DoubleDown Interactive Q2 2025 Earnings Call Transcript

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Provided by Quartr
August 12, 2025

Key Takeaways

  • Positive Sentiment: In Q2, Double Down delivered $84.8 M revenue and $33.5 M adjusted EBITDA, with operating cash flow of $19.7 M, stable monetization metrics (ARPDAU $1.33, 7% payer conversion) and direct-to-consumer purchases exceeding 15% of social casino sales.
  • Negative Sentiment: Social casino revenues declined 14% year-over-year and 1.5% sequentially, leading to a margin contraction to 39.5% and reduced profit per ADS driven by lower top-line results and unrealized foreign-exchange losses.
  • Positive Sentiment: The acquisition of Val Games (Wow Games) in Hamburg expands Double Down’s European footprint, diversifies revenue beyond the U.S., and creates synergy opportunities for content integration and marketing efficiencies.
  • Positive Sentiment: iGaming subsidiary SuperNation posted a record $15.5 M Q2 revenue (up 96% YoY), doubling its quarterly run rate since acquisition, as disciplined player-acquisition spend drives strong payback and sets the stage for new brands and geographies.
  • Positive Sentiment: With approximately $444 M net cash and $481.2 M in cash and equivalents, even after the Wow Games purchase, Double Down maintains a strong balance sheet to support organic growth and future M&A.
AI Generated. May Contain Errors.
Earnings Conference Call
DoubleDown Interactive Q2 2025
00:00 / 00:00

There are 8 speakers on the call.

Operator

Good afternoon, and welcome to Double Down Interactive's Earnings Conference Call for the Second Quarter Ended 06/30/2025. My name is Michelle, and I'll be your operator this afternoon. Prior to this call, Double Down issued its financial results for the 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 Double Down's CEO, Mr.

Operator

I. K. Kim and its CEO, Mr. Joe Sigrist. Following their remarks, we will open the call for questions.

Operator

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

Speaker 1

Thank you, Michelle, and good afternoon, everyone. Before management begins our 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. 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 words. Forward looking statements include and are not limited to those regarding the company's future plans, mergers and acquisition strategy, strategic and financial objectives, expected performance and financial outlook.

Speaker 1

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 upon them. We refer you to Double Down's annual report on Form 20 F filed with the SEC on 04/21/2025, and other SEC filings for a more detailed discussion of 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.

Speaker 1

As noted in this afternoon's press release, beginning with the twenty twenty four fourth quarter, Double Down is reporting its financial results in accordance with IFRS. As such, the financial results for the twenty twenty five second 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 Double Down's financial reporting with financial reporting standards of its controlling shareholders 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.

Speaker 1

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 would like to remind everyone that this call is being recorded and will be made available for replay via a link in the Investor Relations section on Double Down's website. With that, it's now my pleasure to turn the call over to Double Down's CEO, Ake Kim. Please go ahead.

Speaker 2

Thank you, Joe. Good afternoon, everyone. We are delighted to be with you today to discuss not only our strong twenty twenty five second quarter results and our continued progress with Super Nation, but also our other recent initiatives intended to enhance shareholder value. Let's start with the quarterly results. This afternoon, we reported second quarter consolidated revenue of $84,800,000 and adjusted EBITDA of $33,500,000 Q2 revenue was comprised of 69,300,000 generated by social casino operations and $15,500,000 generated by our iGaming business Super Nation.

Speaker 2

In Q2, we again delivered on our key operating priority of driving a high conversion of revenue to cash flow, even as we comp against our strong social casino performance in the 2024. Cash flow from operations were $19,700,000 bringing our total for the 2025 to $60,100,000 And we are able to continue delivering this profit and cash flow results even as we continue to prudently increase marketing spend to acquire new players at Super Nation. Our Flexit DoubleDown Casino app continues to be the engine of cash flow generation for the company. Monetization metrics for the second quarter reflect this performance with ARPADAU at $1.33, equal to that of Q2 twenty twenty four, as well as payer conversion rate at 7%, increasing from both Q2 twenty twenty four and Q1 twenty twenty five. In Q2, we again increased the proportion of our social casino revenue generated by direct to consumer purchases.

