DoubleDown Interactive Co., Ltd. Q3 FY2024 earnings call

Core Business Growth

• Consolidated revenue rose 14% year-over-year to $83 million, with social casino/free-to-play games revenue up 3% year-over-year for the fourth consecutive quarter.
• Adjusted EBITDA increased 22% to $36.1 million in Q3 2024.

SuprNation Performance

• Q3 revenues for SuprNation were $7.8 million, above pre-acquisition estimates. The company is being disciplined with player acquisitions and sees a path to scaling SuprNation's top line while focusing on positive cash flow.

Product Development

• An internally developed meta 3-type game is in beta trial. There is a pipeline of additional internally developed mobile games planned for 2025.

D2C Efforts

• Direct-to-consumer revenue efforts are a strategic focus, contributing to improved gross margins. The company is working on product and marketing levers to increase D2C revenue and continues to enhance the entertainment value of DoubleDown Casino while being disciplined in user acquisition and R&D spend.

Consolidated revenue for the third quarter was $83 million. The social casino/free-to-play games segment generated $75.2 million in revenue, contributing approximately 90.6% to total revenue. The SuprNation iGaming business generated $7.8 million in revenue, contributing approximately 9.4% to total revenue. The social casino/free-to-play games segment saw 3% year-over-year revenue growth in Q3, marking the fourth consecutive quarter of year-over-year growth.

SuprNation Scaling

• Expect to continue scaling SuprNation's top line by leveraging core strengths, product development expertise, and marketing platform to improve profitability.

Product Launches

• Optimistic about the release of an internally developed meta 3-type game in beta trial and the pipeline of additional internally developed mobile games for 2025.

M&A Opportunities

• Continue to evaluate M&A opportunities to expand operations into new markets and further diversify revenue and cash flow.

D2C Conversion Risk

• Risk of not achieving desired conversion to direct-to-consumer revenue and potential player friction. The company is being careful to avoid creating excessive friction for players.

Processor Charges

• Uncertainty regarding processor charges compared to typical platform fees, which could impact margins.

Q: David Bain asked about the direct-to-consumer piece, cost of revenue decline, and mix shift.

A: Joseph Sigrist responded that D2C efforts are a strategic focus contributing to gross margin improvement, with progress made and expected to continue. Mix shift is ongoing, and the company is being careful to avoid player friction.

Q: Aaron Lee inquired about SuprNation synergies and meta features.

A: Joseph Sigrist said work has begun on bringing games to SuprNation's platform, and In Keuk Kim mentioned continuing to experiment with fun retention features like meta features and rewards.

Q: Greg Gibas asked about diversifying revenue and KPI drivers.

A: Joseph Sigrist stated the company is focused on organic growth through internal development and M&A, with KPI improvements driven by player and payer retention, and SuprNation upside related to player acquisition and marketing ROI in target markets