DoubleDown Interactive Co., Ltd. Q1 FY2026 earnings call

• Overall Financial & Profitability Performance

  • Delivered strong results to start 2026, with adjusted EBITDA of $38.2 million, up 24% year-over-year, and an adjusted EBITDA margin of 40.6%, up from 36.9% in Q1 2025
  • Net cash flow from operations was $46.4 million, up from $41.1 million in Q1 2025, with $533.4 million in total cash, cash equivalents and short-term investments and a net cash position of approximately $500 million as of March 31, 2026
  • Profit excluding non-controlling interest increased 48% year-over-year to $35.4 million, or $0.71 per ADS, up from $0.48 per ADS in Q1 2025

• Strategic Priorities

  • M&A remains a core strategic priority to expand the online gaming and mobile entertainment portfolio and drive long-term shareholder value, supported by the company's strong balance sheet and cash position
  • Prioritize DTC transition for the social casino segment to optimize margins, amid the estimated secular decline of the global social casino market
  • Continue targeted investment in new player acquisition for SuperNation to grow the iGaming segment, while mitigating the impact of the recent UK gambling tax increase

• Operational Updates

  • Integration of acquired businesses WOW Games and SuperNation is progressing successfully
  • The newly launched Las Vegas iGaming brand has received a strong positive response from players
  • Early actions to offset the higher UK gambling tax rate, including product adjustments, have returned positive initial results

Consolidated total revenue for Q1 2026 was $94.1 million, a 13% year-over-year increase. 1. Social casino segment: Revenue grew 9.5% year-over-year to $76.9 million, representing 81.7% of total consolidated revenue. Growth was driven by the inclusion of WOW Games, acquired in Q3 2025. Direct-to-consumer (DTC) revenue accounted for 44% of total social casino revenue in Q1 2026, up from 33% in Q4 2025, with DTC penetration in the flagship Double Down Casino exceeding 40% in the quarter. 2. iGaming segment (SuperNation): Revenue grew 30% year-over-year and 6% quarter-over-quarter to $17.2 million, representing 18.3% of total consolidated revenue. Growth was supported by the successful launch of the new iGaming brand Las Vegas.

Management did not provide explicit quantified full-year or future quarterly financial guidance in this call. The only forward-looking guidance relates to core strategic commitments:

• The company will continue to focus on increasing DTC revenue penetration across the social casino segment throughout 2026
• Management remains committed to growing the SuperNation iGaming business and achieving sustained profitability after the UK tax increase
• The company will continue to actively evaluate and pursue disciplined M&A opportunities targeting larger accretive deals than prior acquisitions, aligned with its long-term growth strategy

• The global social casino market is estimated to be in secular decline, creating a structural headwind for organic growth of the company's core social casino business
• SuperNation's iGaming business faces a material headwind from the recently implemented higher UK gambling tax rate, which impacts profitability, though early mitigation efforts have been positive
• All forward-looking statements, including expectations for M&A, growth, and profitability, are subject to inherent uncertainties that could cause actual results to differ materially from expectations
• Valuation misalignment between buyers and sellers can impact the ability to complete accretive M&A transactions

Q: David Bank (Texas Capital Bank) asked if SuperNation has reached its profitability inflection this year and whether it is still at breakeven after the UK tax increase. / A: SuperNation achieved a small profit in Q1 2026, before the new higher UK tax rate went into effect April 1. Early mitigation actions to offset the tax increase have looked positive so far, but it is too early to draw definitive conclusions as the new tax regime has only been in place for just over a month. Management remains fully focused on growing the business and achieving sustained profitability over time. It is still targeting to move beyond breakeven. /

Q: Aaron Lee (Macquarie) asked for an update on the current M&A environment, including the volume of available deals and key factors that have prevented closing larger transactions. / A: There are still active deal opportunities, and valuations have come down, which is favorable for Double Down as a buyer. Most current available deals are smaller, while the company is targeting a larger step-up deal following its $40 million SuperNation acquisition and $65 million WOW Games acquisition that added ~$40-50 million in annual revenue. Management continues to evaluate opportunities with a disciplined approach, and cannot predict when the next larger deal will close. /

Q: David Bank also asked how much further DTC penetration can grow, specifically for the core Double Down Casino. / A: DTC penetration in the flagship Double Down Casino itself exceeded 40% in Q1 2026, driving the sequential increase in total social casino DTC penetration from 33% in Q4 2025 to 44% in Q1 2026. Management has made exceptional progress over the past two years, but it is hard to predict an exact ceiling or timeline for reaching 50%+ penetration. Management remains very pleased with the growth achieved to date. /

Q: Josh Nicholas (B Reilly) asked what the organic social casino growth rate was excluding WOW Games, and what the trajectory will be after lapping the acquisition in the second half of 2026. / A: The global social casino category is mature and in secular decline, so there is a structural organic headwind for the existing business. That said, Double Down outperformed broader category expectations in Q1 2026 and retained strong cash generation and profitability. The company's strategy focuses on optimizing profitability via DTC transition and growing through M&A rather than relying on organic growth of the mature core segment.