Speaker 2

With this progress, DTC revenue is now running at over 15% of total social casino revenue. As you know, the ability to convert more social casino revenue to DTC further enhances our profitability as we offer players different ways to make purchases. 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 for shareholders. Our ongoing commitment to the social casino business is highlighted by Double Down's recently completed acquisition of Val Games, a social casino operator based in Hamburg, Germany. With this acquisition, which closed on July 15, CDI is further expanding its presence in Europe as both revenue is primarily generated in Germany using casino game content that is familiar and appealing to local players.

Speaker 2

The integration of Wow games further geographically diversified DDI's top line, which historically has been concentrated in The US. And we are excited to begin leveraging Double Down's knowledge and expertise in a number of key operational areas to accelerate our success going forward. Turning to supra nation, Q2 revenue of $15,500,000 yet again, represented the highest quarterly performance of the business since our acquisition in late twenty twenty three and grew by $2,300,000 from the 2025. For perspective, Super Nation's quarterly revenue run rate has more than doubled since Double Down closed its acquisition. Super Nation's second quarter growth reflects our strategy to prudently scale investment to acquire new players for their 3i gaming online casinos.

Speaker 2

Our investment continues to generate excellent payback and strong returns, even as the number of new players increased. At this time, we believe that such expenditure can drive further success and growth for SuperNation in the 2025. Our experience in owning and operating SuperNation over the last few quarters and our success with integrating its operations and driving very healthy level of top line growth makes us increasingly confident that we can leverage our core strengths, financial discipline and strong balance sheet to further diversify our company by focusing on new gaming category and underserved geographies. This priority is reflected in our acquisition of Valve Games and our ongoing search for other acquisition targets that meet our criteria for expanding our operation into new markets, while further diversifying our revenue and cash flow sources to create value for shareholders.

Speaker 3

Now, I will turn it over to our CFO, Joe Sigrist, to walk us through our financial report providing my closing remark. Joe? Thank you, IK, and good afternoon, everyone. As was earlier mentioned, beginning with the 2024, we are now reporting our financial results in accordance with IFRS. And the comparisons of our twenty twenty five second quarter results to twenty twenty four second quarter results reflect that change for the prior year period under IFRS.

Speaker 3

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. As IK mentioned revenues for the 2025 were $84,800,000 and were comprised of $69,300,000 in revenues from our social casino business, and $15,500,000 of revenues from Super Nation. This compares to total company revenues of $88,200,000 for Q2 twenty twenty four. On a year over year basis, as expected given our strong social casino performance in Q2 last year, social casino revenues declined 14% and were down approximately 1.5% from Q1 twenty twenty five.

Speaker 3

At the same time, iGaming revenues nearly doubled, increasing 96% from the second quarter of twenty twenty four. And as Ike stated, we're up $2,300,000 on a 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 q2. Average revenue per daily active user or ARPDAU at a dollar 33 in q2 twenty twenty five was equal to that in q2 twenty twenty four. Payer conversion rate, which is the percentage of players who pay within the social casino apps increased to 7% in q2 twenty twenty five, compared to 6.7 in q2 twenty twenty four.

Speaker 3

And average monthly revenue per payer continued to be strong at $286 in q2 twenty twenty five, which is down just slightly from $288 in the prior year period. As reviewed on recent quarterly calls, industry revenues are forecasted to decline in 2025. These industry forecasts combined with our strong performance throughout 2024 will make year over year social casino comps challenging in 2025. As I can describe, we remain steadfast in our commitment to the social casino business. With our flagship Double Down Casino, we have the right strategies in place, including a focus on product development improvements, live operations enhancements, and payer based marketing initiatives to support its strong industry position.

Speaker 3

And with the acquisition of Wow games, we look forward to taking our social casino business to the next level. In the 2025, operating expenses of $52,400,000 were essentially flat compared to $51,900,000 in the 2024. Lower research and development expenses, and a decline in the cost of revenue were partially offset by higher sales and marketing and G and A expenses. Sales and marketing expenses for the 2025 were $13,100,000 compared to $11,600,000 in the 2024. In q2, we continue to optimize spending to acquire new players for Double Down Casino, while at the same time increasing sales and marketing spend for Super Nation to focus on new player acquisition.

