic means as we leverage the strength of our talented teams and through our evaluation of potential future acquisitions.

We are now happy to take your questions. Sherry?

[Operator Instructions] And our first question will come from the line of David Bain with Texas Capital Bank.

Nice quarterly execution again. Maybe if you could help us bifurcate DoubleDown Casino and WHOW revenue contribution and growth. And I assume, just based on the D2C mix, WHOW has a pretty high mix. Could you bifurcate do you see gains in mix for both WHOW and DoubleDown as well?

Yes. Thanks, Dave. Appreciate that. Yes, going forward, we're going to, as we started in Q3, continue to formally report our KPIs and our revenue in the social casino sector and not specifically quantify WHOW Games versus the traditional DoubleDown Social Casino business.

But I can say that in both cases, the businesses held their own during the quarter. Certainly, as we continue to look at, for instance, the industry reports, we know that the social casino sector was down slightly in the year in 2025. And so from a growth perspective, both companies are -- both entities of ours are working hard to grow in what is obviously a very mature category.

Relative to DTC, yes, I mean I definitely want to highlight that -- well, 2 things. One, as you mentioned, the DTC element, if you will, in WHOW Games has always been quite high because many of their players actually still play through a website, whether it be on the phone, their phone or on their computer and they historically have had a large kind of non-app store contribution from their purchasers. But at the same time, I don't want that to mask the really significant increase we saw on the double -- on the traditional DoubleDown casino side in ramping DTC. And obviously, from a just a pure size perspective, that is the largest contributor to our overall revenue and certainly was the largest contributor to the increase in our DTC results.

Awesome. Very helpful. And then I guess my follow-up would be the leader of the Social Casino group announced some employee reductions recently, and they're going to rely more on AI and automation. One, can we get an update as to what DoubleDown a while the combined company is doing from that standpoint? And then again, if we look at the industry just from a bigger picture and you see Aristocrat's recent divestiture of non-social casino assets. I don't know if they lean more into marketing.

I guess the question is, are you seeing the broader promotional landscape is rational elevated or even benign as just revenue for the sector continues to be. On the current growth trajectory. So kind of 2 questions, one on AI and automation and the other on just promotions out there.

Yes. No, I'll take the second one then I can talk about AI. Relative to the business, I mean, obviously, as the industry has matured, we've all had to deal with making our businesses more and more profitable. And in fact, one of the things that I think we've been recognized for is early on, not going crazy as it relates to overspending, frankly, to acquire new players. We moderated our player acquisition spend back 2, 3 years ago. And we've been staying very disciplined to our measuring systems and how we predict LTV, et cetera, et cetera.

And I think that as we look forward, Social Casino and the Social Casino business is all about efficiency. Yes, it's about innovation. Yes, it's about doing everything we can to continue to acquire new players and get our players to be excited about playing and ultimately purchasing. And at the same time, just becoming more and more efficient in all aspects of that business. And to that end, AI is an important element. So I'll turn it over to IK, he can talk a bit about AI I think in that context.

Thank you, David, AI is everywhere nowadays and already driving meaningful change across the broader technology and gaming industry and DDI is no exception.

First, in content production, AI is helping us accelerate asset creation, localization and early-stage prototyping. So this shortens development cycles, levy and improves our ability to test concepts and Meta features more efficiently. Second, in live operations AI-driven analytics enable us to better personalize player experience, including offers, challenges and engagement mechanics based on behavior patterns and real-time data. And third, in marketing optimization, as Joe mentioned, AI enhances our audience targeting precision, greater iteration speed and performance monitoring supporting stronger ROI discipline. So we are building these capabilities shortly and responsibly integrating AI into our workflows while maintaining strong creative and operational oversight. Overall, AI is not just about cost efficiency for us. It is about increasing speed, improving decision quality and ultimately enhancing returns across the business.

One moment for our next question. And that will come from the line of Aaron Lee with Macquarie.

I guess on SuprNation, I believe you mentioned moderating the previous increases in customer acquisition spend. Is that just kind of temporary? Or is that signaling a shift more towards driving profitability? And how should investors be thinking about the long-term margin structure of that business?

