DoubleDown Interactive Co., Ltd. Q1 FY2025 earnings call

Management Statement and Operational Highlights: - DoubleDown executed on the key operating priority of driving revenue to profit and cash flow, with cash flow from operations at $41.1 million in Q1 2025, up over $5 million from Q1 2024. - In Social Casino, despite average DAUs and MAUs being down, monetization KPIs like ARPDAU ($1.29 in Q1 2025 vs $1.26 in Q1 2024), payer conversion rate (6.9% in Q1 2025 vs 6.4% in Q1 2024) improved. Direct-to-consumer revenue in Social Casino was over 10% in Q1 2025, targeting over 15% in 2025. - SuperNation had Q1 2025 revenue of $13.2 million, the highest since acquisition, driven by new player acquisition investment in The UK and Sweden. They see opportunity to scale further in existing markets and expand into other regulated European iGaming markets. - Decided not to commercial launch a new match three type game due to not meeting player engagement and monetization criteria; continue developing new game concepts and evaluating in trials.

Segment Performance: In the first quarter of 2025, consolidated revenue was $83.5 million. The Social Casino free-to-play games generated $70.3 million in revenue, which was a 12% decline year-over-year. The iGaming business, SuperNation, generated $13.2 million in revenue, a 59% increase year-over-year, representing the highest quarterly performance since its acquisition in late 2023. Social Casino contributed approximately 84.2% of the total revenue ($70.3 million / $83.5 million), while SuperNation contributed approximately 15.8% ($13.2 million / $83.5 million).

Guidance: - Will maintain capital efficiency discipline focusing on product improvements and live ops enhancements in DoubleDown Casino. - For SuperNation, will selectively increase investments in new player acquisition to target top-line growth. - Expect to expand the track record of generating attractive free cash flow, strengthen the balance sheet, and explore growth opportunities in adjacent gaming categories via in-house development and potential M&A.

Risks: - Forward-looking statements are subject to numerous risks and uncertainties that could cause actual results to differ materially from expectations, as detailed in DoubleDown's annual report on Form 20-F and other SEC filings. Risks include those impacting operating results and financial condition.

Q: Hi, good afternoon. Thanks for taking my question. Nice drop on the SuperNations growth this quarter. Can you just speak to what trends you're seeing in SuperNations markets? And are there any major sporting events we should be mindful of that are important from either a handle or customer acquisition standpoint?

A: The continued benefit of quick ROI from new player acquisition investment. SuperNation markets in The UK and Sweden, and sales and marketing spend focused on new players there. No major sporting events specifically tied to handle or customer acquisition mentioned in terms of direct impact.

Q: Yes. Thanks for taking my question. Just to dig a little bit deeper on the SuperNation iGaming piece of the business, again pretty phenomenal growth of almost 60%. Do you feel that, this level of north of $13 million for the quarter is kind of like a base and you would expect to expand that and commensurate with that? Do you expect that this like elevated level of sales and marketing to kind of persist for the foreseeable future? Effectively, do you think that the SuperNation business is going to be growing throughout the rest of the year from this current base that you just hit in 1Q that's a new record?

A: As we said, we are excited about the returns from investment in new player acquisition and expect to continue investing at or even above this level to see requisite revenue results. The SuperNation business is expected to grow throughout the rest of the year from the current base.

Q: Hey, good afternoon, IK and Joe. Congrats on the strong SuperNation results. Thanks for taking the questions here. If I could just follow-up on that, given that nice strength, nice year over year growth, you spoke to liking the spend efficiency. Would you say it's improving or kind of leveled out here? And I guess I would just ask, other than kind of the attractive return on your spend for player acquisition, could you maybe speak to any of the other drivers of strength of SuperNation?

A: The marketing story is strong. Also, product development efforts in Malta, and the benefit of having three brands (including Duelz) which have shown strength and are being leaned into with additional marketing dollars.

Q: In your prepared remarks, you talked about not moving forward with the commercial launch of a new game. Maybe could you discuss what you're not happy with there? And do you have any other kind of in house developments over the foreseeable future? And how should we maybe think about the timeline of kind of new development?

A: We currently have several new game concepts in development with AI-assisted production pipelines to iterate faster. We are cautious and metrics driven, as even well-developed concepts may not meet internal thresholds for player engagement or monetization. Long-term success in new categories requires patience, rigorous testing, and walking away if data doesn't support commercial launch.