Speaker 3

Profit excluding non controlling interest for the 2025 was $21,900,000 or $8.82 per diluted share and 44¢ per ADS, compared to profit excluding non controlling interest of $33,200,000 or $13.35 per diluted share and 67¢ per ADS in the 2024. This decline in profit excluding non controlling interest was primarily driven by lower revenue and especially increased unrealized loss on foreign currency due to the weakening of the US dollar in Q2. Adjusted EBITDA for the 2025 was 33,500,000 compared to $37,500,000 for the prior year quarter. Adjusted EBITDA margin was 39.5% for q two twenty five, twenty twenty five, as compared to 42.5% in Q2 twenty twenty four. Net cash flows provided by operating activities in Q2 twenty twenty five were $19,700,000 compared to $34,800,000 in Q2 twenty twenty four, and $41,100,000 in Q1 twenty twenty five.

Speaker 3

The decline in net cash flows in Q2 was primarily attributed to income tax payment timing. For the 2025, net cash flows provided by operating activities were approximately $60,000,000 Finally, turning to our balance sheet. As of 06/30/2025, we had $481,200,000 in cash, cash equivalents and short term investments with a net cash position at quarter end of approximately $444,000,000 or approximately $8.97 per ADS. Our current cash position has of course been subsequently reduced due to the approximate $64,000,000 payment made in July for the Wow games acquisition. As a final note, I'd like to acknowledge the sale of shares during the second quarter by our private equity investor in Korea, our second largest shareholder.

Speaker 3

The successful completion of this process has expanded our shareholder base and increased liquidity of our publicly traded stock. I'd like to take this opportunity to welcome these new investors to Double Down. Now, I'll turn it back to Ike for closing remarks.

Speaker 2

Thank you, George. In summary, Double Down Interactive is delivering strong cash flow from its two meaningful and exciting businesses, social casino and iGaming. Our strong balances and cash position allow us to continue to make disciplined investments in each of our business, while continually evaluating new opportunities to enhance the growth of each. This includes investments through both organic means as we leverage the strengths of our talented teams and through our evaluation of potential future acquisition. We are now happy to take your questions.

Speaker 2

Michelle?

Operator

Thank you. Our first question comes from Aaron Lee with Macquarie. Your line is open.

Speaker 4

Hi, good afternoon. Thanks for taking my question. Maybe to start with Wow Games. Any color on how you're thinking about balancing growth versus profitability for that business? And I guess generally, how do you see the drivers of growth for that business going forward?

Speaker 4

Thank you.

Speaker 3

Yeah, thanks, Aaron. Wow games for us is a very exciting opportunity. Because on one hand, of course, we understand the social casino business quite well. And on the other hand, it's incremental to what we're doing today relative to their strength in Europe, and specifically in Germany, and their use of more of a white, I'll call it a white label model, relative to how they work with some of their major partners, especially partners that are strong with content and land based gaming. So, you know, for us, you know, we want to lean into what they do well.

Speaker 3

As you may know, Europe relative to the rest of the world has had some growth more recently in the social casino industry. And we want to take full advantage of that. And that's, you know, through this acquisition, and you know, through the ways that we can help them help Wow games, grow and take advantage of what they're already doing well.

Speaker 4

Okay, got it. And then on direct to consumer, you previously talked about B2C surpassing 15% as the target for 2025. And you guys have already achieved that. I guess looking further out, what do you think is an appropriate medium or long term target? Thank you.

Speaker 3

Yeah, thanks for making that comparison. I appreciate that, Aaron. Yeah, I mean, we're really pleased just to lean into that a

Operator

little bit

Speaker 3

on the progress we've made. Well, really since we started this initiative in earnest a year and a half ago, but especially what we've been able to do in the last six months. And, you know, we look to do more. I mean, relative to the target,

Speaker 2

I know

Speaker 3

some of our peers have put targets out there. I mean, certainly, it's going to grow from continue to grow from here. I guess we have to update our end of year target now. But, you know, relative to continued progress, I mean, we have initiatives from a product and a marketing perspective that will allow us to grow from the 15 plus percent of social casino revenue that we are now. Don't have a target for you specifically.

Speaker 3

But, you know, I certainly believe that we'll be higher by the end of the year than we are now.

Speaker 4

Okay, understood. Congrats on the quarter. Nice job. Good luck with Wow.

Speaker 3

Yeah. Thanks, Aaron.

Operator

Thank you. Our next question comes from David Bain with Texas Capital Bank. Your line is open.