Yes. No. It's definitely, I guess, a reaction, if I could use that term to what I mentioned earlier, which is staying true to our discipline relative to measuring the ROI of acquiring new players. And what we've seen -- I think as we've discussed for the past several quarters, we were able to really lean into marketing and acquiring new players in SuprNation without reaching the -- that threshold of payback and ROI. But more recently, we have started to kind of bump up against the threshold where we've decided at least on a sequential basis to moderate the spend or in the sense to moderate the increase because we spent essentially the same amount from Q3 to Q4.

We just didn't increase it again. And in 2026, it will be interesting to see. I mean there are a number of changes going on. Many people, I think, understand that there are gaming tax changes, specifically in the U.K. for online games.

And so we're going to have to deal with that, and we're going to have to deal with what is, I think, an exciting opportunity as we further invest and lean into this fourth brand for SuprNation that we launched. And so we're going to have to continue just to be mindful of our disciplined approach to spending marketing dollars.

Got you. Okay. That's helpful. And then on direct-to-consumer, you had really impressive results there. Nice growth with WHOW Games but you also mentioned on the traditional DoubleDown Casino side as well. I guess any updated thoughts on where this can go over the next few quarters?

Yes. I mean I think I'll definitely speak for IK in saying that our ability to take advantage of DTC, again, WHOW Games aside, just on our traditional business has even been faster than we would have thought. And I'm not going to say if there's -- what the limit of that is, what the plateau level will be, but we're not there yet for sure, and we're going to continue to ramp DTC revenue as a percentage of our overall Social Casino revenue.

And so that's what we're continuing to work on from a product and a messaging standpoint, in-app communications and all of the rest. And as I think IK mentioned, we even have new things that we've already launched this quarter to take advantage of that.

[Operator Instructions] One moment for our next question. That will come from the line of Eric Handler with ROTH Capital.

So I know you guys get asked this question a lot, but I understand you're looking for acquisitions to grow the business. But when you think about how much free cash flow you generate a year, I mean, if you allocated 20% to capital returns, you'd still have over $100 million or $2 per share to grow your existing cash base. You're definitely overcapitalized at this point.

So is there any gating factor that's preventing you from either thinking about a buyback or a dividend? Or what do you -- is there something that would signal that you're ready to return capital?

Yes. Thanks, Eric. Thanks for the question. I would definitely just reinforce the fact that long-term shareholder value and return to shareholders are topics that are top of mind for the company, have been and continue to be. Management and the Board and our controlling shareholder continue to discuss ways to create shareholder value.

And as you said, the results so far, at least up until now, has been a strong consensus that the way to create long-term shareholder value is through our M&A strategy, dealing with kind of the biggest challenge we have in the company, which is the very mature nature of the Social Casino business.

That being said, there isn't any particular trigger or any particular event that would say we can do more than that with our cash balance, other than the fact that it gets bigger and bigger, and we certainly are mindful of that and we certainly want to be sensitive to having such a large balance sheet.

And so not only do we continue to talk about long-term shareholder value and return to shareholder, we also continue to discuss ways that we can do more than one thing at a time with our strong balance sheet. And as I said, those are very -- always very present very much in the minds of everybody who's associated with this company.

Okay. And then as a follow-up, curious just from accounting standpoint, has something changed at all with SuprNation that caused you to take an impairment charge?

Well, we do valuations of our goodwill and whether that be the original -- for the original purchase of DoubleDown Casino or the DoubleDown business? Or the 2 acquisitions we've done, we do those at the end of the year or in the fourth quarter.

And so you may recall or may remember that we did a very large goodwill write-down for the original DoubleDown acquisition 2 or 3 years ago. And so it was just -- this is the time that we do it. And based on the various third parties analysis was that was the result. Obviously, it's noncash. It doesn't affect EBITDA, and that was the outcome.

One moment for our next question. That will come from the line of Josh Nichols with B. Riley Securities.

Yes, I probably would echo the previous caller's notes about the company being overcapitalized. EV is negative at this point despite doing $160-plus million of annualized free cash flow and I appreciate the focus, as you describe it for shareholder value. But I think by most people's definition, that would mean getting the stock price and the EV to positive and ideally with the multiple to digress.

Looking at the iGaming piece of the business, it was essentially flat quarter-over-quarter. Clearly, I know you mentioned you've been optimizing the spending there. But how should we think as we model like 2026, the dynamics between sequential growth versus profitability for that space? Is it clear to you what direction you're leaning? Or are you going to be focusing more on growth or profitability going forward from here?