Speaker 5

Great. Thanks. I was hoping to get a little bit of background on the Wow Games M and A process. If you were looking for a social casino opportunity or if it was more opportunistic as just a great priced bolt on fit with the core business? And then going forward, does that shift the spectrum of the M and A genre focus, size, timing, as you look to digest Wow and grow Super Nation?

Speaker 3

Yeah, great question, Dave. I mean, we definitely have been looking as you know, for ways to leverage our strong balance sheet to grow the business, to grow the company. And well, you know, our first acquisition was an iGaming business, and we've been looking primarily outside of social casino. This was opportunistic. It's something that came across the desk.

Speaker 3

And the more we looked into it, the more we realized it was, as I mentioned earlier there and kind of a little bit of what we knew and incremental opportunity based on what they

Speaker 6

could

Speaker 3

add to the current social casino business that is our strength. So, you know, it was a really nice thing to execute on and I'd say it was opportunistic. Because of that, it doesn't take our focus away from the other searches that we're doing and our other looks relative to future and potential new ways to use our strong balance sheet. And I don't think it delays our excitement or, know, what we think we can execute on if the right thing comes across.

Speaker 5

Okay. So I guess the next one would be on the regulatory action towards sweeps in markets where some of the larger players have at least abided by cease and desist letters. I know a lot haven't yet. Are you seeing any increase in trend for sign ups or plays? Is it too early to monitor or see that?

Speaker 5

And are you trying to anticipate in some of those territories to make marketing changes?

Speaker 3

Well, mean, just to be clear to everybody on the call, I mean, we're not involved in the sweepstakes business. We do not have anything akin to sweepstakes casinos. And I think your question is, do we

Speaker 2

see upside because of the Yeah,

Speaker 3

I just want to be clear upside because of potential action that's been taken or is being taken against them. You know, the short answer is, no, we haven't. There's nothing I can quantify or tell you that, you know, is a positive impact, if you will, to whatever has been occurring legislatively or regulatory on the regulatory side with those games. It's not something that we can say has had a specific impact.

Speaker 5

Okay. And if I could just one more, I'm sorry, I know I'm going over by one. But I was checking news on W and they have a history of return of capital to shareholders, as you know, like in this July news, if I'm reading it right, of a buyback of KRW 35,000,000,000. Is there any kind of just high level thoughts regarding the parents' return of capital activity versus Double Down's thought process towards their own or the parents' thought process? I mean, understanding valuation considerations between companies and things like that, but I would actually think that would work towards us.

Speaker 5

I'm just trying to understand the view of the differential, if you have one.

Speaker 3

I mean, know, can't comment on W's actions or W's activity. I mean, obviously, they're a separate company. Yes, there are controlling shareholder. And, you know, obviously, that's an important part of our corporate structure. But I can't comment on what they're doing with their company.

Speaker 5

Fair enough. Thanks, guys.

Operator

Thank you. Our next question comes from Josh Nichols with B. Riley. Your line is open.

Speaker 6

Yes, thanks. Just wanted to double click real quick on

Speaker 7

the Wow! Acquisition. I guess, one, in terms of the revenue to EBITDA profitability, is that relatively comparable where you're looking at something that's like 30 plus percent. But overall, like, just as you integrate this acquisition, I'm thinking about some of the potential synergies and, you know, expanding direct to consumer. Is that something that they're doing or even potentially expanding your content agreements with Double Down, W, or IGT to Wow and potential positives that they could have on the business as you integrate that?

Speaker 3

Yeah, Josh. Certainly there are synergy opportunities relative to growing the business and improving profitability. Some of those things you mentioned, such as our direct to consumer initiatives that you know, we're seeing success with that we're, you know, going to be discussing with the Wow team. And, you know, from a content standpoint, you know, while perhaps not all of our content are not all of the traditional double down or double down casino content will be appropriate given the European player, some of it very well maybe. And so those are also other discussions that we're starting to have with the Wow team.

Speaker 3

Especially that content by the way that we've developed internally in our Korean studios, which then of course would be royalty free revenue for us and for Wow. So yes, I mean, we've, you know, started to have discussions about a number of those initiatives, both to grow the top line or accelerate their growth on the top line as well as improve profitability.