I'm sorry Josh, you said on the Social Casino business, right?

No, on the iGaming piece.

Oh, I'm sorry, I misspoke. Yes, iGaming. I mean like I said, it's really based on what we're seeing almost in real time. the biggest -- other than gambling tax, the biggest expense in the business is marketing, it is acquiring new players. And we have this disciplined approach to marketing and to spending to acquire players. So I definitely believe that we're going to continue to spend and to spend to acquire players. I think the question is only going to be, kind of what level of increase will we make? I mean we're not going to pull back on our spend. It's just a question of how much more quarter-to-quarter will we spend. And again, that goes back to, blame the algorithms to the algorithms on the LTV and payback period and the like.

And then just one follow-up for me. I mean, I think a lot of the stuff has already been hit on AI, WHOW, DTC. One thing I was curious about on the Social Casino side, given some of the legislative changes we're seeing in places like California, sweepstake bans and whatnot.

Are you seeing any easing of pressure in terms of like marketing or customer acquisition cost on that front? Or what's your expectation as we look forward to 2026 now that there's been some significant actions taken by a number of states on that front?

Yes. No, that's a really good question, Josh. I mean the really rapid rise of legislation in sweepstakes is really interesting. As I think we mentioned in past quarters and some of our peers have as well, the pressure that the growth of sweeps had on marketing costs were significant. I'd like to say that it's reverted back to some kind of lower level. But I think one of the things that we learn over time is that the costs to acquire players regardless of what sector of gaming don't ever seem to go down -- but I think the increases that we saw, especially during the period where sweeps were kind of taken the country by storm almost, I think that pressure has lessened to a certain extent.

And one moment for our next question. And that will come from the line of Eric Gregg with FTIA.

I have 2 questions. First one, in comment, it seems like a pretty strong quarter. So congratulations on that. Joe, just going back on the impairment, you didn't do the SuprNation deal that long ago. I think the business is roughly double what it was when you bought it.

It just -- what was the magnitude of the goodwill write-down? And again, it just -- it seems surprising that any kind of goodwill write-down would need to happen when you've had such robust growth to the business. So if you just could help me understand that a little bit better.

Yes, it was around $8 million. And we paid -- the upfront was $35 million or so. So that kind of gives you the relative size of it. And to a great extent, we're driven in these cases by what the third-party valuation experts conclude. And that's kind of -- that's where it ended up this year to address the goodwill balance.

So they're looking at comparables or something or weighted average cost of capital. I don't know, it just seems -- what was the thinking behind...

I'm not an expert, but I have obviously reviewed their report. I mean they have a number of different ways they look at valuation -- the valuations of this. And that includes comparables and weighted average cost of capital and peers in both public and private markets and a bunch of things.

Okay. And then the next question is really directed at IK. Joe, you gave some feedback on the capital allocation front. At this point, the company is trading at a negative enterprise value. And one could argue that's a referendum on the concern over the lack of savvy capital allocation policy or maybe about its focus -- current focus on its growth policy over taking advantage of this.

It's hard to see how the company can buy any other business at a negative enterprise value, how it could do any other acquisition at a negative enterprise value. And so buying in its own shares in negative enterprise is incredibly compelling.

So IK, can you just help us understand what's taking so long to -- for the management to come around to that thinking? Or is that just -- is this just a cultural issue that it's just hard to get around, especially giving us more context given that DoubleU Games has been buying back stock. And just help us understand all that.

So if you don't mind, I'll ask IK to answer as well, but I'll just kind of do a preview here and just say that one of the things that has been really positive relative to buybacks is the activity that occurred last year through the sale of [ STIC ], the private equity firm that helped buy DoubleDown in Korea, the sale of those shares and the expansion of the public float.

So I think that just before IK makes his comments, I'll say that, that definitely is something that was important relative to a buyback because it doesn't increase the float. And so it makes us less concerned about basically us buying back and then making what was at least already a very small amount of float, even smaller.

But IK, do you want to say anything about DoubleU and DoubleU strategy for buybacks? IK, are you there? Can you hear me?

Now we can. Sorry. I cannot speak for DoubleU Games but as long as I understood, DoubleU Games also wants to grow leveraging DDI's growth as well. So they will take care of DDI's growth as well.