Speaker 7

Thanks. So then just looking at the cadence here, social casino revenue attrition seems to be attenuating at least sequentially when you look at the trajectory. I know it's expected to be down year over year in '25, but do you think that that business could start to be closer to flat sequentially or maybe up sequentially by the end of this calendar year? What are the expectations for the back half excluding the acquisition, but on an organic basis?

Speaker 3

Yeah, well, you know, obviously, we don't give specific guidance, but I'll say that your observation is right relative to, you know, obviously the flattening of the revenue here over the last couple of quarters. And, you know, we're really feeling good about the initiatives that we've enacted in the first half of the year to create that flattening, if you will. And, you know, we've got additional monetization features, retention features, features that, you know, will enhance, you know, the continued payment from players that we're continuing to introduce. In fact, we'll be continuing to introduce this summer that we think all end towards, you know, our, you know, continued trajectory, if you will, of where the kind of double down traditional social casino business is trending right now.

Speaker 7

Thanks. And then the last question for me. Very high growth, right, that we're seeing on the iGaming business from Super Nation. I think you mentioned previously that was running around breakeven. When we think of this, you're close to 100% year over year growth.

Speaker 7

Is that type of cadence something that you think is sustainable? And are you still expecting that, that business would be positive as it scales next year to EBITDA contribution and to what extent potentially?

Speaker 2

Hi, Josh. Let me take the question. About Super Nation's sustainable growth, from a marketing payback perspective, our current operations consistently meet our ROI targets, making these investments accretive rather than dilutive to profitability. Based on our experience, scaling remains the priority in the iGaming business. Looking at larger market peers, we believe that once we achieve sufficient scale, SuperNation can start to deliver a profit margin of over two digits.

Speaker 2

To drive further revenue growth, we are planning to launch fourth and fifth brand sites in addition to our existing three sites, along with native apps on each site. So, these initiatives are expected to enhance retention and bring additional efficiencies within the supernation ecosystem. Lastly, beyond our existing slots and table games, we are also exploring entry into the vertical, as well as geographic expansion within Europe and into Canada. With focused execution, we aim to accelerate both growth and operational efficiency. Hope this helps.

Speaker 7

Yes, it does. Thank you.

Operator

Thank you. Our next question comes from Eric Handler with Roth Capital. Your line is open.

Speaker 2

Good afternoon. Thank you for

Speaker 6

the question. I want to dig in a little bit on what you were just saying

Speaker 5

there.

Speaker 6

Are you saying you're looking to expand beyond UK and Sweden at this point? And I'm just curious, what sort of

Speaker 3

you

Speaker 2

know,

Speaker 6

as you look at scaling that business, what are you finding that's working well, more so than others and some of your other findings, you know, in the last couple of quarters?

Speaker 2

Yes, it depends on regulatory direction changes. Currently, are seeing additional licenses into the Finland, Spain, and additional other Western Europe countries, including Canada, Ontario.

Speaker 3

And Eric, I just wanna be clear when IK had mentioned the fourth and fifth, he was talking about potential brands, meaning additional web, essentially additional websites that could be additional or additive to the three online casinos they have today. And then of course, there's potential for regional expansion as well.

Speaker 6

Got it. And just, you know, as a follow-up, as

Speaker 2

I said, you know, what do

Speaker 6

you mean, these are highly competitive markets, you know, what are you doing that is specifically you think allowing you to sort of grow and maybe outpace the market a little bit? It's something that you're finding with marketing that's just resonating well.

Speaker 3

Yeah, I think, you know, honestly, we're bringing a certain amount of discipline and professionalism and improvement to what had previously been going on. And so, you know, to that extent, it's been a little bit of low hanging fruit in that we're, you know, we're just doing better as a marketing team in acquiring new players.

Speaker 2

Yeah, actually a combination of production enhancement and real time marketing enhancement as well. If we look for iGaming business, it is about a bit traditional marketing style related to affiliate marketing sources. So, our experience in such a casino industry, it helps a lot to increase our short term ROI level and long term retention level as well from product standpoint. So, we see nowadays a bit better performance compared to recent two or three years ago.

Speaker 6

Great, very helpful. Thank you.

Speaker 3

Thanks, Aaron.

Operator

Thank you. There are no further questions at this time. This does conclude today's conference call. You may now disconnect. Everyone, good day.

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