Yes. It may not just -- okay, so it's growth at all costs regardless of whether it leads to negative enterprise value in the business. Is that what we should interpret that as?

I certainly wouldn't interpret that from what IK said. I think what IK is saying is that and let me just try to fill in the blanks here that -- and this has come up in the past where people point to DoubleU having done buybacks themselves.

I do know for a fact that that's not their primary strategy for their cash or their primary desire in order to kind of deal with their fairly low enterprise value relative to the size of their company. So I think it's -- it is similar to us in the sense of they are, again, not speaking for them, that the focus of the company is on -- their company is on growth as well. And obviously, since we roll up to them, that there is a desire for us to grow as well.

Thank you. This concludes our question-and-answer session. Thank you for joining us today for DoubleDown's earnings call. You may now disconnect.

Good afternoon, and welcome to DoubleDown Interactive's Earnings Conference Call for the Third Quarter Ended September 30. My name is Daniel, and I will be your operator this afternoon. 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 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 DoubleDown's CEO, Mr. In Keuk Kim; and its CFO, Mr. Joe Sigrist. Following their remarks, we will open the call for questions. Before we begin, Joe Jaffoni, the company's Investor Relations adviser, will make a brief introductory statement.

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 the meaning 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.

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. 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.

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. We refer you to DoubleDown's annual report on Form 20-F filed with the SEC on April 21, 2025, and other SEC filings for a more detailed discussion of the risks that could impact future operating results and financial condition.

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.

As noted in this afternoon's press release, beginning with the 2024 fourth quarter, DoubleDown is reporting its financial results in accordance with IFRS. As such, the financial results for the 2025 third quarter reflect IFRS as do the comparable period for 2024. 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.

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. A full reconciliation of these measures to the 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.

It's now my pleasure to turn the call over to DoubleDown's CEO, In Keuk Kim. Please go ahead.

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 SuprNation, 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 revenue of $95.8 million and adjusted EBITDA of $37.5 million. Q3 revenue was comprised of $79.6 million generated by Social Casino operations and $16.2 million generated by SuprNation, 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. Cash flow from operations was $33.4 million, bringing our total for the first 9 months of 2025 to $94.1 million, and we are delivering the profit and cash flow results even as we continue to invest in the business and prudently increased marketing spending to acquire new players at SuprNation.

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 ARPUDAU at $1.39, up from $1.30 in Q3 of 2024 and from $1.33 in Q2 of 2025. The payer conversion rate also rose during the quarter to 7.8%, up from both Q3 2024 and Q2 2025 levels. We continue to develop innovative enhancements to double-down casino, including with upcoming releases of new slot lobby for our mobile app and a new link Java system.

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 per DoubleDown Casino is now running at over 15%. 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. This not only helps to improve margins. It also enhances player engagement and retention.

Our goal is to execute for with a DTC percentage of Social Casino revenue of over 20%. As I mentioned a moment ago, we are complementing our strong free cash flow profile and financial position through other initiatives intended to build new value per shareholders. Our commitment to building our Social Casino business is highlighted by the July appreciation of WHOW Games a Social Casino operator based in orange in Q3 of we believe the growth potential in international social market is currently greater than in the United States and we are working to leverage this investment for our shareholders.

Turning to SuprNation. Q3 revenue of $16.2 million yet again represented the highest quarterly performance of the business since our acquisition in late 2023 and grew $700,000 on a quarterly concert basis. For perspective, SuprNation'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. 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 SuprNation into 2026.

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 only next year. Our experience in owning and operating SuprNation 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 sheet to further diversify our company by focusing on new gaming categories and underserved geographies.

This priority is reflected in our acquisition of our 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 shareholders.

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

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. And the comparisons of our 2025 third quarter results to 2024 third quarter results reflect that change for the prior year period under IFRS. The financial statement implications and 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. This generally makes our reported adjusted EBITDA slightly higher.

To review, revenues for the third quarter of 2025 were $95.8 million, and were comprised of $79.6 million in revenues from our Social Casino business and $16.2 million of revenues from SuprNation. This compares to total company revenues of $83.0 million in the third quarter of 2024. Our Social Casino segment grew nearly 6% from the third quarter of 2024 and nearly 15% sequentially and as we realized initial contributions from the WHOW Games transaction, which further increased our revenue in Europe, specifically in Germany. The initial results from WHOW Games are encouraging, and we are assessing their operations and will include the impact on our Social Casino KPIs when we report our Q4 2025 results.

iGaming revenues more than doubled, increasing 108% from the third quarter of 2024. And as IK stated, we're up $700,000 on a quarterly sequential basis. 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. We average revenue per daily active user or ARPDAU at $1.39 in Q3 2025 was up from $1.30 in Q3 2024. Payer conversion rate, which is the percentage of players who pay within the Social Casino apps increased to 7.8% in Q3 2025 compared to 6.8% in Q3 2024. And average monthly revenue per payer continued to be strong at $272 in Q3 2025, which is down just slightly from $281 in the prior year period. Again, this last quarter's results are KPIs that exclude WHOW Games.

In the third quarter of 2025, operating expenses were $60.9 million compared to $47.6 million in the third quarter of 2024. The increase is primarily due to increased operating expenses related to SuprNation driven by revenue growth and the inclusion of operating expenses related to the addition of operations from WHOW Games. Sales and marketing expenses for the third quarter of 20 were $15.7 million compared to $9.2 million in the third quarter of 2024. In Q3, we continued to optimize spending to acquire new players for DoubleDown Casino while increasing sales and marketing spending for SuprNation focused on new player acquisition and marketing expenses at WHOW Games were included in our financial results for the first time.

Profit, excluding noncontrolling interest for the third quarter of 2025 was $32.8 million or $3.21 per diluted share and $0.66 per ADS compared to profit, excluding noncontrolling interest of $25.0 million or $10.10 per diluted share and $0.51 per ADS in the third quarter of 2024.

Adjusted EBITDA for the third quarter of 2025 was $37.5 million compared to $36.5 million for the third quarter of 2024 and $33.3 million for Q2 and 2025. Adjusted EBITDA margin was 39.1% for Q3 2025 as compared to 44.0% in Q3 2024 and 39.5% and in Q2 2025. Net cash flows provided by operating activities in Q3 2025 were $33.4 million compared to $32.1 million in Q3 2024 and $19.7 million in Q2 2025.

For the first 9 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. And finally, turning to our balance sheet. As of September 30, 2025, and we add $439.2 million in cash, cash equivalents and short-term investments with a net cash position at quarter end of approximately $404 million or approximately $8.14 per ADS. Our current cash position reflects the approximate $65 million payment made in July for the WHOW Games acquisition.

Now I will turn the call back to IK for closing remarks.

Thank you, Joe. In summary, DoubleDown Interactive is delivering strong cash flow from its 2 meaningful and exciting businesses: Social Casino and iGaming. Our strong balance sheet and cash position allow us to continue to make disciplined investments in each of our businesses while continually evaluating new opportunities to enhance the growth of each. This includes investments through both organic means as we leverage the strength of our talented teams and through our evaluation of potential future acquisitions.

We are now happy to take your questions. Daniel?

Our first question comes from Aaron Lee with Macquarie.

Maybe to start with SuprNation. So you've driven really nice growth out of that asset over the last couple of quarters, another over 100% growth in 3Q. Maybe share your thoughts on how you're thinking about the balance between investing for growth versus profitability from here?

Yes. Thanks, Aaron. The reality is that we really believe that -- have believed that there was capacity in SuprNation's business to add users profitably. 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 acquired when we market to acquire new players. And the good news is adding new players to the SuprNation business continues to meet our targets for return on ad spend.

As we go forward, we'll just continue to monitor that. And when -- and I think we've talked before that essentially our payback period for acquiring new users about 6 months. And as long as we're achieving or hopefully even beating that threshold, we'll continue to add players. But if not, we'll dial it back and spend less to acquire new players.

Got you. 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 time line for that acquisition?

Yes. It seems like it's been a long time, but it was just July when we closed the deal, and there's still work for us to do to really dig in. But so far, so good. We are, as I think I can mentioned excited about the growth in the European Social Casino sector, and we want to lean into that as much as we can. Again, just as I mentioned with the SuprNation, it's all about the road, the return on ad spend as we acquire new players, and so that's first and foremost on our mind.

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 and 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.

Our next question comes from Eric Handler with ROTH Capital.

Just want to follow up that last question with WHOW. I mean, now that you've had up for 2.5 months, I'm sort of wondering if you could maybe lay out the road map over the next 6 months of what you hope to achieve?

Yes. 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 because that's the quickest and perhaps simplest way to affect the business in the short term. And then secondarily, we want to look at the product and some of the features and technology that we are interested in potentially leveraging from our traditional Social Casino business.

And then I think, thirdly, one of the things that they've done a really good job on is kind of a build for third-party casino apps. So I think as we've discussed, they have a casino that they operate that is 100% supported with mature box, and they work with mature directly the care being a German slot machine manufacturer in that app. And so being able to lean into that and in fact, perhaps more with that with others is something that we're also looking at leveraging.

That's helpful. And then as a follow-up, fully recognizing that there's a big difference between being shown acquisitions and being some quality acquisitions. I wonder if you could talk a little bit about your M&A pipeline at this point on what you're seeing?

Yes. I think the M&A pipeline continues to be busy. I mean it's interesting, obviously, that there are there are gaming assets that are ones that we all know about or that have been around for a while that are potential opportunities for us to integrate into our business. So that's on one end of the spectrum, and we continue to look at some of those. 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. And so we're open for both ends of the spectrum, and 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, as I said, up in comes.

Our next question comes from Josh Nichols with B. Riley.

Good to see the progress. Just real quick, it looks like we're seeing potentially some stabilization in the Social Casino business. I didn't hear if you broke it out. What was the revenue contribution from WHOW for the quarter?

Yes. 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. So there was no real surprise there from Laos operations in the summer.

Understood. And then there's been a lot of action that's being taken again like stat comps. You've seen things in California, there's a ban that's going into effect for overall. 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? 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?

Yes. No, I appreciate you mentioning what's going on in Sweepstakes category. It's obviously very interesting. I think it's a little early for it to have. And you're right, by the way, we've said it's probably the biggest impact on us that we can have perceived with the sweepstakes business is upward pressure on CPIs on advertising costs. 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 too soon to determine if that's going to have an impact on lowering cost. But I think all in all, none of this can hurt and we're obviously glad to see it.

Our next question comes from David Bain with Texas Capital.

I guess I would first ask about direct-to-consumer. I know you're at 5% in 2Q and you're over that in 3Q. And I, you mentioned 20% is the goal. And if that's the case, I was wondering if you could put a time frame on that? And then also, is that sort of like an interim goal? I'm just looking at the industry leader. Was it 31% in 3Q and they want to get to 40% over 2 years? So I'm just kind of wondering what your overall thought process is with D2C.

Well, 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. But yes, our -- and I think IK mentioned that our goal is to exit Q4, exit this quarter with a run rate of over 20% D2C. So we really think that it's possible to achieve something considerably higher than what we did over the last 6 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.

IK, do you want to talk a little bit about what we're doing...

Yes, for the broader D2C co-system especially in terms of providing more flexibility in how developers can communicate with transact direct with users, the recent direction of this platform is very helpful. At DDI, we've already been investing in our own D2C capabilities particularly through our own channels and direct CRM strategy. We engage players more freely and cost effectively outside of traditional platform constraints 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.

Okay. No, that's helpful. So it sounds like there's no cap on that 20% either. This is by the end of the year, and you'll reassess from there. was my take anyway. Well, maybe switching gears to SuprNation unless you had something to add on that. I'll go to SuprNation. So I believe on the last call, you cited the potential entry into new regions within Europe and into Canada. Maybe if you could provide us any sort of time frames or ideas or kind of updates with that? And then IT, you also mentioned a new brand, I believe, by the end of the year, if you could expand on that as well would be helpful.

Yes. Let me start first about the first front. From a marketing payback perspective, as Joe mentioned, our current operation consistently with ROI targets, making these investments accretive rather than dilutive to profitability for the future. 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 ship a sufficient scale, then portion, we can start to deliver a profit margin of over to it. to drive further revenue growth, we are about to launch our first brand Las Vegas sites in addition to our existing 3 long-rate apps. This initiative are expected to enhance retention and bring additional efficiencies within the SuprNation ecosystem. Hope this helps.

Definitely helpful. And any update on geographic expansion?

Dave, 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 book share is. And so we're continuing to evaluate new markets. It's a more long-term thing. And we have room to run with our existing markets. So I wouldn't put a time frame on expansion, but we're always continue to evaluate that.

Thank you. This concludes our question-and-answer session and today's conference call. Thank you for participating. You may now disconnect.